[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
CBO OVERSIGHT: ORGANIZATIONAL AND OPERATIONAL STRUCTURE
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HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, D.C., JANUARY 30, 2018
__________
Serial No. 115-7
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Printed for the use of the Committee on the Budget
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COMMITTEE ON THE BUDGET
STEVE WOMACK, Arkansas, Chairman
TODD ROKITA, Indiana, Vice Chairman JOHN A. YARMUTH, Kentucky,
DIANE BLACK, Tennessee Ranking Minority Member
MARIO DIAZ-BALART, Florida BARBARA LEE, California
TOM COLE, Oklahoma MICHELLE LUJAN GRISHAM, New Mexico
TOM McCLINTOCK, California SETH MOULTON, Massachusetts
ROB WOODALL, Georgia HAKEEM S. JEFFRIES, New York
MARK SANFORD, South Carolina BRIAN HIGGINS, New York
DAVE BRAT, Virginia SUZAN K. DelBENE, Washington
GLENN GROTHMAN, Wisconsin DEBBIE WASSERMAN SCHULTZ, Florida
GARY J. PALMER, Alabama BRENDAN F. BOYLE, Pennsylvania
BRUCE WESTERMAN, Arkansas RO KHANNA, California
JAMES B. RENACCI, Ohio PRAMILA JAYAPAL, Washington,
BILL JOHNSON, Ohio Vice Ranking Minority Member
JASON SMITH, Missouri SALUD O. CARBAJAL, California
JASON LEWIS, Minnesota SHEILA JACKSON LEE, Texas
JACK BERGMAN, Michigan JANICE D. SCHAKOWSKY, Illinois
JOHN J. FASO, New York
LLOYD SMUCKER, Pennsylvania
MATT GAETZ, Florida
JODEY C. ARRINGTON, Texas
A. DREW FERGUSON IV, Georgia
Professional Staff
Dan Keniry, Staff Director
Ellen Balis, Minority Staff Director
CONTENTS
Page
Hearing held in Washington D.C., January 30, 2018................ 1
Hon. Steve Womack, Chairman, Committee on the Budget......... 1
Prepared statement of.................................... 3
Hon. John A. Yarmuth, Ranking Member, Committee on the Budget 5
Prepared statement of.................................... 7
Keith Hall, Ph.D., Director, Congressional Budget Office..... 9
Prepared statement of.................................... 13
Hon. Steve Womack, Chairman, Committee on the Budget,
questions submitted for the record......................... 65
Hon. Gary Palmer, Member, Committee on the Budget, questions
submitted for the record................................... 68
Director Hall's response to questions submitted for the
record..................................................... 69
CBO OVERSIGHT: ORGANIZATIONAL AND OPERATIONAL STRUCTURE
----------
TUESDAY, JANUARY 30, 2018
House of Representatives,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to call, at 10:00 a.m., in Room
1334, Longworth House Office Building, Hon. Steve Womack
[Chairman of the Committee] presiding.
Present: Representatives Womack, Cole, Woodall, Palmer,
Westerman, Renacci, Smith, Arrington, Black, Lewis, Smucker,
Ferguson, Johnson, Sanford, Gaetz, Rokita, Bergman, Brat,
Grothman, Yarmuth, Lee, Moulton, DelBene, Wasserman Schultz,
Jayapal, Carbajal, Schakowsky, Jeffries, Jackson Lee, Higgins,
and Lujan Grisham.
Chairman Womack. It is 10:00 and good morning, everyone.
The hearing will come to order. Welcome to the Committee on the
Budget's hearing on Oversight of the Congressional Budget
Office. This hearing will focus on CBO's organizational and
operational structure. It is the first of five hearings that
the Committee plans to hold regarding oversight of the
congressional budget.
The goal of today's hearing is to learn more about CBO,
which was created as part of the Congressional Budget and
Impoundment Act of 1974. For decades, this agency's primary
duty and function has been to assist Congress in the Federal
budget making process by providing cost estimates, economic
analysis, working papers, and other insightful publications.
Members of the House and Senate Budget Committees rely on
CBO as an objective, impartial resource when writing budget
resolutions. The agency also plays a key role in advising this
Committee as it enforces budget rules. Without question, there
are dozens of fine men and women employed by CBO, including
analysts, management, and support staff.
But more than 40 years since its founding, Congress has not
undertaken a comprehensive review of CBO's structure and
processes. In fact, CBO still operates under its original
permanent authorization. I say this not to raise alarm about
the future of CBO or question Congress' need for it. It is
simply a fact that serious oversight has not been exercised to
ensure the agency still has the tools it needs to be successful
in fulfilling its mandate. That being said, our intention is
the same with today's hearing as it will be with upcoming
hearings. We want to better understand how CBO carries out its
nonpartisan mission in service and support to Congress.
During today's hearing, we will take a closer look at the
organizational and operational structure of CBO, including its
staffing, assumptions, processes, and work products. To provide
an overview on the inner workings of this congressional support
agency and how it has evolved over the years, I am pleased to
welcome Dr. Keith Hall. Dr. Hall has served as director of CBO
since April of 2015, when he became the ninth director of the
agency.
Before we hear directly from Dr. Hall, I want to stress
again that this series of hearings is not designed to be
partisan or to invite cheap shots against the agency so vital
to the Congress' ability to budget independently. However,
there are legitimate questions about how CBO operates, and I am
hopeful that these hearings will shed light on how we can
improve its operations to provide Congress what it needs in the
21st Century.
To ensure CBO can effectively and efficiently carry out its
mission, I am pleased we are advancing a comprehensive review
through these oversight hearings, and I look forward to
productive conversations today with Dr. Hall.
Now, before I yield to my colleague, the Budget Committee's
Ranking Member, Mr. Yarmuth, I will remind everyone that this
Committee will strictly enforce the 5-minute rule. I am a
military guy, I like to run a tight ship, and I want to ensure
that our hearings are as productive as possible.
So, I will ask that your remarks and your questions are
delivered with enough time for our witness to respond. If they
are not, answers will be submitted for the record, and I will
hold my colleagues and myself to this rule. So, thanks in
advance.
I look forward to a productive hearing. And now I would
like to yield to the Ranking Member, Mr. Yarmuth, from the
great commonwealth of Kentucky for his remarks.
[The prepared statement of Chairman Womack follows:]
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Mr. Yarmuth. Thank you very much, Mr. Chairman, and
congratulations on your new role. I look forward to working
with you, and thank you for calling this hearing.
All of us on the Budget Committee take our oversight role
seriously, and I am very glad we will be discussing these
important issues today. I hope that we will be just as diligent
in our responsibilities to develop a budget proposal, and we
will hear testimony from the Federal agencies that we expect to
be significantly impacted by the President's budget. Director
Hall, thank you for your testimony in advance, and thank you
for your service.
Congress created the Congressional Budget Office to give us
an independent and reliable source of budgetary information and
expertise. For more than 40 years, CBO has fulfilled its
mission, providing impartial, high-quality analysis to inform
our decision making and improve our ability to protect the
power of the purse. While everyone here is aware that Director
Hall was appointed by congressional Republicans, expectations
have always been that the CBO director will carry out his or
her responsibilities without allegiance or deference to any
political ideology or party.
Same is true of the staff who are hired based on their
ability and qualifications, not political affiliation. As a
result, CBO produces its best analysis regardless of any
desired outcome for an administration, the majority in
Congress, or the congressional minority.
Despite that commitment to objectivity, however, CBO has
been the target of criticism, and I am sure we will hear some
of that today. You have actually heard some of it from me over
the years. Director Hall, I do not envy you. You have what I
would argue as one of the most thankless jobs in Washington,
and that is to be our objective referee. And coming from a
basketball State, I know how loved the referees are.
In an arena where passions run deep, your calls will often
be embraced by one side while questioned by the other. One day,
it is the Republicans complaining; the next, it is the
Democrats. That has been a reality in Congress since CBO's
inception. But there has been a dramatic shift recently in the
treatment of CBO, and as members of the Committee this should
be deeply troubling to us all. Questioning and fair criticism
of CBO have morphed into more caustic attacks. Many have
crossed the line, and much of this friction seems to center on
analysis of my Republican colleagues' efforts to repeal the
Affordable Care Act.
Look, I get it. I would not want to defend increasing
number of uninsured Americans by 20 million, or causing
premiums to skyrocket, particularly when there is no viable
plan for replacement. But I am not sure what you thought CBO's
analysis would show.
The Affordable Care Act expanded coverage through three
related strategies: requiring insurance companies to make
meaningful coverage available to all, requiring individuals to
get covered, and subsidizing premiums to make coverage
affordable. If you end the individual mandate, which we have
just done, people will go without coverage. If you end
subsidies that help families afford insurance, people lose
coverage.
If you take away consumer protections and once again allow
insurers to play games, premiums will increase for everyone who
is not in perfect health. People lose coverage. There is no way
around the fact that repealing the Affordable Care Act will
result in millions of American families losing health coverage,
and there is no way to defend that to the American people.
So, with nowhere to turn, many of my Republican colleagues
unfairly went after the CBO, inappropriately impugning the
integrity of the agency and the staff. I want to be clear. I
think Congress has every right, even a duty, to review CBO's
work and ask questions. And CBO needs to be forthcoming in
providing explanations.
Democrats have certainly raised questions about assumptions
or interpretations. But what we have not done is call into
question the integrity of the institution or individual staff
members. It is all too easy these days to take refuge in
information that tells us only what we want to hear. But that
does not lead to sound policy.
CBO does not exist to give us the information we want to
hear. Its job is to give us the information we need to make
informed, responsible decisions. It is one of the few
institutions in Washington that serves that role. Attacks on
the CBO are not just attacks on Director Hall and his staff;
they are attacks on our integrity as a deliberative body. They
reduce trust in government and undermine the standards on which
a functioning democracy depends.
Today, I hope to hear from you, Dr. Hall, about how you
ensure your work is objective and the steps you have taken to
increase transparency at CBO. I would like to learn more about
your expert staff, technical capabilities, and about any need
for additional funding or tools. You will likely hear from us
disagreements with some of your methodologies.
I think some will challenge you on the process and will
encourage you to look at alternative methods. I think that is
all fair game and I look forward to that discussion.
Thank you again, Dr. Hall, for your leadership at CBO and
for testifying today. I yield back.
[The prepared statement of Mr. Yarmuth follows:]
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Chairman Womack. Thank you, Mr. Yarmuth. In the interest of
time, if any other members have opening statements, I would ask
that they be submitted for the record.
Chairman Womack. I would like to now introduce and
recognize the director of the Congressional Budget Office, Dr.
Keith Hall. Dr. Hall, thank you for your time today, and let me
just say, from a personal standpoint, how enjoyable it was
yesterday to visit the fourth floor of the Ford Building and
the great staff work that is taking place over there with the
Congressional Budget Office under your leadership.
The Committee has received your written statement and it
will be made part of the formal hearing record. You have 10
minutes to deliver your oral remarks, and the floor is yours.
Thank you, sir.
STATEMENT OF KEITH HALL, DIRECTOR, CONGRESSIONAL BUDGET OFFICE
Mr. Hall. Chairman Womack, Ranking Member Yarmuth, and
members of the Committee, thank you for inviting me to testify
this morning about CBO's organization and operations. And thank
you for your support and guidance. We at CBO have long relied
on the Budget Committees to explain our role to others in
Congress. We also rely on you to provide constructive feedback
and guidance on Congress' priorities. The work on your part has
been key to our success over the years.
I would like to make 10 points in my remarks, and then I
look forward to talking with you about how we can serve
Congress better.
First, lawmakers created CBO to give the Congress a
stronger role in budget matters. CBO was established under the
Congressional Budget Act of 1974 to provide objective,
nonpartisan information that would support the budget process.
CBO's mission is to help the Congress make effective budget and
economic policy. In carrying out that mission, the agency
offers an alternative to the information provided by the Office
of Management and Budget in the Executive Branch.
Second, the Congress sets CBO's priorities. CBO follows
processes specified in the statute or developed by the agency
in concert with the Budget Committees and congressional
leadership. CBO's chief responsibility under the Budget Act is
to help the Budget Committees with matters under their
jurisdiction. The agency also supports other Committees,
particularly the Appropriations, Ways and Means, and Finance
Committees and leadership.
Among CBO's statutory requirements is producing certain
reports, the best known of which is the Annual Budget and
Economic Outlook. That report includes CBO's baseline budgetary
and economic projections. CBO is also required by law to
produce a formal cost estimate for nearly every bill that is
approved by a full Committee of either House or Senate. Those
cost estimates are only advisory. They can but do not have to
be used by it to enforce budgetary rules or targets. Moreover,
CBO does not enforce such budgetary rules, the Budget
Committees does.
Third, CBO produces a lot of work each year. For example,
last year the agency published 740 formal cost estimates,
provided technical assistance to congressional staff as they
developed literally thousands of legislative proposals and
amendments, and it has published many reports about the budget,
the economy, and related issues.
Nevertheless, because of limited resources, the number of
estimates and analyses that CBO can produce falls short of
congressional requests. Moreover, we must balance our
commitment to respond quickly to the Congress with our
professional responsibility to release estimates and analysis
only when their quality is high enough.
Fourth, in order to provide Congress with the high-quality
analysis that it needs, CBO staff has expertise in many areas.
Among CBO's roughly 235 people, the largest concentration of
expertise is in the area of health. Other areas of focus
include national security, labor, taxes, energy, and
macroeconomics.
Maintaining a broad array of expertise allows CBO to
respond to policymakers needs quickly. Analysts are organized
into a number of divisions but much of CBO's work requires work
from more than one division. CBO analysts always pursue high
quality and accuracy. They approach issues with a detailed
understanding of Federal programs and the tax code.
They carefully and critically read the relevant research
literature. They painstakingly analyze data collected by the
government, statistical agencies, and by private organizations.
And they regularly consult with a diverse range of outside
experts, including professors, analyst think tanks,
representatives of industry groups, other private sector
experts, and government employees of the Federal, State, and
local levels. Some of the consultations occur during periodic
meetings with CBO's panel of Economic Advisers and panel of
Health Advisers.
Fifth, CBO's analysis is objective, impartial, and
nonpartisan. We maintain our objectivity in a number of ways.
One is that we make no policy recommendations. Another is that
we hire people on the basis of their expertise--nearly 80
percent of CBO's employees have advanced degrees--and without
regard to political affiliation.
We carefully consider whether potential analysts can
perform objective analysis, regardless of their own personal
views, and we enforce strict rules to prevent employees from
having financial conflicts of interest and to limit their
political activities. We aim to reflect the full range of
experts' views as we present the elected consequences of
proposals being considered by the Congress. Our estimates are
inherently uncertain, but our goal is to produce estimates that
are in the middle of the distribution of possible outcomes.
Sixth, the models do not produce CBO estimates, CBO does.
CBO's estimates often require projections of how people and
institutions would respond to proposed changes in law. A
computer model is one tool that analysts may use to make such a
projection. There are various kinds of models, such as complex
simulation models, regression models, and calculations in the
spreadsheets. CBO's models are constantly being enriched and
improved.
Nonetheless, models often cannot show the full scope of the
effects of the legislative proposal. Analysts must routinely go
further, combining what could be learned from a model with
other information so the estimates correspond as closely as
possible to what the best available research suggests.
Seventh, CBO has a rigorous system of checks and balances.
