Republican War on CBO Now Targets Its Director
Almost from its inception in 1974, Republicans have hated the nonpartisan Congressional Budget Office. Ever since Capitol Hill's budget scorekeeper presciently predicted Ronald Ronald's magical tax cuts would produce oceans of red ink, the GOP has had the CBO in its crosshairs over its inconvenient truths about taxes, the economic stimulus, health care and more. When CBO concluded that repealing Obamacare would increase the national debt, then House Majority Leader Eric Cantor accused the office of "budget gimmickry." In late 2011, then GOP presidential front-runner Newt Gingrich called for the death penalty, declaring "if you are serious about real health reform, you must abolish the Congressional Budget Office because it lies." Now, many conservative hardliner are not only demanding that the new GOP majority force CBO to change the way it does its math, they want to get rid of its Director, Douglas Elmendorf.
Over the years, Elmendorf has established a reputation as an even-handed, no-drama authority whose budget estimates have both helped and hurt (especially on the $10.10 minimum wage proposal) President Obama's agenda. It's precisely because of that credibility that some Republicans, notably including the American Enterprise Institute and Bush economists Gregory Mankiw and Douglas Holtz-Eakin, want the new GOP Congress to keep Doug Elmendorf on for another term at CBO.
But as the New York Times reported, Grover Norquist, the Heritage Foundation, the Wall Street Journal and others in the "tax pay for themselves" crowd want to replace Elmendorf with a compliant GOP ideologue. While AEI's Michael R. Strain gushed "Doug Elmendorf has been so exceptional, he seems to be trying as hard as possible to give a fair, unbiased review of academic literature on all these issues":
Not so, say the most ardent conservatives, who want Mr. Elmendorf, a former Federal Reserve economist, replaced as soon as his term ends on Jan. 3. Grover G. Norquist, the small-government, low-tax activist at Americans for Tax Reform, has prominently laid out an indictment that includes putting a supposedly inaccurate price tag on the Affordable Care Act and Mr. Elmendorf's "failed Keynesian economic analysis."
Dan Holler, a spokesman for Heritage Action, the political arm of the Heritage Foundation, agreed. "It would be absurd for a Republican-controlled Congress to keep Elmendorf at the helm of the C.B.O." he said. "For a party looking to change the culture in Washington, this would be a good place to start."
Especially if the culture Republicans want to change is one of honesty and fidelity to the truth.
Consider, for example, the Republican effort to brand President Obama's 2009 stimulus program a "failure" that "not create a single job." While GOP presidential nominee Mitt Romney was touring the country propagating the "Obama made the economy worse" fraud, CBO Director Douglas Elmendorf was calmly bludgeoning the fabulists of the Republican Party.
As the Washington Post reported in June 2012, the House Budget Committee heard testimony from the CBO chief answering a simple question: did the $787 billion Obama stimulus work? Unfortunately for Republican propagandists, Elmendorf clearly refuted Mitt Romney's claim that the American Recovery and Reinvestment Act (ARRA) was "the largest one-time careless expenditure of government money in American history."
Under questioning from skeptical Republicans, the director of the nonpartisan (and widely respected) Congressional Budget Office was emphatic about the value of the 2009 stimulus. And, he said, the vast majority of economists agree.
In a survey conducted by the University of Chicago Booth School of Business, 80 percent of economic experts agreed that, because of the stimulus, the U.S. unemployment rate was lower at the end of 2010 than it would have been otherwise.
"Only 4 percent disagreed or strongly disagreed," CBO Director Douglas Elmendorf told the House Budget Committee. "That," he added, "is a distinct minority."
Not content with that response, Kansas Republican Rep. Tim Huelskamp tried again. "Where did Washington mess up?" Huelskamp demanded. "Because you're saying most economists think it should've worked. It didn't." As the Post's Lori Montgomery detailed, Elmendorf drove home the point:
Most economists not only think it should have worked; they think it did work, Elmendorf replied. CBO's own analysis found that the package added as many as 3.3 million jobs to the economy during the second quarter of 2010, and may have prevented the nation from lapsing back into recession.
