Dynamic scoring

Using dynamic scoring has been promoted by Republican legislators to argue that supply-side tax policy, for example the Bush tax cuts of 2001{{cite web|last=Wilson|first=D|title=The Economic Impact of President Bush's Tax Relief Plan|url=http://origin.heritage.org/Research/Reports/2001/04/The-Economic-Impact-of-President-Bushs-Tax-Relief-Plan|archive-url=https://web.archive.org/web/20110308142121/http://origin.heritage.org/Research/Reports/2001/04/The-Economic-Impact-of-President-Bushs-Tax-Relief-Plan|url-status=unfit|archive-date=8 March 2011|publisher=The Heritage Foundation|accessdate=6 April 2011|author2=William Beach}} and 2011 GOP Path to Prosperity proposal,{{cite web|last=Ryan|first=Paul|title=Path to Prosperity 2012|url=http://paulryan.house.gov/UploadedFiles/PathToProsperityFY2012.pdf|accessdate=6 April 2011}} return higher benefits in terms of GDP growth and revenue increases than are predicted from static scoring. Some economists{{Cite news|url=https://www.nytimes.com/2014/10/06/opinion/paul-krugman-voodoo-economics-the-next-generation.html|title=Voodoo Economics, the Next Generation|last=Krugman|first=Paul|date=2014-10-05|newspaper=The New York Times|issn=0362-4331|access-date=2016-12-01}} argue that their dynamic scoring conclusions are overstated,{{cite web|url=http://delong.typepad.com/sdj/2006/05/greg_mankiws_ab.html |title=Brad deLong's blog |publisher=Delong.typepad.com |date=2006-05-15 |accessdate=2012-03-27}} pointing out that Congressional Budget Office (CBO) practices already include some dynamic scoring elements and that to include more may lead to politicization of the department.{{cite web|url=http://www.cbpp.org/files/7-12-06bud2.pdf |title=Center on Budget and Policy Priorities |accessdate=2012-03-27}}

On January 6, 2013, the version of the Pro-Growth Budgeting Act of 2013 included in the Budget and Accounting Transparency Act of 2014 passed the United States House of Representatives as part of their Rules adopted in House Resolution 5, passed with the exclusive support of the Republican Party (United States) by a vote of 234-172.{{cite web|url=http://clerk.house.gov/evs/2017/roll006.xml|title=Final vote results for roll call 6|website=clerk.house.gov|access-date=19 November 2023}} The same rules package for the year had other controversial provisions funded.{{cite news|last1=Marcos|first1=Cristina|title=House adopts 'dynamic scoring' rule|url=https://thehill.com/blogs/floor-action/house/228684-house-adopts-dynamic-scoring-rule/|access-date=12 January 2015|work=The Hill|date=6 January 2015}} The bill would require the Congressional Budget Office to use dynamic scoring to provide a macroeconomic impact analysis for bills that are estimated to have a large budgetary effect.{{cite web|title=H.R. 1874 - CBO|date=21 June 2013|url=http://cbo.gov/publication/45213|publisher=Congressional Budget Office|accessdate=28 March 2014}} The text of the provision read:

{{cquote|(a) An estimate provided by the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974 for any major legislation shall, to the extent practicable, incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation.

(b) An estimate provided by the Joint Committee on Taxation to the Director of the Congressional Budget Office under section 201(f) of the Congressional Budget Act of 1974 for any major legislation shall, to the extent practicable, incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation.

(c) An estimate referred to in this clause shall, to the extent practicable, include--

:(1) a qualitative assessment of the budgetary effects (including macroeconomic variables described in paragraphs (a) and (b)) of such legislation in the 20-fiscal year period beginning after the last fiscal year of the most recently agreed to concurrent resolution on the budget that set forth appropriate levels required by section 301 of the Congressional Budget Act of 1974; and

:(2) an identification of the critical assumptions and the source of data underlying that estimate.

(d) As used in this clause--

:(1) the term `major legislation' means any bill or joint resolution--

::(A) for which an estimate is required to be prepared pursuant to section 402 of the Congressional Budget Act of 1974 and that causes a gross budgetary effect (before incorporating macroeconomic effects) in any fiscal year over the years of the most recently agreed to concurrent resolution on the budget equal to or greater than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; or

::(B) designated as such by the chair of the Committee on the Budget for all direct spending legislation other than revenue legislation or the Member who is chair or vice chair, as applicable, of the Joint Committee on Taxation for revenue legislation; and

:(2) the term `budgetary effects' means changes in revenues, outlays, and deficits.''[https://www.congress.gov/bill/114th-congress/house-resolution/5/text "H.Res.5 - Adopting rules for the One Hundred Fourteenth Congress"] US House of Representatives, January 6, 2015}}

These provisions were removed in January 2019 for the 116th Congress by H. Res. 6 section 102(u).{{cite web |title=H. RES. 6, ADOPTING THE RULES FOR THE 116th CONGRESS, SECTION-BY-SECTION ANALYSIS |url=https://docs.house.gov/billsthisweek/20181231/116-HRes6-SxS.pdf |website=house.gov |publisher=U.S. House of Representatives |accessdate=9 January 2019}}