All of CBO's cost estimates and reports are reviewed internally
for objectivity, analytical soundness, and clarity. That
process involves many people at various levels in the agency.
Analysts' consultations with outside experts help them hear all
perspectives on an issue, and we continually revisit our past
work and learn from the differences between our projections and
actual outcomes. We also compare our analysis to others work
and incorporate outside feedback into our projects.
Eighth, CBO prioritizes transparency. Since its inception,
the agency has used many approaches to be transparent. To begin
with, CBO's cost estimates and publications include
documentation of the basis of their findings.
In addition, we document the revisions through our budget
projections and estimates. We report on the accuracy of our
projections, including our projections about the economy,
spending, revenues, and health insurance subsidies. We publish
analysis of how sensitive our estimates are to key parameters
and we seek external review of our reports before they are
released and of the methods in which are products are based.
CBO allows promotes transparency by providing broad access.
When CBO completes a formal cost estimate, it is made
immediately available to all Members of Congress, their staff,
and the public on CBO's website. Furthermore, CBO's analysts
regularly explain their analysis to congressional staff. For
instance, earlier this month, in collaboration with the
Congressional Research Service, my colleagues gave a
presentation to 150 congressional staff members about how CBO
develops estimates of health insurance costs and coverage.
Unfortunately, the pace of congressional action sometimes
limits the time available for providing extensive explanation
of estimates. And because the overall demand for CBO's work is
high and our resources are constrained, we need to balance
requests to explain more about finished analysis with requests
for analysis. And with our other responsibilities, such as
regularly updating our baseline projections.
Ninth, CBO evolves as the needs of Congress evolve. Though
CBO has remained true to its original mission, we work with the
Congress in ways probably not envisioned when the agency was
first created. For example, as legislation has grown more
complex, we found ourselves spending more time providing
preliminary analysis and technical assistance during the
drafting stage. And we are being asked more often to prepare
cost estimates for bills that are heading for votes without
being marked up by Committees first.
To accommodate the Congress' needs and agendas, CBO shifts
staff and develops new analytical tools. For example, we
developed significant resources to strengthen our ability to
analyze healthcare issues, so we would be prepared for large-
scale legislative proposals on that front. Similarly, we
improved our capability to study how legislative proposals
would affect the economy and thus the budget as the Congress'
desire for dynamic analysis intensifies.
Tenth, CBO's always looking for ways to do things better.
For example, we are reviewing and updating every aspect of our
simulation model of health insurance coverage which forms the
backbone of our budget projections related to Federal
healthcare spending for people younger than 65.
In addition, we will further improve our capability to
perform dynamic analysis, as well as our ability to analyze how
changes in Federal regulations affect the economy and the
budget.
Responsiveness and transparency are top priorities of mine
and CBO has plans to bolster them further. The agency will make
greater use of team approaches to handling surges in demand for
analysis of particular issues. We will increase the public
documentation of our computer models. We will also do more to
explain how analysts employ models while producing estimates.
The extent to which CBO can accomplish these objectives
will depend partly on whether we receive the funding we
requested for them. As always, we look for ways to serve you
better. I welcome your suggestions.
[The prepared statement of Keith Hall follows:]
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Chairman Womack. Thank you, Dr. Hall, for your opening
remarks. I look forward to the questions. The chair expects to
be here for the entire duration of the hearing and as such I am
going to defer my time until later in the sequence of Q&A.
So, I will be yielding first to our members who I know are
on a tough timeclock today because of the number of things that
have been crammed into one day and the fact that the Republican
retreat begins tomorrow. So, I will withhold my questions at
the present moment and use those as we clean up the hearing at
the end. Now I yield to my friend, the ranking member from
Kentucky, Mr. Yarmuth.
Mr. Yarmuth. Thank you, Mr. Chairman. I intend to do the
same thing. I will sit to the bitter end with you. Thanks.
Chairman Womack. For the first round of questions, I go to
my friend from Oklahoma, Mr. Cole.
Mr. Cole. Thank you, Mr. Chairman. I want to begin by
thanking you for this hearing. I think this is something I know
my good friend, the former Chairman, was planning to do as
well.
But it is really important for us to do and I want to
begin, Dr. Hall, by thanking you and your staff. I have dealt
with a lot of different CBO directors since I have been on this
Committee, and with the staff, and it has been unfailingly
professional and courteous no matter who was at the head of it.
So, I think you head a very fine agency.
I do not always agree, but I have never had any difficulty
getting the explanations and the judgments, and that is fair
enough. I do want to ask a couple of things, and my good friend
from Kentucky talked about the Affordable Care analysis, and
there is one area that I want to ask about. And it is sort of
down in the weeds, and then I want to build on that and ask you
how you come to assumptions, and models, and what kind of input
if any Congress has as you build your predictions on a series
of assumptions and models.
As I recall--and I think I have mentioned this to you
before when you were kind enough to come by office--in the
model that was used there was an assumption that non-Medicaid
expansion States would all become Medicaid expansion States.
And therefore, people would get insurance; and therefore, they
would lose insurance later on down.
I quibble with that just because--and I am not basing this
on a policy argument either way--I mean, I am not arguing for
or against Affordable Care Act. I can just tell you,
politically, in my State, that is just not going to happen.
There was no way it was ever going to become a Medicaid
expansion State. The population was heavily opposed. Just
politically, it was not feasible. And frankly, the State did
not have the money even for a 10 percent match at the time.
So there are, literally, in that model of how many people
would lose insurance, a bunch of people that do not have it now
in the State of Oklahoma, would not get it because you would
not have the Medicaid expansion, so therefore could not lose
it.
So, walk me through how you make those kind of assumptions,
because I think when you make assumptions like that sometimes
it would be helpful to--and maybe you do this, just talk to the
Committee itself, both sides of the aisle, and say, ``Okay,
this is what we are doing. Do you have a problem with this? Or
do you think there is some fault in this or something else we
should be thinking about?'' We should not be making the final
decisions, you should, but just a way in which you got more
input back and forth between members and the institution which
is here to serve them.
Mr. Hall. Well, thank you for that question. That was
actually a tricky part of the ACA for us because initially all
States were required to expand. So, our initial estimates had
50 States expanding. Then when that was overturned, we, of
course, did not anticipate that. So, we are now into an area we
now have to sort of predict how many States will voluntarily
expand and will not expand. Now, we have never been so extreme
that we think all the States are going to expand. I think right
now we anticipate that enough States right now have expanded
that is covering about 50 percent of the population that could
potentially be eligible. We see it going up to about 70
percent. So it is not so extreme where we go from 100, from 50
percent to all the States will take it. So it is much lower
than that.
And that is a tricky thing because what we have done is we
have looked at States, looked at their past behavior, looked at
a number of things, how they have taken Federal money in the
past. And sort of put them into categories. Buckets, if you
will. And then from those buckets we assign some probability
with each bucket that they will expand at some point over the
next 10 years.
Although we put States in the buckets, State A could
actually be in a different bucket in reality. And State B could
be moved back to that other bucket in reality. So, there is
uncertainty in that. And we try not to focus too much on the
individual States. Once we have States categorized, we then
calculate the population in those three buckets and put some
probabilities on that.
Mr. Cole. Well, I am not going to ask an additional
question. My time is limited here. But please tell us who made
these decisions and is there any political dimension? I mean,
literally, I think in a lot of these States the members on both
sides of the aisle give you a pretty good opinion. Again,
reserving for you to make the final decision; it is your
estimate after all.
Mr. Hall. Well, first of all, we spend some time deciding
what are the different things that could influence whether a
State expands or not. We had our large number of sort of
dimensions under which we did that. And used that to sort of, I
say, sort of put them in the buckets. Now, we work that up with
consultation with folks. I had a briefing talking about how
that was done, that sort of thing. I do not know exactly who we
wound up talking with. We probably talked with some State
insurance companies----
Mr. Cole. I do not want to be the first guy the Chairman
chastises for running over time.
Mr. Hall. Okay.
Mr. Cole. So, thank you, Mr. Chairman. Thank you and we
will visit about this again but thank you very much.
Chairman Womack. Ms. Lee of California.
Ms. Lee. Thank you very much. Thank you, Mr. Chairman, and
our ranking member for this hearing. And I also thank you,
Director Hall, for being with us today. Today's hearing gives
us an opportunity to really discuss how important CBO's
impartial analysis is to Congress and to the American people.
And I would like to reiterate the fact that Congress created
CBO, so we could have clear guidance on budgetary matters to
inform our work here and for the public, and it was not created
so Republicans or Democrats could smear the organization's
impartial and nonpartisan analysis just because we do not like
CBO's scores.
Last year, Director Hall and our ranking member mentioned
the ACA. It is a fact the Republicans spent weeks attacking
your organization's score of their, quite frankly, terrible ACA
repeal bill. They found it ridiculous when Speaker Ryan jammed
through an updated repeal bill without a score in May. And that
upon your analysis, though, it would reduce healthcare coverage
by 32 million while increasing premiums for older Americans by
as much as 850 percent.
So, can you just explain how your organization comes up
with just the basic analysis of how many people will go
uninsured? How you came up with that, and what else do you need
from us in order to ensure that these attacks no longer happen?
What is it you think we could do to make sure that your job
could be accomplished without the partisan attacks?
Mr. Hall. Well, I will start with the last question first
briefly, it is things like the oversight hearings are really
helpful to us. I would love the chance to talk about things,
and one that I wish were able to do more is come to visit
individual's offices and make little presentations on things. I
have never turned that down, but I think in hindsight I would
have pushed into offices more when somebody has an issue to
come in and talk about where we got the numbers and what we
were thinking.
On the ACA repeal, there are various versions of that. But
there were some things that were kind of clear, right? There
were aspects of it that were essentially reducing subsidies for
people; things that were to reduce the expansion of Medicaid
that would eliminate the mandate.
So, those are things that are going to work to lower the
coverage relative to our baseline. Even just saying those
things without modeling it, and I think you are talking about a
decline of probably tens of millions of people from coverage
without the modeling. And with our modeling, we spent a lot of
time doing this very, very carefully, very different aspects of
it, and our best estimate, I think, on the final bill was
something like 23 million-person decline in coverage overall.
But it involved actually a very long process. There were a
lot of steps to it. We used the famous healthcare simulation
model. That was just a piece of it. We had to create several
other models. We had to use models looking at the interaction
with Medicare. We had to use a tax model-the Joint Committee on
Taxation.
So, it was a very complicated process. I cannot do it
justice here, but we did make a presentation that I mentioned
at the Congressional Research Service going through exactly
what we did to get to that estimate. I can make those notes
available to you, and we can think about doing another
presentation if folks want to hear it.
Ms. Lee. So, do you think that it is the process that
appeared flawed by those who attacked this? Or do you think it
was the outcome of your analysis that was not liked?
Mr. Hall. Yeah, I cannot guess. I think the numbers were
very large for folks. And personally, I am not sure they should
have expected anything but pretty large numbers. But we
certainly can try to do better in explaining what we have done.
Ms. Lee. Okay. And also--I have a few more minutes--I just
want to ask you about the Trump administration and their
criticism of the CBO. I remember they had indicated their
budget would kick off with 3 percent growth and end the deficit
within 10 years, and CBO found that it would do no such thing.
I think it was boosting growth instead, I think you came up
with 1.8 percent or 1.9 percent.
So, what is it? Again, is it the process or is it the
outcome of your analysis that the administration also believes
was not accurate?
Mr. Hall. Well, I do not know that much about how they did
their economic forecasting. They have not provided a lot of
information on it. But certainly, this is part of the value, I
think, of CBO. We did our own independent analysis. We did our
own forecast on the economy. We looked at a lot of data. We are
very, very careful about that.
And when we publish our budget outlook, we have a lot of
detail in there about how we get to our economic forecast and
how that economic forecast affects our budget forecast. So, we
are very transparent about that.
Ms. Lee. Thank you, Mr. Hall. Thank you.
Chairman Womack. Thank you, Ms. Lee. The gentleman from
Georgia, Mr. Woodall.
Mr. Woodall. Thank you very much, Mr. Chairman, and thank
you for holding the hearing today. You have got your work cut
out for you, Mr. Chairman. I am reading from today's Washington
Post. They say, ``If you are already bored with State of the
Union coverage, tune in this morning for what we are dubbing
Republicans versus the Congressional Budget Office.''
It is hard to see how we get from where we are to where we
want to be. and I thought my friend from California accurately
expressed her frustration about partisan attacks on the Budget
Office and then went in to use the CBO data to make partisan
attacks on bills. And I think that is a challenge.
When I go back and look at the '74 Act--I think you said in
your opening statement, Director--the CBO was created to give
Congress a stronger role. I think what was actually true is the
Budget Committee was created to give Congress a stronger role,
and the CBO was corrected to advise and counsel the Budget
Committee. In fact, under the original legislation, you were to
be the staff of the Budget Committee--joint shared staff
between the House Budget Committee and the Senate Budget
Committee. Is that not the original incarnation of the CBO?
Mr. Hall. Yeah, I am not sure about what the original
intent was, but certainly that characterization is right. That
we are here only to assist the Budget Committees and the rest
of the Congress.
Mr. Woodall. My reading of history tells me the Senate
found it beneath them to share a staff with the House Budget
Committee. And so, once they insisted on having their own
staff, we insisted on having our own staff, and you were left
to advise us both there on the side. You talk about hiring
people irrespective of political outlook, and I think that is
very challenging to do.
My experience with CBO directors is I tend to learn more
about their politics after they are gone than while they are
there. We see a lot in hindsight. But I look at--I am reading
from a CBO cost estimate of the American Healthcare Act--and
the top line says this: ``CBO and JCT estimate that enacting
the enacting the American Healthcare Act would reduce Federal
deficits by $119 billion over the coming decade and increase
the number of people who are uninsured by 23 million in 2026
relative to current law.''
Mr. Hall. Yes.
Mr. Woodall. What you could have said is that we are going
to increase healthcare freedom for 12 million people between
now and 2026 relative to current law. You could have said we
are going to expand the choices that the American people have
and repeal the mandates in their life. Every single sentence
has a political flavor to it, you rightly describe your role as
scorekeeper.
But because words have meaning, every single line takes on
a political connotation. How do we scrub to prevent that? And
specifically, for example, did folks talk about describing the
American Healthcare Act in healthcare freedom terms instead of
people lose insurance because they decided it is not right for
them and so they leave it on their own volition?
Mr. Hall. Of course, I respectfully disagree that our
language at all was political. And one of the things that we
tried very, very hard to do was to be very factual about this--
--
Mr. Woodall. Well, let me interrupt you, because my time is
limited. Because that is critically important. The top line
says, ``Americans lose something.'' The fact is Americans have
the right to choose something new. They lose nothing. They make
new choices.
And if you do not recognize that line as being political,
then we have a much harder challenge. If you recognize that
just by nature of words having meaning, they will be political.
Someone will take those and use them politically. Then it may
not have been your intent, but at least we recognize the
outcome of that.
Mr. Hall. Like I said, we do not use language like lose. We
talked about how the number of people with coverage would
change over time relative to the baseline. I think part of what
happens is we have no control over how the press reads our
work, and interprets it, and translates it. And I think
sometimes some of the language that people use in describing it
is not really our language and it gets attributed to us.
We try very hard. This was a document written for members
of Congress. We have lots of detail in there about where that
change in coverage----
Mr. Woodall. Well, yeah. Those are the winds of change
blowing here, Director. But you make a very interesting
observation. CBO was, in fact, created to advise Congress.
