Congressional Budget Office
Robert A. Sunshine, Acting Director
Director’s Blog

CBO is required by law to report semiannually on OMB’s assessment of expenditures under the Troubled Asset Relief Program (TARP).  Today, CBO released the first of these reports.  (For more on the TARP program, this blog post from October includes CBO’s analysis of the financial rescue legislation).

Through December 31, 2008, the Treasury disbursed $247 billion to acquire assets under that program. CBO valued those assets using discounted present-value calculations similar to those generally applied to federal loans and loan guarantees, but adjusting for market risk as specified in the legislation that established the TARP. On that basis, CBO estimates that the net cost of the TARP’s transactions (broadly speaking, the difference between what the Treasury paid for the investments or lent to the firms and the market value of those transactions) amounts to $64 billion—that is, measured in 2008 dollars, we expect the government to recover about three quarters of its initial investment.

The Office of Management and Budget’s (OMB’s) report on the TARP, issued in early December, only addressed the first $115 billion distributed under the program. CBO and OMB do not differ significantly in their assessments of the net cost of those transactions (between $21 billion and $26 billion), but they vary in their judgments as to how the transactions should be reported in the federal budget. Thus far, the Administration is accounting for capital purchases made under the TARP on a cash basis rather than on such a present-value basis—that is, the Administration is recording the full amount of the cash outlays up front and will record future recoveries in the year in which they occur. That treatment will show more outlays for the TARP this year and then show receipts in future years.

Decisions made today about national defense– whether they involve weapon systems, military compensation, or numbers of personnel– can have long-lasting effects on the composition of the nation’s armed forces and the budgetary resources needed to support them. CBO has published a series of reports over the past six years about its projections of the resources that might be needed over the long term to carry out the Administration’s plans as expressed in the Future Years Defense Program (FYDP). Yesterday CBO released a paper providing projections of the amount of budgetary resources might be needed in the long term to carry out current defense plans (as they are described in the 2009 FYDP).

As in recent similar CBO reports, today’s report projects that carrying out the plans proposed in the 2009 FYDP would require sustaining higher inflation-adjusted levels of spending than those that occurred at the peak of the defense buildup in the mid-1980s. Four key factors account for the projected high level of spending:

• Plans to purchase more new military equipment over the next several years and then to sustain that rate of procurement over the longer term;
• Plans to develop and produce weapons systems with new capabilities and rising estimated costs;
• Plans to increase the size of military forces, coupled with the increasing cost of pay and benefits for military and civilian personnel; and
• Plans to meet rising operations and maintenance costs for both aging equipment and newer, more complex equipment.

In CBO’s projection of DoD’s current FYDP, defense resources average about $549 billion annually (in 2009 dollars) from 2014 to 2026, or about 6 percent more than the $515 billion in total obligational authority (TOA) provided by the Congress for 2009. (The 2009 FYDP and CBO’s projections of its long-term implications exclude potential future supplemental or emergency appropriations; CBO’s projections include additional appropriations that have already been enacted).

Possible unbudgeted costs have the potential effect of increasing the projection of long-term demand for defense funding to an annual average of about $652 billion through 2026, or 26 percent more than the funding provided for 2009. CBO’s analysis includes several possible sources of unbudgeted costs: that the costs of weapon systems now under development would exceed early estimates; that medical costs might rise more rapidly than DoD has assumed; and that DoD would continue to conduct military operations overseas as part of the war on terrorism, albeit at reduced levels relative to current operations in Iraq and Afghanistan.

Costs for operations in Iraq, Afghanistan, and for other purposes related to the war on terrorism have been rising. In 2007, appropriations for those activities totaled $170 billion in 2007 dollars, or 28 percent of total funding for the Department of Defense. In 2008, the appropriations rose to $187 billion in 2008 dollars, or 28 percent of defense funding that year. (In both years, some of the supplemental and emergency funding was for purposes unrelated to military operations overseas: in 2007, $5 billion; in 2008, $7 billion.)

Under DoD’s current plans and CBO’s projections of them, defense resources would steadily decline in relation to the size of the economy. The share of the U.S. gross domestic product (GDP) allocated to defense spending declined from an annual average of 5.6 percent in the 1980s to 3.8 percent in the 1990s. If DoD’s current plans were carried out, defense spending would drop to 3.1 percent of GDP by 2013 and to 2.5 percent of GDP by 2026, excluding unbudgeted costs.

