As prepared for delivery during today’s hearing, CBO Oversight: Economic Assumptions, Baseline Construction, Cost Estimating, and Scoring:
Good morning, and thank you to everyone for being here as we continue the House Budget Committee’s series of oversight hearings on the Congressional Budget Office.
As we discussed during our first hearing, CBO was created more than 40 years ago as part of the Congressional Budget and Impoundment Act of 1974.
Since then, CBO has been a vital, congressional support agency that provides nonpartisan budgetary analysis and directly assists the House and Senate Budget Committees.
These hearings with CBO are intended to help us learn more about how the agency carries out its mandate of supporting Congress in the federal budgeting process and to consider areas in which the agency can improve.
CBO has not undergone a comprehensive review since it was created. However, the demands on the agency have undoubtedly changed since 1974.
So we are here to make sure the agency has everything it needs to effectively and efficiently fulfill its mission in the 21st century.
Last week during our hearing with CBO’s director, Dr. Keith Hall, we looked more broadly at CBO’s organizational and operational structure, including its staffing, assumptions, processes, and work products.
In today’s hearing and at our next hearing, we’re diving deeper to explore the “nuts and bolts” of how CBO actually crafts the impartial work-products Congress relies on to make informed legislative decisions.
Today’s discussion will be largely technical in nature, but it will provide the Committee with greater insight into CBO’s work, with the goal of making that work more useful to Congress.
We will discuss CBO’s budget and economic reporting responsibilities, which include providing information on the national economic outlook, as well as cost estimates for proposed legislation.
As our committee members know well, CBO regularly produces an economic outlook and details long-term budget projections.
Based on current laws that affect federal spending and revenues, CBO’s budgetary and economic projections are updated regularly throughout the year and together form a “baseline.”
Congress intended this baseline to be a neutral benchmark in the budget process, and CBO uses the baseline to project the impact of proposed legislation.
CBO’s baseline, or The Budget and Economic Outlook as it is called in report form, is instrumental to building the budget each fiscal year.
This annual report details the expected levels of spending, revenue, surpluses or deficits, and debt over the forthcoming 10 years.
Using CBO’s baseline, committees and Members of Congress consider policy options through the lens of whether they increase or decrease spending and revenues.
So it is essential we on the Budget Committee have a firm grasp on this process.
As we learn the “how” behind these various work products, I am also interested in exploring CBO’s efforts for maintaining an appropriate level of transparency.
Transparency within CBO is critical to ensuring the agency can effectively fulfill its nonpartisan mission to support the work of Congress.
At the same time, the Budget Act recognizes that there is a delicate balance between CBO’s need for access to good private sector data and the appropriate transparency of that data.
And in this series of hearings, we look forward to carefully evaluating and understanding how to strike the right balance.
So with that in mind, I am pleased to welcome three individuals from the agency who are here today to help improve our understanding of CBO’s work.
Each one comes with expert knowledge related to CBO’s processes for constructing various types of analysis and providing support to Members and congressional staff.
First, we have Mark Hadley, Deputy Director of CBO. Mark is responsible for assisting the CBO Director in managing the daily operations of the agency and coordinating between the divisions.
Also joining us is Wendy Edelberg, Associate Director of Economic Analysis. Wendy is here to provide us with her expert insight into how CBO handles its economic forecasting and analysis.
And finally, we welcome Teri Gullo, Assistant Director for Budget Analysis. Teri’s division is responsible for producing baseline projections, formal cost estimates, and informal support to Congressional staff.
Before we hear from our witnesses, I want to stress again that we are not here to invite attacks on an agency so vital to Congress’s ability to budget independently.
But we are here to see how things are being done and identify potential areas for improvement.
Today, I look forward to hearing from our witnesses and engaging in more productive conversations.