No Bias in the Baseline Act Reintroduced to End CBO Distortions

The No Bias in the Baseline Act (H.R. 8570 and S. 4372) has been reintroduced by Rep. Ben Cline (R-VA-6) and Sen. Roger Marshall (R-KS).

This important legislation would help remove distortions from the Congressional Budget Office’s (CBO) baseline. Removing the bias in the baseline would provide more consistent, transparent, and realistic cost estimates for legislative proposals.

The House version of the No Bias in the Baseline Act would also require the CBO to provide alternative fiscal scenarios in the annual Budget and Economic Outlook. While the current law baseline would be used as the neutral benchmark for official cost estimates, the alternative projections would provide valuable information about potential fiscal outcomes if lawmakers make various policy decisions.

The Distortions in the Baseline

The official CBO baseline is often described as reflecting current law, but this is a myth.

In reality, the CBO is required by law to distort the baseline in favor of higher spending and taxes. Section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985 requires the CBO to incorporate four deviations from current law into the baseline: three that make spending look much higher and one that makes revenues look slightly higher than they would actually be if Congress made no further changes in law:

1. Discretionary appropriations are assumed to be continued and grow with inflation each year.
2. Many direct spending programs larger than $50 million are assumed to be extended beyond their statutory expiration.
3. Entitlement programs are assumed to make all scheduled benefit payments, even if a program’s trust fund financing is inadequate to do so.
4. Excise taxes dedicated to a trust fund are assumed to be continued beyond their statutory expiration.

As CBO recently explained in response to a question for the record, baseline distortions can make projected deficits “tens of trillions of dollars” larger. About 29% of the $95 trillion of spending included in CBO’s fiscal year 2027-2036 baseline is attributable to assumptions that do not reflect actual current law.

The No Bias in the Baseline Act Would Provide a Neutral Benchmark

The CBO baseline is important because it is used as the official benchmark against which legislative proposals are scored. The biases built into the baseline allow the true costs of legislation to be hidden from the public and Members of Congress.

As the CBO itself has stated, “CBO’s baseline is not intended to be a forecast of budgetary outcomes; rather, it is meant to provide a neutral benchmark that policymakers can use to assess the potential effects of policy decisions.”

However, as CBO Director Phill Swagel testified before the House Budget Committee, the official CBO baseline is “not a neutral benchmark.” Tax and spending programs are treated differently.

A current law baseline would provide the clearest picture of the choices facing lawmakers if they either maintain the legal status quo or make changes in law. Fixing the baseline to reflect actual current law would make it more obvious that keeping spending high is a policy choice.

The No Bias in the Baseline Act would be an important step toward restoring transparency to Congressional scoring.

Additional Background

 Read the EPIC Report: The Myth of the Current Law Baseline: Keeping Spending High is a Policy Choice.

• Download the Myth of the Current Law Baseline One Pager.
• Read the Myth vs. Fact: Fixing the Budget Baseline.
• CBO Testimony: Baseline Is “Not A Neutral Benchmark”.
• Blog Post: How the Budget Baseline Is Biased.
• Analysis: Social Security Exposes the Flaws in the CBO Baseline
• Additional Background: No Bias in The Baseline Act Removes Distortions that Push Higher Spending and Taxes