Tuesday, January 19, 2010

The Joint Committee on Taxation's (lack of) institutional independence

Howard Gleckman of the Urban Institute suggests that former Joint Committee on Taxation chief Edward Kleinbard may be hinting at support for abolition of the JCT, or more specifically at transferring its revenue estimating function (and perhaps other functions) to the Congressional Budget Office (CBO).

Specifically, he draws attention to footnote 111 in a recently posted Kleinbard article draft, which says:

"It is the author’s view that the CBO is better suited to this task [i.e., identifying tax subsidies in new legislation] than is the JCT Staff, from the perspective of both the relative stature and the independence of the two organizations. In particular, the JCT Staff is very much staff to the two taxwriting committees, and therefore almost by definition to their Chairmen. The CBO by contrast is organized as an independent agency controlled by the Congress, not Congressional staff, and has a clear statutory mission. Similarly, the Chief of Staff of the JCT serves at the pleasure of the two Chairmen of the taxwriting committees, while the CBO Director is appointed for a fixed term and can be removed only by a majority vote of one chamber of Congress. These differences have real meaning within Congress."

Gleckman responds:

"By turning the scorekeeping over to CBO, Kleinbard would send a powerful signal that these subsidies are, in fact, spending. But what about the broader point? Is CBO more objective than JCT, as Kleinbard suggests?

"I’m not so sure. To an outside observer, JCT has almost always seemed to be a pretty honest arbiter. I can think of only one period, when the staff was directed by Ken Kies more than a decade ago, when many considered JCT more partisan than objective. Similarly, CBO has been remarkably immune from political pressure. Certainly, the current incarnation, headed by Doug Elmendorf, has not been shy about making its best calls about the costs and consequences of health reform. The Democrats who appointed Doug can’t be thrilled, but like his predecessors, Elmendorf has called ‘em as he’s seen ‘em. But so did JCT under Ed and so it does now under his successor, long-time career staffer Tom Barthold."

I agree with Gleckman's bottom line historical judgment as to revenue estimating. But this, I think, reflects that, to this point, committee chairs have mostly seen institutional value to retaining the independence and objectivity of the estimating process. This could change. E.g., it might take no more than a shift to Republican majorities in both Houses of Congress for JCT revenue estimating to be deliberately reduced to hackery - even though the Republicans didn't do this the last time they were in the majority. They may have changed fundamentally, even since 2006. For that matter, with tough budget rules in place, making revenue estimates highly politically consequential, one could imagine the Democrats deciding at some point to undermine JCT revenue estimating integrity. If Elmendorf didn't have his current independence at CBO and instead served at pleasure like the JCT chief, might healthcare estimates in the 2009 legislative process have been affected?

There's also the question of whether one wants an independent tax policy-minded voice in the legislative process. I can't imagine why the Members of Congress would want it, but I certainly do. JCT actually used to function a bit this way, at least as late as the mid-1980s (when I was there as a junior staffer). The ability to do this arose from a combination of self-selection in terms of who worked at the JCT, with the fact that the other staffs weren't big enough or expert enough to get things done without the JCT. The expansion of those staffs has effectively curtailed JCT independence and clout.

Kleinbard's point sounds most provocative if one states it in terms of JCT vs. CBO, given where he recently was. But I think it is really about the current JCT institutional structure versus that at CBO. Moving the non-member, non-committee Hill tax policy staff to a position of greater independence may soon become vital to its continuing to provide credible revenue estimates, and is already long past due if one thinks JCT's de facto more independent status 20 to 40 years ago was a good thing.

One further point goes to hiring further JCT chiefs. In Barthold, the Members of Congress were lucky to have a highly qualified current staff member on hand who evidently wanted the job. But the next time they decide to hire from outside, they may find it hard, without offering CBO-style independence, to get someone as high quality as their recent outside appointees (such as Kleinbard and George Yin). Through no fault of those two gracious individuals, my impression is that others who observed JCT from the outside during their tenures generally concluded that the JCT chief position was not one to envy or ever want.

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