Opinion Editorial | |
| Wednesday, June 17, 1998 | |
Congressional Leadership Scapegoats the CBO |
On June 9, the entire House Republican leadership signed a remarkable letter attacking the Congressional Budget Office (CBO), the congressional agency that estimates the budgetary impact of legislation. Addressed to Congressman James Walsh, chairman of the appropriations subcommittee that oversees CBO's budget, Congressmen Newt Gingrich, Dick Armey, Tom DeLay, John Boehner and Chris Cox wrote: "We are deeply concerned about the increasing evidence that the Congressional Budget Office is utterly unable to predict consistent and accurate future revenues or even the fiscal implications of changes in budget policy....These forecasts are the foundation upon which Congress crafts legislation. Congress should not be put in a position of relying upon incorrect information. The CBO must address this problem. If it does not, I [sic] believe we must review the structure and funding for the CBO in this appropriations cycle." In short, they told the CBO: give us better numbers or we will cut your budget. The immediate cause of this threat is CBO's continuing underestimates of federal revenues and the growing budget surplus. Over the last four years, these forecasting errors have forced the Republican Congress to enact politically painful spending cuts in its effort to balance the budget that ultimately turned out to be unnecessary. Now they think that CBO's low-balling of the surplus is preventing the enactment of an election-year tax cut. The truth, however, is otherwise. The main barrier to enactment of a tax cut this year is not the CBO, but the pay-go rule. Under this rule, which was originally enacted into law in the 1990 budget deal, Congress may not cut taxes for any reason unless such cuts are paid for with tax increases or cuts in entitlement spending such as Medicare. The idea is to prevent tax cuts from enlarging the deficit. But the rule applies equally when there is a budget surplus and also prevents Congress from using cuts in non-entitlement programs to finance tax cuts. Thus it makes no difference whatsoever whether we have a surplus of $40 billion this year or $400 billion in terms of allowing a tax cut to take place. Unless the pay-go rule is amended or abolished, it is impossible to use the surplus to pay for any tax cut. Furthermore, since changing the pay-go rule would require legislation, it would almost certainly be vetoed by Bill Clinton. That is why, despite the surplus, Republicans are scrambling to find $100 billion of entitlement cuts to finance a reduction in the so-called marriage penalty. The irony is that the original pay-go rule expired last year and was renewed by the very congressmen who are now complaining that the CBO won't let them cut taxes. They agreed to it as part of their budget deal with the White House and it was included in the final legislation. So the Republican leaders are really responsible for their own predicament. The CBO has simply become a scapegoat for their political blunder. Another leadership mistake was their early decision to torpedo dynamic scoring, which would allow revenue estimators to take into account the increased economic growth that often accompanies tax cuts that stimulate work, saving and investment. This was done in an unusual joint hearing of the House and Senate Budget Committees on January 10, 1995, which was organized for the sole purpose of discrediting the use of dynamic scoring in the budget process. House Budget Committee Chairman John Kasich, a co-chairman of that hearing, is now among those most upset that the CBO does not use dynamic scoring in its analyses. He has no one but himself to blame. Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, June 17, 1998. Home | Support Us | All Issues | Social Security Debate Central | Contact Us |