Dynamic Scoring in the Congressional Budget Process

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Dynamic Scoring in the Congressional Budget
~~August 2, 2021~~May 24, 2022
Process
Megan S. Lynch
When Congress considers legislation, it takes into account the proposal’s potential budgetary When Congress considers legislation, it takes into account the proposal’s potential budgetary
Specialist on Congress and Specialist on Congress and
effects. Although this information may come from numerous sources, Congress generally relies effects. Although this information may come from numerous sources, Congress generally relies
the Legislative Process the Legislative Process
on estimates provided by the Congressional Budget Office (CBO) and on estimates provided by the Congressional Budget Office (CBO) and ~~th e~~the Joint Committee on Joint Committee on

Taxation (JCT) when determining whether legislation complies with congressional budgetary Taxation (JCT) when determining whether legislation complies with congressional budgetary
Jane G. Gravelle
rules. rules.
Senior Specialist in Senior Specialist in
Economic Policy Economic Policy
Generally, CBO and JCT estimates include projections of the budgetary effects that would result Generally, CBO and JCT estimates include projections of the budgetary effects that would result

from proposed policy changes, and incorporate anticipated individual behavioral responses to the from proposed policy changes, and incorporate anticipated individual behavioral responses to the
policy. The estimatespolicy. The estimates~~, however,~~ do not typically include the macroeconomic effects of those do not typically include the macroeconomic effects of those
individual
~~individual~~ behavioral responses that would alter gross domestic product (GDP). behavioral responses that would alter gross domestic product (GDP).
In recent decades, however, Congress has sometimes required that JCT and CBO provide estimates that incorporate such In recent decades, however, Congress has sometimes required that JCT and CBO provide estimates that incorporate such
macroeconomic effects (effects on overall economic output—GDP). These estimates are often referred to as macroeconomic effects (effects on overall economic output—GDP). These estimates are often referred to as dynamic
estimates or or dynamic scores..
Proponents of dynamic estimates have argued that such estimates provide a more accurate assessment of budgetary impact Proponents of dynamic estimates have argued that such estimates provide a more accurate assessment of budgetary impact
than conventional scoring, and that they can improve Congress’s ability to compare competing policy proposals. Proponents than conventional scoring, and that they can improve Congress’s ability to compare competing policy proposals. Proponents
argue that dynamic estimates are important for the sake of consistency, and that by not including dynamic effects, the argue that dynamic estimates are important for the sake of consistency, and that by not including dynamic effects, the
legislative process is biased against policy proposals designed to encourage productive economic activity. Opponents of legislative process is biased against policy proposals designed to encourage productive economic activity. Opponents of
dynamic estimates argue that estimates of macroeconomic feedback effects are too uncertain to be relied upon as accurate dynamic estimates argue that estimates of macroeconomic feedback effects are too uncertain to be relied upon as accurate
projections of budgetary outcomes. Opponents of dynamic estimates have stated thatprojections of budgetary outcomes. Opponents of dynamic estimates have stated that , with assumptions about the behavioral , with assumptions about the behavioral
responses that determine macroeconomic feedback being so uncertain, there is consistency in assuming, for all legislative responses that determine macroeconomic feedback being so uncertain, there is consistency in assuming, for all legislative
proposals, that GDP remains the same, regardless of changes in tax or spending policy. proposals, that GDP remains the same, regardless of changes in tax or spending policy.
Between 1997 and 2018, congressional rules existed that required JCT or CBO to provide dynamic Between 1997 and 2018, congressional rules existed that required JCT or CBO to provide dynamic ~~estima tes~~estimates under certain under certain
circumstances. These congressional rules and requirements varied, sometimes permitting the creation of dynamic estimates, circumstances. These congressional rules and requirements varied, sometimes permitting the creation of dynamic estimates,
and sometimes requiring it. During this period, some dynamic estimates provided a range of potential budgetary and sometimes requiring it. During this period, some dynamic estimates provided a range of potential budgetary ~~outco mes~~outcomes, ,
while some included a while some included a point estimate. During this period, dynamic estimates were used only for informational purposes, as . During this period, dynamic estimates were used only for informational purposes, as
opposed to being used to determine whether Congress was complying with its budgetary rules. In some cases, published opposed to being used to determine whether Congress was complying with its budgetary rules. In some cases, published
estimates showed wide variation in estimated results depending on the model type and assumptions. estimates showed wide variation in estimated results depending on the model type and assumptions.
While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for
certain policies or legislative proposals, there are currently no explicit congressional rules or requirements that pertain certain policies or legislative proposals, there are currently no explicit congressional rules or requirements that pertain
specifically to the preparation or use of such estimates. If Congress were to reinstitute explicit rules related to dynamic specifically to the preparation or use of such estimates. If Congress were to reinstitute explicit rules related to dynamic
estimates, it may choose to consider many facets of such a potential rule, such as whether a threshold should exist for the estimates, it may choose to consider many facets of such a potential rule, such as whether a threshold should exist for the
creation of such estimates (i.e., should such estimates be provided only for “major legislation”); whether dynamic estimates creation of such estimates (i.e., should such estimates be provided only for “major legislation”); whether dynamic estimates
should be provided for spending as well as revenue proposals; what types of information should be included in such should be provided for spending as well as revenue proposals; what types of information should be included in such
estimates; whether dynamic estimates should be used only for informational purposes, or also for enforcement purposes; and estimates; whether dynamic estimates should be used only for informational purposes, or also for enforcement purposes; and
whether additional resources ought to be provided to CBO and JCT so that they might develop greater capacity for providing whether additional resources ought to be provided to CBO and JCT so that they might develop greater capacity for providing
dynamic estimates. dynamic estimates.
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Introduction
When Congress considers legislation, it takes into account the proposal’s potential budgetary When Congress considers legislation, it takes into account the proposal’s potential budgetary
effectseffects. This helps Members to weigh the legislation’s merits, and to consider whether it complies This helps Members to weigh the legislation’s merits, and to consider whether it complies
with the budgetary rules that Congress has created for itself. with the budgetary rules that Congress has created for itself.
While information on the potential budgetary effects of legislation may come from numerous While information on the potential budgetary effects of legislation may come from numerous
sources, the authority to determine whether legislation complies with congressional budgetary sources, the authority to determine whether legislation complies with congressional budgetary
rules is given to the House and Senate Budget Committees.1 In this capacity, the budget rules is given to the House and Senate Budget Committees.1 In this capacity, the budget
committees committees ~~general y~~generally rely on estimates provided by the Congressional Budget Office (CBO) and rely on estimates provided by the Congressional Budget Office (CBO) and
the Joint Committee on Taxation (JCT).2 the Joint Committee on Taxation (JCT).2
As described in the following section, cost estimates provided by CBO and JCT are guided by As described in the following section, cost estimates provided by CBO and JCT are guided by
certain requirements that Congress has articulated in different forms. These requirements are not certain requirements that Congress has articulated in different forms. These requirements are not
completely prescriptive, however, and as a result both CBO and JCT adopt practices and completely prescriptive, however, and as a result both CBO and JCT adopt practices and
conventions that guide the creation of cost estimates.3 conventions that guide the creation of cost estimates.3 ~~General y~~Generally, CBO and JCT estimates include , CBO and JCT estimates include
projections of the budgetary effects that would result from a proposed policy and incorporate projections of the budgetary effects that would result from a proposed policy and incorporate
anticipated individualanticipated individual behavioral responses to the policy. The estimatesbehavioral responses to the policy. The estimates~~, however, do not typical y~~
do not typically include the macroeconomic effects—effects on the include the macroeconomic effects—effects on the ~~overal~~ overall size of the economy—of those size of the economy—of those
~~individual~~ individual behavioral responses.4 Congress has behavioral responses.4 Congress has
sometimes required that JCT and CBO provide sometimes required that JCT and CBO provide
estimates that Conventional estimates generally
~~estimates that~~ incorporate such macroeconomic incorporate such macroeconomic
effects. These exclude macroeconomic effects
~~effects. These~~ estimates are often referred to as estimates are often referred to as
dynamic estimates If legislation If legislation reduced taxes on wages, for example, a reduced taxes on wages, for example, a
~~dynamic estimates~~ or or dynamic scores. .
conventional estimate conventional estimate would likelywould likely calculate the cost of calculate the cost of
This report provides information on the authorities the legislation ~~the legislation~~ based on the amount of wages and the based on the amount of wages and the
~~This report provides information on the authorities~~
tax rate reduction. Such a conventional estimatetax rate reduction. Such a conventional estimate, would
and requirements under which cost estimates are and requirements under which cost estimates are
~~however, would~~ not include the effects on revenuesnot include the effects on revenues if
if that change prepared, as prepared, as ~~wel~~ well as a summary of the debate as a summary of the debate
~~that change increased~~ increased the amount of hours worked, the amount of hours worked,
which in turn surrounding dynamic cost estimates, and previous surrounding dynamic cost estimates, and previous
~~which in turn~~ would increase taxable income,would increase taxable income, ~~and~~
and provide an rules and requirements related to dynamic estimates. rules and requirements related to dynamic estimates.
~~provide an~~ offsetting tax increase that would reduce offsetting tax increase that would reduce
the conventional cost of the change. the conventional cost of the change.
Currently, no congressional rules explicitly require Currently, no congressional rules explicitly require
dynamic estimates, and Congress may examine what dynamic estimates, and Congress may examine what