And I would expect that you would probably get more
attention from outside of Congress than you do from inside of
Congress these days. And though we will not have time to do it
in this hearing, I look forward to having that conversation. I
think Congress could benefit more from your work if it was less
the object of a political conversation and more policy.
Mr. Hall. Right. Well, let me just say one thing about
that, that it was a conscious decision. When we put out these
estimates, while the debate was going on, I got so many offers.
We got so many offers to go appear on TV and talk about things.
We deliberately chose to let our report speak for itself.
That would be like interviewing the referee at halftime. Right?
We made our estimate, we did our best to describe it, and then
it was up to you all to deal with the politics and the
decisions about it. And again that, to me, is very consistent
with the idea that we are just providing advice. We are not
trying to get attention at all. Except by you because we want
to help you make good decisions.
Chairman Womack. Mr. Moulton from Massachusetts.
Mr. Moulton. Thank you, Mr. Chairman. Thank you, Director,
for being here. I appreciate your presence and your work. I am
reminded of when I lost my dog, whom I loved very much, and
people expressed their condolences. And I said, ``Oh no, no. I
just have the freedom from my dog.'' And that is how I looked
at it. Can you tell me what are some of the transparency
initiatives that you have taken to help the public better
understand your work? I mean, you have admitted that this is a
place where you could do better to help Congress and the public
understand your analysis. So, what are some of the things you
are working on?
Mr. Hall. Sure. Well, we always relied upon trying to write
up our estimate as clearly as we possibly can with as much
detail as we possibly can. And we have always counted on being
able to come in and talk to members if they have questions and
that sort of thing.
We are hearing concern over transparency, and we are trying
very hard to increase transparency. And we are doing it really
in a number of ways, where there has been a lot of talk about
the health insurance coverage model, where we are completely
revising that. We are going to be making presentations about
different aspects of that publicly, so we get feedback on it.
And we are going to provide documentation and we are going
to provide some computer code. That is a big lift. We have been
planning on doing this since I came on board 3 years ago. We
have been too busy doing healthcare estimates. We had hoped to
be done literally a year ago. We have been too busy doing
healthcare estimates and having to do that with the old model
to take the time to sort of update things and try to be more
transparent. That would help, I presume, a bit for people to
understand where we get our healthcare estimates.
Although again, we have also made some presentations. We
are trying to document our processes. We are increasing that.
We are trying to document our models more. We are doing things
like our long-term budget model. We are redoing parts of that
and we are going to make that publicly available----
Mr. Moulton. Director, what kind of formal review does
CBO's work undergo? Do you consult outside experts? How do you
decide whom to consult? What are some of the ways that you
check your work?
Mr. Hall. Well, part of what we do is we train people very
carefully that they need to go out and get information from
various different sources with different points of view, and
people who have some understanding not only of how the
legislation would work but how it would be implemented. So, we
do that very carefully with training. And then once we get that
down, we try very carefully to rely on all the data we found
and have a general opinion on how things are going to work.
We have a very careful review process. Everything we
produce is reviewed at several different levels. For big
things, we have a huge number of people involved. For the
healthcare estimates, we probably had two dozen people
involved. So, a lot of it is getting a lot of viewpoints inside
CBO but also trying to get a variety of viewpoints outside CBO.
Mr. Moulton. Are there analytical tools that you lack that
you would like to have? Are there places where you feel like
you could improve the robustness of your analysis if you had
access to more materials or more resources?
Mr. Hall. Certainly, with the analytical tools, the answer
is yes. Always. Because we have so many models, we are always
trying to update them. They always need to be adapted. To give
you some idea of the range of work that we have got, we did a
count of our models. And not just the models that exist, but
the models that we recurring use over, and over, and over
again. We got up to about 215 different models, and we are
constantly updating those things.
So, this gives you an idea of the challenge that we have,
right? In sort of keeping these things up to date. We have a
lot of people doing that. And it is also a challenge for the
transparency part because it takes time to make these things
publicly available.
Mr. Moulton. Director, my final question is about a
relatively new challenge you face, which is all this outside
criticism of CBO. As anyone who has led a team knows, morale is
important, and morale affects the quality of work. Has your
morale, the morale of your team, suffered as a result of these
attacks? And how do you see that affecting your work going
forward?
Mr. Hall. I think our morale has held up pretty well
because, I think we have people who are professionals. And they
expect that people criticizing the analysis or disagreeing with
the analysis, that is fair game. We do have some trouble when
people call us biased or something like that, which is going
just too far because we are actually trying very, very hard to
do our work carefully.
I think for the most part people understand. And we have
had quite a few people come to our defense. People who actually
know CBO's work and use CBO's carefully have really come to our
defense in some of these criticisms.
Mr. Moulton. Thank you.
Mr. Hall. Some have been very helpful.
Mr. Moulton. Thank you, Mr. Chairman.
Chairman Womack. The gentleman from Alabama, Mr. Gary
Palmer.
Mr. Palmer. Thank you, Mr. Chairman. I want to get away
from the partisan jabs and get to issues that I think all of us
ought to take very seriously, and one of them is your report:
2017 Long-Term Budget Outlook. And you pointed out that--this
was about, obviously, a year ago--that the GDP was currently
about 77 percent. Is that where we are?
Mr. Hall. Yes.
Mr. Palmer. And you also pointed out that in 30 years that
the GDP will be 150 percent.
Mr. Hall. Yes.
Mr. Palmer. And for anybody who is still awake at this
point watching this, I just want to point out that that means
our debt will be approximately half again bigger than our
entire economy. Is that correct?
Mr. Hall. That is right.
Mr. Palmer. Is that a serious problem?
Mr. Hall. It is a serious problem. It is a serious issue
that it is not getting better.
Mr. Palmer. Would you suggest that this Committee might
ought to be taking a very serious look at how we scale that
back instead of talking about what we did last year or year
before last?
Mr. Hall. Well, I want to be careful about making
recommendations to the Committee. But we prepared----
Mr. Palmer. Well, you put out the report.
Mr. Hall.--to support that work.
Mr. Palmer. You put out the report and it is a serious
report. And I assume you are planning to release another long-
term budget outlook in a month or two? Is that--would that be
fair?
Mr. Hall. That is fair.
Mr. Palmer. Okay. You are obviously looking at the numbers
now and I do not know if you can speak to that. But roughly
what would we need to do in the next budget to get us on track
to, say, get us back to the historic 50-year average for debt-
to-GDP, which I think is about 40 percent? Is that correct?
Mr. Hall. That is right. We actually have some of those
scenarios in our budget outlook that will be coming up. We
actually do have some scenarios about sort of what it would
take if you start now, and that sort of thing. I do not know
those off the top of my head, but we----
Mr. Palmer. About $680 to $700 billion, I think, is it not?
Mr. Hall. Okay. Okay, you read the last one. That sounds
right.
Mr. Palmer. Yeah. So, my point, Mr. Chairman, is that since
you are now the Chairman of the Budget Committee, we have some
serious work to do if we want to get our fiscal house in order.
And it is going to require that we make some tough decisions in
regard to budget, particularly mandatory spending. And that
would include healthcare. Also, I want to ask you, in your last
report that we were looking at, I think you were projecting
economic growth at 1.9 percent? Is that correct?
Mr. Hall. Well, yeah, the long-term economic growth would
settle in at 1.9----
Mr. Palmer. What is long-term, 10 years? Or are you saying
averaging 1.9 over 10?
Mr. Hall. That is right. Before 10 years, 7 or 8 years, and
then going forward it would remain at about that level.
Mr. Palmer. So, are you optimistic or pessimistic that that
number might improve?
Mr. Hall. Well, I think part of what I would like to do is
point out the sort of things that would be needed for that to
improve.
Mr. Palmer. What would that be?
Mr. Hall. Well, it would be supply side things. It would be
the capability of the economy to increase production past its
sort of potential. So, the biggest single problem we have is a
slowly growing labor supply because of the aging population.
Mr. Palmer. Well, I was going to try to get to that. I
appreciate you preemptively bringing that up because I think
that is, again, part of the work that we have got to do in the
Budget Committee in regard to making sure that the able-bodied
are in the workforce. And that we then take a look at what we
might need to do in regard to bringing in other people to work.
I have only got a little over 1 minute left, and I want to
change directions just a little bit here and ask you: I
appreciate the work you are doing towards trying to enhance a
culture of transparency at the CBO. In addition to those
efforts that you have listed there, has there been any
discussion of including some sensitivity analysis with
estimates so that members can see how small changes and
assumptions could drastically impact the estimate?
Mr. Hall. Yeah, I am a fan of that, and we do that
certainly in the reports where we have more time, like the
outlook. That can be really hard to do in cost estimates where
there is a real time constraint.
And then sometimes there are these so called ``unknown
unknowns'' where there is some statistical uncertainty. But
also, there is some just uncertainty. We just do not know what
it is.
Mr. Palmer. Is this because of limited bandwidth or
insufficient tools? I mean, limited bandwidth for the staff? I
mean, what do you need? Because if we are going to start
talking about how we resolve the longer-term issues, 30 years
down the road, these minor changes that could help make big
differences will matter a lot to this Committee.
Mr. Hall. Yeah, sure. To be honest, that is one of the
reasons why we have a fair number of technical economists who
are there to sort of help us work through some of this
methodology and develop some ways to be more transparent on
things like the uncertainty.
Mr. Palmer. I thank you, Mr. Chairman, and I yield back.
Chairman Womack. Thank you, Mr. Palmer. Ms. DelBene from
Washington.
Ms. DelBene. Thank you, Mr. Chair, and thank you, Director
Hall, for being here with us and for your time. Before coming
to Congress, I was a businesswoman and I also ran the
Washington State Department of Revenue, and I know that an
organization cannot move forward if they only have limited
visibility. A business would not stay in business if it only
planned 30 or 60 days at a time.
Yet here we are, 4 months into the fiscal year and have
passed four continuing resolutions. Would you agree that this
very short-term approach to budgeting undermines the budget
process? And introduces unnecessary uncertainty into government
programs and agencies?
Mr. Hall. Well, I appreciate the question, but I want to
try to back off on offering advice to the Budget Committee
beyond sort of the technical work that we do. It is part of how
we establish our objectivity.
Ms. DelBene. Well, does uncertainty make it harder for you
to provide long-term budget projections?
Mr. Hall. Sure. I mean, it poses challenges I spent some
time as the head of a Federal agency, the Bureau of Labor
Statistics, and the budget challenges there from not knowing
the budget was not trivial.
Ms. DelBene. And what about your own ability to plan for
this year and hire staff?
Mr. Hall. That is an issue for us. We had some extra
expenses last year, and right now our continuing resolution is
not what it needs to be. And if we were to continue with this
continuing resolution for the rest of the year, we would
actually have to cut back on staff, and in training, and some
things like that, and it would make it very difficult for us.
Ms. DelBene. Thank you. Also, my district is a district on
the northern border in Washington State. It is a very
politically diverse district. Yet everyone seems to agree that
we need to pass comprehensive immigration reform. We have
farmers, the business community, the faith-based community,
across the law enforcement, across the board want to see
comprehensive immigration reform. And in your prepared
testimony, you mentioned that the CBO will publish new reports
in 2018 describing your processes for producing economic
forecast for major legislation affecting health insurance. I
wonder, do you plan to do the same for any major legalization
affecting immigration?
Mr. Hall. If we have specific proposals, we will do our
thing and estimate the likely impact.
Ms. DelBene. So, in 2013 CBO released a report on the
economic impact of comprehensive immigration reform. That
report said that ``the cost estimate shows that changes in
direct spending and revenues under the legislation would
decrease the Federal budget deficits by $197 billion over the
2014 to 2023 period, and by roughly $700 billion over the 2024
to 2033 period.''
Folks are talking about debt and deficit, and so, as there
are several proposals for immigration reform in both houses of
Congress at the moment, are there any key takeaways from your
2013 analysis and modeling that will be helpful for members to
know as we work to craft a new immigration bill?
Mr. Hall. The main takeaway is fine. I do not recall too
many specifics at this point. But, obviously, immigration
reform really depends upon a lot of the specifics. That is one
of the things that we are very, very careful about, is that
sometimes the details matter when you do not think they matter.
That makes a big difference. And we rely on research
literature, what the most current research literature is that
talks about the effect of immigration on the labor force and
some things like that.
Ms. DelBene. Well clearly, there is a lot of work that went
in from the CBO in the past on this issue, and it has shown
that it would decrease the budget deficits. And obviously is an
important part of the conversation when we are looking at a tax
bill that just passed that would increase our debt and deficit
by over $1.5 trillion. So, I think this is an important
conversation.
I want to emphasize that the Congressional Budget Office is
a nonpartisan office and it is tasked with objectively looking
at the facts. And so, I want to thank you for your work. And I
yield back.
Chairman Womack. Thank you, Ms. DelBene. Mr. Renacci from
Ohio, the witness is yours.
Mr. Renacci. Thank you, Mr. Chairman, and I want to
congratulate you on your selection. I look forward to working
with you in 2018. I appreciate this hearing. I hope we can also
go back and look at the or Budget Committee reform that we did
a few years back and look at some of those issues as well over
the coming year.
I want to thank you, Director Hall, for being here. I
appreciate you coming to my office, I know a few months ago,
when talking about how you can be more transparent.
We talked about my career. I mean, I spent almost three
decades in the business world. I had 3,000 employees at one
point in time. I had to wake up every morning making decisions
on how I could make sure that their livelihoods were
maintained. And I relied on people to help me do that, just
like we rely on your organization. And I think that is
important.
But what you and I talked about in our meeting was the
biggest concern I have is that in the business world you make a
decision, and then you look back and see where you failed or
where you did not fail. And my concern, as it has always been
with CBO, is that you do a lot of good work and you put out a
plan, but then we never go back and look at where we made a
mistake and how we can correct it.
Because it is easy to say, ``This is what is going to
happen.'' And I realize it is difficult for you because, as you
make those decisions, you are moving on to another issue and
another issue. But at the same time, I think it would be best
for members, especially in the Budget Committee, to realize
that some of your decisions are right, some of your decisions
are wrong, where you made your mistakes and where you made your
failures, where you were right, and so that we can learn
better.
So, I am hoping that at some point in time we can talk a
little bit about how that transparency can be better--can be
better informed for us. Because I still do not know how you do
that and--every time we do have mistakes--can you kind of talk
about how you are going to change that transparency?
Mr. Hall. Sure.
Mr. Renacci. Why do we not talk a little bit about that?
Mr. Hall. One of the things that we have actually done this
past year, we actually produced a report that looked at how we
have estimated outlays, how accurate we have been after
outlays.
So, for example, between 1984 and now, our estimates of
outlays were off by about 1.7 percent on average within the
first budget year. And over 6 years, we are off by about 3
percentage points. So, this gives you an idea when we make an
estimate, on average, that is how far we are off, up or down.
It is hard to say whether that is good or bad. We would like it
to be zero. But that is a pretty good comprehensive look.
It gets hard when you look at individual pieces of
legislation because they wind up being thrown into a bigger
budget category and you cannot always follow them. But we are
doing that sort of thing. We did a pretty careful report on how
we did on the budget estimates on the ACA. So, that is
something I actually look forward to because there has been a
lot of focus on that. So, we went back and did our, I think
nice, objective look about how we did and how others did.
