    [House Report 112-377]
    [From the U.S. Government Publishing Office]

    112th Congress                                            Rept. 112-377
                            HOUSE OF REPRESENTATIVES
     2d Session                                                      Part 1
    _______________________________________________________________________

                        PRO-GROWTH BUDGETING ACT OF 2012

                                   __________

                                  R E P O R T

                                     of the

                            COMMITTEE ON THE BUDGET

                            HOUSE OF REPRESENTATIVES

                                  to accompany

                                   H.R. 3582

                                 together with

                         MINORITY AND DISSENTING VIEWS

    January 30, 2012.--Committed to the Committee of the Whole House on the
                  State of the Union and ordered to be printed
                            COMMITTEE ON THE BUDGET

                         PAUL RYAN, Wisconsin, Chairman
    SCOTT GARRETT, New Jersey            CHRIS VAN HOLLEN, Maryland,
    MICHAEL K. SIMPSON, Idaho              Ranking Minority Member
    JOHN CAMPBELL, California            ALLYSON Y. SCHWARTZ, Pennsylvania
    KEN CALVERT, California              MARCY KAPTUR, Ohio
    W. TODD AKIN, Missouri               LLOYD DOGGETT, Texas
    TOM COLE, Oklahoma                   EARL BLUMENAUER, Oregon
    TOM PRICE, Georgia                   BETTY McCOLLUM, Minnesota
    TOM McCLINTOCK, California           JOHN A. YARMUTH, Kentucky
    JASON CHAFFETZ, Utah                 BILL PASCRELL, Jr., New Jersey
    MARLIN A. STUTZMAN, Indiana          MICHAEL M. HONDA, California
    JAMES LANKFORD, Oklahoma             TIM RYAN, Ohio
    DIANE BLACK, Tennessee               DEBBIE WASSERMAN SCHULTZ, Florida
    REID J. RIBBLE, Wisconsin            GWEN MOORE, Wisconsin
    BILL FLORES, Texas                   KATHY CASTOR, Florida
    MICK MULVANEY, South Carolina        HEATH SHULER, North Carolina
    TIM HUELSKAMP, Kansas                PAUL TONKO, New York
    TODD C. YOUNG, Indiana               KAREN BASS, California
    JUSTIN AMASH, Michigan
    TODD ROKITA, Indiana
    FRANK C. GUINTA, New Hampshire
    ROB WOODALL, Georgia

                               Professional Staff

                         Austin Smythe, Staff Director
                    Thomas S. Kahn, Minority Staff Director

                                C O N T E N T S

                                                                       Page
    Pro-Growth Budgeting Act of 2012.................................     1
        Introduction.................................................     3
        Summary of Proposed Changes..................................     3
        Legislative History..........................................     5
        Hearings.....................................................     5
        Purpose and Need.............................................     5
        Section by Section...........................................     6
        Votes of the Committee.......................................     8
        Committee Oversight Findings.................................    10
        Budget Act Compliance........................................    10
        Performance Goals and Objectives.............................    11
        Constitutional Authority Statement...........................    11
        Committee Cost Estimate......................................    11
        Advisory Committee Statement.................................    12
        Applicability to the Legislative Branch......................    12
        Federal Mandates Statement...................................    12
        Advisory on Earmarks.........................................    12
        Changes in Existing Law Made by the Bill, as Reported........    12
        Jurisdiction.................................................    15
        Views of Committee Members...................................    15
            Minority Views...........................................    16
            Dissenting Views.........................................    18

    112th Congress                                            Rept. 112-377
                            HOUSE OF REPRESENTATIVES
     2d Session                                                      Part 1

    ======================================================================

                        PRO-GROWTH BUDGETING ACT OF 2012

                                    _______

    January 30, 2012.--Committed to the Committee of the Whole House on the
                  State of the Union and ordered to be printed

                                    _______

    Mr. Ryan of Wisconsin, from the Committee on the Budget, submitted the
                                   following

                                  R E P O R T

                                 together with

                         MINORITY AND DISSENTING VIEWS

                            [To accompany H.R. 3582]

          [Including cost estimate of the Congressional Budget Office]

        The Committee on the Budget, to whom was referred the bill
    (H.R. 3582) to amend the Congressional Budget Act of 1974 to
    provide for macroeconomic analysis of the impact of
    legislation, having considered the same, report favorably
    thereon with an amendment and recommend that the bill as
    amended do pass.
        The amendment is as follows:
      Strike all after the enacting clause and insert the
    following:

    SECTION 1. SHORT TITLE.

      This Act may be cited as the ``Pro-Growth Budgeting Act of 2012''.

    SEC. 2. MACROECONOMIC IMPACT ANALYSES.

      (a) In General.--Part A of title IV of the Congressional Budget Act
    of 1974 is amended by adding at the end the following new section:
              ``macroeconomic impact analysis of major legislation
      ``Sec. 407.  (a) Congressional Budget Office.--The Congressional
    Budget Office shall, to the extent practicable, prepare for each major
    bill or resolution reported by any committee of the House of
    Representatives or the Senate (except the Committee on Appropriations
    of each House), as a supplement to estimates prepared under section
    402, a macroeconomic impact analysis of the budgetary effects of such
    bill or resolution for the ten fiscal-year period beginning with the
    first fiscal year for which an estimate was prepared under section 402
    and each of the next three ten fiscal-year periods. Such estimate shall
    be predicated upon the supplemental projection described in section
    202(e)(4). The Director shall submit to such committee the
    macroeconomic impact analysis, together with the basis for the
    analysis. As a supplement to estimates prepared under section 402, all
    such information so submitted shall be included in the report
    accompanying such bill or resolution.
      ``(b) Economic Impact.--The analysis prepared under subsection (a)
    shall describe the potential economic impact of the applicable major
    bill or resolution on major economic variables, including real gross
    domestic product, business investment, the capital stock, employment,
    and labor supply. The analysis shall also describe the potential fiscal
    effects of the bill or resolution, including any estimates of revenue
    increases or decreases resulting from changes in gross domestic
    product. To the extent practicable, the analysis should use a variety
    of economic models in order to reflect the full range of possible
    economic outcomes resulting from the bill or resolution. The analysis
    (or a technical appendix to the analysis) shall specify the economic
    and econometric models used, sources of data, relevant data
    transformations, and shall include such explanation as is necessary to
    make the models comprehensible to academic and public policy analysts.
      ``(c) Definitions.--As used in this section--
              ``(1) the term `macroeconomic impact analysis' means--
                      ``(A) an estimate of the changes in economic output,
                    employment, capital stock, and tax revenues expected to
                    result from enactment of the proposal;
                      ``(B) an estimate of revenue feedback expected to
                    result from enactment of the proposal; and
                      ``(C) a statement identifying the critical
                    assumptions and the source of data underlying that
                    estimate;
              ``(2) the term `major bill or resolution' means any bill or
            resolution if the gross budgetary effects of such bill or
            resolution for any fiscal year in the period for which an
            estimate is prepared under section 402 is estimated to be
            greater than .25 percent of the current projected gross
            domestic product of the United States for any such fiscal year;
              ``(3) the term `budgetary effect', when applied to a major
            bill or resolution, means the changes in revenues, outlays,
            deficits, and debt resulting from that measure; and
              ``(4) the term `revenue feedback' means changes in revenue
            resulting from changes in economic growth as the result of the
            enactment of any major bill or resolution.''.
      (b) Conforming Amendment.--The table of contents set forth in section
    1(b) of the Congressional Budget Act of 1974 is amended by inserting
    after the item relating to section 406 the following new item:

    ``Sec. 407. Macroeconomic impact analysis of major legislation.''.

    SEC. 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

      Section 202(e) of the Congressional Budget Act of 1974 is amended by
    adding at the end the following new paragraphs:
              ``(4)(A) After the President's budget submission under
            section 1105(a) of title 31, United States Code, in addition to
            the baseline projections, the Director shall submit to the
            Committees on the Budget of the House of Representatives and
            the Senate a supplemental projection assuming extension of
            current tax policy for the fiscal year commencing on October 1
            of that year with a supplemental projection for the 10 fiscal-
            year period beginning with that fiscal year, assuming the
            extension of current tax policy.
              ``(B) For the purposes of this paragraph, the term `current
            tax policy' means the tax policy in statute as of December 31
            of the current year assuming--
                      ``(i) the budgetary effects of measures extending the
                    Economic Growth and Tax Relief Reconciliation Act of
                    2001;
                      ``(ii) the budgetary effects of measures extending
                    the Jobs and Growth Tax Relief Reconciliation Act of
                    2003;
                      ``(iii) the continued application of the alternative
                    minimum tax as in effect for taxable years beginning in
                    2011 pursuant to title II of the Tax Relief,
                    Unemployment Insurance Reauthorization, and Job
                    Creation Act of 2010, assuming that for taxable years
                    beginning after 2011 the exemption amount shall equal--
                              ``(I) the exemption amount for taxable years
                            beginning in 2011, as indexed for inflation; or
                              ``(II) if a subsequent law modifies the
                            exemption amount for later taxable years, the
                            modified exemption amount, as indexed for
                            inflation; and
                      ``(iv) the budgetary effects of extending the estate,
                    gift, and generation-skipping transfer tax provisions
                    of title III of the Tax Relief, Unemployment Insurance
                    Reauthorization, and Job Creation Act of 2010.
              ``(5) On or before July 1 of each year, the Director shall
            submit to the Committees on the Budget of the House of
            Representatives and the Senate, the Long-Term Budget Outlook
            for the fiscal year commencing on October 1 of that year and at
            least the ensuing 40 fiscal years.''.

                                  Introduction

        H.R. 3582, the ``Pro-Growth Budgeting Act of 2012'' was
    introduced by Representative Price of Georgia. Economists from
    across the ideological spectrum agree that legislation
    considered by Congress can have significant effects on economic
    growth. While the Congressional Budget and Impoundment Control
    Act of 1974 (Congressional Budget Act) requires that the
    Congressional Budget Office (CBO) provide Congress with
    information on the fiscal impact of all legislation reported
    from committee, there is no systematic requirement for analysis
    of the economic impact of legislation. This bill remedies that
    shortcoming.
        The economic recovery from the recession in 2008 and 2009
    has been unsatisfactory on nearly all fronts despite the
    unprecedented amount of debt-financed government spending aimed
    at boosting output and creating jobs. Real gross domestic
    product (GDP) grew by just 1.6 percent last year, roughly half
    the historical trend rate of U.S. growth and just a fraction of
    the growth pace observed in a typical recovery from recession.
    The unemployment rate, although it has ticked down recently,
    remains unacceptably high at 8.5 percent and of the 8.6 million
    jobs lost during the recession and aftermath, less than one-
    third have been recovered.
        Economists now estimate that with such subpar economic
    growth the unemployment rate will probably not return to its
    pre-recession level until very late in the decade. It is clear
    that one of the key drags on the economy is the enormous amount
    of policy uncertainty generated by Washington, which makes
    businesses unable to predict their future costs, tax liability
    and profits, making them wary about investing, expanding and
    hiring. This uncertainty has been generated by a host of tax
    and legal mandates soon to take effect as a result of recently-
    passed health care legislation as well as the new regulatory
    burdens, some of which have yet to come into effect, contained
    in the Dodd-Frank Wall Street and Consumer Protection Act.

