March 24, 2011

The Honorable Douglas Elmendorf Director Congressional Budget Office Ford House Office Building Washington, DC 20549 Dear Director Elmendorf: The Congressional Budget Office (CBO) is charged with providing analysis that is both objective and nonpartisan.1 Given that CBOs budget estimates serve as the basis for Congress annual budget deliberations and its cost estimates shape the vast majority of bills introduced in Congress, it is critically important that CBOs estimates remain untainted by any bias or partisanship. Thus, CBO is charged by statute to hire personnel without regard to political affiliation and solely on the basis of their fitness to perform.2 My office was recently contacted by Ms. Lan Pham who was terminated by CBO. Ms. Pham claims that she was fired because she created work product, which did not paint a sufficiently optimistic picture of the economy. Specifically, Ms. Pham alleges that her supervisor, Ms. Deborah Lucas, engaged in a pattern of systematically ignoring data that might undermine a positive picture of the housing and mortgage markets. For example, Ms. Pham claims that she was told to ignore information on home foreclosures and their effect on driving down property tax revenues. In fact, on March 3rd, the New York Times spotlighted this trend in an article titled, Broke Town, U.S.A.3 Further, Ms. Pham claims that Ms. Lucas pressured her to reach specific conclusions and at one point asked her point blank, dont you want home prices to go up? Although Ms. Pham did not speculate as to Ms. Lucas motives, some factors in Ms. Lucas background could raise concerns about the appearance of CBOs objectivity. While employed as a Professor at the Kellogg School of Management, Ms. Lucas joined Obama for
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Congressional Budget Office, CBO Fact Sheet. 2 USCS 601 (b) 3 New York Times, Broke Town, U.S.A., March 3, 2011.

America and donated to President Obamas campaign.4 In addition, on a Kellogg Finance Department blog site she wrote a post titled, Where do we go from here? at approximately the same time that her employment with CBO began.5 The post starts with Rahm Emanuels now infamous quote, You never want a serious crisis to go to waste and calls for a fundamental rethinking of the structure and regulation of housing finance.6 Her strongly held views on this issue are particularly concerning because she was specifically picked by CBO to co-author a report for the Senate Committee on Banking, Housing, and Urban Affairs titled, Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market, which delves deeply into the issues she expressed a policy preference for fundamentally rethinking.7 No one would question the propriety of Ms. Lucas participation in the political process through donations, membership in organizations, or online advocacy prior to her becoming a non-partisan employee of CBO. Moreover, Ms. Pham did not allege that Ms. Lucas political views played a direct role in her firing. However, when a person with such strong views is hired for an objective and non-partisan position, it naturally raises red flags.8 These concerns are magnified in light of allegations that she fired an employee because that employees work was not sufficiently optimistic about the state of the housing market and the potential effects on the economy. Professional disagreements about such complex matters may be inevitable, but it seems odd that someone at CBO would lose her job due to such a disagreement. More rosy assessments of the housing market would lead CBO to improve its economic outlook. An improved economic outlook could, in turn, be cited as validation of the Presidents economic claims, such as the assertion that the Stimulus improved the economy. For CBO to retain its credibility as a non-partisan scorekeeper it must be above reproach. In fact, I recall that in the course of our conversations during health care reform I stressed that your analysis should be intellectually honest and free of political bias. This incident is of grave concern because it threatens to undermine that goal. In order to fully investigate Ms. Phams allegations, I respectfully request the following documents: 1. All personnel files or other records relating to Ms. Lan Pham, including, but not limited to, the Official Personnel file, Employment Performance File, training files, payroll files, and any records relating to CBOs evaluation of Ms. Lan Phams application for employment, including any records relating to her pre-employment interview. 2. All records describing the required qualifications or job description of the CBO position for which Ms. Lan Pham was hired. 3. Emails to or from you (Douglas Elmendorf) and Deborah Lucas that mention Lan Pham, Lan or any other designation used to refer to Lan Pham, from July 1, 2010 to the present.
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Federal Election Commission Image #28992661121. Deborah Lucas, blog post available at: http://kelloggfinance.wordpress.com/2009/10/02/where-do-we-go-fromhere/ 6 Id. 7 Congressional Budget Office, Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market, December 2010. 8 Congressional Budget Office, CBO Fact Sheet.

4. All emails, correspondence, or other communications between Deborah Lucas and any employee or officer of the White House relating to her employment by CBO. 5. Any emails to or from you (Douglas Elmendorf), Deborah Lucas, and any agent, officer, or employee of Goldman Sachs or Morgan Stanley relating to interests rates, banking, mortgages, foreclosures, from July 1, 2010 to the present. Thank you for your cooperation and attention in this matter. I would appreciate all the documents in this request by April 7, 2011. If you have any questions, please do not hesitate to contact Chris Lucas for the Committee on the Judiciary at (202) 224-5225.

Sincerely,

_______________________ Charles E. Grassley Ranking Member Committee on the Judiciary