Mr. Renacci. Sure. The problem is 1 or 2 percent on a $3.5
trillion budget is a big number in many cases. So, I look at
those dollars as well. I know that the Social Security Trustee
Report and the CBO differs on Social Security Trust Fund and
the shortfall. Can you tell me why there is differences there
and how you are reconciling that out?
Because as a member of the Ways and Means Committee, I am
very concerned about Social Security. I am very concerned about
the shortfalls and the outlays. But we also have two reports
that differ.
Mr. Hall. Well, actually we had a hearing a little while
back that was really helpful for us to understand how Social
Security comes up with its numbers and we talked to them about
how came up with our numbers. And I am hoping that after we
produce the next long-run budget outlook that we go back to
compare ourselves a little bit to the Social Security folks.
The biggest difference starts with their economic assumptions,
which are sort of basic.
We do have some differences there. Some differences in
labor force. But then, there are some other things like
mortality rates and that sort of thing where we have some
differences. But we did write up a report that has some of the
details of where we differ, and I would like to update that.
Mr. Renacci. So, you would admit though--because I know I
talked to you a little bit about your predecessor. I had the
CARERS Act out there, which I had outsiders do kind of a
preparation of the cost differences and CBO scores are
different than my outsider scored it.
And when I met with CBO, I really did this to get a
learning model for myself. And it was simple math. CBO was
saying, ``Well, this is what we believe,'' and my outsiders
were saying, ``This is what I believe.'' You admit that we
could have those differences on anything? On any issue, right?
So that is why the transparency is so important.
Mr. Hall. Sure.
Mr. Renacci. I appreciate it. Again, I yield back and thank
you.
Chairman Womack. Thank you, Mr. Renacci. Next, to Florida,
Ms. Wasserman Schultz.
Ms. Wasserman Schultz. Thank you, Mr. Chairman, and
congratulations on your ascendency. It is good to see a fellow
appropriator leading this Committee. And Director Hall, it is
good to be with you.
For a little historical context for some of my colleagues,
you may know that I was the chair and ranking member of the
Legislative Branch Appropriations SubCommittee for 10 years.
In that role, I was responsible in part for the oversight
of CBO's budget. And we spent a lot of time working with your
predecessors to make sure that CBO had exactly what you said
you needed, in terms of expertise, in terms of the staffing
levels, so that you could really do an objective and expert
analysis of all the workload that you have. And that is
something that Congress has endeavored to continue to make sure
you have because if you hamstrung by not having enough staff,
then there is a concern.
And I have had CBO analyses I have agreed with, some that I
disagreed with; in fact, I remember when you came before us for
the first time. And you were appointed by Speaker Ryan, I
believe, and you worked in the George W. Bush administration,
and you subscribed to the idea of the practice of dynamic
scoring, which is an analytic process with which I disagree.
Yet, I do not malign you and your staff's analyses, even when I
disagree with them.
Facts can be annoying. Especially when they are presented
to you and they do not line up with your beliefs. But we are in
a world of alternative facts. And so, to me, it is absolutely
essential that we have CBO's objective analysis in the majority
and the minority so that we can at least have some objective
facts.
With that predicate, I want to just ask you. Under your
leadership, do you feel like--given who you worked for
previously and who you were appointed by--that CBO or that
members of Congress should read bias into your analysis that
are generated by unduly favorable projections, or unfavorable
projections, of the likely effects of Republican policy
proposals?
Mr. Hall. I have about 25 years of managing policy, policy
analysis, and policy research. I have worked with a lot of very
great technical people who are professional and do their work
objectively. CBO is the top of that. They are just outstanding
people. They are very, very professional. We have always done a
really good job of hiring very capable, professional people.
And the culture there is very strong to try to do objective
work and get all sort of viewpoints and try very hard to be
objective about things.
We have value because we are credible. And that is why, I
will tell you, I have been particularly bothered about the
efforts to sort of attack our credibility because we spend so
much time trying to be objective and impartial and do our work
middle of the road and always have. I think, again, with the
people who are really familiar with us, I think, we have a very
strong reputation for doing nonpartisan work.
Ms. Wasserman Schultz. Thank you. And please send our best
wishes and support and thanks to the folks that work for CBO.
You work excruciatingly long hours. I have had many
conversations with two or three directors before you, and your
work is really second to none, whether I agree with it or not.
And I will again stress that you are currently using a practice
of dynamic scoring with which I and most Democrats do not
agree. And yet we still have faith in your analysis.
Before I run out of time, I just want to ask a question
that is more granular. In the 2014 long-term budget outlook CBO
projected that with the continuation of current policy, the
life expectancy gap between those with high incomes and those
with low incomes will continue to grow. Director Hall, is there
any reason for us to believe that this projection was erroneous
and had it been improved, CBO organizational and operational
structure would have resulted in a more, which is the subject
of today's hearing, would have resulted in a more accurate
projection?
Mr. Hall. Well, that gap in the life expectancy is
something we have certainly seen in the literature and in the
data. And we are actively researching that a bit to see that we
get it right in our forecast because that is an important part
of our long-term forecast.
Ms. Wasserman Schultz. I yield back the balance of my time.
Chairman Womack. Thank you. Mr. Arrington from Texas.
Mr. Arrington. Thank you, Mr. Chairman. And I look forward
to serving under your leadership and congratulations on your
appointment. And Dr. Hall, thank you for your service to this
Committee and to our country.
The topic, as I understood it, was organizational and
operational in nature. And so, I am going to be a little boring
but in my series of operational questions. But just because
they may be boring does not mean they are not extremely
important.
So, let me start with Peter Drucker sort of philosophical
question. And let me ask you if you subscribe to this: if you
cannot measure it you cannot manage it. Do you subscribe to
that?
Mr. Hall. Yes, actually. Developing metrics about how we
are doing it is very important.
Mr. Arrington. Well, how do you measure success in your
organization for the work that you do and for the people you
manager? Just succinctly, if you could, please.
Mr. Hall. Sure. A part of it is judging the quality of the
end product. Everything that comes out of CBO has my signature
on it. We have a very strong review process. We want to be
comfortable with it. And we now do some things and we are going
to try to do more things to assess how we have done. I
mentioned the report looking about we have done in projecting
outlays we have done on revenues. We do one on economic
forecasts----
Mr. Arrington. Would you say quality--and, pardon me, for
interrupting but just to be more specific. When you are talking
about quality do you mean accuracy, impartiality? Would those
two be at the top of the list of quality?
Mr. Hall. Yes.
Mr. Arrington. How do you measure accuracy? Do you go back
and look at what you projected? What you estimated? And then
within a margin of error that is reasonable how far you hit the
target or how far away from the target you were?
Mr. Hall. Yeah, that is right, we do. And one of the things
that we have done privately for years, which I think there has
been an increased interest in; we may start to make public.
Once a year we do what is called an ``analysis of actuals''
where we get down into all the small budget categories and see
how did we predict those numbers this past year, and what was
the actual number? And we have an analyst go through that, and
we have always done this, and talk about where they were off or
they were not off. And that is part of how we judge their
performance.
Mr. Arrington. I commend you for that exercise. I am
comforted to know you do that. So, do you have like a success
rate on your timeliness? Success rate on your accuracy? Success
rate on impartiality or something, whatever the metrics are, do
you have that? And could I look at that to see how often you
are hitting the target so we can work together to make
improvements? If you cannot measure it, you cannot improve it,
right.
Mr. Hall. Yeah, I can see what we have. But one of the
things that we are really hampered by is pieces of proposed
legislation are such a small part of budget categories. That
once we make an estimate quite often we have no idea how it
actually worked out, because the data is just not there to do
that. So, one of the things that we try to do is try to do more
of that individual analysis. But a lot of it is we just cannot
do it.
Mr. Arrington. Thank you for all that. Let me jump to
culture. I am big on culture. I think it has a tremendous
impact on your success and outcomes, desired outcomes. You said
you had a strong culture. Where is your weakness? Where
culturally can you improve? And just be very transparent about
that would be helpful to us.
Mr. Hall. I think one of the most complicated things we do
is this sort of trade off when we are under really severe time
pressure, we have to decide what is a good high quality
analysis and try to hold to that. And so, sometimes there is
this real tradeoff between feeling like we got a high enough
quality, we are comfortable enough with an estimate.
And, frankly, being leaned on sometimes pretty hard by
Committee staff, ``Hurry, hurry, hurry.'' And now we are
throwing in this transparency part and that is another third
area. And that is a really tough trio of things to manage.
Mr. Arrington. Let me just run through this list. Thank you
for answering the question. Are you all unionized? Okay. No
union members. And what are you doing now from a sort of
product standpoint, or line of business, that you were not
doing in your stated mission in 1974? That is what are you
doing additionally to what you have been authorized to do in
terms of products?
Mr. Hall. Well, the biggest single thing is the technical
assistance we provide. We spend more time offering technical
assistance talking with Committee staff, giving them little
estimates of what proposed legislation. We spend way more time
on that probably than we do on our formal cost estimates. And I
think that is a difficult thing, right? Because there is no
output for that except, I hope, that Committees find it
valuable because they spend a lot of time asking us these
technical questions. That is a real difference from the old
days. And a lot of that is because legislation gets to be so
complicated and complex.
Mr. Arrington. Thank you, Dr. Hall. My time has expired. I
will follow up with the rest of my questions and, Mr. Chairman,
I yield back.
Mr. Hall. Okay, great. Thank you.
Chairman Womack. Let's go now to Ms. Jayapal from
Washington.
Ms. Jayapal. Thank you, Mr. Chairman. And thank you, Dr.
Hall for being with us. I want to just echo how important we
know the Congressional Budget Office is, and thank you and your
staff. I do share the concerns of some of my colleagues that we
are operating in an increasingly partisan environment where
actual institutions are being undermined and you mentioned some
of the accusations of bias.
And I think, you know, I found several statements OMB
Director Mick Mulvaney who questioned the analysis of a version
of the ACA Repeal Bill last June. And said if the same person
is doing the score of undoing Obamacare who did the scoring of
Obamacare in the first place, my guess is that there is
probably some sort of bias in favor of a government mandate.
And then, last year the White House tweeted that the CBO
continues to prove its model simply cannot be trusted to
accurately predict the outcomes of important healthcare
legislation. I want to give you a chance to respond to those
charges once again.
But also just say that I think it is important to
recognize, with all due respect to my friend from Georgia who
is commenting on Ms. Lee's questioning, that there is a
difference between what the Congressional Budget Office does
and how members choose to use the results of that. And we all
understand that we have different perspectives, different
political philosophies.
We may use the numbers that you come up with in different
ways. We may believe different conclusions can be drawn from
those numbers. But your job, as I understand it, is to provide
us with the numbers of any proposed legislation.
So, I want to give you just a quick minute to respond again
to the charges of bias against the agency. And while you do
that, please tell us if your staff are career or appointed, and
explain to the public that might be watching, what that means
to be career staff.
Mr. Hall. Well, first of all we hire people at CBO purely
on their technical abilities. We do not ask anybody about their
politics or their views in anything. In fact, we try very hard
to avoid that. And part of our process is, you know, I have
worked for many, many years in the executive branch where I
helped hire lots of people who were very technical, unbiased,
people who were able to work objectively.
We go even a little further, and it is part of the culture
we will actually go back and look at some of the places where
some of our employees worked. And if they had been in political
jobs relatively lately we do not hire them. We check their
social media. If they post a lot of things that would be
inappropriate for someone at CBO to post, then it puts doubt as
to whether they can work objectively. So, that part is really
important to us.
And then, you know, we do not just throw analysts out there
by themselves. We have a review process that involves lots of
people. And, you know, ultimately the director is responsible
for all the work at CBO.
And I, you know, I think the CBO has processes in place and
we try very hard to make sure that we are objective and it
works like that. And, frankly, if there were signs of someone
not being objective in their work, that would be a problem.
That would be against CBO policy. And we are like congressional
offices. People work at the pleasure of the director.
Ms. Jayapal. Thank you. I appreciate that. Let me talk
about the importance of the CBO score. My colleague, Mr.
Higgins, and I introduced a bill to say that for major
legislation we should have a CBO score before it goes to the
floor. Tell us what Members of Congress miss when we do not
have a CBO score in front of us as we are evaluating a major
piece of legislation like healthcare or taxes.
Mr. Hall. Well, I think one of the most important and
underrated things that we do is we describe the legislation
very carefully and in detail about what exactly it does. And if
you have ever looked at that actual text and then read a CBO,
well, you can tell there is a lot of work. They just describe
exactly what it does and what it involves and what is impacted.
I think that is a real help right off the bat in addition, of
course, to, then, us going further and trying to look at the
effects on the budget.
Ms. Jayapal. Thank you. And let me just end by asking if
there is anything you want to say on the recent tax bill and
how you built all the wide ranging impacts into your baseline.
You only have about 30 seconds left.
Mr. Hall. Sure. Well, the estimate of the tax bill itself
was done by the Joint Committee in Taxation. We are required to
take their estimate. But now, we are going to work it into our
own economic and budget forecast; we have been doing that. We
normally would close our economic forecast in early December.
It is still open.
I think we are going to close it by Friday, hopefully, and
it will include the full economic impact of the tax bill. And
then on top of that we are now going to overlay the budgetary
impact. So, it will be fully scored, in a sense, in our
baseline.
Ms. Jayapal. Thank you so much, Director, and I yield back.
Chairman Womack. Thank you. Next, we go to the former
distinguished chair of this wonderful Committee, Gentlelady
from Tennessee, Ms. Black.
Ms. Black. Well, I congratulate my friend, my colleague,
and my classmate on your new role as the budget chair, and I
wish you the best of luck. And I will certainly be a team
player with you. I also want to thank you, Mr. Hall, and all of
your members of your staff for the hard work they do. I know as
the budget chair and also being on the Ways and Means Committee
the many, many hours that you all spend and you have a very
dedicated staff.
However, I think it is good and healthy for us to have
these hearings. And I do not want to have this hearing to go
away with the title in the newspapers saying that we are
picking on or totally disagreeing with the Congressional Budget
Office.
But I think it is healthy for us to have discussion. And we
are not talking about whether we agree or disagree we are
talking about getting it right. I mean, that is really what we
want to do. Because, honestly, we have to set policies and
those policies that we think are good and we get a score back
that we do not necessarily think is an accurate score is
difficult for us.
So, when we look at some of those scores, you know, they
are off a little bit. I know the economic forecasts of the CBO
was growth somewhere between 1.6 and 1.9 and the growth this
year was 2.3. And we had two-quarters of 3 percent or over. So,
we know that there are going to be some differences there.
But where I want to go, and it concerns me the most and I
do not really know that I understand exactly how you get these
assumptions. The economic models are numbers so they are a
little easier to do. But when you get into behavioral
assumptions is where I have the question, because I have seen
on more than one occasion an estimate come out from CBO where I
do not agree with the assumptions that they are making on the
behavioral side.
So, for instance, on that was one of the bills that I had
about making sure that our dollars under Title 10 would, first
of all, go to those organizations that do not provide
abortions. And there was an assumption that if we did that
then, perhaps, those organizations that do provide abortions
would close down and then we would have X number more
pregnancies. And those pregnancies would result with more
children being on Medicaid.
Well, I have a real problem with the assumption that if one
provider closes that women are not intelligent enough to go to
another provider to get the services of birth control. And, in
addition to that, that the children that would be born as a
result of those additional pregnancies would necessarily all go
on Medicaid.