That May, Elmendorf's agency released its latest assessment of the stimulus showing why. At its peak in 2010, the ARRA added up to 3.3 million jobs, cut unemployment by as much as 1.8 percent and boosted GDP by up to 4.1 percent. It's also worth noting that the CBO once again confirmed that aid to the states and purchases by the federal government delivers the biggest bang for the buck, while upper income tax cuts provide the least.
Now, few things are as near and dear to the conservative heart as tax cuts for the wealthiest Americans. But sadly for the GOP's supply-side snake oil salesmen, the CBO has time and again debunked right-wing rhetoric insisting that massive windfalls for the wealthy from Uncle Sam pay for themselves and fuel job creation and economic growth.
During and after the stimulus debate, CBO advised that rate reductions for the rich provided the worst "multiplier" of any ARRA program. Then as the nation approached the so-called "fiscal cliff" at the end of the 2012, CBO explained that increasing taxes on the top earners would have virtually no impact on the economy at all. As I noted in November 2012:
In its report ("Economic Effects of Policies Contributing to Fiscal Tightening in 2013"), the CBO warned that the deficit-slashing effects of allowing the Bush tax cuts expire, ending the two-year payroll tax holiday and letting last year's budget sequestration deal proceed on January 1, 2013 could return the United States to recession. The combination of spending cuts and tax increases could reduce gross domestic product by 2.9 percent and drive the unemployment rate from 7.9 percent today to 9.1 percent by the end of next year.
But as Dylan Matthews explained in the Washington Post, letting upper-income tax rates return to their slightly higher Clinton-era rates (as President Obama has proposed) will play no part in that instant austerity. While extending the Bush rates for all Americans carries a $330 billion overall price tag for Uncle Sam next year, the CBO calculated that $42 billion goes to the top taxpayers...Eliminating that Treasury-draining windfall for the wealthy (by raising rates for the top-two tax brackets, indexing the AMT and raising capital gains, dividend and estate taxes), would slice only 0.1% from economic growth next year.
Making matters worse, CBO analyses (and decades of American history) have made a mockery of that central pillar of GOP economic orthodoxy, "tax cuts pay for themselves." To battle reality's well-known liberal bias, Republicans declared war on math itself.
That's why in 2012, 2013 and again in 2014 Republicans in Congress sought to require that the CBO use so-called "dynamic scoring" to make their budget-busting tax cuts miraculously work. That's why House Republicans proposed H.R. 3582 (the "Pro-Growth Budgeting Act") last year to require that the CBO estimates also use dynamic scoring to incorporate "supply-side assumptions about the growth-generating magic of tax cuts into official budget estimates, enabling conservatives to evade the deficit-boosting implications (and various congressional barriers that come along with them) of their pet proposals for reducing the tax burden of 'job creators.'" In September, Paul Ryan promised the Wall Street group, the Financial Services Roundtable, "I'd like to improve our scorekeeping so it better reflects reality." By "improve our scorekeeping," Ryan means forcing the nonpartisan Congressional Budget Office (CBO) to change the way it forecasts (or "scores") the impact of tax and budget legislation. And by "better reflects reality," Paul Ryan means rigging the outcome so GOP tax-cutting bills don't appear to hemorrhage the red ink they inevitably must. As The Hill reported:
Ryan said if Republicans take control of the Senate, they will be able to calculate the price tag of legislation differently. Republicans have long pushed for the Congressional Budget Office to use "dynamic scoring" when calculating the costs of legislation. Currently, the CBO scores legislation using static scoring, which does not take into account how behavioral changes brought on by legislation could in turn alter how much a particular provision costs.
But Ryan and Republicans argue that adopting a new scoring method would make it easier to adopt revenue-neutral policies, and also paint a more accurate picture. If the GOP controlled Congress, they could change the calculation methods employed by the CBO.
"The scorekeeping we use is not correct," he said.
