Transparency and Objectivity
CBO is responsible for providing nonpartisan and thoughtful analysis to the Congress, and the agency is proud that its success in carrying out that mission, for more than 35 years, is widely acknowledged both on and off Capitol Hill. CBO has the utmost confidence in the objectivity of the work it produces, and the agency devotes considerable time and energy to explaining the basis for its findings as clearly as possible.
In fulfilling its responsibility to the Congress, CBO works hard to ensure that its cost estimates and other analyses are impartial and well researched. To that end, the agency:
- Draws on the knowledge and insights of the talented analysts on its staff as well as input from outside experts (including professors, analysts at think tanks, private-sector experts, and employees at other government agencies) representing a variety of perspectives;
- Applies a rigorous internal review process that involves multiple people at different levels in the organization;
- Makes no policy recommendations; and
- Enforces strict rules to prevent financial conflicts of interest by its employees and to limit its employees’ political activities.
In preparing its cost estimates and other analyses, CBO uses data and other information from a wide variety of sources, including federal agencies, state and local governments, and industry groups, among others. CBO closely follows professional developments in economics and related disciplines, encourages open discussion of analytic issues, and consults with outside experts in a broad range of relevant fields for guidance on ongoing work. It also holds regular meetings with its Panel of Economic Advisers and Panel of Health Advisers, which consist of experts with a wide variety of backgrounds and special knowledge, and staff members of relevant Congressional committees are invited to attend the meetings. Although CBO draws upon a diverse set of outside experts, the agency’s findings are based on its own judgments, and it is solely responsible for the substance and presentation of those findings.
CBO considers the transparency of its analyses to be a basic value of the agency. Although much of the analysis that CBO undertakes is very technical in nature, the agency works hard to explain the basis for its findings so that Members of Congress, their staff, and outside analysts can understand the results and question the methodologies used.
To that end, CBO discloses its methodology and the reliability of its methodology in numerous ways:
- The agency makes its cost estimates for public pieces of legislation and reports presenting other analyses available immediately on the website to all Members of Congress, their staff, and the public.
- The agency's formal cost estimates include descriptions of the basis for the estimates.
- Many of the agency's reports include substantial discussions of the relevant research literature and CBO’s modeling approaches—in the text, in special boxes, or in appendixes. Examples include the following:
- The analysis of the economic impact of the President’s budget, released annually.
- The projections of long-term growth in the costs of health care used for the Long-Term Budget Outlook, released annually.
- The estimates of the effects on output and employment of the American Recovery and Reinvestment Act, released quarterly in 2009 through 2012.
- The reports on the distribution of household income and federal taxes, released periodically.
- Updated estimates for the insurance coverage provisions of the Affordable Care Act, released periodically.
- The estimates of the economic impact of alternative fiscal policies, included in the 2011 testimony on policies for increasing economic growth and employment.
- The report on the budgetary effects of raising the cigarette tax.
- The report on the effects of raising the minimum wage.
- The regular updates to the agency's baseline budget projections include an accounting and explanation of the sources of revisions to those projections.
- The agency releases data and other technical information with some of the key reports. Examples include extensive spreadsheets released with the thrice-annual budget projections and with the annual report on the long-term budget outlook, as well as with the report on the fair-value cost of federal credit programs.
- The agency releases regular analyses of the accuracy of its economic forecasts.
- The agency releases background reports to provide details about its analyses for nonexperts, and working papers to provide technical descriptions of its analyses for experts. Some examples include these:
- A background paper, a working paper, and another working paper describing the agency's analysis of the responsiveness of the labor supply to changes in tax rates.
- A background report describing the main features of the microsimulation model used for long-term analysis of Social Security.
- A working paper on the tax elasticity of capital gains.
- A working paper on the short-term effects on output of changes in federal fiscal policies.
- A report on how CBO projects income.
- Working papers on wages and on benefits and total compensation in the federal government and private sector.
- Working papers on Medicare's demonstration projects on disease management and on value-based payment.