                          Summary of Proposed Changes

        The bill requires CBO to produce a supplemental
    macroeconomic analysis for major legislation that would
    describe the likely impact of such legislation on key economic
    variables such as business investment, the capital stock,
    employment, labor supply, and real Gross Domestic Product
    (GDP). Importantly, this analysis would reflect both the short-
    term and long-term economic impact as the specified horizon for
    the analysis would be four decades (i.e. three decades beyond
    the typical 10-year budget window), allowing policymakers to
    judge whether or not considered policies would have a net
    positive or net negative economic impact over time. Likewise,
    the analysis would include estimates of revenue increases or
    decreases resulting from changes in real GDP, which, as a
    supplement to a traditional cost estimates, would help
    policymaker's better understand the full budget, as well as
    economic, impact of legislation.
        The Act defines major legislation by the gross changes in
    fiscal aggregates the legislation would cause as a percentage
    of the economy. It defines a ``major bill or resolution'' as
    legislation causing a change in revenues, outlays, deficits, or
    debt in excess of 0.25 percent of GDP within the 10-year budget
    window. The Act relies on the analysis CBO is already required
    to conduct under section 402 of the Congressional Budget Act
    which uses the so-called current law baseline.
        Once it is established that legislation is ``major'' for
    the purposes of the Act, CBO is required to conduct its
    macroeconomic impact analysis relative to a ``current policy''
    baseline, which assumes that current tax policies are continued
    into the indefinite future, much like CBO's ``alternative
    fiscal scenario'' baseline.
        CBO already has the necessary analytical tools and
    expertise to produce the macroeconomic reports envisioned by
    this legislation for Congress. CBO has occasionally provided
    such reports for certain legislation or policies (e.g. ``An
    Analysis of the President's Budgetary Proposals for Fiscal Year
    2012 (April 2011), Congressional Budget Office) though
    currently this analysis is done on an ad hoc basis, or by
    request only. One key aim of this legislation is to formalize
    the process of producing such analysis for each major bill or
    resolution before Congress, thereby providing Members with
    useful information on a consistent basis.
        In its macroeconomic analysis, CBO has typically used a
    number of economic models which focus, respectively, on
    different timeframes (e.g. short term vs. long term) and
    contain different assumptions about how individuals, and the
    overall economy, respond to policy changes. While it is clear
    major legislation has a significant impact no one economic
    model gives a complete picture of how the economy would
    actually respond to a major government spending or tax policy
    change. Generally speaking, CBO uses a pair of traditional
    macroeconomic forecasting models developed by private-sector
    companies (Macroeconomic Advisers and IHS Global Insight) to
    gauge the short-term economic impact of policies. These models
    are driven by traditional Keynesian economic relationships that
    emphasize the influence of aggregate demand on output in the
    short term.
        CBO also uses a pair of other models to gauge the medium
    and long-term economic impact of policies. These so-called
    growth models (a Solow-type growth model and a life-cycle
    growth model) concentrate on the supply-side factors in the
    economy. The elements driving economic output in these models
    are labor supply, the size and composition of the capital
    stock, and productivity (the interaction between labor and
    capital). With these diverse economic models, CBO produces a
    range of possible economic effects, reflecting the diversity of
    assumptions inside the models.
        To the extent practicable, this legislation envisions that
    CBO will use a wide variety of economic models as well as the
    broad spectrum of empirical economic research and academic
    scholarship to inform the assumptions and parameters within
    these models (e.g., how people's work hours and employment
    decisions would respond to changes in marginal tax rates) in
    order to reflect the full range of possible economic outcomes
    resulting from a bill.
        The legislation requires CBO to provide detailed
    explanations of the models used and the bases for its analysis
    in order to promote greater understanding by policymakers and
    the public of the strengths and weaknesses of the analysis
    provided. To further this transparency, the Committee requests
    that CBO provide to the House and Senate Budget Committees a
    report within one year of enactment outlining the economic
    models they will be using and the procedures they will follow
    in implementing this bill.

                              Legislative History

        On December 7, 2011, Members of the House Budget Committee
    introduced a comprehensive package of ten legislative budget
    process reform bills designed to fundamentally reform the
    budget process. Included in this package was H.R. 3582, the
    ``Pro-Growth Budgeting Act of 2011,'' introduced by
    Representative Tom Price [R-GA-6].

                                    Hearings

        In 2011, the House Budget Committee held two budget process
    reform hearings to examine the budget process.
        The first hearing, ``The Broken Budget Process:
    Perspectives from Former CBO Directors,'' was held on September
    21, 2011, with former CBO Directors Rudolph Penner and Alice
    Rivlin testifying.
        The second hearing, ``The Broken Budget Process:
    Perspectives From Budget Experts,'' was held on September 22,
    2011, with Philip Joyce (University of Maryland), the Honorable
    Jim Nussle (Chairman of the Committee on the Budget, 2001
    through 2007, United States House of Representatives) and the
    Honorable Phil Gramm (former United States Senator, 1985-2002)
    testifying.

                                Purpose and Need

        A frequent criticism of CBO is its cost estimates do not
    capture the economic impact of legislation. Since the scoring
    of legislation is done on a ``static'' basis, it does not take
    into account the degree to which policies might impact the
    overall economy (i.e. GDP) in a positive or negative way.
        According to the traditional scoring method used by CBO and
    the Joint Committee on Taxation (JCT), scorekeepers implicitly
    assume that the size of the economy (and therefore key economic
    variables such as labor supply and investment) remain fixed
    throughout the considered budget horizon. Many economists
    believe that fundamental tax reform, that is to say a broader
    tax base and lower tax rates, would lead to greater labor
    supply and increased investment, which, over time, would have a
    positive impact on total national output.
        Likewise, sharp increases in marginal tax rates would
    generally be expected to lead to lower national output over
    time. These so-called ``dynamic'' macroeconomic effects are
    left out of the traditional cost estimates provided to
    policymakers. The estimates incorporate certain dynamic
    behavioral effects at the microeconomic, or individual, level
    but they do not incorporate dynamic macroeconomic effects that
    are associated with changes in economic performance.
        Some have therefore advocated that CBO should switch from
    ``static'' to ``dynamic'' scoring in order to provide
    policymakers with a more accurate picture of the economic
    reality that might result from policies under their
    consideration. Several complications have been identified with
    such an approach. For instance, there would be technical
    difficulties in generating consistent and objective dynamic
    scores as these scores would rely heavily on a host of
    sometimes contentious assumptions about the presumed
    macroeconomic response to a given policy. Static scores
    typically produce a point estimate which then becomes the
    single, agreed-upon ``cost'' of legislation for policymakers.
    To accurately reflect the range of opinion about the
    assumptions in a dynamic score, scorekeepers would likely need
    to provide a range of cost estimates, which could complicate
    budget enforcement.
        The consensus of the economic community is that traditional
    ``static'' scoring methods leave out essential information
    about real-world macroeconomic effects that should inform
    policymakers' thinking about legislation. However, the same
    community cautions that a switch to ``dynamic'' scoring of a
    sort that would be objective and consistent is not technically
    feasible at this time. The ``Pro-Growth Budgeting Act of 2012''
    seeks to bridge this divide by providing policymakers with a
    greater amount of information about the likely economic impact
    of policies under their consideration while at the same time
    preserving traditional scoring methods and reporting
    conventions.
        In H. Res. 5 of the 105th (January 7, 1997) Congress
    amended the Rules of the House of Representatives by adding a
    requirement that a macroeconomic analysis be done and included
    in a report effecting federal revenues. The analysis, though,
    was only done for major legislation so designated by the
    Majority Leader, after consultation with the Minority Leader,
    and then requested by the chair of the Committee on Ways and
    Means. Before the House recodified its rules in the 106th
    Congress, the provision was found in former clause 7(e) of rule
    XIII (H. Res. 5, January 6, 1999).
        H. Res. 5 of the 108th Congress (January 7, 2003) amended
    the previous rule by requiring the macroeconomic analysis be
    done, if practicable, rather than only at the request of the
    chair of the Committee on the Ways and Means. A point of order
    lies against any bill if its report does not include such an
    analysis or a statement explaining why a macroeconomic impact
    analysis is not calculable.
        This language may be found in section (2)(A) of clause 3 of
    Rule XIII of the House of Representatives for the 112th
    Congress.

