The new four year term of the Director of the Congressional Budget Office begins soon. Now that Republicans will have majorities in the House and Senate, this job is entirely their call. The President is not involved. Incoming House and Senate Budget Committee Chairman Tom Price and Jeff Sessions will make this choice.

While at first blush it may seem counterintuitive, the best move for fiscal and economic conservatives is to reappoint Doug Elmendorf. If Chairmen Price and Sessions won’t do that, then I recommend they choose Kate Baicker. If any key Hill Rs want to know why I think Dr. Baicker is the best new candidate, please contact me privately. Here I’m going to focus on why I hope Chairmen Price and Sessions reappoint Dr. Elmendorf.

Dr. Elmendorf is not a conservative. He was originally chosen to head CBO by Congressional Democrats. He came from the left-of-center Brookings Institution. I think he is registered as an independent. I don’t know how he votes but I’d bet he’s a moderate/centrist Democrat.

I want to move economic policy to the right, not to the center-left. I think Dr. Elmendorf is the best pick for CBO because (a) he is unbiased and intellectually honest; (b) his background insulates his rulings and the Congressional Republicans who choose to reappoint him from accusations of bias; and, most importantly, (c) this combination greatly disadvantages the progressive Left who both dominate current economic debate within the Democratic party and who cannot refrain from intellectual overreach.

There are two ways to move economic policy debate to the right. One is to make stronger free market and small government arguments. The other is to rebut the wackiest arguments made by the Left. Congressional Republicans should do the former and lean on Dr. Elmendorf and CBO for help with the latter. Over the past few years an Elmendorf-led CBO has weakened a few key support pillars of the Left’s big government intellectual edifice, not because Elmendorf leans right but because the Left is dominant and nuts and their most outrageous arguments just beg to be debunked by a neutral referee.

  • Team Obama overreached, arguing that a minimum wage increase would result in no job loss, that an increase to $10.10/hour would benefit millions and harm no one. Under Elmendorf CBO destroyed this claim, pointing out that the President’s favored policy would reduce the labor supply by about half a million workers. For once economic conservatives were on strong ground not just because we had facts and logic on our side, but also because the press repeatedly wrote that “the nonpartisan CBO said the President’s minimum wage increase would reduce the labor supply by half a million workers.” We won those debates in part thanks to an assist from a CBO that was and was described as unbiased and nonpartisan.
  • Elmendorf’s CBO analyzed the reduced labor supply that would result from ObamaCare, a 1.5-2 percent reduction in hours worked. CBO applied routine analysis straight out of a microeconomics textbook. In doing so they rebutted absurd free lunch claims made by the Obama White House and their allies on the Left. And again, the press (even all the biased ones) had no choice but to report these findings as definitive, since they had no opportunity to accuse the director of Republican bias.

Had CBO been led at the time by a director chosen by Republicans, the exact same conclusions would have been dismissed or caveated by many (most?) of the press. The press coverage and public debate would have instead been about how “Congressional Republicans and their hand-picked conservative CBO Director said ______________.” The identical conclusions from a director chosen by Republicans would have had far less impact on the public debate. That is unfair. It is also an unavoidable consequence of a biased press corps that free market and small government conservatives would be foolish to ignore.

I am not arguing that Republicans should always choose a Democrat to run CBO, or that only a Democrat can have this  public credibility, or that the press credibility of choosing a Democrat is worth appointing someone biased to the left. I think Dr. Kate Baicker would quickly build Elmendorf-like credibility if chosen to lead CBO. And I think Dr. Peter Orszag, chosen by Democrats to head CBO before he became President Obama’s OMB Director, ran CBO as an advocate and policy entrepreneur, not as a neutral referee.

Just as I sometimes disagree with and even yell at the fairest football and basketball refs, I disagree with some of the judgment calls Dr. Elmendorf and CBO have made. But I don’t want the ref to be biased right or left. I don’t even think a right-leaning ref would be that valuable to winning these debates, given the higher press hurdle that would be set by a biased press corps. I also think fiscal and economic conservatives benefit from an institutionally strong CBO, as the Left far more often wants to ignore arithmetic and cost-benefit tradeoffs than do the Republicans now taking the helms of the key economic committees in Congress.

I think CBO is too wedded to assuming large and unproven short-term Keynesian multipliers, but their approaches to estimating long-term tax, debt, labor, and health insurance policy changes support those of us who prioritize increasing the supply of labor and capital. As I noted earlier, an Elmendorf-led CBO showed that ObamaCare and a minimum wage increase would both reduce employment. Under Elmendorf, CBO said that increasing marginal tax rates dampens economic growth because it reduces incentives to work, save, and invest. Elmendorf’s CBO said that transfer payments reduce work incentives and shrink the labor force. In contrast to President Obama and Dr. Krugman, Elmendorf’s CBO warned that high and rising debt levels will lower future income, increase pressure for higher taxes or less defense spending, and increase the risk of a fiscal crisis at some uncertain future date. In contrast to the Piketty Fan Club, CBO’s distributional analysis showed that the burden of financing government is even more distributed toward the high end than is income, and they integrated into their analysis the effects of both taxes and transfer payments.

Many Congressional Republicans need to learn how to use CBO better. They need to actually read what CBO writes and to figure out how to ask questions of CBO and of Dr. Elmendorf that will highlight the ways in which left-wing dogma contradicts straight-up-the-middle economic analysis. If Hill Republicans learn how to do this more effectively, the debate will move rightward as the Left’s case weakens.

I hope Congressional Republicans who want smaller government and freer markets think strategically about this post. Keep CBO strong and unbiased both in fact and in appearance. Win the economic policy debate by keeping the valuable asset they now have, the public and press credibility of a fair ref who often rebuts wacky dangerous arguments made by the Left. Learn to use CBO’s analyses more effectively and to ask them the right questions. Reappoint Dr. Doug Elmendorf to head the Congressional Budget Office.