1 Section 312, Congressional Budget1 Section 312, Congressional Budget Act, as amended,Act, as amended, P.L. 93-344 (CBA), titled, P.L. 93-344 (CBA), titled, Determinations and Points of Order, ,
states thatstates that for the purposes of enforcing budgetary rules, levels of spendingfor the purposes of enforcing budgetary rules, levels of spending and revenues “and revenues “ shall be determined on the shall be determined on the
basisbasis of estimates made by the Committee on the Budget of the House of Representatives or the Senate, as applicable.” of estimates made by the Committee on the Budget of the House of Representatives or the Senate, as applicable.”
HouseHouse ~~Rule~~ Rule XXIX, clauseXXIX, clause 4 clarifies that such determinations may be provided by the 4 clarifies that such determinations may be provided by the chair of the House Budget of the House Budget
Committee. Committee. ~~T his~~This provision was added provision was added to House Rulesto House Rules by H.Res.by H.Res. 5 (112th Congress). 5 (112th Congress).
2 Such 2 Such estimates includeestimates include information on the legislative proposal’s projected budgetary effects, such asinformation on the legislative proposal’s projected budgetary effects, such as spending, spending,
revenue, and the deficit/surplus.revenue, and the deficit/surplus. ~~CBO was established~~ CBO was established in 1974 under in 1974 under ~~T itle~~Title II of the CBA, JCT II of the CBA, JCT ~~was established~~ was established under the under the
United States Revenue Act of 1926 and is governed by provisions in 26 U.S.C.United States Revenue Act of 1926 and is governed by provisions in 26 U.S.C. ~~Subtitle G.~~ Subtitle G. Additional information on Additional information on
CBOCBO can becan be found at https://www.cbo.gov/about/overview.found at https://www.cbo.gov/about/overview. Additional information about JCTAdditional information about JCT can be found at can be found at
https://www.jct.gov/about-us/overview.html. https://www.jct.gov/about-us/overview.html.
3 For example, former CBO Director Douglas3 For example, former CBO Director Douglas Elmendorf, in a paper written shortly after his tenure at CBO, stated that Elmendorf, in a paper written shortly after his tenure at CBO, stated that
the exclusion of macroeconomic effects within the cost estimates provided by CBOthe exclusion of macroeconomic effects within the cost estimates provided by CBO and JCTand JCT ~~is “~~ is “long-standing long-standing
convention.” Douglas W. Elmendorf, convention.” Douglas W. Elmendorf, “Dynamic Scoring”: Why and How to Include Macroeconomic Effects in Budget
~~Estim ates~~Estimates for Legislative Proposals, Brookings Institution, Fall 2015, p. 1. (Hereinafter, “, Brookings Institution, Fall 2015, p. 1. (Hereinafter, “ Elmendorf.”) Elmendorf.”)
4 In addition to dynamic estimates expressly requested 4 In addition to dynamic estimates expressly requested or requiredor required by Congress,by Congress, a limited number of “conventional” a limited number of “conventional”
cost estimates have incorporated macroeconomic effects. For example, estimates for comprehensive immigration cost estimates have incorporated macroeconomic effects. For example, estimates for comprehensive immigration
reform legislation includedreform legislation included the effects of an increased labor force, becausethe effects of an increased labor force, because “ “assuming that those bills wouldassuming that those bills would have had have had
no effect on overall output wouldno effect on overall output would have ignored one of the primary effects of the bills and distorted those estimates too have ignored one of the primary effects of the bills and distorted those estimates too
severely.” Elmendorf, p. 96. For a list of such estimates, seseverely.” Elmendorf, p. 96. For a list of such estimates, see Appendix. .
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rules changes, if any, are needed in the area of dynamic estimates. This report, therefore, includes rules changes, if any, are needed in the area of dynamic estimates. This report, therefore, includes
information on options for the creation of dynamic scoring rules, and general considerations for information on options for the creation of dynamic scoring rules, and general considerations for
Congress related to dynamic estimates. Congress related to dynamic estimates.
Authorities and Requirements Under Which Cost
Estimates Are Prepared
Cost estimates provided by CBO and JCT are guided, in part, by certain requirements that have Cost estimates provided by CBO and JCT are guided, in part, by certain requirements that have
been articulated by Congress in different forms, as described below. been articulated by Congress in different forms, as described below.
The Congressional Budget Act
The Congressional Budget Act (CBA) requires that CBO prepare cost estimates for The Congressional Budget Act (CBA) requires that CBO prepare cost estimates for ~~al bil s~~all bills
reported from committee, “to the extent practicable.”5 The CBA also requires that (1) CBO rely reported from committee, “to the extent practicable.”5 The CBA also requires that (1) CBO rely
on estimates provided by JCT for revenue legislation6 and (2) CBO include in its estimates “the on estimates provided by JCT for revenue legislation6 and (2) CBO include in its estimates “the
costs which would be incurred” in carrying out the legislation in the fiscal year in which the costs which would be incurred” in carrying out the legislation in the fiscal year in which the
legislationlegislation is to become effective, as is to become effective, as ~~wel~~ well as the four following years, together with “the basis for as the four following years, together with “the basis for
such estimate.”7such estimate.”7
The Baseline
When conducting cost estimates, CBO and JCT measure the budgetary effect of a legislative When conducting cost estimates, CBO and JCT measure the budgetary effect of a legislative
proposal in relation to projections of revenue and spending levelsproposal in relation to projections of revenue and spending levels that are assumed to occur under that are assumed to occur under
current law, current law, ~~typical y~~typically referred to as referred to as baseline levels. This means that the way a policy is reflected levels. This means that the way a policy is reflected
in the baseline in the baseline ~~wil~~ will affect how CBO and JCT estimate a related policy. affect how CBO and JCT estimate a related policy.
In calculating the baseline, CBO makes its own technical and economic assumptions, but the law In calculating the baseline, CBO makes its own technical and economic assumptions, but the law
~~general y~~ generally requires that CBO assume that spending and revenue policies continue or expire based requires that CBO assume that spending and revenue policies continue or expire based
on what is currently slated to occur in statute.8 For example, CBO’s baseline must assume that on what is currently slated to occur in statute.8 For example, CBO’s baseline must assume that
temporary tax cuts such as those enacted in 2017 temporary tax cuts such as those enacted in 2017 ~~actual y~~actually do expire.9 The baseline, therefore, do expire.9 The baseline, therefore,
shows an increase in the level of revenue expected to be collected after the tax cut provisions shows an increase in the level of revenue expected to be collected after the tax cut provisions
expire in law. Therefore, a legislative proposal to continue those tax cut provisions would be expire in law. Therefore, a legislative proposal to continue those tax cut provisions would be
scored as increasing the deficit. scored as increasing the deficit.
Although baseline Although baseline calculations calculations ~~general y~~ generally require that direct (mandatory) spending program levels require that direct (mandatory) spending program levels
reflect what is scheduled to occur in law, important exceptions exist for many direct spending reflect what is scheduled to occur in law, important exceptions exist for many direct spending

5 Congressional Budget5 Congressional Budget Act, as amended,Act, as amended, P.L. 93-344 (CBA), Section 402. P.L. 93-344 (CBA), Section 402. ~~T he~~The requirement excludes bills requirement excludes bills reported reported
from the House and Senate Committees on Appropriations. from the House and Senate Committees on Appropriations.
6 Section 402, CBA, 6 Section 402, CBA, Section 201(f) states, “Section 201(f) states, “ Revenue Estimates: For the purposes of revenue legislation which is Revenue Estimates: For the purposes of revenue legislation which is
income, estate and gift, excise, and payroll taxes (i.e., Socialincome, estate and gift, excise, and payroll taxes (i.e., Social Security), considered or enacted in any sessionSecurity), considered or enacted in any session of of
Congress, the Congressional BudgetCongress, the Congressional Budget Office shall useOffice shall use exclusively duringexclusively during that session of Congressthat session of Congress revenue estimates revenue estimates
provided to it by the Joint Committee on provided to it by the Joint Committee on ~~T axation~~Taxation.”.”
7 Section 402, CBA7 Section 402, CBA also requiresalso requires “a comparison of the estimates of costs described“a comparison of the estimates of costs described in the estimate with any available in the estimate with any available
estimates of costs made by suchestimates of costs made by such committee or by any Federal agency, andcommittee or by any Federal agency, and a description of each method.” a description of each method.”
8 Statutory requirements related to the calculation of the baseline can be found in 8 Statutory requirements related to the calculation of the baseline can be found in ~~T he~~The Balanced Budget Balanced Budget and Emergency and Emergency
Deficit Control Act of 1985, as amended in Section 257, 2 U.S.C.Deficit Control Act of 1985, as amended in Section 257, 2 U.S.C. 907. CBO’s907. CBO’s ~~baseline~~ baseline is calledis called the Budget and the Budget and
Economic Outlook. Economic Outlook.
9 For more information, see CRS 9 For more information, see CRS Report R45092, Report R45092, The 2017 Tax Revision (P.L. 115-97): Comparison to 2017 Tax Law, ,
coordinated by Molly F. Sherlock and Donald J. Marples. coordinated by Molly F. Sherlock and Donald J. Marples.
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programs. In particular, any program with estimated current year outlays greater than $50 programs. In particular, any program with estimated current year outlays greater than $50 ~~mil ion~~million
is assumed to continue to operate under the terms of the law at the time of its expiration.10 This is assumed to continue to operate under the terms of the law at the time of its expiration.10 This
means that some programs that are slated in law to expire are assumed to continue in the baseline. means that some programs that are slated in law to expire are assumed to continue in the baseline.
A legislativeA legislative proposal that sought to merely continue those expired programs would therefore proposal that sought to merely continue those expired programs would therefore not
be scored as new spending. be scored as new spending.
Scorekeeping Guidelines
When creating cost estimates, CBO adheres to scorekeeping guidelines, which are “specific rules When creating cost estimates, CBO adheres to scorekeeping guidelines, which are “specific rules
for determining the budgetary effects of legislation.”11 These general guidelinesfor determining the budgetary effects of legislation.”11 These general guidelines are used by the are used by the
scorekeepers—the House and Senate Budget Committees, CBO, and the Office of Management scorekeepers—the House and Senate Budget Committees, CBO, and the Office of Management
and Budget (OMB)—to ensure that each group uses consistent and established practices. The 17 and Budget (OMB)—to ensure that each group uses consistent and established practices. The 17
scorekeeping guidelines include general principles, such as a requirement that mandatory scorekeeping guidelines include general principles, such as a requirement that mandatory
spending provisions included in appropriations spending provisions included in appropriations ~~bil s~~bills be counted against the Appropriations be counted against the Appropriations
Committee spending Committee spending ~~al ocation~~allocation, and direction on how asset sales are to be scored.12 The , and direction on how asset sales are to be scored.12 The
guidelines have been revised and expanded over the years, and any changes or additions to the guidelines have been revised and expanded over the years, and any changes or additions to the
scorekeeping guidelines are first approved by each of the scorekeepers.13 scorekeeping guidelines are first approved by each of the scorekeepers.13
Chamber Rules and the Budget Resolution
Congress sometimes directs the creation and content of cost estimates through chamber rules and Congress sometimes directs the creation and content of cost estimates through chamber rules and
provisions contained in budget resolutions. As described subsequently, House rules have provisions contained in budget resolutions. As described subsequently, House rules have
sometimes explicitly required CBO and JCT to include in cost estimates information on a policy sometimes explicitly required CBO and JCT to include in cost estimates information on a policy
proposal’s projected macroeconomic feedback effects. Similarly, Congress has also used the proposal’s projected macroeconomic feedback effects. Similarly, Congress has also used the
budget resolution to provide direction on how a policy ought to be estimated.14 For example, budget resolution to provide direction on how a policy ought to be estimated.14 For example,
budget resolutions have included provisions requiring that transfers from the Treasury’s general budget resolutions have included provisions requiring that transfers from the Treasury’s general
fund to the Highway Trust Fund be counted as new spending.15 Similarly, budget resolutions have fund to the Highway Trust Fund be counted as new spending.15 Similarly, budget resolutions have
stated that certain policies cannot be counted as offsets, such as Federal Reserve System surpluses stated that certain policies cannot be counted as offsets, such as Federal Reserve System surpluses
transferred to the Treasury’s general fund, as transferred to the Treasury’s general fund, as ~~wel~~ well as increases or extensions of Freddie Mac and as increases or extensions of Freddie Mac and
Fannie Mae guarantee fees.16Fannie Mae guarantee fees.16

10 Section 257(b), BBEDCA. 10 Section 257(b), BBEDCA.
11 11 ~~T hese~~These scorekeeping guidelines scorekeeping guidelines were originally includedwere originally included in the joint statement of managers that accompanied the in the joint statement of managers that accompanied the
conference report on the Balanced Budget Act of 1997 (conference report on the Balanced Budget Act of 1997 ( H.Rept. 105-217). U.S. Congress, House, H.Rept. 105-217). U.S. Congress, House, A ~~Com pendium~~ Compendium of
Laws and Rules of the Congressional Budget Process, 114th Cong., August, 114th Cong., August 2015, “2015, “ Introduction,” p. 2. For Introduction,” p. 2. For
Scorekeeping Guidelines,Scorekeeping Guidelines, ~~see~~ see p. 601, or OMB’s Circularp. 601, or OMB’s Circular A-11, Appendix A, availableA-11, Appendix A, available at https://www.whitehouse.gov/at https://www.whitehouse.gov/
omb/information-for-agencies/circulars/. omb/information-for-agencies/circulars/.
12 Scorekeeping guidelines12 Scorekeeping guidelines 3 and 15, respectively. 3 and 15, respectively.
13 According to the House Budget13 According to the House Budget Committee, U.S. Congress, House, Committee, U.S. Congress, House, A Compendium of Laws and Rules of the
Congressional Budget Process, 114th Cong., August, 114th Cong., August 2015, “2015, “ Introduction,” p. 2, and the first paragraph of the Introduction,” p. 2, and the first paragraph of the
Scorekeeping Guidelines,Scorekeeping Guidelines, p. 603. p. 603.
14 CBA,14 CBA, Section 301(b)(4) states that the budget resolution may include “other matters, and require such other Section 301(b)(4) states that the budget resolution may include “other matters, and require such other
procedures, relating to the budget,procedures, relating to the budget, as may be as may be ~~ap propriate~~appropriate to carry out the purposes of” the CBA. to carry out the purposes of” the CBA.
15 For example, see the budget15 For example, see the budget resolution for FY2016 (S.Con.Res. 11, 114th Congress, Section 3302) and the budget resolution for FY2016 (S.Con.Res. 11, 114th Congress, Section 3302) and the budget
resolution for FY2018 (H.Con.Res. 71, 115th Congress, Section 5110). resolution for FY2018 (H.Con.Res. 71, 115th Congress, Section 5110).
16 For example, see the budget 16 For example, see the budget resolution for FY2018 (H.Con.Res. 71, 115th Congress, Sections 5111 and 5112, resolution for FY2018 (H.Con.Res. 71, 115th Congress, Sections 5111 and 5112,
respectively). respectively).
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The Budget Committees and Tax Committees
Congressional committees may also shape the content or creation of cost estimates. The House Congressional committees may also shape the content or creation of cost estimates. The House
and Senate Budget Committees have jurisdiction over CBO, and the CBAand Senate Budget Committees have jurisdiction over CBO, and the CBA specifies that CBO’s specifies that CBO’s
“primary duty and function” is to assist the budget committees.17 Oversight of CBO, as “primary duty and function” is to assist the budget committees.17 Oversight of CBO, as ~~wel~~ well as as
the creation and content of cost estimates is, therefore, under the jurisdiction of the House and the creation and content of cost estimates is, therefore, under the jurisdiction of the House and
Senate Budget Committees, and the budget committees provide related guidance to CBO. For the Senate Budget Committees, and the budget committees provide related guidance to CBO. For the
JCT, the creation and content of its estimates may be shaped by the committee itself, or by JCT, the creation and content of its estimates may be shaped by the committee itself, or by
guidance or assumptions of the tax committees—the House Committee on Ways and Means and guidance or assumptions of the tax committees—the House Committee on Ways and Means and
the Senate Committee on Finance.the Senate Committee on Finance.
Overview of Dynamic Estimating
~~General y~~Generally, CBO and JCT estimates include projections of the budgetary effects that would result , CBO and JCT estimates include projections of the budgetary effects that would result
from proposed policy changes, and incorporate anticipated individual behavioral responses to the from proposed policy changes, and incorporate anticipated individual behavioral responses to the
policy. The estimatespolicy. The estimates~~, however, do not typical y~~ do not typically include the macroeconomic effects of those include the macroeconomic effects of those
~~individual~~ individual behavioral responses (such as changes in labor supply and the capital stock) that would behavioral responses (such as changes in labor supply and the capital stock) that would
alter GDP.18 For example, if an increase in the corporate tax rate caused corporations to use more alter GDP.18 For example, if an increase in the corporate tax rate caused corporations to use more
debt, conventional estimates would take into account the loss of revenue since the returns from debt, conventional estimates would take into account the loss of revenue since the returns from
debt are taxed more lightly than the returns from equity, and this loss in revenue would offset the debt are taxed more lightly than the returns from equity, and this loss in revenue would offset the
revenue gain calculated by multiplyingrevenue gain calculated by multiplying the change in the tax rate by corporate income. The the change in the tax rate by corporate income. The
conventional estimate would notconventional estimate would not~~, however,~~ take into account the lost revenue from a reduction in take into account the lost revenue from a reduction in
income if the rate increase caused a decline in investment, which affects production. These income if the rate increase caused a decline in investment, which affects production. These
estimates without macroeconomic effects are sometimes imprecisely referred to as “static,” but estimates without macroeconomic effects are sometimes imprecisely referred to as “static,” but
are referred to in this report as conventional estimates because they take into account many are referred to in this report as conventional estimates because they take into account many
behavioral responses.19behavioral responses.19
In contrast, a dynamic score aims to account for legislation’s macroeconomic effect, by In contrast, a dynamic score aims to account for legislation’s macroeconomic effect, by
incorporating changes to (1) aggregate demand for goods and services to increase output in an incorporating changes to (1) aggregate demand for goods and services to increase output in an
underemployed economy and/or (2) aggregate supply of goods and services (underemployed economy and/or (2) aggregate supply of goods and services (supply-side effects) )
to increase potential output. For example, dynamic scoring can include fiscal stimulus effects that to increase potential output. For example, dynamic scoring can include fiscal stimulus effects that
increase aggregate demand. These effects occur when the economy is underemployed (for increase aggregate demand. These effects occur when the economy is underemployed (for
example, during and after a recession), and increased spending either by the government or from example, during and after a recession), and increased spending either by the government or from
taxpayers after a tax cut can expand the economy through multiplier effects and cause output to taxpayers after a tax cut can expand the economy through multiplier effects and cause output to
move closer to potential output. These effects are referred to subsequently as move closer to potential output. These effects are referred to subsequently as demand-side effects. .
Supply-side effects occur if potential output is altered due to changes in investment or savings Supply-side effects occur if potential output is altered due to changes in investment or savings
that increase the capital stock, labor supply, or productivity. The crowding-out (or -in) effect that increase the capital stock, labor supply, or productivity. The crowding-out (or -in) effect
occurs when an increase (or decrease) in the deficit reduces (or increases) funds available for occurs when an increase (or decrease) in the deficit reduces (or increases) funds available for
private investment and hence reduces (or increases) the capital stock. private investment and hence reduces (or increases) the capital stock.

