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tv   Congressional Budget Office Oversight Hearing Panel 1  CSPAN  March 15, 2018 9:14pm-12:27am EDT

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c-span, or listen with the free c-span radio app and for background on each case, order your copy of the landmark cases companion book for $8.95 shipping and handling at cases and explore the interactive constitution created by the national constitution center, there is a link on our website. and now the house budget committee holds its fifth and final hearing in a series examining the role of the congressional budget office in the legislative process. members heard from former cbo director alice rivlin and douglas holtz-eakin who discussed the office mission and purpose. this is three hours and ten
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minutes. the hearing will come to order. welcome to the committee on budget hearing examining perspectives from outside experts on over sight of the congressional budget office. before we begin, i ask you unanimous consent that consistent with clause four of house rules 16, the chairman be authored to declare a recess at any time without objection, the request is agreed to. today we are concluding our five-part series of oversight hearings on cbo, a support agency playing a vital role in the congressional budget process for more than 40 years. established by the congressional budget and impoundment act of 1974, cbo directly assists the house and senate budget committees and support the work of congress with the nonpartisan budgetary analysis. even though cbo has existed for
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decades, this oversight series marks the first time the agency has ever undergone a comprehensive review. over the years cbo's mission of supporting the congressional budget process has remained the same. but as we have learned during the hearings, demands on and expectations of the agency have evolved. so while the purpose of this series has certainly been educational, it is also helped us identify and consider potential areas for improvement. at the end of the day, we want to make sure cbo has everything it needs to fulfill the mandate of supporting congress in the 21st century effectively and efficiently. we started this series by discussing cbo's organizational and operational structure with the director, dr. keith hall. in our second hearing we began to explore some of the more technical aspects of how cbo crafts the impartial work products congress relies on to make informed legislative decisions. during our third hearing, we
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took a deeper dive into cbo use of models as a tool in scoring legislative proposals and what kinds of assumptions are made in that process. and last week we heard from interested members of the house who shared their ideas for improvement at cbo as well as prospectives on challenges they've experienced when interacting with the agency. today we will close out the series. my thanks to the witnesses joining us as we do so. in our first panel, we will hear from two former cbo directors who guided the agency at different stages in the cbo history. each director was appointed during different eras of congress and both were selected to serve based on their ability to perform the duties of that role, not because of their political affiliation. we are pleased to welcome doctoral is rivlin, who is the first director of cbo and served as head of the agency for eight years. she also has served as omb director and federal reserve board vice chairwoman. also joining us today is dr.
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douglas holtz-eakin appointed as director of cbo in 2003 and led the agency for nearly three years. he served on the president's council of economic advisers and he's currently president of the american action forum. i look forward to hearing the unique insights dr. rivlin and holtz-eak holtz-eakin can share with past operations and different challenges faced over the years. in the second panel we will hear from budgetary policy and process experts who can provide valuable outside perspective. joining us from the committee for a responsible federal budget is the organization's president, maya mcginny as known for budget and tax and economic policy and heads the campaign to fit the debt. maya is the at forefront of budget issues for years and able to discuss the importance of cbo within the context of larger budget process. maya is joined by sandy davis from the bipartisan policy center. sandy currently served as senior
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adviser for the organization economic policy project and he also has a wealth of knowledge about the budget process. prior to working at b pc, he devoted more than 30 years of service to cbo including as a associate director for legislative affairs. he was the first person to hold that position. before joining cbo in 1996, sandy specialized in budget process at the congressional research service. through these cbo over sight hearings, we've learned much about the inner workings of cbo and the challenges the agency faces that's provides congress with nonpartisan budgetary analysis. our conversations today will help the committee continue to determine actionable solutions for cbo's ongoing success. as we've considered this very important topic, to consistent themes have arisen. the desire to improve the accuracy of cbo's work and the desire to increase transparency
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at the agency. without question, the simple exercise of having these hearings is already enhanced communication between cbo and congress and i believe this exchange is only made better through regular over sight. that means not waiting another 40 years for a comprehensive review and consideration of how to update the agency for the 21st century. before we get started, i want to remind everyone that our goal here is to make sure that cbo has the tools it needs to affectively support the congressional budget process. especially with the recently formed select committee, there is genuine interest on both sides of the aisle to have a working budget process. cbo undoubtedly plays an essential role to that end. i look forward to the conversations ahead. and continuing to engage in a productive bipartisan dialogue about cbo. thank you and with that i yield to the ranking member, the gentleman from the commonwealth of kentucky, mr. yarmouth. >> thank you very much mr.
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chairman. i join you in welcoming our guests, dr. rivlin and holts k holtz-eakin. you have played key roles to be our independent nonpartisan source of information and analysis. the truth is congress simply could not function effectively without cbo's budget estimates and analysis. we make decisions that impact our entire economy and every family in america and those decisions must be informed by sound data and evidence. we created cbo so we were not forced to rely on analysis from the executive branch or outside organizations, information which reflected their own political agenda. we still need cbo to be that unbiased score keeper. cbo does not make recommendations, they do not take into account politics or ideology. they deal in numbers and analysis only. the only agenda is maintaining their independent respective voice and appreciate the hard work both witnesses have done in
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their mission during ten years as cbo directors. i'm also looking forward to the second panel. maya mcginny as and sandy davis. the committee for responsible federal budget has a long standing relationship for budget analysis and opinion and i'm pleased to extend our welcome back of sorts to mr. davis. sandy has a rare advantage point as an outside expert having spent years on the inside. he is in the perfect position to discuss how seriously cbo staff take their responsibility to produce nonpartisan analysis and how they view the role of the institution they serve. again i thank our witnesses for coming and look forward to their testimony. and i yield back. >> thank you mr. yarmouth. in the interest of time, if any other members have opening statements, i would like to ask for unanimous consent that members submit them for the record. without objection. i would now like to welcome our first witness panel, consistent
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of doctoral is rivlin and dr. rivlin and your written statements will be made part of the official record. you will have five minutes to deliver your oral remarks. and dr. rivlin, the floor is yours and we welcome your testimony. >> thank you mr. chairman. and ranking member yarmouth and members of the committee. i'm delighted to be here, delighted you are holding this series of hearings. and very pleased to present my views. 43 -- excuse me 43 years ago i had the good fortune to be chosen as the first director of cbo. it was a chance to launch a much-needed congressional support agency and establish its structure and its initial traditions. my colleagues and i worked very hard with the then new budget
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committees to create a strong nonpartisan cbo and recruit talented hard-working staff who would give the congress the best budget estimates and analysis that we possibly could. my most important contribution i think to the nonpartisan credibility of cbo was insisting that cbo not make policy recommendations. we believed cbo should provide objective information and analysis if asked it would offer an array of policy options with estimates of what alternative policies would cost and what consequences they would likely have especially for the federal budget. but it would not proassume to tell congress what to do. since then the cbo has had a string of talented directors, one of them here next to me. but i think the reason that the
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cbo is still performing at a high level after 43 years is that congressional leadership and especially the budget committees recognize their need for solid unbiased budget estimates and have protected the cbo from partisan and special interest threats that could undermine its ability to do its job. no one needs to tell members of the budget committee that making budget decisions is extremely hard. advocates of policy changes including presidential administrations are routinely optimistic -- not surprisingly -- about what their preferred policies will cost and what the consequences will be. policymakers need to cut through the pledge ora of -- plethora of competing experts to answer questions like what will it cost and what will the affects be. that is cbo's job. to maintain its credibility and be max mally useful to policy
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makers, cbo needs to be as transparent as possible about the methods and models it uses to arrive at estimates and adjust the methodology in response to new information and estimating techniques. critics of the cbo often appear to imagine that cbo has a vast store house of well documented statistical models that could just be plugged into generate estimates of costs and effects of any policy option that might interest the congress. however, congress often considers complex policies that have never been tried before, and for which no models exist. cbo staff is often forced to reason by -- by analogy from fragmentary data about vaguely similar programs tried under different circumstances and to estimate interactions among several policy changes that have not occurred before.
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writing up these new methods and models in sufficient detail so that others can reproduce them is a time-consuming activity that competes with moving on to the next set of estimates. making these estimates is challenging and the customer's need to have -- a realistic view of what can be done. more transparency requires more staff. one persistent dilemma which is confronted from cbo director since my day is responsibility creep. although a few members of congress criticize cbo's performance, many others and sometimes the same ones are eager to have it take on more jobs for more clients. drafters of the budget act back in 1974 recognized that cbo might become overloaded. if the budget committees want cbo to take on more responsibilities or respond to more requests, they should work
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with the cbo director and the appropriations committee to make sure cbo has resources to do additional work without reducing its quality. though i'm delighted that the committee is devoted this series of hearings to oversight of the cbo, i want in closing to focus your attention on two far more important budget challenges. the dangers of a federal debt that is projected to rise faster than the economy can grow, and the total breakdown of the budget process. the burden of the debt will weigh heavily on future taxpayers and it is on track to rise faster than even the optimists think our economy can grow. these derelictions of fiscal responsibility are not the subject of today's hearing, but they are the dangerous elephant in this budget committee room. i couldn't sit here in good
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conscious wouithout drawing attention to them. thank you and i look forward to your questions. >> thank you for your commentary. dr. holtz-eakin. >> thank you mr. chairman and ranking member and members of the committee. i'm quite proud of the years i spent as cbo director. because of the organization i was privileged to lead. a highly professional support agency dedicated to providing nonpartisan analysis and scores to the congress. it was and remains a gem in the federal agency world. having said that, this is my first oversight hearing. if i was -- as director there were none. and i think that is not right. every dollar of taxpayer money should have good oversight and i think it is a beneficial thing to have an annual oversight hearing for the congressional budget office if only -- to echo what the chairman said, to improve the understanding of what cbo actually does.
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it is a great forum for communication about current activities of cbo and also understanding the method they use and the staffing they cho-- choose and the organization of the agency itself. it has remained a first rate agency for a number of reasons. and i want to point out two important ones. one, alice rivlin did a spectacular job of setting it up and we owe her a thanks for the tremendous groundwork she laid in building a nonpartisan support agency and the budget committees have served as fantastic curators of the cbo for over four decades and i hope they continue to do so. these hearings i think have highlighted a couple of things that i'm going to touch on and then i look forward to answering your questions. the first is this desire for greater transparency on the part of many people with respect to cbo. here i think it focuses on trying to better understand some of the scores that have been produced by cbo. and to my mind, there are two
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different views of what that transparency should look like. the one that i would urge the budget committee to not pursue is the notion that somehow cbo merely needs to disclose every model and every data point that it has ever touched in order to understand the scores. and as alice rivlin said, there is not a piece of model for every legislation that the congress deems up and the most important are things that are new for which there is very little guidance in either the research literature or certainly not a formal model. i always remind people that i had to score terrorism risk insurance, the federal backstop and the private casualty industry for an unknown terrorist location using an unknown weapon. there is no model for terrorism risk insurance. score -- scoring is a judgment exercise so the kind of transparency that i would encourage is to focus on what is currently called the basis of
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estimate and better understanding the nature of the judgments that the congressional budget office had to make in delivering a score. it is just not modeling. the second thing about the process that i think is poorly understood is it is not a forecasting process. scoring is about ranking competing proposals in the correct order. which ones demand more taxpayer resources and expend more taxpayer resouces, what is a greater and smaller deficit, that is the -- the bulk of the scoring. if you want to have perfect forecasting, you would certainly not tie yourself to a march baseline when they have changed by november when you are doing a score, you update everything and just try to get the best forecast. because of the nature of what cbo is doing, forecasting is not its exercise, scoring is there will be a tradeoff between ranking proj jekts.
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that doesn't mean cbo doesn't try to get as close as possible but it is not a forecasting exercise and when it is characterized that way it gets you off on the wrong foot. last thing is the importance of communication. i think that cbo communicating the nature of the judgment it makes in its scores is an important thing for cbo. i think it is also important for the budget committee and for congress generally to communicate to its members what cbo does, what it is responsible for, the federal budget cost and what it is not responsible for. measuring the benefits in a proposed piece of legislation. the better is the communication between cbo and the congress, the better it will be able to fulfill its rightful role under the budget act and continue to be a first rate support agency. thank you for the chance to be here today and happy to answer your questions. >> we appreciate both of you for joining us this morning. the ranking member and i have conversed about our subject questions and we're going to defer to the end of this particular panel the questions that we will have out of
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deference to the members of our committee who have other things going on and other hearings perhaps to attend and so we're going straight to our members. so with that, i'm going to yield to the gentleman from ohio, mr. renacci. >> thank you. i want to thank the witnesses for your participation and your service to our country. gep, what do you is important. dr. holtz-eakin. in your testimony you mentioned that you are concerned with the lack of communication between nonleadership members of the house of representatives and the cbo. i 100% agree with that. as a business guy, i'm trying to find out where the scores are coming from. do you have any recommendations for how rank and file members could have better communication with the cbo? >> if you read the written statement carefully you'll find none because i didn't have a magic solution to this problem. that is the truth. i think it is an issue. members on commities of jurisdiction have good access to
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cbo for the problems they are working on. members are not -- i think have a more difficult time. i would love to promise you blanket access but cbo has a finite number of people and a finity number of time and many demands on them. i think the mission creeps is a real issue. to me is -- it seems best way to solve this is when you need information that you couldn't get it and this committee is uniquely situation -- situated to ask cbo and this is out reach to the rank and file to run through the budget committee. >> still makes it difficult as you could imagine for members to make decisions. so i -- >> it is not a silver bullet. >> i understand. because it is hard. i understand. you have a finite number of members and employees and but you also mentioned in your testimony that cbo provides more information on the scores than -- that it provides, you would encourage the agency to
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fo focus desired structure and the basis of the estimate within the reports, would you discuss what you could provide for more transparency. >> i think the basic structure makes sense. you get a score and it said here is the legislation, this is what it does, here is the tables to tell you the budgetary impact and how did we arrive at that set of numbers. to the extent that you read that, and you don't find the information you want, it seems that it should be instructing cbo to say, we need to know in the basis of estimate more things we care about. so for example, is this bill likely to require entirely new kinds of executive branch administration that will have lots of rule making and should we anticipate so when dodd/frank passes should they flag the fact it is an enormous regulatory exercise. what can you say about that. that might be something you want to know. what are the four key behavioral assumptions that go into our judgment about how this works.