CBO’s report includes two alternatives to its projections for DoD’s plans: an “evolutionary” scenario (in which DoD would forgo or scale back acquisition of the new, advanced capabilities that the department associates with military transformation and instead pursue evolutionary upgrades to its current capabilities) and a “transformational” scenario (in which DoD would increase its emphasis on acquiring the advanced capabilities it associates with military transformation). Under those two scenarios, CBO projects that the long-term  demand for defense resources would be reduced by 7 percent and 4 percent, respectively, relative to its projection of the implications of the 2009 FYDP.

This morning CBO released the Budget and Economic Outlook: Fiscal Years 2009-2019.  This volume is one of a series of reports on the state of the budget and the economy that the Congressional Budget Office (CBO) issues each year.  Because economic and budgetary circumstances have changed significantly in recent months, this report was preparedand released several weeks earlier than usual to aid the new Congress in its deliberations.

The sharp downturn in housing markets across the country, which undermined the solvency of major financial institutions and severely disrupted the functioning of financial markets, has led the United States into a recession that will probably be the longest and the deepest since World War II.  CBO anticipates that the recession—which began about a year ago—will last well into 2009. That would make it the longest recession since World War II.  Under the standard assumption CBO uses for its estimates—namely, that current laws and policies regarding federal spending and taxation remain the same—we forecast the following:

• A marked contraction in the U.S. economy in calendar year 2009, with real (inflation-adjusted) gross domestic product (GDP) falling by 2.2 percent, a steep decline from a historical perspective.
• A slow recovery in 2010, with real GDP growing by only 1.5 percent.
• An unemployment rate that will exceed 9 percent early in 2010; the unemployment rate has been that high only twice in the past 50 years (in 1975, for one month, and in 1982-1983).
• A continued decline in inflation, both because energy prices have been falling and because inflation excluding energy and food prices—the core rate—tends to ease during and immediately after a recession; for 2009, CBO anticipates that inflation, as measured by the consumer price index for all urban consumers (CPI-U), will be only 0.1 percent.
• A drop in the national average price of a home, as measured by the Federal Housing Finance Agency’s purchase-only index, of an additional 14 percent between the third quarter of 2008 and the second quarter of 2010; the imbalance between the supply of and demand for housing persists, as reflected in unusually high vacancy rates and a low volume of housing starts.
• A decrease of more than 1 percent in real consumption in 2009, followed by moderate growth in 2010; the rise in unemployment, the loss of wealth, and tight consumer credit will continue to restrain consumption— although lower commodity prices will ease those effects somewhat.
• A financial system that remains strained, although some credit markets have started to improve; it is too early to determine whether the government’s actions to date have been sufficient to put the system on a path to recovery.

The major slowdown in economic activity and the policy responses to the turmoil in the housing and financial markets have significantly affected the federal budget. As a share of the economy, the deficit for this year is anticipated to be the largest recorded since World War II. Under the rules governing CBO’s budget projections—that is, an assumption that federal laws and policies regarding spending and taxation remain unchanged—the agency’s baseline reflects these key points:

• CBO projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. Enactment of an economic stimulus package would add to that deficit. In CBO’s baseline, the deficit for 2010 falls to 4.9 percent of GDP, still high by historical standards.
• CBO expects federal revenues to decline by $166 billion, or 6.6 percent, from the amount in 2008. The combination of the recession and sharp drops in the value of assets—most significantly in publicly traded stock—is expected to lead to sizable declines in receipts, especially from individual and corporate income taxes. 
• According to CBO’s estimates, outlays this year will include more than $180 billion to reflect the present value of the net cost of transactions under the Troubled Asset Relief Program (TARP), which was created in the fall of 2008. (Broadly speaking, that cost is the purchase price minus the present value, adjusted for market risk, of any estimated future earnings from holding purchased assets and the proceeds from the eventual sale of them.) The TARP has the authority to enter into agreements to purchase assets totaling up to $700 billion outstanding at any one time, but the net cost over time will be much less than that amount.
• The deficit for 2009 also incorporates CBO’s estimate of the cost to the federal government of the recent takeover of Fannie Mae and Freddie Mac. Because those entities were created and chartered by the government, are responsible for implementing certain government policies, and are currently under the direct control of the federal government, CBO has concluded that their operations should be reflected in the federal budget. Recognizing that cost in 2009 adds about $240 billion (in discounted present-value terms) to the deficit this year, but that is not a measure of the amount of cash we expect the government to have to put in to those entities this year; that amount is only $18 billion.  Note that the Administration may not treat Fannie Mae and Freddie Mac this way in its budget presentation.  For comparison purposes, if those two entities were treated as being separate from the federal budget, CBO’s estimate of the deficit this year would be $966 billion—stil the highest, as a percent of GDP, since shortly after World War II.
• Economic factors have also boosted spending on programs such as those providing unemployment compensation and nutrition assistance as well as those with cost-of-living adjustments. (Such adjustments for 2009 are large because most of them are based on the growth in the consumer price index over the four quarters ending in the third quarter of 2008.)