                               Section by Section

    SECTION 1. SHORT TITLE.

        This section establishes the short title of the bill as the
    ``Pro-Growth Budgeting Act of 2012''.

    SECTION 2. MACROECONOMIC IMPACT ANALYSES.

        Subsection (a) amends Title IV of the Congressional Budget
    Act (CBA) by adding at the end of Part A, a new section 407
    that requires CBO to perform a macroeconomic impact analysis of
    ``major legislation''. The macroeconomic impact analysis is a
    supplement to the cost estimates CBO prepares pursuant to
    section 402 of the CBA. The analysis is required to address the
    10-year budget window and each of the next three 10-year
    fiscal-year periods resulting in an analysis that covers a
    total of 40 years. The analysis is required to be conducted
    relative to a baseline that assumes the continuation of current
    tax policies.
        Subsection 407(b), as added by this section, provides that
    the macroeconomic impact analysis will describe the potential
    economic impact of the applicable bill or resolution on major
    economic variables, including real gross domestic product
    (GDP), business investment, the capital stock, employment, and
    labor supply. The analysis is also to describe the potential
    fiscal effects of the bill or resolution, including any
    estimates of revenue increases or decreases resulting from
    changes in GDP. The analysis should, to the extent practicable,
    use a variety of economic models to reflect the full range of
    possible economic outcomes resulting from the bill. This
    analysis is required to be conducted relative to a baseline
    that assumes the continuation of current tax policies. Unlike
    the current law baseline, the current policy baseline
    established in section 3 of the Act assumes a more realistic
    future trajectory of fiscal policy as it does not assume the
    expiration of trillions of dollars of tax relief that is
    supported by neither the President, his party's leaders in
    Congress, nor House and Senate Republicans.
        Subsection 407(c) of this section defines the terms used:
        ``Macroeconomic impact analysis'' means estimates of the
    changes in economic output, employment, capital stock, and tax
    revenues expected to result from enactment of the proposal. In
    addition, it is a statement identifying critical assumptions
    and the source of data underling that estimate.
        ``Major bill or resolution'' means any bill or resolution
    if the gross budgetary effects for a fiscal year which an
    estimate is prepared under section 402 are estimated to be
    greater than 0.25 percent of the current projected GDP for any
    such fiscal year. If CBO estimates under its traditional
    estimating methodology that the legislation will change direct
    spending outlays, revenues, deficits, or debt by an amount
    greater than 0.25 percent of GDP in that year, then it is a
    major bill or resolution under this definition. CBO's
    determination of whether a bill is major for the purposes of
    the Act relies on nearly 700 formal cost estimates cost
    estimates CBO routinely performs each year (not to mention the
    thousands of informal estimates CBO provides). These cost
    estimates are conducted relative to the current law baseline
    required by statute. Thus legislation extending current tax
    policy would be measured relative to the current law baseline
    and if the budgetary effects of such legislation exceeded the
    0.25 percent of GDP threshold then that legislation would be a
    major bill or resolution under the Act.
        ``Budgetary effect'' when applied to a major bill or
    resolution means the changes in revenues, outlays, deficit, and
    debt resulting from that measure.
        ``Revenue feedback'' means changes in revenue resulting
    from changes in economic growth as the result of the enactment
    of any major bill or resolution.
        Subsection (b) amends the table of contents for the CBA
    (section 1(b)) to reflect the addition of section 407.

    SECTION 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

        This section amends section 202(e) of the CBA by requiring
    the Director of the CBO to submit, together with the analysis
    of the President's budget submission, a supplemental budget
    projection that assumes the extension of the Economic Growth
    and Tax Relief Reconciliation Act of 2001; the Jobs and Growth
    Tax Relief Reconciliation Act of 2003; extension of the
    ``Alternative Minimum Tax fix''; and the extension of the
    estate, gift, and generation-skipping transfer tax provisions
    of title III of the Tax Relief, Unemployment Insurance
    Reauthorization, and Job Creation Act of 2010.
        The section requires the Director of the CBO submit the
    agency's Long-Term Budget Outlook on or before July 1 of each
    year and that the outlook cover at least the ensuing 40 fiscal
    years.

                             Votes of the Committee

        Clause 3(b) of rule XIII of the Rules of the House of
    Representatives requires each committee report to accompany any
    bill or resolution of a public character to include the total
    number of votes cast for and against each rollcall vote, on a
    motion to report and any amendments offered to the measure or
    matter, together with the names of those voting for and
    against.
        Listed below are the actions taken in the Committee on the
    Budget of the House of Representatives on the Pro-Growth
    Budgeting Act of 2012.
        On January 24, 2012, the committee met in open session, a
    quorum being present.
        Chairman Ryan asked unanimous consent to be authorized,
    consistent with clause 4 of rule XVI of the Rules of the House
    of Representatives, to declare a recess at any time during the
    committee meeting.
        There was no objection to the unanimous consent request.
        Chairman Ryan asked unanimous consent to dispense with the
    first reading of the bill and the bill be considered as read
    and open to amendment at any point.
        There was no objection to the unanimous consent request.
        The committee adopted and ordered reported the Pro-Growth
    Budgeting Act of 2012.
        The committee took the following votes:

    Amendment in the Nature of a Substitute Offered by Mr. Price

        1. The amendment was offered in the nature of a substitute
    to H.R. 3582 and made in order as original text. The bill
    requires CBO to prepare an analysis for all major legislation
    and of the effect that legislation would have on the U.S.
    economy. Major legislation is defined as any legislation
    estimated by the CBO to have a budgetary effect of at least
    0.25 percent of annual GDP in any year within the ten-year
    budget window. The analysis must cover forty years and also
    include an estimate of the legislation's potential fiscal
    impact, including any changes in tax revenues resulting from
    changes in GDP. The macroeconomic impact analysis is
    supplemental information, in addition to the official
    congressional cost estimate of the legislation. The bill
    requires CBO to submit a statement identifying critical
    assumptions and sources of data underlying the estimate.
        The amendment was agreed to by voice vote.