~~17 CBA,~~ 17 CBA, Section 202(a). Section 202(a).
18 In addition to dynamic estimates expressly requested18 In addition to dynamic estimates expressly requested or requiredor required by Congress,by Congress, a limited number of “a limited number of “ conventional” conventional”
cost estimates have incorporated macroeconomic effects. For example, cost estimates have incorporated macroeconomic effects. For example, certain estimates for comprehensive immigration estimates for comprehensive immigration
reform legislation includedreform legislation included the effects of an increased labor force, becausethe effects of an increased labor force, because “assuming that those bills “assuming that those bills ~~would have~~ would have had had
no effect on overall output wouldno effect on overall output would have ignored one of the primary effects of the bills and distorted those estimates too have ignored one of the primary effects of the bills and distorted those estimates too
severely.” Elmendorf, p. 96. severely.” Elmendorf, p. 96. ~~T hey also do not include~~Estimates have not included other direct macroeconomic effects, such as the effect on interest other direct macroeconomic effects, such as the effect on interest
rates from increased government borrowing. For a list of such estimates, serates from increased government borrowing. For a list of such estimates, see ~~Appe ndix~~Appendix. .
19 Estimates of tax and spending 19 Estimates of tax and spending policies take into account behavioral effects, such aspolicies take into account behavioral effects, such as changes in spendingchanges in spending ~~due~~ due to excise to excise
taxes and their effects on prices or changes in realizations as a result of changes in capital gains taxes. taxes and their effects on prices or changes in realizations as a result of changes in capital gains taxes.
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Increased Interest in Dynamic Estimating
Congressional interest in dynamic estimating has increased in recent decades. This interest may Congressional interest in dynamic estimating has increased in recent decades. This interest may
be attributed to the increase in the number of House and Senate rules restricting budgetary be attributed to the increase in the number of House and Senate rules restricting budgetary
legislation.20 Because legislation.20 Because ~~bil s~~ bills and resolutions are expected to comply with these congressional rules, and resolutions are expected to comply with these congressional rules,
estimates of a measure’s fiscal impact arguably become more important. Interest in dynamic estimates of a measure’s fiscal impact arguably become more important. Interest in dynamic
scoring is also likelyscoring is also likely related to recent advancements in economic analysis and economic related to recent advancements in economic analysis and economic
modeling that make estimating macroeconomic feedback effects possible. modeling that make estimating macroeconomic feedback effects possible.
Views on Dynamic Estimating
Both proponents and opponents of dynamic estimating point to accuracy and consistency as their Both proponents and opponents of dynamic estimating point to accuracy and consistency as their
primary objectives. Some have suggested that dynamic scoring is useful, but only under certain primary objectives. Some have suggested that dynamic scoring is useful, but only under certain
circumstances. circumstances.
Arguments for Dynamic Estimating
Arguments in favor of dynamic scoring include the view that dynamic scoring provides a more Arguments in favor of dynamic scoring include the view that dynamic scoring provides a more
accurate assessment of budgetary impact than conventional scoring, particularly for some types of accurate assessment of budgetary impact than conventional scoring, particularly for some types of
~~legislative~~ legislative proposals, and that conventional estimating methods produce a projection that does not proposals, and that conventional estimating methods produce a projection that does not
reflect the actual expected impact on revenues. Under this argument, dynamic scoring makes use reflect the actual expected impact on revenues. Under this argument, dynamic scoring makes use
of of ~~al available~~ all available information, and excluding macroeconomic feedback effects “amounts to information, and excluding macroeconomic feedback effects “amounts to
throwing away valuable information.”21 It has also been argued that including macroeconomic throwing away valuable information.”21 It has also been argued that including macroeconomic
effects can improve Congress’s ability to compare competing policy proposals.22 effects can improve Congress’s ability to compare competing policy proposals.22
Arguments in favor of dynamic scoring state that these estimates are required for the sake of Arguments in favor of dynamic scoring state that these estimates are required for the sake of
consistency, consistency, ~~especial y~~especially for large legislative for large legislative packages that would likely affect the economy. As packages that would likely affect the economy. As
stated above, a legislativestated above, a legislative proposal’s budgetary impact is measured against a baseline, and that proposal’s budgetary impact is measured against a baseline, and that
baseline takes into account macroeconomic assumptions. It is, therefore, argued that certain baseline takes into account macroeconomic assumptions. It is, therefore, argued that certain
legislativelegislative proposals should proposals should also take into account economic assumptions. If such legislation take into account economic assumptions. If such legislation
were to be enacted into law, CBO would then build that policy into its baseline, and would have were to be enacted into law, CBO would then build that policy into its baseline, and would have
to make assumptions about the macroeconomic feedback effects that would be expected to occur to make assumptions about the macroeconomic feedback effects that would be expected to occur
under those policies. It is only consistent, the argument goes, to use macroeconomic feedback under those policies. It is only consistent, the argument goes, to use macroeconomic feedback
effects in the initialeffects in the initial estimate of the legislationestimate of the legislation ~~as wel .23~~
as well.23 Advocates for dynamic scoring also state that not using a dynamic approach to measure the Advocates for dynamic scoring also state that not using a dynamic approach to measure the
impact of policy changes biases the legislative process against policy proposals that are designed impact of policy changes biases the legislative process against policy proposals that are designed
to encourage productive economic activity.24 Some have argued that under conventional to encourage productive economic activity.24 Some have argued that under conventional

20 Many congressional rules and restrictions were first established by20 Many congressional rules and restrictions were first established by the Congressional Budgetthe Congressional Budget Act of 1974. Budgetary Act of 1974. Budgetary
restrictions were also includedrestrictions were also included ~~in t he~~ in the Balanced Budget Balanced Budget and Emergency Deficit Control Act of 1985 (Grammand Emergency Deficit Control Act of 1985 (Gramm -Rudman--Rudman-
Hollings;Hollings; P.L. 99-177), the Budget Enforcement Act of 1990 (BEA; P.L. 101-508), the Budget Enforcement Act of P.L. 99-177), the Budget Enforcement Act of 1990 (BEA; P.L. 101-508), the Budget Enforcement Act of
1997 (BEA of 1997; P.L. 105-33), the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO Act; P.L. 111-139), 1997 (BEA of 1997; P.L. 105-33), the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO Act; P.L. 111-139),
and the Budgetand the Budget Control Act of 2011 (BCA; P.L. 112-25). Control Act of 2011 (BCA; P.L. 112-25).
21 Alan J. Auerbach, 21 Alan J. Auerbach, “Dynamic Scoring: An Introduction to the Issues,” University of California, Berkeley, Department “Dynamic Scoring: An Introduction to the Issues,” University of California, Berkeley, Department
of Economics, 2005, p. 2. (Hereinafter, “of Economics, 2005, p. 2. (Hereinafter, “ Auerbach.”)Auerbach.”)
22 Donald B. Marron, 22 Donald B. Marron, Thoughts on Dynamic Scoring of Fiscal Policies, , ~~T ax~~Tax Policy Center, June 2016, p. 1. Policy Center, June 2016, p. 1.
(Hereinafter, “Marron.”) (Hereinafter, “Marron.”)
23 CBO23 CBO also routinely conducts dynamic analysisalso routinely conducts dynamic analysis for proposals that are not for proposals that are not ~~n ecessarily~~necessarily enacted into law (such as enacted into law (such as
proposed budgetproposed budget paths or the President’s budget),paths or the President’s budget), alternative fiscal scenarios (for example, in the Long-alternative fiscal scenarios (for example, in the Long-~~T erm~~Term Budget Budget
Outlook reports), and various illustrative spendingOutlook reports), and various illustrative spending and revenue policies. and revenue policies.
24 Dita Aisyah, “Four Reasons Why We Need24 Dita Aisyah, “Four Reasons Why We Need Dynamic Scoring,” Dynamic Scoring,” ~~T ax~~Tax Foundation, August Foundation, August 5, 2015, 5, 2015,
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estimating methods, the impact of a cut in the marginal tax rates, for example, is viewed (through estimating methods, the impact of a cut in the marginal tax rates, for example, is viewed (through
the lens of budgetary outcomes) less favorably than it should be.25 the lens of budgetary outcomes) less favorably than it should be.25
It has also been argued that, It has also been argued that, ~~methodological y~~methodologically, the production of quality dynamic estimates is , the production of quality dynamic estimates is
now possible due to technical advances in modeling and analysis, and an increase in evidence now possible due to technical advances in modeling and analysis, and an increase in evidence
showing public responses to policy changes.26 Some have pointed out that both CBO and JCT are showing public responses to policy changes.26 Some have pointed out that both CBO and JCT are
capable of producing dynamic estimates,27 and JCT staff have stated that, with regard to capable of producing dynamic estimates,27 and JCT staff have stated that, with regard to
macroeconomic estimates, “we think we have been producing reasonable results for over a macroeconomic estimates, “we think we have been producing reasonable results for over a
decade (though we welcome comments and discussion).”28 decade (though we welcome comments and discussion).”28
Arguments Against Dynamic Estimating
Likewise, arguments against dynamic estimates also point to concerns about accuracy and Likewise, arguments against dynamic estimates also point to concerns about accuracy and
consistency. Those who oppose the use of dynamic scoring argue that projected macroeconomic consistency. Those who oppose the use of dynamic scoring argue that projected macroeconomic
feedback effects are too uncertain to be relied upon as accurate projections of budgetary feedback effects are too uncertain to be relied upon as accurate projections of budgetary
outcomes. outcomes.
Projecting macroeconomic feedback effects requires economic modeling, and it has been said that Projecting macroeconomic feedback effects requires economic modeling, and it has been said that
“because reasonable people can disagree about what model, and what parameters of that model, “because reasonable people can disagree about what model, and what parameters of that model,
are best, the results from dynamic scoring are best, the results from dynamic scoring ~~wil~~ will always be controversial.”29 Previous always be controversial.”29 Previous
macroeconomic analyses by CBO and JCT have yielded a range of estimates depending on what macroeconomic analyses by CBO and JCT have yielded a range of estimates depending on what
type of model is used and the underlying behavioral assumptions in each model.30 type of model is used and the underlying behavioral assumptions in each model.30
With assumptions about the behavioral responses that determine macroeconomic feedback being With assumptions about the behavioral responses that determine macroeconomic feedback being
so uncertain, it has been argued that there is consistency in assuming, for so uncertain, it has been argued that there is consistency in assuming, for al all legislative proposals, legislative proposals,
that GDP remains the same, regardless of changes in tax or spending policy.31 that GDP remains the same, regardless of changes in tax or spending policy.31
Arguments against dynamic scoring often point to potential problems with cost estimating in Arguments against dynamic scoring often point to potential problems with cost estimating in
general, but note that under dynamic scoring these vulnerabilities may be exacerbated. For general, but note that under dynamic scoring these vulnerabilities may be exacerbated. For
example, as mentioned above, example, as mentioned above, al all cost estimates are inherently uncertain. Dynamic estimates are cost estimates are inherently uncertain. Dynamic estimates are
always subject to always subject to more uncertainty, even for relatively simple tax changes, because of the uncertainty, even for relatively simple tax changes, because of the
uncertainty of taxpayer responses (such as consumer spending and labor supply). In contrast, uncertainty of taxpayer responses (such as consumer spending and labor supply). In contrast,

