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Alice Rivlin, the founding director of the Congressional Budget Office (CBO), died on Tuesday at age 88.
Rivlin, a PhD in economics, had a long and varied career, serving as budget director and No. 2 at the Federal Reserve under Bill Clinton. In more recent decades, she served as a kind of center-right Democratic éminence grise, teaming up with Paul Ryan to push privatization of Medicare and block-granting of Medicaid, and working with retired Republican Senator Pete Domenici (NM) to push a deficit reduction plan.
But creating the CBO was her crowning achievement. Created in the aftermath of Watergate, as Congress was attempting to assert its authority against an increasingly powerful presidency by creating a counterpart to the White House Office on Management and Budget, the agency has come to play a dominant role in debates over taxes, health care, defense spending — basically any legislative matter where money is involved.
The development of today’s CBO, a powerful, respected institution that has profoundly shaped the course of American public policy, was not inevitable. And no one person deserves more credit (or blame, depending on your view) for its current shape than Rivlin.
How Alice Rivlin helped build one of the most powerful agencies in Washington, DC
A couple months ago, my colleague Dylan Scott wrote an excellent, long, detailed piece trying to answer a seemingly small, technical question: Would a bill establishing Medicare-for-All meet the requirements of the US budget process?
To pass it with 50 Senate votes, you have to meet the requirements of the budget reconciliation process. To meet the requirements of the budget reconciliation process, you have to craft a bill that flies with the Congressional Budget Office.
If you zoom out, this process feels a bit ... bizarre. The American political system is set up in such a way that if Americans are going to get universal health coverage, they have to go through the CBO first. That’s just how important the CBO, and the budget process, are. They’re kingmakers with tremendous, albeit indirect, power over what money does and doesn’t get spent, what health care is and is not provided, what jet fighters and aircraft carriers are not built, and much, much more.
The CBO can thank Rivlin for this extraordinary power and influence.
In his history of the agency, University of Maryland political scientist Philip Joyce writes that the CBO’s image as a highly credible, impartial arbiter is due in large part to Rivlin’s influence. The institution’s pretense to objectivity “would have been a hollow promise … were it not for leadership decisions made by the first director, Alice Rivlin, in the organization of the CBO.”
First and foremost, as Andrew Prokop recounted in our CBO explainer, Rivlin decided the CBO would not “carry Congress’s water in its squabbles with the White House or openly advocate for certain bills.” It would not be beholden to the majority party in Congress, or committee chairs. It would act independently, evaluating the cost of bills as they came up for consideration and preparing independent economic projections.
In hearings during the agency’s early years, Joyce writes, there are “a striking number of instances in which Rivlin asserted her vision of this broader role for CBO, often in the face of attempts from budget committee members to articulate a narrower role.” She invited criticism from the left to bolster the agency’s reputation for violating pieties of both parties. “Though she was appointed by Democrats, Rivlin proved herself willing to challenge President Jimmy Carter’s White House, issuing harsh estimates about his energy plan’s effects,” Prokop writes.
Rivlin was also willing to issue scathing reports once Ronald Reagan took office and proposed massive tax cuts, noting that the cuts would inevitably blow up the US budget deficit. She fiercely resisted efforts by senators like Bob Dole to limit the agency’s purview.
A whole section of Joyce’s final chapter is titled simply “The Importance of Alice Rivlin.” Her creation of the CBO, he writes, shows that “a leader with a strong vision can create a sustainable culture, provided that subsequent leaders and employees commit to that culture.” She created an image of the CBO as a neutral arbiter, and the very commitment to avoid a partisan allegiance for the agency has made it uncommonly powerful in partisan disputes.
And perhaps most importantly of all, she chose to give the CBO, and herself, a public profile. She publicized their reports in the DC press. She chose to have a vastly greater press presence than the Congressional Research Service, which as Joyce says “bends over backwards to be low profile,” or the Government Accountability Office, which conducts auditing but also lacks the CBO’s public gravitas.
“If Congress wanted to bury CBO analyses and put the budget committees out front, she held press conferences,” Joyce recalls. “She intentionally looked out for the profile of the institution, even when that upset her political masters.”
There is power in respectability
Information is cheap in Washington, if you don’t care about the quality. There are plenty of think tanks and research institutes and industry fronts that can produce reports saying whatever you want those reports to say. It was trivially easy for, say, the tobacco industry to fund an institute producing white papers showing that smoking isn’t actually bad for you.
But reliable information is expensive, and rare. After a while, and enough consensus statements by pulmonary doctors and public health experts, all the pro-tobacco studies that Philips Morris and RJ Reynolds could afford … stopped working. They just weren’t credible in the face of higher-quality information. Harvard political scientist Daniel Carpenter has argued that this is how the Food and Drug Administration (FDA) became the most powerful regulator in the US: not by capitulating to industry, but by building a reputation for expertise and caution that let it wield power with more authority.
The CBO, due to Rivlin’s careful positioning, has developed a similar reputation. And that has given it remarkable influence in a number of subsequent legislative battles.
It arguably dealt the death blow to Bill Clinton’s efforts to pass health care reform. The CBO had to answer a big question: Are the health “alliances” that the bill proposed to establish — pooling together individuals and employers to negotiate lower rates for private coverage — considered government agencies? And if so, are premiums paid to them by individuals and employers taxes? If yes, then the CBO would have to score the plan as a gigantic tax increase — and the plan would likely be dead in the water politically.
Supporters of the proposal knew this, and Sen. Ted Kennedy all but threatened to destroy the CBO’s funding if it made that decision, according to Haynes Johnson and David Broder’s book on the health care battle. Knowing that risk to the agency’s future, then-director Robert Reischauer decided to classify the premiums as government revenue anyway — a tax increase.
Joyce found that Clinton administration veterans, almost to a person, cite the CBO report as a principal reason the health plan failed, second only to difficulties in negotiations between the president and Congress.
The CBO didn’t kill Obamacare in 2009 and 2010, but it did profoundly shape it. Joyce reports that when the CBO scored the final bill as costing under $1 trillion over 10 years and saving money, Obama made that his main talking point for winning over House moderates.
Budget math also seeped into the bill’s design. The Medicaid expansion and premium subsidies in Obamacare didn’t kick in until 2014. There was no policy rationale for that, but it did lower the expenses of Obamacare in a 10-year budget window, making it easier for the proposal to score as lowering deficits. The CBO’s scores showing that taxing employer-provided insurance would contain costs were a major motivation behind the bill’s “Cadillac tax” on expensive health care plans.
“It is completely unchallenged that CBO was viewed as the health care reform oracle (mostly on costs, but also on coverage) and that its analyses were viewed as more or less holy writ by the media and public,” Joyce concludes.
And so it was in the 2017 tax fight, in which Republicans chafed against the discipline imposed by the agency, and so it will be in every significant taxing and spending dispute to come.
The CBO’s power has a substantive shape. It biases Congress toward lower deficits, for letting tax cuts expire, for using unlikely spending cuts in the future to pay for spending or tax cuts now. It’s less a left or right bent than it is an Establishmentarian, green-eyeshades bent. The agency is a immensely powerful voice for fiscal “seriousness.”
You can love or hate that role. But it’s an uncommon role for a relatively small agency of economists to play. And the CBO wouldn’t play anything like that role were it not for the contributions of Alice Rivlin.
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