    Amendment Offered by Mr. Amash

        2. The amendment requires CBO to specify the economic and
    econometric models used when performing the supplemental
    analysis.
        The amendment was agreed to by voice vote.
        3. Mr. Garrett made a motion that the committee report the
    bill as amended and that the bill do pass.
        The motion was agreed to by a rollcall vote of 21 ayes and
    11 noes.

                                    H.R. 3582
    ------------------------------------------------------------------------
     Name &                      Answer    Name &                    Answer
     State     Aye       No     Present     State     Aye     No     Present
    ------------------------------------------------------------------------
    RYAN        X                         VAN                  X
     (WI)                                  HOLLEN
     (Chair                                (MD)
     man)                                  (Rankin
                                           g)
    ------------------------------------------------------------------------
    GARRETT     X                         SCHWARTZ
     (NJ)                                  (PA)
    ------------------------------------------------------------------------
    SIMPSON     X                         KAPTUR
     (ID)                                  (OH)
    ------------------------------------------------------------------------
    CAMPBEL     X                         DOGGETT              X
     L (CA)                                (TX)
    ------------------------------------------------------------------------
    CALVERT     X                         BLUMENAU             X
     (CA)                                  ER (OR)
    ------------------------------------------------------------------------
    AKIN        X                         McCOLLUM             X
     (MO)                                  (MN)
    ------------------------------------------------------------------------
    COLE                                  YARMUTH              X
     (OK)                                  (KY)
    ------------------------------------------------------------------------
    PRICE       X                         PASCRELL             X
     (GA)                                  (NJ)
    ------------------------------------------------------------------------
    McCLINT     X                         HONDA
     OCK                                   (CA)
     (CA)
    ------------------------------------------------------------------------
    CHAFFET     X                         RYAN                 X
     Z (UT)                                (OH)
    ------------------------------------------------------------------------
    STUTZMA     X                         WASSERMA             X
     N (IN)                                N
                                           SCHULTZ
                                           (FL)
    ------------------------------------------------------------------------
    LANKFOR     X                         MOORE                X
     D (OK)                                (WI)
    ------------------------------------------------------------------------
    BLACK       X                         CASTOR
     (TN)                                  (FL)
    ------------------------------------------------------------------------
    RIBBLE      X                         SHULER
     (WI)                                  (NC)
    ------------------------------------------------------------------------
    FLORES      X                         TONKO                X
     (TX)                                  (NY)
    ------------------------------------------------------------------------
    MULVANE     X                         BASS                 X
     Y (SC)                                (CA)
    ------------------------------------------------------------------------
    HUELSKA     X                         ........
     MP
     (KS)
    ------------------------------------------------------------------------
    YOUNG       X                         ........
     (IN)
    ------------------------------------------------------------------------
    AMASH       X                         ........
     (MI)
    ------------------------------------------------------------------------
    ROKITA      X                         ........
     (IN)
    ------------------------------------------------------------------------
    GUINTA      X                         ........
     (NH)
    ------------------------------------------------------------------------
    WOODALL     X
     (GA)
    ------------------------------------------------------------------------

        Mr. Honda, made a unanimous consent request to let the
    record reflect he would have voted no on the rollcall vote.
        There was no objection to the unanimous consent request.
        Mr. Garrett made a motion that, pursuant to clause 1 of
    rule XXII of the Rules of the House of Representatives, the
    Chairman be authorized to offer such motions as may be
    necessary in the House to go to conference with the Senate, and
    staff be authorized to make any necessary technical and
    conforming changes to the bill.
        The motion was agreed to without objection.

                          Committee Oversight Findings

        Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
    House of Representatives, the Committee on the Budget's
    oversight findings and recommendations are reflected in the
    body of this report.

                             Budget Act Compliance

        The provisions of clause 3(c)(2) of rule XIII of the Rules
    of the House of Representatives and section 308(a)(1) of the
    Congressional Budget Act of 1974 (relating to estimates of new
    budget authority, new spending authority, new credit authority,
    or increased or decreased revenues or tax expenditures) are not
    considered applicable. The estimate and comparison required to
    be prepared by the Director of the Congressional Budget Office
    under clause 3(c)(3) of rule XIII of the Rules of the House of
    Representatives and sections 402 and 423 of the Congressional
    Budget Act of 1974 submitted to the committee prior to the
    filing of this report are as follows:

                           Congressional Budget Office,
                                                 U.S. Congress,
                                      Washington, DC, January 27, 2012.
    Hon. Paul Ryan, Chairman,
    Committee on the Budget, U.S. House of Representatives, Washington, DC
            20515.
        Dear Mr. Chairman: The Congressional Budget Office has prepared the
    enclosed cost estimate for H.R. 3582, the Pro-Growth Budgeting Act of
    2012.
        If you wish further details on this estimate, we will be pleased to
    provide them. The CBO staff contact is Jared Brewster, who can be
    reached at 226-2880.
                Sincerely,
                                          Douglas W. Elmendorf,
                                                              Director.

