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House Adopts Dynamic Scoring

In one of the first acts of the new Republican-controlled Congress, the House of Representatives adopted a rule change Jan. 6 that directs Congress’ legislative analysts — the Joint Committee on Taxation and the Congressional Budget Office — to incorporate the economic effects of major legislation into their official cost estimates of proposed legislation, including future tax reform bills.

The resolution (H. Res. 5) to adopt so-called “dynamic scoring” was adopted by essentially a party-line vote. The change may make it easier to enact tax reform legislation since the positive effects (i.e., greater tax revenue) of certain reforms would be documented officially, meaning that lawmakers would have to come up with less in offsetting revenues to “pay for” cuts in tax rates.

When the language of H. Res. 5 becomes available, it will be posted on the Library of Congress’ “Thomas” site here.

“H. Res. 5 continues our efforts to streamline House operations while making a number of important reforms,” said Rep. Pete Session (R-Texas), Chairman of the House Rules Committee in a statement. “One of those reforms is the inclusion of nonpartisan macroeconomic analysis in official scores from the Congressional Budget Office and the Joint Committee on Taxation for major pieces of legislation. This change will give Members of Congress and the American people an accurate idea of the real-world effects of proposed legislation designed to grow the economy and create jobs.”

Congressional Democrats reacted by blasting the adoption of dynamic scoring. “Republicans today are extending their embrace of voodoo economics by wrapping their arms around voodoo scorekeeping,” said Rep. Sander Levin (D-Mich.) in a statement on the House floor. “They are changing House rules to be able to cook the books to implement their long-held, discredited notion that tax cuts pay for themselves.”
 
In fact, dynamic scoring is not really a Republican concept, or even a conservative one. In the realm of tax legislation, for example, the Kennedy administration pushed for accounting for the dynamic effects of changes in the tax code on both tax revenues and on the economy at large. Kyle Pomerleau, an economist at the Tax Foundation’s Center for Federal Tax Policy, offer a good commentary on the utility and likely impact of dynamic scoring on tax legislation here.