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there -- the perceived dissatisfaction with the scoring must be things that people want to know that are not in there now and i ken you ara-- encoura to tell cbo what they are. >> and i'ming -- going to put you on the spot. what do you think the over site is on the congressional budget and do you think they've done a effective job to date in providing over sight. >> i think you are doing it right now. this series of hearings was a good idea. i think it is brought out a lot of information and i would encourage you to do it again at least once a year as doug said. but a formal hearing is not the only way to have oversight. i think communication -- if you don't understand something, ask a question. and i'm sure a phone call to
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director hall or to someone he might direct you to might answer the question. and at least in my experience, and i'm sure in dr. holtz-eakin, a lot -- i spent a lot of time communicating with members and their staffs about what we were doing. and i certainly would encourage that. >> again i want to thank you both for coming today and participating. and mr. chairman, i yield back. >> thank you mr. renacci. let's go to mr. kana, california. >> thank you mr. chairman. dr. holtz-eakin, this white house earlier described the cbo assessment as, quote, little more than fake news. would president george w. bush or president george herbert walker bush have ever referred to the cbo as little more than fake news?
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>> i'm not privileged to know what they thought but they never said it. >> what is your reaction to the president or the white house describing the agency as producing fake news and, quote, saying that it favors mandates over choice and competition, that its past predictions have not born much resemblance to reality. are you personally insulted by the white house giving that this is an agency that you led for a number of years? >> i'm not easily personally insulted. largely because i led the agency for several years. the cbo gets lots of criticism because it is in the middle of the important decisions and not everyone gets what they want. and that criticism has traditionally come from members of congress. typically from the party of the director and their disappointing in the director. that is the empirical
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regularity. the thing i found unprecedented was for an administration sitting omb director to criticize the cbo in very, very harsh terms and to name in the public staff members at cbo and criticize them. i think that is -- it is way over the line, unacceptable and i told mr. mulvaney that in particular. i hope we don't see another repeat of it. >> dr. rivlin, when you were director president reagan had disagreements but it seems the tone of the disagreements were very different than the type of disagreements we see now and it would be great to have your perspective on what those disagreements were and the tone of the conversation today? >> i am generally distressed by the tone of political discourse these days. because it is become much more angry and less polite and civil
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than it used to be and particularly distressed by a president who hasn't just named the cbo fake news, it is appears to be anything he disagrees with. but that said, let me tell one story about the reagan administration. when they first came in, they didn't understand who cbo was and who they work for and they -- they immediately attacked. they meaning the staff around the president, not the president himself. and said we have to get a new director. and the congress immediately reacted and senator dole and senator demmin itchy and others who were republicans called the white house and said, she works for us. she doesn't work for the white house. and that was an inappropriate comment.
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and it ended right there. >> a great point. it seems that your part of your point is that the cbo strengthens congress's role compared to the executive branch and gives us a equal voice. i guess to either of you, what do you believe we could do quickly to help make sure that the cbo doesn't face partisan attacks and is something that is valued by both sides? >> i think it will always face partisan attacks. because there will always be somebody would doesn't agree with the -- what the cbo is saying. that cbo is saying this bill will cost more than its advocates say or it won't do as many beneficial things. so that is part of the furniture. i would just ignore that and keep supporting the cbo and using it and asking questions
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about the basis for its estimates. >> i would echo in a. i think it is inevitable those attacks occur but people should know about cbo is the quality of the work and the ability it has to aid the congress to make its decisions. >> thank you very much. >> i thank the gentleman. now to mr. arrington of texas. >> thank you mr. chairman, for hosting or chairing and providing over these -- presiding over the over sight hearing. i found them as a new member to be very useful and i what like to ask both panelists a general question and that is if you were the committee of one up here having the experience you have, what would be the one, two or three things you would change to make this process work better and to make sure that we had the most timely and accurate impartial information to do our job. just a couple of things from
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each of you, please. >> dr. rivlin you could start. >> i would start with whether cbo has enough staff to do the things that you ask them to do. that is not a specific recommendation. but it is really important to recognize that they're job is complicated and it takes quite a lot of people and they need enough people and good people. that would be my major recommendation. and then continue communicating about how they do their work and how they can make it more useful to you. >> mr. holtz-eakin. >> i was director and -- i thought of cbo as a consulting firm whose clients was the congress and it was our job to provide them the information they needed to make the decisions that were coming. and if we could think ahead and identify the tough things, we
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could get ready and provide them with what they needed. there is a role for you in that as well. in providing the cbo with the game plan for what you intend to work on. so they can in fact do studies, we did many studies on immigration form well in advance of the debates that ensued and studies of social security and prescription drugs in advance of efforts during my tenure to do legislation there. to the extent that you can convey to them the information that they need so they could be ready, that would be faunt. i think there is a real role for this committee in talking with the cbo about not only what will be in the score but what would you like in the form of supplemental information. one of the pieces of mission drift as dr. rivlin described that has occurred is moving past just a table with budget numbers to something more about the policy and the affects of the policy whether it is in health or tax or whatever.
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and growth and cost to premiums. there is a demand for more information. that is fair. but they should be given advanced notice about the nature of the supplementary information you want, the presentation so they could get it right. as opposed to doing their job and -- giving you a number and which is their job and doing it and having less faith in the number because they haven't had time to prepare it carefully. >> i think could reduce the criticism and you always get it and i think we can reduce the partisanship on both sides with respect to this process where partisanship should be quite frankly eliminated to the extent you can. if there was a better record of timely and accurate information. so you talked about subjectivity and judgment, how do we get more empirical information and analysis to bear and less judgment and less subjectivity
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and then how do we -- who is keeping the score card on how many times the information and analysis has been accurate and timely within a margin of error, i've asked that question and i haven't seen any score card. i don't know if you don't measure that how we can make that judgment. and then you really get caught up in the sort of he said, she said sort of perspective and perception as opposed to what is real in terms of the performance of cbo. some thoughts from both of you guys on that. >> i think that dr. holtz-eakin put his finger on it when he drew a distinction between scoring and predicting or projecting. and that is an important distinction to keep in mind. a score tells you given everything else that we've assumed about the budget in the baseline, how will this
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particular piece of legislation affect the deficit and other magnitudes in the budget. and those kind of things can also be checked. i mean for example, on the health -- the original affordable care act, cbo over estimated the take-up rate, the number of people who would pick up this kind of insurance if offered. which metropolitan they also overestimated the cost. now, that kind of thing means you need to readjust your model. but to say they made a mistake because the economy changed, or because congress did something else that affected the budget, that is not a fair criticism of a score. >> my time is expired. >> thank you.
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and now from texas. >> and thank you and to the ranking member thank you for this hearing and thank you to dr. holtz-eakin and of course dr. rivlin for their presence here this morning. i frankly believe that the budget committee is one of the most important committees in the congress because it is the conductor, if you will, of the comings and goings of revenue and expenses. in what i hope would be an objective manner. and i really appreciate your honesty, dr. holtz-eakin and i would assume the same for dr. rivlin that a toxic political atmosphere is not productive for assessing the needs of the american people. let me proceed with questions that i think we've talked about that kind of toxicity. i would want to pose a question generally of tax cuts and the
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question of revenue and the ability to pay for the government. the recent -- forgive me for my description, tax scam, but the recent tax bill that was passed, so you'll answer it as a tax bill, was supposed to work towards investment by corporate america. all the economists have assessed that many corporations are using their tax relief to do enormous amount of buybacks. so the question is whether or not it results in investment. so my question to you is, how devastating in the work that the cbo would do, which is dealing with the comings and goings of any instances as the budget committee may ask you questions of revenue and expenses, how
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difficult is it when it has to assess that on a growing debt and deficit? >> so i guess there are probably three different pieces to my answer. piece number one would be, the direct scoring of the bill is the domain of the joint committee on taxation. so issues about how it's scored initially should be taken there. the second place that would show up is cbo would have to and will have to roll into its baseline estimates of the outlook for the economy the impact of the tax cuts and job act and other legislation as passed. so they'll have to make some evaluation of its impact on the economy both directly and through the larger debt that it would entail. and that they will put out in this month or early next month, i think. then the third i would say as an economist, you can't make that judgment on the basis of the initial buyback. that gets a lot of attention.
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but that's actually the first transaction in money coming back into the united states. what matters is the final transaction. as you point out, what you want is to have that turn into genuine investment in fixed capital or intellectual property, some tangible intellectual property, that would raise productivity in the economy. you can't tell that from a buyback. the money goes back out into the financial system. someone with investment opportunities can then use those funds to make investments. the jury is out as to how much of that will happen, we'll have to find out. >> i think the jury is out. could you follow up, dr. riff vin, by do tax cuts pay for themselves? you may want to follow up with that question. then if the cbo office was cut by half, as republicans wanted, is that helpful in its doing its comprehensive work? so tax cuts paying for itself, and following up? >> well, the tax -- this tax bill is a good illustration of a -- how hard it is for the jct, and it is the jct, to estimate
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exactly what will happen as a result of quite drastic and unusually large set of cuts. i think history does not support the people who think that tax cuts pay for themselves. they may be conducive to higher growth, but not so much higher that the tax cut pays for itself. and i think almost all economists that i know are agreed on that. cutting the cbo staff in half would make it much less useful to the congress, and i would urge you not to do that. >> thank you so very much. i yield back. >> the lady yields back her time. >> so noted, mr. chairman, i yield back some time. >> noted. trust me, noted. as somebody who gets to chair the proceedings in the house a lot, very much noted.
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in fact, it caught me by surprise. mr. mcclintock, california. >> thank you, mr. chairman. ms. rivlin, you say that the budget committee really needs to focus on two much more important priorities. the staggering debt, as well as the total breakdown of the budget process. i tend to agree with you, although as far as a breakdown of the budget process, i look at the process that's laid out in law. it is very logical. it is very thorough. but to me there are just two problems with it. number one, they're no imperative to pass a budget, so we very seldom do. because we can spend money just as easily, in fact, i think you can say we can spend money more easily without going through all of the fuss and bother of the budget process, so we simply ignore it. what's your view of that perspective?
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>> i think you ought to have a process. and this was the original intention in the '74 act -- that forced the congress to look at the whole budget. >> right. >> and to say, how much do we want to spend, not just this year, but over the next few years? >> but we don't have to because we can spend -- >> you don't have to. you should make yourselves have to. >> that's my point is that perhaps the way to fix the budget process is to say, you can't spend money until you've got a budget in place. >> yes. >> let me just add one other thing, and that is, once the -- another reason i think that the budget process is cast aside is that if we do go through all of the fuss and bother of adopting a budget, the formal appropriations process is discharged out of the house. and then cannot be taken up in the senate without 60 votes. if you're in the minority, whichever party is in the minority, it's much to your
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benefit simply to prevent the appropriations bills from coming up, run us into a deadline, and then have a lapdaslapdash omnib continuing resolution instead. is that also part of the root of the problem? >> there are a lot of problems and i'm hopeful that this new select committee will get into exactly those kinds of questions. i don't want to opine on the rules of the senate. but i think you need a simpler process that has a -- that forces you to look at the budget as a whole first. and maybe make some rule like, no budget, no pay. no budget, no recess -- >> the problem with that is that puts members' personal interests ahead of their public duties, and that is always a bad place
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to go. but again -- >> you need to force yourselves to do it. >> again, i think the simple way to force to do it is say you can't spend money unless you have a budget in place. >> yes. >> and the appropriations bills are taken up on the senate floor by the same vote as the budget itself. majority, not 60 votes just to take the bill up for consideration. let me turn to the other area where you say we are ignoring the -- a dire problem, and that is the ballooning deficit. now we just passed a major tax reduction. i think it was absolutely essential to move the economy forward. but it seems to me at the same time that places an added responsibility on congress if we are to do that, then to restrain spending and to go through the budget with a fine-tooth comb. would you agree that having passed that, that's now our responsibility? we've got to restrain spending? >> yes, but it depends what you mean by the budget.
