Dynamic scoring

Dynamic scoring is a way of estimating the budgetary effects of legislation that includes the expected effects on the overall economy, such as changes in work, saving, investment and growth. In contrast, conventional scoring holds the size of the economy fixed (although it does account for behavioral responses, such as shifting income across tax categories).

Both the Joint Committee on Taxation and the Congressional Budget Office produce estimates with macroeconomic feedback for major bills. A House rule adopted in 2015 requires dynamic analysis for major legislation. A tax cut that spurs growth could raise some revenue to offset part of its cost, while spending on infrastructure or education could be expected to raise output over time.

Supporters, including many supply-side economists, argue that conventional estimates ignore the incentives that tax policy creates and overstate the cost of tax cuts. Critics say dynamic estimates depend on contested assumptions about how people and markets respond, and about how the government will finance the deficit, and that they show only partial feedback. Estimates have generally found that tax cuts recover only a fraction of their costs. Dynamic scoring is related to the laffer curve and shapes the CBO score debate.