Congressional Budget Office

Congressional Budget Office (CBO) in the United States

Legislative Definition

This Congressional concept is provided by the United States Congress website as a a basic reference document: The Congressional Budget Office is a legislative branch agency that produces independent analyses of budgetary and economic issues to support the Congressional budget process.

Congressional Budget Office: the Organisation

The Congressional Budget Office produces independent analyses of budgetary and economic issues to support the congressional budget process.

The Congressional Budget Office was established by the Congressional Budget Act of 1974 (2 U.S.C. 601), which also created a procedure by which the Congress considers and acts on the annual Federal budget. This process enables the Congress to have an overview of the Federal budget and to make overall decisions on spending and taxation levels and on the deficit or surplus these levels generate.

Funding

The Budget and Accounting Act of 1921 gave the President overall responsibility for budget planning by requiring him to submit an annual, comprehensive budget proposal to the Congress; that act also expanded the President’s control over budgetary information by establishing the Bureau of the Budget (renamed the Office of Management and Budget in 1971). By contrast, the Congress lacked institutional capacity to establish and enforce budgetary priorities, coordinate actions on spending and revenue legislation, or develop budgetary and economic information independently of the executive branch.

Conflict between the legislative and executive branches reached a high point during the summer of 1974, when Members of Congress objected to President Richard Nixon’s threats to withhold Congressional appropriations for programs that were inconsistent with his policies (a process known as impoundment). The dispute led to the enactment of the Congressional Budget and Impoundment Control Act of 1974 in July of that year.

That act reasserted the Congress’s constitutional control over the budget by establishing new procedures for controlling impoundments and by instituting a formal process through which the Congress could develop, coordinate, and enforce its own budgetary priorities independently of the President. In addition, the law created new legislative institutions to implement the new Congressional budget process: the House and Senate Budget Committees to oversee execution of the budget process and the Congressional Budget Office to provide the Budget Committees and the Congress with objective, impartial information about budgetary and economic issues.

Activities

The Congressional Budget Office assists the congressional budget committees with drafting and enforcing the annual budget resolution, which serves as a blueprint for total levels of Government spending and revenues in a fiscal year. Once completed, the budget resolution guides the action of other congressional committees in drafting subsequent spending and revenue legislation within their jurisdiction.

To support this process, the CBO makes budgetary and economic projections, analyzes the proposals set forth in the President’s budget request, and details alternative spending and revenue options for lawmakers to consider. The Congressional Budget Office also provides cost estimates of bills approved by congressional committees and tracks the progress of spending and revenue legislation in a scorekeeping system. CBO cost estimates and scorekeeping help the budget committees determine whether the budgetary effects of individual proposals are consistent with the most recent spending and revenue targets.

Upon congressional request, the Congressional Budget Office also produces reports analyzing specific policy and program issues that are significant for the budget. In keeping with the Office’s nonpartisan role, its analyses do not include policy recommendations, and they routinely disclose their underlying assumptions and methods. This open and nonpartisan stance has been instrumental in preserving the credibility of the Office’s analyses.

Analysis of the President’s Budget

The Congressional Budget Office estimates the budgetary impact of the proposals in the President’s budget using its own economic forecast and assumptions (CBO “reestimates” the buddget). The Congressional Budget Office’s independent reestimate allows Congress to compare the administration’s spending and revenue proposals with the Congressional Budget Office’s baseline projections and other proposals using a consistent set of economic and technical assumptions.

Baseline Budget Projections and Economic Forecasts

Each year, the Congressional Budget Office issues reports on the budget and economic outlook that cover the 10-year period used in the congressional budget process. Those reports present and explain the Congressional Budget Office’s baseline budget projections and economic forecast, which are generally based on current law regarding Federal spending and revenues. The reports also describe the differences between the current projections and previous ones, compare the Congressional Budget Office’s economic forecast with those of other forecasters, and show the budgetary impact of some alternative policy assumptions.

Budgetary and Economic Policy Issues

The Congressional Budget Office also analyzes specific program and policy issues that affect the Federal budget and the economy. Generally, requests for these analyses come from the chair or ranking minority member of a committee or subcommittee or from the leadership of either party in the House or Senate. Congressional Budget Office periodically publishes a reference volume, often referred to as “Budget Options,” that includes dozens of policy options to reduce federal budget deficits.

The Congressional Budget Office also prepares analytic reports that examine specific federal programs, aspects of the tax code, and budgetary and economic challenges.

Cost Estimates for Bills

The Congressional Budget Office provides cost estimates of every bill to show how it would affect spending or revenues over the next 5 or 10 years, depending on the type of spending involved. The Congressional Budget Office also provides informal estimates at the committee level and other stages in the legislative process. Each year, Congressional Budget Office provides the Congress with several hundred formal cost estimates that analyze the likely effects of proposed legislation on the federal budget. The estimates are posted on Congressional Budget Office’s website in chronological order, and they are searchable by bill number, title, committee, and program area; each generally includes a description of the legislation, a statement about its estimated budgetary impact, and an explanation of the basis for that estimate.

Congressional Budget Office’s analysts also provide Congressional staff with thousands of informal estimates each year, generally to help staff draft proposals early in the legislative process or to indicate the budgetary impact of proposed amendments to pending legislation.

Cost estimates show how federal outlays and revenues would change if legislation was enacted and fully implemented as proposed—compared with what future spending and revenues would be under current law. Each estimate also includes a statement about the costs of any new federal mandates that the legislation would impose on state, local, or tribal governments or on the private sector.

When a law imposes a new requirement on an agency (such as preparing a plan or completing a study), complying with that new requirement will entail the use of resources, and the cost of carrying out that requirement is the amount of resources used. In general, in bills that are being considered, such requirements would apply to future fiscal years, for which appropriations have not yet been determined—so the requirements could, in fact, influence the amount of budget authority available to the agency in the future. Even if future funding was not affected, the agency would have to spend appropriated resources on that new activity instead of spending them to carry out other responsibilities. The resources used to carry out the new activity would be a measure of the “opportunity cost” of not carrying out other responsibilities.

Federal Mandates

As required by the Unfunded Mandates Reform Act of 1995, the Congressional Budget Office analyzes the costs that proposed legislation would impose on State, local, and tribal governments and on the private sector. The Congressional Budget Office produces mandate statements with its cost estimates for each committee-approved bill. In addition, the agency maintains an online search that includes information, starting in 2013, about mandates in legislation and in public laws.

Scorekeeping

The Congressional Budget Office provides the budget and appropriations committees with frequent tabulations of congressional action affecting spending and revenues. Those scorekeeping reports provide information on whether legislative actions are consistent with the spending and revenue levels set by the budget resolution.

Congressional Budget Office

In Legislation

Congressional Budget Office in the U.S. Code: Title 2, Chapter 17

The current, permanent, in-force federal laws regulating congressional budget office are compiled in the United States Code under Title 2, Chapter 17. It constitutes “prima facie” evidence of statutes relating to Congress (including congressional budget office) of the United States. The reader can further narrow his/her legal research of the general topic (in this case, Budget and Congress of the US Code, including congressional budget office) by chapter and subchapter.


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