So the number was so high on that of what the costs would
be that the policy then is difficult because we have to pay for
it. And that is where I really have a problem is how we get to
these assumptions that are behavioral assumptions. So, if you
can talk just briefly about that I would really appreciate it.
Mr. Hall. Sure. We try very hard to see what sort of
economic literature there is, what sort of literature there is
on how these things are working, what is likely to happen, and
what sort of data is available. On things like what you are
describing it can be really hard to make an estimate. But we do
as thorough a job as we can, you know, when we are looking at
the healthcare providers, you know, how many are in regions
where they are the only provider, how many are in regions where
they are not.
One of the things I think that would be always helpful,
especially if it is something you do not agree with, is we love
the opportunity to come in and tell you how we got our numbers
and how it happened. And, to be honest, if you feel like we are
missing something, if there is some research literature that we
did not see, we will take a look at it.
Ms. Black. So, there I thank you for that. And I appreciate
that. And I hope that that message gets out to all of the
colleagues here in Congress so that we can have more of that
dialogue. And that gets to my second point is about
transparency. I think that we have to look at a way that the
Members of Congress can get more transparency from the CBO to
make sure that we are looking at what you are deciding and what
we think is not exactly accurate and have that dialogue.
So, I would say one thing I continue to hear from my
colleagues, and I have even heard it from my colleagues across
the aisle, that they would like to see how you got to where you
got to. And sometimes you can just say once you see the
information, ``Oh okay, I agree with that more.''
But we have got to have an environment here where when we
are making decisions and policies that affect the people, not
only in our own States and our own districts but across the
entire country, that we have full transparency. And that
probably is a dialogue that we need to have more conversation
on, Mr. Chairman. And I know that as you move forward on
additional hearings that that may be also something that is
talked about a little bit more.
But many times you can accept what it is that someone is
saying or have that argument if we at least have the
transparency. And with that I am right on time and I yield
back, Mr. Chairman
Chairman Womack. Thank you, Ms. Black. To California, Mr.
Carbajal.
Mr. Carbajal. Thank you, Mr. Chair, and thank you, ranking
member. Thank you, Dr. Hall for your testimony today. And thank
you for the objective nonpartisan analysis that you provide our
Committee. The recent tax bill made substantial changes to the
tax code that will have wide-ranging impacts on the budget and
the economy. Can you walk us through how you build that into
your baseline?
Mr. Hall. Well, sure. It starts, of course, with the
economic forecast. I will walk through all of the details of
the bill. You know, of course, JCT did the estimate on the
legislation. But we are tasked with putting our own estimate
into our baseline. We have spent weeks and weeks already going
through the tax bill and working through how we think it is
going to affect the economic forecast. And preparing, then, for
the budget side of things once we get an economic forecast then
we have the budget forecast on it.
There are just so many steps on it. But we have a bunch of
really dedicated people. We have a really good tax group in
there. And we are going to try to produce something that is
understandable and as accurate as possible.
Mr. Carbajal. Do you ever have third party outside people
that look over your analysis?
Mr. Hall. Absolutely. We have a very good panel of economic
advisors and they meet twice a year. They actually sort of
approve our economic forecast for us. We actually make a
presentation to them; they will make comments. And they are a
diverse group. And whether they realize it or not when they
volunteer to be on the panel, they give us their phone numbers.
And we call them up and we will have discussions with them on
aspects of the analysis or the forecast that we are unsure of.
Mr. Carbajal. And how do you go about selecting those
advisors?
Mr. Hall. Well, we have got if you sort of look at our
panel, it is up on our website. We have a panel of very
impressive people from different schools. And we actually make
an effort of people who have sort of a diverse background with
respect, possibly, to politics. We try to avoid that part of
it. But we try to get people who have different points of view
certainly on some of the things that we have to deal with.
Mr. Carbajal. Have you ever gotten any criticism or
objection from anybody on this Committee about any of those
advisors?
Mr. Hall. I am not sure about this Committee. Not during my
time, I do not know. We have been pretty transparent about who
they are and that sort of thing. But I have not heard anything.
Mr. Carbajal. Thank you. What is the CBO's best estimate of
the impact of the recent tax bill on the deficit? I understand
that it is $1.5 trillion.
Mr. Hall. Well, that was JCT's estimate. We are in the
process right now of working through our estimate. It will be a
little while before it comes out in our budget outlook, but it
will be there.
Mr. Carbajal. So, you do not have an estimate today.
Mr. Hall. No, I do not.
Mr. Carbajal. Okay. Do you know if the estimate that JCT
has put out there includes the compound interest over the next
10 years?
Mr. Hall. I think we did a version of that that included
the interest.
Mr. Carbajal. And what is that version number that you came
up with?
Mr. Hall. I would have to get back with you. It added a
little bit more to it from the deficit. But I do not remember
right offhand. I should know, but I----
Mr. Carbajal. I believe the number was $2.3 trillion, but I
appreciate you getting me that information later.
Mr. Hall. Okay, I will be happy to follow up.
Mr. Carbajal. Thank you very much. I yield my time back my
time.
Chairman Womack. Thank you, Mr. Carbajal. Let's go to
Minnesota, Mr. Lewis.
Mr. Lewis. Thank you, Mr. Chairman, and congratulations,
looking forward to working with you. And, Director Hall, thank
you so much for being here. I am little perplexed at the other
side of the aisle's hammering you over dynamic scoring. It is
only a model about a century old when Alfred Marshall came up
with supply and demand curves. I do not think anybody doubts
the elasticity of work savings and investment. We saw that
reaction in the `20s when we had tax policy changes, in the
`60s, in the `80s. I think we are seeing it now.
But if you were to ask anyone on this panel if they wanted
to reduce smoking, which we all want to do, for our young
people. What is the first thing they would do? They would raise
the cigarette tax. Well, but prices do not have any effect on
people's behavior. Well, of course they do. I understand you
have got a very tough job. If I could predict interest rates or
the Super Bowl winner I would be in a different line of work.
But the bottom line is there are things that we can predict
with historical accuracy.
I understand you have a very tough job as I say monetary
policy is something that you have no control over and would
have to be a problem for some of your models. But let's get
back to the baseline you issued last year of 1.9 percent growth
if we made. The Atlanta fed now today came out with their first
quarter estimate of 4.2 percent GDP growth.
You mentioned in your analysis and today that you had
concerns over the labor supply. But as we all know, the GDP,
economic growth made up of two principal parts, productivity,
and people. Either one goes up you are going to get more
economic growth. Did you take into account, from a historical
perspective, the increases of productivity when there is more
capital invested, when there is more incentive to invest
capital? You were sticking with 1.9 percent or at least a year
ago--we will see this year--but 1.9 percent growth when we are
clearly seeing faster growth, at least right now.
Mr. Hall. Yeah, well like you say the productivity has been
really slow. But we do actually have in our long-term forecast
productivity getting back to its historical levels; something
like 1.3, 1.4 percent. So, actually that is in part of what is
baked into that long-term growth. It is why really is that
labor supply part that is big distraction.
Mr. Lewis. Then how would you account for the increases in
GDP growth in the last few quarters?
Mr. Hall. Well, part of it in the last few quarters has
been a number of things. Part of it has probably been
anticipation of the tax bill. Part of it is probably demand
side because we are getting stimulus. And we still think there
has been some slack in the economy so there is room for sort of
demand stimulus. And that is clearly a bit of what is going on.
Mr. Lewis. You know that is really an interesting point you
make, and I am glad you did. And that is really why some of us
have concerns about this. We can go through the debate over
Keynesian analysis versus supply side or classical economics
all day long. But we have had that experience. We had it with
the stimulus package in the previous administration and we did
not get growth.
And I think some of us would like to see a little bit more
supply side analysis in there in restoring productivity and
growth. To quote a famous economist, Jean-Baptiste Say, that
``Supply will create its own demand'' and we do not need to go
down this Keynesian road time and time again. And is that not a
value judgment that the CBO makes that we are going to use
demand side analysis?
Mr. Hall. Not really because I think certain aspects of any
legislation is demand stimulus and other aspects affect the
supply side. So, we do not assume at all that supply side, that
labor supply and productivity, is just fixed. That, in fact,
there can be some policy things that affect that.
Mr. Lewis. Do you think you have a demand side bias?
Mr. Hall. No, I think one of our challenges is we have to
work through the demand side in the near term years and then
slip into the long-term, which is supply side and that part is
just tricky. But it is two different models really, two
different approaches.
Mr. Lewis. It certainly is. It is a great debate. In 2012,
you came out with the exchange coverage rates for the
Affordable Care Act. And that estimate updated from 2010, you
said that by 2016 you predict, I think, around 23 million would
be covered under the exchanges. The Center for Medicare and
Medicaid Center said 10.4 was the actual number. What happened
there?
Mr. Hall. Well, the first thing that happened was the
Supreme Court decision that took away the requirement that
States expand Medicaid. So, that threw a big kink into things.
Once we corrected that, we have still been off a little bit.
Let me mention a little bit of the talk about the exchange
stuff just really quickly is a little bit of cherry picking
because the most important thing was getting the budget effect
correct. We were not----
Mr. Lewis. Okay, I will cut you off. I have to go. But
thank you so much for being here looking forward to a healthy
debate. I would just hope you understand that you were created
by a political branch of government. You serve the political
branch of government. This is a political exercise, and so we
have got to get the referee to make the most accurate call as
possible. Thank you so much. I yield back.
Chairman Womack. Thanks to the gentleman. And reference to
his remark about the Super Bowl there is one other thing you
can take to the bank and that is the Minnesota Vikings will not
be winning the Super Bowl.
Mr. Lewis. No, that is low. I miss Chairman Black already.
Chairman Womack. I am going to hear from all the Minnesota
people now. Mr. Higgins of New York.
Mr. Higgins. Thank you, Mr. Chairman. And coming from
Buffalo the Super Bowl is not a good subject.
Dr. Hall, thank you very much just a couple of questions.
And the previous speaker had talked about supply side, and
these are all very fair debates that should be debated
rigorously. And, you know, supply side trickle down. And I
think the new term for all of that is dynamic scoring. And that
is what the future economic impact from tax policy will be
which is, you know, it is not an exact science and I guess that
is why it is subject to a lot of interpretation.
But a couple of things that concern me, you know, the
treasury secretary had stated explicitly--explicitly--that the
tax cuts as proposed that are now in the bill, particularly the
corporate tax cut, which was about 14 percentage points, but
the percentage change was actually 40 percent. The tax cuts
generally pay for themselves. Do you believe that?
Mr. Hall. I want to be really careful because different tax
changes have different effects. Some can have an effect
probably on supplies and some on the demand side.
Mr. Higgins. Okay.
Mr. Hall. I think the literature, we need to look at the
literature, and how things have been affected going forward.
And we are going to have our own estimate of it is not an
effect of just the bill, but we are going to work in the tax
cuts into our economic forecast, so you will see how we view
that particular bill, how it is affecting----
Mr. Higgins. Okay, well I appreciate your cautiousness. But
I would remind you that there is not a tax cut in human history
that has ever paid for itself, not once, ever. The best
literature in that area comes from Harvard and Yale economists
who say that best-case scenario that you could recapture in
economic growth about 30 cents for every dollar in tax cut. And
I would challenge you to challenge me as to whether the
literature says anything differently, but let me move on.
The White House Council of Economic Advisors came out with
a report saying that the corporate tax cut would result in
increasing annual household income. I am not talking about a
one-time bonus but annual household income of between $4,000
and $9,000. Do you believe that?
Mr. Hall. I have not read that report but I can tell you we
will have our own analysis, independent analysis, of the
effects of that.
Mr. Higgins. But you are familiar with that report.
Mr. Hall. I am not really, to be honest.
Mr. Higgins. You are not familiar with that report?
Everybody in America is familiar with that report. That has a
direct impact on the Federal budget. Because if you increase
household income, that increases aggregate demand in an
economy. Where aggregate demand is increased in an economy that
increases employment. As head of the Congressional Budget
Office, this issue has been discussed, debated, in various
publications over the last 6 months. I am shocked that you have
never heard of that.
Mr. Hall. I can tell you in a few months' time we will have
our own analysis and our own view of that. And we will be very
careful to explain why we have come up with whatever estimate
we come up with.
Mr. Higgins. Okay, just switching topics infrastructure
investment. I think the President will talk a little bit about
tonight, presumably, about an American infrastructure
investment of some $200 billion, which will be used to leverage
somewhat of a trillion dollars in infrastructure through the
combination of State and local contributions in the private
sector.
I think all of us agree that an infrastructure investment
is desperately needed. But I would remind people that the $200
billion is woefully inadequate. And I would provide, as an
example of that is the United States deficit financed $180
billion over the last decade rebuilding the roads and bridges
of Iraq and Afghanistan. Those were off-budget, they are
deficit financed, they add directly to the debt. So, what would
be the ideal infrastructure investment to really have a
positive impact on job growth in the American economy?
Chairman Womack. Give the witness about 20 seconds to
answer.
Mr. Hall. Okay. Really quickly we are prepared to analyze
any proposal that comes forward. We will do it carefully and in
detail. I do not want to make recommendations. We do not do
that.
Mr. Higgins. Thank you, sir. Thank you. I yield back.
Chairman Womack. Next, we go to the keystone State, which
could produce a Super Bowl winner, Mr. Smucker.
Mr. Smucker. Thank you, Mr. Chairman. Yes, that is one
other given. One thing that we know is that Philadelphia will
be there. So, thank you and congratulations.
Dr. Hall, I would like to thank you for the work that you
do, the work that your staff does. And I have some comments.
Some of my comments have already been addressed but I would
like to start by just saying how important I think CBO is to
the Committee and to the budget process within the Committee
and within Congress. And it is important, really, to asserting
the proper constitutional role of Congress in developing a
budget. And I say that from the perspective of having served in
the Pennsylvania State Senate.
During my time there initially we had no equivalent to the
CBO in the Senate. And even when negotiating with a governor of
the same party we had to rely entirely on the executive branch
data in regards to decision making. And it changed the dynamic
dramatically when we established the independent fiscal office
of the legislative branch, similar to your role. So, yes I
disagreed with some of your analyses about healthcare but we
cannot lose sight of the fact of the importance of the initial
intent of the CBO that was laid out in 1974, and of the
importance of the work that you do to what we do.
I do think the effectiveness of the CBO is almost entirely
dependent on its perception of Members of Congress. And number
one, it has to be perceived as nonpartisan. And number two, it
has to be perceived as accurate as possible. I like your idea
of more communication with Members of Congress to talk about
what CBO does. You said you come to congressional offices if
they request at any time. But I think what you should see as
part of your role is to continue to talk about what you do and
the importance of what you do. Is that part of your strategic
plan at all?
Mr. Hall. Yes. You see, the only time that I think I shy
away from that is I do not want to talk about legislation as
being debated. I do not want to get involved in the political
process, but otherwise, yes, absolutely.
Mr. Smucker. Have you ever brought members to your facility
to show the operations? I think is something I would like to do
at some point.
Mr. Hall. Yes. And you are welcome to come over.
Mr. Smucker. We have talked about the part there has been a
lot of discussion about the importance of being nonpartisan. I
think it is equally important that we can believe that we have
the best thinking out there in regards to policies in regards
to your analyses. And we know that predicting is tough, and it
reminds me of a quote that has often been attributed to Mark
Twain when he said, ``Predicting is difficult, particularly
about the future.''