    Enclosure:
        cc: Hon. Chris Van Hollen, Ranking Member.
                   congressional budget office cost estimate
                                january 27, 2012

                  H.R. 3582: Pro-Growth Budgeting Act of 2012

    As ordered reported by the House Committee on the Budget on January 24,
                                      2012

                                    summary
        H.R. 3582 would require the Congressional Budget Office to provide
    a macroeconomic impact analysis for bills that are estimated to have a
    large budgetary effect. The bill would also require CBO to provide
    supplemental budget projections that assume certain tax policies are
    extended.
        Under H.R. 3582, CBO would be required to provide--to the extent
    practicable--an analysis of the impact on the economy of any bill that
    would have an estimated budgetary effect of greater than 0.25 percent
    of gross domestic product (GDP) in any fiscal year. (Currently, that
    threshold would be about $40 billion, based on GDP of about $16
    trillion.) The macroeconomic analysis would include the estimated
    effect on revenues and outlays of a change in GDP resulting from the
    legislation being evaluated. Those estimates would have to assume that
    certain tax policies not currently in CBO's baseline are extended.
    Furthermore, CBO would be required to publicly provide the assumptions
    and models underlying those analyses.
        CBO estimates that implementing H.R. 3582 would cost about $2
    million over the 2012-2017 period, assuming appropriation of the
    necessary amounts. Enacting H.R. 3582 would not affect direct spending
    or revenues; therefore, pay-as-you-go procedures do not apply.
        H.R. 3582 contains no intergovernmental or private-sector mandates
    as defined in the Unfunded Mandates Reform Act (UMRA).
                    estimated cost to the federal government
        The estimated budgetary impact of H.R. 3582 is shown in the
    following table. The costs of this legislation fall within budget
    function 800 (general government).

                                        [By fiscal year, in millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                  2012   2013   2014   2015   2016   2017  2012-2017
    ----------------------------------------------------------------------------------------------------------------
                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

    Estimated Authorization Level..............................      *      *      *      *      *      *          2
    Estimated Outlays..........................................      *      *      *      *      *      *          2
    ----------------------------------------------------------------------------------------------------------------
    Note: * = less than $500,000.

                               basis of estimate
        For this estimate, CBO assumes that the bill will be enacted in
    fiscal year 2012, that the necessary funds will be provided for each
    year, and that spending will follow historical patterns for similar
    activities.
        CBO estimates that in order to prepare for the macroeconomic impact
    studies, as called for in H.R. 3582, the agency would probably need two
    or three additional staff members. (The amount of extra personnel
    resources needed is uncertain, as it would depend on how many pieces of
    legislation with budgetary effects greater than 0.25 percent of GDP in
    a fiscal year are considered by the Congress in each year.) In addition
    to taking the lead on new macroeconomic impact studies, the additional
    CBO staff members would be responsible for preparing the descriptions
    of underlying assumptions and models for the public (as required by the
    bill). Based on current average costs (including salaries and
    associated benefits), adding two or three staff members could have a
    small cost in fiscal year 2012 and would cost between $300,000 and
    $500,000 per year beginning in fiscal year 2013, resulting in a six-
    year cost of roughly $2 million.
                          pay-as-you-go considerations
        None.
                  intergovernmental and private-sector impact
        H.R. 3582 contains no intergovernmental or private-sector mandates
    as defined in UMRA and would not affect the budgets of state, local, or
    tribal governments.
                              estimate prepared by
        Federal Costs: Jared Brewster.
        Impact on State, Local, and Tribal Governments: Elizabeth Cove
    Delisle.
        Impact on the Private Sector: Paige Piper/Bach.
                             estimate approved by:
        Theresa Gullo, Deputy Assistant Director for Budget Analysis.

                        Performance Goals and Objectives

        With respect to the requirement of clause 3(c)(4) of rule
    XIII of the Rules of the House of Representatives, the
    performance goals and objectives of this legislation are to
    provide for systematic requirements for analysis of the
    economic impact of major legislation.

                       Constitutional Authority Statement

        Pursuant to clause 7 of rule XII of the Rules of the House
    of Representatives, the committee finds the constitutional
    authority for this legislation in Article I, section 9, clause
    7.

                            Committee Cost Estimate

        Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
    House of Representatives, the committee report incorporates the
    cost estimate prepared by the Director of the Congressional
    Budget Office pursuant to sections 402 and 423 of the
    Congressional Budget Act of 1974.

                          Advisory Committee Statement

        No advisory committee within the meaning of section 5(b) of
    the Federal Advisory Committee Act was created by this
    legislation.

                    Applicability to the Legislative Branch

        The committee finds that the legislation does not relate to
    the terms and conditions of employment or access to public
    services or accommodations within the meaning of section
    102(b)(3) of the Congressional Accountability Act (Public Law
    104-1).

                           Federal Mandates Statement

        The committee adopted the estimate of Federal mandates
    prepared by the Director of the Congressional Budget Office
    pursuant to section 423 of the Unfunded Mandates Reform Act
    (Public Law 104-4).

                              Advisory on Earmarks

        In accordance with clause 9 of rule XXI of the Rules of the
    House of Representatives, H.R. 3582 does not contain any
    congressional earmarks, limited tax benefits, or limited tariff
    benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI
    of the Rules of the House of Representatives.

             Changes in Existing Law Made by the Bill, as Reported

      In compliance with clause 3(e) of rule XIII of the Rules of
    the House of Representatives, changes in existing law made by
    the bill, as reported, are shown as follows (new matter is
    printed in italic and existing law in which no change is
    proposed is shown in roman):

                        CONGRESSIONAL BUDGET ACT OF 1974

                        SHORT TITLES; TABLE OF CONTENTS

      Section 1. (a) * * *
      (b) Table of Contents.--

    Sec. 1. Short titles; table of contents.
         * * * * * * *

          TITLE IV--ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

                           Part A--General Provisions

         * * * * * * *
    Sec. 407. Macroeconomic impact analysis of major legislation.