- The agency undertakes and publishes analyses of the sensitivity of its estimates to key parameters. For example, the analyses of the economic effects of fiscal policies include alternative estimates based on ranges of assumptions about the short-term stimulus from lower taxes or higher government spending, the response of the labor supply to changes in tax rates, and the effects of budget deficits on private saving and international capital flows. The agency's report on employment-based health insurance under the Affordable Care Act showed how alternative assumptions would alter the estimates.
- When the agency revises its view of key aspects of its analyses, it explains the rationale for those revisions. Examples include reports explaining the agency’s revised view of the effects of several policy options: the effectiveness of malpractice reform in reducing health care costs, the effect of prescription drug use on Medicare’s spending for other health care services, and the effect of raising the age of eligibility for Medicare to 67 on the budget deficit.
- The agency responds to letters from Members of Congress requesting additional information on methodology. Examples include reviews of how CBO views the budgetary impact of long-term agreements by the federal government to purchase electric power and the budgetary impact of opening more federal lands to oil and gas leasing.
- Members of CBO's staff present information about how the agency does its analyses and the results of those analyses at academic and professional conferences so as to encourage input from outside experts.
- CBO's analysts spend a great deal of time explaining details underlying the cost estimates and reports in phone calls and meetings with interested Members of Congress and their staff.
CBO’s Policies Regarding Potential Financial Conflicts of Interest
A financial conflict of interest would arise if an employee’s personal financial interests conflicted with the conduct of his or her duties at CBO. To prevent such conflicts of interest and protect the agency’s reputation for impartiality, CBO enforces strict limits on its employees’ financial interests and activities.
The Ethics in Government Act requires CBO’s employees earning at least 120 percent of the GS-15 rate of basic pay ($119,553.60 in 2012) to submit financial disclosure statements to the Clerk of the House. The Office of the General Counsel reviews the financial disclosures for conflicts of interest and substantive compliance.
CBO also requires all employees to disclose to their managers any financial interests they or their family members have in any organization that would have an interest in the conclusions of any analysis in which the employees are involved during the performance of their official duties. That disclosure is necessary regardless of the size or value of the interest, but it is not required for diversified mutual funds and unit investment trusts.
An employee’s managers, in consultation with the Office of the General Counsel, determine whether any disclosed interest would interfere with, or might appear to interfere with, the employee’s work assignments at CBO. Depending on the situation, conflicts of interest may be mitigated through such actions as recusal, giving the employee other work assignments, independent review of the work product, or divestiture of specific financial interests. An employee need not divest his or her holdings or recuse himself or herself from an assignment if the holdings involve securities issued by interested entities and owned by the employee, his or her spouse, or minor children when the securities are publicly traded or are long-term federal government or municipal securities and the aggregate market value of the holdings issued by all similar entities does not exceed $15,000.
Because of the time involved and the potential for conflicts of interest, CBO employees who wish to engage in outside employment—with or without compensation—must obtain approval from their managers. In addition, a number of specific statutory prohibitions apply to CBO employees. No CBO employee may act as an agent for anyone, regardless of compensation, before any government entity in any matter or proceeding in which the United States government has an interest; accept compensation of any kind from a foreign government; or act as an agent for a foreign principal. Under the rules of the House, employees earning at least 120 percent of the GS-15 rate of basic pay are also subject to restrictions on total outside earned income, fiduciary relationships, and service as a board member or officer of an organization.
Moreover, CBO employees earning 120 percent or more of the GS-15 rate of basic pay may not accept an honorarium for a speech, article, or appearance. An employee earning less than the threshold amount may receive an honorarium for a speech, article, or appearance, except when: the subject matter directly relates to the employee’s official duties; the payment is made because of the status of the employee; or the person offering the honorarium has an interest that may be substantially affected by the performance or nonperformance of the employee's official duties.
CBO's Policies Regarding Political Activity
Because CBO’s reputation, credibility, and usefulness to the Congress depend on its being—and being perceived to be—an objective organization free from political bias and involvement, the agency imposes certain limitations on employees’ political activities and public advocacy. At the same time, CBO wants its employees to have as much opportunity as possible to participate in civic life and comment on matters of public concern. Therefore, CBO’s policies in this area are designed to balance the interest of the agency in maintaining its reputation for objectivity and the interests of employees in engaging in political activity and public speech.
