# Dynamic Scoring Conventional budget scoring holds the size of the economy fixed and asks what a bill does to revenues and outlays. Dynamic scoring lets the economy respond — a tax cut may increase labor supply and investment, generating growth that partially offsets the revenue loss. **The idea is defensible. Large policy changes plainly do affect the economy, and pretending otherwise is its own distortion.** What makes dynamic scoring a [[Mathematics and Power Hub]] subject is not that it is wrong but that it moved the contested political judgment from a visible place to an invisible one. ## The rule In January 2015, the House adopted a rule requiring the [[Congressional Budget Office]] and the Joint Committee on Taxation to incorporate macroeconomic effects into cost estimates for **"major legislation"** — defined as legislation with a gross budgetary effect of at least **0.25% of GDP** in any year, or designated as major by the Budget Committee chairman (or the JCT chair/vice-chair for revenue bills). Appropriations and highway spending are excluded. ## Where the politics went A conventional score contains an arithmetic claim you can check. A dynamic score contains a *model*, and the model contains elasticities: how much additional labor does a given after-tax wage increase call forth? How much investment does a lower cost of capital produce? How is the resulting deficit financed, and what does that financing crowd out? **Reasonable economists produce very different numbers for these parameters, and the choice among them can change a bill's headline cost by hundreds of billions of dollars.** The parameters are not reported in the headline. The headline reports a single figure, framed as the official estimate. So the fight over whether tax cuts pay for themselves — an argument that used to be conducted in public, with both sides visible — became a fight over elasticity assumptions inside a modeling apparatus, conducted by a handful of specialists, and emerged as a number the press reports as neutral arithmetic. This is the branch's core pattern: **quantification did not resolve the dispute; it relocated the dispute somewhere less observable and gave the output the authority of measurement.** ## The relationship to the Laffer claim Dynamic scoring is the institutional form of the [[Laffer Curve]] argument — see [[The Laffer Curve as Existence Proof]] for why the underlying mathematical claim carries far less weight than it is asked to. It is worth being precise about what mainstream dynamic scoring actually finds, because it is frequently overstated in both directions. CBO and JCT dynamic analyses of major tax legislation have generally found **partial, modest offsets** — growth effects that recover some fraction of static revenue loss, not all of it and not more than all of it. The models used by the official scorekeepers have not validated the strong self-financing claim. Advocacy-shop models, using more aggressive parameters, report larger effects, and those are the numbers that circulate in political argument. The distinction between "the official scorekeeper's dynamic estimate" and "a dynamic estimate" is doing enormous work and is almost never made in coverage. ## The asymmetry problem The most damaging structural critique is that dynamic scoring is applied **asymmetrically in practice**. Tax cuts get dynamic treatment showing growth feedback. Public investment — infrastructure, research, education, child health — has plausible long-run growth effects that conventional scoring also omits, and it receives dynamic treatment far less consistently. If the growth channel counts for one category of policy and not the other, dynamic scoring is not a neutral methodological improvement. It is a thumb on the scale wearing a methodology's clothes. ## What to ask What elasticities were assumed. How the deficit financing was modeled. What the range across plausible parameters looks like, not just the point estimate. Whether the same treatment was applied to comparable legislation of the other kind. And whether the number being quoted came from the official scorekeepers or from an advocacy model. ## Related [[CBO Baselines and Scoring Windows]] · [[The Laffer Curve as Existence Proof]] · [[Rate Versus Level]] · [[Discount Rates as Policy Choices]] · [[Congressional Budget Office]] · [[Supply-Side Economics]] · [[Tax Cuts and Jobs Act]] · [[Mathematics and Power Hub]]