House GOP tax writers say a new reform proposal could strengthen their case for making congressional projections more “dynamic.”
Republicans have long favored “dynamic” scores for legislation that they say are more realistic than the traditional “static” projection — and that can make their policy proposals look more attractive.
While “static scoring” of legislation focuses on how it shapes individual and business behavior — like the impact of incentives to encourage savings or capital investment, for instance — “dynamic” scoring tries to capture how policy changes affect the broader growth of the economy.
In the case of Camp’s plan, JCT’s alternative scores found that Camp’s plan would increase revenues anywhere from an additional $50 billion to $700 billion over a decade.
“If we’re talking about growth and we’re talking about realistically how economies work, you have to look at the dynamic aspects of this,” said Rep. Charles BoustanyCharles BoustanyYoga lobby fighting certification for teachers Ill. rep named new chairman for House tax-policy subcommittee Clay Higgins wins La. House seat MORE (La.), a senior GOP tax writer. “Because I don’t think a static score truly reflects what the impact would be with a massive tax overhaul.”
Conservative groups such as Heritage Foundation also hailed the scores detailing economic growth from Camp plan, which faces long odds in Congress.
And while Democrats have long been skeptical of dynamic scoring, comparing the projections to fuzzy math or even a fairy tale, Republicans think they have added leverage this time around.
JCT and the Congressional Budget Office have also projected that the Senate immigration bill passed last year would spark economic growth — new funds that the White House and other Democrats have baked into recent budgets proposals.
The Democrats’ argument, said Rep. Pat Tiberi (R-Ohio), a senior Ways and Means member, “is less effective than it used to be because of Senate Democrats using the same thing in their immigration bill.”
As it stands, members of Congress effectively decide how JCT and the Congressional Budget Office will judge their budget and tax proposals.
The House, for instance, voted in 2003 that any bill that comes out of Ways and Means would also receive a dynamic score, though analysts and lawmakers on both sides of the aisle say that smaller measures generally have little impact of their own on economic growth.
Republicans on the Ways and Means Committee said they’ve had not discussed how to find even more official recognition for dynamic scoring, though they’re clearly interested in the idea.
“I think dynamic scoring is a more accurate representation of what these policies achieve,” Rep. Kevin BradyKevin BradyThe House GOP tax plan needs some tweaking A guide to the committees: House House Democrats hit GOP over town hall protests in Twitter ad campaign MORE (Texas), a senior Republican on the Ways and Means panel, told The Hill. “We’re starting to build a pretty strong case for a more real-life scoring process.”
“I think for the time being static scoring’s going to be sort of the basic reference point,” Boustany added. “I think, more and more, demands are going to be there to do dynamic scoring.”
Ed Kleinbard, a former JCT chief of staff, noted that the committee’s scores already account for human behavior, examining how changing one provision will have ripple effects in other areas of the code, for instance.
Part of the reason official JCT scores don’t — and shouldn’t — project how broad tax proposals grow the economy, Kleinbard said, is that the models aren’t sophisticated enough. Liberal analysts have also expressed serious doubts that economic growth from Camp’s reform plan would approach the $700 billion figure.
“They might be interesting in an academic setting, and as a conversation for economists to play around with,” said Kleinbard, now a law professor at the University of Southern California. “But they have nothing to do with how human beings approach the world. To draw lessons from it would be a very dangerous thing.”
With the more traditional projection, Kleinbard added, JCT “may not be completely confident, but they’re very confident that they have the direction right.” But on the dynamic score, “you can literally be wrong on the direction. The models are not as sophisticated as the economy is.”
Even with the dynamic score for the Senate immigration bill, Democrats also say there are still plenty of other reasons to be skeptical, especially after they say Republicans long tried to use the method to insist that broad tax cuts would spark growth and essentially help offset their own cost.
Democrats added that the wide range of outcomes that JCT projected for the Camp in its dynamic scores merely illustrated why they’re concerned. JCT found that Camp’s plan could spur as little as 0.1 percent growth in the economy over a decade, or as much as 1.6 percent, depending on factors like how aggressive the Federal Reserve decides to be.
Plus, Rep. Sandy Levin (D-Mich.) said, it’s far harder to cobble together growth projections from a tax proposal that touches every corner of American life than it was for the immigration bill. Other Democrats insist that Republicans have hardly shown themselves to be open to dynamic scoring in other areas.
“Is it useful information? Yes,” said Rep. Chris Van Hollen (Md.), the top Democrat on the House Budget Committee. “It’s also useful information on immigration reform. And it would also be useful to get similar assessments for what kind of economic benefits you get from early education, investing in infrastructure, and those kinds of things.”
Other Democrats and Kleinbard agreed that the dynamic scores from JCT were helpful in evaluating Camp’s proposal, and could become even more useful as the models evolve.
“I haven’t been convinced yet of dynamic scoring,” said Rep. Richard Neal (Mass.), the top Democrat on a Ways and Means subcommittee that deals with taxes. “I think we’re moving toward a place where there’s going to be an effort to try to explore it, in terms of credibility.”
This post was updated at 4:44 p.m. to clarify the potential economic and revenue impacts in the Joint Committee on Taxation's "dynamic" scores of House Ways and Means Chairman Dave Camp's (R-Mich.) tax reform draft.