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one of -- i would say you have to go through spending and taxing -- >> yes, correct -- >> and the driving force for the long-term increase in the debt is not appropriations, which is what the budget process now deals with -- >> i would push that -- >> it's the entitlement, the mandatory spending -- >> agreed. >> and the axes. >> the point, though, it is spending in general. whether discretionary or up and down tore. once we've spent a dollar, we've already decided to tax it either now or in the future. the future tax is the debt. the debt and taxes are essentially the same thing, wouldn't you agree? a debt is simply a borrowing now so that we tax it in the future? >> did you decide to spend money, you've got to pay for it sometime. >> exactly. >> but i think the problem with the budget process is it only deals with one-third of the
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budget. you've got to get the mandatory spending in there and the -- >> the budget process gives us a reconciliation process that allows us to adjust all the mandatory statutes. we simply choose not to use it. >> right. and you're not reviewing mandatory spending or tax expenditures. >> all right, thank you. >> we have members coming and going. and i believe i am correct when i suggest the next round of questions goes to the gentleman from virginia 7, mr. bratt. >> thank you, mr. chairman. thank you both for coming in. i taught college economics for 20 years. i'm sure you'll all be familiar with the literature between positive economics and normative economics. and i think that applies, normative has to do with ethics, positive has to do with your charter and goals. and so it's interesting, if you're going to do positive analysis on scoring and not forecasting, et cetera, i can
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buy that if you stick straight to the game. then we always get into this political bias and the other side, even within these meetings, we got former heads of cbo weighing in on what are inappropriate comments. and have you ever heard these comments before? those are normative claims coming from the head of a nonpartisan positive institutions. so i studied economics and ethics for 20 years, that was my area. i always find it fascinating. and that's part of what's wrong with this city. let me just kind of connect the dots. it's too complex to weigh in. i don't think there's a perfect plan but i think we're all gained in normative activity. i can watch your heads nod yes and no when people put their political comments forward. and it's no surprise in academia, ride, harvard, yale, princeton, the leading economic departments across the country, it's predominantly democrats, right, and they feed most economists, most economists working up here. so i wish we had politically
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neutral scores and bias and all that, but i don't think we do. i wish it was just even. let me get at what i'm getting at a little bit. so if the cbo wants to weigh in, tom mcclintock was just making comments, we have $21 trillion in debt going to the kids. intergenerational theft. there's going to be a burden on them. so when we do our scores and ouour explanations, it would be good to have naturanalysis of not jue gains but the pain we're inflecting on the then generation. $100 trillion minimum unfunded liabilities. if we continue to bust the budget, they don't get those programs. where is that in the normative analysis and the score when you're talking about budgets? these are fundamentally huge questions where we're stealing from the next generation. and up here it's always just, no, we're going to be very precise, we're going to do a cbo score, it's very tight and narrow, and here's the impact on obamacare, this, that, the tax
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package doesn't pay for itself and has a deficit, et cetera. narrow little questions. but completely abstracted from reality. and the pain it's going to cause. maybe if you could just go shortly on that. then i want to ask one other question. where is -- it seems to me you are connected to the normative game whether you like it or not. and as leaders in those institutions you have to not only score the narrow, but show the full implications of a policy into the 75-year, 50-year scenario as well. dr. rivlin? >> i think cbo's done a very good job focusing the congress' attention periodically and insistently on the long-run implications of current decision-making. they do a long-run forecast, and the numbers are scary. you're absolutely right. we are inflicting a large burden on future taxpayers.
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cbo has been pretty good about that, stressing that. >> doctor? >> i guess i'd politely disagree with the notion that the cbo's not providing nonpartisan products. i was the first cbo director to go from the white house to the cbo. there were people who flatly said i was a political hack there to run the place -- >> just to be clear, i didn't make that -- i didn't say -- >> okay. so i was every day conscious of the distinction between normative, what i thought was the right thing to do, and doing the job, which was answering the questions the congress asked us. >> right. >> in a way that was consistent with the research and literat e literature. that's what they do. >> yeah. >> you should ask them. >> yeah. >> if your concern is, what programs will not be available in 2035? ask them. >> right. >> they'll tell you. and then everyone will know what's at stake. it's just that simple. >> right. and i'm kind of getting at -- i mean, doctor, i agree with you,
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right? you've shown -- good job, cbo, good run, showing on future taxpayers. but who are they? it is a political gain up here. i think we need to define the actors a little more clearly as to who's winning and who's losing, the american people are fed up, bernie through trump, the lex sake keel -- they don't think the elites up here get it in terms of the pain being inflicted. i'll just kind of close on adding to this broader context, what have i got left, a few seconds in? on the health care debate, for example, there's a question of -- >> you got to take a call anyway. >> the governor's got incoming. there's a question, again, on the health care, on the narrow. how many people are going to lose their insurance? versus, who's going to get better or worse health care coverage? i don't think the analysis got into any of that. and so all we get from cbo on that is, you know, millions, this many million are going to lose their coverage.
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but then nothing on, hey, the people that have coverage have $10,000 deductibles, $5,000 deductibles, can't see a doctor, et cetera. and if you keep federalizing every program up here, economic growth was going down, down, down as far as i could see. and now we're trying to crack it open. and so again, i mean -- i know, thank you, chairman. all right, that's it. >> mr. chairman, can i use the remainder of his time to answer that? >> i'll yield the gentleman a few seconds to respond. >> this is the issue i was getting at when i suggested the committee should think hard about the nature of the supplementary information it wants. cbo's job is to estimate the federal cost of legislation, period. it's the rest which is part of the mission creed that you're talking about. so if you're going to let the mission creep, provide guidelines for how it's supposed to be executed. >> mr. bratt, you owe miss jackson lee a debt of gratitude for taking the rest of her lime, by the way. mr. lewis. minnesota. >> thank you, mr. chairman. and thank you to the panel --
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>> oh, i apologize. would the gentleman jeeld for a minute? >> yes. >> i forgot we have a newly arriving member of the other party that is here, mr. carver hall, i'm going to recognize you from california. sorry for the -- >> it's okay. thank you, mr. chair. thank you, ranging member yarmuth. i'm a new member to congress. this is my first term. so i'm going to call this for what it is. there's very few democrats up here. so let's just call this what it is. it's a partisan hearing to try to discredit the cbo because recent scores about the affordable care act did not yield the type of result that the majority party wanted. that's what this is. let's just call it what it is. certainly if it would have yielded a different outcome, you wouldn't be here today. so since you are here, i will ask you a few questions. but let's just call this what it is.
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what do you see as the biggest threats to the cbo's ability to fulfill its mission? today? >> well, i would differ with your characterization of this hearing. i've looked -- i heard the washington c-span, the first one, and have looked through the others, and i don't think that the committee has in general been out to get cbo. they've been trying to understand what cbo does and how they do it and how it can be improved. that's the spirit in which i would answer your question. the partisanship doesn't help. the congress needs to understand the information and to ask as
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many questions as it can so that it can understand what the consequences of various pieces of legislation, including the affordable care act, are. >> thank you, dr. rivlin. dr. lirivlin, did you sign the letter of july 21st, 2017, letter from former cbo directors, on the importance of the cbo's role in the legislative process? >> yes. we did send a letter when we were concerned about the attacks on the cbo. >> so you no longer believe that these hearings are an attack on the cbo? >> i think there may be some members who want to attack the cbo. but i haven't had the feeling about these hearings that the whole series was an attack. >> but the letter you did sign did refer to concerns about
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trying to undermine the nonpartisanship of the cbo, correct? >> i've always been concerned about that. i've been concerned about that for 43 years. we've had a lot of partisanship in previous eras. and i was always trying to preserve the nonpartisan role in the face of some partisan attacks. >> well, thank you for stepping up at least in this letter, expressing your concerns about the partisan attacks. can you add to the question i asked, please? >> i would echo dr. rivlin on the importance of these hearings and the tenor with which they've been conducted. i'm pleased to be here today. this is my first oversight hearing, i think it's overdue. i think it's a great way to learn about what cbo does and cbo learn about genuine concerns of congress. that's a beneficial thing. i know about the letter. as i said earlier, my concern was not that there were partisan
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discontent with the cbo. that comes with the territory. i was appointed by republicans and they were more disappointed in me than were the democrats. that's the nature of the beast. i was concerned that the executive branch seemed to be trying to undercut the standing of the congressional support agency on which this committee and the remainder of congress relies. that to me is unacceptable. you shouldn't let it happen, i wasn't going to let it happen. >> thank you. you both have participated with panels of economic advisers over the years. do you think it represents a diverse -- diversity of views? >> absolutely. i both supervised those panel meetings, i've been -- a member as a former director. there's a conscious, deliberative effort to turn over the membership to represent new views of the performance of the macro economy, to bring in experts in new issues, greater
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openness to global capital flows, for example. and i think they've done a very good job of essentially running a shadow blue chip process whereby a consince forecast can arrive by consulting all parties. >> thank you very much, mr. chair. i yield back. >> i thank you the gentleman. by the way, the letter he references, a 2017 letter, i want the record to reflect that letter was not in any way or shape related to the hearings that have been held in 2018. just wanted to make that clear. for purposes of clarity. with that said, let's go now to minnesota, mr. lewis, thank you for patiently waiting. >> belated minnesota. thank you, mr. chairman, i appreciate that. i too am a freshman here. and one of the things i've learned rather quickly, especially on this committee, is that it seems we're in a situation where those who declare others being partisan are usually the most partisan.
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i'm having a really, really hard time trying to figure out how we invite the esteemed dr. rivlin to come as a witness when she was omb under bill clinton, is that right? you were a vociferous critic of reaganomics, is that fair? >> yes. >> yes, that's fair. you've been a life-long democrat. i don't know where the partisanship comes in here. if we wanted this to be just a hit job, i would have thought we could find a different panel member, notwithstanding your fine credentials. i followed you for many, many years. i'm old enough -- i was a lot of run before running water -- i'm old enough to remember reaganomics. i'm old enough to remember your role as the first congressional budget office director. i'm old enough to remember the rather blatant criticism coming from larry speaks and david stockman and jack kemp and the president himself of the cbo at that time. so when i hear about the concern
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over the discourse today, i too have some concerns. but i'm also equally as distr s distressed about people hiding behind calling others partisan when they're being immensely partisan. i mean, i presume, dr. rivlin, you're equally distressed as you are coming from this president and the white house, you're equally distressed by some of these resistance groups and the activities they're undertaking today, right? >> well, i consider myself, actually, i am a democrat, but i am a strong advocate of nonpartisan analysis and bipartisan action. and i just hope we can get over this crisis of partisanship and have the two parties working together for the good of the country. >> and i think we are on this panel on this committee. but i just don't want to let this one-sided narrative go forward too far with the entire
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amount of blame headed towards one side of the aisle. we've got irresponsible rhetoric, irresponsible actions. we've got groups crashing congressional offices, sit-ins daily. we've got anti-fa out there. we've got the people who would be the first to criticize the cbo had they come out with some other scores, for instance. what i'm getting at here is, if you come out with 1.9% growth rate over the 10-year period, and in fact, the growth rate has already exceeded that. if you suggest people buying health insurance on the affordable care act exchanges is 10 million overestimated, and someone says, you know what, there might be a problem wilt the growth model here, maybe we need a little bit more dynamic scoring, maybe tax cuts won't pay for themselves, but they usually garner more revenue than some of the critics admit. maybe that criticism has nothing to do with partisanship, maybe it's exactly what we ought to be doing up here. go ahead. >> can i say a word about that?
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i think it's perfectly fine to disagree with cbo in the way you just described. lord knows i disagreed with the staff when i was director. and i continue to at times believe they've come down on the wrong side of a question from the point of view of the research literature. i think it's a very different thing to take something that you disagree with and suggest that it's only because they have bad motives and they're not professional and try to undercut their credibility entirely. those are two different things. the former is fine. it's been going on since the founding of the cbo. the latter flares up occasionally, but i think should be stopped as soon as possible. >> so, for instance, if you're passing a tax reform bill and the critics of the tax reform bill describe it as a sop to the rich, a gift to your corporate donors, things like that, they're not describing ul tier onmotives? i'm saying it's both sides of the aisle, some of this untoward criticism you describe and i agree with.
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i don't think, quite frankly, that we sign the light of disinfectant on one side quite as much as we should. that's all i'm saying. >> you're not hearing any of that kind of rhetoric from the cbo. >> no, that is true, and i'm not hearing it from you. >> yeah. >> but i'm certainly -- the white house is not the only origin of that sort of unfortunate rhetoric. and i think the other side needs to be held to that account as well. >> i think we could all agree that there is partisanship on both sides. >> yes. thank you very much. i yield back. >> mr. johnson from ohio. >> thank you, mr. chairman. dr. rivlin, in your testimony, you mentioned the dilemma of responsibility. >> yes. >> what are some examples of how expectati expectations or products required by cbo have evolved in the organization? >> well, there have been a number of responsibilities that cbo was asked to undertake.
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and i'm not sure that i remember them all but some of them had to do with impact on state and local government was a responsibility not perceived at the beginning. and at other times, environmental impact has been suggested as a possible responsibility. i think the budget committees and the cbo together have been sensible in saying, we'll stick to the budget impact of legislation. because that's our primary mission. >> okay. dr. holtz-eakin, if cbo identifies an error in its scoring, what's the process for releasing a revised statement?
