Saturday, April 5, 2014

4 Democrats Join House GOP to Vote for Magic....I Mean Dynamic Scoring

How Paul Ryan Scores a Tax Plan

Today, the House passed the Pro-Growth Budgeting Act 224 to 182.

The bill would require the Congressional Budget Office to adopt "dynamic" scoring in its analysis of major legislation.

The problem with dynamic scoring is that it just isn't that accurate:
Dynamic scoring of tax cuts lets policymakers account for the greater economic activity potentially spurred by these cuts, thereby reducing the cuts’ overall costs. In theory, there is nothing wrong with dynamic scoring. But in practice, empirical estimates of the macroeconomic impact of tax reforms have proven nowhere near precise enough to use to make informed policy. The results critically depend on the value chosen for parameters, and assumptions on future monetary and fiscal policies—different parameters values and assumptions can produce a very wide range of results for the economic effects of policy changes.
The legislation would also require the CBO to analyze the effects of legislation over a 40-year time horizon, rather than the 10 years it currently uses. As we all know, 40-year predictions are wonderfully accurate. 
It would exempt appropriations bills from the dynamic scoring requirement. In other words, the macroeconomic impact of tax cuts would get scored, but not that of education and infrastructure spending. Funny that.

House Democrats criticized the GOP for just trying to fix the process to justify their tax cuts:
Democrats argued that the bill is an attempt to create a process at the CBO that lets Republicans point to the economic benefits of tax cuts as a way to justify those tax cuts. "What this bill is after is simply to do the analysis primarily on the tax policy," Budget Committee ranking member Chris Van Hollen (D-Md.) said.
"It's motivated primarily by this idea that if you provide big tax breaks to people at the very high end of the income ladder, it will trickle down and lift up all the boats," he added. "We saw how well that worked in the 2000s."


One Democrat used the debate to argue that tax cuts for the wealthy don't have any significant impact on job creation, because the wealthy already spend "as much as they feel like spending." Rep. Bill Foster (D-Ill.) said that means tax breaks for the wealthy don't create any new economic activity.
"The very wealthy have already spent everything they can to send their children to the finest schools, they already have seven Cadillacs in their garages," he said. "So the marginal investments of the wealthy are intrinsically less productive due to the basic principle of economics known as the law of diminishing returns."
Van Hollen added that while the bill requires the CBO to run dynamic analyses on major bills, it specifically excludes appropriations bills. He said that exemption shows that Republicans want to downplay how federal spending on education, infrastructure and other areas can also help the economy.
4 Democrats joined the House GOP to vote for the bill: John Barrow (GA-12), Alan Grayson (FL-09), Jim Matheson (UT-04), and Mike McIntyre (NC-07). 
Gerry Connolly (VA-11) offered an amendment to require appropriations bills to receive such scoring as well. It failed 182 to 214.

Six Republicans voted for it:
Chris Gibson (NY-19)
Louie Gohmert (TX-01)
Walter Jones (NC-03)
Mark Meadows (NC-11)
Mark Sanford (SC-01)
Steve Stockman (TX-09)

Five Democrats voted against it:

Ron Barber (AZ-02)
Dan Maffei (NY-24)
Jim Matheson (UT-04)
Mike McIntyre (NC-07)
Pete Visclosky (IN-01)

Steve Israel (NY-03) offered an amendment to require the CBO to look at a bill's impact on state and local governments as well. It failed 189 to 211.

8 Republicans supported it:

Lou Barletta (PA-11)
Chris Gibson (NY-19)
Walter Jones (NC-03)
Richard Hanna (NY-22)
Tom Massie (KY-04)
Steve Stockman (TX-09)
Tom Reed (NY-23)
Steve Stockman (TX-09)

Two Democrats opposed it: Dan Maffei (NY-24) and Collin Peterson (MN-07).

Sheila Jackson Lee (TX-18) offered an amendment to require the CBO to include as part of their macroeconomic analysis estimates of the potential impact on HUB ZONE areas as defined by the Small Business Act. It failed 185 to 222.

4 Republicans voted for it: Chris Gibson (NY-19), Walter Jones (NC-03), Tim Murphy (PA-18), and Steve Stockman (TX-09).

6 Democrats voted against it:
Alan Grayson (FL-09)
Dan Maffei (NY-24)
Jim Matheson (UT-04)
Ed Perlmutter (CO-07)
Scott Peters (CA-52)
Collin Peterson (MN-07)

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