https://taxfoundation.org/four-reasons-why-we-need-dynamic-scoring/; and Zachary Karabell, “https://taxfoundation.org/four-reasons-why-we-need-dynamic-scoring/; and Zachary Karabell, “ A Dynamic World A Dynamic World
Demands Dynamic Scoring,”Demands Dynamic Scoring,” Politico Magazine, January 14, 2015, https://www.politico.com/magazine/story/2015/01/, January 14, 2015, https://www.politico.com/magazine/story/2015/01/
dynamic-scoring-114237. dynamic-scoring-114237.
25 Auerbach. 25 Auerbach.
26 Auerbach. 26 Auerbach.
27 Elmendorf; Marron. 27 Elmendorf; Marron.
28 U.S.28 U.S. Congress, Joint Committee on Congress, Joint Committee on ~~T axation~~Taxation, , Macroeconomic Analysis at the Joint Committee on Taxation and the
Mechanics of its ~~Im plem entation~~ Implementation, , Outline of Presentation of the Joint ~~Com m ittee~~Committee Staff at the Brookings Institution
Program “Dynamic Scoring: Now What?,,” prepared by the staff of the Joint Committee on prepared by the staff of the Joint Committee on ~~T axation, 114 th~~Taxation, 114th Cong., Cong.,
January 26, 2015, available at https://www.jct.gov/publications.html?func=startdown&id=4687. January 26, 2015, available at https://www.jct.gov/publications.html?func=startdown&id=4687.
29 N. Gregory Mankiw, “ 29 N. Gregory Mankiw, “ Dynamic Scoring in CongressDynamic Scoring in Congress Is DefensibleIs Defensible but Slippery,” but Slippery,” New York Times, February 28, , February 28,
2015, https://www.nytimes.com/2015/03/01/upshot/a-slippery-new-rule-for-gauging-fiscal-policy.html. (Hereinafter, 2015, https://www.nytimes.com/2015/03/01/upshot/a-slippery-new-rule-for-gauging-fiscal-policy.html. (Hereinafter,
“Mankiw.”) “Mankiw.”)
30 See30 See the discussionthe discussion of modelsof models and estimates in CRSand estimates in CRS Report R43381, Report R43381, Dynamic Scoring for Tax Legislation: A Review
of Models, by Jane G., by Jane G. Gravelle. For example, in estimating the effects of the Gravelle. For example, in estimating the effects of the ~~T ax~~Tax Reform Act of 2014, the JCT Reform Act of 2014, the JCT used used
two different types of models and different assumptions within those models that produced a range of estimates from two different types of models and different assumptions within those models that produced a range of estimates from
0.1% to 1.6%, depending0.1% to 1.6%, depending on model and assumptions within the model. Seeon model and assumptions within the model. See Joint Committee on Joint Committee on ~~T axation,~~
~~Macroeconom ic~~Taxation, Macroeconomic Analysis of the “Tax Reform Act of 2014,,” JCS-22-14, February JCS-22-14, February 26, 2014, at https://www.jct.gov/26, 2014, at https://www.jct.gov/
publications.html?func=startdown&id=4564. publications.html?func=startdown&id=4564.
31 Mankiw. 31 Mankiw.
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many conventional estimates (such as the effect of rate changes in the tax code or changes to many conventional estimates (such as the effect of rate changes in the tax code or changes to
exemptions and deductions) may be estimated quite precisely because data are readily available exemptions and deductions) may be estimated quite precisely because data are readily available
on income levels and family characteristics.32on income levels and family characteristics.32
Similarly, while cost estimates Similarly, while cost estimates ~~general y~~generally might always have the potential to be perceived as might always have the potential to be perceived as
subject to manipulation by political forces, it has been argued that this possibility is exacerbated subject to manipulation by political forces, it has been argued that this possibility is exacerbated
with dynamic scoring, which might damage the budget process’s credibility.33with dynamic scoring, which might damage the budget process’s credibility.33
Arguments for Dynamic Estimating Under Certain Circumstances
Some have argued that dynamic estimates would be useful for Congress but only in certain Some have argued that dynamic estimates would be useful for Congress but only in certain
situations. It has been argued that dynamic estimates should be provided by CBO and JCT but situations. It has been argued that dynamic estimates should be provided by CBO and JCT but
only for “major proposals” such as those that have a large estimated budgetary impact or those only for “major proposals” such as those that have a large estimated budgetary impact or those
designated as “major” by either majority or minority committee and/or chamber leadership. designated as “major” by either majority or minority committee and/or chamber leadership.
(Recent dynamic scoring rules [discussed below] used a similar threshold.) It has been stated that (Recent dynamic scoring rules [discussed below] used a similar threshold.) It has been stated that
neither CBO nor JCT have sufficient time or staff to carefully estimate the macroeconomic effects neither CBO nor JCT have sufficient time or staff to carefully estimate the macroeconomic effects
of of every proposal for which they must conduct an estimate.34 (To this end, it has also been argued proposal for which they must conduct an estimate.34 (To this end, it has also been argued
that dynamic estimates should be conducted only when CBO and JCT have the time and tools that dynamic estimates should be conducted only when CBO and JCT have the time and tools
necessary to conduct the analysis.) necessary to conduct the analysis.)
Further, it has been stated that dynamic estimates should be conducted for spending as Further, it has been stated that dynamic estimates should be conducted for spending as ~~wel~~ well as as
revenue proposals because each have the potential to produce notable macroeconomic effects.35 revenue proposals because each have the potential to produce notable macroeconomic effects.35
(As stated below, in some years dynamic estimates were required (As stated below, in some years dynamic estimates were required only for revenue legislation.) It for revenue legislation.) It
has also been argued that dynamic estimates should be provided for discretionary spending as has also been argued that dynamic estimates should be provided for discretionary spending as
~~wel~~ well as direct/mandatory spending.36 As stated below, even when dynamic scoring requirements as direct/mandatory spending.36 As stated below, even when dynamic scoring requirements
applied to spending as applied to spending as ~~wel~~ well as revenue, these rules excluded discretionary spending legislation as revenue, these rules excluded discretionary spending legislation
(i.e., appropriations legislation). (i.e., appropriations legislation).
Previous Dynamic Scoring Rules and Requirements
While committees and Members continue to have the ability to request that CBO or JCT provide While committees and Members continue to have the ability to request that CBO or JCT provide
dynamic estimates for certain policies or legislativedynamic estimates for certain policies or legislative proposals, for the first time in decades there proposals, for the first time in decades there
are no explicit congressional rules or requirements that pertain are no explicit congressional rules or requirements that pertain ~~specifical y~~specifically to the preparation or to the preparation or
use of such estimates. use of such estimates.
As described below, rules related to dynamic estimates have varied over the years. As described below, rules related to dynamic estimates have varied over the years.
1997-2002
In January 1997, the House first adopted a rule that explicitly In January 1997, the House first adopted a rule that explicitly mentioned dynamic estimates. It mentioned dynamic estimates. It
stated that a dynamic estimate provided by JCT could be included in the committee report stated that a dynamic estimate provided by JCT could be included in the committee report
accompanying “major tax legislation” (as designated by the House majority leader), but that the accompanying “major tax legislation” (as designated by the House majority leader), but that the

32 For some specific proposals, conventional estimates are quite uncertain, such as the effect of changing capital gains 32 For some specific proposals, conventional estimates are quite uncertain, such as the effect of changing capital gains
tax tax ~~rat es~~rates (because (because of uncertainty about realization responses) or when a new feature is introduced and there is not of uncertainty about realization responses) or when a new feature is introduced and there is not
previous data (such as the effect of the repatriation holiday). previous data (such as the effect of the repatriation holiday).
33 Paul N. Van 33 Paul N. Van de Water and Chye-Ching Huang, de Water and Chye-Ching Huang, Budget and Tax Plans Should Not Rely on “Dynamic Scoring,,”
Center on BudgetCenter on Budget and Policy Priorities, November 17, 2014, https://www.cbpp.org/research/budget-and-tax-plans-and Policy Priorities, November 17, 2014, https://www.cbpp.org/research/budget-and-tax-plans-
should-not-rely-on-dynamic-scoring. should-not-rely-on-dynamic-scoring.
34 Elmendorf, p. 93. 34 Elmendorf, p. 93.
35 Elmendorf; Marron. 35 Elmendorf; Marron.
36 Elmendorf, p. 93. 36 Elmendorf, p. 93.
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estimate could be used “for informational purposes only.” The rule, which was in effect through estimate could be used “for informational purposes only.” The rule, which was in effect through
2002, defined a dynamic estimate as “a projection based in any part on assumptions concerning 2002, defined a dynamic estimate as “a projection based in any part on assumptions concerning
probable effects of macroeconomic feedback” and required that the estimate include a statement probable effects of macroeconomic feedback” and required that the estimate include a statement
identifying identifying al all such assumptions.37 such assumptions.37
When the new rule was adopted in January 1997, JCT staff hosted a symposium entitled When the new rule was adopted in January 1997, JCT staff hosted a symposium entitled
“Modeling the Macroeconomic Consequences of Tax Policy.” According to JCT “Modeling the Macroeconomic Consequences of Tax Policy.” According to JCT
This symposium presented the results of a year-long modeling experiment by economists This symposium presented the results of a year-long modeling experiment by economists
notednoted ~~for their~~ for their work in developing modelswork in developing models ~~of the~~ of the U.S. economy.U.S. economy. ~~The purpose of~~ The purpose of this this
experiment was to explore the predictions of a variety of models regarding the experiment was to explore the predictions of a variety of models regarding the
macroeconomic feedback effects of major changes in the U.S. tax code with a focus on macroeconomic feedback effects of major changes in the U.S. tax code with a focus on
evaluatingevaluating ~~the feasibility of us ing these types of results to enhance the U.S.~~ the feasibility of using these types of results to enhance the U.S. budgeting budgeting
process.38 process.38
2003-2014
In January 2003, the House replaced its previous dynamic scoring rule with a more extensive In January 2003, the House replaced its previous dynamic scoring rule with a more extensive
rule, which remained in effect through 2014.39 Whereas the previous rule had rule, which remained in effect through 2014.39 Whereas the previous rule had permitted a a
dynamic estimate to be included in a committee report, the new House rule dynamic estimate to be included in a committee report, the new House rule required it. Further, it. Further,
whereas the previous rule had applied only to whereas the previous rule had applied only to ~~bil s~~bills designated as “major tax legislation,” the new designated as “major tax legislation,” the new
rule applied to rule applied to any bill reported by the House Committee on Ways and Means that proposed to reported by the House Committee on Ways and Means that proposed to
amend the Internal Revenue Code. The new rule also omitted the previous provision that amend the Internal Revenue Code. The new rule also omitted the previous provision that
~~explicitly~~ explicitly required the estimate be “used for informational purposes only.”required the estimate be “used for informational purposes only.”
The new rule no longer used the term “dynamic estimate” but instead used the term The new rule no longer used the term “dynamic estimate” but instead used the term
“macroeconomic impact analysis,” which the rule defined as an estimate provided by JCT “of the “macroeconomic impact analysis,” which the rule defined as an estimate provided by JCT “of the
changes in economic output, employment, capital stock, and tax revenues expected to result from changes in economic output, employment, capital stock, and tax revenues expected to result from
enactment of the proposal.” The estimate was required to identify critical assumptions and the enactment of the proposal.” The estimate was required to identify critical assumptions and the
source of data underlying that estimate. source of data underlying that estimate.
Around the time of the rule’s adoption in 2003, the JCT released a report providing an overview Around the time of the rule’s adoption in 2003, the JCT released a report providing an overview
of the joint committee’s efforts to model macroeconomic effects of proposed tax legislation.40 of the joint committee’s efforts to model macroeconomic effects of proposed tax legislation.40