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>> if the error is caught during the process of scoring legislation, you'll communicate with the committee staff, typically. and the members who are sponsoring the legislation. about what you've discovered. let them know. and then you continue to score new pieces of legislation till they either pass or -- >> so if the score has already been released and they discover an error, they communicate back to the author. >> yes. >> then they release a revised statement? or a revised score? is that correct? >> i'll be honest, i can't speak for the current cbo director and exactly what their procedures are right now. but it was not a common event, i had one instance where this happened. >> okay, all right. for both of you, what suggestions do you have for both congress and the cbo to improve communication and create a better working relationship
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between congress and cbo? >> well, i would say just do it, in the sense of get in touch with the director, talk to him, ask questions. and hold hearings like this one. but the main thing is just keep asking cbo, well, what was the basis for that estimate? and can you tell us a little more about it? >> i suggest you ask sandy davis on the next panel. >> yes. absolutely. good idea. >> when i became director, i came in a situation where the sitting chairman of the budget committee had uttered the phrase "cbo sucks." i apologize for my language, that's a quote. that's a bad moment. i interpreted that as there's very poor communication between cbo and the hill, for whatever reason. i've got to talk if the budget
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committee feels that way. i asked sandy to take on the job of making sure there was any surprise or miscommunication on what cbo was up to. you might not like what you heard, but you weren't going to be surprised to hear it, and you were going to understand where it came from. he did a spectacular job. i don't think there's anyone who's worked longer at trying to improve this communication than him. since i made him do all the work then, i'm going to make him do it now. >> it's amazing what you can do when you communicate. dr. holtz-eakin, continuing with you. can you share some ideas on how cbo can make information such as underlying data and assumptions more widely available, while recognizing the need to protect the agency's access to private data? >> yeah, i think -- this is one where cbo really should be congratulated for the enormous advances in the past 15 years in what's available on the internet, what they put up on the website, the capacity to download spread sheets that underlie the mandatory baseline,
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the budget outlook, things like that. none of that was there. you could continue to do that. and pursue it to every sort of -- digitize every written product they have so the underlying data are there. i have zero problem with any of that. there are going to be things you can't digitize and distribute. there are going to be proprietary data. there is some of that. there are going to be assumptions. so in scoring legislation, you're going to have to assume something about how the executive branch behaves. and there are no models for that. so that those judgments are the things they're going to have to write down. >> mr. chairman, i yield back. >> mr. sanford. from south carolina. >> thank you, chairman. i guess i begin with you, dr. holtz-eakin. in 2015, you criticized the cbo for not having an official conflict of interest policy for panels on outside advisers -- >> i'm sorry, i didn't hear the
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beginning of that. >> in 2015, you criticized the cbo for not having an official conflict of interest policy for its panel of outside advisers. cbo responded that you -- to your criticism by saying they were developing a process in terms of dealing with this. i guess my question, since we've had much conversation on bias, was that policy ever developed? where do things stand on that now? >> to my knowledge, they've put in place a formal conflict of interest policy. they have a panel of health advisers, panel of economic advisers. i guess i wouldn't characterize it as criticism. i thought it would be wise to have one because it is easy to criticize them for failure to do due diligence in the absence of one. this struck me as one of those oversights that had not happened over the years and someone could fix it. >> true. in today's political vernacular, that would be viewed as criticism, but you can define it however you like. you wrote an op-ed in "the
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washington post" last april on the subject of the president's tax reform proposal in which you state, "sailing straight into sovereign debt crisis is not pro-growth strategy." do you think we are sailing into a sovereign debt crisis? >> yes. >> based on? >> the trajectory in any forecast for the u.s. debt, rising levels of debt relative to gdp. that finding is not sensitive to either the growth or the budgetary assumptions. it's happening. we're not on knife edge, we're headed in an unsustainable direction, so the only question is when, not if. >> in that same vein, dr. rivlin, you in an interview suggested projection forth sustained 3% economic growth included in the president's budget proposal were "very optimistic." and you went on to furthermore say that 2% was much more responsible.
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if i was -- since both of y'all have alluded to this or commented directly on it, if you put the continuum of 3% growth out there as crazy, impossible, improbable, unlikely, probable, likely, or going to happen, where would you register yourself on the 3% continuum? crazy, impossible? or, yeah, could happen? just give me a probability. pick odds between 1 and 100, you'd say odds are? >> i don't want to give you a number. i would say it's very optimistic, but let me tell you why i think that -- >> no, i just -- in the interest of time, i have two minutes, give me a probability between 1 and 100. >> no, i can't do that. what it depends on -- >> let me skip to your co-worker, then. i understand a lot of what it depends on. what would you give me as odds as a betting man? >> 10%. >> i happen to agree with you. i think we're vastly optimistic in terms of our economic forecast. but in the 1:45 i have left,
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there's been much talk of actually doing a budget versus a resolution, something less binding. if you were to say, got to have budget versus resolution, okay, where would you be on that one? >> i think there should be a budget. i think there should be a single document where the house, senate, white house agree on what will be spent what will be raised in taxes what will be borrowed. until then, there isn't really a budget. you don't have a plan. you just have budgetary outcomes. and they're usually bad. >> concur? >> i agree with that. >> last question. in some ways i empathize with you all. at times do you feel like neutered academics? there have been study after study after study pointing to what you know on the impossibility of us closing this funding gap, whether it's on the entitlement side, which we've studied to death there have been
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ultimately -- i can't remember how many different panels saying we got to do something, we got to do something. we continue not to do something. you've seen it over the years on the degree to which congress will study that which it knows it has to deal with, that which you would assign a 10% probability to, and yet we continue to do nothing. and that's got to be at some level frustrating. similarly, forecasting out whether it's 10 years or 75 years, that's a pretty tough thing in the world of economics. any wisdom as to some of the frustrations you've developed either with studying things to death or being assigned the fairly difficult task of what's going to happen in 10 years? >> i'm more optimistic than many people. in part because i'm a veteran of the last time the congress and the president together -- it was very bipartisan -- got a surplus in the federal budget -- >> respectfully, the senate would say that was due to the
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tax bubble, and the other came as a consequence -- >> no let me give you my view, since i'm here. i think it was partly good fortune. but it was very substantially the rules that the congress imposed on itself in 1990. this was bipartisan, it was president bush and the democratic congress decided on the budget enforcement act and enforced them for more than a decade. and that held the growth of spending in check. including entitlements. and that was very important. and you need to do -- it's harder now. but you need to do something like that again. >> mr. woodall of georgia. >> thank you, mr. chairman. thank you all for being here. dr. rivlin, i should have invited you to come by my office. i'm glad we have five minutes together today. but i hope you will come by -- >> happy to. >> visit with me more. i want to go back to 1975. when i read the debate that
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congress was involved in around the creating of the cbo, i get the idea that we were creating an adjunct budget committee staff. in fact, i get the impression if the senate hadn't insisted on having its own staff, that we wouldn't even have had a budget committee staff, we would have had two budget committees, both of which relied on the cbo to staff them. i can't imagine what it was like to try to build that organization up. but as i sit here today, the cbo is the only staff director on capitol hill that comes and testifies in front of its committee to tell it, tell the committee, how it's going to be. dr. holtz-eakin just talked about the breadth of information that cbo releases, that's available out here today. there's no other committee staff on capitol hill that is running their own web page, releasing whatever information they decide is pertinent to release. back in '75, were you trying to set up a completely independent,
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almost co-equal committee structure there? or were you trying to provide congress with a counterbalance to omb so that article i wouldn't get pushed around by the economies in all-strticle i? >> we were trying to do what we thought the law asked us to do, namely, create a nonpartisan source of information for the congress, and particularly for the budget process, that was its own, so they didn't have to depend on the executive branch for estimates. that was the main objective. >> and so given that for the first time we were bringing together all of this intellectual prowess, you know, if i call the cbo director today, and i suspect it would be true in dr. holtz-eakin's era as well, and say, give me some good advice on how we can do things differently, the director today
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will say, well, congressman, i'm not in the business of giving advice. if you want me to analyze something, i'll analyze it for you. but i won't give you advice. i can't imagine when we were creating cbo in '74 and '75 that we were trying to create a structure that handicapped you from giving the members the very best advice that you could. could you speak to that? >> oh, absolutely. i said in my testimony, i was the one who said we should not make recommendations. i think that was the right thing. that you need an agency which will give you analysis, but not tell you what to do. and i have sat in rooms like this any number of times and said, i'm sorry, mr. chairman, i can't answer that question. i can give you options and alternatives, but i can't say what you ought to do. and i think that's right. >> now given that the entire point of the exercise was to create a counterbalance to omb,
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i'm certain that director mulvaney is not telling president trump that he's unable to give him good advice and he can't make any recommendations. how are we as article i advantaged by that mission statement that you laid out very early on? >> i have held both jobs. i've been in mulvaney's position. and when president clinton said, what do you think i ought to do? i had an answer. that's a different job. you're part of the president's cabinet. you give him the best information that you can. but there's no reason why the budget director can't give advice. >> help me to understand why that's a different job. we created cbo to serve congress in the same way that your role was to serve president clinton. how are we maximizing the expertise at cbo if we restrict cbo from giving its very best advice? >> because you have both republicans and democrats.
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clinton didn't. he was a partisan. and you have to -- if the cbo is to maintain nonpartisan credibility in this intensely partisan atmosphere up here, it has to refrain from giving advice on policy. >> and as you look at the cbo as it sits here today, does it look as you imagined it would when you were setting it up in '75? or does it look substantially different? >> i think it looks as i -- as i hoped it would, although i don't remember what i hoped. but i'm proud of the way it has developed. >> dr. rivlin, thank you very much. dr. holtz-eakin, you have been very generous with your time to various events that i have been involved in over the years. my great hope was i was going to go back to the origins of cbo and solve many of my problems.
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dr. rivlin has disabused me of that notion today. i'll come back to the start. thank you both for being here. mr. chairman. >> mr. smucker, pennsylvania. >> thank you, mr. chairman. thank you to both of you for being here. appreciate the chairman's scheduling oversight hearing in regards to cbo. appreciate the work that you have done to both establish and to maintain the effectiveness of cbo. i served in a state legislature where we did not, in pennsylvania, where we did not have an equivalent. and formed an independent fiscal agency, nonpartisan, fiscal agency, to do exactly what cbo was intended to do. we had to rely too much on the executive projections in the budget deliberations. so from my perspective, i think there's a really, really important role that cbo is filling and that should continue to fill. we can always talk about how to
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improve it. but i think it's, again, very important. you play a very, very important role. we appreciate what you've done to advance that. i do have a question on -- we talked about some of the frustrations, lack of communication that some members feel. do you think that the way cbo prioritizes, is required to prioritize requests, may lead to some of that? today we have -- you start, i believe, with leadership requests, then committee requests, then if resources permit you go with personal office requests. i'd like to hear from either of you whether you think that is working. >> i believe it is. cbo is oversubscribed. and that's the reality. so i know in my time it led to frustration by some members. because they had to go and it hadn't been scored yet and i would get calls and have to explain. it said nothing about our
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relevance with that member or the legislation, it was the priorities the leadership and other committees put on us. >> do you agree with that, dr. rivlin? >> yes, i agree. there have to be some priorities. and they are telled out spelle statute. i think it is the job of the budget committees to help cbo enforce the priorities. >> change subjects. dr. rivlin, i'd love to at some time talk more with you, with your experience -- >> happy to. >> having been here in 1974. you know, i look back at that and understand that the intent was to create a process that works. and as i look back over what we've done since then, it clearly isn't working. at least in my view. and i'm interested in learning more about your comments in regards to the budget act of 1990 and how that led to a balanced budget. but i'm new.
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first term. certainly come to conclusion that the process itself is broken and needs to be fixed. so i guess i'd like to hear your perspective, dr. rivlin. you've been here, you saw what was done in 1974. do you think we need a complete overhaul of the budget system? or do you think that we can just make incremental changes to what we attempted with the budget control act of 1974? >> i think you can build on some of the institutions that were created, including the budget committees. you don't need to rip it up entirely, start over. but you need to think about, what are we trying to do here? and, how can we get a process that will lead us to a responsible, long-term federal budget? and i've written -- i worked with the late senator demen chee most recently on a proposal for
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a budget process reform. i'm happy to share that. but i think the main things are that the president and both houses -- both chambers have to be involved in a decision about what the overall spending and taxing and debt is going to be. >> i agree with that. i have 45 seconds. what are some of the biggest takeaways that we can learn from 1990? >> from 1990? >> right. >> well, i think the budget enforcement act of 1990, which was what had the caps on discretionary spending, those worked. as long as they were enforced. and the pay go process worked. to hold down increases in mandatory spending. the problem now is that it isn't
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legislation that increases mandatory spending primarily, it's demographics. and that requires a different kind of rule-making to make sure that you have enough revenue to pay for the long-term entitlements that you want. >> thank you. i look forward to continuing that discussion with you. >> mr. ferguson of georgia. >> thank you, mr. chairman. and thank you to the committee members. i'd be remiss if i didn't pushback on my colleague from california who's left the hearing. but i want to pushback a little bit on the shallow comments. i think it says a lot about h his -- our goal should be to gain as much knowledge as possible so we can give cbo direction to give us -- and have confidence in those decisions so that we can make the best decisions for the
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future of america. and i have been, you know -- dr. rivlin, i share your comments earlier. your perception earlier. that these have been very much some good questions that have been asked and a real intent to get at a process that we all can have confidence in, because as we go through time, both parties will be in the majority or minority at different times and we want to have confidence in this process. so i was also interested in the comments that you made about separating out the analysis of the numbers versus the policy side of it. i think that sounds good in theory. i wonder how accurate that your long-term determinations would be if you don't take into account some of the changing behavior models as a result of the policy. maybe i was reading the comments wrong. because one of the concerns that
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i have is the accuracy of cbo scores at the 10-year mark. we're being asked to make huge decisions on information that we don't know what the accuracy is going to be at the 10-year mark. how would you -- can either one of you speak to how you would change the process so that we can have a better understanding of the accuracy of the projections at years seven, eight, nine, ten as we make our decisions? and if we can't get there, would it be a good idea for cbo to say at year seven, there's a 70% chance this will be right, in year ten there's a 50% chance this will be right? >> nobody can make projections for ten years. and in my opinion, nobody's ever going to be able to make very accurate projections for the u.s. economy or pieces of it for ten years. there's always going to be great
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uncertainty. and the cbo does convey that. it shows ranged bands of uncertainty around longer-run projections. but you need a number -- >> and yet -- >> you need a number. >> this body and congress takes that cbo score as gospel. >> but that -- >> and we bet the farm on that number. no matter which way. >> right. but that's -- you have imposed that on the cbo by making rules, rightly i think, rules for yourself about the size of the budget deficit or the permissible increase. and then when you've got a bill, you've got to have a number which tells you, compared to the baseline, what will this bill do to the deficit? and you can't stand a range. you have to have a number. because it has to add up.
