Serving Competing Principals: The Budget Estimates of OMB and CBO in an Era of Divided Government

Abstract

Battles over the federal budget have been at the heart of Washington politics over the past two decades. In assessing the potential consequences of fiscal policy choices, Congress and the president turn to the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) for spending and revenue estimates. While politicians carp about the partisanship of these agencies, previous scholarly research finds little evidence of bias. In this article, the authors systematically explore these estimates for signs of partisan bias. Specifically, the authors examine differences between OMB and CBO estimates of the president's budget since 1978 and find that agency differences are associated with party control of Congress and the presidency. During periods of divided government, when their principals may be expected to disagree most sharply about spending and taxes, these agencies' expenditure projections diverge.