[Congressional Record Volume 149, Number 45 (Thursday, March 20, 2003)]
[Senate]
[Pages S4172-S4173]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENSIGN (for himself, Mr. Sessions, Mr. Crapo, and Mr. 
        Kyl):
  S. 675. A bill to require the Congressional Budget Office and the 
Joint Committee on Taxation to use dynamic economic modeling in 
addition to static economic modeling in the preparation of budgetary 
estimates of proposed changes in Federal revenue law; to the Committee 
on Governmental Affairs and the Committee on the Budget, jointly, 
pursuant to the order of August 4, 1977, with instructions that if one 
Committee reports, the other Committee have thirty days to report or be 
discharged.
  Mr. ENSIGN. Mr. President, I rise today to introduce legislation to 
instruct the Joint Committee on Taxation and the Congressional Budget 
Office to employ dynamic scoring models, alongside static scoring when 
estimating the fiscal effect of tax policy changes.
  For too long, Congress has debated tax changes without considering 
how those changes might affect the economy.
  The current method, static scoring, assumes tax cuts or tax hikes 
have no effect on how taxpayers work, save and invest their money. Not 
surprisingly, experience shows this assumption is completely off-base. 
The idea that tax relief and investment incentives strengthen our 
economy is not new to the 21st Century.
  On April 15, 1986, President Reagan talked about the positive effect 
of tax relief on economic growth. He stated:

       Whatever you want to call it, supply side economics or 
     incentive economics . . . it's launching the American economy 
     into a new era of growth and opportunity . . . Our basic 
     ingredients for a tax package have not changed: tax rate 
     reductions, thresholds high enough so hard-working Americans 
     aren't pushed relentlessly into higher brackets, some long-
     overdue tax relief for America's families, and investment 
     incentives for business. . .

  What President Reagan stated so eloquently in 1986 holds true today. 
Economic growth is more easily achieved in an atmosphere where more 
Americans are able to save and invest their money. Tax relief provides 
economic growth, and when we draft legislation, we should understand 
not just the cost of tax relief to the Federal budget, but also the 
benefits that tax relief provides to the economy and the long-term 
increase in revenues to the federal government that tax relief can 
provide.
  The current static estimates that we use imply that tax policy 
changes have no effect on our economy, never produce higher or lower 
revenues and never cause resources to shift within our federal budget. 
This is simply incorrect. Tax policy changes can have a huge impact on 
our economy.
  The belief that tax policy changes directly impact our economy is not 
just a Republican ideal.
  In 1962, President John F. Kennedy remarked:

       It is increasingly clear that no matter what party is in 
     power, so long as our national security needs keep rising, an 
     economy hampered by restrictive tax rates will never produce 
     enough jobs or enough profits.

  Tax relief provides jobs and profits, no matter who is in the White 
House and no matter who holds the majority in Congress. It is time that 
Congress looks at the real world implications of our tax policy before 
we decide the overall cost and how much relief we can afford to give to 
American families.
  The debate on dynamic versus static scoring may sound like an inside-
the-Beltway squabble, but as I have said today, the decision on how to 
estimate revenues does have important real world implications.
  For example, better revenue estimating methods would make it easier 
to implement tax rate reductions. This would put more money into the 
pockets of taxpayers, which would have a very real positive affect on 
our economy.
  Another example, shifting to a more simple, fair tax code would be 
less difficult if revenue estimators were allowed to consider the 
positive impact of tax reform on economic performance. Clearly a 
simplified tax code would affect each and every tax paying American.
  American families face the challenge of paying their tax burden; 
providing food, clothing and shelter for their children; and must work 
even harder to have money leftover so they can afford to pay their 
medical bills, enjoy a family vacation, save for education costs, or 
put money away for retirement.
  We know that when government takes money away from working families, 
it stifles growth. We also know that when the government gives money 
back to the working families that earned it, we encourage growth.
  I should clarify that this legislation does not negate the Congress' 
use of the currently used static scoring model. This bill simply 
directs OMB and the Joint Tax Committee to use both static and dynamic 
scoring.
  This will create a system that will allow Congress a slide-by-slide 
analysis of both scoring methods. In a Washington Post editorial on 
January 31, it was suggested that dynamic scoring could be useful as a 
way to present tax or spending policies as an additional alternative 
scenario. The editorial states that it would do no harm to the 
traditional way that CBO goes about its job to set up a dual scoring 
method. This is not, as some of my colleagues on the other side of the 
aisle have suggested, ``fantasyland scoring.''
  By using both static and dynamic scoring methods, Mr. President, 
through time we will all understand which approach is more realistic, 
and only then, I believe, can we then confidently do away with the 
antiquated, unrealistic static model we use today.
  I ask unanimous consent that the text of the bill be printed in the 
Record.

