The Case Against Doug Elmendorf at CBO

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Posted by ATR on Friday, November 21st, 2014, 12:22 PM PERMALINK

Americans for Tax Reform president Grover Norquist sent an open letter today to House and Senate GOP Leadership laying out seven reasons not to reappoint Doug Elmendorf as Director of the Congressional Budget Office:

Elmendorf’s CBO Got Grubered.  It was Doug Elmendorf who adopted the scoring models for Obamacare given to him by Obamacare architect Jonathan Gruber.  These inaccurate models were key to CBO’s assertion that Obamacare would be good for health insurance markets and reduce the deficit.  That would be the same Jonathan Gruber who said that lying to the American people was necessary to pass Obamacare because Americans are stupid.

Elmendorf’s CBO Pushes Failed Keynesian Economic Analysis.  As Dan Mitchell of the Cato Institute has pointed out, “the CBO – over and over again – produced reports based on Keynesian methodology to claim that Obama’s so-called stimulus was creating millions of jobs even as the unemployment rate was climbing….CBO also radically underestimated the job losses that would be caused by Obamacare…CBO has produced analysis asserting that higher taxes are good for the economy, even to the point of implying that growth is maximized when tax rates are 100 percent…When purporting to measure loopholes in the tax code, the CBO chose to use a left-wing benchmark that assumes there should be double taxation of income that is saved and invested…[and] on rare occasions when CBO has supportive analysis of tax cuts, the bureaucrats rely on bad methodology.”

Elmendorf’s CBO “Can’t” Score Obamacare.  On June 17, 2014, CBO Director Doug Elmendorf issued a blog post on CBO’s website where he explains that CBO cannot any longer estimate the budgetary impact of Obamacare: “Attempting to construct a counterfactual benchmark for the budget that excluded [Obamacare] would raise significant challenges and would go beyond CBO’s traditional role in the budget process.”  This was another way of saying that CBO had given up the Gruber-led façade that Obamacare would reduce the deficit, but was not willing to show their math in getting there.

Elmendorf chooses to not make CBO's analysis fully transparent.  CBO does not disclose—in detail, and for peer review—their scoring methodologies.  If they did, there would be a lot more pressure on them to incorporate macroeconomic analysis into their scores.  This was a conscious choice of Doug Elmendorf’s.

Elmendorf’s CBO Used Dynamic Scoring Only Once—to Help the Obama Administration. The whole history of the CBO is one of opposition to so-called “dynamic scoring,” which is nothing more than incorporating common sense assumptions about changes to the economy resulting from large fiscal policy shifts.  There is one notable exception—the 2013 Senate immigration bill.  There and only there, Elmendorf’s CBO used both halves of its brain and produced a dynamic score.  It just so happens that this immigration bill was a priority of the Obama administration, and producing a score here (as opposed to killing the death tax, or repealing Obamacare, or cutting the capital gains tax rate) would advance to the administration’s agenda.

Elmendorf is a liberal Democrat appointed by former Senator Kent Conrad (D-N.D.) under a Democrat Senate majority. It’s a longtime rule of the U.S. Congress that the majority party gets to pick their own staff.  That’s what Senate Democrats did when they appointed one of their own, Doug Elmendorf. It’s absurd to say that Democrats have that right, but that Republicans are not free to pick their own CBO Director when they are in the majority.

Elmendorf served on President Bill Clinton’s Council of Economic Advisors and in the Clinton Treasury Department.  He was a senior fellow at the liberal establishment Brookings Institution.  He even got a Ph.D. from Harvard under the dissertation guidance of former Clinton Treasury Secretary Larry Summers.  There is no doubt that he is a career Man of the Left.

The Bottom Line: Reappointing Doug Elmendorf Is an Endorsement of CBO’s Practices. The CBO under Doug Elmendorf adopted all the bad practices of his predecessors, acquired some new ones (for example, a disturbing discontinuity between Obamacare’s baseline score and CBO’s long term fiscal outlook), and has not implemented needed reforms to CBO.  Reappointing Elmendorf would be validating the status quo.


Photo Credit: 
Gerold R. Ford School of Public Policy, University of Michigan's photostream