House approves ‘dynamic’ scoring

The House approved a bill Friday that would require “dynamic” scoring of major legislation before it comes up for a vote.

{mosads}Members passed the Pro-Growth Budgeting Act in a 224-182 vote, a few days before the House is slated to pass the latest Republican budget, which would cut $5.1 trillion from current spending plans over the next decade. Four Democrats voted with Republicans on the scoring bill.

The bill is reviving a partisan debate over how Congress should weigh the costs and benefits of the legislation it passes. 

Budget Committee Chairman Paul Ryan (R-Wis.) said the Congressional Budget Office should be required to use dynamic scoring to determine legislation’s likely effects on jobs and the economy.

Under dynamic scoring, budget scorers would include in their analysis estimates on how the behavior of companies and individuals would change as a result of legislation, and how this would either bring in more or less federal revenue.

Republicans argue this method would provide a more accurate analysis. 

Ryan argued that the CBO today only runs “static” analyses that don’t consider the possibility that legislation may have an impact on people that changes the economy.

“It usually assumes the economy will stay the same, no matter how much government taxes or spends,” Ryan said of the CBO. “Think about that. We all know that that is not true. People respond to incentives.”

The bill would also require the CBO to consider the effects of legislation over a 40-year time horizon, not the 10 years the nonpartisan agency uses today.

Democrats argued that the bill is an attempt to create a process at the CBO that lets Republicans point to the economic benefits of tax cuts as a way to justify those tax cuts.

“What this bill is after is simply to do the analysis primarily on the tax policy,” Budget Committee ranking member Chris Van Hollen (D-Md.) said.

“It’s motivated primarily by this idea that if you provide big tax breaks to people at the very high end of the income ladder, it will trickle down and lift up all the boats,” he added. “We saw how well that worked in the 2000s.”

Republicans cited ObamaCare as an example of a bill with longer-term costs and negative economic impacts that should have been examined more closely. But Ryan said that, in his view, many other Democratic policies are hurting economic growth.

“It is clear that now that we’re five years into this that the president’s policies are weighing down the economy and hurting the budget outlook,” Ryan said.

Ryan said slower growth over the last five years is making it harder for Congress to balance the budget and more knowledge about the economic effects of legislation would help Congress make better choices going forward. He also noted that he prefers the term “reality-based scoring” over “dynamic scoring.”

One Democrat used the debate to argue that tax cuts for the wealthy don’t have any significant impact on job creation, because the wealthy already spend “as much as they feel like spending.” Rep. Bill Foster (D-Ill.) said that means tax breaks for the wealthy don’t create any new economic activity.

“The very wealthy have already spent everything they can to send their children to the finest schools, they already have seven Cadillacs in their garages,” he said. “So the marginal investments of the wealthy are intrinsically less productive due to the basic principle of economics known as the law of diminishing returns.”

Van Hollen added that while the bill requires the CBO to run dynamic analyses on major bills, it specifically excludes appropriations bills. He said that exemption shows that Republicans want to downplay how federal spending on education, infrastructure and other areas can also help the economy.

Ryan replied by saying that exemption is there because subjecting all spending bills to dynamic scoring would create significantly more work for the budget office. Rep. Gerry Connolly (D-Va.) proposed an amendment to include major spending bills, but the House rejected it 182-214.

The House accepted one amendment from Rep. Tim Bishop (D-N.Y.) to require the CBO to review the accuracy of its macroeconomic impact analysis, but it rejected three other Democratic amendments.

The Pro-Growth Budgeting Act is one of three budget reform bills the House is expected to pass in the coming days. The two others would end the practice of adding an inflation adjustment to the prior budget as a baseline for the next budget and ensure more accurate accounting of government liabilities.

Next week, the House is slated to pass the latest Republican budget for fiscal 2015, which would cut $5.1 trillion from current spending plans over the next decade. Democrats oppose the budget from Ryan as one that would cut too deeply into programs that millions of Americans use, although Ryan has noted that his budget only slows the increase in federal spending over the next decade.

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