                                 S. 675

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SENSE OF CONGRESS.

       It is the sense of Congress that it is necessary to ensure 
     that Congress is presented with reliable information from the 
     Congressional Budget Office and the Joint Committee on 
     Taxation as to the dynamic macroeconomic feedback effects to 
     changes in Federal law and the probable behavioral responses 
     of taxpayers, businesses, and other parties to such changes. 
     Specifically, the Congress intends that, while not excluding 
     any other estimating method, dynamic estimating techniques 
     shall also be used in estimating the fiscal impact of 
     proposals to change Federal laws, to the extent that data are 
     available to permit estimates to be made in such a manner.

     SEC. 2. ESTIMATES OF THE JOINT COMMITTEE ON TAXATION.

       In addition to any other estimates it may prepare of any 
     proposed change in Federal revenue law, a fiscal estimate 
     shall be prepared by the Joint Committee on Taxation of each 
     such proposed change on the basis of assumptions that 
     estimate the probable behavioral responses of personal and 
     business taxpayers and other relevant entities to that 
     proposed change and the dynamic macroeconomic feedback 
     effects of that proposed change. The preceding sentence shall 
     apply only to a proposed change that the Joint

[[Page S4173]]

     Committee on Taxation determines, pursuant to a static fiscal 
     estimate, has a fiscal impact in excess of $250,000,000 in 
     any fiscal year.

     SEC. 3. ESTIMATES OF THE CONGRESSIONAL BUDGET OFFICE.

       In addition to any other estimates it may prepare of any 
     proposed change in Federal revenue law, a fiscal estimate 
     shall be prepared by the Congressional Budget Office of each 
     such proposed change on the basis of assumptions that 
     estimate the probable behavioral responses of personal and 
     business taxpayers and other relevant entities to that 
     proposed change and the dynamic macroeconomic feedback 
     effects of that proposed change. The preceding sentence shall 
     apply only to a proposed change that the Congressional Budget 
     Office determines, pursuant to a static fiscal estimate, has 
     a fiscal impact in excess of $250,000,000 in any fiscal year.

     SEC. 4. DISCLOSURE OF ASSUMPTIONS.

       Any report to Congress or the public made by the Joint 
     Committee on Taxation or the Congressional Budget Office that 
     contains an estimate made under this Act of the effect that 
     any legislation will have on revenues shall be accompanied 
     by--
       (1) a written statement fully disclosing the economic, 
     technical, and behavioral assumptions that were made in 
     producing that estimate, and
       (2) the static fiscal estimate made with respect to the 
     same legislation and a written statement of the economic, 
     technical, and behavioral assumptions that were made in 
     producing that estimate.

     SEC. 5. CONTRACTING AUTHORITY.

       In performing the tasks specified in this Act, the Joint 
     Committee on Taxation and the Congressional Budget Office 
     may, subject to the availability of appropriations, enter 
     into contracts with universities or other private or public 
     organizations to perform such estimations or to develop 
     protocols and models for making such estimates.
                                 ______