September 15, 2023 | OPINION | By Zoraiz Zafar
The abandonment of the gold standard in 1973 under the Richard Nixon presidential administration brought about a range of economic concerns, including that of fiscal overspending. In essence, once the gold standard had been scrapped, Uncle Sam’s arsenal added yet another powerful weapon: a money printer. Thankfully, it did not take long for the D.C. bureaucrats of the time to look around and realize that none of them could be trusted with an infinitely growing, endless piggy bank.
As a result, the Congressional Budget and Impoundment Control Act of 1974 created the Congressional Budget Office to serve as a non-partisan agency that would provide unbiased economic projections to the United States Congress concerning legislation that was under consideration.
To hinder political appointees from seeping into the agency and compromising its meritocratic values, the appointment of the CBO Director was left to the discretion of the House Speaker and the President Pro Tempore of the Senate. Additional checks and balances were also added to the overall hiring process with the central goal to ensure that the CBO acts as a “source of truth” for the legislative wing of the federal government.
Yet, here we stand, nearly half a century later, with the question looming large: Has the CBO truly delivered on its promise of unbiased economic forecasting? Or, like other bureaucratic entities, has it grown into another swampy alphabet agency that fails to stay within its legally mandated bounds?
While the CBO was designed as a bulwark against partisan politics, its projections have often been subjects of contention, its methodologies scrutinized and its “unbiased” tag occasionally called into question. Not to forget that its track record, while impressive on many fronts, isn’t immune to significant and impactful misses.
For instance, the projections related to the Affordable Care Act, the Tech Bubble of 2001 and the 2007-08 Financial Crisis turned out to be overly optimistic and the costs of these events were far higher than anticipated. These instances should not be brushed off as mere miscalculations but should prompt deeper introspection into the efficiency and relevance of the agency in today’s world.
The 21st century has borne witness to an unprecedented democratization of knowledge and expertise. Today, numerous private think tanks, research organizations and even universities produce economic forecasts that rival, and occasionally surpass, the accuracy and depth of the CBO. They utilize state-of-the-art technology, artificial intelligence, real-time data analysis and, most of all, are incentivized to maximize the quality of their work due to the competitive nature of the free market.
In a world teeming with such expertise, is there a genuine need for a monolithic entity funded by taxpayer dollars to hold a quasi-monopoly on fiscal projections for congressional legislation?
One might argue that a multitude of private entities would result in a cacophony of forecasts, potentially confusing rather than clarifying the economic implications of legislation. But isn’t that the essence of democracy and free markets? Multiple voices lead to robust debates, refinement of ideas and ultimately better-informed decisions. By leaning into this diversified expertise, Congress might access a broader spectrum of economic insights, challenging its assumptions and refining its approaches.
Moreover, the privatization of such forecasting work could lead to significant savings for the taxpayer. Rather than funding a centralized agency with all its overhead and administrative costs, Congress could commission specific studies as needed, ensuring competition drives up quality and keeps costs in check.
It is crucial, however, to set certain standards for these private entities to ensure transparency, accuracy and accountability. Mechanisms should be in place to avoid potential conflicts of interest and to ensure the veracity of the data used. Privatizing the CBO’s role does not mean a free-for-all; it means transitioning to a system that is more adaptive, efficient and in tune with modern needs.
In conclusion, while the CBO was undoubtedly a well-intentioned creation for its time, ensuring fiscal responsibility in the aftermath of the gold standard’s abandonment, we must not shackle ourselves to the past. Institutions, no matter how venerable, should not be immune to scrutiny and evolution. It is high time we seriously consider whether the CBO, in its current form, still serves our best interests or if a more diversified, privatized approach to fiscal forecasting could better guide our nation’s economic journey into the future.