“First thing we do, let’s kill all the beancounters” Part 2

First, it was Newt Gingrich saying abolish the CBO. Now, Mick Mulvaney advocates ignoring the CBO.

From The Washington Examiner:

White House Office of Management Director Mick Mulvaney on Wednesday opened fire on the Congressional Budget Office, asserting in an interview with the Washington Examiner that the day of the institution as an authoritative non-partisan arbiter of legislation “has probably come and gone.”

Mulvaney, speaking in his office in the Old Executive Office Building, described the CBO’s scoring of the House Republican healthcare bill as “absurd,” arguing that it was a perfect example of why Congress should stop being so deferential to the group.

“At some point, you’ve got to ask yourself, has the day of the CBO come and gone?”…

This is pretty rich for an administration official who has double counted (a yet to be released plan for) tax reform in its growth and budget projections.

Just to be clear, this is the same Mulvaney that asserted in a speech to the John Birch Society that the dollar had been debased by Obama policies at a time when it had just appreciated by 20% in real terms over the preceding two years.

So the assault on technocratic policy institutions within the government continues.

Update, 8:30PM Pacific: And I couldn’t say it better than Doug Holtz-Eakin:

Mulvaney’s words “are a disgrace, reflect more poorly on him than CBO, and show budget ignorance. Should apologize.”

16 thoughts on ““First thing we do, let’s kill all the beancounters” Part 2

  1. Steven Kopits

    This is incorrect. First you kill the lawyers. Then you kill the bean counters.

    Actually, as something of a bean counter myself, I take an exception to a fatwā calling for our termination. The problem rather is that the Republicans do not have very good bean counters and are otherwise unwilling to say, ‘Sorry, we can’t afford it, because the deficit is a trillion dollars.”

  2. noneconomist

    Not surprising, there’s: something very Enronish in Mulvaney’s thinking: Don’t worry and don’t pay any attention to the naysayers, we’ll just tell you NOW how we’ll be doing at the end of the year. Trust us. You’ll see.

  3. Rick Stryker

    Mulvaney is not advocating ignoring the CBO. He is advocating not giving it the preeminent role it now enjoys in deciding authoritatively the effects of complex legislation.

    The CBO was created by Democrats in a veto-proof Congress in 1974 to mute the influence of Nixon’s OMB projections. I think the record shows that it has been non-partisan over the years. But being non-partisan doesn’t mean its models are right. The voters, Congress, and the CBO itself would benefit from transparency and competition from other models and analyses. It’s dangerous to confer on any organization, no matter how well motivated that organization is, a priori deference and legitimacy. The CBO does not model ex cathedra and yet we wait for the white smoke to come from the offices of the CBO whenever any major policy is being debated.

    Economic models are doing well if they can get the sign right. Why should one set of modelers be elevated above all others in such a situation? We need to look at many models and analyses of complex policies, without making the assumption that one of them is the right one. Mulvaney has a strong point I think.

    1. Menzie Chinn Post author

      Rick Stryker: Thanks for your comment. I am unsurprised that you have joined the ranks of those seeking to destroy the influence of technocratic institutions. In fact I have been waiting for you weigh in on this post, with exactly this assertion.

      By the way, what did you think Mulvaney’s assertion about dollar debasement. Do you have an alternative metric which makes his assertion completely defensible? I would love to see it. You are, if nothing else, extremely imaginative in your arguments.

    2. baffling

      rick, mulvaney does not offer any real nonpartisan solution. mulvaney and others are advocates of the use of partisan analysts. you really think heritage could provide a nonpartisan, better, analysis than the CBO? the entire purpose of his comments is to simply discredit the CBO. he does not want a solution. why? because any legitimate solution will still produce results which conflict with the trump agenda.

    3. 2slugbaits

      Rick Stryker Mulvaney is not advocating ignoring the CBO. He is advocating not giving it the preeminent role it now enjoys in deciding authoritatively the effects of complex legislation.

      I’m not sure what Mulvaney (and apparently you) would recommend as an alternative. Are you saying that it would be better to not have any official scorekeeper and just let 535 politicians invent whatever economic “analysis” happens to suit them at the moment? Or are you recommending that there be multiple official scorekeepers and Congress should then take an average of the forecasts?

      We need to look at many models and analyses of complex policies, without making the assumption that one of them is the right one.

      Well, even if you had twenty models, ultimately you’d have to decide that one of them was more right than the others. And who would decide? Each of the 535 moronic Congress critters? God help us. So I don’t think there’s any escaping the need to settle on one model as being the official scorekeeper. But informally there are pressures from other models that keep the CBO’s forecasts in line with other respectable unofficial forecasts. And by “respectable” I do not mean to include some of the whacko crap coming from the Tax Foundation or the Heritage Foundation or Club for Growth. Here we have to look at past performance and as you yourself admitted, the CBO has been non-partisan and has a pretty good record given the complexity of its tasks. Track records matter. I don’t think CBO’s preeminent role is something handed down by God (or even comes down ex cathedra), but it has been earned. As long as CBO continues to advise in a professional and non-partisan way I don’t see any compelling reason why we should allow official forecasts to get polluted with Club for Growth crapola.

