Newsletters

I would like to receive the following free email newsletters:

Newsletter Signup
  1. Bridal Party
  2. Dining Out
  3. Kliman Online
  4. Photo Ops
  5. Shop Around
  6. Where & When
  7. Well+Being
  8. Learn more
Head of CBO: America’s Financial Counselor in Fiscal Cliff Talks
Doug Elmendorf takes pride in offending both parties—and chooses his words very carefully. By Paul Quinlan
Comments () | Published December 4, 2012
Elmendorf keeps a stuffed skunk in his office—a reminder of CBO’s reputation for being the skunk at the picnic. Photograph by Stephen Voss.

Most people haven’t heard of him. But it doesn’t take long after a bill gets written for everyone on Capitol Hill to ask: What does Doug Elmendorf have to say about it?

Like his predecessors, the 50-year-old economist toils in obscurity, despite the power he wields as head of the Congressional Budget Office. The nonpartisan agency is Congress’s fiscal referee, responsible for estimating the cost of every major policy proposal or piece of legislation. Today these estimates—“scores,” as they’re known on the Hill—carry more weight than ever. Few things doom a bill faster than word that it would add to the nation’s $16-trillion debt.

But that’s just the half of it.

Congress also looks to this bearded, bespectacled technocrat for straight talk about where our fiscal policies are taking us, and the outlook isn’t good.

Elmendorf described the problem in 2009 as “a fundamental disconnect between the services the people expect the government to provide . . . and the tax revenues that people are willing to send to the government to finance those services.” Translation: Americans expect more from the government than they’re willing to finance.

“I don’t usually get frustrated,” Elmendorf says on the way back to his office from a recent House Budget Committee hearing. He has just delivered his direst estimate yet of the nation’s long-term economic outlook. Judging by the Q&A that followed, the committee registered little, but he doesn’t seem bothered: “I don’t expect them to be experts in budgets.”

That’s Elmendorf’s job, and he says he wouldn’t trade it for anything. He seems to relish the challenge of being the nation’s financial counselor in chief at a time of rising fear that the US is cruising toward fiscal calamity.

In the coming weeks, Elmendorf and his staff will be sprinting to analyze proposals and counterproposals as Congress attempts to address a two-part problem.

First is the so-called fiscal cliff that looms at the end of this year. Barring a change in law, the George W. Bush-era tax cuts will expire and an immediate $100-billion across-the-board reduction in federal spending will take effect, to be followed later by $1 trillion more. The spending cut—known as the sequester—was part of a deal President Obama cut with Congress last year to raise the nation’s debt limit. Many fear that the sequester and the expiring tax cuts will put the country in a European-style economic lurch.

To the extent Congress succeeds in extending tax cuts and delaying budget cuts, odds are that the second part of the problem—a long-term swell in the national debt—will trigger something far worse: a loss of confidence in the US economy.

In short, fiscal crisis.

When—or if—that will happen remains a matter of debate, and Elmendorf is one of very few people in a position to help Congress and the White House do something to stop it, preventing the global economic catastrophe that would follow.

• • •

Elmendorf is an economist with a Harvard PhD who introduces himself as Doug and rides the Metro to work. He answers to Congress but is about as close to being his own boss as anybody in Washington. Appointed in 2009 by then-speaker of the House Nancy Pelosi, Elmendorf, a Democrat, doesn’t play political favorites. His economic judgments regularly offend and draw praise from both parties.

He was born in Mount Kisco, New York, in 1962 to a father who was a programmer for IBM and a mother who was a math teacher. He went to Princeton, where he found himself in orbit with economists who made up the nation’s financial brain trust.

“I loved my freshman-year courses in economics,” Elmendorf recalls. His professors Alan Blinder and Harvey Rosen would go on to serve as top US economic advisers. “They were both fired up about the ability of economic analysis to make the world a better place.”

During grad school at Harvard, his dissertation committee included Greg Mankiw, Martin Feldstein, and Lawrence Summers, who served as advisers to Presidents George W. Bush, Ronald Reagan, and Barack Obama, respectively.

He also met fellow grad student Karen Dynan, who became his wife. An expert in macroeconomics and household finance, Dynan is codirector of the Brookings Institution’s economic-studies program.

The couple live in Bethesda with their two daughters, both in high school. They have coauthored several papers, and Mankiw once hired Elmendorf and Dynan to help write a textbook—it answers questions about monetary policy in the imaginary economy of Elmendyn.

“I love her because she’s smart, beautiful, charming, and warm,” Elmendorf says of Dynan. “But it turns out she teaches me a lot about economics.”

• • •

Elmendorf’s years in Washington have included roles in nearly every arm of the nation’s economic establishment. He arrived in 1993 to work at the Congressional Budget Office and later moved to the Federal Reserve and the White House Council of Economic Advisers. In 1999, he became deputy assistant secretary of the Treasury for economic policy. He returned to the Fed in 2001, then moved to the Brookings Institution and later back to CBO as director.

Such hopscotching would ordinarily be discouraged. “Smart people mostly focus on something and become an expert on it,” Elmendorf says. But he had planned to return to CBO, and his broad experience was in some ways ideal, given the galaxy of legislative issues the agency is asked to analyze. “It would have been terrible preparation for almost any job but this one.”

Congress keeps Elmendorf and his staff of 235—mostly economists and public-policy analysts—running. CBO will pump out 600 written cost estimates this year and thousands more informal estimates.

On nights when Congress stays up late, CBO stays up later. When congressional leaders struck a late-night deal on a highway bill in June, CBO didn’t receive the final version of the 600-page plan until 4 am on a Thursday morning—less than three days before highway programs were set to expire and one day before most of Congress was to leave town. CBO returned its analysis in time for leadership to hammer out an agreement and vote 36 hours later.

Most of the bills that CBO analyzes never become law. Many more bills are never even analyzed because there isn’t time. Not getting a CBO estimate can ruin a bill’s chances—even more than being given a hefty price tag.

It can also get Elmendorf’s phone ringing—with calls from lawmakers who hope to nudge a bill up CBO’s list of priorities.

Elmendorf says it’s a misconception that he spends his days getting yelled at on the phone: “There are people who call who are very angry—that does happen—but there are also people who call and say thank you.”

Nevertheless, some of CBO’s answers have sparked epic fights. The Clinton administration railed against CBO in 1994, when the agency toppled the President’s signature health-care initiative with estimates that it would increase the size of government and cost far more than expected. Elmendorf was part of the team of analysts that rendered the lethal verdict under then-CBO director Robert Reischauer.

Says Reischauer, who was appointed by Democrats: “If the folks who invited you to the dance want to drive you home at the end of it, you haven’t done your job.”

Elmendorf would soon come to know the feeling.

Categories:

People & Politics
Subscribe to Washingtonian

Discuss this story

Feel free to leave a comment or ask a question. The Washingtonian reserves the right to remove or edit content once posted.
blog comments powered by Disqus

Posted at 01:30 PM/ET, 12/04/2012 RSS | Print | Permalink | Comments () | Washingtonian.com Articles