Let’s imagine you’re striking out from home for the first time. Growing up, you felt like your family never really knew how to handle money. So the day you get your first job, you also go out and hire the services of a personal financial advisor. Not just any financial advisor though: a highly qualified fiduciary named Charles Bartholomew Owens. His friends call him “Chuck”, but due to his professionalism with you, you do not (at least not to his face). Chuck isn’t just any fiduciary, either. He’s incredibly thorough, to the point of maybe overwhelming you with information.
With Chuck in your life, all of your financial options and goals are analyzed and projected for you to see the impacts they will have. Drawing up a new budget for the year? Chuck will make sure it is reasonable and give you tips on improvements. Thinking of working a bit harder for a promotion? Chuck gives you a 2-year report on how that may change your spending abilities. Weighing out plans for a weekend dinner, or how to invest for retirement? Chuck is on both, with a few pie charts to boot.
You and Chuck don’t always see eye-to-eye. Sometimes he’s flat out disagreed with you. Like when you decided you’d rather drive a few towns over to shop at a pricier grocery store. Chuck told you it wasn’t a great idea, considering higher costs of food and gas. But you did it anyhow, and Chuck adjusted accordingly as he worked away at your finances. That’s the thing about Chuck. You’re not bound to follow his advice at all. But on the flip side, Chuck’s reports don’t just go to you. They’re made public to your family, your co-workers, and your neighbors. Basically anyone who may also be strongly affected by the way you spend your money. Chuck says it’s fair and part of his deal with you. So you live with it.
Lately, a few of those friends and neighbors have been a little critical of Chuck’s work. A former co-worker says he knows some big shot financial advisors who will do a similar job, but with less of the publicity and asking for a large cut. And you’ve noticed Chuck has been off a few times. Like when you decided to put up your old Lego collection for sale and he said you’d never make a cent. But you found some bidders who paid you a fortune those blocks! And then there was the big party you were planning. Chuck thought this party was a great idea, and forecast that a lot of people would come to it. Not only that, but all the people who came would improve your social life in ways that could even be financially beneficial. You trusted Chuck on that one, but only about half of the people you expected came. The people who came really had a good time. But it wasn’t up to your expectations.
A bunch of your friends got upset about that party. They really dug into you and Chuck on it. But here’s the other thing: Chuck is only human, and he can’t predict everything. He didn’t really know about the Lego market. And people are even harder to read. He’s been on the dot with so many of his reports, but your friends think he’s a drag on your life. That maybe you should cut back on how much he does. That maybe these other financial advisors really would do a better job. Now you’re worried. What do you do about Charles Bartholomew Owens?
Of course, this whole thought experiment is a little over the top. Until you size it up to a federal level, and replace yourself with Congress. In that case, the CBO, or Congressional Budget Office, has been a trusted budgetary agency for 43 years. It was created by Congress to help them control “power of the purse” over the Executive Branch (i.e. the President, then Richard Nixon). The House of Representatives and Senate jointly appoint a director and receive reports and testimony to their budget committees from the CBO. The agency’s 235 non-partisan employees comb over legislative work and advise the House and Senate on how proposed bills will affect the economic future of the country. They publish hundreds of reports a year. Often, they’ve been very accurate, even praised by economists as a highly capable fiscal agency operating without political biases. A few times, they’ve been off, because like anything to do with economics, the future is impossible to predict.
Politically, the CBO has found criticism on both sides of the aisle, as their forecasts don’t always neatly back political agendas. Our current administration has found a small group of congressional allies who want to see the CBO “reformed” for just such a reason. Last Monday, our 9th District Representative Morgan Griffith tagged an amendment to a new spending bill to carry out this reform. Essentially, Griffith and his comrades in the House Freedom Caucus wanted to see the CBO’s budget slashed, one-third of its staff eliminated, and the duties of budget analysis outsourced to four partisan economic think tanks. Griffith pointed to 2 incidences as unforgivable mistakes on the CBO’s part: the sale of the government-owned wireless spectrum (netted $40 billion, far more than predicted) and the estimates of enrollment in state-run healthcare markets under the Affordable Care Act. In many ways, both examples illustrate the difficulty of modeling forecasts when headed into uncharted territories, a challenge that vexes all economists. No one could accurately value a market price on open airwaves, or account for every moving variable in a complex and new healthcare bill.
The amendment was argued down two days later by other representatives. But Mr. Griffith is still claiming a victory. He feels he has sparked an important conversation. And, in being tasking to evaluate even this amendment, the CBO presented a report that Mr. Griffith claims to uphold his view: that slashing the CBO would have a net neutral effect on our fiscal future. He has read this as the office describing itself as valueless. I would read this report in another way: that the services provided by the CBO are important enough that Congress would have no choice but to reallocate any saved funds to outsourcing the same services.
In the end, I’d ask us to take a good look at the political tactics our representative just used. He proposed an amendment, in the name of to-the-bone fiscal conservatism that would slash the very office that would evaluate whether legislation would in fact be fiscally conservative or liberal, a tactic that has, in effect, sowed a seed of doubt about the very ability of that office to do so. He’s not alone among politicians trying to undermine our faith in our political institutions, but Mr. Griffith is ours to hold accountable. And his actions show he’d prefer to disregard the financial oversight and public transparency that helps us citizens trust our lawmakers. While those of us in Southwest Virginia spent that weekend in the national spotlight because of the Wise County Remote Access Medical clinic, Mr. Griffith preferred to use his time pushing a corrosive spending amendment that didn’t meet any of our needs. He may have found better use of his time if he’d met with his 2,000+ uninsured constituents receiving care at the clinic. They might have had some bigger concerns than how Morgan and Mr. Trump feel about the work of Charles Bartholomew Owens.