    4. Beeker

      While you’re correct that the CBO was created by Congress after many fights with the executive branch on its number projections which Congress had to rely on. Nixon took it to the next level in its fight that Congress decided not trust the projection so they created the CBO and Alice Rivlin did a great job in making the agency non-partisan and they have developed models that have come close to the estimate while stating the obvious that they are estimates because the economy is like a moving chain that it is impossible to be right. What you don’t realize that the CBO do talk to various economists for their reports they do. I have seen other economic models that claims to be right when they may be wrong. The Heritage Foundation is an example of an organization using models and assumptions that are not true according to the legislation enacted something the CBO does and that’s the difference.

      Additionally, many of the politicians are not economists nor have an understanding of how the economy work when they are considering legislation because they are relying on some lobbyist’s and partisan organizations’ agenda for the bill they are considering.

      Mr Mulvaney seeks to ignore the CBO because it conflicts with his assumptions what the impact of the budget on the economy as a whole and something Trump (and he’s not the only one) likes to do when things don’t go his way.

    5. Mike v

      There are dozens of think tanks that do that sort of analysis, and OMB is a more partisan version of CBO.

      The current CBO director is a conservative, and their models are generally more conservative than the econ community, at large.

      It’s telling that all of the butt-hurt hacks are coming out of the woodwork to criticize an invaluable institution because their shitty policies are shitty.

  4. Bruce Hall

    Most of us should know that there is a distinct difference between accounting and forecasting. I remember how the accountants at Ford were often quite skeptical of the budget forecasts… with good reason.

    1. Menzie Chinn Post author

      Bruce Hall: And did Ford get rid of their forecasters? Or did they downweight the mean forecast and account for downside and upside outcomes. The latter seems like the more appropriate (based on statistical theory) and less nihilistic approach.

      1. Bruce Hall

        Menzie,

        I’ve been traveling for the last 5 days without a computer so I couldn’t respond to you and Beeker. Sales forecasting isn’t done in a vacuum… or wasn’t at Ford. The economics office provided their best estimates (guesses) about economic activity (several factors) for the next year. That became the input to a model that churned out, with great confidence 😉 the sales forecast for the coming year. Usually it was 2-3% growth. You might catch a whiff of playing the averages there. Of course, budgets were then predicated on what the sales forecasts were plying.

        I remember being in a meeting with the division’s VP who asked me if I had any qualms about the 2-3% projected increase (this was late 1978 which was a very good year). I said that I had been following gasoline prices and thought they could double in the next year or so. He asked if anyone else agreed with me and no one volunteered they did. So he asked if I thought the 2-3% increase was good. I said I thought there was a risk of a 5% or more decline if gasoline prices doubled. There were smirks. The VP chomped on his cigar and said he thought a 10% decline was more likely and told those in the room to build the budgets around that. Turned out he was closer than I was.

        Budgeting is a craft; forecasting is sorcery.

    2. Beeker

      Bruce,

      Did you know many companies use forecasting to estimate what will happen to the sales in relation to their budget for the year.

  5. spencer

    When the CBO was first created I had my doubts because I worried about some right wing extremist taking over and giving the republicans the cover they needed for their failed policies.

    But over the years we have been fortunate to have sensible and responsible directors of the CBO who have established an outstanding reputation for objective analysis.

    What we are seeing is another republican attack on the facts and the only thing that would be worse would for them to appoint Larry Kudlow to the CBO to give Trump the “alternative facts”. he wants.

  6. joseph

    Economist Tyler Cowen tries to explain the phenomenon of folks like Megapixel Stryker.
    https://www.bloomberg.com/view/articles/2017-01-23/why-trump-s-staff-is-lying

    Cowen: “If you want to ascertain if someone is truly loyal to you, ask them to do something outrageous or stupid.”
    There is no greater demonstration of devotion than to debase yourself by blindly defending your Dear Leader’s ridiculous lies. Stryker did so on Trump’s very first day in office by trying to defend Trump’s childish claims that his inauguration crowds were bigger than Obama’s — with megapixel photos no less.

    Cowen: ““By requiring subordinates to speak untruths, a leader can undercut their independent standing, including their standing with the public, with the media and with other members of the administration.”
    Stryker, by making himself look foolish, estranges himself from intelligent social discourse, isolating him and requiring him to retreat to his Trumpist tribe for comfort. There is no escape from the cult once you have debased yourself before the general public. You can only dig in deeper.

    Sad.

    1. noneconomist

      Isn’t it always easier to kill the messenger who has the nerve to carry bad news.

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