CBO employees are prohibited from participating in political activity if such participation would identify, or appear to identify, CBO with a political campaign, candidate, officeholder, or cause. The specific positions taken are irrelevant; rather, the potential harm to CBO’s reputation for objectivity comes from association with political activity or public advocacy.
Some activities present negligible potential harm because an employee’s name and employer do not arise in the course of the activities. Therefore, as long as an employee does not do something to identify himself or herself with CBO (such as wearing clothing with the CBO logo), he or she can participate in the following activities: attending rallies, registering voters, driving voters to the polls, stuffing envelopes, distributing literature, canvassing by telephone, voting, and making campaign contributions below the reporting threshold of the Federal Election Commission (currently $200). In addition, CBO employees can generally seek local, nonpartisan positions or offices, such as membership on a school board, advisory board, or zoning board; however, such positions are considered outside employment (discussed in an earlier section), even if uncompensated.
The likelihood of potential harm to CBO’s reputation and, therefore, the limitation that CBO needs to impose on an employee depend on a number of factors. When determining whether a specific political activity beyond those mentioned in the previous paragraph is permitted, CBO considers the employee’s intended degree of participation, the nature of the activity, the time and place of the activity, the employee’s position at CBO, and the connection between the activity and the employee’s responsibilities at CBO. The potential harm to CBO generally is greater for political activities related to an employee’s area of analysis at CBO and for political activities by employees in senior positions; the potential harm is less for political activities by employees involved in the agency’s business operations (such as human resources, information technology, and acquisitions) than for employees involved in analytic projects for the Congress. Even past political activities can sometimes affect the perception of the objectivity of CBO’s work on certain projects, and CBO may take those past activities into account in assigning projects to employees.
CBO does not consider political affiliation in hiring: For any open position at CBO, the agency seeks to hire the best-qualified job candidate based solely on his or her fitness to perform the duties of the position. However, given the importance to the agency of being—and being perceived to be—free from political bias and involvement, for most positions at CBO, a person’s fitness to perform the duties is determined, in part, by whether the individual can carry out the responsibilities in an objective and nonpartisan way, and also whether that individual would be perceived to be free from political bias and involvement. Therefore, for most positions, CBO considers whether a job candidate has been publicly associated with a political campaign, candidate, officeholder, or cause, and if so, whether that job candidate would be able to carry out his or her duties objectively, and whether hiring that candidate would identify, or appear to identify, CBO with that campaign, candidate, officeholder, or cause. The specific positions taken are irrelevant; rather, the potential harm for CBO comes from association with political activity or public advocacy. The magnitude of potential harm to CBO’s reputation, and therefore the weight that CBO gives to this consideration in a hiring decision, generally depends on the nature of the position at CBO and on how recent and prominent has been the job candidate’s association with political activity or public advocacy.
For example, a job candidate who currently holds a position in an organization focused on politics or advocacy might be disqualified because the objectivity of his or her work at CBO could be called into question. That problem would be especially acute if the candidate’s assignments at CBO would include analyzing policies that he or she had recently been advocating for or against. At the same time, it would not be practical for CBO to limit employment to people who had never been involved in political activity or public advocacy. Therefore, a job candidate who has been doing objective analysis for some time generally would not be disqualified because of earlier political associations; the length of time required for such “cooling off” depends on the significance and prominence of those associations. Also, candidates for senior positions are held to a higher standard than candidates for junior positions, and candidates for positions that are primarily involved in the analytic work CBO does for the Congress are held to a higher standard than candidates for positions that are primarily involved in CBO’s business operations, such as human resources, information technology, and acquisitions.
In addition to the considerations just discussed that are specific to CBO, the Federal Election Campaign Act and provisions of the U.S. Criminal Code prohibit all federal employees from engaging in the following activities:
- Soliciting or receiving political contributions in any building where federal employees work, including office buildings of the House of Representatives;
- Soliciting campaign contributions from federal government employees, including employees of the House of Representatives; and
- Making a political contribution to a Member of Congress or other federal official who is the employer or employing authority of the contributor. What that means is unclear, but it might preclude CBO employees from making contributions to the Speaker of the House and the President pro tempore of the Senate.