But, I guess, in terms of experts that you bring in, could
you characterize to me what you look for. Are you looking for
the best thinking in the country? Would you say that the group
you have really does provide some of the best experts in terms
of policies that we are looking at that?
Mr. Hall. Absolutely, I do. I think we get people who are
very smart and very capable who have a lot of technical skills.
And part of how we get them is because we work for Congress.
They feel like they can make a difference by helping inform
Congress that we have an important job. And one of the things I
think is underrated is we spend a lot of time, our folks,
keeping in touch with experts around the country. So, we have a
really good understanding----
Mr. Smucker. How do you choose those experts?
Mr. Hall. Well, part of it starts with our panel of
economic advisors. We have a really good panel. They are all
very well smart, connected people. And we do a lot of calling
and say, ``Well, here is a topic we are concerned about. Who
should we talk to?'' And we make an effort to get literally we
get some of the opposing views.
If you look at some of our analytical research reports that
we put out, you will see us list the names of the people who
reviewed it. We treat it like it is a journal article.
So, we try very hard to sort of multiply ourselves and use
research----
Mr. Smucker. I am running out of time, and I am sorry to
interrupt you. I have a number of other questions but one that
I really wanted to get to was CBO was first put into place 43
years ago. I think we should look at the entire Budget Act of
1974 and update it and improve it. As a part of that how can we
ensure CBO is more effective, more efficient, in its
operations? You cannot answer that now, I do not think. But I
would love to hear from you at some point about whether you had
specific ideas or specific recommendations for updating the act
and improving your operations.
Mr. Hall. Sure.
Mr. Smucker. Thank you.
Chairman Womack. Ms. Schakowsky from Illinois.
Ms. Schakowsky. Thank you, Mr. Chairman. I also want to
associate myself with the comments and the questions of Mr.
Smucker. We are all interested in CBO being able to do the best
job. And I want to thank you for the work that you do and
associate myself with all the ``thank yous'' that we have made.
After the passage of the Republican Tax Bill in December,
CBO revised its cost estimate for the expenditures for the
Children's Health Insurance Program. In fact, the new estimate
showed that reauthorizing CHIP for 10 years would save the
government about $6 billion. So, why did passage of the GOP tax
bill change the CBOs for CHIP so dramatically?
Mr. Hall. Well, the elimination of the mandate had an
effect. And one of the short versions is the elimination of the
mandate, we think, will raise the average premiums in
exchanges. And since if children are not covered under CHIP
they are likely to be covered in exchanges or through Medicaid,
then it will cost the government more by having children
covered that way as opposed to CHIP directly.
Ms. Schakowsky. So, essentially the CHIP savings are a side
effect of the increased costs that Americans are going to face
due to the Republican effort to undermine the Affordable Care
Act.
Mr. Hall. I would not word it that way, but it is an effect
of the mandate.
Ms. Schakowsky. Eliminating the mandate. CBO looked at the
effect of repealing the individual mandate, the number of
uninsured Americans, and premium costs. What did the CBO
estimate?
Mr. Hall. We estimate that after 10 years, the number of
people covered with insurance will be down by about 13 million
people, relative to the baseline. And that premiums would be
about, in exchanges, be about 10 percent higher at the end of
that time period.
Ms. Schakowsky. And what about the administration's
decision to end cost-sharing reduction payments, the ACA
Outreach Budget by 90 percent, allow work requirements for
Medicaid? Were those part of that calculation as well?
Mr. Hall. No. We have treated the cost-sharing reductions
as actually as an entitlement, at least so far until we get
other direction from the Budget Committee. So, since it is an
entitlement it was not affected.
Ms. Schakowsky. Beyond the tax bill, how does the CBO
account for administrative action that change implementation of
the ACA? Is that a consideration as well?
Mr. Hall. It is and that is one of the more difficult
things sometimes to estimate, that certainly was with the ACA
because there was a great deal that had to be done to implement
the ACA. And we had to make some assumptions about how it would
be implemented, how well it would be implemented. And, you
know, clearly some of that did not happen so well. And so, we
have updated. We update it every year. We update our estimate
of the operations of the exchanges and that sort of thing to
try to take that into account.
Ms. Schakowsky. So, was there consideration of the fact
that there was a reduction in the amount of publicity, of
telling people about it, a shortening of the enrollment period.
Was that prior to the calculation?
Mr. Hall. It will be. We have not. It has been a little
while since we updated it. We will probably do that this
spring. We will talk about that and see if we think that is
having some really solid impact that we can measure.
Ms. Schakowsky. Thank you. Is the CBO updating scores of
other health legislation following the passage of the tax bill
and the temporary authorization?
Mr. Hall. Yeah, there are some proposals out there. If we
are working on anything it might be technical assistance, in
which case I cannot talk about it. But if we are asked to
update any of those by the Committee of jurisdiction we will do
an update on those.
Ms. Schakowsky. So, you initiate or are you always
responsive to inquiries from the Congress?
Mr. Hall. We do not initiate very much at all. We respond.
Ms. Schakowsky. Okay, and that goes for the administration
as well? No, I am talking about looking into acts of the
administration; executive orders, et cetera.
Mr. Hall. Sure. Yeah, no we actually we do certainly every
year we go down and look to see if there has been some changes
in implementation, whether it is executive orders or et cetera,
that are going to have a big enough impact to change our
baseline. And we will change our baseline if we see those. And
we will try to detail it in our Budget Outlook Report if they
do.
Ms. Schakowsky. I appreciate your work. And I yield back.
Chairman Womack. Thank you, Ms. Schakowsky. Let's go now to
Georgia, Mr. Ferguson. The witness is yours.
Mr. Ferguson. Thank you, Mr. Chairman. Dr. Hall, thank you.
And I want to thank you for taking time to come to my office. I
have taken you up on that offer. I would encourage other
members of the Committee to spend some time with you and your
staff in their offices, or in your office, really talking about
the process. And I want to thank you for the direct and candid
responses that you gave me. I found it helpful and look forward
to continuing that.
One of the things I want to go to. I want to get back to
process here. If you could go back and pick a 5-year window in
the budget process, okay? And it does not matter to me where it
is. Let's go back 10 years, 12 years, 15 years and look at the
estimates that you made in year one and what they actually
turned out to be 10 years later. And do that to the second year
and go out another 10 years, and third year, and all the way
out year five.
Mr. Hall. Right.
Mr. Ferguson. What is the accuracy at the 10-year mark when
we are making a decision on the budget, we are making it on
this 10-year budget window, okay? So, if you go back
historically what is the accuracy at 10 years from the date
that this Budget Committee acted on those recommendations or
those assumptions?
Mr. Hall. Yeah, just this past year we looked at our record
for estimating outlays. And, you know, it is in kind of
broadish categories but it gives you an idea of the average
error. We looked at it at the budget year and then we looked at
it 6 years down the road rather than 10 years down the road.
But, after 6 years, our average error was about 3 percent.
Mr. Ferguson. Three percent?
Mr. Hall. Three percent.
Mr. Ferguson. Yeah.
Mr. Hall. So, that, of course, that means for individual
smaller parts some could be higher, some could be lower but
they averaged out to be about 3 percent error.
Mr. Ferguson. Yeah, we are making decisions on a 10-year
window.
Mr. Hall. Right.
Mr. Ferguson. Okay? Which is where, you know, it becomes
harder and harder the further you go out to predict, correct?
Mr. Hall. Right. Yeah, I mean, maybe when we update this
report we will consider trying to do it for a little bit
longer.
Mr. Ferguson. Well, and let me say I would encourage you to
do that because I think it is important. If we are going to
make decisions based on a 10-year assumption it does us very
little good to only have six years worth of historical data. I
mean, we are missing, you know, a significant portion of the
equation in doing that.
So, when you look at it and you look at the results during
that window what tools do you need to close that gap? Because,
you know, 3 percent may not sound like a big number but, you
know, when you have got a $4 trillion budget hanging around
that is a pretty big number.
Mr. Hall. Right.
Mr. Ferguson. So what do you need to be more accurate in
that?
Mr. Hall. Yeah, you know, that is a good question because
we, you know, we have a lot of challenges. One of which is that
we just have so much more work than we can handle. But that is
not really an issue of being able to just throw resources at it
because we suffer from a real peak load problem, right? When
healthcare gets popular, our poor healthcare well, not our
healthcare people they are not poor because they get energized
with this. They are working full time.
Mr. Ferguson. So, can you talk very briefly about maybe
developing, or should we consider developing a new model for
scoring. You know, we are in this debate right now demand side
versus supply side. You know, you have heard it here today.
But, you know, do we need to look more at what the private
sector does to predict using predictive algorithms to
anticipate changing consumer behavior? I think the private
sector does that in a very, very effective way and should we
look at doing that more here, or your office do that more, to
give us a better outlook?
Mr. Hall. We certainly could, you know, we really do look
to research and we do try to talk to private sector folks. So,
you know, we can continue to make an effort to sort of see how
we can improve our accuracy by talking with other people, like
the private sector, who does similar sort of work.
Mr. Ferguson. I think it would be important that we look at
two things I want to push on this. Again, I think we need to
look at the 10-year accuracy. Okay, if we are going to operate
in a 10-year budget window we need that 10-year data out there.
I think that is pretty important because we need to see what
those outlying years are actually like. And then to look at
right at, you know, look at different modeling programs that
use predictive algorithms to look at consumer behavior and how
that may change these budget outlooks.
The final question that I want to ask you is something that
when the gentleman from Pennsylvania spoke, Mr. Smucker, and he
was asking about your hiring process and you said, ``We try to
get people with opposing views.'' Define the view and the
opposing view.
Mr. Hall. Sure. And by that I do not mean in our hiring but
in our consultations with folks. If it is a topic where we know
in the literature there is some debate in the literature, this
has a big effect, this has a small effect, they focus on
different things. That is the sort of thing we will look at
because our real goal is to sort of try to represent the state
of research on that topic. And, you know, sometimes there is
not full consensus on a research topic. So, that is where we
look for that sort of diversity.
Mr. Ferguson. So, the view would be the process by which
you would have a demand side view and a supply side view,
right? And I mean I know that is kind of a broad----
Mr. Hall. Yeah, I mean, it would be something----
Mr. Ferguson. But that is what you are----
Mr. Hall.----like that that is right. That is right.
Mr. Ferguson. Okay, thank you and Mr. Chairman, I yield
back.
Chairman Womack. I thank the gentleman. Let's go now to
Ohio, Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman.
Chairman Womack. It should be noted that the ranking member
has agreed to allow us to take care of the people in the queue
before we go to him. So, Mr. Johnson, the floor is yours.
Mr. Johnson. Well, thank you very much. And, again,
congratulations on your Chairmanship; this is your first
hearing, and I think it is a good one. Dr. Hall, I too want to
echo my thanks for you and your team coming by my office and
having the meeting a few weeks ago that we did.
I do not really know how to frame this question that I
have. But I have heard you say a couple of times in your
testimony, you know, ``We use this model for this. We use that
model for that.'' It seems to me that there is an element of
science and an element of art in the work that you guys are
doing. There is an element of subjectivity and an objectivity,
some fact, some assumption, and speculation.
I am a pretty simple-minded guy. Is there not a way to
develop a scoring methodology that applies to everything so
that members and their staffs understand? I mean, we have
talked extensively here about the need for budget reforms
because we have a budgeting process that does not work. We have
got an appropriation process that fails us year after year, not
for lack of intent but process.
Seems to me it would be a lot easier to address some of our
budgeting and fiscal concerns if we had more clarity and
understanding around the methodology. Is there not a way to
develop a methodology--the methodology--to score legislation so
that members and the American people can understand what we are
potentially getting ourselves into?
Mr. Hall. We are certainly willing to talk about ideas that
you have. You know one of the things that we actually have
coming out, I have talked about documenting models, well, we
are trying to also document our processes. We actually have a
document coming out that says here is the process that we go
through in creating a cost estimate. And so, here are all the
steps, here is what we do.
That is a transparency thing, so you can at least see
exactly what we do and the process we undergo. And to the
degree it gives you ideas on how we could do that differently
or how we could articulate the results differently that might
be an----
Mr. Johnson. A follow up question you just said,
``developing a cost estimate.'' A cost estimate is not the only
thing that we need. I mean, we need to understand the long-term
implications on the cost side, certainly, but on all of the
other unintended or unplanned consequences of legislation.
Mr. Hall. Right.
Mr. Johnson. So, how do we get to that part of it so that
we have a clear picture of what legislation is going to do. Not
just the cost but the long-term.
Mr. Hall. I think when we do cost estimates, in fact, we
were just talking about this a little bit. We have, you know,
we have accuracy. How much time do we spend with it to where we
are really comfortable with the result? How much time do we
have, right? You need to get it accurate, you need to have time
to do it, then we need to provide transparency. Those are three
things that conflict with each other quite a lot. I always
think that the more time we have on an estimate to be able to
do the work and do it carefully the better our estimate is, the
more precise we can make it.
Mr. Johnson. You know in business you look at three
factors. You look at time, your money, and quality because you
can get two of those in that pyramid but you cannot get all
three of them at the same time. A higher quality is going to
cost you more, it is going to take more time. If you want to
cut time you are going to sacrifice quality or you are going to
spend more money.
You have mentioned a couple of times, at least I heard it
once, and you just alluded to it there, taking more time. You
said earlier that we have more work than you can handle. What
drives that?
I mean, the CBO is the organization that we go to get these
things scored, and it is a critical part of what we do. And as
my colleague from Georgia mentioned earlier, the politics of it
is crazy in today's 24-hour a day news cycle. Why do you have
more work than you can handle? Is it a resource problem? Is it
a time problem? Is it a training problem? Is it a----
Chairman Womack. Ten seconds to answer.
Mr. Johnson. What is it?
Chairman Womack. Ten seconds.
Mr. Hall. Okay, I would say the big issue is so little of
our work is getting a piece of legislation handed to us and
say, ``score this.'' So much of it is having ideas and helping
Committee staff think through things. What are the things that
we should be thinking about in this piece of legislation? That
technical assistance takes up just a ton of our time. But it
seems to be really valuable. There is a reason why they come to
us to help with that.
Mr. Johnson. Mr. Chairman, I do yield back, and I apologize
for running over. That is an issue that we have got to address,
I believe, as we talk about budget reforms and oversight of
CBO. There has got to be a clear understanding of the process
and what they are doing, how much time they take to do it, and
whether they have the resources to do it or not because it has
such serious implications to the work that we do here.
Chairman Womack. That is what the Oversight Hearings are
about. And we are going to have three or four of these so more
to come.
Mr. Johnson. I yield back.
Chairman Womack. Gentleman from Indiana, Mr. Rokita.
Mr. Rokita. I thank the chair and congratulations, this is
a great hearing. Dr. Hall, thanks for being here. I want to
thank you and your staff, particularly your staff, who always
seem to be responsive, especially when there is a lot of things
going on. I can particularly remember the healthcare bill last
year that we were able to work out some Medicaid issues. Really
in the fast lane on that and I appreciate the responsiveness.
Having said all that, when you talk about technical
assistance how much would you say, what percentage of your
staff's work on technical assistance is given to Committee
staff or Committees versus personal offices?
Mr. Hall. Most of it is Committees. That is absolutely
true. But when we do help personal staff it tends to be
technical help. So, because individual members they do not have
legislation that is at a Committee, so it is not typically a
formal estimate.
