The Choice Of A New Budget Director
November 18, 1998
One of the first major decisions Rep. Bob Livingston of Louisiana will have to make as Speaker of the House is the appointment of a new director for the Congressional Budget Office (CBO). Current director June O'Neill's four-year term expires on January 3 and she is not seeking reappointment. By law, the new director is appointed jointly by the Speaker of the House and the President Pro Tempore of the Senate, who is Sen. Strom Thurmond (R-S.C.).
CBO's baseline budget estimates provide the framework within which all budgetary legislation is considered. In the last two years, it has been severely criticized for the inaccuracy of its baseline budget forecasts. In particular, revenues were seriously underestimated, causing the deficit to be overestimated. For example,
- In January the CBO projected federal revenues at $1,665 billion and a deficit of $57 billion in fiscal year 1998, which ended on September 30.
- Actual revenues ended up at $1,721 billion, $56 billion higher than estimated.
- The deficit turned into a surplus of $70 billion, a turnaround of $127 billion in just 9 months.
If congressional Republicans had a more accurate estimate of revenues and the deficit in January they would have pushed much harder for a tax cut this year. In the recent election, exit polls indicate Republican losses stemmed mainly from high-income voters who switched their votes from Republican in 1994 and 1996 to Democrat this year. This is a group that may well have stayed in the Republican camp had the party delivered on the promise of a tax cut. The proposed $80 billion tax cut, offered in the final days of the legislative session, was too little and much too late to help.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, November 18, 1998.
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