WASHINGTON – House Republicans have pushed through a new rule intended to better show the budgetary impact of major pieces of legislation, particularly tax cuts, maintaining that the former system failed to take into account the full value of congressional actions.
In a 234-172 party-line vote, the lower chamber adopted what is characterized as “dynamic scoring” to determine the true fiscal effect of bills under consideration. The move is expected to, among other things, place tax cut legislation in a more positive fiscal light.
Democrats and many economists are comparing the move to a shell game, asserting that it is only being done to further enhance the prospects of GOP legislation at the expense of accurate economic forecasts.
Paul N. Van de Water and Chye-Ching Huang with the Center on Budget and Policy Priorities, a progressive think tank, said dynamic scoring “could ease the path for a tax reform plan that’s revenue-neutral on paper but, in reality, would increase budget deficits.”
“Those deficits, in turn, would reduce long-term economic growth by creating a drag on saving and investment that outweighs any positive effects of the rate cuts,’”they concluded, adding that lawmakers could use dynamic scoring “to appear to finance large cuts in tax rates by assuming those cuts would significantly boost economic growth and thereby raise revenues. They could seek to manipulate the assumptions to produce the most favorable results.”
Dynamic scoring takes a more macroeconomic view of legislation. It was developed in an effort to improve predictions on the potential impact of proposed fiscal policy changes by looking at how various factions likely will react to the incentives created by the proposals. It displaces static scoring, the traditional method for analyzing policy changes, on most major pieces of legislation, which holds that any bill that cuts tax rates results in a decrease in government revenues.
Republicans, particularly Rep. Paul Ryan, of Wisconsin, the new chairman of the House Ways and Means Committee, have been promoting dynamic scoring for some time. Ryan and others have argued that the tax cuts adopted under President George W. Bush in 2001 generated greater economic benefits than they generally were credited with.
Rep. Pete Sessions (R-Texas), chairman of the House Rules Committee who presented the modifications to lawmakers, said dynamic scoring is “going to allow us to measure the impact of legislation, it is going to help us to use some commonsense projections on how our ideas are going to help the bottom line.”
“This means that, now, we are going to be able to recognize on percentage basis points how close is the impact of our decisions that we make and to project them out to where we are able to actually know what the impact will be of the legislation that we pass in order to create more jobs,” Sessions said. “It is meant to err on the side of people and the free enterprise system, as opposed to stymieing what would end up going to them and erring on the side of growing this government.”
Under the new system, Sessions said, the House “will take time to analyze how legislation that we consider will really impact the American economy to where we can project what it will be as a result of including billions of dollars back into the economy for economic growth and development on the side of the free enterprise system.”
But House Democratic Whip Steny Hoyer, of Maryland, insisted that the rules change “does not live up to the responsible governing the American people expect and deserve from Congress.” He characterized dynamic scoring as “a gamble.”
“It is a gamble that your projection is correct,” Hoyer said. “If your projection is not correct, as it has so often been, then you end up putting the deficit even higher because you bet on the outcome. The more conservative policy, I would suggest, would be to get the money first and then decide how you are going to apply it. Don’t gamble on the fact that you are going to get the money, which is what dynamic scoring is.”
Hoyer said the change will enable them “to hide the true cost of tax cuts behind a debunked mantra that tax cuts pay for themselves. They do not. This provision will allow them to explode the deficit as they did the last time they were in charge.”
House Democratic Caucus Chairman Xavier Becerra, of California, sided with Hoyer, arguing that the rule change “requires Congress to use fuzzy math, so-called dynamic scoring, to make it easier to give massive tax breaks to special interests and the wealthy.”
“Is that what the middle class wants?” Becerra asked. “No.”
Democrats also asserted the change will politicize the nonpartisan Congressional Budget Office, which considers the economic impact of legislation by determining how much a bill would increase or decrease the federal budget deficit over a 10-year period. Until now it has not embraced dynamic scoring. Republicans already are moving to replace Douglas Elmendorf, the CBO’s director.
But Rep. Tom Price (R-Ga.), the new chairman of the House Budget Committee, countered that all economic projections contain a level of uncertainty.
“We have heard that it is ‘stacking the deck’ or that it is ‘cooking the books’ in favor of tax cuts,” Price said. “Nonsense. Nonsense. It doesn’t game the system at all. All we are trying to do is make certain that members of Congress have more information upon which to be able to make decisions. That is the kind of commonsense things that our folks back home want.”
Price noted that Congress doesn’t predetermine the outcome of the economic analysis.
“We simply make it so that the Congressional Budget Office is allowed, the scorekeepers are allowed, to have a more realistic score,” he said. “It has come as no surprise, talking to economists from around the country over the past couple of weeks, over the past couple of months, and to a person they say economic scoring, the effects of legislation that we pass, it is an inaccurate science. It is hard to do. But what we want to do is to make certain that they have greater opportunity to get that scoring correct, to give us the kind of information so we can make wiser decisions.”
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