CBO released an economic and budget issue brief today that discusses the factors underlying the decline in manufacturing employment over the past several years. The manufacturing sector of the U.S. economy has experienced substantial job losses since 2000. During the recession of 2001 and its immediate aftermath, employment in the manufacturing sector fell by about 2.9 million jobs, or 17 percent. Even after overall employment began to improve in 2004, the decline in manufacturing employment persisted. By the end of 2007, with the slowing of economic growth, employment in the sector had edged down further, by half a million jobs. And, as of November 2008, employment in manufacturing had fallen yet again, by slightly more than 600,000 jobs. A significant number of additional losses is likely given the current weakness in the economy.

Although the decline in manufacturing employment in recent years is not a departure from long-standing trends—the sector’s share of total employment has been falling steadily for more than half a century—the recession of 2001 hit manufacturing particularly hard. And, in sharp contrast to the pattern observed during previous expansions, employment in manufacturing (as reflected in the total number of hours worked) did not recover as it usually does following a recession.

The decline in manufacturing employment between 2000 and 2007 stemmed as much from an absence of new hiring as it did from layoffs of individual workers and downsizing. Rates of both job losses and job gains have been lower since the 2001 recession than they were in the 1990s. Workers who lost jobs, however, have typically experienced longer stretches of unemployment than did workers who lost jobs in the previous decade.

The steep decline in manufacturing employment since 2000 is associated with two interrelated developments: rapid gains in productivity (output per hour) in U.S. manufacturing and increased competition from foreign producers. Productivity in manufacturing has risen by about one-third since 2000, and growth in that productivity has consistently exceeded that of the overall nonfarm business sector.

Competition from overseas helped spur U.S. firms to boost productivity, but that competition has also dampened demand for goods produced in the United States, despite domestic manufacturers’ efforts to reduce costs through productivity enhancements. Those same developments have also had some beneficial effects for many U.S. residents, including the ability to buy manufactured goods at relatively low prices.

This decline in manufacturing employment represents a reallocation of jobs among industries rather than a decline in total employment in the United States. Until recently, other sectors of the economy have more than compensated in terms of overall employment, as evidenced by the relatively low 4.7 percent unemployment rate that existed during early 2007 and the roughly 7.5 million net new jobs created in the U.S. between early 2004 and the end of 2007.

This brief was prepared by David Brauer with the assistance of Eric Miller, both of CBO’s Macroeconomic Analysis Division.

Today, CBO is releasing two volumes that focus on health care issues:  Key Issues in Analyzing Major Health Insurance Proposals and Budget Options, Volume 1:  Health Care.  These two volumes build upon CBO’s previous analytical work on health insurance and health care financing issues and are intended to assist the Congress as it contemplates possible changes– both large and small– to federal health programs and the nation’s health insurance and health care systems.  In keeping with CBO’s mandate to provide objective, impartial analysis, neither volume makes any recommendations. 

The first document, Key Issues in Analyzing Major Health Insurance Proposals, focuses on large-scale proposals, provides extensive background information, and explains CBO’s analysis of numerous issues that could arise should the Congress seek to enact major changes in the health insurance system.  Key Issues does not provide analyses of specific proposals; rather, it provides an overview of CBO’s approach to major questions and issues that would likely arise in the context of such legislation.  Its main conclusions are as follows:

• The rising costs of health care and health insurance pose a serious threat to the future fiscal condition of the United States. Under current policies, CBO projects that federal spending on Medicare and Medicaid will rise from about 4 percent of gross domestic product (GDP) in 2009 to nearly 6 percent in 2019 and 12 percent by 2050.  Most of that increase will result from rising per capita costs, rather than from the aging of the population.
• Without changes in policy, a substantial number of nonelderly people (those younger than 65) are likely to be without health insurance. CBO estimates that the average number of nonelderly people who are uninsured will rise from at least 45 million in 2009 to about 54 million in 2019.
• Those problems cannot be solved without making major changes in the financing or provision of health insurance and health care. In considering such changes, policymakers face difficult trade-offs between the objectives of expanding insurance coverage and controlling both federal spending and total costs for health care.
• By themselves, premium subsidies or mandates to obtain health insurance would not achieve universal coverage.  Proposals could, however, achieve near-universal coverage using a combination of approaches. One option, for example, would be to establish an enforceable mandate for individuals to obtain insurance and provide subsidies for lower-income households to help them pay their required premiums. Another option, under a voluntary system, would be to provide subsidies that cover a very large share of the expected costs of insurance for every enrollee and establish a process to facilitate enrollment (as is done in Medicare). Other policies could achieve substantial reductions in the number of people who are uninsured at a lower budgetary cost.
• Serious concerns exist about the efficiency of the health care system, but no simple solutions are available to reduce the level or control the growth of health care costs. Steps to restructure the insurance market and to encourage people to purchase less extensive coverage could reduce the use of treatments that provide minimal benefits, but enrollees would face higher cost sharing or tighter management of their care.
• Other approaches—such as the wider adoption of health information technology or greater use of preventive medical care—could improve people’s health but would probably generate either modest reductions in the overall costs of health care or increases in such spending within a 10-year budgetary window. 
• In many cases, the current health care system does not give doctors, hospitals, and other providers of health care incentives to control costs.  Significantly reducing the level or slowing the growth of health care spending would require substantial changes in those incentives.

The second document, Budget Options, Volume I: Health Care, is much more specific and focused on discrete changes. It presents 115 discrete options, encompassing a broad array of issues related to the financing and delivery of health care.  (Volume 2 of Budget Options, which will address policy options in other areas of the federal budget, will be issued in 2009.) The health care volume includes some options that would reduce spending and others that would increase it, as well as changes that would reduce or raise revenues. Those options were culled from a wide variety of sources. Many variants are possible, and many other options exist but are not included in the report. The inclusion or exclusion of a particular policy option does not represent an endorsement or rejection by CBO, which does not make policy recommendations.

The options in the volume are organized by thematic chapters:

• The private health insurance market
• The tax treatment of insurance
• Changing the availability of health insurance through existing federal programs
• The quality and efficiency of health care
• Geographic variation in spending for Medicare
• Paying for Medicare services
• Financing and paying for services in Medicaid and SCHIP
• Premiums and cost sharing in federal health programs
• Long-term care
• Health behavior and health promotion
• Closing the gap between Medicare’s spending and receipts.

The Budget Options volume presents CBO’s estimates of year-by-year costs or savings for five years, as well as a 10-year total. The options are not additive; a package of multiple options would, in many cases, have a budgetary effect that differs from the sum of the individual effects because of interactions among them.  Subsequent cost estimates by CBO or revenue estimates by the Joint Committee on Taxation may differ from the estimates in the volume – either because the policy proposal differs from the option as described, or because of additional data and analysis.

These projects involved an enormous amount of effort by more than three dozen CBO staff over a period of many months, and we are grateful to the health policy group of the staff of the Joint Committee on Taxation, which prepared estimates for the various tax provisions.  

The reports provide a foundation for the CBO’s work in the next Congress. New issues will arise, however, and more analysis will be necessary, so CBO will continue its own energetic research efforts and will follow carefully the research of others on health care issues.  

Today, CBO released a cost estimate for H.R. 7321, the Auto Industry Financing and Restructuring Act, as passed by the House of Representatives last night.  We estimate that enacting H.R. 7321 would increase net direct spending by $1.7 billion over the 2009-2018 period, mostly for loans to domestic automobile manufacturers.  An additional $7.0 billion in potential costs would be subject to future appropriation action.

The act would provide sufficient funding to cover the costs of up to $14.0 billion in “bridge loans” to the auto manufacturers.  It would make available for that purpose $7.0 billion of federal funds previously authorized to cover the cost of loans to automobile manufacturers and component suppliers for the manufacture of advanced technology vehicles (often labeled “section 136 loans,” referring to the provision of law that authorized them).

How does the $7.0 billion in previous funding relate to the $14.0 billion in loans to be made under this legislation?  Under federal budgeting procedures, most loans and loan guarantees issued by the federal government are not recorded in the budget on a cash basis. Rather, estimates of the various cash flows (including, for example, disbursement of the loan principal, interest and principal payments received, and recoveries on defaults) are netted and discounted to the year of disbursement so as to show a net cost or savings to the government on a present-value basis; the amount of funding needed is not the total amount of the loan, but rather the net cost, if any, on that present-value basis. That net cost, as a percentage of the loan principal, is called the subsidy rate. For example, if the subsidy rate for a $1 billion loan is 50 percent, its net subsidy cost and the amount of funding necessary would be $500 million.

