What is Dynamics Scoring?
In simple terms, dynamic scoring means that estimates would be designed to capture revenue effects from changes in overall economic conditions. Instead of deliberately ignoring these variables, as is the convention today, revenue estimators would predict whether a change in policy would be likely to affect the level of compensation, prices, employment, and gross domestic product (GDP). If there is an effect on one or more of these variables, they would then calculate the amount of revenue feedback or loss. How would this work? Take the example of the 15 percent across-the-board tax cut proposed some weeks ago by Senator Spencer Abraham (R-MI). Static revenue estimates reportedly show this proposal reducing tax revenues by about $500 billion over a six-year period.17 If such a proposal boosted the economy’s rate of growth by one-half of one percentage point over the same period, however, Congressional Budget Office sensitivity tables (designed to measure the effects of selected economic
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