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Republicans to require analysis of how major legislation affects the economy

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House Republicans this week proposed a new rule that would require both the Congressional Budget Office and the Joint Committee on Taxation to examine how major bills would affect the U.S. economy.

According to a description from the House Budget Committee, Congress today is free to ignore how legislation affects the economy, and is only required to look at whether legislation would increase or decrease federal revenues. The committee said the rule change would force Congress to examine legislation more broadly.

Screen Shot 2014-12-24 at 3.45.06 PM The House Budget Committee, led by Rep. Paul Ryan (R-Wis.), announced a new rule that will require major bills to be assessed for their impact on the U.S. economy.
Image: AP Photo/J. Scott Applewhite

"The ultimate goal — both for elected officials and their constituents — is to build a healthy economy," a Budget Committee summary said. "And by showing the full implications of their decisions, the rule would help elected officials see major legislation the way their constituents do."

"Instead of concentrating on the top line — whether it's good for the Treasury — elected officials would concentrate on the bottom line — whether it's good for the taxpayer," it added.

Many Republicans have argued that Congress too easily approves legislation — such as Obamacare — without worrying about how it will affect the economy. Some GOP members have also called for "dynamic scoring" of legislation, which could be used to argue, for example, that lower taxes would not decrease federal revenues, and would instead boost the economy and therefore add to federal revenues.

Budget Committee Republicans indicated their initiative falls short of letting the GOP claim tax cuts lower the deficit. But it did say the addition of macroeconomic analysis could make room for analysis that shows tax cuts don't lead to as much of a drop off in revenues.

"In the past, JCT has found that lowering tax rates leads to lower revenue," the committee wrote. "But analysis from JCT, backed up by academic research and macroeconomic models, has also shown that some pro-growth tax policies reduce revenues by smaller amounts once the economic growth effects are taken into account."

The committee said the new rule would only apply to "major" bills that cause a gross increase or decrease in revenues, outlays or deficits that are more than 0.25 percent of GDP. The committee said the rule change would have only applied to three bills in all of the 113th Congress that just ended.

The change won't apply to any of the huge appropriations bills Congress considers.

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