As Diogenes dramatized with his lamp, it is not easy finding an honest man. That is especially true when it comes to honesty in the face of strong political pressures. Doug Elmendorf is that rarity. If he is willing to continue as Director of the Congressional Budget Office (CBO), where honesty is especially needed, the new Republican majority would be well-advised to keep him on. They should remember that it was the CBO under Doug that pointed out what a budget-buster an early incarnation of Obamacare was. (Of course the final version was not cheap either–something the CBO under Doug also pointed out. You can see what I have to say about Obamacare here.) And it was the CBO under Doug that gave the estimate that raising the minimum wage as much as some proposed would cost half a million jobs, when the party line among many Democrats is that raising the minimum wage won’t cost any jobs at all. (You can see what I have posted so far about the minimum wage here: 1,2,3,4. I definitely lean against a higher minimum wage, but I am still debating all of the issues in my mind.) 

David Lawder makes the same case in the Reuters article “Republicans weigh big changes at U.S. budget referee agency.” One of the key issues is “dynamic scoring.” Dynamic scoring is when the changes to tax revenue induced by changes in economic behavior are included in calculations–an area where impartiality in doing the calculations is especially important because of the judgment calls that need to be made. The CBO has already done some dynamic scoring in unofficial estimates. Here are some key excerpts from David Lawder’s reporting:

The budget math used under dynamic scoring has long been a goal for Republican lawmakers, including the incoming chairman of the House Budget Committee, Representative Tom Price, and the current chairman, Paul Ryan, who next month will take over the tax-writing House Ways and Means Committee. …

“What we’re simply striving for is accuracy in score keeping,” Ryan told Reuters in a recent interview. “We know for a fact that it is not accurate or prudent to ignore the effects of economic growth on policies we make in Congress.” …

“I’ve always said that Doug Elmendorf has done an extremely good job at CBO,” Price said. “My complaint, my concern about CBO is not about the individual at the lead of CBO, my concern is the rules under which they operate.” …

… several prominent conservative economists have backed Elmendorf, arguing that Republicans would gain more credibility by keeping the former Clinton administration economist. …

“If you’re going to go with dynamic scoring, Elmendorf is a great guy to implement that,” said Michael Strain, deputy director of economic policy studies at the conservative American Enterprise Institute. “It would be harder to accuse Republicans of putting their thumb on the scale” if he stays.

To everything said above about dynamic scoring, let me add that I think Doug Elmendorf is the right person to implement disciplined capital budgeting to the CBO. I have in mind the approach I advocated when I visited the CBO this past May. (See my post “Capital Budgeting: The Powerpoint File.)

I know Doug well. Doug is a Harvard PhD classmate of mine, a coauthor on "Taxation of Labor Income and the Demand for Risky Assets” and a friend. So I can’t claim to be unbiased. But everything I am saying about Doug Elmendorf, others are saying as well.  

Bleg: It may be important to write again on this topic. So I would be grateful for links and information relevant to the argument for keeping Doug as Director of the CBO.