CBO estimates that the subsidy cost for $14.0 billion in loans would be about $7.0 billion (an average subsidy rate of 50 percent), the amount of existing funds made available for that purpose.

In CBO’s judgment, the subsidy cost of the bridge loans authorized in this legislation could fall within a wide range depending on estimates of potential interest income, a significant probability of default (which could be different for different firms), and possible recoveries in the event of default. Under the Federal Credit Reform Act, the Administration determines the estimated subsidy cost of loans based on the procedures specified in that act.  CBO’s point estimate of 50 percent represents a weighted average of many possible outcomes and takes into account the possibility that subsidy rates assigned by the Administration could fall within a wide range.

There is, however, some likelihood that the net costs of the subsidy for the bridge loans would be higher.  To the extent that the Administration assigns subsidy rates to loans that exceed CBO’s current estimate of the average subsidy rate, total funding available for bridge loans would exceed the $7.0 billion reallocated from existing funds. Such an outcome would result in greater spending for bridge loans. If, on the other hand, the Administration assigns subsidy rates lower than 50 percent, there would be no corresponding reduction in spending for loans under the bill because any amounts not required for bridge loans would remain available to the Department of Energy for section 136 loans.  As a result, there is a possibility that the total loan costs resulting from this legislation could exceed the $7.0 billion in existing funds, but no possibility that they could be smaller.  (We sometimes label such a situations a “one-sided bet.”)

Reflecting the significant uncertainty and the possibility that the Administration might assign subsidy rates other than 50 percent,  authorizing the Administration to spend higher amounts if necessary yields about $1.0 billion in estimated additional spending for bridge loans in 2009.

Another $500 million in costs arises because the act would provide, out of the indefinite “such sums” appropriation, $500 million in new funding for the original section 136 loans to auto makers (for advanced-technology vehicles).

The Congress could, in the future, decide to provide an additional $7.0 billion in funding to replace the $7.0 billion that had previously been appropriated for section 136 loans and that, under this legislation, would be used instead for the bridge loans.  This act would authorize future appropriations for that purpose, but would not provide such funding.

The remaining almost $200 million in new costs stem from provisions that would provide government insurance for certain financing arrangements made by transit systems and authorize a cost-of-living increase for federal judges.

Today (December 5), CBO released a letter at the request of House Majority Leader Hoyer analyzing the budgetary effects of two legislative proposals: S. 3715, the Auto Industry Emergency Bridge Loan Act, as introduced on November 20, 2008; and draft legislation released by the House Committee on Financial Services (and posted on that committee’s Web site) on November 17, 2008.

Both proposals would authorize the federal government to provide up to $25 billion in “bridge loans” to support ongoing operations of automobile manufacturers and component suppliers.  S. 3715 would rescind $7.5 billion of funds previously appropriated to the Department of Energy for loans to automakers and also appropriate $7.5 billion for the cost of “bridge loans” to support ongoing operations of eligible auto manufacturers and component suppliers. Repayments of bridge loans would be available to support new loans.

The draft legislation posted by the House Committee on Financial Services would require the Secretary of the Treasury to provide $25 billion in bridge loans to eligible auto manufacturers and component suppliers, to be administered under the Troubled Assets Relief Program (TARP) that was created by the Emergency Economic Stabilization Act of 2008 (Public Law 110-343).

Provisions related to the administration and financial terms of such loans are similar under the two proposals, but significant differences arise regarding their budgetary treatment and potential net impact on the federal budget.  In particular, the subsidy costs of loans under S. 3715 would be calculated on a present value basis following the requirements of the Federal Credit Reform Act (FCRA), while loans made under TARP (as directed by the draft House legislation) would be calculated on a slightly different basis.  Under TARP, subsidy costs would be calculated by adjusting the discounting called for in FCRA to account for the market risk associated with the loans. In contrast, FCRA discounting is done by using the relatively “risk-less” Treasury rate of borrowing. (That difference, and its impact on the net budget impact of the proposals is explained in more detail in the letter to Majority Leader Hoyer.)

