NCPA - National Center for Policy Analysis

Congressional Leadership Scapegoats Budget Office

June 17, 1998

The entire House Republican leadership has signed a letter attacking the Congressional Budget Office (CBO), the congressional agency that estimates the budgetary impact of legislation. They said they "...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...."

In short, they told the CBO: give us better numbers or we will cut your budget. Over the last four years, the CBO's continuing underestimates of federal revenues and the budget surplus have forced Congress to make unnecessary spending cuts. Now they think CBO's low-balling of the surplus is preventing an election-year tax cut.

However, the main barrier to a tax cut this year is the pay-go rule. Under this rule, first enacted in the 1990 budget deal, tax cuts must be 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 cutting non-entitlement programs to finance tax cuts.

Unless the pay-go rule is amended or abolished, Congress can't use the surplus to pay for any tax cut. Furthermore, changing the pay-go rule would almost certainly be vetoed by Bill Clinton. That is why Republicans are scrambling to find $100 billion of entitlement cuts to finance a reduction in the so-called marriage penalty.

Ironically the original pay-go rule expired last year and was renewed by the very congressmen who are now complaining the CBO won't let them cut taxes. So the Republican leaders are really responsible for their own predicament. The CBO has simply become a scapegoat for their political blunder.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, June 17, 1998


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