               *       *       *       *       *       *       *

    TITLE II--CONGRESSIONAL BUDGET OFFICE

               *       *       *       *       *       *       *

                              DUTIES AND FUNCTIONS

      Sec. 202. (a) * * *

               *       *       *       *       *       *       *

      (e) Reports to Budget Committees.--
              (1) * * *

               *       *       *       *       *       *       *

              (4)(A) After the President's budget submission under
            section 1105(a) of title 31, United States Code, in
            addition to the baseline projections, the Director
            shall submit to the Committees on the Budget of the
            House of Representatives and the Senate a supplemental
            projection assuming extension of current tax policy for
            the fiscal year commencing on October 1 of that year
            with a supplemental projection for the 10 fiscal-year
            period beginning with that fiscal year, assuming the
            extension of current tax policy.
              (B) For the purposes of this paragraph, the term
            ``current tax policy'' means the tax policy in statute
            as of December 31 of the current year assuming--
                      (i) the budgetary effects of measures
                    extending the Economic Growth and Tax Relief
                    Reconciliation Act of 2001;
                      (ii) the budgetary effects of measures
                    extending the Jobs and Growth Tax Relief
                    Reconciliation Act of 2003;
                      (iii) the continued application of the
                    alternative minimum tax as in effect for
                    taxable years beginning in 2011 pursuant to
                    title II of the Tax Relief, Unemployment
                    Insurance Reauthorization, and Job Creation Act
                    of 2010, assuming that for taxable years
                    beginning after 2011 the exemption amount shall
                    equal--
                              (I) the exemption amount for taxable
                            years beginning in 2011, as indexed for
                            inflation; or
                              (II) if a subsequent law modifies the
                            exemption amount for later taxable
                            years, the modified exemption amount,
                            as indexed for inflation; and
                      (iv) the budgetary effects of extending the
                    estate, gift, and generation-skipping transfer
                    tax provisions of title III of the Tax Relief,
                    Unemployment Insurance Reauthorization, and Job
                    Creation Act of 2010.
              (5) On or before July 1 of each year, the Director
            shall submit to the Committees on the Budget of the
            House of Representatives and the Senate, the Long-Term
            Budget Outlook for the fiscal year commencing on
            October 1 of that year and at least the ensuing 40
            fiscal years.

               *       *       *       *       *       *       *

          TITLE IV--ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

    Part A--General Provisions

               *       *       *       *       *       *       *

               MACROECONOMIC IMPACT ANALYSIS OF MAJOR LEGISLATION

      Sec. 407. (a) Congressional Budget Office.--The Congressional
    Budget Office shall, to the extent practicable, prepare for
    each major bill or resolution reported by any committee of the
    House of Representatives or the Senate (except the Committee on
    Appropriations of each House), as a supplement to estimates
    prepared under section 402, a macroeconomic impact analysis of
    the budgetary effects of such bill or resolution for the ten
    fiscal-year period beginning with the first fiscal year for
    which an estimate was prepared under section 402 and each of
    the next three ten fiscal-year periods. Such estimate shall be
    predicated upon the supplemental projection described in
    section 202(e)(4). The Director shall submit to such committee
    the macroeconomic impact analysis, together with the basis for
    the analysis. As a supplement to estimates prepared under
    section 402, all such information so submitted shall be
    included in the report accompanying such bill or resolution.
      (b) Economic Impact.--The analysis prepared under subsection
    (a) shall describe the potential economic impact of the
    applicable major bill or resolution on major economic
    variables, including real gross domestic product, business
    investment, the capital stock, employment, and labor supply.
    The analysis shall also describe the potential fiscal effects
    of the bill or resolution, including any estimates of revenue
    increases or decreases resulting from changes in gross domestic
    product. To the extent practicable, the analysis should use a
    variety of economic models in order to reflect the full range
    of possible economic outcomes resulting from the bill or
    resolution. The analysis (or a technical appendix to the
    analysis) shall specify the economic and econometric models
    used, sources of data, relevant data transformations, and shall
    include such explanation as is necessary to make the models
    comprehensible to academic and public policy analysts.
      (c) Definitions.--As used in this section--
              (1) the term ``macroeconomic impact analysis''
            means--
                      (A) an estimate of the changes in economic
                    output, employment, capital stock, and tax
                    revenues expected to result from enactment of
                    the proposal;
                      (B) an estimate of revenue feedback expected
                    to result from enactment of the proposal; and
                      (C) a statement identifying the critical
                    assumptions and the source of data underlying
                    that estimate;
              (2) the term ``major bill or resolution'' means any
            bill or resolution if the gross budgetary effects of
            such bill or resolution for any fiscal year in the
            period for which an estimate is prepared under section
            402 is estimated to be greater than .25 percent of the
            current projected gross domestic product of the United
            States for any such fiscal year;
              (3) the term ``budgetary effect'', when applied to a
            major bill or resolution, means the changes in
            revenues, outlays, deficits, and debt resulting from
            that measure; and
              (4) the term ``revenue feedback'' means changes in
            revenue resulting from changes in economic growth as
            the result of the enactment of any major bill or
            resolution.

               *       *       *       *       *       *       *

                                  Jurisdiction

        The following letters were exchanged between the House
    Committee on Rules and the House Committee on the Budget
    regarding committee jurisdiction:

                                                      January 24, 2012.
    Hon. Paul Ryan, Chairman,
    Committee on the Budget, 207 Cannon House Office Building, Washington,
            DC 20515.
        Dear Chairman Ryan: On January 25, 2012, the Committee on the
    Budget ordered reported H.R. 3582, the Pro-Growth Budgeting Act of
    2011. As you know, the Committee on Rules was granted an additional
    referral upon the bill's introduction pursuant to the Committee's
    jurisdiction under rule X of the Rules of the House of Representatives
    over the rules of the House and special orders of business.
        Because of your willingness to consult with my committee regarding
    this matter, I will waive consideration of the bill by the Rules
    Committee. By agreeing to waive its consideration of the bill, the
    Rules Committee does not waive its jurisdiction over H.R. 3582. In
    addition, the Committee on Rules reserves its authority to seek
    conferees on any provisions of the bill that are within its
    jurisdiction during any House-Senate conference that may be convened on
    this legislation. I ask your commitment to support any request by the
    Committee on Rules for conferees on H.R. 3582 or related legislation.
        I request that you include this letter and your response as part of
    your committee's report on the bill and the Congressional Record during
    consideration of the legislation on the House floor.
        Thank you for your attention to these matters.
                Sincerely,
                                                  David Dreier.
                                     ______

                                                      January 25, 2012.
    Hon. David Dreier, Chairman,
    Committee on Rules, H-312, the Capitol, Washington, DC 20515.
        Dear Chairman Dreier: Thank you for your letter regarding H.R.
    3582, the Pro-Growth Budgeting Act of 2012, which the Committee on the
    Budget ordered reported on January 24, 2012.
        I acknowledge that certain provisions in this legislation are in
    your committee's jurisdiction. I appreciate your decision to facilitate
    prompt consideration of the bill by the full House. I understand that
    by foregoing a sequential referral, the Committee on Rules is not
    waiving its jurisdiction.
        Per your request, I will include a copy of our exchange of letters
    with respect to H.R. 3582 in the Congressional Record during House
    consideration of this bill. We appreciate your cooperation and look
    forward to working with you as this bill moves through the Congress.
                Sincerely,
                                                     Paul Ryan,
                                                              Chairman.

