Should Federal Budget Estimates Analyze a Bill's Overall Economic Impact? (H.R. 4361)
Do you support or oppose this bill?
What is H.R. 4361?
(Updated April 19, 2018)
This bill would require that a macroeconomic impact analysis (aka dynamic scoring) be performed on all major revenue legislation by the Joint Committee on Taxation. The analysis would provide an estimate changes in economic output, employment, interest rates, and tax revenues; an estimate of revenue feedback resulting from those provisions; and a statement identifying the critical assumptions and data underlying the estimate.
This requirement would apply to all legislation expected to have a positive or negative effect in terms of revenues that exceeds 0.25 percent of the current projected gross domestic product for the U.S., as determined by the bureau of economic analysis.
Argument in favor
Major tax and spending legislation should be scored dynamically so that lawmakers can consider its impact on employment, economic output, interest rates, and tax revenue.
Argument opposed
Dynamic scoring diverts from traditional budget estimates of a bill’s impact to project economic conditions that are highly uncertain, and generally portray tax cuts too favorably.
Impact
People reviewing cost estimates of legislation; the Joint Committee on Taxation; and Congress.
Cost of H.R. 4361
A CBO cost estimate is unavailable.
Additional Info
In-Depth: This legislation, introduced by Rep. Luke Messer (R-IN), would require that major tax legislation by scored dynamically, meaning that its cost estimate would take into account overall economic impacts. That’s in contrast to conventional (or static) scoring, which only looks at direct revenue impact.
For instance, the Tax Policy Center estimated using static scoring that repealing Obamacare in 2015 would increase deficits by $353 billion over a decade, while dynamic scoring yielded an increase in deficits of only $137 billion for the same period.
Since 2015, the House of Representatives has required that dynamic scoring be used in certain circumstances. Critics of dynamic scoring argue that it offers a more favorable view of tax cuts and provides little certainty, while proponents argue that it simply offers a more comprehensive assessment of a bill’s impact on the federal budget and economy.
Media:
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Tax Policy Center (Context)
Summary by Eric Revell
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