On Monday the Congressional Budget Office (CBO) released its report on the projected effects of the House Republican plan to replace the Affordable Care Act.
Here are five facts you should know about the federal agency that “scores” legislation:
1. The Congressional Budget Office (CBO) is an independent, nonpartisan federal agency within the legislative branch that provides analyses of budgetary and economic issues to support the Congressional budget process. (The CBO can sometimes be confused with the Office of Management and Budget (OMB), an office within the executive branch that assists in creating the President’s proposed budget and “assist the President in meeting his policy, budget, management and regulatory objectives and to fulfill the agency’s statutory responsibilities.”)
2. The CBO was created after a dispute between Congress and President Richard Nixon in 1974. The Congressional Budget and Impoundment Control Act of 1974 outlines the structure and function of the CBO and how it will conduct it’s processes. The director of the CBO is jointly chosen by the Speaker of the House and the President pro tempore of the Senate.
3. The CBO is required by law to produce a formal cost estimate for nearly every bill (excluding appropriations) that is approved by a full committee of either the House or the Senate. Cost estimates show how federal outlays and revenues would change if legislation was enacted and fully implemented as proposed—compared with what future spending and revenues would be under current law. According to the CBO, each estimate also includes a statement about the costs of any new federal mandates that the legislation would impose on state, local, or tribal governments or on the private sector.
4. Throughout its history the CBO has worked to maintain an appearance of objectivity and nonpartisanship. In 1976, the first CBO director, Alice M. Rivlin, issued a memo to CBO staff stating:
We are not to be advocates. As private citizens, we are entitled to our own views on the issues of the day, but as members of CBO, we are not to make recommendations or to characterize, even by implication, particular policy positions as good or bad, wise or unwise.
Commitment to transparency and objectivity, however, has not made the CBO immune to criticism. Both Republicans and Democrats in Congress and the White House tend to support or oppose the CBO’s reports depending on how it affects their preferred policy objectives.
5. The CBO’s “scoring” of legislation often used in partisan policy debates. For this reason, the agency’s past mistakes often leads critics—including members of Congress—to dismiss their projections. A prime example was the CBO’s forecast that 21 million would gain coverage through the Obamacare exchanges in 2016, when the real total was only 10.4 million. As Reason’s Peter Suderman says, “CBO is a worthy institution that provides directionally useful estimates that are often wrong by non-trivial margins in hard-to-predict ways.”