Republicans Target CBO For Unattractive Economic Reports

Capitol Hill analysts blame good old-fashioned politics for Republican complaints that the Congressional Budget Office is using fuzzy math to fuel the fire of Democrats seeking to cast aspersions on the Bush tax cut package.

Sources confirm for Fox News that Rep. Jim Nussle, R-Iowa, chairman of the House Budget Committee, said “the CBO sucks, and you can quote me on that,” in a closed-door GOP leadership meeting two weeks ago.

Sources said the congressman was referring to the agency’s release of an updated analysis of the farm bill, which showed much higher costs than an earlier, higher scoring report. The problem, they said, was the second analysis came after the House already voted on the bill and before the Democratic-led Senate had a chance to do so.

“I think at the time his frustration had gone up a little,” said Brenna Hapes, a spokeswoman for Nussle, who played down reports that Nussle had scheduled a budget oversight hearing on the CBO to attack the agency.

Though the farm bill passed both chambers and has been signed into law, sources inside the meeting said most of the frustration stemmed from the fact that Nussle was not notified by his staff that the updated analysis was coming. All agree, however, that the chairman was clearly angry.

The CBO was created by the Congressional Budget and Impoundment Control Act of 1974 to act as a nonpartisan research and analysis provider for economic and budget policy. ITs recent reports suggest smaller economic growth and surplus estimates and larger deficits than White House projections, which the House has preferred to use as it moves through tax and budget negotiations this year.

Rep. Paul Ryan, R-Wis., a member of the House Ways and Means Committee, told Roll Call that the reason for that is CBO’s use of a “static” economic model, which does not take into account the long-term benefits of tax cuts on the economy, as well as other “dynamic” factors that would reflect consumer spending activity and production resulting from tax relief.

“It’s not like we’re trying to get them to cook the books in our direction,” Ryan said. “We simply are seeking the truth: a better illustration of what is reality.”

But Democrats say the GOP can’t have it both ways – during the Clinton administration, they were happy to use CBO numbers, which were more conservative, while knocking forecasts by the White House's Office of Management and Budget.

“During the Clinton administration, the Republicans thought the CBO numbers were holier than thou,” complained one Democratic aide who did not want to be named.

“Under Bush, there has been a reverse of that. But poo-pooing it because they won’t meet your political agenda is bad policy if anything else,” he added.

Rep. Ken Bentsen, D-Texas, a member of the Budget Committee, agreed. “The Republicans are upset because there is volatility, which is appropriate, but they’re also upset because the numbers don’t come up the way they want them to come out.”

“There has always been battles among the Congress and Executive Branch over whether to use the CBO or the OMB,” he added.

Earlier this year, Republicans showed their exasperation when CBO Director Dan Crippen made public statements linking the dwindling surplus to President Bush's $1.35 trillion tax cut, which extends over a 10-year period and has so far been manifested in $300 billion in rebate checks that went out to most taxpayers last year.

Crippen was appointed three years ago by then-Budget Committee Chairman Sen. Pete Domenici, R-N.M, despite the fact that he was not a favorite among fiscal conservatives in the Republican Party. CBO officials declined comment for this story.

In March, the CBO projected a $121 billion deficit next year — $40 billion more than Bush forecast, blaming the tax cuts, spending increases for defense, homeland security and increased spending. Democrats quickly incorporated the report into their arguments against rolling out more of the tax cut.

Also, where the White House has projected $1 trillion in surpluses starting in 2005, the CBO sees much less, like in the $681 billion range.

Most acknowledge that the differences between the two reports, as well as the two parties, can be traced back to economic philosophy and disputes over how estimates are factored.

“I think they continue to ignore the basic lessons of how a well-designed tax cut can benefit Americans and its not just a matter of tallying up benefit losses that a 20-year bureaucrat has been carrying around throughout his entire career,” charged Pete Sepp, a spokesman for the American Taxpayers Union.

Recent hearings by both the Budget and House Ways and Means Committee sought to air those differences, but there have been no suggestions that the system ought to change anytime soon.

“There is a recognition that economic forecasts are never going to be perfect,” said Hapes. “(Nussle) realizes that (CBO) is sometimes unfairly singled out as a lightening rod. But there is no reason to believe it cannot be improved.”

Kevin Hassett, a resident scholar with the American Enterprise Institute, suggested in the May 2 budget hearing that a more independent body be set up for fiscal policy decisions, based on the Federal Reserve’s professional staff.

“Such a measure may significantly reduce the chance that political influence could have an impact on the analysis of the economic staff,” he said, “and might also restrain the tendency for the economic analysis to be tied to unrealistic projections of future policies, as is now sometimes the case.”