                           Views of Committee Members

        Clause 2(l) of rule XI of the Rules of the House of
    Representatives requires each committee to provide two days to
    Members of the committee to file Minority, additional,
    supplemental, or dissenting views and to include such views in
    the report on legislation considered by the committee. The
    following views were submitted:

                                 MINORITY VIEWS

        Although there are large differences in budget priorities
    between the parties, we share a common goal of putting the
    federal budget on a fiscally sustainable path. We all want the
    federal government to be efficient, to focus scarce resources
    where they can do the most good, and to not waste a single dime
    of taxpayer dollars. And we want our budget laws to help
    support those goals.
        Budget process rules and laws can make a difference. For
    instance, the PAYGO principle that has been in effect at
    different periods has played a useful role in preventing the
    deficit from getting even worse. But budget process changes
    will never be a substitute for tackling the difficult fiscal
    questions facing us today. It is not that the budget process
    does not work, it is that Congress has failed to follow the
    rules already on the books.
        The Budget Committee has held two hearings on the general
    topic of budget process reform and the recommendations crossed
    party lines. Former Budget Committee Chairman Jim Nussle, a
    Republican witness, testified that ``It may not be that the
    budget process is broken. It may not be, in other words, that
    tools are broken, but it may be the fact that the tools are not
    even being used.'' Similarly, Dr. Philip Joyce, former
    Congressional Budget Office (CBO) staff member and a Democratic
    witness, testified that ``My main message is that most of the
    tools that you need to solve the budget problems faced by the
    country are already in your toolbox. If the goal is to deal
    with the larger fiscal imbalance that faces us, the most
    important thing to do is to make use of them, not search for
    more tools.''
        The reason we are not following the existing budget rules
    is that Republicans have shown a lack of political will and an
    unwillingness to compromise. Until Republicans are willing to
    support a balanced approach, we will never address the urgent
    need to put Americans back to work and to put our nation on a
    path toward long-term fiscal sustainability. Unfortunately, the
    Pro-Growth Budgeting Act of 2012 does nothing to create a
    single job, to reduce the deficit by a single penny, or to put
    the country on a fiscally sustainable path.
        It is clear from the bill's language and approach that it
    is designed to make it easier to enact deficit-increasing tax
    cuts. The bill requires CBO to produce supplementary estimates
    of the economic impact of major bills using dynamic scoring, an
    approach that involves more uncertainty and subjectivity than
    current scoring rules. Former Republican Budget Committee
    Chairman Jim Nussle opposed moving to dynamic scoring, noting
    that CBO ``generally have done a better job than some of the
    dynamic score-keeping. That has been part of the challenge of
    moving to something called dynamic scoring is that we have not
    found anything that was any more accurate than the current
    way.''
        The bill focuses on analyzing qualifying legislation's
    impact on economic growth and employment, while neglecting to
    mention the economic impacts resulting from increased
    government borrowing to finance revenue changes. Existing
    analysis by CBO suggests that the Bush tax cuts would actually
    reduce growth in the long-run because the negative impacts from
    increased borrowing outweigh any benefits from lower tax rates.
    But it is not even clear if under this bill an analysis of
    extending the Bush tax cuts would show any economic impact
    because the bill seems, despite the stated intention of the
    sponsor, to suggest analyzing impacts against a baseline that
    already assumes the tax cuts are extended. In addition, the
    bill explicitly exempts measures reported from the
    Appropriations Committee, meaning there will be no attempt to
    analyze additional economic benefits from investments in
    education, infrastructure, or any other discretionary spending.
        It is imperative that we get Americans back to work and get
    our fiscal house in order. The bill does nothing to achieve
    either goal. Instead, it pretends that budget process reform in
    the form of mandating supplemental dynamic scoring is the
    answer to solve our very real problems.
                                       Chris Van Hollen.
                                       Michael M. Honda.
                                       Earl Blumenauer.
                                       Paul Tonko.
                                       Bill Pascrell, Jr.
                                       Gwen Moore.
                                       Betty McCollum.
                                       Allyson Y. Schwartz.
                                       Debbie Wasserman Schultz.
                                       Karen Bass.

                                DISSENTING VIEW

        During the Budget Committee hearing, I referenced the work
    of Art Rolnick, former Senior Vice President and Director of
    Research at the Federal Reserve Bank of Minneapolis. In March
    2003, he published a paper with his colleague Rob Grunewald
    titled ``Early Childhood Development: Economic Development with
    a High Public Return.'' Their paper applies an economic
    analysis to argue that Minnesota would be best served by
    increasing public investments in quality early childhood
    development programs.
        Reviewing a study of a Michigan preschool, research found
    the benefit-to-cost ratio was as great as 8-to-1. For every
    public dollar spent in 1960, the participants and community
    received more than $8 dollars in benefits. These benefits were
    seen across the board: children had higher graduation rates,
    businesses had a more educated workforce, and courts saw a
    reduction in juvenile delinquency. Investing in early childhood
    development was a win for the child, their families, and the
    community.
        The advantages cited by Mr. Rolnick and Mr. Grunewald of
    early education make it clear that these programs not only pay
    for themselves, but are a strong investment in our society's
    well-being and future. I encourage all my colleagues to review
    their paper.
        As policymakers, we must understand the broader economic
    impact of the bills we consider on the House floor.
    Unfortunately, the Pro-Growth Budgeting Act (H.R. 3582) would
    not provide us with that information. H.R. 3582 specifically
    excludes appropriations bills--which provide key investments in
    our neighborhoods, schools, and economy--while highlighting the
    potential and frequently erroneous impact of reducing federal
    revenues. Ignoring the tangible and quantifiable benefits of
    direct federal investments in our fellow citizens and
    communities may be a scoring strategy and ideological ploy of
    the Majority, but it will ultimately result in very bad public
    policy.
                                       Betty McCollum.