NCPA - National Center for Policy Analysis

All New Legislation to be Dynamically Scored

May 19, 2015

On January 6, 2015, the House of Representatives adopted a rule change that would require all legislation to be dynamically scored. The House rule applies to the Congressional Budget Office and the Joint Committee on Taxation.

As Vox.com explains, "When policy proposals are put forward in Congress, their impact on the budget is often estimated — or 'scored'— by the Congressional Budget Office and the Joint Committee on Taxation." Since its creation in the 1970s, the Congressional Budget Office has always scored legislation statically, without regard to economic changes within a particular industry or sector. The CBO defends static scoring, stating that dynamic scoring is unnecessary as 1) most legislation has a negligible effect on the entire economy, 2) macroeconomic changes are difficult to predict, and 3) the research and work burden would be unfeasible. 

What are the differences between dynamic and static scoring?

  • "Dynamic scoring is the idea that when estimating the budgetary impact of changes in tax policy, you ought to take into account changes to the economy induced by the policy change," according to Vox.  
  • Static scoring assumes the size of the economy remains unchanged.
  • Dynamic scoring, for example, assumes reduced taxation encourages more work and investment, and, therefore, the cost of the policy will not be so steep.

Dynamic scoring has been used without fanfare during earlier debates about immigration. The best argument for dynamic scoring is that it accurately reflects the fact that large pieces of legislation will affect the overall size of the economy. The arguments against dynamic scoring fall short. The process the CBO and JCT use will be reported broadly and their work will continue to be backed by rigorous methodological transparency and statistical sophistication.

Source: Mike Gajewsky, "Dynamic Scoring and Congress," National Center for Policy Analysis, May 2015. 

 

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