Origins
The Congressional Budget Office emerged from the constitutional crisis of the Nixon administration and Congress’s determination to reassert control over federal spending. President Nixon’s impoundment of appropriated funds—refusing to spend money Congress had authorized—highlighted the legislature’s weak position in budget disputes with the executive branch. The Congressional Budget and Impoundment Control Act of 1974 created CBO to provide Congress with independent analytical capacity matching the President’s Office of Management and Budget.
Alice Rivlin, a Brookings Institution economist, became the first CBO Director, serving from 1975 to 1983. Rivlin established the agency’s reputation for nonpartisan analysis, resisting pressure from both parties to shade estimates in their favor. Her insistence on methodological transparency and professional independence created an institutional culture that has persisted through subsequent directors and shifting political environments.
CBO filled a critical gap in congressional capacity. Before 1974, Congress relied almost entirely on executive branch estimates of program costs and economic effects. This dependence meant legislators often voted on major bills without independent verification of their fiscal impact. CBO’s cost estimates, budget projections, and economic analyses gave Congress its own source of budgetary information, fundamentally changing legislative deliberation.
Structure & Function
CBO employs approximately 275 analysts, economists, and support staff, making it small compared to executive branch counterparts but highly influential relative to its size. The Director, appointed jointly by the Speaker of the House and President Pro Tempore of the Senate for a four-year term, leads an organization structured around budget analysis, macroeconomic analysis, health/human resources/labor analysis, microeconomic studies, and other specialized divisions.
The agency’s core function is “scoring” legislation—estimating the budgetary effects of proposed laws. Every bill reported from committee includes a CBO cost estimate showing projected spending or revenue changes over ten years. These scores determine whether legislation complies with budget rules and shape political debates over fiscal responsibility. A CBO score showing billions in costs can doom legislation; a favorable score can provide crucial political cover.
CBO produces regular publications structuring congressional budget work. The annual Budget and Economic Outlook projects federal deficits, debt, and economic conditions over ten years. The Long-Term Budget Outlook extends projections decades into the future, highlighting the fiscal pressures from aging populations and healthcare costs. Options for Reducing the Deficit catalogs potential policy changes without recommending specific approaches. These publications frame budget debates even when Congress ignores their implications.
Historical Significance
CBO’s estimates have influenced every major fiscal policy debate since 1974. Scoring of the Reagan tax cuts, Clinton deficit reduction, Bush tax cuts, Affordable Care Act, and Tax Cuts and Jobs Act shaped legislative strategy and political arguments. The constraint of budget rules—pay-as-you-go requirements, reconciliation procedures, deficit targets—depends entirely on CBO’s role as official scorekeeper.
The Affordable Care Act debate demonstrated CBO’s political significance. Director Douglas Elmendorf’s estimate that the ACA would reduce deficits by $143 billion over ten years provided crucial cover for Democratic votes. Republican efforts to repeal the law repeatedly foundered when CBO estimated that repeal would increase deficits and reduce insurance coverage. The “CBO score” became a political weapon wielded by both sides.
CBO’s independence has weathered sustained political pressure. Directors have been criticized by presidents and congressional leaders of both parties when estimates conflicted with preferred narratives. Yet the agency has maintained its methodological approach regardless of which party controls Congress. This credibility makes CBO estimates the baseline for budget debates, even when politicians dispute specific conclusions.
Key Developments
- 1974: Congressional Budget and Impoundment Control Act creates CBO
- 1975: Alice Rivlin becomes first CBO Director; establishes nonpartisan culture
- 1981: CBO scores Reagan tax and spending proposals
- 1985: Gramm-Rudman-Hollings requires CBO deficit estimates
- 1990: Budget Enforcement Act creates statutory pay-as-you-go rules
- 1993: CBO analysis shapes Clinton deficit reduction package
- 1997: CBO scores Balanced Budget Act achieving first surplus since 1969
- 2001: CBO projects surpluses later erased by tax cuts and recession
- 2009: CBO becomes central to healthcare reform debate
- 2010: ACA score estimating deficit reduction enables passage
- 2017: CBO estimates millions would lose coverage under ACA repeal
- 2017: Tax Cuts and Jobs Act scored to add $1.5 trillion to deficits
- 2020: CBO projects massive deficits from pandemic response
- 2024: Long-term projections show unsustainable debt trajectory