House requires calculations of economic impact of major bills

House Republicans have changed they way congressional number crunchers calculate the economic impact of major bills, a controversial step that will make it easier to cut taxes.

The move, part of a package of rules enacted Tuesday as lawmakers began their new session, would require non-partisan staff to take into account effects on the economy of significant changes to the tax code and other laws.

Republicans have long wanted to make the change, which is opposed by Democrats.

Now the GOP is poised to do so after the November elections gave the party control of the Senate, which also is expected to adopt the new rules in coming days.

The changes alter the way the staffs of the Congressional Budget Office and Joint Committee on Taxation analyze bills and estimate their budgetary costs -- a process known as scoring.

Since the process began in 1974, it has been a fairly straightforward calculation of how much more government revenue a tax increase would produce or how much less a tax cut would trigger without determine the impact on the overall economy.

The new rules call for a procedure known as dynamic scoring.

It uses complex models to try to determine “the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables,” according to the rules package adopted by a 234-172 vote.

“What we are trying to do is simply say that if a piece of legislation is going to have a large effect on the economy, that we include that effect in the official estimate,” said House Budget Committee Chairman Tom Price (R-Ga.).

Dynamic scoring estimates would be required on bills expected to have an impact on the federal budget of more than 0.25% of total economic output, or $42 billion based on the latest figures.

But Democrats strongly oppose dynamic scoring, saying it amounts to cooking the books to lessen the perceived budgetary effects of tax cuts.

It is based on what Democrats said was the flawed theory of “trickle-down economics,” which implies tax cuts don’t increase the deficit because they generate more economic activity and therefore more tax revenues.

“What it means is the Republicans will be able to hide the true cost of tax cuts behind a debunked mantra that tax cuts pay for themselves,” said Rep. Steny Hoyer (D-Md.), the second-ranking House Democrat.

“They do not,” he said. “This provision will allow them to explode the deficit as they did the last time they were in charge.”

As part of the shift to dynamic scoring, Republicans are likely to replace Douglas Elmendorf, the head of the Congressional Budget Office.

He was appointed by Democrats in 2009 when they controlled both chambers of Congress. His term expired Saturday and many conservatives don’t want to reappoint him.

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