The Chairman of the House Budget Committee has announced that the committee will be developing and voting on a proposed budget resolution this week. Past experience indicates that CBO will receive lots of questions about that budget resolution and about our “estimates” of its impact. So, let me explain a bit about such resolutions.
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.
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.
Although CBO does not analyze budget resolutions themselves, the House Budget Committee has sometimes found it helpful for CBO to assess the implications of its budget plan for years beyond the 10-year time frame addressed by the resolution. In 2011 and 2012, for example, 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. That was not feasible last year because, as a result of recent major changes in law, CBO’s previous long-term projections were not a sound basis for such an analysis.
This year, though, 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 for the coming decade) that had taken place after we produced those projections. Such an update was possible because those changes were fairly small. As a result, CBO was again able to analyze the economic and budgetary consequences of a long-term stream of revenues and noninterest outlays specified by Chairman Ryan; that analysis, Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Ryan, April 2014, 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 Ryan released today as part of his proposed budget resolution.
Bob Sunshine is CBO’s Deputy Director.