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Republicans to push ahead on new math for U.S. taxes, budget

WASHINGTON (Reuters) – As Republicans assume control of the entire U.S. Congress in the new year, they are expected to push a controversial change to use more macroeconomic projections in determining the impact of tax and budget legislation on the federal deficit.

Critics say wider use of “dynamic scoring,” as the Republican-favored approach is known, would introduce new uncertainties into fiscal policy and degrade the value of present analysis now done by Capitol Hill staff experts.

Republican advocates argue it would make fiscal analysis better reflect what they call economic realities. Dynamic scoring, as they envision it, would assume that lower tax rates boost growth, offsetting some lost revenue.

The “scoring” of tax and budget bills matters because it can influence whether a bill becomes law. Lawmakers shy from measures that would balloon the deficit. So any math that makes scores look less worrisome has political appeal.

House Republicans were scheduled to meet on Monday to consider rules for the new Congress that convenes in January. One proposed rule, quietly unveiled two days before Christmas, is to require more dynamic scoring.

The top Democrat on the tax-writing House Ways and Means Committee has been sharply critical of this approach.

“In the guise of dynamic scoring, Republicans are trying to rig the system in ways that can be very destructive,” said Michigan Democrat Sander Levin in a recent statement.

“The proposed change would undermine fiscal responsibility and further embrace Republican trickle-down economics,” he said.

At the moment, when a U.S. lawmaker wants to raise or lower a tax or change the budget, the proposal has to be “scored” by the non-partisan staff experts of Congress’s Joint Committee on Taxation (JCT) or the Congressional Budget Office (CBO).

JCT and CBO scores estimate how much a proposal will raise or lower projected government revenues and spending, a crucial factor when considering such measures because of the large federal budget deficit.

Scores currently are based on projected alterations in behavior due to changes in tax law and the budget, but not on changes in the broad economy. For instance, standard JCT scores hold gross domestic product (GDP) constant. GDP measures the economy’s total output.

Dynamic scoring, as Republicans urge, would include more projected macroeconomic impacts.

JCT is already doing some of this, under 2003 orders from Congress, in supplemental materials it issues, but it does not include the results of dynamic scoring in official scores.

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