A Dynamic World Demands Dynamic Scoring

And it’s not just right-wing supply siders who think so.



One of the first things the new Republican Congress voted on this week was to mandate a change in how the Congressional Budget Office analyzes (“scores”) spending bills. A technocratic change in how Congress assesses the impact of its proposed bills is not typically the stuff of great drama. This time is different.

On January 6, with the new year barely fresh, the new Republican majority instructed the Congressional Budget Office to implement “dynamic scoring.” Rather than the current system of “static” scoring—estimating the specific budgetary effects of a piece of legislation—the CBO will now incorporate assessments of how a new law could alter the trajectory of the overall economy. So, a tax bill will be assessed not just on whether it produces more or less revenue but on how the changing mix of revenue could affect overall economic growth and consumer behavior, which in turn could change how much tax is collected.

These moves have been long debated in Washington and academic circles, and the battle lines have been drawn for just as long. Republicans tend to favor dynamic scoring because they can use it to argue that massive tax cuts will invigorate the overall economy and achieve a balanced budget faster. Democrats say this is just more “voodoo economics” to justify ideas that have been thoroughly discredited since Arthur Laffer left town. Each side typically opposes efforts by the other side to change the scoring system in a knee-jerk manner that reflects ideology, not genuine economic analysis.

I’m not a Republican ideologue (nor a Democratic one for that matter), but let me say it plainly: We need dynamic scoring. It works as well in favor of Democratic causes—like Obamacare—as it does for Republican ones. Dynamic scoring, in short, is a powerful and needed reform to a process that is in need of it.

It is undeniably true that the main proponents of dynamic scoring are Republicans such as Paul Ryan who have been frustrated that dramatic tax and budget cuts proposals have received harsh grades from a CBO employing the static scoring systems in place since the CBO was established in the 1970s. It is also true that dynamic scoring, as its many and vocal opponents point out, introduces significant levels of uncertainty into budget analysis by attempting to factor in such unknowables as future economic growth trajectories shaped by present economic policies. None of that, however, should undermine the case for dynamic scoring.

Just because someone you dislike and distrust proposes something does not make that something immediately suspect. Even if the Republicans like dynamic scoring mainly because they believe it will ease the political path to cutting taxes and shrinking government, that in itself is not a reason to oppose the idea as tainted. Like anything, dynamic scoring is subject to use or abuse, to good faith efforts or duplicity, depending on who is using it and what the motives are. But opposing it because you distrust its advocates is part of today’s Washington problem.

Of the many byzantine peculiarities of the current federal government, none is more consequential than the Congressional Budget Office. It forms a budget gauntlet that intimately shapes for how we spend (or don’t spend) trillions of dollars. While the CBO is staffed by professional economists and non-partisan officials, its analyses and recommendations are the fodder for intensely partisan arguments. And if you have a piece of legislation that affects budgets, how the CBO assesses that idea will go a long way to determining whether it has any chance of becoming law.

he CBO is widely praised as being a non-ideological island floating in a rabidly partisan sea. Fair enough. It is non-partisan, and its staff and directors have been largely diligent in attempting to gauge long-term spending effects. In that sense, it has been a successful watchdog.

However, the very rigidity of its static scoring system has meant that many good ideas (and of course many bad ones) get stymied. It isn’t just Republican tax bills; it is also Democratic education and infrastructure and a whole swath in between. Because the current scoring system allows for only minimal, micro-economic analysis of how say an expansion of health insurance might affect overall economic activity, the CBO can never incorporate systemic changes that might result from a new piece of legislation. The Affordable Care Act might, as designed, contain future growth of healthcare costs. But the CBO can’t provide such scenarios under its current methodology—other than by some speculation about changed consumer behavior. Yet such scenarios lie at the heart of the bill’s design and will ultimately determine whether the legacy of the bill. A new infrastructure bill can only be seen by the CBO as a cost negatively impacting future budgets because without dynamic scoring the positive effects of economic growth cannot be analyzed.

Source: http://www.politico.com/magazine/story/201...