Another key difference between the two proposals is that S. 3715 would allow loan repayments to be “revolved” into new loans. That provision would effectively raise the estimated subsidy rate of the initial loans under S. 3715 to 100 percent. That result occurs because repayments would automatically revolve into new loans without subsequent appropriation of any additional funding to cover the subsidy costs of those new loans, as would normally be required under FCRA. By making new loans with the repayments of the initial loans, the government would essentially be spending those receipts, thus adding to the subsidy costs of the initial loans.

A summary of CBO’s estimates for the two proposals is provided in the following table:

CBO also sent a letter today to Cong. John M. Spratt Jr., Chairman of the House Budget Committee, providing information on how two alternative scenarios to provide $34 billion in bridge loans to the auto industry would affect the federal budget. Under both scenarios, the loans would support firms’ ongoing operations and would carry interest rates of 5 percent for the first five years after disbursement and 9 percent thereafter. CBO’s estimates of the subsidy cost for providing $34 billion in bridge loans under the two scenarios specified by Chairman Spratt are summarized in the following table:

CBO estimates that the subsidy rate for bridge loans under standard credit reform accounting (following the requirements of FCRA) would be 50 percent. By comparison, we estimate a subsidy rate of 70 percent for providing such loans under TARP because that program’s accounting requires an adjustment to reflect market risk. Using those subsidy rates, CBO estimates a budget cost of $17.0 billion for the use of new budget authority (with FCRA accounting), and a net budget cost of $13.6 billion to $17.0 billion for use of existing TARP authority.

Yesterday, CBO released its Monthly Budget Review.  CBO estimates that the Treasury will report a federal budget deficit of $408 billion for the first two months of fiscal year 2009, $253 billion higher than the deficit recorded through November of last year.  This estimate includes $191 billion disbursed for the Troubled Assets Relief Program (TARP) during the first two months of the fiscal year.

CBO believes that the equity investments for that program should be recorded on a net present value basis adjusted for market risk, as specified in the Emergency Economic Stabilization Act of 2008, rather than on a cash basis as recorded by the Treasury.  CBO’s preliminary analysis suggests that the present value cost of the TARP transactions made through November totals about $50 billion, $141 billion less than the cash disbursement recorded in the budget by the Treasury.  The estimated cost accounts for subsidized interest rates and market risk, but also for the likelihood that the government will ultimately get much of its money back.  As a result, CBO’s estimates of outlays and the deficit are much lower than the amounts that will be reported by the Treasury. 

Evaluating TARP on a net present value basis, CBO estimates the federal deficit totaled $267 billion through November, compared with a deficit of $155 billion during the same period last year. Revenues are running about 6 percent below receipts during the same period last year—but even excluding the TARP payments and $14 billion in payments to Freddie Mac to cover its losses, outlays are up by about 13 percent (after adjusting for shifts in the timing of certain payments).

CBO has been privileged, for the past two years, to have Peter Orszag as its Director.  During that time, he worked tirelessly to ensure that the Congress received the timely, high quality, budget and economic information and policy analysis that it needs to address the important public policy issues facing our nation.  He also expanded the agency’s focus on key areas like climate change and health care, with particular emphasis on the long-term fiscal threat posed by rising health care costs.  CBO’s work, under his leadership, was done, as always, in a scrupulously objective and nonpartisan manner. 

Peter’s broad knowledge, energy, wisdom, and dedication have been enormous assets to CBO, and the agency wishes him well as he begins the next phase of his career in public service.

Bob Sunshine, Acting Director

Today President-elect Obama announced his intention to nominate me as director of the Office of Management and Budget.  I am therefore resigning as director of CBO and this will be my final blog entry.

I have absolutely loved my time at CBO.  CBO is unique because it combines rigor, relevance, and range.  Rigor reflects the intellectual integrity of what CBO does.  Relevance speaks to the importance of what it does.  And range reflects the wide array of topics upon which CBO has something important to say – from national security to labor markets to natural resources, health care, immigration, and the list goes on and on and on.  (This blog has also been a special treat: it has provided another way of discussing CBO’s work and some of my own views about the policy world.)

Perhaps most fundamentally, CBO is a reflection of the smart and hard-working but also warm and wonderful people who work here.  (If you find it hard to believe that budget analysts and economists can be warm and wonderful, please just take my word for it.) I have worked with many outstanding people in both the public sector and the private sector, and the CBO staff is truly exceptional in its analytical capability and its devotion to the work it does.   

I will very much miss CBO, and hope that I will do it proud if I am confirmed by the Senate to assume my new post.

Peter R. Orszag