This Week’s Minimum Wage Debate is a Reminder About Why We Need the CBO

Senate.govSenate.govThe Congressional Budget Office’s report on the effects of raising the minimum wage was exactly the sort of balanced, careful report that the CBO is known for. It offered talking points to folks on both sides of the debate, estimating that hiking the wage floor to $10.10 an hour would raise about 900,000 people above the poverty line, but would also cost about 500,000 jobs. Both estimates, it said, were subject to substantial uncertainty, and could be significantly higher or lower.

But it resulted in something that’s been relatively rare over the past few years: Democratic criticism of the CBO. The White House, in particular, did not like hearing that the minimum wage hike that President Obama supports would result in lost jobs. The day the report was released, Jason Furman, the administration’s top economist, told reporters that the CBO findings do “not reflect the consensus view of economists who have said that the minimum wage would have little to no impact on employment.” House Minority Leader Nancy Pelosi (D-Calif.) released a statement saying that the CBO report’s “conclusions contradict the consensus among hundreds of America’s top economists.”

Asked about the White House pushback the following day, CBO director Douglas Elmendorf  declined to respond directly. But he stood by his agency’s assessment. “I want to be clear that our analysis on the effects of raising the minimum wage is completely consistent with the latest thinking in the economic profession,” he said at a Christian Science Monitor breakfast. “What we have done is to do a very careful reading of the literature and put weight on a wide range of results.”

This might sound like gentle disagreement, but in the soft-spoken world of government economic estimates, it’s roughly the equivalent to a shooting war. And while not a regular event, it’s not the first time this White House and the CBO have rubbed elbows. During the 2009 debate over the president’s health care law, the CBO issued a skeptical assessment of many of the law’s proposed cost-savings measures, concluding that there wasn’t enough evidence that they would work. Then-White House Office of Management and Budget Director Peter Orszag (a former CBO director himself) shot back, saying that the CBO had “overstepped” in its analysis. Again, it sounds pretty low key, but in some ways it’s the government budget wonk equivalent of a slugfest.

This sort of intra-agency economic debate is a good thing, and it’s one of the prime reasons the CBO is so valuable: The budget office provides a check on administration econo-spin, which has a tendency to be rosier in general, since the president’s political fates are tied so closely to the economy, and more specifically friendly to the administration’s favored proposals. (In the past, it also provided reality checks for overly optimistic estimates that came from Hill offices too.) As an independent economic authority, CBO doesn’t have the same incentive structure as the White House economic team; if anything, its biggest incentive is to maintain its own authority and independence. The result is essentially a form of internal government competition, in which the CBO helps keep the administration in line—or, at the very least, reminds people that other reputable perspectives exist.

This doesn’t mean that every CBO estimate should be treated as holy writ. Like every organization that does economic projection, the CBO gets things wrong too. (I've disagreed with some of their conclusions in the past, and I'm sure I'll do so again.) But its checking function is one of the biggest reasons why we’re better off with an independent authority like the CBO than without. 

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  • UnCivilServant||

    Who picks who works at the CBO, and how?

  • Ivan Pike||

    Who picks who works at the CBO, and how?

    You apply same as with any fed job.

    https://www.usajobs.gov/Search?Keyword=cbo

  • UnCivilServant||

    I am disappointed. I was hoping for some kind of economist deathmatch. (Though I figured it was either that or get appointed)

  • Swiss Servator, mehr Käse!||

    *digs pit, shoves 100 economists into it*

    "First 5 out get jobs"

  • Brett L||

    We threw the shovels in, right? So that the Keynesians would waste their time trying to dig out of the hole?

  • Swiss Servator, mehr Käse!||

    I was going more for the Bear Bryant, this-is-how-I-get-starting-linemen thing. But I like your idea too.

  • Banjos||

    "Dig up, stupid!"

  • NoVAHockey||

    first, assume a ladder.

  • Swiss Servator, mehr Käse!||

    +1 can opener

  • ~Knarf Yenrab~||

    Wise and just kings. New Soviet Men. The Übermensch. Angels. Dedicated civil servants. People whose primary skill is getting elected to office. Roll a die.

  • ||

    dat alt text

  • wareagle||

    and the secondary aspect to the job losses is the chimera of people being raised out of poverty, which will last until some other govt agency recalculates the poverty level and many of those who were out are back in.

    http://www.youtube.com/watch?v=UPw-3e_pzqU

    What do you suppose the step after that might be? Lather, rinse, repeat.

  • SweatingGin||

    Seems like the big issue with the CBO is when the request for scoring on a law spells out the exact conditions, and makes it so they have to come to a specific conclusion. IIRC, they did that with Obamacare -- assuming that the doc fix wasnt' passed and such, requiring the CBO to score it without the doc fix, even though everyone knew the doc fix would be extended.

  • JW||

    House Minority Leader Nancy Pelosi (D-Calif.) released a statement saying that the CBO report’s “conclusions contradict the consensus among hundreds of America’s top economists.”

    In my hand, I hold the names of HUNDREDS of top economists. Top. Economists."

  • SugarFree||

    "Binders full of economists."

