Joseph Lawler of the Washington Examiner reports on a possible change in the nation’s capital that would appeal to policy wonks while providing benefits for normal people.
The Republicans’ capture of the Senate will allow them to push through an arcane change to the budget process that they hope will tip the politics of taxes in their favor and maybe even clear the way for a comprehensive overhaul of the U.S. tax code.
With control of both chambers, the GOP, led by policy dean Rep. Paul Ryan, is primed to mandate that Congress’ official budget scorekeepers consider the economic growth generated by tax cuts in their official analyses. This “dynamic analysis,” as it is known among budget experts, could drastically reduce the budgetary cost of lowering tax rates.
Because chopping tax rates is a top GOP priority, dynamic scoring has long been the preferred accounting method favored by Republicans, who say that the static analysis now used by Congress’ official budget experts unfairly skews tax debates in favor of higher rates.
The move is viewed with deep skepticism by Democrats, who see dynamic scoring as nothing more than a Republican ploy to excuse what they want to do anyway, namely reduce taxes for high earners and corporations, without acknowledging fiscal irresponsibility. …
… The election’s results mean that Ryan is set to become chairman of the House Ways and Means Committee; Republican Sen. Orrin Hatch of Utah will be his counterpart on the Senate Finance Committee. Together they will be able to control the Joint Committee on Taxation staff, which provides the official numbers for tax legislation for Congress, and the Congressional Budget Office, which produces Congress’ official budgetary and economic projections. Rather than independent agencies, both scorekeepers are part of Congress and subject to its rules.
For Ryan, changing the rules to account for the supply-side effects of tax changes is common sense.
“This notion that a person’s behavior does not change, incentives don’t matter per tax changes — we know that that’s not true. And more importantly, econometrics has evolved to a place where with conservative econometric modeling we can get much much more closer to the truth and reality based upon experience,” Ryan said.