Why Does Newt Gingrich Hate the Congressional Budget Office?

A blog about business and economics.
Nov. 22 2011 9:36 AM

Why Does Newt Gingrich Hate the Congressional Budget Office?

Newt Gingrich

Photo by Jessica McGowan/Getty Images

Those eager to see if anything trumps partisan loyalty in Washington, DC these days must be exstatic over the controversy Newt Gingrich touched off yesterday by referring to the Congressional Budget Office as a "reactionary socialist institution which does not believe in economic growth, does not believe in innovation, and does not believe in data that ithasnot internally generated." What would Doug Holtz-Eakin, the former CBO chief who's gone on to become founding head of the hottest new right-wing think tank in town say? Well, he called Gingrich's remarks "ludicrous." Institutional loyalty trumps partisanship!

But what's Newt's game here? As is often the case, beneath the overheated rhetoric is a germ of a valid point. The way the American tax code is structured, faster economic growth not only increases tax revenue, it increased tax revenue as a share of GDP. Consequently, extra growth is extremely valuable in budgetary terms and finding ways to super-charge growth is the best way to deal with long-term fiscal challenges. So any big thinking politician worth his salt is going to have a pocket full of ideas for how to super-charge growth. Gingrich, meanwhile, is nothing if not a lover of bigthink. He wants the CBO to verify that his pet ideas on natural resource extraction and tax cutting will generate a massive new era of economic growth that makes past budget concerns look trivial. What's more, he's probably convinced himself that history vindicates his position. Economic growth during the Gingrich Speakership was consistently higher than CBO forecasts, which consistently made the budget picture rosier than previously predicted. Common sense holds that Gingrich's pet policy ideas are not responsible for this coincidence, but common sense also holds that Gingrich sincerely believes he deserves credit for the spurt of economic good fortune that coincided with his period of maximum power.

Pyschology aside, the long and short of it is that conservatives have long dreamed of creating a CBO that will score giant tax cuts as affordable and they've never had a CBO chief—not even Holtz-Eakin—who's been willing to give them what they want.

Liberals, too, have a version of this. My former colleagues at the Center for American Progress are chock full of ideas that they believe will substantially increase the efficiency of the health care system, saving money and reducing the need for unnecessary treatments. Many of these ideas were included in the Affordable Care Act. But it turns out that the CBO isn't willing to score anything in this neighborhood as working. It's not that they didn't like CAP's particular ideas, they don't like the whole concept of scoring hypothetical efficiency gains which is very frustrating because nobody can seriously maintain that it's impossible to make the health care system more efficient. At the end of the day, however, there's no way for the CBO to play its designated referee role unless it sticks to fairly concrete models in a way that will frustrate cranks, visionaries, and big thinkers on all sides. 

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



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