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House changes how bills are evaluated

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The House of Representatives approved a change to how bills are “scored,”  that is, how government economists figure out how much a given piece of legislation will cost. The House is moving to a system known as “dynamic scoring” for major bills. It sounds mundane, but it’s actually a big deal, and it’s caused a sizzling debate in economic circles.  

Dynamic scoring is supposed to take into account all of the effects of a bill on the economy. That’s “something the Congress should know,” says Douglas Holtz-Eakin, chief economic adviser for Sen. John McCain’s 2008 presidential campaign and former head of the Congressional Budget Office. 

Holtz-Eakin says dynamic scoring helps members of Congress properly evaluate a bill, and supports the effort to move away from the current system of “static scoring,” which doesn’t look at a bill’s impact on the overall economy. “If you have two identical proposals, but one causes the economy to grow and one causes it to shrink, you’d like to know that,” he says.

Not everybody agrees. Bruce Bartlett, a former economic adviser to President Reagan, says dynamic scoring forces economists to make assumptions about the future, which can highlight the economic benefits of tax cuts. 

Bartlett says that’s why House Republicans changed the rules to require government economists to use dynamic scoring. “By tying their hands and forcing them to make assumptions that will give them the answer they want which is that tax cuts are vastly expansionary,” he says.

“In principle, dynamic scoring is a perfectly reasonable technique,” says Robert Pollin, a distinguished professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts-Amherst.

The problem with dynamic scoring is you can pick and choose, Pollin says. You could just look at the positive effects of a tax cut, like people spending the extra money, and not the possible negatives of lower government spending. “There’s a wide range of potential effects, and so the technique to susceptible to this kind of cherry picking,” he says.

In principle, dynamic scoring is better, Pollin says. But it’s hard to do well, and easy to manipulate.

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