Mr. Rokita. So again, what percentage of your staff's time
is used with personal----
Mr. Hall. I do not know we would have to look into. We
probably do 350, 400 informal estimates for individual members
during the year.
Mr. Rokita. Yeah, I would appreciate that in writing just
as we go through this debate to understand where you guys are
spending your time.
You talked with Ms. Black about behavioral assumptions. And
how you looked at available literature and you offered a member
of Congress to submit literature if the estimate or the scoring
came back and it was not what was expected or assumed or
anything like that. Is there a procedure for a member of
Congress to submit literature as they submit the bill for
scoring to you?
Mr. Hall. I appreciate that question, because that is one
of the things that we do when we get some legislation. We ask
the Committee staff, whoever gave it to us, now is there some
data you want us to look at?
Mr. Rokita. Okay.
Mr. Hall. Is there some research you would like us to see?
Mr. Rokita. You were not made to wait. Members of Congress
are not made to wait until we receive the scoring back.
Mr. Hall. Oh no, absolutely not. We want to be sure we look
at what you are thinking of.
Mr. Rokita. All right, I appreciate that. When you talk
about the economic advisors and the health advisors that you
have I want to focus on that process a little bit. You say you
use these economic advisors to ``multiply'' your ability to
understand what is going on in the world. What is their
objective methodology you use in selecting these people?
Mr. Hall. No, to be honest it is literally a director's
choice to sort of look at the makeup of the Committee and think
about whether we want some little strengths in one area or
another area and to think about whether we have the right kind
of balance.
Mr. Rokita. So how do you ensure absent any criteria or
objective methodology how you are not creating a little echo
chamber for yourself or your organization?
Mr. Hall. The best I can say is we put the names of
everybody up on our website. You can take a look through the
panel to get an idea.
Mr. Rokita. I have been looking.
Mr. Hall. Yeah.
Mr. Rokita. And honestly, while I can determine some,
perhaps, some of their natural bias or professional bias based
on the organization they represent or work for, I do not know
any of them personally. I have not peer reviewed their
published work. Have you? Or is there any methodology or
criteria that would force you to peer review their work to
ensure you have a mix of economic ideology and theory and all
that sort of thing?
Mr. Hall. Absolutely. We do look through their work, and we
do get an idea----
Mr. Rokita. Okay, so that is what I am asking. When I ask
you if there is an objective methodology you responded and
said, ``Hey, it is kind of a director's pick. We look to make
sure that,'' in your mind, ``that it looks great.'' But is
there any objective methodology or criteria or process that
your organization goes through----
Mr. Hall. Sure. Well, this is one of the reasons why we
have very technically capable people working at CBO because
they keep up with literature and read the literature. And we
get people on the panel we expect them to be technically
capable and to be objective in their advice on things, just
like we try to be objective in our working, as well.
Mr. Rokita. Right, but you understand, sir, if you do not
have an objective methodology, if you do not have a set of
published criteria for how you are picking these people, you
risk at least the attack, if not the reality that you are
creating an echo chamber onto yourself. And that if you are
using these advisors to inform your work to members of
Congress, then you might unintentionally or intentionally
create a bias that might cause some of this tension.
We might be seen from time how am I going to give a bill?
So, my suggestion to you would be, well, let's make this
process more transparent. I mean, it is a great start to have
at least the names of the people on a website. Let's create and
agree on. By a bipartisan way, let's publish a set a criteria
or methodology that you might use to select these people, if in
fact they are informing your work to such a degree.
Mr. Hall. Well, let me just be clear. I mentioned those
folks because they help sort of keep us balanced. We make our
own decisions. We make our own judgments. We try to help inform
our own judgments, but I do not want to suggest that they are
making decisions for us.
Mr. Rokita. Well, I am not suggesting that in my
questioning. My time is up, but the point is, you brought up
this panel up as a way to inform you work, which I think is
healthy, assuming that that panel is healthy. I yield back.
Chairman Womack. All right, thank you. Mr. Brat, Virginia.
Mr. Brat. Thank you, Mr. Chairman, for holding this
hearing. Thank you, Dr. Hall, for being with us. I have four
questions I want to kind of get to real quick. I used to be a
liberal arts professor, and sometimes what is missing in this
city is a connection between pieces of knowledge.
And so, my friends over there, John's a nice Democrat
friend, I like all, but they are very smart and intelligent the
way they ask questions. We had the Chicago economist up here,
they were asked ``Does the tax bill pay for itself?''
And the economist correctly said, ``No. Probably does not.
Probably pays for maybe a third.'' Right? And then, you get
into current law versus current policy, also may give a third.
And the key question is, and no one really cares about, does
the tax bill pay for itself? I care. Does the economy pay for
it? Do all of our policies together pay for it, when you put in
deregulation and some of those outcomes as well?
And so, that is what I find missing. And even when you
score, the score is always at the Federal level only. It does
not include State and local impacts. Right? Which also has a
huge impact. I think State and local revenues are about 40
percent of Federal.
And so, if you abstract away from this, it becomes
politically misleading, even though you do not intend. You have
been asked a narrow question; does the bill itself pay for
itself, et cetera, when you score it? So, how do we get at
truth in its totality to avoid the politics? And I do want
truthful outcome. Right? We are not making decisions on that
question. How do you think about that quickly?
Mr. Hall. Sure. No, one of my points was we adapt to what
Congress wants. If there is something different that you want
that we can do, we are happy to talk with you to try to work it
out.
Mr. Brat. Okay. Well, then it is on us. I mean, I am
interested in that, because if you look at the Fed forecasting,
which is horrendous after the '08 recession. Partly they were
cheerleading, and I do not blame them. Right? But they were
always rosy scenario, and it never got there, right? And there
is reasons for that. But there is systematic bias for 8 years
in a row.
I mean, you have got a problem when you can guess the
direction of the error, year after year after year. The second
big issue that is coming our way; we just had the budget
debate. The CSR bailouts subsidies, et cetera. What is the
assumption of CBO on the score there? President Trump ended the
CSR payments. How is that going to be scored? As if he is
ending them, or as if he is continuing them?
Mr. Hall. We have been treating it as an entitlement.
Mr. Brat. Okay.
Mr. Hall. So, it has remained there, unless we get
direction to do something different.
Mr. Brat. Okay.
Mr. Hall. So, we are assuming, essentially, that the money
will be found somewhere, because it is an entitlement.
Mr. Brat. Right. And that brings us back to the whole
healthcare debate. And the score there, again, I just do not
feel like we got a systematic account, right? In
Charlottesville, I think we got the highest rate quotes in the
country. I think $39,000, all in, before a family of four on
the individual side gets to access insurance. That is not
sustainable.
And so, we would love your economist to say, ``Hey, the way
you are going, the economics are not sustainable for healthcare
in addition to showing us, you know, the merits of technical
bills,'' and the big programs, too; Medicare, Social Security.
And I will just add one other piece that is interesting to me
lately. Immigration is a huge issue coming our way, right? We
are all debating that. And so, have you guys done any scoring
on the total cost of illegal immigration yet?
Mr. Hall. No, we have not.
Mr. Brat. How do we get these folks to preempt? Right?
These studies take long periods of time to do. And so, I mean
it is a major issue. Can I request that? Or at what level will
a request be acted on if we ask for a score?
Mr. Hall. Well, I will you what a good starting point might
be, is I will be happy to talk to our folks. We can come in and
talk to you about our take on the literature. What literature
is out there, what it says about immigration and the effects.
Give you an idea of sort of where we see things at the moment
and then, you know, whether or not you want us to do some work.
Mr. Brat. Right. Right. And I do not want to get, you know,
political, but it is pretty well-known in academia. Right, I
came from a small liberal arts college, et cetera. And you can
go around the country and look at the makeup of who they donate
to and who the politics are to.
If you go to Harvard and Yale and Princeton, and it is not
bad, it is free country, you can be in a party of one. But if
you do not have any economist on a faculty who voted for the
current President of the United States, you might call that
bias, right, in a certain sense. And that includes even kind of
a burning kind of thing, right, and a burning populist thing
over on the left that ran through the country. And I am curious
to hear your response. How do you track that?
Mr. Hall. Let me give you an example of the challenge for
us a little bit. But I think we handle it pretty well. We
looked at the effects of minimum wage.
Mr. Brat. Yep.
Mr. Hall. Ton of literature about minimum wage.
Mr. Brat. Yep.
Mr. Hall. Lot of it has an agenda. A lot of is not very----
Mr. Brat. Right.
Mr. Hall. So, we did a lot of sorting through; not who the
people are but sorting through the actual research. What was
good research, solid research, what was not.
Mr. Brat. Yeah.
Mr. Hall. We culled that down and focused on things. It was
the actual work we tried to focus on.
Mr. Brat. Right.
Mr. Hall. That was really what got us down to where we had
somewhere to go. And I think that is sort of how I think about
the people we talk to. We try to let their research speak for
them.
Mr. Brat. Right. Right. I know what is somewhat missing is
the normative aspects of economics, right? We try to abstract
from that and act like we are doing objective, you know, social
science, when it is very hard to come by that. Am I already
over?
Chairman Womack. Yes.
Mr. Brat. Sorry, I thought I had 28 left. All right, Mr.
Chairman, thank you very much for running the hearing. Thank
you very much for being here.
Chairman Womack. Thank you, Mr. Brat, for your commentary.
We have two that have joined the dais. Ms. Jackson Lee, you can
be next. Are you prepared?
Ms. Jackson Lee. I am.
Chairman Womack. Okay, Ms. Jackson Lee, from Texas.
Ms. Jackson Lee. Thank you, Mr. Chairman, and
congratulations to your position. And Mr. Yarmuth, ranking
member, thank you for this important hearing. To Dr. Hall,
thank you so very much for your patriotic service to this
Nation. I was just in the Judiciary Committee, voting on the
need for transparency and to view something called the Nunes
memo and the underlying materials, in as much as my colleagues
on the other side of the aisle have chosen, in certain
Committees, to issue statements without facts. Is it the role
and the mission of the CBO to present whatever they present on
the basis of facts?
Mr. Hall. Absolutely.
Ms. Jackson Lee. I recall being here in 1997 and, in
actuality, it was the budget resolution of 1997 that created
the Children's Health Insurance Program. I am not sure if you
were on staff or you might be aware of that, but good things
can come out of a budget resolution we have offered to save
lives.
But allow me for a moment just to create the atmosphere
very quickly. Unlike in a dictatorship, autocracy, or monarchy,
where the king is law, in a constitutional democracy, such as
the United States, the law is king. And you can judge the
soundness and health of a constitutional democracy not by the
physical health, the mental health of the chief magistrate, but
the vitality, robustness, strength, and resilience of its
critical institutions.
The President began his term in office by disparaging and
distrusting the intelligent community. He learned that the FBI
was investigating this Russian interference of the elections
and whether the Trump campaign personnel were involved.
The President tried to coerce the personal allegiance of
FBI Director Comey. Failing to secure that, he fired him. When
Special Counsel Mueller was appointed to take and oversee the
Russia-Trump investigation, the President and his Republican
acolytes in Congress began a campaign that continues to this
day of obstructing, disparaging, and trying to discredit.
And here, we are now looking at an institution that has
since 1974 has in a nonpartisan manner done the work that it
should do. And we are being disparaged and litmus test of who
voted for whom. I would just ask a simple question: as you are
looking at talented analysts, others with Ph.D.'s and masters,
do you ask them to show you, first of all, their voter
registration card?
Mr. Hall. Absolutely not.
Ms. Jackson Lee. And then, since we do not really have
registration parties, or at least they are not in my State, in
Texas, do you ask them what political party they are in?
Mr. Hall. I do not.
Ms. Jackson Lee. As you continue discussion to oversee the
work that you do, and I assume teams are called together of
expertise and they are analyzing. In that discussion, do you
ask who you voted for President of the United States?
Mr. Hall. No.
Ms. Jackson Lee. Would that be the appropriate guide in
which you make your determinations for those very important
work that you are doing?
Mr. Hall. Absolutely not.
Ms. Jackson Lee. So, let me precede on this. Is this a
document that you have produced?
Mr. Hall. Yes.
Ms. Jackson Lee. ``10 Things to Know About the CBO.''
Mr. Hall. That is right.
Ms. Jackson Lee. ``Number one: lawmakers created the CBO to
give the Congress a stronger role in budget matters.'' Is this
a political statement?
Mr. Hall. I hope not.
Ms. Jackson Lee. Well, I mean, did you intend it to be a
political statement?
Mr. Hall. I did not.
Ms. Jackson Lee. ``Number two: the Congress sets the CBO
priorities.'' Did you intend that to be a political statement?
Mr. Hall. I did not.
Ms. Jackson Lee. I ask unanimous consent to put this
statement of the CBO into the record.
Chairman Womack. Without objection.
Ms. Jackson Lee. Thank you Let me ask, specifically,
points. The recent tax bill made substantial changes to the Tax
Code that will have wide-ranging impacts on the budget and the
economy. Can you walk us through how you bill that into your
baseline? And I know my time is short, so abbreviate.
Let me give you this other one. And what is CBO's best
estimate of the impact of the recent tax bill on the deficit?
And do you do this in a nonpartisan way? And if you can
remember the third question, would you explain why the scoring
of a simple CHIP extension changed after the enactment of the
tax bill?
Mr. Hall. Sure, okay. The actual tax bill itself was scored
by the Joint Committee of Taxation. We are required to take
their estimate and put it in to the estimate. But when we do
our baseline, which we are working on right now, we will fold
in the effects of the tax bill.
Ms. Jackson Lee. May I pause you for one moment because of
my time?
Mr. Hall. Sure.
Ms. Jackson Lee. Can I get that in writing?
Mr. Hall. Sure.
Ms. Jackson Lee. Get your staff to remember that. So, let
me just jump to this question.
Mr. Hall. Okay.
Ms. Jackson Lee. Is this tax deficit going to have an
impact on the budgeting process of the United States? The tax
bill being passed creating a $1.4 trillion deficit, is that
going to create an impact? I just said impact.
Mr. Hall. Sure. No, it will likely change our forecast for
the next 10 years or 30 years on budget.
Ms. Jackson Lee. And impact government as well? So, the
deficit tax scam bill is going to impact it. Let me ask you
this. You talked about the question of an aging population.
Full employment, or the opportunity for people to work
increased the engine of the economy. So, suppose, just
speculate, DREAMers were able to work, or younger population;
does that drive the economy?
Mr. Hall. The effect of any of those things on the labor
supply is part of our analysis.
Ms. Jackson Lee. So, all of that plays into it.
Mr. Hall. Yes.
Ms. Jackson Lee. And you make the analysis fairly, without
any attention to political yeas or nays?
Mr. Hall. That is correct.
Ms. Jackson Lee. I thank you. With that, Mr. Chairman, I
happily yield back. Thank you very much.
Chairman Womack. Thank you, Ms. Jackson Lee. Mr. Grothman,
Wisconsin.
Mr. Grothman. Thank you, sir. I was at a couple of other
meetings first, but I decided to save the best for last.
Chairman Womack. Understood.
Mr. Grothman. I will give you a couple of questions kind of
off the top. I know this has been asked already. What time
every year do you come out with your estimates, as far as
future revenue estimates?
Mr. Hall. We do our first baseline analysis typically
around this time of the year. We are going to be delayed
because we are working on the tax bill.
