Whenever a bill is drafted by a congressional committee or legislator for consideration, an entity called the Congressional Budget Office scores the bill. The CBO’s job is essentially to say how much a bill will cost if implemented into law and has been performing this role since it was created in 1974 by the Congressional Budget and Impoundment Control Act of 1974. For being an entity largely unknown to the American people, the CBO has essentially served as the referee for many political fights over the budget and spending. In the days of the healthcare debate, a projection by the CBO that the Affordable Care Act would decrease the deficit caused many Republicans to decry the supposed impartiality of the agency. The RNC Chairman of the time, Michael Steele, responded to the score by saying, “I have three words for you: that’s a lie.” Democrats used the CBO numbers to help sell the plan and arguably would not have been able to had the CBO projection came in differently.
The CBO currently functions as an apolitical entity, and for all intents and purposes is an extremely complex calculator whose function is to not prescribe policy recommendations. It is for this reason the CBO does not take into account macroeconomic factors.
For some time, Republican legislators have sought to change this rule, even passing legislation in 2014 to do it in the House of Representatives. Now that Republicans control both houses of Congress, it is increasingly likely they will push for a change to the way the CBO operates, allowing for what is called “dynamic scoring.”
Dynamic scoring would allow the CBO to take into effect macroeconomic factors like tax cuts. The vast majority of lawmakers in the Republican Party believe that tax cuts help spur economic growth and enacting them could lead to additional revenue for the government from that economic growth. Under previous CBO rules, a tax cut of $800 billion would simply be scored as an $800 billion addition to the budget deficit. Under the proposed rule change backed by the Republican leadership, an $800 billion tax cut would not necessarily be an additional $800 billion added to the deficit because some of the cost would be offset by economic growth that is the result of tax cuts.
Although the debate is highly technical, the change would be the biggest change to how we calculate government expenditures in over 40 years. Most Democrats do not agree that tax cuts bring in additional revenue and would view the move as a massive power grab by the Republicans to politicize the CBO and it is likely Obama would veto such a change. What remains more likely is Senate Democrats block the measure from even being voted on by denying the votes needed for cloture.
“Dynamic scoring” is a term that America will likely get to know very well in the coming months. If the CBO’s rules are changed the Republicans will have their first major legislative victory in the 114th Congress, and we’ll see a major change in all upcoming spending battles.