Why the GOP loves ‘dynamic scoring’
One of the biggest questions facing the supercommittee is how much revenue lawmakers will put on the table—and where it will come from. Supercommittee Republicans are so far sticking by their party’s hardline pledge not to accept any tax increases, infuriating Democrats. Instead, they’re offering up $640 billion through a small number of sources— including $200 billion “attributed to the impact of future tax reform spurring economic growth,” as Politico reported last week.
Sound familiar? It seems that Supercommittee Republicans are depending on a longtime hobby-horse known as “dynamic scoring” in their effort to put revenue on the table. Traditionally, Republicans have pushed this approach to justify tax cuts and supply-side economics: the rationale is that tax cuts will boost the economic growth so much that revenues will actually increase, to the point where the tax cuts could for themselves. It’s the method, for example, that Rick Perry has used to justify his extremely regressive tax plan.
But when outside budget analysts actually run the numbers, they don’t always look great: a “dynamic” analysis of the Bush tax cuts by the Treasury Department in 2006 refuted the exaggerated claims that Republicans had made about them. That’s partly why even Republican-appointed directors of the Congressional Budget Office haven’t embraced dynamic scoring as the office’s primary approach to estimate the cost of legislation. And Bush’s embrace of the method is partly why “ ‘dynamic scoring’ is a pair of dirty words among many Democrats,” as my colleague Lori Montgomery explained back in September, examining why supercommittee Dems might dismiss this kind of revenue as “voodoo economics.”
To be sure, it’s not clear exactly what kind of “future tax reform” the Republicans on the supercommittee are considering—whether they’d be tax cuts, closed loopholes, or other changes. So far, the lawmakers are staying mum about the details—and the conditions under which such tax reforms would generate that big chunk of revenue. (Queries to supercommittee member Jon Kyl and Jeb Hensarling’s press offices went unanswered.)
And, whatever the details, supercommittee members are perfectly within their rights to use dynamically scored revenue if they so choose. There’s nothing in the debt-ceiling deal that bars them from doing so. And the CBO itself regularly conducts such dynamic analyses of legislation, separate from the process of scoring bills. But given the ways that dynamic analyses of tax reforms have been used and abused in the past, it’s worth paying close attention to any proposals that emerge under such auspices—and the methods being used to extrapolate their impact.