How to Think About the CBO
I want to link to some of the criticisms of the Congressional Budget Office that are flying around today, but I want to link to them with a disclaimer: These are not criticisms of the Congressional Budget Office. These are criticisms of how the Congressional Budget Office's work is being used by politicians and interpreted by the media.
The CBO was formed in the Budget Act of 1974. It exists for a simple reason: to help Congress build the budget. In order to do that, the CBO develops estimates of how much things cost, because that's what the people writing the budget need to know. Those estimates are, as you'd expect, biased toward costs and away from savings: What we will save if a policy works as hoped is always a lot less concrete than what we will spend.
This is a good approach for the agency charged with giving Congress budget numbers. It is not how we'd set up an agency charged with advising Congress on how to vote on policy. Which is why the CBO does not allow itself to advise Congress on whether something is a good idea. It limits itself to how much it thinks that thing will cost, and how much the CBO can confidently predict it will save.
Making things better is always something of a gamble. Few policies are a sure thing, and new policy approaches are hard to assess precisely because they have never been tried before. You probably want to pay for a new approach conservatively, emphasizing sure costs over likely savings. That's good budgeting. But when deciding whether to pursue a new approach, you don't want to make that judgment conservatively. You want to ask whether this is worth a try. That's a question the CBO can't ask. But it is the question that their numbers are being used -- by both sides -- to answer.
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