CBO's Role in Budget Resolutions

Posted by
Bob Sunshine
March 15, 2016

The Chairman of the House Budget Committee has announced that the committee will be considering a proposed budget resolution soon. Past experience indicates that CBO will receive lots of questions about those resolutions and about our “estimates” of its impact. So, as I have done in previous years, let me explain a bit about budget resolutions and CBO’s role in this process.

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; the budget committees 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 makes no assessment of the budget deficits or the amounts of spending and revenues that would result from any budget resolution approved by either of the budget committees.

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

Although CBO does not analyze budget resolutions themselves, the House Budget Committee has sometimes found it helpful for CBO to evaluate the budgetary impact of streams of revenues and outlays specified by its Chairman. Last year, for example, CBO assessed how federal debt and U.S. economic output would evolve from 2016 to 2040 under paths for revenues and noninterest spending specified by Chairman Tom Price. The projections showed how federal revenues and spending—and the resulting federal borrowing—under those paths would affect the economy and how those macroeconomic effects (or feedback) in turn would affect the federal budget. The projections did not incorporate any other potential effects of the changes in policies relating to revenues and spending that might be used to generate those paths. Such changes in policies could affect overall economic output not only by reducing federal borrowing but also by altering incentives to work and save and by altering federal investment; those effects would depend on the specific policies that were adopted.

This year, CBO has provided a similar analysis of the economic and budgetary consequences of a stream of revenues and noninterest outlays specified by Chairman Price; that analysis, Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Price, March 2016, spanning the period from 2017 through 2040, was released this morning. As in the past, those projections do not represent a cost estimate for legislation or an analysis of the effects of any specific policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures that Chairman Price released today as part of his proposed budget resolution.

Robert Sunshine is CBO’s Deputy Director.