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and that's a very difficult problem. i don't think you can fix it. i think you just have to understand it. >> i'm going to concur. i mean, during my tenure, we put out this fan chart that showed the probabilities of being at different points in larger or smaller deficits. members of congress asked us to get rid of us because they thought it made it look like we didn't know what we were talking about, because we had a range, and they needed a number so why give us all this extra stuff? it's the decisions the congress has made, it's not cbo. >> that -- so what you're saying is that we need to be honest with ourselves about this and not -- >> not blame cbo. >> you need a number. and cbo, to this day, when it writes things, will write things that convey more or less certainty in those. if there's a great deal of uncertainty, there will be words like "there's a great deal of
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uncertainty associated with this estimate." you should then not be sure the legislation solves the problem for ten years, you should be watching that. >> i yield back. >> all right, let's now go to miss black from tennessee. >> thank you, mr. chairman. i certainly do appreciate you having these hearings. i think they've been very instructive and informational. i'm really delighted to have both of you here today. you've been two experts that we've turned to on a number of occasions. and looking at one of the biggest complaints that i've heard about cbo and the frustration for our members is the whole transparency piece. i know you talked a little bit about that earlier on. because it is frustrating when you have an analysis and you get cost estimates and you get forecasts and you do look back and nobody is going to be able to view that perfectly. but we do have to make decisions on those. and it is, i think, fair to say that in those instances where we
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believe an assumption has been made, especially in a behavioral assumption where you make an assumption that people are going to behave in a certain way. and i don't believe necessarily that what cbo puts out is the way people will behave because i've been around long enough to see something different about the way people behave. i think that's one of the hardest pieces for me to accept. so what i want to get to is, it would be nice for me when i get that from the cbo to be able to have that conversation, that dialogue, so perhaps i could even change the mind of the person who's said, this is the assumption they made. is that possible to do with cbo where having a body where there's 435 members and each of us maybe having a disagreement with the way something has been analyzed, that we would have that ability to have the transparency, first of all, to see it, and second, then to have that dialogue with whomever it is in cbo that may have put that information forward?
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dr. rivlin, you want to start? >> well, ideally, i guess, it would be nice if you could do that. but you're also -- you collectively are also saying to the cbo, we need a score and we need it by wednesday morning. and that precludes having a dialogue with 435 members. it's just not possible. so the best cbo can say is clearly, here's what we assumed, here's how we got this estimate, and they have been doing that. and then you can take it and question it. but there will be lots of uncertainty about who's right. >> and i may just disagree a little bit that we don't have an opportunity to even in their assumptions to be able to know where they got their assumptions from. that's not always transparent. i certainly would appreciate for my sake that that would be something that would be more transparent. >> i think these are important
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issues. as i said in my written statement, transparency is a word lots of people use, particularly around cbo these days. it can mean a lot of different things. there's what's the staffing of it, how much money does it get from the congress, those things should be knowable. there's what are are the methods by which cbo does scores and they put out descriptions of the steps involved in scoring. how do they develop their scores? then there's the question of a particular score. and at least for me, in the moment when you're trying to do all this stuff and the legislation's moving, you don't have time to write the best treatise on all the different aspects of conflicts of legislation. for my tenure, that piece of legislation was the prescription part "d" program, the prescription drug program for seniors. we put out in the aftermath a detailed estimate of the prescription drug bill so that the congress would know how we thought about it and that we give them the opportunity to come back and do exactly what you said, which is, no, that's not quite right.
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and so that -- that's i think a necessary part of the communication, to down i have a it. it took another 50 pages of a complete publication to get it done. but i thought that was important to document what had gone on in that debate. >> i'll just give you a real quick example and then i know i'm not going to have time. i do want to leave this with you all. i would like to know since cbo and the budget act has been around since the early 1970s, in your opinion, what does need to be done to update from where it was in 1974 when the original provision was put out there? but i'm going to ask you all to send that to us because i know i'm running out of time. i'm going to give you a real quick example. when one of my bills to defund planned parenthood, there was an estimate that came back from cbo that said if planned parenthood were not there, that women would not have an alternative source to have a birth control, and therefore, x number of babies, x number of pregnancies, would occur, and all of those babies
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would be medicaid eligible or they would go on medicaid. so the score on that was just astronomical. i don't believe that women are not smart enough that if one place closes down, you would go to another place to get a service, number one. and number two, i don't think that every baby that necessarily was born, if they didn't have a birth control from that particular agency, would necessarily go on medicaid. so i'm just giving you an example of a frustration for me that i think would have been better if i could have had a dialogue with the individuals that were giving that score. i yield back. thank you. >> mr. bergman, michigan. >> thank you, mr. chairman. thanks to both of you for being here. you know, you've heard from quite a few of us freshmen. and we all are a little bit of freshmen with experience in our own way. and mine happens to be federal service for 40 years in a marine corps uniform. and all that means is i've seen a lot of different things over a
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lot of different decades. but was keeping notes here on some of the commonality of terms. when i heard mission creep earlier, that's a term applied to the department of defense. i heard something to do with our role. i would just add from the military side, roles and missions. you hear that term a lot when it comes to the military doing what it needs to do. i heard the term quality advice. the chairman of the joint chiefs, through the joint -- in conjunction with the joint chiefs and the secretary of defense, gives that best military advice to the president on what they should do in matters of defense. now i'm going to add a couple here. in military terms, we've got the fog of war. i would suggest you have the fog of scoring. because of the fact that when you -- no matter how quickly you plan or how long you plan,
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you're going to go into a period where when it really starts to hit the fan, that you were actually enacting policy, enacting legislation, based on a score, there's going to be a fog right now, i think everyone would agree, the confidence in the united states military to actually carry out its missions, because we have now, for the first time in a long time, taken a force that's been stressed for a period of a decade, and 10 -- continually add a level of conflict. we have a military that is held in high esteem throughout the united states, because it gets its job, it completes its mission.
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it's not perfect, because the fog of war. that credibility of the united states military has is highly rated amongst all of us in the country. you've said, quote, undermining the credibility of the cbl when policymakers need it most harms not only congress's ability to do its job, but also the long- term effectiveness of political parties in addressing the challenges that face our country's future. using that idea of credibility, what should this budget committee do to support the cbo's mission well we conduct our oversight? give me some points, if you would. >> i think you are doing it. in this series of hearings.
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in continuing to ask the cbo for information about its methods, and how it arrives it estimates. and listening to their answers. i think that is the primary thing that you can do, and then, not to imagine that the cbo is going to be perfect, but to use what information they can give you, then get on with budgeting, which is your job. >> thank you, i'm thankful that you use those terms. because one of the things that i believe we, as an oversight committee, but also as a congress emma one of our challenges is to have the monday morning quarterbacking going on within the media at halftime, comparing the cbo score to what we proposed, and
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all the back-and-forth of that, we are not at the end game yet. the question is, how do we, you as the cbo, review your game films, your mission in such a way that what you say is misinterpreted or taken to a degree, as opposed to the reality or the uncertainty, it's gray, not black and white, how then do you convince the american public and the congress that we got this right, but we didn't get that right, and we're going to move forward -- again, in the military, not let that happen to us twice. if you want to reply to that -- >> i think you said it well, and i think cbo tries to do that. to say, when they didn't get something right, and how they were revising their next asked him it -- estimate in light of
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that.>> thank you, gentlemen. the ranking member. mister yarmouth from kentucky. >> thank you mister chairman, thank you for your testimony, i think it's been very helpful today. it put the finishing touch to a certain extent, on a very productive series of hearings. i don't want you to infer that the lack of my democratic colleagues attendance today indicates a lack of interest. any of them were up half the night watching what was going on in pennsylvania. [ laughter ] but we've had better participation in other hearings. i'm honored to serve on this joint committee led by our chairman, mister womack, and others. one of the things that i know, it may not be a prevailing attitude among the group there, but certainly has been expressed by some, is that what
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we have in our budget process is not a structural or procedural issue, so much as a human issue. clearly, i think there's a lot of validity to that. but, and the human issue implies a lot, a political element as well. it seems to me that there are probably some things that we might be able to do to kind of affect the human element of our, the human aspect of the budget problems. one of them, i'm going to throw it out, and with that discussion i talked to the chairman about this -- one of the things that seems to have corresponded roughly to a breakdown over the last decade or so, the budget process seems to correlate with when we ended earmarks. and ending earmarks i think took away a lot of the, the
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motivating aspects of getting a budget done, and doing it seriously. to either of you have an opinion on the issue of earmarks on a budget process? >> i think the -- earmarks were a useful tool in a negotiation, and i'm not speaking as a former cbo director, because the cbo wasn't involved in this at all. but when i was budget director, certainly, there were a lot of times when the administration wanted to get something through, like our budget reduction package, and it was important to have a courthouse or something else to offer, to round up the votes.
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>> i concur with everything i know, i wasn't in that job, i've not done those negotiations, everyone says they are important. for the budget i think the issue is, will the budget reflect that earmark in a transparent fashion? if something is in a bill and is voted for the house and the floor in senate and signed by the president, i don't view that as an earmark that's a matter of national public policy, there's no problem with that. i think we need to make sure that the dead of night phone call earmark doesn't come back that's not good budgeting. the rest -- >> we talk a lot and we've had discussions about this for years and years and years, the problem of long-term forecasting and long-term budgeting, and in many cases in the budget process, we've gotten -- the legislative process as well, we got around by certain gimmicks. for example, in the tax lot we let the tax cuts expire after a certain number of years so they
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could get under the limit, the $1.5 trillion debt limit of the bill, and we've done gimmicks on both sides, um, you know, putting it on the revenue side saying we're going to sell oil from the strategic petroleum reserves, and that's how we make -- we comply with pickle rules. and i'm wondering whether, because we do things that are, i would say somewhat disingenuous if not dishonest when we do some of the -- i think you're the first person who's actually mentioned the word in all these series of hearings, and you favorite, but are there downsides to the rule in the sense that they may encourage the kind of gimmickry that we see too often? ? i think there will always be that, but you do need rules,
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and you need to take them seriously, and the pay go rule in the budget enforcement act of 1990 was a very useful tool for keeping both congress and these ministration from proposing either tax cuts, or big entitlement increases that weren't paid for, that increased the long-term deficit. i've sat in the oval office and said the president clinton, you can't do prescription drugs, we couldn't pay for it. now come president bush eventually did. but as far as the paygo rules were enforced, they held down long run spending. and tax cuts as well. >> and i know this? one observation on pay go rules, which is that paygo is bad -- good for stopping the problem from getting worse, but it
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doesn't ever fix the problem. we are now at the point where you need to fix the problem, so something different than paygo will be needed. >> thank you. this doesn't have much to do with cbo, but it does have to do with our budget process, and as omb unit dealt with this. the question is timing. we begin the budget process at least in the house, it seems to have been on the kitty for 10 years now, we generally begin in march. and we expect that process to finish very quickly, so that the appropriations committees can do their work, last year i think a former chairman black, we finally did our budget work in july, which basically made it the idea that we were going to get any kind of action out of the senate and coordinated was -- well, it was a moot issue. my question is, we wait for the
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presidential budget, to come out, and that's, this year that was last year was late because first year of the administration, my question is, would it make any difference from your perspective that we actually start the budget process at the beginning of the fiscal year, instead of waiting until february or march, because we all know what happens around here in january and february, and we work very few days, and we have state of the union, and we have retreats and all of those things. does that make any sense?>> every other year will be a different congress, that's the main problem. starting sooner is always a good thing, so you're ready to go in january, but the important thing you're going to take the budget process seriously, is to get the budget resolution done early, so that you can then proceed to appropriation. >> i'm going to yield back my time because you been very
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generous.>> this goes back to some things we talked about earlier in this hearing, which is one of the things that is in the gap between the president's budget and the resolution work is cbo's rescoring of the president's budget. that has come overtime, taken on greater dimensions, including an analysis of the budget started under my tenure. if you want to speed things up, you'll have to think about the scope of what you ask. in order to get everything done. >> thank you very much.>> we are almost at the conclusion of this panel, i have a few questions i want to ask. doctor, at your testimony this morning, you made some comments about the debt, which i truly appreciated your thoughts on it, it to me it's a fascinating topic, we had our behavior modeling hearing with cbo recently, the one thing that i guess we are not really good at
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modeling is the politics of an issue, and in this particular case the fact that we all know if we have an honest conversation with ourselves, that the issue is not what we appropriate, it's not the discretionary spending of the federal government, that peace is getting smaller and smaller every year. the downward pressure is coming from the mandatory side, and we just aren't able to have a political discussion satisfactory to render a decision. i've always been amazed at how many people say yeah, we just need to take politics out of some of these issues. take polity tics out of the political process. all but impossible. the fascinating topic. to me, it seems that the only real way to constrain congress on matters of spending to the extent that we see them today and moving on a trajectory that
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is terribly unsustainable, is that to enshrine into the constitution the notion that congress shall not spend more than it brings in. your thoughts. >> the trouble with a balanced budget requirement, year-by-year , is that it would be very counterproductive at certain moments, when the economy was in recession. or when you had to go to war suddenly. you don't want that. and to write a requirement with a lot of exceptions my late friend charlie scholz used to say by the time you're through, your writing algebra into the constitution. and that's the basic problem. i think the only solution is not a balanced budget amendment, but sitting down together as we
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did in the simpson bowles commission, publicans and democrats, and going through the numbers, and saying, how do we bring these two lines, the rising and spending line, and the static tax line together? you got to think about both sides. not just the spending. but reasonable people can do that, we had very good discussions in simpson bowles, came up with a pretty good plan. >> will require caps on spending? mandatory spending?>> you could, and i think that would be a good idea for the congress to have a plan, what do we want mandatory spending to look like , and then reviewed every once in a while to see whether your off-track, decide what to do, but it still comes back to the political problem that you'll have different views about spending and taxing.
