Dynamic Scoring ‘Voodoo’ Doesn’t Have to Hurt Dems
The new Congress has already pushed through some controversial new rules. Republicans on Tuesday passed a package of rules that will govern how the House of Representatives operates over the next two years, including an obscure change that has infuriated many on the left, who see it as designed to favor tax cuts by tinkering with federal budget math.
The new rule requires that major legislation be subject to so-called dynamic scoring by the Congressional Budget Office and the Joint Committee on Taxation, meaning that the official analysis of the costs of legislation would have to factor in assumptions about the macroeconomic effects it might have. The rule applies to any bill that would have an effect on the federal budget equal to .25 percent of projected GDP in a given year, which works out to about $45 billion as of now.
It’s a change Republicans have spent 17 years trying to implement. One reason why Republicans like this idea so much is that they assume tax cuts drive economic growth and partially pay for themselves by increasing tax revenue. That means that when their cost to the federal budget is measured, they look cheaper.
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“What we are saying is let us take what the experts at [Congressional Budget Office] and [Joint Committee on Taxation] can measure about the real-world impact of policies and incorporate those more realistic assessments into an honest analysis that policymakers can use to make better informed decisions,” new House Budget Committee Chairman Tom Price (R-GA) said in a statement praising the move.
One problem is that while dynamic scoring models are useful in an academic setting, experts say their imprecision means they are far less so in the world of actual budget math. For instance, a dynamic analysis of a major tax reform proposal issued by former House Ways and Means Chairman Dave Camp (R-MI) found the effect of the bill on U.S. GDP would be an increase of between .1 percent and 1.6 percent – an enormous range when talking about something the size of the U.S. economy.
They also avoid some difficult issues.
“These models were not developed for the purpose of answering the question, ‘Do we have enough money to pay our bills?’” said Edward D. Kleinbard, a former chief of staff of the Congressional Joint Committee on Taxation, now a law professor at the University of Southern California.
According to Kleinbard, the models assume that tax cuts are offset with future federal spending cuts. However, he said, those cuts “aren’t defined or described and are not part of the debate when they are in fact vitally important.”