Republican plans to use a method of budget-keeping that will lower the estimated budgetary costs of tax cuts are getting modest support from economists.
In a survey of top economists conducted by the IGM Forum at the University of Chicago published Tuesday, a plurality responded that using so-called dynamic scoring would improve tax revenue estimates.
The controversial budgeting method incorporates the feedback in tax revenues that would follow economic growth that resulted from tax changes. Using conventional “static” analysis, in comparison, the added economic growth from tax cuts is assumed to be zero.
House Republicans established a rule for the current session of Congress that would require dynamic analysis from Congress’ in-house budget scorekeepers for major tax legislation, a move that Democrats warned would lead to bigger deficits.
But 47 percent of the economists surveyed by the IGM forum agreed that dynamic analysis for major bills would “probably be more accurate.”
“The estimates would not be perfect but they would be better than assuming no response,” Harvard economist Oliver Hart noted in the survey.
Twenty-two of the respondents disagreed that dynamic analysis would improve the revenue projections issued by the Congressional Budget Office and Joint Committee on Taxation.
Implementing dynamic analysis “would open the process up to political shenanigans of the worst kind,” wrote Austan Goolsbee, a professor at the University of Chicago and former economic adviser to President Barack Obama.
Twenty-one percent of respondents said they were uncertain about whether dynamic analysis would improve projections, some noting that it would depend on which estimates of tax effects would be used.
The IGM Forum regularly polls top academics on economics topics in the news. It is not a scientific survey of all economists.
