Exit Elmendorf, Enter a New Politicized CBO?
Policy + Politics

Exit Elmendorf, Enter a New Politicized CBO?

Ever since the Republican Party’s strong showing in the November elections gave the GOP control of both the House and Senate in the 214th Congress, which begins in January, the fiscal policy community has been abuzz with questions about the future of Congressional Budget Office Director Douglas Elmendorf, whose term expires next month. 

A report from Bloomberg News on Monday afternoon says Republicans have decided not to reappoint Elmendorf who has headed the office in charge of assessing the cost of Congressional actions since January of 2009. 

Related: Conservatives Split on Keeping or Ditching CBO’s Elmendorf 

Members of the anti-tax conservative right, who believe that CBO has historically been too reluctant to consider the potential fiscal benefits of tax cuts, greeted the news with excitement. 

Asked about the reported decision not to reappoint Elmendorf, Grover Norquist, founder of American for Tax Reform, said, “I think that’s probably a wise decision.” 

Norquist believes the CBO ought to be much more of a force for reducing government spending, and in large part blames the agency’s founding director, Alice Rivlin, for setting precedents that endure to this day – including a reluctance to directly engage in debates over government spending levels. 

“When you have a famous part in an opera, and somebody plays it one way, then for 100 years everybody feels like they have to play it the same way,” Norquist said in an interview. In his view, and the view of many conservatives, CBO ought to be “the traffic cop to slow down runaway spending.” 

Related: The High Cost of Missing the Mark on Budget Forecasts 

With some exceptions, though, Elmendorf has won praise from both sides of the aisle. The CBO director is jointly appointed by the House and Senate, and Elmendorf was originally tapped to fill the unfinished term of Peter Orszag, who left CBO to become President Obama’s Director of the Office of Management and Budget. 

Despite that Democratic pedigree, Elmendorf was reappointed to a full term in 2011, even after Republicans took over the House. He had pleased some conservatives with his agency’s perceived evenhandedness in assessing the cost of federal programs, most notably the Affordable Care Act. 

However, one thing Elmendorf resisted, as have all of his predecessors, was accepting the practice of “dynamic scoring” of legislation. The central premise of dynamic scoring is that the macroeconomic effects of legislation – particularly tax cuts – ought to be considered when estimating the long-term budgetary effects of legislation. 

It seems like it ought to be uncontroversial on its face – clearly tax cuts must have effects on peoples’ economic decisions. However, the majority of economists believe that, at least currently, the estimation of macroeconomic effects of tax policy is so uncertain that any data they produced, especially over the long term, would be unreliable. 

Related: Domestic Spending Again takes a Back Seat to Defense 

That view is most certainly not shared by influential Republicans about to take control of key Congressional committees that deal with government spending, and who will likely have outsized influence on any replacement for Elmendorf. Utah Sen. Orrin Hatch will run the Senate Finance Committee next year, Rep. Paul Ryan of Wisconsin will head the House Committee on Ways and Means, and Rep. Tom Price of Georgia will run the House Budget Committee. All three, to a man, support dynamic scoring. 

Asked if he believes they would replace Elmendorf with a candidate who shares their views, Norquist said, “I hope they would. I certainly hope they would.” 

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