Joint Select Committee Should Focus on Improving Budget Transparency

COMMENTARY Budget and Spending

Joint Select Committee Should Focus on Improving Budget Transparency

Apr 17th, 2018 4 min read
COMMENTARY BY
Paul Winfree

Director, Roe Institute for Economic Policy Studies

Paul Winfree serves as director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
The CBO currently faces a lack of faith due, in part, to its lack of transparency. Pgiam/Getty Images

Key Takeaways

The Joint Select Committee was established in February by the Bipartisan Budget Act of 2018 and is made up of 16 members (eight Democrats and eight Republicans).

The committee must decide whether to scrap the current process established by the Congressional Budget Act of 1974 or to simply amend it.

The Budget Committees should be required to produce a report every year (or two) with a review of CBO’s models, activities, staffing, etc.

The first public hearing of the new Joint Select Committee on Budget and Appropriations Process Reform will take place on Tuesday.

The Joint Select Committee was established in February by the Bipartisan Budget Act of 2018 and is made up of 16 members (eight Democrats and eight Republicans) equally divided between the House of Representatives and the Senate.

You can probably guess, given the creative naming, that the committee is charged with coming up with reforms to the budget and appropriations processes. They have until the end of November to develop proposals if the expedited process for consideration, established by the 2018 Bipartisan Budget Act, is to be enabled. However, whatever they come up with will still require 60 votes to pass the Senate.

This is a significant undertaking. The committee must decide whether to scrap the current process established by the Congressional Budget Act of 1974 or to simply amend it so that the law is actually followed in practice.

For instance, the Congressional Budget Act requires the House and Senate to adopt a concurrent budget resolution by April 15. Both chambers ignored that requirement altogether this year.

A major problem that the committee will find is that although many members are frustrated with the current budget and appropriations processes, their displeasures are derived from different motives.

There are those who want to reinvigorate the practice of earmarking because it will give more people in Congress the “skin in the game” needed to support each appropriations bill. Members of Congress will be hard-pressed to reject a spending bill if it also funds an important project close to home.

But should the goal of the process be to produce massive bills that hand out stuff to everyone involved? I would hope not—especially during a time when Congress seems reluctant to impose any serious forms of budget restraint.

There are others who want to limit the requirement to pass a budget every two years. The argument is that Congress will spend one year budgeting and the other year conducting oversight.

But congressional oversight is independent of the budget process. The Government Accountability Office—Congress’ own in-house appropriations “watchdog”—provides many excellent suggestions to reform programs that are often ignored. And good oversight is usually derived by dedicated and diligent staff who stay on top of the departments and agencies.

The oversight function is unlikely to improve by setting aside one out of every two years to review programs. Congress should be able to simultaneously review programs and allocate resources.

Plus, Congress already ignores the statutory calendar for considering its own budget. Congress has adopted 10 budgets in the last 18 years with only three since 2010. Therefore, it’s unlikely that moving to a biennial budget will improve the process. It will simply move current law into alignment with current practice. Is that really something that should be encouraged given the frustration with the process?

Sen. Mike Enzi, R-Wy., chairman of the Senate Budget Committee, has come up with an innovate idea. He has suggested eliminating the Budget Committees altogether. Such a move would at least eliminate duplication with the new Joint Select Committee on Budget and Appropriations Process Reform in place.

All kidding aside, the Joint Select Committee would best spend its time and resources focused on improving transparency within the budget process. They can start by building off of the Congressional Budget Office’s (CBO) oversight hearings held by the Budget Committees over the last several months.

CBO’s existence is derived, in part, from the need for Congress to have access to independent analyses of budget information so as not to rely on the administration’s Office of Management and Budget. Therefore, faith in the efficacy of CBO’s estimates is not only critical, but core to the agency’s very being.

Congress can improve faith in CBO’s analysis by increasing the transparency of how its estimates are produced. Below are a number of ways that CBO can increase transparency.

  1. We essentially want to encourage the replication of CBO’s estimates by independent sources. Therefore, CBO should publish detailed descriptions of how it arrived at the published cost estimates (e.g., what assumptions were made and what weights were put on those assumptions). Divulging models is less important than publishing how the agency arrived at an assessment of the costs of legislation considered by Congress.
  2. CBO should provide a formal assessment of how comfortable it is with the cost estimates produced. For instance, is CBO very comfortable with a cost estimate or does the agency think it’s just a shot in the dark?
  3. CBO should provide some qualitative assessment of how important the baseline was in developing its cost estimates. Some cost estimates are entirely driven by baseline assumptions. Others are less constrained. For instance, CBO often acknowledges that the policy world has changed when new information becomes available. But cost estimates for new legislation are often provided against an outdated baseline to remain consistent in evaluating all proposals over the course of a legislative session. The difference is important to policymakers.
  4. The House and Senate Budget Committees are responsible for providing oversight of CBO and reviewing its activities. Budget Committee staff are routinely invited to sit down with analysts, ask detailed questions about the estimates CBO has produced, and are invited to the meetings with outside advisers. The Budget Committees should be required to produce a report every year (or two) with a review of CBO’s models, activities, staffing, etc. In that report, the Budget Committees can publicly highlight weaknesses or concerns in advance of the consideration of major legislative initiatives.

CBO would likely argue that transparency would make their job more difficult. Transparency requires resources. And CBO worries that transparency will cause people on the outside to question its analyses.

Sometimes the agency is under significant pressure by members of Congress to produce cost estimates quickly and without all the necessary information needed to be absolutely comfortable. Other times CBO is asked to provide a cost estimate for a new program that fundamentally changes the policy environment—an inherently difficult task.

However, this is exactly why we should have a more transparent CBO.

Sen. Mike Lee, R-Utah, and Rep. Warren Davidson, R-Ohio, have a proposal that would take an important step in increasing transparency: the CBO Show Your Work Act of 2017 (S. 1746, with H.R. 3822 as the House counterpart).

Specifically, the bill would require CBO to publish its models for the purpose of replication. This is largely based on the American Economic Association’s data availability policy that requires authors of accepted papers to provide “the data, programs, and other details of the computations sufficient to permit replication.” This data and other information is published online when the paper is published by an American Economic Association journal.

I do hope that the Joint Select Committee on Budget and Appropriations Process Reform adopts a broader perspective than what is laid out in this short article. However, they should start by doing no harm and working from a place where there should be broad agreement: increasing transparency over the process and giving members of Congress the resources that they need to fairly evaluate legislative proposals.

This piece originally appeared in The Daily Signal