CBO’s Role in Budget Resolutions

March 11, 2013

The House and Senate Budget Committees have announced that they will be developing and voting on proposed budget resolutions this week. Past experience indicates that CBO will receive lots of questions about those budget resolutions and about our “estimates” of their impact. So, let me explain a bit about them.

What Is a Budget Resolution?

A budget resolution is basically a blueprint to guide Congressional action on budget-related legislation over the course of the year. It does not provide funding for federal programs or change tax law; rather, it sets overall spending and revenue targets, sometimes for as many as ten years. The committee report that accompanies the budget resolution provides an allocation of new spending authority and outlays among the Congressional committees that have jurisdiction over legislation that governs such spending. Sometimes those allocations give committees the budgetary flexibility to propose legislation that would increase projected deficits, and sometimes such allocations require them to take actions that would reduce those deficits. A budget resolution may include “reconciliation instructions” that direct committees to propose legislation having a certain budgetary result; a bill aimed at satisfying those instructions is entitled to expedited consideration in the House and Senate. A budget resolution is not a law because it is not signed by the President.

What Role Does CBO Play in Congressional Consideration of a Budget Resolution?

CBO assists the budget committees by providing informal estimates of the budgetary impact of various legislative proposals that the committees might want to allow for in the budget resolution; they may use those estimates as a guide in setting the spending and revenue targets for the budget as a whole and for individual committees. Although the budget committees’ reports provide some information about what policies they envision, the budget resolution itself does not specify those policies.

CBO does not analyze or prepare estimates of budget resolutions because they are targets for the Congress and its committees and do not contain legislative language for specific proposals whose budgetary effect we could estimate. Thus, CBO will make no assessment of the budget deficits or the amounts of spending and revenues that would result from any budget resolution approved by the budget committees.

Will CBO Do Any Long-Term Projections of Budget Resolution Plans?

In each of the past two years, CBO evaluated the long-term budgetary impact of certain proposed policies and specified streams of revenues and outlays that Chairman Paul Ryan of the House Budget Committee viewed as the extension of the 10-year budget resolution that was approved by that committee. However, as we stated in a letter to Chairman Ryan today, we cannot conduct such an analysis this year because we have not produced new long-term projections under current law since significant changes in law were enacted in early January. In the past two years, we were able to prepare a preliminary update of our previous long-term projections that incorporated changes in law (and in the agency’s economic forecast and technical estimating procedures) that had taken place after we produced those projections. Such an update was possible because those later changes were fairly small, but that approach is not feasible this year because the recent changes in law (in particular, in the provisions of the individual income tax) were quite large.

Bob Sunshine is CBO’s Deputy Director.