Dynamic Scoring

 

DYNAMIC SCORING: Republicans Seek to Rig Rules on Tax Cuts

Trickle-Down Economics and the Potential Real Cuts in Social Security and Other Key Programs

  • After the GOP’s pursuit of a huge cut in the top tax rate was derailed last year, Republicans are changing the rules of congressional scorekeeping by requiring CBO and JCT to incorporate “dynamic scoring” into their official estimates of major legislation. They’ve returned to voodoo economics so they can have it both ways – cut taxes and pretend not to increase the deficit – and cast aside on the first day of the new session their stated desire to find bipartisan common ground.
  • For four straight years, the GOP budget has proposed slashing the top tax rate to 25%. The tax draft produced by Rep. Dave Camp last year fell short of that goal, reducing the top rate to 35% while adhering to a promise not to raise the deficit. Republicans have singled out dynamic scoring as a critical tool to get around that deficit promise while cutting the rate much further. 
  • The Joint Committee on Taxation’s conventional model for scoring revenue measures takes behavioral changes into account. It does not account for legislation’s possible long-term impact on the overall size of the economy, positive or negative, because these nonpartisan experts have concluded that’s too unpredictable. Republicans now want to change how bills are scored, giving them control to implement their long-held,
    discredited notion that tax cuts pay for themselves.
  • Economists across the political spectrum have criticized the GOP push toward dynamic scoring:
     
    Ed Kleinbard, former JCT Staff Director, USC professor of law and business: "The Republicans’ interest in dynamic scoring is not the result of a million-economist march on Washington; it comes from political factions convinced that tax cuts are the panacea for all economic ills. They will use dynamic scoring to justify a tax cut that, under conventional scorekeeping, loses revenue.”
     
    Howard Gleckman, Resident Fellow at the Tax Policy Center: “It is important for lawmakers to understand how changes in tax law affect growth. But predicting these outcomes is extremely difficult, in part because they depend on factors that wouldn’t be specified in a reform bill. For instance, if a tax cut increases the deficit, how would that increased borrowing ultimately be repaid—by higher taxes or less spending? Who’d pay the new
    taxes? What spending would be cut? And when? The answers matter–a lot.”
     
    Bruce Bartlett, former Reagan and Bush administration official: “It is not about honest revenue-estimating; it’s about using smoke and mirrors to institutionalize Republican ideology into the budget process.”
     
    Finally, Chye-Ching Huang and Paul N. Van de Water of the Center on Budget and Policy Priorities note: “The economic growth and budgetary estimates that Chairman Camp touted of his tax reform plan came from a model that assumes future Congresses will take controversial deficit-reduction actions that policymakers have long resisted. Those estimates assumed not only that Congress will subsequently act to cut future deficits
    enough to stabilize the debt as a share of the economy, but also that all of this deficit reduction will come from cuts in transfer payments, a category that includes programs such as Social Security, unemployment insurance, and SNAP (formerly known as food stamps). Yet the distributional impacts that Chairman Camp relied on in presenting his bill failed to include any of these cuts in transfer payments, showing only the tax changes. The
    distributional analysis of his plan would have looked very different — and much less favorable — had it incorporated the cuts in benefit programs that Camp’s favored dynamic scoring estimate assumed.”