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>> the select committee that mister yarmouth referenced is going to undertake a process that we hope, realizing hope is never a method, but hope will yield a result there will be good for our country, and good for the process, is by annual budgeting and outcome that we should seriously take a look at? >> you don't have to. it's effectively what's going on now. a budget resolution isn't passed during election years, and you're doing by annual budgeting. if you're going to do by annual budgeting, think about how to do it well, -- i think both you mister chairman and you mister yarmouth for leading this effort. this is something i think it's very important at this point in time. to my eye, there are two distinct problems that stand out. what is the appropriations project and the shutting of the government, how do you get the
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post process back to what was originally intended, the second is entitlement spending. i don't think it makes sense to rework the budget process, but focus on those as the things where you have to make it better politics to get the appropriations done, and to get settlement the penalty spending on track. that's really it. >> you made a comment about paygo and the peak to the 74 process. i categorize it as giving first- aid to a process when the patient really needs major surgery, i think we are now at that stage where we may not have a terminal case, though the glide path demonstrates otherwise. we don't need a band-aid anymore, we don't need first- aid, we need some kind of major circumstance, do we not?
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>> the outcomes have to be dramatically better. your better judge of what changes in the process will do that, every cbo director has hidden behind the phrase, the problem is not the process, the problem is the problem. the problem is now here, it's not a long-term budget problem, it's large, and its extraordinary consequential for the american future. what process gets that addressed is really hard to say, but we have to do something different.>> doctor, comment? >> i agree, i think the main thing is to sit down and say, what is the problem? the problem is rising debt, what are the things we can do about it, and you know what those are, and i submit that we are doing a lot of spending through the tax code as well as direct spending, and had we bring those two lines together? those are political questions,
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but if the two sides have the will to solve the problem, you can do it. >> i'm going to yield the balance of my time for purposes of this panel, and i'd like to yield to a couple of members who are late arrivals that were here earlier and had to go for other reasons. mister grossman of wisconsin, i'll recognize you first. >> first of all, we are honored to have you here. i never thought 20 years ago that someday i would get to ask ellis rippling the question. i'm honored. you brought up something that's interesting. we do a lot of spending on the tax code. do you think -- of course that spending is a practical matter, it becomes mandatory spending, correct? do you think that, that mandatory spending to the tax code should be reclassified as discretionary spending? >> i think it should be the object of periodic
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congressional scrutiny, whatever you call it, and that goes for the mandatory spending for an entitlement program. you got to take a look at this every once in a while, and say, is it too big?>> i guess it's obviously too big, and i can argue that would be better with mandatory spending, and better with discretionary spending. asking that question. there's a feeling around here that we ought to vote on mandatory spending all the time. but at least hypothetically, if one party has both houses, we can do something about mandatory spending, we can touch discretionary spending, correct? >> you do touch discretionary -- >> in this regard, it seems to me -- that as a practical matter , with discretionary spending, which is going through the roof in this year, we have an informal agreement that
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military and nonmilitary spending will go up and down together. so, what's happening right now a group of a group of republicans, i believe, demanded a big increase in defense spending, and because they got an increase, you couldn't get a big increase without a big increase in nondefense spending as well. do you believe that's accurate? do you believe that's a problem? >> no, i don't get judgment on that. i think that you -- that was a strong reason for increasing military spending. i think there's a strong reason for not cutting anymore and probably increasing domestic spending as well. but that's just my own judgment. the basic problem is not the long-term increase
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discretionary spending. if you want to do something about the rising debt, discretionary spending won't help you. >> see -- here, i idolized he. [ laughter ] all i ask, that's why this budget is bad. because the people have drilled that discretionary spending doesn't count, so we are borrowing 20% of our money, and we are increasing discretionary spending by 10% this year. is mandatory spending is more important. like it is a matter that were increasing discretionary spending by 10%. do you want to comment on that? doctor? >> i will also avoid drawing judgment on the nature of the political deal that was cut, whatever that might be, um, i think from a budget committee perspective, there are several lessons here. lesson number one, is that currently discretionary and mandatory spending are on an
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equal footing. if you really believe in dollars a dollar, and that equal policy opportunities should be waived on a level playing field, you have to address that, you have to chase that in some way. if that dollar is a refundable tax credit, and is really just spending, in my view, it should be labeled as mandatory spending, brought over to that side, and show the real picture for the resources that are going out. so leveling that budgetary playing field and identifying everything on an even keel is the objective. the second thing is there's a very uneven review process. every year few discretionary in principle, and almost never for mandatory, so you need to fix that, you have to get the mandatory programs regulate reviewed if not every year. the third is, however desirable the caps might be for making the budgetary outlook look better, caps aren't a policy.
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there saying, independent of what the objectives might be, this is how much we will spend. that doesn't make a lot of sense. in situations where you develop a policy, and that's what this budget is supposed to do, you have a national defense strategy, and you funded, you now know what it costs for that policy. if you have the discretion on whether that the policy this nation wants, and caps take that away. that's not helpful.>> i'll yield the remainder of my time. >> mister palmer, alabama. >> thank you mister chairman. doctor berlin. glad to see you. in 2014, you get testimony from the house committee on financial services, use of the following. that the right policy to address the debt would be to slow the growth of healthcare entitlements. get social security into long- run balance, reform the taxes by broadening the base and lowering the rates, and cap the growth of discretionary spending
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, do you still believe those four principles are key to addressing and lowering the debt?>> yes. >> i think just for the record, that's what we've been trying to do for the last year. i will say on the discretionary side, we are not doing very well. it's good to see you, i've been working on the regulatory side of things, as we've seen estimates as high as $1.9 trillion in terms of our group regulation is costing the economy. in the last 18 months, we've done quite a bit to get rid of the obsolete, the redundant, the contradictory regulations. has anyone taken a look at how regulatory form impact economic growth and given any
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projections on how it will impact federal revenue? >> i haven't seen those estimates. i would concur that there's been an enormous change in the regulatory burden and the growth of regulatory burden in particular. i have to believe that directionally it's going to improve the overall performance of the macroeconomy, but that's an area where the research literature provides very little guidance as to the actual magnitude.>> is there any way to include that in estimates for the impact on the economy? and particularly on revenue? are we going to have to learn by doing, or -- >> i believe there are ways, i thought about this problem a lot, there are none that are easy, and that are to the degree of maturity that you could, between now and a month from now have estimates to the impact. there's work that needs doing. >> before i had to leave, i
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tried to jot down what you said, you said something about mission creep for cbo and certain things being outside their ability to project. one of my frustrations has been the projections on the benefit of repealing the ban on exporting crude oil. their projections for in terms of revenue generation have been, i think, incredibly low. are those type of things, including the estimates on the impact of regulatory form, are those outside the ability of the cbo? >> cbo has no portfolio on regulatory issues, that's what it's been suggested in the past, and i've always been concerned about that. that's an enormous undertaking, we could not undertake it with its current staffing. i've always been worried that you would turn a premier budget shop into a less than premier budget plus rigid -- regulatory shop. have a good regulatory analysis
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shop if that's what we need. >> my take on this is that in trying to deal with the deficit and the debt, is not just reducing spending, it's increasing revenues. and i try not to be too hard on the cbo, because in my years with the think tank, worked with the cbo on other things, but there's got to be better information, in my opinion the comes out, that takes into account these improvements in the economy, we got to do this with revenue growth, and with spending cuts. in that regard, i want to go back to something you said earlier. about the way the cbo sends growth and when it creates baseline evaluates changes to programs and incentives, incentivizes further spending. even when a program spends more than it did in the previous year, any change to that program results, the result in less
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spending, the cbo projects that it's a cuts. i don't quite understand that, because, for instance, on medicaid expansion. in our bill that we passed last year froze medicaid expansion, everybody's running around saying we were cutting medicaid, which, frankly, that's not a cut. when we were talking about requiring able-bodied adults without dependent children to work, that the cut, that's not a cut. would you comment on that? >> yes, this has been a controversy over terminology for a long time. but i would submit, you do need a baseline, you do need to ask the question, if we make this change, how will it change what the budget from what would otherwise have happened? now you can find another word then cut, but you do need to
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know what the impact on the budget of changing a law is, and compared to what would otherwise have happened under existing law. that's just a useful thing to know. you can change the terminology, but you need to know that. >> if the chairman will indulge me for a minute, on that point, i agree with where you're going with that, but the key is that if we are spending, we are obligated to spend a certain amount of money. and we don't spend that, that's a cut, but if it's an open- ended deal read depends on how many people sign up, i don't think that's a cut. i think the doctor whole sink in, if you would respond.>> you need a baseline, and the method by which the baseline is created, the rules are followed in doing that projection, are laid out in the budget act. in the cbo in consultation with the budget committee fulfills its mandate to prepare the baseline, if you don't like the
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appearance, what you're really saying is i don't like that baseline. you got to think about looking at the budget and deciding if there's a better baseline. >> thank you so much for your testimony today. if you want to submit written questions for the record to be answered later in writing, please do so. they'll be made part of the formal hearing. any members who wish to submit questions or extraneous material for the record may do so within seven days. that concludes this part of the hearing. the chair is going to declare the committee in a recess for a period of about five minutes. so we can switch out our witnesses, and also provide for an opportunity for members like myself to enjoy the comfort break for a moment, and will reconvene with our second panel here in five minutes. [ laughter ]
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how >> once again, ladies and gentlemen, the house budget committee hearing is back in session. and we welcome our second panel, and on this panel we have
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mcginnis, president of the committee for responsible federal budget, and sandy davis, senior advisor of the bipartisan policy center. thank you for your time today, the committee received a written statement, they'll be made part of the formal hearing record. you each will have five minutes to deliver your oral remarks, and we will give the floor to you. you have five minutes, and the time is yours. >> thank you, thank you for having me, and thank you for sticking around, because that was a panel that covered a lot of details, and i won't have much to add that contributes more than they were able to. i do have an interesting perspective of also being a consumer of was cbo gives out, so that's useful. thank you for holding these hearings. i think they have turned out to be very valuable. we've learned a lot from them. also thanks for inviting me to come before the committee, which is my favorite committee. to talk about cbo, which i think is really invaluable.
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both because the mission that has of being an independent body producing impartial members is so important, and because of the quality of its work. having an independent nonpolitical referee producing impartial members is certainly invaluable, in that it allows us to know the cost of policies, adjust them accordingly, figure out appropriate papers. the fact that cbo takes no positions helps to provide the quantity of analysis that lawmakers can use as they see fit. if we were living in an ideal policymaking world, the way things would work, is that we as a country would decide what our main budgetary objectives are, we figure out which of them should be done in the public sector, and/or at the federal level, he would think about the different policies that could achieve those objectives, and we'd have an honest debate about the pros and cons of the policies. we would have those policies scored, we figure out how we could pay for them, and we would
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pass policies that didn't add to the physical deteriorating situation that we have. if you look at the breakdown of how we should really banking policy, i would first point out , i don't think the world -- role that cbo plays is -- getting the numbers and the cost of the policies and the pay force is everything else considered working pretty well. i also think, during this time of fiscal danger, having estimates is critically important. right now, our debt relative to the economy is quite the historical average. is twice where we were when we went into the recession of 2008, so when the economy turns down next, we will have very little physical flask of -- flexibility to respond. probably worse than where we are right now is where we are
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headed. we are on track to add as much is $14 trillion to the debt over the next 10 years. these numbers have stopped having meaning because they are so huge they are unmanageable that we are doing this to ourselves. recent legislation, we've made the situation considerably worse. our debt is on track to be the size of our entire economy a decade from now. having an agency that scores legislation, releases protections and generates options and their savings to address the situation is critical, particularly in a time like this. there are ways cbo could and should be improved, one of the main criticisms, clearly we talked about this a lot, is the need for more transparency. another criticism includes questioning the accuracy of the estimates and how cbo prioritizes its work. more transparency is certainly desirable. director hall has made steps to improve the transparency, and i think that there's a lot of discussion about if and how there could be more done there. i do think it's worth considering the tensions in the
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trade-offs when it comes to things like proprietary data, and information, we want to be careful there, but listening to this panel that just passed, and the other hearings, i feel confident that people are taking those issues into consideration, and bottom line, more transparency is always desirable when the trade-offs aren't too high. there are also additional members that cbo two could take. i think idea of doing more briefings with members and their staff about their methodologies on things like scoring and baseline would certainly be useful, that way anyone who is interested in learning more can come and talk about how those things are done. it feels like a black box, but it doesn't have to. a lot of what cbo does, they make accessible, we have to find ways to link that to the members who want to learn more. doing more to evaluate itself and its track record is useful, and i think they are on track doing more of that incident considering doing more. one area i think is interesting is how to provide more analysis for members who are not in leadership or on the committees
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of jurisdiction. they want to develop legislation, they want to iterate with cbo, get scores, figure out how things would work, and a lot of times they're frustrated because they don't have the access or ability to do that. the only way that will be possible is if we further resource cbo give them more money, i would be horribly remiss if i didn't point out that would have to be paid for, and shouldn't be added to the debt. but just as i was driving in this morning i was thinking about how much money in this country we spend on politics, versus how much we spend on policymaking, and cbo can be a real part of the policymaking area, and particularly that allows more members, those not in leadership, those non- committees to be more engaged in the process. that's a real priority. quickly, we use cbo's materials, information, scores, methodologies when we do outside work. our organization scores the presidential proposals during the elections.