Mr. Grothman. Okay. I would like to ask you, because there
is a feeling that the business optimism may have changed or
attitudes toward government may have changed when President
Trump was elected. Could you tell us right now what the
receipts were? Do you have the receipts yet for fourth quarter
last year? Government income tax receipts?
Mr. Hall. No, I do not think we do. But I certainly do not
have them in front of me, I am afraid.
Mr. Grothman. Okay. Are they available yet?
Mr. Hall. If they are, we can get them to you.
Mr. Grothman. Okay, well, we will go back.
Mr. Hall. They probably are.
Mr. Grothman. We will look at the third quarter.
Mr. Hall. Okay.
Mr. Grothman. Do you have the receipts for the third
quarter of 2017?
Mr. Hall. I am sure we do.
Mr. Grothman. Do you know whether those were higher or
lower than your estimates were for the prior year, at the time
you came up with an estimate?
Mr. Hall. Yeah, yeah. No, I do not know. We actually, every
quarter, we do produce a little document that tells you how we
are doing with receipts.
Mr. Grothman. But you do not know whether it was above or
below projections?
Mr. Hall. I do not off-hand, no. I am sorry.
Mr. Grothman. You know, I want to like you a lot. That is
usually a big deal. Okay. That just kind of amazes me, but we
will switch gears a little bit. You have said that you want
about a, what, 9 to 10 percent increase in spending next year
over last year? Is that true?
Mr. Hall. Oh, yes, that is right. That is right.
Mr. Grothman. Right. And you are not alone in that.
Mr. Hall. Right.
Mr. Grothman. I mean, everybody thinks the problem we have
in this government is we are not spending enough money, so I am
not going to single you out for that. But you are apparently,
right now, spending substantially more than in President Bush's
last year, correct? It has been 8 years ago.
Mr. Hall. I am sure that is true.
Mr. Grothman. Right. They always feel as things become more
computerized or automated, you should require less people. But
you feel you need a substantially larger staff today than 8
years ago?
Mr. Hall. We are trying to respond to Congressional
interest in speeding up some of our estimates and providing
more transparency. And if we are going to do that, we need more
staff.
Mr. Grothman. Okay. You think Congress is asking a lot more
questions than they were 8 years ago? You really feel the
demand. Maybe it is the demand for your services is much
greater now than it was 8 years ago?
Mr. Hall. I was not around 8 years ago, but I am sure it is
true, actually. But a lot of the transparency stuff is just not
free. You know, we have to take time to do that, and something
has to give.
Mr. Grothman. Okay. You right now have 233 full-time
employees. Is that true? 233? And how many employees do you
think you would need to adequately do your job?
Mr. Hall. I think we are fine adequately doing our job now,
but if Congress wants more from us, we have a plan to increase
our staff by only about 20 people over the next 3 years that we
think will enhance----
Mr. Grothman. Okay, right now you feel you have enough
people to deal with inquisitive congressmen? You are worried
more about the future?
Mr. Hall. Well, let me put it this way. Since I have been
at the job, we have way more work than we can do. And so, we
just have to prioritize things.
Mr. Grothman. Okay.
Mr. Hall. So, one of the more frustrating things for me is
dealing with individual Members who want some of our time, when
at the same time, we are working very hard all out on some
other work for a Committee. And it is just a matter of
resources.
Mr. Grothman. Okay. You think sometimes Congressmen ask
dumb questions?
Mr. Hall. No. No, actually, they do not.
Mr. Grothman. Good. In order to turn around stuff on a
timely basis, you feel you need about 20 more people than you
currently have? And if you were given your rather substantial
increase, you would hire 20 new employees. Is that what you
would do with it?
Mr. Hall. That is right. But also, some of it is our
increase in cost of doing business for us, which includes cost
of living raises for people.
Mr. Grothman. Okay.
Mr. Hall. If you do not get money for cost of living, then
we have to go down a couple of people.
Mr. Grothman. Okay. Okay, those are the questions. I will
yield the remainder of my time. Thank you.
Chairman Womack. Thanks to the gentleman from Wisconsin. My
ranking member has been very patient through this entire
process, deferring his questions to the end, as I have. And I
want to yield to the gentleman from the Commonwealth of
Kentucky, Mr. Yarmuth.
Mr. Yarmuth. Thank you, Mr. Chairman. And it has been an
interesting session. I have enjoyed the conversation. So, thank
you, Dr. Hall. Thank you for your testimony and your responses.
They have been very cogent, and I appreciate them. And I also
want to add that I have been the beneficiary of visits from you
and your team and they have very, very valuable. I have had the
pleasure of coming to your place of business and your team is
very impressive, as well.
First of all, I want to mention, I think it was my friend,
Mr. Woodall, who talked about not having a sense of the bias of
the leadership of the CBO. And I will say that in the, I think,
6 years that your predecessor was here when I was on the
Committee. I never for an instant had an idea of what his
personal bias was. And I was pleased to find out after he left
the position that he was pretty liberal.
And I will say that I have never had one indication in
listening to you and talking with you of what your personal
bias may be, too. So, I salute that. This is a totally
rhetorical question, but have you ever done an analysis of the
cost per piece of legislation enacted? The CBO cost of a piece
of legislation enacted?
Mr. Hall. Yeah, we have not in large part, because it
varies so much. It can be a piece of legislation changed in the
name of a building or it can be something we worked on for 18
months.
Mr. Yarmuth. Right, and just because Mr. Grothman asked the
question, in this document that you provided, it says that in
2017, you did 740 reports. Do you have any sense of how that
has grown, maybe just within your tenure?
Mr. Hall. Yeah, we are probably 100 or so above. And in
some respects, it is a little misleading, because so much of
our work is that technical assistance side that, you know, if
we wrote down the instances of technical assistance, we are up
to something like 10,000 of those. So, to give you an idea.
Mr. Yarmuth. A lot of work. I think it was Mr. Renacci
asked you a question, and you were responding about--this is
going back to the ACA--the situation with the exchanges, and
you were cut off. Would you like to want to continue to make
that? t was an explanation of what was happening in the
exchanges and how that might relate to coverage and costs?
Mr. Hall. Well, sure. Well, one of the points I certainly
want to make is, while we wanted, of course, to get an estimate
of the exchanges correct, more than that, we wanted to get the
budget impact correct. And so, we have actually written a
little piece that goes through how that worked out for us; you
know, how accurate we were on the spending, on the subsidies,
how accurate we were on the number of people who were
uncovered, and including the exchanges.
So, it is a bit more of a complete look of things. And then
one of the real challenges, of course, especially with the ACA;
implementation was such an important thing. And you know, we do
what we can, but we really kind of wind up assuming that
implementation is going to be about average, about the same as
other piece of legislation; and that does not always happen.
Mr. Yarmuth. I do not want to spend too much on healthcare,
but I do want to ask one question. When we put together the
ACA, one of the things that we focused on was making sure that
preventive care was a significant part of the agenda, because
we believed, those of us who were involved in that, that
preventive care ultimately has a significant benefit on the
budget in reducing long-term healthcare costs. Has the CBO, to
your knowledge, ever done a score on the benefits of preventive
care?
Mr. Hall. Yeah, the one that had the clearest sort of
result was from cigarette tax. And the cigarette tax, you know,
there would be revenue generated from the tax. There would be
increase of revenues from better health. That had a real
impact.
In terms of spending, it had sort of odd counter, right,
because the cigarette tax would reduce the number of smokers
and that would reduce Medicaid and Medicare spending, but then
people would live longer. And that would increase government
spending, because they are living longer. So, there was an odd
thing there to sort of balance out the spending, which is an
odd part of what we do, sometimes.
Mr. Yarmuth. Right. But inside the budget window.
Mr. Hall. Right.
Mr. Yarmuth. You know, that is probably not going to be as
great as an impact, I would not think. But, just in terms of
pure preventive care, the ability to go and have checkups
annually without any copays or so forth, has there ever been a
score done on those types of initiatives?
Mr. Hall. Yeah, I can look see if we got some more
examples. The tax was just really obvious. Sometimes, the
preventative medicine stuff is hard because there is not as
much evidence as we would like to sort of base the analysis on.
Mr. Yarmuth. Right. Moving to another question, and I have
talked about this in my contexts, but the idea that when CBO
puts out a number, like 23 million, automatically, that gets
used for our political purposes. But it gets kind of in
concrete in the public's mind. Has the CBO contemplated--and
maybe this is a restriction we have put on you--that you could
create a range of estimates so that, first of all, it would
narrow your error rate? But also, it would not be something
that people actually rely on for arguments, when in fact,
nobody is ever going to be accurate exactly. And the range
might be more useful.
Mr. Hall. Well, my starting point is, it is a Budget
Committee thing. The point estimate is used in enforcement. And
so, the Budget Committee needs a point estimate. So, we try to
characterize uncertainties best we can. And sometimes, we can
put in ranges, but that is hard to do. To be honest, so much
uncertain is unknown unknowns.
Mr. Yarmuth. Could you walk through maybe some of the other
requirements that are either in statute or otherwise that
affect how you develop the baseline and score legislation
relative to that baseline?
Mr. Hall. Oh, yeah, there is quite a lot. You know, for
example, how we treat Social Security trust fund and et cetera.
We are directed to assume that that pays out, rather than the
trust fund cuts off benefits. You know, when we forecast
discretionary spending, we are not really forecasting it. We
just put an inflation rate in and assume that. So, most of
those little rules are directed either through law or through
the Budget Committee.
Mr. Yarmuth. So, that kind of goes to Mr. Brat's comment
about it is on us to actually deal with some of these. Just
wanted to talk a little bit about something that I am obsessed
with, and that is the pace of change in society and how that
complicates a lot of policymaking, not to speak of your role.
I remember when Secretary Geithner used to come before the
Committee, and one time, I asked him, we were talking about 30-
and 40-year projections. And I asked him how reliable he
thought 30- and 40-year projections were. And he said, ``I do
not think any projection outside of 5 years is reliable.''
And the pace of change in the world has only quickened
since then. And I was reading the other day an interview that
was done with the managing director of Mercedes-Benz. And he
had some unbelievably disruptive predictions about what was
going to happen in various fields; transportation, energy,
education, the legal profession, within the next 10 years. And
they are things that, for instance, basically the cost of
electricity because of the reduction in the cost of solar power
going to virtually zero. That obviously has huge implications;
the abolition of a huge percentage of the jobs that now exist.
We know about the possibility of about 170,000 truck
drivers losing their jobs imminently because of self-driving
vehicles. A lot of these things are happening. My question is,
is any of that done in the CBO? You do not have any futurists
on staff, but that might be helpful. We need them in Congress,
I know that.
Mr. Hall. Actually, I rather like what we do. There are
unknown unknowns, but we can look at things like productivity.
Historically, productivity is ranged about 2 percentage points.
You know, you go back and look at labor supply; how is that
ranged historically? We can then put those into our long-term
forecast, and we have a point estimate.
Well then, we can vary those important variables by how
they varied in the past and give you some idea of the direction
we are heading. And of course, that does not tell you about the
real outliers, but it does give you some idea of historically,
how much variation we have had, and what does that mean for our
forecast.
Mr. Yarmuth. Great. Well, thank you once again for your
work, your service, and your appearance here today. I yield
back.
Chairman Womack. Thank you, Mr. Yarmuth. I hope not to take
all of my 10 minutes. I want to bring out a couple of
questions. One: CBO has nine distinct divisions. When was the
last time that there was any kind of a review of the
organizational structure of CBO? And how often do you access
the org structure, if you will, of the organization?
Mr. Hall. I mean, we certainly think about it. We had a
little turnover in the heads of those divisions. I think more
than half of them have been replaced over the last 3 years
because of retirements, and et cetera. And when that happens,
we do think about do we have the right sort of organization,
when you think about that.
We have not given any real clear thought, frankly, because
I think it works pretty well. We work in teams. You know, our
budget analysts are separate from our program analysts, our
program folks. A lot of what we try to focus on, more so I
think than the organization, is trying to make sure that they
coordinate better, they work better together. You know,
sometimes our budget analysts are really different than our
Ph.D. economists. And we need to make sure that they listen to
each other, work together, because there is propensity for them
to be apart. And that is probably a function of our
organization.
Chairman Womack. But you are not afraid to get outside the
box?
Mr. Hall. No, no. Not at all.
Chairman Womack. Okay. Just a couple of words about Joint
Committee on Taxation. And I realize you are on the floor, I
guess, right above you and they are probably watching, so you
have got to be careful with your answer. Do you have a really
good relationship with them? Is it a good collaborative
relationship with them?
Mr. Hall. I think so. I think so. We have pretty distinct,
clear roles. And they have been very patient about helping
review some of our stuff, and we certainly work well together,
I thought, through the healthcare, because all of those
healthcare estimates fall the Joint Committee on Taxes.
Chairman Womack. From time to time, because of the makeup
of your organization, this goes back to my collaborative
question. Are times when your folks in CBO might think
differently about something come out of Joint Committee on
Taxation? And are they free to exchange those ideas, in hopes
of getting a little closer to the truth, as we all want to
know?
Mr. Hall. I think so. I think the biggest room for
improvement, frankly, is that if we were a little bit more
transparent with each other. You know, I do not think we know a
ton about their model. I do not know if they know a ton about
our model. But we do manage to work together. But I cannot
think of instances where we did any sort of second-guessing on
what they have done.
Chairman Womack. And I do not want you to speak for Joint
Committee on Tax, but since the passage of the tax cut and jobs
act, there have been a number of companies and businesses,
large and small, that have made significant decisions about how
they are going to take this windfall, real or perceived, and
how it is going to impact downstream to people that work for
them with bonuses, raising minimum wages, imputing more
resources into retirement plans, and those kind of things.
I know there is expected to be some of that, but has the
avalanche of this news coming out, has it surprised anybody in
your organization, in Joint Committee on Tax?
Mr. Hall. Yeah, yeah. I know we have had some discussions
about it, you know, from our look at the forecast with the tax
cut in it. We have done some going back and looking to see,
now, how consistent is this with what we have seen with the
initial reaction to the tax bill? I do not think we have
anything that is been dramatically different than we expected.
And hopefully, we will try to talk about some of that when we
release our budget outlook.
Chairman Womack. And to be respectful of your time, my last
question is, the U.K. has, in their CBO equivalent, the Office
of Budget Responsibility, has a process where they take certain
policy issues and that they give some kind of a confidence
factor to them, regarding the data that is used, regarding the
modelling that is used, and regarding the behavioral aspect of
it. And then they give kind of a final grade to that.
Does CBO have something like that? I know you have spoken
generally about how you look at your products from a confidence
standpoint. But do you have anything that has a metric like
that or a confidence factor built into it? And if you do not,
have you considered using something like that and sharing that
with the Congress?
Mr. Hall. Yeah. You know, I mean, our confidence and our
uncertainties is sort of mixed into our work, but that is an
interesting idea. We have had some interactions with the
British equivalent. I think it sounds like it would be worth
our time to take a look at what they do and see if we can get
some good ideas from them. If it is something that you all
think is valuable, we would love to figure out how to do it.
Chairman Womack. Very good. Dr. Hall, thank you for
appearing before this Committee today. I want to advise members
that you can submit written questions to be answered later in
writing. Those questions and your answers will be made part of
the formal hearing record. Any member who wishes to submit
questions or any extraneous material for the record may do so
within 7 days. And with that, this hearing stands adjourned.
[Whereupon, at 12:32 p.m., the Committee was adjourned.]
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