The Congressional Budget Office (CBO) plays a vital role in shaping legislation, producing hundreds of cost estimates each year. Lawmakers rely on this scorekeeper to provide impartial analysis. But what happens when those projections miss the mark? A new bill from Rep. Andy Barr (R-KY) aims to answer that question by holding the CBO more accountable when its forecasts fail to match reality.
Barr’s CBO Scoring Accountability Act (H.R.2666) would require the agency to publish follow-up analyses of major legislation after they’ve been enacted into law. This would ensure Congress and the public have a clearer picture of how well CBO estimates hold up once policies are implemented.
There’s often a disconnect between what legislation is projected to cost and what it ends up costing once implemented. CBO’s estimates are not always accurate—and there’s little formal review when reality diverges from projection. Barr’s bill aims to close that gap by requiring CBO to compare original projections to real-world outcomes—helping Congress learn from past mistakes and improve future policymaking.
CBO’s Role in the Budget Process and the Risks of Inaccurate Scores
CBO was established as a neutral budget scorekeeper by the Congressional Budget Act of 1974. Before this, Congress was generally dependent on the White House’s Office of Management and Budget for fiscal analysis. CBO plays a pivotal role in the development of policy, producing official cost estimates for hundreds of bills each year. In addition, members of Congress and their staff routinely consult with CBO for informal analysis while drafting legislation.
CBO’s estimates play a major role in shaping policy debates, but they are not infallible. Many factors can cause actual fiscal outcomes to diverge from projections, including unexpected economic shifts, policy implementation challenges, and incorrect assumptions. For example, CBO’s dramatic underestimation of the cost of the IRA’s clean energy tax credits and its overestimation of the revenue impact of IRS enforcement funding both illustrate how uncertainty can lead to significant discrepancies between projections and reality.
We at NTUF successfully urged CBO to better highlight uncertainty in its estimates, ensuring that lawmakers and the public have a clearer understanding of the potential range of outcomes. Instead of burying these details deep within explanatory text, CBO now summarizes key points of uncertainty more prominently in its reports, particularly in the sections presenting top-line budgetary impacts. This change helps policymakers better assess the reliability of estimates and recognize when projections might be overly optimistic or pessimistic.
However, these points of uncertainty are often overlooked, and sometimes CBO’s estimates can be significantly off the mark. Understanding that CBO’s scores are well-considered but not infallible will be crucial for having a clear view during this year’s tax debate. Taxpayers should be cautious when analyzing estimates that depend on numerous uncertainties. Here are some of the key misses from CBO in recent years.
Inflation Reduction Act Electric Vehicle Tax Credits
One of the most costly miscalculations in recent memory involves the expansion of the Electric Vehicle (EV) Tax Credit under the so-called Inflation Reduction Act (IRA). The law removed a cap on the number of eligible EVs per manufacturer, massively broadening the credit’s reach.
Though originally intended to boost demand, recent research shows that 75% of the credit’s claimants likely would have bought the electric vehicle anyways, meaning the credit functions more as a subsidy than an incentive. But Congress had little idea of the potential price tag, in part because CBO and the Joint Committee on Taxation (JCT) dramatically underestimated the cost.
In 2022, CBO estimated that IRA’s clean vehicle credits would cost around $14 billion over the decade. Revised and follow up estimates range from around $200 billion from CBO, to around $400 billion from the Penn-Wharton Budget Model with some of the overrun tied to a Treasury Department loophole for leased vehicles.
To rein in these runaway costs, the One Big Beautiful Bill Act (OBBBA) phases out or eliminates many of the green energy tax credits created under the IRA. This includes repealing the electric vehicle subsidy. OBBBA also rolls back production and investment tax credits for wind and solar, and eliminates credits for clean hydrogen, sustainable aviation fuel, advanced manufacturing, and zero-emissions facilities. These reforms are expected to save roughly $500 billion over the next decade.
Medicaid Expansion Flop
The Affordable Care Act (ACA) has faced criticism on many fronts, but one of its most costly provisions for taxpayers is the Medicaid expansion. Beginning in 2014, states were permitted to expand their Medicaid coverage to non-elderly, able-bodied adults with incomes up to 133% of the federal poverty level. When the ACA passed in 2010, the CBO, assuming nationwide adoption, projected sixteen million new enrollees by 2019. Yet by 2019, enrollment in expansion states had already reached fifteen million—even though only about three-fifths of states had implemented the expansion. This is also a huge contributing factor to why the program has been roughly 157% more expensive than anticipated. CBO scored Medicaid expansion repeal at around $800 billion in the ten year budget window back in 2017, which is likely far higher now that additional states have implemented the expansion.
Improving Transparency and Accuracy in Budget Scoring
Budget misses such as these undermine effective policymaking. These cost estimates of enacted laws get included in CBO’s baseline, and, when they are faulty, lead to a skewed outlook of outlays and revenues. More accurate evaluations of major legislation are essential to improving fiscal discipline and accountability.
Under the bill, CBO would assess the actual budgetary effects of such laws and compare them with its original estimates. If actual outcomes diverge from initial projections by more than 10%, CBO must notify Congress and provide an explanation of the discrepancy. The bill also requires federal agencies to cooperate with CBO by supplying data and support necessary for these analyses.
Barr’s bill would build on efforts already undertaken by CBO. For example, it already publishes a variety of recurring reports, such as its ten-year budget and economic outlook and long-term outlook, which include analyses of legislative and economic factors that lead figures to differ from what CBO had previously reported. CBO also regularly examines the accuracy of its baseline. However, these reports do not always dig into the impacts of specific laws.
Barr’s legislation would fill a critical gap by ensuring ongoing reviews of the actual costs of major legislation. These reviews may be challenging due to the many variables that affect both cost estimates and real-world outcomes. However, requiring them would help CBO learn how policies actually unfold and use those insights to improve its future scoring models.
Conclusion
Rep. Barr’s CBO Scoring Accountability Act is a commonsense reform that would strengthen the accuracy and accountability of CBO’s cost estimates—an especially important step following the enactment of sweeping legislation like the One Big Beautiful Bill Act. Requiring regular updates on the real-world fiscal impact of major laws will help lawmakers assess whether a policy is working as intended or needs correction. By improving oversight of budget projections, this bill would help ensure more responsible policymaking, provide for improved estimates from CBO, and lead to better outcomes for taxpayers.