Score-Keeping and Spending

Research Report

Score-Keeping and Spending

April 7, 2003

Abstract

Dynamic score-keeping -- the recording of budget feedback effects as people react to government actions such as tax cuts -- is a hot topic again, fueled in part by the recent release of a Congressional Budget Office study of the revenue effects of the president's tax proposals. The topic is also one of the most misunderstood. Some Republicans like to believe that almost any tax rate cut has very large feedback effects that make its costs significantly lower. Some Democrats like to believe that there is no issue here worth discussing. As is usual when an issue becomes politicized to this extent, things are more complicated than they appear.

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