The Kansas state government cut personal income taxes to stimulate economic growth, depending on optimistic assumptions from dynamic scoring for state revenue. Authors of the plan claimed that "cutting taxes can have a near immediate and permanent impact,"{{Citation | last1 = Laffer | first1 = Arthur | author1-link = Arthur Laffer | last2 = Moore | first2 = Stephen | author2-link = Stephen Moore (writer) | title = Taxes Really Do Matter: Look at the States | publisher = Laffer Center for Supply-Side Economics | date = September 2012 | url = http://www.laffercenter.com/wp-content/uploads/201209/2012-09-TaxesDoMatterLookAtStates-LafferCenter-Laffer-Moore.pdf | archive-url = https://web.archive.org/web/20230415114615/http://www.laffercenter.com/wp-content/uploads/201209/2012-09-TaxesDoMatterLookAtStates-LafferCenter-Laffer-Moore.pdf | url-status = dead | archive-date = April 15, 2023 }} arguing for tax cuts over rebuilding roads or improving the quality of schools. In addition, the tax on "pass-through" businesses was eliminated. After continual revenue deficits, the largest sales tax increase in Kansas history, downgrades from Moody's and Standard & Poor's and economic performance that lagged neighboring states, the election of 2016 was a referendum on tax policy and the legislature increased income taxes over the governor's veto {{Cite news|url=https://www.npr.org/2017/10/25/560040131/as-trump-proposes-tax-cuts-kansas-deals-with-aftermath-of-experiment|title = As Trump Proposes Tax Cuts, Kansas Deals with Aftermath of Experiment|newspaper = NPR|date = 25 October 2017|last1 = Hobson|first1 = Jeremy|last2 = Russell|first2 = Dean|last3 = Raphelson|first3 = Samantha}}{{Cite web|url=https://www.theatlantic.com/politics/archive/2017/10/tax-trump-kansas/542532|title = Kansas Republicans Warn Congress: 'You Better Learn Our Lesson'|website = The Atlantic|date = 11 October 2017}}Jim Tankersley. [https://www.nytimes.com/2017/10/10/us/politics/kansas-tried-a-tax-plan-similar-to-trumps-it-failed.html Kansas Tried a Tax Plan Similar to Trump’s. It Failed.] New York Times. 10 Oct 2017 Kansas's "rainy day" fund reported levels $570 million lower than before the tax cut,{{cite web | url = http://realprosperityks.comgoossen-income-tax-cuts-broke-kansas-budget/ | title = Income Tax Cuts Broke the Kansas Budget | last = Goossen | first = Duane | date = July 13, 2016 | website = Kansas Center For Economic Growth | access-date = April 22, 2017 }}{{Dead link|date=July 2019 |bot=InternetArchiveBot |fix-attempted=yes }} even though Kansas had directed more tax revenue to it.

• Laffer curve

{{reflist|30em}}

• [https://www.wsj.com/articles/SB112770080908551793 Doesn't Anyone Know the Score?] by Newt Gingrich and Peter Ferrara
• [http://www.nationalreview.com/nrof_bartlett/bartlett071702.asp Dynamic Due] by Bruce Bartlett
• [http://www.hmenews.com/?p=article&id=hm200907iAIG9M "Here's How Part B Can Save Medicare,"] by Michael Johns, HME News, July 2009.
• [https://web.archive.org/web/20090710091132/http://www.aeaweb.org/annual_mtg_papers/2005/0107_1430_1304.pdf Dynamic Scoring: An Introduction to the Issues] By Alen J. Auerbach
• {{unfit|1=[https://web.archive.org/web/20070206094435/http://www.heritage.org/Research/Taxes/bg1989.cfm Dynamic Analysis at Treasury: What Are the Next Steps?]}} By Tracy Foertsch
• [https://web.archive.org/web/20070315194221/http://www.taxfoundation.org/blog/show/1505.html Resources on the Dynamic Scoring Issue] By The Tax Foundation
• [http://www.people.hbs.edu/mweinzierl/paper/dynamicscoring.pdf Dynamic Scoring: A Back-of-the-Envelope Guide] by N. Gregory Mankiw and Matthew Weinzierl
• {{unfit|1=[https://web.archive.org/web/20180226032827/https://www.heritage.org/taxes/report/the-bush-budgets-hidden-gold-dynamic-scoring-comes-thetreasury The Bush Budget's Hidden Gold: Dynamic Scoring Comes to the Treasury]}} by William Beach, Heritage Foundation, 2006
• [https://www.washingtonpost.com/blogs/ezra-klein/post/why-the-gop-loves-dynamic-scoring/2011/11/01/gIQA5fNgcM_blog.html Why the GOP loves ‘dynamic scoring’] by Suzy Khimm
• [https://www.forbes.com/sites/joshbarro/2012/04/14/a-problem-with-dynamic-scoring/ The Problem with Dynamic Scoring] by Josh Barro
• [https://www.cbo.gov/publication/50409 Dynamic Scoring at CBO], by Ben Page of CBO's Macroeconomic Analysis Division, 2015

Category:Economic forecasting

Category:Fiscal policy