[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.