Former Congressional Budget Office Director Peter Orszag is worried about his former agency.
In an op-ed published by Bloomberg View on Tuesday, Orszag expressed concerned that when the Republican Party controls both houses of Congress starting in January, current CBO Director Douglas Elmendorf could be replaced with “someone who is more an advocate than an analyst.”
Under the provocative headline “A Party Hack Would Ruin the CBO,” Orszag touts the agency’s hard-earned reputation for objectivity, but warns, “The CBO is one of the few remaining high-performing organizations in government. Its reputation has been hard to build but would be easy to destroy.”
Any politicization of the agency would naturally be troubling. The CBO provides budgetary and economic analysis to members of Congress. Many bills cannot proceed through the legislative process until their budgetary impact has been “scored” by CBO.
Orszag, however, says only that his concern about the future of the agency arose because “rumors are circulating” about GOP leaders opting to politicize the post. The trouble with the article is that Orszag doesn’t specify any of the rumored replacements who are evidently giving him so much heartburn.
A likely source of his discomfort, though, is that the Republicans might realize a long-held wish by replacing Elmendorf with an advocate of “dynamic scoring” for the federal budget. Dynamic scoring essentially incorporates estimates of the impact policy changes will have on the behavior of individuals and businesses into the CBO’s budget scores.
For instance, supply-side economists believe that up to a certain point, tax cuts are partially or even completely self-financing because they increase economic activity and therefore generate new tax revenue.
Like other CBO directors before him, Elmendorf has been largely resistant to dynamic scoring. The process is viewed skeptically by economists. According to the National Bureau of Economic Research, “There is little agreement among professional economists about how best to model long-run economic growth and the impact of taxes on the economy.” (The CBO does dynamically score a small number of proposal for which there is little debate about the economic impact.)
A CBO director who favors dynamic scoring would be a major boon to the Republican agenda, because tax cuts would no longer be a zero sum game on the budget spreadsheet. Right now, every dollar in reduced taxes represents a dollar in lost revenue. Under dynamic scoring, tax cuts would get a lot “cheaper” when the budget is scored. By some analyses, they might even be considered free.
In September, for example, House Budget Committee Chairman Paul Ryan (R-WI), who is expected to take over the tax-writing Ways and Means Committee in January, called for dynamic scoring of tax reform proposals he expects to introduce in the next Congress.
Democrats like Orszag are, no doubt, concerned about the possibility of a hardcore supply-sider taking Elmendorf’s job in January. Orszag’s suggested remedy is for Congress to simply reappoint Elmendorf who, he says, “has done an exceptional job of guiding the organization through the stormy aftermath of the financial crisis.”
The CBO director is appointed by the Speaker of the House of Representatives and the President pro tempore of the Senate, and serves a four-year term. Elmendorf was originally appointed to serve out an incomplete term, and was reappointed in 2011.
During his tenure, his office has delivered reports that both Republicans and Democrats decried. The GOP, for example, objected to the CBO’s finding that the Affordable Care Act would not add to the budget deficit. The Obama administration had a major public disagreement with the CBO over its finding that a minimum wage increase would cost the country half a million jobs.
Some argue that in a time of serious polarization, keeping the widely-respected Elmendorf in place would send a strong signal that the GOP is dedicated to policy that succeeds on the merits, rather than on partisan favor.
“They would be well advised to keep Elmendorf,” said economist Bruce Bartlett, a former advisor to President Ronald Reagan who has since broken with a Republican Party that he views as too extreme. “If they want to do anything out of the ordinary, it would be easier for them if it has his imprimatur” rather than someone seen as “kowtowing to a Republican agenda.” (Disclosure: Bartlett is a former columnist for The Fiscal Times.)
The decision, in any case, is completely in the hands of Congressional Republicans. Although Democrats on the House and Senate Budget Committees have nominal input, the ultimate decision belongs to the GOP.
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