John K. Delaney, a Democrat, represents Maryland’s 6th Congressional District in the House.
My Republican colleagues have adopted a new rule for how legislation will be analyzed during the 114th Congress, one that has enormous potential to alter the direction of the legislative process in Washington. The new rule will require budget forecasters to use “dynamic scoring” to evaluate the real-world impact of certain bills. I lived with such real-world financial projections when I was in the private sector, and I would welcome this change — provided that it will be done in a consistent and intellectually honest way. Sadly, it does not appear that this will be the case.
As background, the Congressional Budget Office and the Joint Committee on Taxation provide Congress with a nonpartisan financial projection — or “score” — of the expected effect of proposed legislation on the federal budget. In the past, the CBO and the JCT have made their determination using a “static” methodology that makes limited assumptions about how legislation would change people’s behavior. Dynamic scoring will require the CBO to consider behavioral and macroeconomic changes that result from new legislation.
Using static scoring, tax cuts are broadly assumed to “cost” a raw amount of reduced revenue. With dynamic scoring, the new revenue likely to flow from increased economic activity produced by a tax cut is considered, improving the accuracy of the projection. But new investments also create scoring problems: Under static scoring, a $1 billion investment in infrastructure is assumed to cost $1 billion, with no consideration given to any new tax revenue produced by the projects. With dynamic scoring, that $1 billion investment will “cost” less than $1 billion because of the effect of new jobs, goods sold and other economic factors.
Since Congress is generally required to pay for a new law with offsetting revenue or spending cuts — which can be hard to produce in today’s tight fiscal environment — dynamic scoring could make lawmakers’ jobs easier. That means that dynamic scoring could accomplish two goals at once: increasing the accuracy of budget forecasts while lowering the barriers to passing new laws.
If done correctly, dynamic scoring will provide a more complete picture of Congress’s actions. This is exactly the type of modeling the private sector uses, and advances in data collection and analysis create an opportunity for it to be employed accurately.
In addition, as a pro-growth progressive, I favor dynamic scoring because I want to increase our nation’s investment in infrastructure, education and research, which will be difficult to do unless we take economic benefits into account. Federal research dollars invested at the National Institutes of Health seem expensive until we factor in the economic growth and jobs created by our world-leading life sciences industry. New highways, ports and runways appear economically foolish if we don’t understand the economic growth that flows from such investments.
If dynamic scoring is truly about reflecting the on-the-ground impact of government action, it must be applied to both sides of the ledger: spending and revenue. Unfortunately, the Republicans’ new rule effectively amounts to dynamically scoring only tax cuts. It does this by excluding appropriations bills and stating that only “major” pieces of legislation — defined as affecting the economy annually by 0.25 percent of gross domestic product, or $43 billion per year — will be dynamically scored. While that sounds reasonable, only comprehensive tax reform bills would meet that threshold. Other bills that increase investments in infrastructure, education and research generally do not rise to that level.
So tax cuts will be seen in a shiny new light, while smart investments will remain unattractive. One-half of the policy agenda will use one set of facts, while the other half will use a different set. This is intellectually dishonest, and it’s wrong.
If we are going to move to dynamic scoring, let’s do it right. Congress shouldn’t implement an artificial trigger that only serves the policy objectives of conservatives. Instead, we should set the trigger in a way that includes categories such as taxes, infrastructure, education, research and immigration. Because these items matter to both conservatives and progressives, such an approach could lead to healthier, and potentially more bipartisan, public policy debate. If we only apply dynamic scoring to tax reform, it will clearly be no more than a partisan gimmick — not serious economics.
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