~~37 T his rule was~~ 37 This rule was in effect from 1997 to 2002 (105th Congress-107th Congress). (It was originally Housein effect from 1997 to 2002 (105th Congress-107th Congress). (It was originally House ~~Rule~~ Rule XIII clause XIII clause
7(e) [105th Congress] but was7(e) [105th Congress] but was ~~recodified~~ recodified as House Ruleas House Rule XIII clause 3(h)(2) in the 106th Congress.) XIII clause 3(h)(2) in the 106th Congress.) ~~T he~~The rule stated that rule stated that
the committee report from the House Committee on Ways and Means accompanying “major tax legislation” (as the committee report from the House Committee on Ways and Means accompanying “major tax legislation” (as
designateddesignated by the majority leader after consultation with the minority leader) could includeby the majority leader after consultation with the minority leader) could include a dynamic estimate of a dynamic estimate of
changes in federal revenues expected to result from enactment of the legislation. changes in federal revenues expected to result from enactment of the legislation. ~~T he~~The rules stated that JCT rules stated that JCT should should
render a dynamic estimate “only in response to a timely request from the Chairman of the Committee on Ways and render a dynamic estimate “only in response to a timely request from the Chairman of the Committee on Ways and
Means (after consultation with the ranking minority member of the committee).” Means (after consultation with the ranking minority member of the committee).”
38 U.S.38 U.S. Congress, Joint Committee on Congress, Joint Committee on ~~T axation~~Taxation, , Joint Committee on Taxation Tax Modeling Project and 1997 Tax
~~Sym posium~~ Symposium Papers, committee print, 105th Cong., November 20, 1997. , committee print, 105th Cong., November 20, 1997. ~~T his~~This project followed increased interest in project followed increased interest in
macroeconomic modeling that included congressional hearings and the creation of a revenuemacroeconomic modeling that included congressional hearings and the creation of a revenue -estimating advisory -estimating advisory
board. For more information on this history, and the history of macroeconomic analysis at the JCTboard. For more information on this history, and the history of macroeconomic analysis at the JCT , see , see ~~Randal l~~ Randall D. D.
Weiss and JamesWeiss and James W. Wetzler, “W. Wetzler, “~~T he~~The Evolution of Economics at the joint Committee on Taxation, Part 2,” Evolution of Economics at the joint Committee on Taxation, Part 2,” ~~T ax~~Tax Notes, Notes,
May 23, 2016. May 23, 2016.
39 Rule 39 Rule XIII, clauseXIII, clause 3(h)(2) (108th Congress-113th Congress). 3(h)(2) (108th Congress-113th Congress). ~~T he~~The rule stated that it was not in order to consider in the rule stated that it was not in order to consider in the
HouseHouse a billa bill or joint resolution reported by the Committee on Ways and Means that proposed to amend the Internal or joint resolution reported by the Committee on Ways and Means that proposed to amend the Internal
Revenue CodeRevenue Code of 1986 unless (1) the report included a macroeconomic impact analysis, (2) the report included a of 1986 unless (1) the report included a macroeconomic impact analysis, (2) the report included a
statement from JCTstatement from JCT explaining why a macroeconomic impact analysis wasexplaining why a macroeconomic impact analysis was not calculable, or (3) the chair of the not calculable, or (3) the chair of the
Committee on Ways and Means causedCommittee on Ways and Means caused a macroeconomic impact analysis to be printed in the a macroeconomic impact analysis to be printed in the Congressional Record
before consideration of the legislation. before consideration of the legislation.
40 U.S.40 U.S. Congress, Joint, Congress, Joint, Overview of the Work of the Staff of the Joint Committee on Taxation to Model the
~~Macroeconom ic~~Macroeconomic Effects of Proposed Tax Legislation to ~~Com ply~~Comply with House Rules XII 3(h)(2) , prepared by the staff of , prepared by the staff of
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While varying in length and detail, the macroeconomic analyses provided by JCT during this While varying in length and detail, the macroeconomic analyses provided by JCT during this
period (2003-2014) included information on the expected macroeconomic effects (if any) of the period (2003-2014) included information on the expected macroeconomic effects (if any) of the
proposed legislation, provided general conclusions, and sometimes provided a range of potential proposed legislation, provided general conclusions, and sometimes provided a range of potential
budgetary effects using different models and different assumptions within models. The analyses budgetary effects using different models and different assumptions within models. The analyses
did not include a specific dollar amount or did not include a specific dollar amount or point estimate. These analyses also reported details of . These analyses also reported details of
the effects on different aspects of the economy (such as labor supply, output, and capital stock). In the effects on different aspects of the economy (such as labor supply, output, and capital stock). In
addition, the estimates often referenced the model(s) used for the analysis. addition, the estimates often referenced the model(s) used for the analysis.
During this time, the JCT used four different types of models. During this time, the JCT used four different types of models. ~~Crucial y, al~~ Crucially, all of these models of these models
incorporated the impact of supply-side effects in their dynamic estimates. Only the MEG and GI incorporated the impact of supply-side effects in their dynamic estimates. Only the MEG and GI
model also incorporated demand-side effects (for a brief discussion of these effects, see model also incorporated demand-side effects (for a brief discussion of these effects, see
“Overview of Dynamic Estimating”). The models are briefly described below: ). The models are briefly described below:
1. 1. MEG: a macroeconomic growth (MEG) model that incorporates aggregate a macroeconomic growth (MEG) model that incorporates aggregate
demand effects similar to those in most economic forecasting models and demand effects similar to those in most economic forecasting models and
includes labor and savings responses. (This model includes labor and savings responses. (This model ~~fal s~~falls into a class of steady state into a class of steady state
growth models growth models ~~cal ed~~called Solow models, discussed below.) Solow models, discussed below.)
2. 2. OLG: an overlapping generations (OLG) life-cycle model that assumes that an overlapping generations (OLG) life-cycle model that assumes that
generations of individuals optimize choices of consumption and leisure over a generations of individuals optimize choices of consumption and leisure over a
lifetime and cannot include demand-side effects. lifetime and cannot include demand-side effects.
3. 3. GI: a Global Insight (GI) private econometric forecasting model that captures a Global Insight (GI) private econometric forecasting model that captures
demand-side effects. demand-side effects.
4. 4. DSGE: a domestic stochastic general equilibrium (DSGE) model that assumes a domestic stochastic general equilibrium (DSGE) model that assumes
that individuals that individuals optimize over infinite lifetimes and often does not, without optimize over infinite lifetimes and often does not, without
modification, capture aggregate demand effects to decrease unemployment.41modification, capture aggregate demand effects to decrease unemployment.41
In the past, the JCT also had different behavioral responses within models (e.g., a high and low In the past, the JCT also had different behavioral responses within models (e.g., a high and low
labor supply response in MEG).labor supply response in MEG).
During this period, the JCT prepared five published macroeconomic estimates of legislative During this period, the JCT prepared five published macroeconomic estimates of legislative
proposals: one (in 2003, for the Jobs and Growth Tax Relief Reconciliation Act, P.L. 108-27) that proposals: one (in 2003, for the Jobs and Growth Tax Relief Reconciliation Act, P.L. 108-27) that
used MEG, GI, and OLG; two that used MEG only (the 2009 economic stimulus legislation and used MEG, GI, and OLG; two that used MEG only (the 2009 economic stimulus legislation and
the 2009 Affordable Care Act)the 2009 Affordable Care Act); and two that used MEG and OLG (a and two that used MEG and OLG (a ~~bil~~ bill extending bonus extending bonus
depreciation in 2014 and the Tax Reform Act of 2014).42 Several depreciation in 2014 and the Tax Reform Act of 2014).42 Several ~~bil s~~bills were examined but were were examined but were
too too ~~smal~~ small for a macroeconomic analysis. The GI model was dropped after 2003, and the DSGE for a macroeconomic analysis. The GI model was dropped after 2003, and the DSGE
model was introduced in 2006. That model did not model was introduced in 2006. That model did not ~~al ow~~allow unemployment. None of the published unemployment. None of the published
analyses of legislationanalyses of legislation used the DSGE model. The JCT also provided used the DSGE model. The JCT also provided ~~il ustrative~~illustrative analysis for analysis for
different types of proposals on two occasions: to compare individual rate cuts, corporate rate cuts, different types of proposals on two occasions: to compare individual rate cuts, corporate rate cuts,
and increases in the personal exemption in 2005 and to examine a revenue-neutral tax cut that and increases in the personal exemption in 2005 and to examine a revenue-neutral tax cut that

the Joint Committee on the Joint Committee on ~~T axation~~Taxation, 108th Cong., December 22, 2003, available at https://www.jct.gov/publications.html?, 108th Cong., December 22, 2003, available at https://www.jct.gov/publications.html?
func=startdown&id=2940. func=startdown&id=2940.
41 See 41 See Joint Committee on Joint Committee on ~~T axation~~Taxation, , Overview of Joint Committee Macroeconomic Modeling, April 23, 2018, at , April 23, 2018, at
https://www.jct.gov/publications.html?func=startdown&id=5092. Also, see CRShttps://www.jct.gov/publications.html?func=startdown&id=5092. Also, see CRS Report R43381, Report R43381, ~~Dynam ic~~Dynamic Scoring for
Tax Legislation: A Review of Models, by Jane G., by Jane G. Gravelle for a more detailed discussionGravelle for a more detailed discussion of the types of models and of the types of models and
effects. effects. ~~T he~~The DSGE DSGE model is also a form of the Ramsey or infinite horizon model (sometimes also called a real business model is also a form of the Ramsey or infinite horizon model (sometimes also called a real business
cycle model) but iscycle model) but is modified by having some agents in the model liquiditymodified by having some agents in the model liquidity ~~const rained~~ constrained and unable and unable to lend or borrow, to lend or borrow,
uncertainty, and by having sticky prices. Without certain modifications, Ramsey type models cannot be affected by uncertainty, and by having sticky prices. Without certain modifications, Ramsey type models cannot be affected by
demand-sidedemand-side effects. effects. ~~T he~~The current OLG model does not have an infinite horizon but a lifetime one, but has current OLG model does not have an infinite horizon but a lifetime one, but has not been not been
modified to permit demand-side effects. modified to permit demand-side effects.
42 These~~42 T hese~~ analyses can be found at Joint Committee on analyses can be found at Joint Committee on ~~T axation~~Taxation, , Overview of Joint Committee Macroeconomic
Modeling, April 23, 2018, at https://www.jct.gov/publications.html?func=startdown&id=5092. , April 23, 2018, at https://www.jct.gov/publications.html?func=startdown&id=5092.
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broadened the individual broadened the individual income tax base and lowered the rate in 2006. The first analysis used income tax base and lowered the rate in 2006. The first analysis used
MEG and the second used the MEG, OLG, and DSGE models.MEG and the second used the MEG, OLG, and DSGE models.
2015-2018
During this period, dynamic estimates were required to be conducted for revenue and mandatory During this period, dynamic estimates were required to be conducted for revenue and mandatory
spending legislationspending legislation that met the threshold of “major legislation”that met the threshold of “major legislation” under both a House rule and under both a House rule and
budget resolutions. budget resolutions.
House Rule
In 2015, the House replaced its former rule with House Rule XIII, clause 8. The new rule, which In 2015, the House replaced its former rule with House Rule XIII, clause 8. The new rule, which
was in effect through 2018, expanded the type of legislation for which dynamic estimates were to was in effect through 2018, expanded the type of legislation for which dynamic estimates were to
be conducted to include not just revenue proposals, but also mandatory spending proposals.43 This be conducted to include not just revenue proposals, but also mandatory spending proposals.43 This
meant that the rule now required dynamic estimates from CBO as meant that the rule now required dynamic estimates from CBO as ~~wel~~ well as JCT, but only for as JCT, but only for
“major legislation,” which was defined as (1) legislation that would be projected (in a “major legislation,” which was defined as (1) legislation that would be projected (in a
conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of
projected U.S. GDP,44 (2) mandatory spending legislation designated as major legislationprojected U.S. GDP,44 (2) mandatory spending legislation designated as major legislation by the by the
chair of the House Budget Committee, or (3) revenue legislation designated as major legislation chair of the House Budget Committee, or (3) revenue legislation designated as major legislation
by the chair or vice chair of the JCT. Although not explicitly stated in the new rule, the rules by the chair or vice chair of the JCT. Although not explicitly stated in the new rule, the rules
change resulted in dynamic estimates, for the first time, including a point estimate (i.e., a specific change resulted in dynamic estimates, for the first time, including a point estimate (i.e., a specific
dollar amount) as opposed to a range of potential budgetary outcomes. dollar amount) as opposed to a range of potential budgetary outcomes.
Under this rule, the estimates would incorporate the budgetary effects of changes in economic Under this rule, the estimates would incorporate the budgetary effects of changes in economic
output, employment, capital stock, and other macroeconomic variables resulting from such output, employment, capital stock, and other macroeconomic variables resulting from such
legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the
long-term budgetary effects and macroeconomic variables of such legislation, and to identify long-term budgetary effects and macroeconomic variables of such legislation, and to identify
critical assumptions and the source of data underlying the estimate.45critical assumptions and the source of data underlying the estimate.45
Budget Resolutions
During this period, Congress also used the budget resolution to direct CBO and JCT to provide During this period, Congress also used the budget resolution to direct CBO and JCT to provide
dynamic estimates. The budget resolutions agreed to by both the House and Senate for fiscal dynamic estimates. The budget resolutions agreed to by both the House and Senate for fiscal
years 2016 and 2018 included provisions that required dynamic estimates in both houses for the years 2016 and 2018 included provisions that required dynamic estimates in both houses for the
114th and 115th Congresses.46 114th and 115th Congresses.46