As James Valvo, policy director at Americans for Prosperity put it, "This is something that remains important to us."
Something else that is important to the Republican Party is pretending that draconian budget cuts won't hurt the American economy. As the deadline for the start of the $1.2 trillion, decade-long sequester neared in March 2013, House Speaker John Boehner was asked if he had "a sense of how many jobs will be lost as a result," the Speaker of the House said, "I do not." Days later, Boehner once again proclaimed his ignorance in an interview with David Gregory on Meet the Press:
"I don't know whether it's going to hurt the economy or not. I don't think anyone quite understands how the sequester is really going to work."
Of course, there were no shortage of dire, specific and nonpartisan warnings about the impact of that year's $85 billion in cuts to defense and discretionary spending. And Speaker Boehner knew this, because just three weels prior he heard them directly from the heads of the Congressional Budget Office and the Federal Reserve.
John Boehner may not have known how many jobs will be lost, but virtually everyone else in Washington did. On February 13, 2013, CBO Director Douglas Elmendorf testified to the House Budget Committee about the economic blow from the first year of $1.2 trillion, decade-long sequester:
"The sequester alone will reduce GDP growth this year by 0.6 percentage points, lowering GDP at the end of the year by that 0.6 percent. We think that would reduce the level of employment at the end of the year by about 750,000 jobs."
(Ironically, Speaker Boehner could have just reread his February 20, 2013 op-ed in the Wall Street Journal. After all, it starts with the sentence, "A week from now, a dramatic new federal policy is set to go into effect that threatens U.S. national security, thousands of jobs and more.")
But when it comes to the Republicans' current bête noire--Obamacare, the Congressional Budget Office is enemy number one. As it turns out, that designation dates back long before CBO boss Elmendorf destroyed the GOP talking point that the Affordable Care Act will destroy 2 million jobs.
In January 2011, the new House Republican Majority quickly filed HR2, a bill to repeal the Affordable Care Act signed into law by President Obama the previous March. But the first of the GOP's repeal efforts, like all of the forty-odd attempts to come, quickly ran into a brick wall at the CBO. Elmendorf's office quickly doused the repeal fire by pointing out that repealing Obamacare would add to the national debt.
In response, Republicans turned to the only tactic left; they lied. Charging that "most people understand that the CBO did the job it was asked to do by the then-Democrat majority," House Majority Leader Eric Cantor warned, "bill has the potential to bankrupt this federal government as well as the states." As CBS News reported three years, Cantor quickly doubled down:
Cantor also disputed the claim, put forth by the nonpartisan Congressional Budget Office, that the health care reform bill passed by Congress last year will actually reduce the deficit by $143 billion, calling the figure "budget gimmickry."
"I think what we do know is the health care bill costs over $1 trillion," Cantor told Hill. "And we know it was full of budget gimmickry. And it spends money we don't have in this country."
As Ezra Klein of the Washington Post explained at the time, "Republicans are aware that this looks, well, horrible. So they're trying to explain why their decision to lift the rule requiring fiscal responsibility is actually fiscally responsible."
What's important about Cantor's argument is not that he's wrong. It's why he's saying something he knows to be wrong. There are plenty of reasons to oppose the health-care reform bill. You might not want to spend that money insuring people, or you might not think the legislation goes far enough in reforming the system. But as a matter of arithmetic, using the math that Congress always uses, the bill saves money. It cuts enough spending and raises enough taxes to more than pay for itself, both in the first 10 years and in the second 10 years.
"Repealing health-care reform would cost hundreds of billions of dollars," Klein rightly concluded, "and Eric Cantor knows it." (If you have any doubt on that point, note that the Paul Ryan budget that 95 percent of Republicans voted for three years in a row keeps all of the revenue raised or saved by Obamacare even as it repeals the spending for actual health care.)
And so it goes.
"Facts," President Reagan famously declared, "are stupid things." Facts also happen to be, well, facts. And that, in a nutshell, is why Republicans hate the Congressional Budget Office and its current director.