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cbo wouldn't be able to do that, because they are not -- they don't have the information. outside groups can, and we and the many other groups that do that rely on cbo's work because it's impartial and it's important for us not to be politicized in the work that we do. i just want to say that as a consumer, we couldn't do our jobs if we didn't have the work cbo to rely on. so every institution can be improved, i think it's important that your holding these hearings, and i think they've gone really well, so i think we launch into assessing the trade-offs, but we don't lose the point, the importance of having an impartial arbiter, and we don't lose the focus on the things we need to think about now, how to pass the budget this year. and how to deal with the dangerous national debt situation that we have. think you so much for having me here today. >> thank you, just to point out, he did consume more time than you are allocated, so, with no offset. >> i will apply paygo to my questions.
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>> we appreciate your testimony. >> thank you mister chairman, i just want to make clear that i'm not going to give any offsets, i think i'm off budget, i'm not sure. [ laughter ] let me thank the chairman, ranking member yarmouth, all members of the committee i really am honored by the opportunity to come here and testify today. it feels a little like a homecoming for me, as you all heard, i spent many years working at cbo, most of it closely with a lot of the staff i see behind the dais. it feels good defeat -- secretly bases. it's a good experience to be here. i appreciated very much. i find myself being the fourth witness in the fifth hearing, as you are wrapping these hearings up for now, i concur with everything my predecessors on these panels have said, i'll see if i can give a slightly different twist. just based on my experience, at cbo, and as a senior advisor at the pc, bipartisan policy center, viewing how other
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agencies look at cbo's work. i want to add my congratulations to you on these hearings. i think these have been done in a very methodical, educational way. i think they provided a real service, and i think that regular oversight hearings are a good thing, maybe you don't need five every year, regular oversight hearings are a good thing. this was necessary to get off to a good start. as i said, i've had the advantage of working both inside and outside cbo. based on that, i got four observations which i want to share with you, and i'm happy to answer any questions. first, i just want to make sure that along with everyone else, i firmly believe that a vibrant, robust, and independent cbo is absolutely essential to congress and the performance of its article one duties. bipartisan policy center review cbo is the gold standard of the budget for fiscal and policy analysis. we don't have this view because cbo's estimate are always right, but we always agree with
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them, but because of their long- standing reputation for objectivity. i would like to say that bpc also stood strongly against the legislation and proposals considered last summer to make drastic cuts to cbo, and to modify and limited the budget analysis division. those are the wrong approaches for dealing with issues that the members and concerns the members have. some have advocated the use of outside organizations, substitute for cbo, a melding of estimates from outside policy expectations with relevant expertise. this approach is unworkable. i think this would diminish the quality and quantity of the objective analysis and estimates that members get. nonpartisan analysis is not the product of splitting the difference between partisan positions. secondly, effective communication has been alluded to today, between cbo and congress, this is one of the industry's challenges. this is made more difficult by the changes in the budget process over the years, it has caused a huge increase in the
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demand for cbo estimates. as you all know, cbo is directed under the budget act to give priority could to congressional committees, the house and senate budget committees. because of that, there sadly not able to respond to all the requests they get for information, and estimates especially from rank-and-file members. the frustration this causes is understandable. cbo acknowledges the problem, we acknowledge that when i was there, it was something we struggled with all the time, but even with the problem of excess demand for cbo estimates, i think you should never feel as though you can't get questions answered. or have a sense of what the information they are giving you is incomplete. there's always multiple avenues at cbo to get your questions answered, to get extra information, you may not like the answer you get, but you should get your questions responded to. the issue of transparency. which is the big one. cbo's analyses and transparency of its analyses is more
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critical than ever, i would say. cbo devotes considerable time to this, as you all know, but they acknowledge they could do a much better job. the difficulty is they are stretched too thin. this as others have said, this is a resource question, and i think that a better approach, rather than posting models on the website or something like that, is to actually provide cbo with the additional resources and dedicated explicitly to transparency. you could have cbo report annually, or have a hearing annually on what progress has been made on these efforts for transparency. fourth, i would like to had the budget committee on the back, and give a little push, i think the budget committee has a key role to play in helping cbo address members concerns, and helping it to be a more effective organization. i think working with cbo to address these concerns is much more productive than putting in place well-meaning statutory requirements, to post models, or to cost -- contract out
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estimates. in my view, as i finish, i think the real issue hampering the effectiveness and responsiveness is something the committee is all too aware of, and that is that the broader issues in the dysfunction of the budget process. at bpc, we see, we have high hopes for the joint select committee on budget reform, which is just starting its work. we have lots of thoughts on budget process ideas, including biannual budgeting and ways to help strengthen the budget committee that we feel would make some real improvements, which would be happy to share. in conclusion, just remember one thing. the cbo works for you. the people at the agency are dedicated to its mission, fully dedicated to its mission. i ask you to work with them, ask rick -- explanations. take a visit to the building, show up.
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there cringing down there as i say this, but it should be an open institution, walk in to get your questions answered. if you can't get it over the phone, walking in the pay a visit. work with cbo to resolve these issues and concerns, cbo's critical mission to support congress and its budgetary duties depends on it. thank you very much.>> both panelists, i'm going to lead with a couple of questions, and then i'll yield to the ranking member and my fellow colleagues on the right over here for their questions. it has been universal in both panels that there is a need for cbo with the ability to maintain oversight, and mister davis, in your comments, you talk about if we don't resource them properly, if we were to cut cbo, that it would create stress on the organization to be able to achieve his congressional mission. speak to that just a little bit
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more. if we don't resource them adequately, then, um, i guess, it it suggests that the information that we will get from them is going to be less than the product that we want to see. is that an accurate assessment?>> i think the remarkable thing to me, is that cbo has been able to do the level amount and quality of work that it's done over the years despite, especially in recent years, having insufficient resources. cbo is essentially the same size it's been for many years. while the workload has vastly increased. i think that -- the quality of the work will not be affected, is not affected. i think of their ability to explain, to make clear the basis of the analysis and the estimates is the thing that's going to suffer.
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it may have suffered in recent years because as doctor said, if you're getting pressed for an estimate by wednesday morning and it's tuesday night, you won't have a lot of time to write up and explain that estimates. in my view, is the resources that would help them devote some time to that effort of transparency that's the key.>> as you know, we had a hearing on the behavioral modeling. and i kind of like and it to baseball season was getting underway at the time we had the hearing, and was talking about, you know, doctors, hitters. that face a multitude of different pitches. if everything was a fastball, they probably would be able to time it, hit it, with a lot of accuracy. but we know the pictures makes of their pitches, and they throw a lot of things that move in different directions. it's kind of like, life comes at us that way.
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and certainly cbo faces a lot of changeups and curveballs and every once in a while a spinner comes their way. they throw those at the hitters. how difficult is it for us to actually model, to the extent where we can be confident in the product? >> okay, my office is cringing right now, because i'm not known for doing well with sports analogies. nevertheless, particularly recently with healthcare, cbo has been dealing with huge new issues that have been moving at a very quick pace. nicole give a great example on trying to score risk care and reinsurance when you have a whole new thing, one thing you can be confident is that the projections and answers aren't going to be perfect. they couldn't be. what we are striving for is to understand and believe that they will credibly be not biased in any one direction, and that they will be open to
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ongoing input so those models are regularly updated, that we are learning when there are things that don't come out as projected, we are taking those results and updating the models and the behavioral assumptions. i think what you can ask for is that you trust and that your confidence, there's no bias in what you're getting out of the best that they can do, and that they are regularly learning, and nobody can do perfect spot on projections for any of these new big areas that we are moving into, and i would add, members of congress on these big issues are wanting answers more and more quickly, which goes to the resource question that sandy discussed, which is why the more people working on it, the faster the turnaround can be.>> your organization, they are able to see how complicated matters are when there are substitute changes in the economy, in healthcare, and the lifespan, the average life span is getting longer and longer, and all the
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technological changes and that kind of thing, so both of you, i'm sure, would agree that there is no real definitive answer, it's not as simple as a math question for a lot of things. we have behavior involved, we have a lot of external conditions that have to be considered. so the modeling piece of cbo is an ever-changing thing, right? >> yes sir, i think that you hit the nail on the head. models require additional work to be updated, i'm the last person you want to be talking about models, i appreciate it,>> >> talking about sports. the pitches they worry about are the ones that are -- i'm just saying.
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i do think you are correct, it requires a lot of attending and effort, and analysis itself. so that's where i talk about the need for resources to do that. it's hard to do that concurrently when you are pushing to get the estimate of the analysis out the door. but it's necessary, it's important. part of it is writing it up in a clear way that members can understand and appreciate. part of it is just having the time to do it. and the resources quite frankly to do it. >> mister yarmouth, myself and mister woodall are all in the select menu for budget process reform, can both of you, in just a minute or so, i'm going to run out of time, could both of you give us a taste of what your initial suggestion would be , or your strong guidance would be to the select committee? you have three of them here. >> i'm so pleased of this joint committee is occurring, and i'm hopeful it will make progress. when we started tax reform and you could look at the tax code and say well if there's one
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thing we can agree on, it's broken. we all feel that way with the budget process there's a lot of improvements we could make. starting from smaller to larger, i think there are a number of smaller changes within the existing process that could and should be made, including ensuring that a budget is in place. i concurred with until a budget is in place, you should not be able to pass legislation that affect, that costs money. i like those ideas. i think auto crs are something to think about. i think joint budget resolution, where you have the president and congress agree in the beginning so that you have a real law is important for this to be taken seriously. the budget doesn't have the teeth that it needs to at this point. it's absurd that we have budgets in place, and then have -- subsequent policies are often completely at odds with that budget, and regularly, members don't even realize they're inconsistent. second, i think doing more to avoid the gimmicks that exist in the budget, so everything from timing gimmicks to using
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roth iras and pensions which we all know our massive gimmicks to look like you're paying things when you're not, just going to the gimmicks we produce to hit big important how to address those, focusing on strengthening enforcement, we just had a moment where everybody was on board to waive paygo for the tax bill, very few people realized that was allowing a massive change in the budget the tax bill added to the debt, getting rid of paygo allow that to happen. it needs to be a stronger mechanism. focusing more in the long term so we can have projections and think about the effects in the long-term and low savings that occur in the long-term give you credit today, so you for political incentives to generate long-term savings, and i'd like to see a bigger overhaul that helps improve very poor fiscal outcomes, and i recommend considering something like that targets and triggers to get you there along the year for multiyear budgets, so that's smaller more manageable to bigger.
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i also encourage you to figure out as much as you can push for, and get that done, because we need a win. we need congress to come together and work on something and succeeded something that moves us in the right direction. >> mister davis?>> i think she would have some really good ideas and proposals. i think her point about needing a win is important. i would say try not to bite off too much more than you can chew. you have a relatively quick turnaround, i think the focus on , as i mentioned earlier, making the trains run on time, could be the biggest thing that you could do with the budget process. the bipartisan policy center, we have a series of ideas, doctor mentioned her work with senator domenici, on a series of budget process proposals, which was done through the bipartisan policy center, a senior fellow there. a couple of the key ideas from that, that i would encourage the committee to think about, the first is by annual budgeting, there's a mention of
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that here today as a way to sort of ease the pressure on the budgetary agenda and on congress and free up some time for actual congressional oversight. in a second session of congress. another idea, which we would stress, mentioned in my testimony is ways to strengthen the budget committee. to make it a leadership committee in a sense that would create more of a sense of urgency and importance for the budget resolution process. broadly speaking, i think the process can be made to work, but it needs more support from leadership levels, and needs to be made a priority. i think i will mention that something like an automatic continuing resolution is worth thinking about there are issues that you have to deal with about creating incentives not to get the work done and living under constant crs, but there are ways to deal with that. to take away the uncertainty, the possibility of the government shutdown. >> next to both of you. >> thank you mister chairman, think both the witnesses also,
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and thank you for asking questions that i don't expect certain answer to, just curious. it occurred to me that something that might be useful is if we ask cbo two, as a matter of course, do a score on an an active piece of legislation every two years or so, above some level. $5 billion or whatever, hypothetically some -- so that it, with the aca we would have a score every two years. as to what it looked like for the next 10. obviously we don't want to add too much to the cbo's plate, but since they had already done a lot of the work, the incremental work might not be all that -- require all that many additional resources. i just threw that out.
