Legal Definitions - Congressional Budget Office

The Congressional Budget Office (CBO) is an independent, non-partisan agency within the U.S. legislative branch, specifically serving Congress. Its primary role is to provide objective economic and budgetary analysis to help Congress make informed decisions. The CBO achieves this by forecasting economic trends, estimating the costs of proposed legislation, conducting in-depth studies on budget-related issues, and publishing annual reports that detail federal spending and revenue levels.

Here are some examples of how the Congressional Budget Office operates:

• Imagine a senator introduces a new bill proposing a nationwide high-speed rail network. Before Congress votes on it, the Congressional Budget Office would be tasked with analyzing the bill's financial implications. They would produce a detailed report estimating the total cost of constructing and operating the rail network over the next ten years, including how much it would add to the national debt or require in new taxes. This helps lawmakers understand the fiscal impact of their decisions.

• When Congress is debating a major tax reform package, the Congressional Budget Office plays a crucial role by publishing a comprehensive report. This report would detail how the proposed changes to the tax code are likely to affect economic growth, employment rates, and federal revenue collection over the next several years. This objective forecast provides essential data for members of Congress to consider the broader economic consequences of their policy choices.

• Suppose lawmakers express concern about the long-term financial sustainability of a particular federal program, such as Medicare. The Congressional Budget Office would then conduct a special, in-depth study to assess the program's financial health, project its future costs, and identify potential risks or challenges. The findings from such a study would be included in one of their annual budget outlook reports, offering Congress a clear, non-biased picture of the program's fiscal trajectory.