Category Archives: Economics

Some economists do more than teach classes and write books. Alice Rivlin, who passed away this week, was proof. She was the first director of the Congressional Budget Office (CBO), from 1975 to 1983, serving under Presidents Ford, Carter, and Reagan. She helped develop many of the standards used for estimating how much legislation would cost if enacted. More importantly, she developed a reputation for keeping politicking out of the bill scoring.

Over in the executive branch, Rivlin was deputy director and then director of the Office of Management and Budget (OMB) under President Bill Clinton. Though Rivlin worked mostly on fiscal issues, part of the OMB’s job is providing cost estimates for proposed regulations. Rivlin was in the OMB when Clinton issued the famous Executive Order 12866 on reforming the rulemaking process, and she played a significant role implementing it. Among other things, E.O. 12866 specifies the definition of a “significant” regulation and contains disclosure and cost estimate standards still in use today—at least when agencies bother to obey them.

Major accomplishments in budget and regulatory policy were apparently not enough, so Rivlin next took on monetary policy. She left the OMB in 1996 to become Vice Chair of the Federal Reserve, the number two position under then-chair Alan Greenspan, which she held until 1999.

Rivlin is perhaps best known for her work at the local level in the District of Columbia. The District was in a massive financial mess during the Marion Barry years, and Mayor Barry’s personal problems were not helping matters. Recommendations from a Rivlin-chaired task force resulted in the federal government stripping the mayor of most authority and establishing a committee to tend to the district’s finances. Rivlin eventually chaired that committee as well until it disbanded in 2001.

Milton Friedman observed that economists who go to work in government often suffer a decline in the quality and independence of their work; part of the price of influence is not telling the boss when he’s wrong, or at least not in public. Rivlin was an exception to that rule, successfully irking powerful politicians throughout her time in government. The CBO, for example, was initially created as a counter to President Nixon’s OMB.

Though Rivlin was a Democrat, she scored President Carter’s energy proposals honestly. For obvious reasons, this upset both the President and Democratic House Speaker Tip O’Neill, who needed legislation to campaign on. As a deficit hawk, Rivlin had two parties deserving criticism. When Rivlin was on the other end of Pennsylvania Avenue working at OMB, President Reagan publicly expressed his displeasure when Rivlin called shenanigans on his deficit spending.

Rivlin also left a footprint in the think tank world, working at the Brookings Institution between government appointments. Her book “Systematic Thinking for Social Action” is one of Brookings’ best-selling books, and remains an influential text in public administration courses. She also taught courses at Georgetown, George Mason, and Harvard.

Rivlin’s 1993 book “Reviving the American Dream: The Economy, the States, and the Federal Government” makes the case for increased federalism, which is a rare stance among career Washingtonians. It is also somewhat ironic, given Rivlin’s role in a partial federal takeover of the D.C. local government. But her long experience with federal budget dysfunction gives her plenty of ammunition for arguing for devolving many federal tasks to the state level—and D.C.’s troubles were something of an outlier case. In Rivlin’s system, the federal government would focus more on foreign policy, with the states taking on education, health care, poor relief, transportation, and other tasks that are currently mostly federally administered. The federal government would establish some uniform standards for states to follow, but would be more of a supervisor than an actual policy actor.

Though Rivlin mostly retired from government work after Clinton’s second term ended, she served on the Simpson-Bowles Commission in 2010 that looked for ways to reduce the national debt. She continued to warn about the dangers of perpetual deficit spending for the rest of her life.

Rivlin also worked in a time, place, and occupation that were all far more difficult for women than today. Intentionally or not, she set some major precedents. It says a lot about Rivlin that despite her era’s social norms, strong personalities on both sides of the aisle respected her. She was a stickler for keeping politics out of her budget and cost estimates. This sometimes involved making very powerful people very upset, and she did it anyway. Her reputation for fairness was well-earned, even if some of her praises were sung through clenched teeth.

While CBO and OMB’s modeling techniques are not always very accurate, on Rivlin’s watch such shortcomings usually had more to do with the nature of forecasting than with poll results or an upcoming election.

Few economists can claim as many accomplishments in as many policy areas as Rivlin. She held important roles in the executive branch and the legislative branch, in the federal government and overseeing a local government, plus the Federal Reserve, and still found time to make scholarly and popular contributions to federalism, administrative structure, and debt reduction efforts. She also had the good sense to be a thorn in the side to both parties, even as she was a member of one of them—something that is sadly missing in Washington today.