Dynamic Scoring and Budget Estimations

Research Report

Dynamic Scoring and Budget Estimations

June 11, 2002

Abstract

Dynamic scoring is meant to provide a more complete picture of the budget effects of tax and spending proposals by incorporating the macroeconomic effects of the legislation. Official estimates already account for the microeconomic effects on individual behavior. Incorporating macroeconomic feedback effects to reflect how policies might affect economic growth would be, in theory, desirable. In practice, however, dynamic scoring would not improve the reliability of budget estimates. Because the process would necessarily require many subjective decisions, it would also risk opening up the scoring agencies to criticism of bias.

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