Dynamic Scoring Resource Guide

The Congressional Budget Office, the official arbiter of fiscal policy, provides budget estimates for legislation before both chambers of Congress, a process also known as scoring. CBO incorporates micro-dynamic analysis — looking at the effects of changes in behavior, supply and demand, and the timing of certain decisions – in official estimates but does not include changes in macro-economic variables such as labor supply or private investment that could affect total economic output. The Joint Committee on Taxation (JCT) uses similar methods to CBO in preparing estimates of revenue legislation. This is the practice that has been followed since the modern Congressional budget process was established in 1974.

There is increased interest in adopting dynamic scoring as a potential addition to the official scoring process. Dynamic scoring would incorporate the macro-economic impact of policy changes on the overall economy and the secondary “feedback effects” that occur as a result of these changes to the overall economy. This would require estimators to choose and refine an economic model to estimate macro-economic effects, an area where there is not a clear consensus among experts about the assumptions that should be used. CRFB recently held an event discussing dynamic scoring with policymakers.

There are important arguments made both for and against dynamic scoring.  The CRFB paper "Understanding Dynamic Scoring" has outlined these arguments.

Arguments for dynamic scoring include:

  1. Dynamic scoring provides valuable information about the economic effects of legislation omitted from conventional scores.
  2. Conventional estimates create a bias against pro-growth policies by disregarding economic effects.
  3. Policymakers should take advantage of better technology and information.

Arguments against dynamic scoring include:

  1. Dynamic scoring is very sensitive to assumptions, including assumptions about future policy changes, and there is no consensus among economists about the best assumptions to use.
  2. Producing dynamic scores could impose an impractical workload on CBO.
  3. Dynamic scoring could undermine estimators’ credibility.

Below are resources on dynamic scoring, including background, support and opposition, and examples of dynamic analyses that CBO and JCT have done.

Background on Dynamic Scoring

Additional CRFB Resources on Dynamic Scoring

Other Informative Sources in Favor of Dynamic Scoring

 Other Informative Sources Opposed to Dynamic Scoring

Older Dynamic Scoring References