A Conversation with CBO Director Keith Hall
The Committee for a Responsible Federal Budget and our partners at the Campaign to Fix the Debt hosted a conference call conversation with Dr. Keith Hall, director of the Congressional Budget Office (CBO), on Tuesday, May 8. Hall explained CBO's role and process for coming up with its cost estimates and projections before answering a few questions submitted by followers of our organizations.
You can listen to the full call here.
Hall started out by explaining the ten things to know about CBO, which include why CBO was formed, how it sets its priorities, what guides its analysis, how it tries to be as transparent as possible about its conclusions, and how it is always looking to improve its operations. He discussed how CBO provides support to the budget committees and other Congressional committees by producing statutory reports, creating cost estimates of legislation, and providing technical assistance in writing legislation. Using an objective, impartial, and nonpartisan lens, CBO tries to he provide the best estimates and projections that it can without making any policy recommendations, providing analysis that represents the middle of a range of potential outcomes. Hall also noted that CBO works hard to refine its analytical work and provide transparency on how accurate its estimates and projections have been in the past.
Hall's presentation was followed by a question and answer portion with questions submitted by callers. First, Hall was asked how CBO produces its cost estimates. Hall answered that CBO has recently started producing materials to explain its processes, including a document detailing how CBO goes through the process of creating a cost estimate. He then laid out the four-step basic process of creating a cost estimate, including by first reading the legislation to fully understand it, conducting research about the effects of enacting it, analyzing and quantifying the effects on the federal budget and state and local governments, and finally communicating the results in a report. Hall mentioned that last year there were about 740 official estimates and somewhere around 10,000 informal estimates. CBO tries its best to do due diligence to ensure it is as confident as it can be about its conclusions in a limited amount of time.
The next question was about how effective CBO is. Hall explained that CBO is confident that it is effective for a number of reasons, including how it does a broad range of analysis. He also discussed how he has met with many Members of Congress to discuss CBO's analysis, and the oversight hearings (which the House recently completed a series of) provide CBO with the opportunity to solicit more feedback on its operations. CBO also examines its record of forecasting in regular reports, which Hall said show that CBO has generally done reasonably well and is in line with other forecasters.
Another question was asked about whether CBO keeps track of actual spending. Hall responded that they do, and he indicated that this month the agency would release a public version of this analysis. Hall was then asked about how many more employees CBO would need to fulfill every request it gets, to which Hall responded that CBO sort of does this already (by analyzing all bills that come out of committee) but has not been able to provide much help to individual Members of Congress. He said that they are asking for funding to hire 20 more employees so they can provide faster analysis and more support to members.
Hall was then asked about CBO's analysis of the 2017 tax law, particularly on its dynamic effects on the macroeconomy. Hall mentioned that the Joint Committee on Taxation (JCT) generally provides revenue estimates for CBO, but CBO's recent Budget and Economic Outlook also analyzed the bill and found it would increase the size of the economy by about 0.7 percent over the decade. He noted that CBO found the tax cuts will pay for about one-third of themselves.
Another caller asked about CBO's economic estimates, noting that the agency doesn't estimate a recession soon despite a long recovery. Hall explained that the way CBO estimates potential growth essentially includes the fact that a recession is likely to happen at some point but does not say exactly when because it is not possible to predict. (Read more about CBO's technical explanation here.)
The final question asked Hall about the fiscal state of the budget. Hall answered that U.S. will face some significant budget challenges over the next decade, including a mounting debt at a post-WWII high and rising. Hall indicated that CBO will produce a long-term outlook in July, which is likely to show a very high level of debt in 30 years.
We thank Dr. Hall for taking the time to talk to us about CBO, its processes, and the federal budget.