Mother Jones
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When Republicans took control of both houses of Congress earlier this month, they won an important new power: They can change how Congress does math.
Seriously. Republicans, led by Rep. Paul Ryan (R-Wisc.), their budget guru, are considering altering the way Congress calculates the costs of tax cuts—a move that could make big tax cuts for the rich appear less costly than they really are.
Here’s how it would work. In January, Republicans will be in charge of Congress. And that includes the Joint Committee on Taxation (JCT), which calculates how tax laws affect revenue, and the Congressional Budget Office (CBO), which produces official budget projections. Right now, when the CBO and the JCT calculate the impact of tax laws on government income, they consider how Americans might alter their behavior in response to tax rate changes. But the tax-math bodies do not evaluate how tax legislation could affect economic growth—largely because those sorts of impacts are hard to predict. Republicans have long claimed that tax cuts lead to greater economic activity that inexorably yields more tax revenues—a point much disputed. But Ryan, who in January will head up the House Ways and Means committee—which has jurisdiction over tax reform—and his fellow GOPers are looking to enshrine this Republican belief into the hard and fast calculations of Capitol Hill’s number-crunchers.
Last THIS week, in an interview with the Washington Post, Ryan said he will push to make sure that the two congressional budget scorekeepers use this accounting method when evaluating GOP tax reform legislation. Orrin Hatch (R-Utah), who will chair the Senate finance committee starting in January, said last week that he was open to implementing the change.
Ryan and Hatch can implement dynamic scoring by simply ordering the two budget scorekeepers to accept this budgeting method. Not only that, Republicans can require the CBO and JCT to use very optimistic assumptions about how tax cuts affect the economy—including people’s motivation to work, the response of the Federal Reserve, and household and business decisions on how much to work, save, and invest. Budget analysts then plug those assumptions into several models estimating economic growth, and GOPers can cherry-pick the model that produces the largest number. “The risk is that a Congress that is politically motivated takes the most unrealistic models and plugs in highly rosy assumptions,” says Chye-Ching Huang, a budget expert at the left-leaning Center on Budget and Policy Priorities.
If Republicans don’t want to make these complex choices themselves, they can install directors at the CBO and JCT who they think will use the kind of assumptions they like, Huang adds. Neither congressional Dems nor President Barack Obama can prevent any of this.
Republicans have pushed for this budget-math tweak since the Reagan days. And for years, policy wonks have debated the merits of this novel budgeting method, known as dynamic scoring. Kenneth Kies, a GOP-nominated former director of the JCT, told the Washington Examiner last week that this accounting trick falls “somewhere between pure mathematics and theology.” Because this arcane tweak can make tax cuts for the wealthy appear to cost the government less than they actually do, it is extremely appealing to Republicans. If they make this change, they could argue that new tax cuts would partly pay for themselves.
Democrats say the budgeting trick is a gimmick designed to allow Republicans to chop taxes for the rich without paying the political cost. Ryan’s office did not respond to a request for comment.
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The GOP Controls Congress So Now It Can Change How Math Works