~~43 T he rule did~~ 43 The rule did not apply to discretionary spending legislation, which is undernot apply to discretionary spending legislation, which is under the jurisdiction of the Housethe jurisdiction of the House and Senate and Senate
Appropriations Committees. Appropriations Committees.
44 Specifically, the rule states “any bill or joint resolution for which an estimate is required 44 Specifically, the rule states “any bill or joint resolution for which an estimate is required to be prepared pursuant to to be prepared pursuant to
section 402 of the Congressional Budgetsection 402 of the Congressional Budget Act of 1974 and that causes a gross budgetaryAct of 1974 and that causes a gross budgetary effect (effect (~~befor e~~before incorporating incorporating
macroeconomic effects) in any fiscal year over the years of the most recently agreed to budgetmacroeconomic effects) in any fiscal year over the years of the most recently agreed to budget resolution on the budget resolution on the budget
equalequal to or greater than 0.25 percent of the current projected gross domestic product of the United States for that yearto or greater than 0.25 percent of the current projected gross domestic product of the United States for that year .” .”
~~T he~~The rule defined budgetary rule defined budgetary effect as “changes in revenues, outlays, and deficits.” effect as “changes in revenues, outlays, and deficits.”
45 Specifically, the rule states that the estimate requires information on the effects “of such legislation in the 2045 Specifically, the rule states that the estimate requires information on the effects “of such legislation in the 20 -fiscal -fiscal
year period beginningyear period beginning after the last fiscal year of the most recently agreed to concurrent resolution on the budget that after the last fiscal year of the most recently agreed to concurrent resolution on the budget that
set forth appropriate levels required by section 301 of the Congressional Budgetset forth appropriate levels required by section 301 of the Congressional Budget Act of 1974.” Act of 1974.”
46 46 ~~T he~~The FY2016 budget resolution, agreed FY2016 budget resolution, agreed to in May 2015, S.Con.Res. 11 (114th Congress), Section 3112. Honest to in May 2015, S.Con.Res. 11 (114th Congress), Section 3112. Honest
accounting: cost estimates for major legislation to incorporate macroeconomic effects (applied to both Senate and accounting: cost estimates for major legislation to incorporate macroeconomic effects (applied to both Senate and
House); and the FY2018 budgetHouse); and the FY2018 budget resolution, agreedresolution, agreed to in October of 2017, H.Con.Res. 71 (115th Congress), Section to in October of 2017, H.Con.Res. 71 (115th Congress), Section
4107. Honest accounting: cost estimates for major legislation to incorporate macroeconomic effects (applied to Senate) 4107. Honest accounting: cost estimates for major legislation to incorporate macroeconomic effects (applied to Senate)
and Section 5107. Estimates of macroeconomic effects of major legislation (applied to House). and Section 5107. Estimates of macroeconomic effects of major legislation (applied to House).
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The requirements included in these provisions were The requirements included in these provisions were ~~very~~ similar to the House rule described similar to the House rule described
above. The dynamic estimates were required to be conducted for revenue and mandatory above. The dynamic estimates were required to be conducted for revenue and mandatory
spending spending ~~legislation~~ legislation that met the threshold of “major legislation.”that met the threshold of “major legislation.” Major legislation was again Major legislation was again
described as legislation that would be projected (in a conventional cost estimate) to cause an described as legislation that would be projected (in a conventional cost estimate) to cause an
annual gross budgetary effect of at least 0.25% of projected U.S. GDP, but this version of the rule annual gross budgetary effect of at least 0.25% of projected U.S. GDP, but this version of the rule
excluded any legislationexcluded any legislation that met this criterion as a result of a timing shift.47 To accommodate the that met this criterion as a result of a timing shift.47 To accommodate the
Senate’s constitutional authority to approve treaties, the rule expanded the definition of major Senate’s constitutional authority to approve treaties, the rule expanded the definition of major
~~legislation to~~ legislation to include any treaty with an impact of at least $15 include any treaty with an impact of at least $15 ~~bil ion~~ billion in that fiscal year. And the in that fiscal year. And the
definition of major legislationdefinition of major legislation also included any mandatory spending legislation designated as also included any mandatory spending legislation designated as
major legislation by the chair of the House or Senate Budget Committee, or revenue legislation major legislation by the chair of the House or Senate Budget Committee, or revenue legislation
designated as major legislation by the chair or vice chair of the JCT.designated as major legislation by the chair or vice chair of the JCT.
As with the House rule, these estimates were required to incorporate the budgetary effects of As with the House rule, these estimates were required to incorporate the budgetary effects of
changes in economic output, employment, capital stock, and other macroeconomic variables changes in economic output, employment, capital stock, and other macroeconomic variables
resulting from such legislation. The estimate was, to the extent practicable, to include a resulting from such legislation. The estimate was, to the extent practicable, to include a
qualitative assessment of the long-term budgetary effects and macroeconomic variables of such qualitative assessment of the long-term budgetary effects and macroeconomic variables of such
legislation, and to identify critical assumptions and the source of data underlying the estimate.48 legislation, and to identify critical assumptions and the source of data underlying the estimate.48
For the Senate provision applying to the 115th Congress, the estimates were to include the For the Senate provision applying to the 115th Congress, the estimates were to include the
distributional effects across income categories, to the extent practicable. distributional effects across income categories, to the extent practicable.
Although not explicitly Although not explicitly stated in the provisions, the requirements resulted in dynamic estimates, stated in the provisions, the requirements resulted in dynamic estimates,
including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential
budgetary outcomes. Although the House and Senate Budget Committees might presumably have budgetary outcomes. Although the House and Senate Budget Committees might presumably have
used such point estimates as the official estimate for the purposes of budget enforcement (under used such point estimates as the official estimate for the purposes of budget enforcement (under
the authority granted by Section 312 of the CBA), the Senate Budget Committee communicated the authority granted by Section 312 of the CBA), the Senate Budget Committee communicated
that the dynamic estimates would be used for informational purposes only.49 that the dynamic estimates would be used for informational purposes only.49
Estimating Practices
Estimates during the 2015-2018 period included a point estimate that provided a conventional Estimates during the 2015-2018 period included a point estimate that provided a conventional
estimate and the macroeconomic effects for a 10-year period. The JCT currently uses the three estimate and the macroeconomic effects for a 10-year period. The JCT currently uses the three
models previously discussed: MEG, OLG, and DSGE. In the past, the JCT also had different models previously discussed: MEG, OLG, and DSGE. In the past, the JCT also had different

47 A timing shift was47 A timing shift was ~~defined~~ defined as (1) provisions that cause a delay of the date on whichas (1) provisions that cause a delay of the date on which outlays flowingoutlays flowing from direct from direct
spending wouldspending would otherwise occur from one fiscal year to the next fiscal year, or (2) provisions that cause an acceleration otherwise occur from one fiscal year to the next fiscal year, or (2) provisions that cause an acceleration
of the date on whichof the date on which revenues wouldrevenues would otherwise occur from one fiscal year to the prior fiscal year. otherwise occur from one fiscal year to the prior fiscal year.
48 Specifically, the provisions state that the estimate requires information on the effects “of such legislation in the 20-48 Specifically, the provisions state that the estimate requires information on the effects “of such legislation in the 20-
fiscal year period beginningfiscal year period beginning after the last fiscal year of the most recently agreed to concurrent resolution on the budget after the last fiscal year of the most recently agreed to concurrent resolution on the budget
that set forth appropriate levels required by section 301 of the Congressional Budgetthat set forth appropriate levels required by section 301 of the Congressional Budget Act of 1974.” Act of 1974.”
49 49 ~~T he~~The Senate Budget Senate Budget Committee communicated that the estimates would be usedCommittee communicated that the estimates would be used only for informational purposes in only for informational purposes in
two separate committee prints. First, a committee print for the budget resolution for FY2016, S.Con.Res.two separate committee prints. First, a committee print for the budget resolution for FY2016, S.Con.Res. 11, states, 11, states,
“Provides Honest Accounting Estimates. “Provides Honest Accounting Estimates. ~~T he~~The resolution directs CBO to produce, alongsideresolution directs CBO to produce, alongside its conventional estimates, its conventional estimates,
cost estimates that incorporate the economic effects of major policy changes. cost estimates that incorporate the economic effects of major policy changes. ~~T hese~~These estimates would estimates would serve serve
informational purposes.” U.S. Congress,informational purposes.” U.S. Congress, Senate Committee on the Budget, Senate Committee on the Budget, Concurrent Resolution on the Budget,
FY2016, S.Prt. 114-14, 114th Cong., 1st sess., March 2015, p. 24. Next, a committee print for a budget, S.Prt. 114-14, 114th Cong., 1st sess., March 2015, p. 24. Next, a committee print for a budget resolution for resolution for
FY2018 that was reported from the Senate Budget Committee, S.Con.Res. 25, states “FY2018 that was reported from the Senate Budget Committee, S.Con.Res. 25, states “ Reactivates Dynamic Scoring Reactivates Dynamic Scoring
Authority. Authority. ~~T his~~This resolution directs the Congressional Budget resolution directs the Congressional Budget Office and the Joint Committee on Office and the Joint Committee on ~~T axation~~Taxation to incorporate to incorporate
the budgetary effects of macroeconomic variables whenthe budgetary effects of macroeconomic variables when each produces estimates of major legislation. each produces estimates of major legislation. ~~T hese~~These estimates estimates
willwill ~~be used~~ be used for informational purposes only. for informational purposes only. ~~T hese~~These more accurate assessments will more accurate assessments will help guidehelp guide the Senate in its work the Senate in its work
both as a legislative body and financial stewardboth as a legislative body and financial steward of the United States.of the United States.” U.S. U.S. Congress, Senate Committee on the Budget, Congress, Senate Committee on the Budget,
Concurrent resolution on the Budget, Fiscal Year 2018 , S.Prt. 115-19, 115th Cong., 1st sess., October 2017, 115-19, p. , S.Prt. 115-19, 115th Cong., 1st sess., October 2017, 115-19, p.
24. 24.
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behavioral responses within models (e.g., a high and low labor supply response in MEG).50 In behavioral responses within models (e.g., a high and low labor supply response in MEG).50 In
2014, JCT had only the MEG and OLG models; the first introduction of the DSGE model in a 2014, JCT had only the MEG and OLG models; the first introduction of the DSGE model in a
published estimate for legislationpublished estimate for legislation was in 2017. Discussions of the DSGE model in 2018 was in 2017. Discussions of the DSGE model in 2018
suggested that it now suggested that it now ~~al owed~~allowed unemployment. CBO has two models that assume full employment. unemployment. CBO has two models that assume full employment.
One is a long-term model that CBO refers to as a “Solow growth model” and the other is a life One is a long-term model that CBO refers to as a “Solow growth model” and the other is a life
cycle model. (The Solow growth model is similar to the long-term growth aspects of MEG and cycle model. (The Solow growth model is similar to the long-term growth aspects of MEG and
the life cycle model is an OLG model. The similarities reflect the way they incorporate behavioral the life cycle model is an OLG model. The similarities reflect the way they incorporate behavioral
responses.)51 The Solow model has stronger and weaker labor supply responses and the OLG responses.)51 The Solow model has stronger and weaker labor supply responses and the OLG
model has alternative assumptions about how the model was to be closed and whether local or model has alternative assumptions about how the model was to be closed and whether local or
worldwide interest rates predominated. CBO also has a separate short-term model that can worldwide interest rates predominated. CBO also has a separate short-term model that can
capture fiscal stimulus that reduces unemployment, while JCT combines short-term and long-capture fiscal stimulus that reduces unemployment, while JCT combines short-term and long-
term effects in its MEG and DSGE models.term effects in its MEG and DSGE models.
Beginning Beginning in 2003, JCT and CBO presented results from more than one model and with different in 2003, JCT and CBO presented results from more than one model and with different
behavioral assumptions within models.52 Beginning in 2015, when point estimates were provided, behavioral assumptions within models.52 Beginning in 2015, when point estimates were provided,
the JCT reported a single estimate that was a weighted average of the various models’ point the JCT reported a single estimate that was a weighted average of the various models’ point
estimates. JCT provided information on the weights used, but did not separately report the estimates. JCT provided information on the weights used, but did not separately report the
different models’ point estimates when more than one model was used. Also, in contrast to past different models’ point estimates when more than one model was used. Also, in contrast to past
informational macroeconomic modeling, there was no reported sensitivity analysis within the informational macroeconomic modeling, there was no reported sensitivity analysis within the
models (sensitivity analysis effectively measures how macroeconomic effects may change under models (sensitivity analysis effectively measures how macroeconomic effects may change under
different behavioral assumptions, such as how much a change in tax rates affects labor supply). In different behavioral assumptions, such as how much a change in tax rates affects labor supply). In
the four analyses that JCT reported on, in the first two cases (in 2015) only MEG, with the high the four analyses that JCT reported on, in the first two cases (in 2015) only MEG, with the high
rather than the low labor response assumption, was used.53 In the case of the major 2017 tax rather than the low labor response assumption, was used.53 In the case of the major 2017 tax
revision, MEG was weighted at 40%, OLG at 40%, and DSGE at 20%.54 In the final case, MEG revision, MEG was weighted at 40%, OLG at 40%, and DSGE at 20%.54 In the final case, MEG
was weighted at 40% and OLG and DSGE were each weighted at 30%.55 CBO and JCT jointly was weighted at 40% and OLG and DSGE were each weighted at 30%.55 CBO and JCT jointly
estimated the effects of some estimated the effects of some ~~bil s~~bills associated with repeal of the Affordable Care Act or associated with repeal of the Affordable Care Act or
modification of that act (JCT estimated certain tax provisions and CBO estimated the other modification of that act (JCT estimated certain tax provisions and CBO estimated the other

