The long-term trend suggests Congress should listen to the CBO.

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The Best Case Against Dynamic Scoring? These Guys

Christopher Flavelle writes editorials on health care, energy and environment for Bloomberg View. He was a senior policy analyst for Bloomberg Government and chief speechwriter for the leader of the Liberal Party of Canada.
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Republicans say the Congressional Budget Office, a nonpartisan evaluator of the cost of legislation, needs to use more dynamic scoring in its reports. You know who doesn't agree? Former Republican directors of the Congressional Budget Office.

The argument from some Republican lawmakers and activists is that if the CBO (along with its counterpart, the Joint Committee on Taxation) would incorporate how bills affect gross domestic product and employment in their cost estimates, then tax cuts would pay for themselves. To conservatives, that's the key to "reality-based scoring"; to liberals, it's a recipe for shenanigans.

To the former budget directors I spoke with, the whole thing is mostly a misunderstanding. They said Republicans exaggerate how much of a difference dynamic scoring would make to estimating the cost of most bills.

"Hopes exceed realities," said Douglas Holtz-Eakin, who ran the budget office from 2003 through 2005, and now leads the American Action Forum. He agreed that more dynamic scoring could be useful, but cautioned that its impact would be limited. "It's just very hard to move" the U.S. economy with any given piece of legislation.

The cost differences from dynamic scoring are trivial, Holtz-Eakin said, compared with the differences between equally plausible outcomes the budget office's models already produce. In many cases, "the amount of uncertainty in static scoring exceeds anything in dynamic scoring."

June O'Neill, who ran the CBO from 1995 to 1999, said another problem with Republicans' focus on dynamic scoring is the assumption that it would only work in favor of their preferred policies, by reducing the cost of tax cuts. But the alternative is just as likely.

"You could attach it to anything with effects beyond cost," she said. "You might say education will increase growth, which should be taken into account." That's unlikely to appeal to current Republicans, who scoff at the idea that government spending has a multiplier effect.

Donald Marron, who succeeded Holtz-Eakin as budget director and served until Democrats took both chambers of Congress in 2006, agreed. "Arguments for dynamic scoring of tax provisions apply equally to spending provisions," Marron told me.

The problem, Marron said, is that dynamic scoring is a lot harder than it sounds. "Folks should not think there's a model, and you tweak it and it spits out a new thing," he said. "It's a lot of work to do macroeconomic proposals."

Although the former directors I spoke with didn't think more dynamic scoring would be the panacea Republicans hope for, they also didn't think it would cause the trouble Democrats predict.

Holtz-Eakin said CBO staff would continue to base its estimates on the consensus in the academic literature. "Would any CBO director really rewrite the staff's results? No," he said.

And given the guesswork that's already inherent in CBO cost estimates -- coupled with the requirement that the budget office attach a single dollar figure to any given bill, whether it makes sense or not -- there's already room for mischief.

"If you want to put your thumb on the scale," Holtz-Eakin said, "that's your chance."

That suggests Republicans should question just how much effort to put into the debate over dynamic scoring. It also suggests Democrats should worry more about who runs the CBO than who wins this debate.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Christopher Flavelle at cflavelle@bloomberg.net

To contact the editor on this story:
Stacey Shick at sshick@bloomberg.net