CBO Chief in Hot Seat of Budget Debate

In the titanic battle over the federal budget, a brawl in which words and numbers careen through the air like heat-seeking weapons, there might seem little room for a soft-spoken, onetime piano student from the Bronx named June O’Neill.

Yet in a twist of fate, the scholarly, bespectacled O’Neill occupies a pivotal role in the stormy political contest: She is the referee, the scorekeeper, the guardian of the clock. Indeed, O’Neill will help determine whether the White House and Republicans have any hope at all of making a long-term budget deal.

“She’s in the hot seat,” said Isabel V. Sawhill, an economist at the Urban Institute. “I wouldn’t want to be there myself. It’s got to be very challenging.”

O’Neill is head of the Congressional Budget Office, which today is expected to unveil a new economic forecast that will dictate the magnitude of spending curbs needed to balance the budget by the year 2002. House Budget Committee Chairman John R. Kasich (R-Ohio) on Sunday added to the intrigue, revealing that the new forecast would narrow the spending chasm between Republicans and the White House.

The CBO is Congress’ official scorekeeper of how much money it would have saved or spent because of policy changes. It also is a sort of timekeeper because it projects how long it would take to balance the budget using such changes.

Nervous Democrats have accused the CBO of acting like a Republican tool rather than the neutral arbiter it is supposed to be.

The attacks, such as Senate Minority Leader Tom Daschle’s recent broadside accusing the CBO of partisanship, inevitably reflect on the decidedly nonflamboyant O’Neill, who--contrary to some of her predecessors--is a market-oriented conservative.

“I think everybody at CBO is particularly distressed at attacks that seem to question our credibility or impartiality,” O’Neill, 60, said in an interview. Political stakes--monumental as they may be--are not the issue, she continued. “Congress makes policies. We’re essentially a number-crunching operation.”

From the moment last February when Republican budget leaders picked the Baruch College economics professor to head the CBO, the conservative labor economist has been tangled up in this year’s political drama.

Democrats immediately questioned her ability to be an evenhanded broker, dispensing analyses and cost estimates impartially to legislators of both parties. O’Neill’s academic research, for example, has provided ammunition against affirmative action, President Clinton’s health care reform plan and bureaucratic solutions in general. She upset some liberals and helped antigovernment conservatives by writing that pay gaps between blacks and whites do not arise mainly from discrimination. Rather, she believes, differences in education, job choice and other factors are more responsible for wage disparities.

Beyond that, O’Neill’s challenge in establishing herself has been made more difficult by the stature of her predecessor, Robert Reischauer, a strong, telegenic personality with a knack for the snappy rhetoric so prized on Capitol Hill and in the media.

O’Neill appears less at home in the Washington fishbowl and more attuned to the academic setting.

The question of communication is not insignificant: Some political observers say the public would be well-served by a visible, plain-talking CBO director to help cut through the confusing budget debate. In that respect, O’Neill is still learning the job.

“Her communication skills are more professorial than Washington has come to expect,” said Stanley E. Collender, a budget expert with the Price Waterhouse accounting firm. “She tends to be somewhat low-key and not terribly quotable.”

In person, O’Neill is warm and hospitable, a strong defender of her organization and the value of the objective analysis it dispenses. She also is a policy addict, sometimes capping off a long day by watching public affairs television on C-SPAN, she admits with a smile.

While her earlier goal was a career in piano performance--she studied at the Julliard School and retains a love of Schumann--practical considerations led her toward economics. “The chances of being a first-rank pianist were remote,” she explained, speaking with the vestiges of an accent from her childhood in the West Bronx.

O’Neill’s husband is an economist at a research institute in New York. They have two children--a son who is a screenwriter and a daughter who is a nurse, specializing in work with AIDS patients. A sister is a violinist in the Los Angeles Philharmonic.

Yet it is economics that she seems most comfortable discussing with a stranger, whether the subject is the consumer price index or an explanation of “distributional analysis,” which shows the impact of tax proposals on haves and have-nots.

It has been O’Neill’s fate to arrive at her public post at a time of extraordinary pressure on the CBO and its cadre of 165 career government analysts. Republicans have taken control of both houses of Congress for the first time in decades--and the budget took center stage in their strategy to overhaul government.

In recent weeks, GOP leaders have demanded that CBO--rather than administration--economic forecasts provide the framework for a budget deal but the White House has been wary.

Democrats have bemoaned CBO’s earlier findings that $400 billion more in cutbacks are needed to balance the budget than the White House says is necessary.

Last week, Daschle (D-S.D.) complained of “Republican coercion” at the CBO. He said the agency was preparing its much-awaited forecast without due consideration of the effect of new budget proposals. He also said it had dropped the practice of considering how policies would affect the gap between rich and poor, an exercise commonly done in the past.

In the interview, O’Neill dismissed the criticism. Members of both parties are invited to make whatever suggestions they believe are warranted when the CBO considers an issue, she said. “‘We will consider this and we will consider that,” she said. “But basically it’s our own call.”

The supposedly pessimistic budget forecast, she said, “was put together by my predecessor.” The rich-poor analyses are not requested as much as in the past but still done when asked for, she added.

“The greatest risk is not June’s integrity,” said Sawhill, who worked with O’Neill at the Urban Institute in the early 1980s. “It’s her relative lack of [political] experience. She came into a caldron.”

In fact, O’Neill’s CBO has managed to frustrate members of both parties this year.

The budget office concluded, for instance, that certain Republican plans for managed-care health systems and welfare reform would prove more expensive than their GOP advocates had thought. A CBO analysis on the cost of a type of adjustable rate mortgage program for veterans upset proponents of both parties, and legislators are still working on that problem.

Although her penchant for market solutions may make some liberals cringe, academic colleagues and outside observers give O’Neill votes of confidence.

“I think she’s a very honest scholar who wouldn’t bend the numbers to fit the Republicans or anyone else,” said Gary S. Becker, a Nobel laureate professor at the University of Chicago who supervised O’Neill’s doctoral work at Columbia University. (In an odd coincidence, Becker also supervised Reischauer’s thesis, and describes both as talented students.)

M. Anne Hill, a colleague of O’Neill’s at Baruch College, credits her integrity and meticulous approach to solving problems. “If the results don’t turn out the way she expected, then they don’t turn out the way she expected,” Hill said.

Even the Washington Post has weighed into the discussion, with an editorial describing Daschle’s attack on the objectivity of the CBO and O’Neill as a “cheap shot.”

O’Neill’s quiet style, as much as the numbers she has endorsed, has caused some people to wonder if she has the assertiveness necessary to preserve the CBO’s authoritative voice.

Consider the recent meeting in her office when representatives of Congress and the White House trooped over to hash out the sort of outside input the CBO would solicit--and when it would do so--in determining its important new budget forecast. A lively argument quickly ensued between Republican staff members and Alice Rivlin, director of the White House Office of Management and Budget.

O’Neill quietly watched as the rival sides slugged it out. “She didn’t seem terribly present,” one witness recalled.

There is a more favorable interpretation, however. “She appropriately is keeping her head down and staying out of the fray,” Reischauer said. “I think she’s doing a good job.”

Characteristically, O’Neill is uncomfortable with the whole subject. “It sounds almost foolish to have this stuff discussed,” she said.