~~50 See~~ 50 See Joint Committee on Joint Committee on ~~T axation~~Taxation, , Overview of Joint Committee Macroeconomic Modeling, JCX-33-18, April 23, , JCX-33-18, April 23,
2018, https://www.jct.gov/publications.2018, https://www.jct.gov/publications.~~ht ml~~html?func=startdown&id=5092. Also, see CRS?func=startdown&id=5092. Also, see CRS Report R43381, Report R43381, ~~Dynam ic~~Dynamic
Scoring for Tax Legislation: A Review of Models, by Jane G., by Jane G. Gravelle for a more detailed discussionGravelle for a more detailed discussion of the types of of the types of
models. Additional details in models. Additional details in ~~footnote 41.~~
footnote 41. 51 OLG 51 OLG models incorporate savings and labor supply effects by introducing explicit optimizing functions for allocating models incorporate savings and labor supply effects by introducing explicit optimizing functions for allocating
consumption and leisureconsumption and leisure over time that generate, depending on many parameters, labor and savingsover time that generate, depending on many parameters, labor and savings responses (as does responses (as does
the DSGEthe DSGE model usedmodel used by JCTby JCT ). Solow). Solow models and the MEGmodels and the MEG model incorporate behavioral responses for savings and model incorporate behavioral responses for savings and
labor supply that reflect direct statistical estimates of these responses. labor supply that reflect direct statistical estimates of these responses.
52 For the initial analyses, see Joint Committee on 52 For the initial analyses, see Joint Committee on ~~T axation~~Taxation, , Macroeconomic Analysis for the Jobs and Growth
Reconciliation Tax Act of 2003, May 8, 2003, https://www.jct.gov/publications.html?func=startdown&id=1191; and , May 8, 2003, https://www.jct.gov/publications.html?func=startdown&id=1191; and
Congressional BudgetCongressional Budget Office, Office, How CBO Analyzed the ~~Macroeconom ic~~Macroeconomic Effects of the President’s Budget, July 2003, , July 2003,
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/44xx/doc4454/07-28-presidentsbudget.pdf. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/44xx/doc4454/07-28-presidentsbudget.pdf.
53 Joint Committee on 53 Joint Committee on ~~T axation~~Taxation, , A Report to the Congressional Budget Office of the Macroeconomic Effects of the
“Tax Relief Extension Act of 2015,” as Ordered to be Reported by the Senate Committee on Finance, JCX-107-15, , JCX-107-15,
AugustAugust 4, 2015, https://www.jct.gov/publications.html?func=startdown&id=5092; and Joint Committee on 4, 2015, https://www.jct.gov/publications.html?func=startdown&id=5092; and Joint Committee on ~~T axation~~Taxation, , A
Report to the Congressional Budget Office of the ~~Macroeconom ic~~Macroeconomic Effects of H.R. 2510H.R. 2510, “Bonus Depreciation Modified
and ~~m ade Perm anent~~made Permanent,” As Ordered to be Reported by the House ~~Com m ittee~~Committee on Ways and Means, JCS-134-15, October , JCS-134-15, October
27, 2015, https://www.jct.gov/publications.html?func=startdown&id=4844. 27, 2015, https://www.jct.gov/publications.html?func=startdown&id=4844.
54 Joint Committee on 54 Joint Committee on ~~T axation~~Taxation, , Macroeconomic Analysis of the Conference Agreement for H.R. 1, The “Tax Cuts and
Jobs Act,” JCX-69-17, December 22, 2017, at https://www.jct.gov/publications.html?func=startdown&id=5055. JCX-69-17, December 22, 2017, at https://www.jct.gov/publications.html?func=startdown&id=5055.
55 Joint Committee on 55 Joint Committee on ~~T axation,~~ Taxation, Macroeconomic Analysis of H.R. 6760, The “Protecting Family and Small Business
Tax Cuts Act of 2018,” as Reported by the Committee on Ways and Means, JCX-79-18, September 26, 2018, , JCX-79-18, September 26, 2018,
https://www.jct.gov/publications.html?func=startdown&id=5145. https://www.jct.gov/publications.html?func=startdown&id=5145.
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provisions). JCT used the MEG model and CBO used its Solow model along with its short-term provisions). JCT used the MEG model and CBO used its Solow model along with its short-term
model, each with a single set of labor supply responses.56model, each with a single set of labor supply responses.56
CBO had been preparing macroeconomic analyses of the President’s budget since 2003, reporting CBO had been preparing macroeconomic analyses of the President’s budget since 2003, reporting
the results from multiple models and assumptions. When CBO prepared its standard analysis of the results from multiple models and assumptions. When CBO prepared its standard analysis of
the President’s budget in 2015 and 2016, the analysis continued to report the results from both the President’s budget in 2015 and 2016, the analysis continued to report the results from both
models, along with estimates of immigration’s effect on productivity, with sensitivity analysis models, along with estimates of immigration’s effect on productivity, with sensitivity analysis
within the models leading to 16 different estimated effects on GDP over 10 years ranging from within the models leading to 16 different estimated effects on GDP over 10 years ranging from
0.7% to 2.8%.57 CBO has not prepared any subsequent macroeconomic analyses of the 0.7% to 2.8%.57 CBO has not prepared any subsequent macroeconomic analyses of the
President’s budget. President’s budget.
Considerations for Congress
Currently, no House or Senate rules explicitly require the preparation or use of dynamic Currently, no House or Senate rules explicitly require the preparation or use of dynamic
estimates, and Congress may choose to examine what rules changes, if any, are needed in the area estimates, and Congress may choose to examine what rules changes, if any, are needed in the area
of dynamic estimates. of dynamic estimates.
While committees and Members continue to have the ability to request that CBO or JCT provide While committees and Members continue to have the ability to request that CBO or JCT provide
dynamic estimates for certain policies or legislativedynamic estimates for certain policies or legislative proposals, at some point Congress may proposals, at some point Congress may
choose to reinstitute explicit rules related to such dynamic estimates. These requirements could be choose to reinstitute explicit rules related to such dynamic estimates. These requirements could be
articulated as formal direction from the committees of jurisdiction or leadership to JCT and CBO. articulated as formal direction from the committees of jurisdiction or leadership to JCT and CBO.
Alternatively,Alternatively, as was done previously, these requirements might be included in chamber rules or as was done previously, these requirements might be included in chamber rules or
in budget resolutions, or might be included in a standing order or in statute. in budget resolutions, or might be included in a standing order or in statute.
If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to
consider many facets of such potential rules: consider many facets of such potential rules:
  ~~Wil~~ Will there be a threshold for the creation of such estimates? Should the proposal there be a threshold for the creation of such estimates? Should the proposal
also also ~~al ow~~allow the legislation the legislation to be designated as “major” by either majority or to be designated as “major” by either majority or
minority committee and/or chamber leadership? Should CBO and JCT provide minority committee and/or chamber leadership? Should CBO and JCT provide
dynamic estimates only for “major proposals,” such as those that have a large dynamic estimates only for “major proposals,” such as those that have a large
estimated budgetary impact? If so, what estimated budgetary impact? If so, what ~~wil~~ would be the threshold for major? Past be the threshold for major? Past
rules have used a measure equal to 0.25% of GDP. Would the effect on GDP be rules have used a measure equal to 0.25% of GDP. Would the effect on GDP be
measured by the entire legislation, or would it be triggered by an individual measured by the entire legislation, or would it be triggered by an individual
provision or group of provisions (such as revenue raisers or revenue losers in a provision or group of provisions (such as revenue raisers or revenue losers in a
tax tax ~~bil )~~ bill) that met the threshold? The latter approach would capture revenue-that met the threshold? The latter approach would capture revenue-
neutral legislation that nevertheless made significant changes that could affect neutral legislation that nevertheless made significant changes that could affect
GDP.GDP.
 Should rules for dynamic estimates apply to spending as  Should rules for dynamic estimates apply to spending as ~~wel~~ well as revenue as revenue
proposals since both have the potential to cause notable macroeconomic proposals since both have the potential to cause notable macroeconomic
effects?58 And if the rule applies to spending, effects?58 And if the rule applies to spending, ~~wil~~ would it apply to discretionary it apply to discretionary
spending that varies from the baseline as spending that varies from the baseline as ~~wel~~ well as direct/mandatory spending? as direct/mandatory spending?

56 Congressional Budget56 Congressional Budget Office, Office, Budgetary and Economic Effects of Repealing the Affordable Care Act, June 2015, , June 2015,
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50252-effectsofacarepeal.pdf. https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50252-effectsofacarepeal.pdf.
57 Congressional Budget 57 Congressional Budget Office, Office, A Macroeconomic Analysis of the President’s 2017 Budget, June 6, 2016, , June 6, 2016,
https://www.cbo.gov/publication/51625. https://www.cbo.gov/publication/51625.
58 Elmendorf; Marron. 58 Elmendorf; Marron.
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 What information should be included in such estimates? Practices prior to 2015  What information should be included in such estimates? Practices prior to 2015
provided insight into how sensitive the results were to choice of model and provided insight into how sensitive the results were to choice of model and
parameters. The JCT has also continued to present information on the parameters parameters. The JCT has also continued to present information on the parameters
of its models that lead to behavioral responses.59 The justification for assigning of its models that lead to behavioral responses.59 The justification for assigning
model weights might also be addressed in more detail.model weights might also be addressed in more detail.
 Should dynamic estimates be used only for informational purposes, or also for  Should dynamic estimates be used only for informational purposes, or also for
enforcement purposes? Dynamic estimates enforcement purposes? Dynamic estimates ~~al ow~~allow Congress to weigh the merits of Congress to weigh the merits of
the legislation—should they also be used to determine whether the legislation the legislation—should they also be used to determine whether the legislation
complies with the budgetary rules that Congress has created for itself? complies with the budgetary rules that Congress has created for itself?
 Should additional  Should additional resources be provided to CBO and JCT so that they might resources be provided to CBO and JCT so that they might
develop greater capacity for providing dynamic estimates? develop greater capacity for providing dynamic estimates?

