Legal Definitions - CBO

The CBO, which stands for the Congressional Budget Office, is a non-partisan federal agency that provides economic and budgetary analysis to the U.S. Congress. Its primary role is to help Congress make informed decisions about the federal budget and the nation's economy by offering independent, objective data and analysis. This includes estimating the costs of proposed legislation, forecasting economic trends, and analyzing the financial impact of various policy options.

Here are some examples of how the CBO's work applies:

• Example 1: Estimating the Cost of New Legislation

  Imagine a group of senators introduces a bill designed to significantly expand federal funding for renewable energy projects. Before voting on the bill, members of Congress need to understand its financial implications for the federal budget over the next decade. The CBO would be tasked with conducting a detailed cost estimate for this energy bill, analyzing the proposed investments, potential tax credits, and projected economic impacts. This objective financial projection helps lawmakers understand the budgetary commitment required by the legislation.

• Example 2: Providing Economic Forecasts for Budget Planning

  As Congress prepares to debate the annual federal budget, members are concerned about the potential for a recession and its impact on government revenue and spending. They need a reliable, independent assessment of the economic outlook for the coming year and beyond. The CBO regularly publishes economic forecasts that project key indicators like GDP growth, inflation rates, and unemployment. Congress would rely on the CBO's latest economic outlook to inform their budget decisions, ensuring their fiscal plans are based on objective economic projections rather than partisan assumptions.

• Example 3: Analyzing the Long-Term Impact of Policy Changes

  A congressional committee is considering reforms to a major federal program, such as Medicare, to ensure its long-term solvency. They want to understand how different reform proposals—like adjusting eligibility ages or changing benefit structures—would affect the program's finances and the national debt over several decades. The CBO would conduct an in-depth analysis of each proposed reform, projecting the changes in revenues and expenditures under various scenarios. This analysis provides the committee with critical data on the long-term fiscal sustainability of the program and its broader impact on the federal budget, allowing for evidence-based policy choices.