New CAP Report: Congress Should Rebuff Use of Dynamic Scoring As a Vehicle for the Trickle-Down Tax Mantra
Washington, D.C. — With a new director at the helm of the Congressional Budget Office, or CBO, and with congressional Republicans expected to release their fiscal year 2016 budget proposal in the coming weeks, the issue of “dynamic scoring” is at the forefront of this year’s fiscal debates. Today, the Center for American Progress issued a new report examining House Republicans’ adoption of a new rule asking CBO and the Joint Committee on Taxation, or JCT, to use so-called dynamic scoring in their evaluation of a proposed legislation’s budgetary impact.
The report provides background on dynamic scoring, examines how it could be manipulated to advance a conservative tax agenda, and demonstrates how tax cuts for the wealthy are linked to rising inequality. It urges responsible leaders in Congress to ensure that the macroeconomic analysis released by CBO and JCT—both nonpartisan institutions—reflects the most current economic research and is not used as a vehicle to promote the conservative tax agenda.
“Now that Republicans are in charge of both the Senate and the House, it’s clear that their congressional leaders want to use the fuzzy math of dynamic scoring to advance their conservative trickle-down tax agenda—an agenda that has been proven ineffective at growing our economy and supporting America’s middle class,” said Anna Chu, Director of the Middle-Out Economics project at CAP. “As nonpartisan institutions, CBO and JCT should not be forced to adopt a scoring gimmick that is essentially designed to advance Republicans’ top-down tax policies. In light of this seemingly inescapable conclusion, it’s even more urgent that Congress’ progressive leaders work to ensure that CBO and JCT’s macroeconomic analyses reflect the most current economic research.”
CAP’s report stresses that Congress should not adopt dynamic scoring and makes two additional recommendations on this topic: first, that CBO and JCT consider the latest economic research—particularly by avoiding the use of overly optimistic assumptions about the economic impacts of tax cuts for the rich and developing instead a macroeconomic model that considers the relationship between economic growth and inequality.
Second, CAP’s report recommends that CBO and JCT conduct a distributional analysis of proposed tax policies, examining how proposed tax cuts affect different income brackets and whether the cuts may increase inequality and slow down economic growth. The results of this analysis should be part of any macroeconomic modeling for the legislation. It also urges that CBO and JCT consider how tax cuts for different income brackets would affect consumption and demand, as middle- and lower-income families have a lower savings rate than the rich and a higher propensity to consume.
Click here to read “Considerations in Dynamic Scoring and Macroeconomic Modeling” by Anna Chu.
For more information or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.