“They introduced the concept!” Sanders said this month, scoffing at Republican criticism of using the budget forecasting ploy, which he neither defends nor decries these days.
“The truth is that economic policy and tax policy has an impact on revenue,” said the Vermont Independent, chair of the Senate Budget Committee. “Everybody knows that. What nobody knows is exactly what it will do. It’s a kind of nebulous concept.”
It’s an imperfect science, indeed. Under the gambit, budget forecasters estimate how much a policy change might boost the economy and send more cash flowing to the federal government. This time, Democrats are pinning their revenue hopes on the idea that major investments in the social safety net, climate policy and tax reform will yield robust, long-term economic growth.
“I’m very concerned that the pay-fors aren’t real,” said Sen. Rand Paul (R-Ky.), a fiscal conservative. “Both parties bear some culpability. But I’m worried about adding so much debt in such a short period of time.”
Both Democrats and Republicans have previously relied on dynamic scoring and both have lampooned its use as a budget trick. Predictions about how much revenue a new government policy will generate are often exaggerated or inaccurate and are difficult to calculate, placing enormous pressure on independent budget analysts to come up with favorable numbers that might turn out to be a bust.
“Everything I’ve seen us do — on both sides, with whoever is in the majority over the last 10 years in terms of putting budgets together — has been squishy,” said House Budget Chair John Yarmuth (D-Ky.). “Everybody plays games with it.”
David Wessel, a director of fiscal and monetary policy at the Brookings Institution, said dynamic scoring could help Democrats squeeze through priorities that would otherwise be iffy under the rules of the reconciliation process, which they’re using to pass their $3.5 trillion package along party lines. Every piece of that massive bill has to have a significant effect on federal spending, revenues or debt within a 10-year budget window, or Democrats risk running afoul of the Senate parliamentarian and tanking parts of the package.
Dynamic scoring allows Democrats to claim items that don’t obviously fit that definition by arguing that they still produce significant budget effects, according to Wessel.
“We’re way beyond the frontiers of what we can be confident of, economically,” Wessel said. “It’s just a way for members to pretend that they’re paying for something.”
Besides using dynamic scoring to reduce the price tag of their $3.5 trillion plan, Democrats have also promised to bankroll much of the package by raising taxes, including by closing corporate loopholes, eliminating overseas havens and boosting IRS funding to help the agency claw back more cash. Democrats contend that those cost offsets are far more fiscally sound than the 2017 tax cuts.