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mister davis, what do you -- >> you're talking about a reassessment of something that's been enacted into law. just to keep track of how the with the original estimate said, how far off it was, what actual spending is that can be a tricky thing to do, and in some places almost impossible. it depends on the change enacted. if you've made changes to an existing program, and these changes get all wrapped up with what already existed under current law, it may be hard to parse out how those differences may change versus what was already under law. if you've created a new program, for example, like congress did under medicare part d. perception drug benefits. that something that can be tracked, that something cbo has tracked, and kept track of their estimates versus how it actually turned out. and folks are aware their estimates were too high initially. the cost of the prescription drug benefit wasn't as high as estimated. i think that's what a baseline is. you take stock every few months
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where current law spending is now, parse it by individual programs like that is more of a challenge, but for new programs enacted, it's a fair question to ask if you want to say we did this, this was our expectation, how did it turn out? that's a fair question. ? i don't have anything else i want to ask, but to give you both an opportunity since i have this time left, to talk about anything you've heard today so far that you were chomping at the bit >> a horseracing term to react to while you are sitting and watching and listening. >> i'll react to something, i'll try to do this the right way. i thought alice and doug just did fabulous jobs of pointing out the tensions -- i heard alice talk about what the real
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big priorities that we should be focusing on our, and i thought doug did an incredible job of showing the tensions between making changes and the pros and cons, and not butchering things as black and white. one of the things i kept hearing was a frustration with our fiscal situation that was being a little bit pushed on cbo. i'm going to politely push back, and see that the physical situation and the broken budget process comes from congress. it doesn't come from the congressional budget office. what we need to do is help cbo put out the kinds of things that will enable congress to do what most people want to do. many people want to do. which is put us on a more fiscally sound track and have a budget the functions better, but because of the political environment, that is really difficult. you don't want to politicize cbo, but i spend my weekends, i'm sure some of you have been soccer parents, i spend my weekend listening to parents on the soccer sidelines yelling at the ref. it is unbelievable how it turns out the ref is always against our team, but never against the other team, right? so you want to say, but it
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probably evens out when the ref makes a mistake or not, i think cbo really does do that. i think we have to focus more on what is it that's making it possible to get the right physical outcomes that we want. i would just keep turning the picture back to what the big fiscal situation is, how were going to budget in a way that reflects and pushes for our national priorities and things about the trade-offs to get there. that was my big, i sit there and think about the national debt no matter what is going on, that's where i am. the reason i ended up in this field is because i had a normal job working on wall street and finance, and i read a cbo report in the 90s, and it was one of the most interesting things. it was unbiased, it was fair, and it talks about deficits of $203 billion, and i was concerned. i think that was the number. things have deteriorated since then. the big picture is, what will we do to change it?
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one more answer to your question about select committees. one thing i didn't mention that would be important is looking at putting caps on the full budget, not just discretionary like we did at sequester, but thinking about how you include mandatory and tax -- which are spending to the tax code is 1 trillion of them a year. looking at those pieces of the budget and figuring out how to m. >> there's always going to be conflict with cbo, it's a nonpartisan -- they get it. it's been the day from alice when they did analysis of the carter energy plan. for democratically controlled congress it wasn't popular at that point. it's been that way throughout cbs history, i wouldn't worry about taking issue with cbo, they want to hear from you. if it's done the right way, as a way to improve things, that's not a problem at all. want the communication. >> thank you both for your testimony.>> i think the ranking member. for somebody this is there not with sports metaphors, you came
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to some good ones. on the soccer field.>> mister woodall from georgia. >> thank you mister chairman. i want to start with you, you said in your encouragement for us to go down to remember that cbo works -- in both of your written testimonies, you talked about the importance of an independent cbo. in my mind, those two things are categorical opposites. if you work for me and do what i tell you to do, or you get to do whatever you want to do because you are independent. help me to understand having your inside view that distinction between working for us, and -- only staff director on capitol hill who will send the witness table until the committee for which they work how it is. >> let me say, i understand what you're saying, i understand the frustration with that. and the distinction you made between cbo with doctor ritalin.
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i think what it boils down to is what you mean by advise. the folks a cbo will sit down and talk with you about anything you want to talk about. you can run your ideas past them, they can tell you what economics is about those ideas, with their analysis indicates about those ideas, what additional options may be, the difficulty is, they have to be consistent with the advice and the information and analysis they give to everybody. they got 535 masters when you bring in the senate, i know we don't like to talk about the senate in the house. when we do that, that's a lot of. it's more about the consistency of the advice making sure independence means nonpartisan. independence means not captured by one party or the other. beholden to one committee or another. working for all of congress. i think that you can have conversations with the director
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, you can go one-on-one with the director, and you can raise these issues, you can put it in context for you, the same can be done at the staff level. it's a matter of understanding that they have to give the same set of analysis to everyone, and everyone has the benefit of their thinking. it may not line up with a particular policy position or not. my view is, with the budget set things up, they set up cbo to be that source of nonpartisan independent for congress, just what i see independence, independence for congress. it was the budget committees that were the policy positions using that nonpartisan analysis , and go forward from there to be the policy ideas and not so much cbo. >> you said you wished we were focused on bigger picture issues than just process, and yet we probably spend more time arguing about the referees than we do focusing on the underlying policy. it seems to me we should be pushing the referees to the background, they should be referees of the behind-the-
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scenes conversation, but they shouldn't rise to the level of importance that it gets in the way of the actual policy conversation we are trying to have.>> i think you've asked the most interesting questions in this whole hearing, i still think about the one you asked previous panel about cbo versus omb. there really thoughtful. i think the cbo, we need a referee, and we need a referee that we agree is doing a good job, and that's why oversight committee hearings are important. then we need to spend our time disagreeing or fighting or evaluating the policies, rather than cbo when we don't like the score that we are getting on things. that's not to say they are perfect, it's just to say we need to be debating those bigger issues. a score cbo has my not be important spending our time thinking about what it means to add $14 trillion to the debt. i'm thinking about relative energy. on thinking about the real importance of getting a budget resolution passed that hopefully has reconciliation that has savings and it, so all
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the kinds of things that are really going to improve the fiscal situation. to your specific question, i think cbo needs to be apolitical, but also accountable. i think you all said a set of rules for them which they then need to enact and follow in an apolitical manner, and if and when it's appropriate, you change those rules. but it is different than omb, because they are accountable to two different parties with different policy preferences, and they don't come back and say i think this about a policy or think that's a good or a bad goal the way they would if they were omb. that's the nature of having one president versus all members of congress. >> let me ask i didn't realize omb had so many non-economists working for them. cbo -- until the chairman and the ranking member had a series of hearings. crs has twice the resources that cbo has. is there a downside for us partnering those two agencies both charged with providing
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nonpartisan counsel? >> well, a couple things. having worked at crs, to. their missions are different. at crs, it has to be broadly, it's basically congress is research arm. they, they are required to set priorities, they don't have to set priorities like cbo does for that cbo engages in. so while there are some similarities, the broad sort of budgetary and economic analysis that cbo does is different from the policy analysis and research done at crs. i think you got to have in my perspective, you need to have a single entity that's producing cost estimates and other analysis that used in the budget process. and there's important work to be done on transparency and effective communications, and taking into account all the latest research, i think a single entity providing that is important to avoid confusion in
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the budget process, to make sure there's a level playing field. of estimates and analysis that's used. the two agencies are distinct, there's an important that they be distinct, because they have different missions. >> thank you for? i want to give ms. mcginnis an opportunity to answer that question as well. >> i think it's an intriguing idea. i think there could be potential in that, i don't know the details of what the downside would be, but i think it's intriguing. >> thank you mister chairman, think both panel members. i love budget meetings, i'm a business guy for 30 years, i get frustrated every time i hear, we are all talking about the answers. i remember somebody told me leadership one time, budget is not -- it's a vision, is not a path. the budget should be a path, not a vision, we have to have a path, we have to follow the path. i want to come back to cbo. my biggest frustration with cbo
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is, in the business world, and i was a turnaround guy, so i take over businesses that were in trouble, and then i bring my cbo in the, my individual, and i would tell them, give me an analysis. i need to make some decisions based on your analysis. what he would do, or she, depending, they would give me best case, worst case, and that i knew where i was at. the problem we have here, is that cbo gives us only case. i think that the problem. the best example i can give you, and that's where my frustration comes, is cbo's estimate in the amount of americans would no longer have insurance under the repeal of individual mandate, i brought this about one of the previous hearings, was different than an estimate from s&p, close to 10 million different. for members of congress, it's important to have an understanding deciding how confident we can be with cbo, i think we could be much more
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confident with the money comes in and says, best case, worst case, then you make your decisions. there is no single case, there's no individual case. >> mister davis, i like to tell you your thoughts on that.>> is a good point. what i would say, is that broadly speaking, that's what cbo tries to do. in its analysis. what cbo says, what they tried to do, the basis of the analysis is to try to find the middle of the range of expected outcomes. taking into account what outcomes are based on research and data and information their experience with the models show about a particular outcome for particular policy. because what they do, and it's been said before this hearing, is to prepare estimates and analysis to support the budget process. the process requires a set of single numbers, a single estimate for typically a 10 year period. so that's their thinking, there also, you know, have to use a
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budget baseline, there under the budget as required to use a current law baseline that often informs their analysis, thus the basis of their analysis. that may cause some frustration but your broader point, hopefully, when they write this, when they write their analysis when they tried to discuss all the elements and the assumptions, they broadly discuss what the wide range is, what the broad best case and worst-case scenarios are. in the form of writing up what they think their best analysis is, which is that sort of middle range of distribution. there trying to give their best judgment based on all the information they're aware of. >> is why we need more transparency, absolute, so we can see what best case worst- case is. we get these numbers, and it really lives and dies by these numbers. is interesting, in the last session said that the biggest problem is we need to get the house the president to sit down and review resin's expenses and debt and make decisions in totality, i think that's true.
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is too bad we don't get to that point, because that's where i think cbo would be helpful, and ms. mcginnis so, again, i appreciate, we've had lots of conversations over the years about the budget process and the national debt and deficits, and i admire your commitment to being with us on the importance of this issue. how do you think cbo -- we don't talk about that enough, should they be talking about this, how can they help members of congress in that area? that should be the starting point. i know they dig down into legislation, the big picture is, we're going in the wrong direction. i don't know if you have any thoughts.>> my guess is for folks who work at cbo, they are probably painfully aware of just how fiscally unsustainable our path is. you can't look at a cbo document and not come away with that. that's why i switched careers into doing this when i read it, because the numbers tell the story. >> i think alice woodland says, it's absolutely right that they don't come out and say to congress you need to do this, that they don't push policies more.
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they shouldn't be in the role of telling folks what to do. unfortunately, the numbers are so bad that they speak for themselves. this really is an issue of, it should be up for debate if it's a problem. anyone who looks at a cbo document is going to know what the problem, that the debt is growing faster than the economy as far as the eye can see. just continuing to publishing the report reports and then we all roll -- have the role of making them -- putting them on a bigger platform, that something you've worked on very clearly and strongly, which is how you have overall national report to the country about the physical state. members of congress take what cbo does, just the numbers, and use it to make a picture clear.>> the only issue is that -- a lot of members don't understand those reports when they come out. i do, you do, others do, but i think we have to make sure they're emphasizing that, because too many times we make decisions based on the next election, not the next inlet --
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generation. >> mister arrington, texas. >> thank you mister chairman, i would think the panelists for your counsel, and your presence here today. i find myself in an enthusiastic agreement with a lot of what you said, but in the interest of time, let me go to the nuts and bolts of cbo, i think that's the main purpose here. i'd like to go to the real threat, which is the debt and deficit spending, let me make one comment on that, i agree with ms. mcginnis that the cbo has little to nothing to do with stopping this train wreck. it's going to happen if we don't change our behavior, it's the will of the united states congress, plain and simple. we can make reforms on process, we might even be able to put accountability measures in there that can help, but ultimately it's the collective will of the united states congress, as a new member, i am awfully discouraged by my first year and what we were able to
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-- even as a majority, to send a budget that finally got of the drivers of the debt, which is our mandatory spending programs, reduce that more than we have in 20 years, send it to a majority civil majority republican senate, because of reconciliation, and then they pulled it out. it's an interesting way to start my time here in congress. nuts and bolts, would you agree with me mister davis, that success for cbo is delivering timely and accurate information to this committee? so we can do our job?>> as best they can, yes. >> how well is cbo doing on
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timely and accurate information? >> i think considering the demands they are under, they would do really really well, they have to set priorities -- >> you have proof of that? can you give me a scorecard? how often have they been right? to me this is also the biggest challenge, one of the bigger challenges in this oversight role that we have in congress is i don't know which programs are working, which ones aren't, we fund unauthorized programs, i can't tell you how many hearings i've had were i just ask the simple questions what is -- is success, how do you measure it, how are we doing? i think cbo, if we are going to manage it, oversee the management of cbo, we need to be able to ascertain their success rate. with some reasonable margin for error, what's their batting average? where can we identify making adjustments and improvements? i think resources are a part of the universal best practice organizational excellence.
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