Lessons of Management and Leadership from the Congressional Budget Office

Five lessons from the CBO story about establishing and maintaining a mission-centered organization.
by | May 11, 2011

Arguments in government -- between Republicans and Democrats, between opponents and supporters of programs -- occur as often over assumptions as they do over priorities. It is useful if the combatants can at least agree on facts. But facts, as John Adams once said, are stubborn things. At a time when partisanship seems at an all-time high, institutions who produce credible facts are particularly valuable. In this context, I have spent a lot of time thinking about a particularly influential and important national government institution -- the U.S. Congressional Budget Office (CBO).

CBO’s importance in national debates, obvious to many observers for a long time, became apparent once again during the debates on the Obama health reform bill in 2009 and 2010. The president, who had insisted that any bill could “not add one dime to the deficit,” put CBO, as the official Congressional cost estimator, in the position of heavily influencing the content of the eventual health reform legislation. This was not the first time that CBO had been in such a position. In 1994, the Clinton health plan was dealt a substantial blow by a CBO analysis which argued both that the plan would add to cumulative deficits and that, rather than regulating private activity, it represented a vast new expansion of the federal government. Twelve years before the Clinton health plan, it was CBO’s analysis of supply-side assertions in the Reagan economic plan, which most damaged the credibility of the Reagan approach.

It is nothing short of amazing that the United States Congress -- as partisan an institution as it is possible to imagine -- actually tolerates (and in fact, supports) inconvenient nonpartisan analyses from its own employees. History is chock full of instances where key initiatives of a majority party -- the Carter energy policy in the 1970s, the Reagan economic program in the 1980s, the Clinton health plan in the 1990s -- were called into question by CBO. Yet it survives.

This credibility -- and accompanying influence -- did not, and does not, just happen. It reinforces what many people who care about management in government have been preaching for many years: A clear leadership vision, sustained over time and reinforced by dedicated public servants and elected officials, is a recipe for effective government. This bit of wisdom extends to any organization trying to make effective public policy. Many states and localities, in fact, have attempted over the years to create or strengthen independent fiscal institutions (such as legislative budget offices and performance audit agencies) for the express purpose of informing policymakers about both cost and performance. A fact that seems to have been lost over time is that CBO, which is now a model for independent fiscal institutions throughout the world, had its own model: California’s Office of the Legislative Analyst.

There are five lessons, I think, that emerge from the CBO story about establishing and maintaining a mission-centered organization. They are:

  1. Leadership sets the tone, particularly for a new organization. Alice Rivlin, the first CBO director, knew what she was doing. The statute that established the CBO was relatively vague about what the organization would do, so upon its formation in 1975, she called a meeting of interested parties to generate a list of goals. The vision embodied by those goals essentially describes the organization and its culture as it exists today.
  2. Sustained leadership and commitment to organizational goals is just as important as initial leadership. Fortunately, the second director of CBO was Rudy Penner, who Alan Greenspan called “a Republican Alice Rivlin.” Penner began a tradition, followed by all directors up to the present, of making few if any personnel replacements, and reinforcing the vision of CBO embraced by predecessors. This practice, and adherence to the culture of CBO, has been sustained by each of the eight directors, sometimes in the face of intense political pressure to change organizational practices.
  3. Given a clear mission and culture, dedicated civil servants will deliver results. None of these directors could have developed the credibility and reputation of CBO on their own. They recruited staff with the necessary skills and trusted them to build relationships with Congressional staff, and to conduct their day-to-day work in accordance with the organization’s mission.
  4. Transparency and accountability are crucial to building a reputation as a high-performance organization. In CBO’s case, some of this was calculated and some was luck. The lucky part was being involved in some high-profile debates, such as the Reagan economic program and the Clinton and Obama health plans. The calculated part was its slavish attention to the timeliness, transparency and accessibility of its products. In short, it is hard to develop a reputation for excellence if no one knows about you.
  5. Having consistent support from your bosses doesn’t hurt. First and foremost, CBO was created to work for the budget committees in the Congress. While polls tell us that support for Congress is at an all-time low, Congress has been relatively unwavering in its support of CBO and its mission, even though the agency sometimes behaves, as the Washington Post observed, “like the skunk at the company picnic.” CBO benefits from the support of Congress in general as well as its key members, from senators Edmund Muskie and Henry Bellmon in the early years, to current Budget Committee Chairs Kent Conrad and Paul Ryan, who worked across party lines to make sure that the current director, Doug Elmendorf, was reappointed.

My point is that the success story of CBO is not mainly a “budgeting” story. Instead, it is a story of strong leaders articulating a clear vision, dedicated public servants adhering to that vision on the ground, and tolerant (if not always thrilled) elected officials recognizing the benefits of having the institutional capacity to produce hard-headed, objective analysis. These lessons are management lessons, as much as lessons of politics or policy.

Just last month, Georgetown University Press published Philip Joyce's book, The Congressional Budget Office: Honest Numbers, Power, and Policy Making. It is the "first ever institutional history of the agency."

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