  • JW||

    And they all want the same thing: "first, a tight pussy; second, loose shoes; and third, a warm place to shit."

  • Mainer2||

    + 1 Earl Butz

  • UnCivilServant||

    Wait a minute - that's McCarthy's list of communists!.

  • pan fried wylie||

    List them, bitch. Hell, list 5 of them.

    I thought so.

  • KDN||

    Krugman, Crugman, Chrugman Qrugmann, and Kroogman.

  • ||

    Or, Friedman, Freedman, Freidman, Fredman and Fridman.*


    *Thomas, not Milton.

  • Adam330||

    Does a degree in Mediterranean studies from Brandeis now qualify oneself as an economist?

  • The Late P Brooks||

    “not reflect the consensus view of economists who have said that the minimum wage would have little to no impact on employment.”

    In other news, our latest survey of cats does not reflect the consensus of opinions held by dogs.

  • The Late P Brooks||

    This might sound like gentle disagreement, but in the soft-spoken world of government economic estimates, it’s roughly the equivalent to a shooting war.

    "Well, if you really want to know, Jason Furman is full of shit. And so's that guy he works for."

  • ||

    Didn't the CBO also say the stimulus would work and green jobs would magically summon the summer of recovery and Obamacare would pay for itself?

    The CBO is bullshit and is only used as an authoritative voice of the state to shout down voices outside the state.

    Just because you Suderman have a nice place to go with easy numbers for your career in media rather then actually going out and talking to economists does not make the CBO's shit smell like roses.

    Furthermore by going to the CBO Sudderman you are helping the state shut down voices out side of the state by ignoring and marginalizing them.

  • Mike M.||

    Yeah, the CBO eventually always ends up saying whatever their masters want them to say, because they don't really have a choice.

    They may have the top man veneer of "wonkishness" and intellectualism that Suderman loves so much, but the idea that they're truly independent doesn't pass the rudimentary laugh test. Their job ultimately boils down to polishing the giant turd.

  • Pro Libertate||

    Caption: "And now, young Skywalker. . .you will die."

  • JW||

    "These are not the statistics you are looking for."

  • Pro Libertate||

    I prefer a Force lightning-preceding quote.

  • NoVAHockey||

    So be it.

  • JW||

    Yeah, well, double dumb-ass on you!

  • Pro Libertate||

    Don't try your Vulcan mind tricks on me, old man.

  • JW||

    "Nucwear Wessel"

  • Cdr Lytton||

    These are not the quotes we're looking for.

  • The Late P Brooks||

    It offered talking points to folks on both sides of the debate

    Oddly enough, the reporters I saw had no problem whatsoever taking the high estimate of "people lifted out of poverty" at face value while simultaneously expressing reservations about the job loss numbers.

  • UnCivilServant||

    I thought that the actual range is 500,000 - 2 mil, so everyone quotes the low number, and still tries to refute it.

  • wareagle||

    about that first group you cite - the ones on the folks lifted out of poverty. Are they so obtuse as to not consider that the poverty level will be recalculated and many of those lifted by a wage increase would later be back in the same spot.

    Rhetorical question but goddamn. It's like thinking is no longer part of journalism.

  • Zeb||

    When you define poverty as the lower income quintile of the population, then yeah, those making minimum wage will always be "in poverty".

  • Sevo||

    "This Week’s Minimum Wage Debate is a Reminder About Why We Need the CBO"

    If that smelly hag Pelosi didn't have this, what would she lie about this week?

  • Volren||

    Is it just sheer incompetence that prevented someone at the white house from picking up the phone and making it clear to their pet number crunchers that when the report came out it should be in favor of this week's Populist Nonsense Policy?

    Now they have this little spat and the CBO has to go back and massage some numbers so they can softly backpedal.

  • ~Knarf Yenrab~||

    Some bureaucrat with a hangover forgot that GI is a necessary element of GIGO. The statistical discrepancy will be rectified.

  • ||

    “conclusions contradict the consensus among hundreds of America’s top economists.”

    Ohhh, so it's a "consensus" now. I suppose if you exclude anyone who disagrees with you from the list of "top economists", then you would find that amoung the "top economists" a "consensus" agrees with you.

  • Mokers||

    Minimum wage is my litmus test for determining how much knows about economics and to what extent they put their feelings over actual results when it comes to public policy.

    I also hate how people think a higher minimum wage means you are supporting the poor. It's possible to support the poor in a number of ways, but forgive me if I don't pat you on the back for stealing other people's money to make you feel good about yourself.

  • ||

    This Week’s Minimum Wage Debate is a Reminder About Why We Don't Need Congress.

    FTFY

  • The Late P Brooks||

    I also hate how people think a higher minimum wage means you are supporting the poor.

    No kidding. Where do they think that money comes from? Teh evul KOCHBROS don't eat at McDonalds.

  • Volren||

    But...but..if you pay them more they can spend more!

    Right? Right?

  • Bubba Jones||

    This is idiotic. The prior studies saying "no negative job impact" were limited to a much smaller increase in minimum wage and its impact on fast food workers.

    They did NOT study the effect of a 40% increase on jobs you can ship overseas or replace with robots.

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