59 Recent estimates have not59 Recent estimates have not~~, however,~~ provided sufficient information to derive labor supply elasticities from the provided sufficient information to derive labor supply elasticities from the
~~DSGE~~ DSGE model to compare to other models. model to compare to other models. ~~T he~~The functional form of the utility function, which is often separable in functional form of the utility function, which is often separable in
consumption and leisure,consumption and leisure, needs to be provided, as wellneeds to be provided, as well as the intertemporal and intratemporal parameters. For a as the intertemporal and intratemporal parameters. For a
~~discussion~~ discussion of the translation of these parameters into elasticities in prior models, seeof the translation of these parameters into elasticities in prior models, see ~~CRS~~ CRS Report R43381, Report R43381, ~~Dynam ic~~
Dynamic Scoring for Tax Legislation: A Review of Models, by Jane G., by Jane G. Gravelle. Gravelle.
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Appendix. Dynamic Estimates Conducted by the
Joint Committee on Taxation and the Congressional
Budget Office
Table A-1. Point Estimates Provided by JCT and/or CBO Incorporating
Macroeconomic Effects
Legislation
Estimate
S. 1946 (114th Congress): Tax S. 1946 (114th Congress): Tax
Staff of the JCT, Staff of the JCT, A Report to the Congressional Budget Office of the Macroeconomic
Relief Extension Act of 2015 Relief Extension Act of 2015
Effects of the “Tax Relief Extension Act of 2015,” as Ordered to Be Reported by the
Senate Committee on Finance, JCX-107-15, August 4, 2015, https://www.jct.gov/, JCX-107-15, August 4, 2015, https://www.jct.gov/
publications/2015/jcx-107-15/. publications/2015/jcx-107-15/.
CBO, CBO, Tax Relief Extension Act of 2015, August 4, 2015, https://www.cbo.gov/, August 4, 2015, https://www.cbo.gov/
publication/50704. publication/50704.
H.R. 2510 (114th Congress): To H.R. 2510 (114th Congress): To
Staff of the JCT, A Report to the Congressional Budget Office of the Staff of the JCT, A Report to the Congressional Budget Office of the
amend the Internal Revenue amend the Internal Revenue
Macroeconomic Macroeconomic Effects of H.R. 2510, “Bonus Depreciation Modified and Made Effects of H.R. 2510, “Bonus Depreciation Modified and Made
Code of 1986 to modify and Code of 1986 to modify and
Permanent,” as Ordered Permanent,” as Ordered to Be Reported by the House Committeeto Be Reported by the House Committee on Ways on Ways
make permanent bonus make permanent bonus
and Means, JCX-134-15, October 27, 2015, https://www.jct.gov/publications/ and Means, JCX-134-15, October 27, 2015, https://www.jct.gov/publications/
depreciation depreciation
2015/jcx-134-15/. 2015/jcx-134-15/.
CBO, CBO, H.R. 2510, A ~~Bil~~ Bill to Amend the Internal Revenue Code of 1986 to Modify and
Make Permanent Bonus Depreciation, August 4, 2015, https://www.cbo.gov/August 4, 2015, https://www.cbo.gov/
publication/50939. publication/50939.
H.R. 3762 (114th Congress): H.R. 3762 (114th Congress):
CBO, CBO, H.R. 3762, Restoring Americans’ ~~Healthcare~~ Healthcare Freedom Reconciliation Act of
Restoring Americans’ Restoring Americans’
2015, October 20, 2015, https://www.cbo.gov/publication/50918. , October 20, 2015, https://www.cbo.gov/publication/50918.
Healthcare Freedom Healthcare Freedom
Reconciliation Act of 2015 Reconciliation Act of 2015
H.R. 1 (115th Congress): Tax H.R. 1 (115th Congress): Tax
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis of the Conference Agreement for H.R. 1,
Cuts and Jobs Act Cuts and Jobs Act
the Tax Cuts and Jobs Act, JCX-69-17, December, JCX-69-17, December 22, 2017, https://www.jct.gov/22, 2017, https://www.jct.gov/
publications/2017/jcx-69-17/.a publications/2017/jcx-69-17/.a
H.R. 6760 (115th Congress): H.R. 6760 (115th Congress):
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis of H.R. 6760, the “Protecting Family and
Protecting Family Protecting Family ~~and Smal~~
~~Smal~~ and Small Small Business Tax Cuts Act of 2018,” as Reported by the Committee on Ways and
Business Business Tax Cuts Act of 2018 Tax Cuts Act of 2018
Means, JCX-79-18, September 26, 2018, https://www.jct.gov/publications/2018/, JCX-79-18, September 26, 2018, https://www.jct.gov/publications/2018/
jcx-79-18/. jcx-79-18/.
Sources: Congress.gov; the websites of the JCT and CBO. Congress.gov; the websites of the JCT and CBO.
Notes: As described above, As described above, ~~such~~ point estimatespoint estimates (as opposed to a range estimate)(as opposed to a range estimate) were required for were required for ~~such~~
~~dynamic estimates~~ dynamic estimates under the House and Senate rules in place between 2015 and 2018. This list may not be under the House and Senate rules in place between 2015 and 2018. This list may not be
comprehensive.comprehensive. It includes only those cost estimatesIt includes only those cost estimates that have been made public. In addition, it includes only that have been made public. In addition, it includes only
dynamic estimatesdynamic estimates that werethat were provided for specific legislationprovided for specific legislation and does not include macroeconomicand does not include macroeconomic analysis that analysis that
may have been provided for general polices or proposals (such as may have been provided for general polices or proposals (such as ~~the President’s budget request~~Congressional Budget Office, Effects of Physical Infrastructure Spending on the Economy and the Budget Under Two Illustrative Scenarios, August 2021). ).
a. Additional point estimatesa. Additional point estimates incorporating macroeconomicincorporating macroeconomic effects of H.R.effects of H.R. 1 were1 were issued for previous versions issued for previous versions
of the legislation. of the legislation. See the JCT website for moreSee the JCT website for more information.information.

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Table A-2. Estimates Provided by JCT Showing a Range of Possible Macroeconomic
Outcomes
Legislation
Estimate
H.R. 2 (108th Congress): Jobs H.R. 2 (108th Congress): Jobs
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis of H.R. 2, the Jobs and Growth
and Growth Tax Relief and Growth Tax Relief
Reconciliation Tax Act of 2003, May 8, 2003, https://www.jct.gov/publications/, May 8, 2003, https://www.jct.gov/publications/
Reconciliation Act of 2003 Reconciliation Act of 2003
2003/macroeconomic-analysis-for-the-jobs-and-growth-rec/. 2003/macroeconomic-analysis-for-the-jobs-and-growth-rec/.
H.R. 598 (111th Congress): To H.R. 598 (111th Congress): To
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis for the American Recovery and
provide for a portion of the provide for a portion of the
Reinvestment Tax Act of 2009, January 27, 2009, https://www.jct.gov/, January 27, 2009, https://www.jct.gov/
economic economic recovery package recovery package
publications/2009/macroeconomic-analysis-for-the-american-recovery-a/. publications/2009/macroeconomic-analysis-for-the-american-recovery-a/.
relating to revenue measures, relating to revenue measures,
unemployment,unemployment, and health and health
H.R. 3200 (111th Congress): H.R. 3200 (111th Congress):
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis for America’s Affordable Health Choices
America’s America’s Affordable Health Affordable Health
Act of 2009, October 14, 2009, https://www.jct.gov/publications/2009/, October 14, 2009, https://www.jct.gov/publications/2009/
Choices Act of 2009 Choices Act of 2009
macroeconomic-analysis-for-america’s-affordable-he/. macroeconomic-analysis-for-america’s-affordable-he/.
H.R. 1 (113th Congress): Tax H.R. 1 (113th Congress): Tax
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis of the “Tax Reform Act of 2014,” JCX- JCX-
Reform Act of 2014 Reform Act of 2014
22-14, February 26, 2014, https://www.jct.gov/publications/2014/jcx-22-14/. 22-14, February 26, 2014, https://www.jct.gov/publications/2014/jcx-22-14/.
H.R. 4718 (113th Congress): To H.R. 4718 (113th Congress): To
Staff of the JCT, Staff of the JCT, Macroeconomic Analysis for Bonus Depreciation Modified and
amend the Internal Revenue amend the Internal Revenue
Made Permanent,, July 15, 2014, https://www.jct.gov/publications/2014/July 15, 2014, https://www.jct.gov/publications/2014/
Code of 1986 to modify and Code of 1986 to modify and
macroeconomic-analysis-for-bonus-depreciation-modi/. macroeconomic-analysis-for-bonus-depreciation-modi/.
make permanent bonus make permanent bonus
depreciation depreciation
Sources: Congress.gov; the website of the JCT. Congress.gov; the website of the JCT.
Notes: As described above, rules requiring dynamic point estimates As described above, rules requiring dynamic point estimates (as opposed to a range estimate)(as opposed to a range estimate) were not were not
required until 2015. This list may not be comprehensive.required until 2015. This list may not be comprehensive. It includes only those cost estimatesIt includes only those cost estimates that have been that have been
made public. made public.
Table A-3. Estimates Provided by CBO That Include Partial Dynamic Estimates
Legislation
Estimate
S. 2611 (109th Congress): S. 2611 (109th Congress):
CBO, CBO, S. 2611, Comprehensive ~~Immigration~~ Immigration Reform Act of 2006, May 16, 2006, , May 16, 2006,
Comprehensive Comprehensive Immigration Immigration
https://www.cbo.gov/publication/17779. https://www.cbo.gov/publication/17779.
Reform Act of 2006 Reform Act of 2006
S. 744 (113th Congress): Border S. 744 (113th Congress): Border
CBO, CBO, S. 744, Border Security, Economic Opportunity, and Immigration
Security, Economic Security, Economic
Modernization Act, June 18, 2013, https://www.cbo.gov/publication/44225. , June 18, 2013, https://www.cbo.gov/publication/44225.
Opportunity, and Immigration Opportunity, and Immigration
Modernization Act Modernization Act
H.R. 2131 (113th Congress): H.R. 2131 (113th Congress):
CBO, CBO, H.R. 2131, Supplying Knowledge-based Immigrants and Lifting Levels of STEM
SKILLS SKILLS Visa Act Visa Act
Visas Act (SKILLS Visa Act), March 12, 2014, https://www.cbo.gov/publication/, March 12, 2014, https://www.cbo.gov/publication/
45179. 45179.
Source: Congress.gov; the website of the CBO. Congress.gov; the website of the CBO.
Notes: This list may not be comprehensive.This list may not be comprehensive. It includes only thoseIt includes only those cost estimatescost estimates that have been made public. that have been made public.
CBO has described the decision to include partial dynamic estimates.CBO has described the decision to include partial dynamic estimates. For example, in the cost estimate related For example, in the cost estimate related
to H.R. 2131, it stated, “to H.R. 2131, it stated, “~~Fol owing~~Following the long-standing convention of not incorporating macroeconomic the long-standing convention of not incorporating macroeconomic effects in effects in
cost estimates—acost estimates—a practice that has been practice that has been ~~fol owed~~followed in the Congressional budget process in the Congressional budget process since it was established in since it was established in
1974—cost estimates1974—cost estimates produced by CBO and JCT produced by CBO and JCT ~~typical y~~typically reflect the assumption that macroeconomic reflect the assumption that macroeconomic variables variables
such as gross domesticsuch as gross domestic product (GDP) and employmentproduct (GDP) and employment ~~remain~~ remain fixed at the values they are projected to reach fixed at the values they are projected to reach
under current law. However,under current law. However, because H.R. 2131 would because H.R. 2131 would ~~material y~~ materially increase the size of the U.S.increase the size of the U.S. labor force,labor force, CBO CBO
and JCT relaxed that assumption by incorporating in this cost estimate their projectionsand JCT relaxed that assumption by incorporating in this cost estimate their projections of the direct effects of of the direct effects of
the the ~~bil~~ bill on the U.S. population, employment,on the U.S. population, employment, and taxable compensation.” and taxable compensation.”
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Author Information

Megan S. Lynch Megan S. Lynch
Jane G. Gravelle Jane G. Gravelle
Specialist on Congress and the Legislative Process Specialist on Congress and the Legislative Process
Senior Specialist in Economic Policy Senior Specialist in Economic Policy

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