Date: 2015-01-06
Speaker: TOM PRICE (republican)
Chamber: H
State: Georgia

Mr. Speaker. in this resolution. we are establishing a new requirement in clause 8 of Rule XIII that the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) incorporate into the official cost estimates required under section 402 of the Congressional Budget Act of 1974 (Budget Act) the macroeconomic effects of "major legislation." Because this rule builds on the existing requirement for cost estimates. it does not apply to appropriations legislation. By including an analysis of how major legislation will affect the economy. this rule provides the House with a more comprehensive estimate than can be produced using only the traditional. conventional scoring methods which implicitly assume that legislation has no effect on the broader economy. In particular. this analysis is required to include the budgetary effects of changes in economic output. employment. the capital stock. and other macroeconomic variables resulting from major legislation. In addition. this rule requires a qualitative assessment of the longterm budgetary and macroeconomic effects of major legislation. Major legislation is defined as legislation causing an increase or decrease in revenues. outlays. or deficits in any fiscal year covered by the budget resolution equal to or greater than 0.25 percent of the projected gross domestic product for that year. In applying the 0.25 percent threshold. CBO and JCT are required to look at the gross budgetary effects of the legislation. In carrying out this requirement. the intent is that CBO and JCT review provisions in the bill that have a significant effect. Thus. the test is whether any provision in the legislation has a budgetary effect larger than the threshold. or if the absolute value of the sum of the provisions exceeds the threshold. rather than whether the legislation as a whole has such an effect when all of the provisions are netted out. Alternately. for legislation that may not have a large fiscal effect. but would still have significant economic impacts. the new rule empowers the House to designate "major legislation." For all legislation other than purely revenue legislation. the rule authorizes the chair of the Budget Committee to designate "major legislation." For purely revenue legislation (i.e.. legislation that contains only provisions described in section 201(f) of the Budget Act). the rule authorizes the House Member serving as the chair or vice chair of JCT. to designate "major legislation" for purposes of this rule. The rule carefully preserves the existing division of labor between CBO and JCT. which requires close collaboration between these two nonpartisan institutions. When major legislation involves both revenue and nonrevenue provisions. CBO and JCT will need to work together to produce a single. integrated cost estimate for the legislation drawing on each agencys institutional responsibilities. The rule requires enhanced transparency around these budgetary estimates. Both CBO and JCT. as applicable. must provide together with their estimates a description of the critical assumptions and the source data underlying such estimates. It is important that CBO and JCT make this information available so that the public. academic. and other experts have an opportunity to review the analysis and pursue possible improvements in the methodologies used to develop these estimates. Distributional analyses of proposed tax changes that JCT provides as background information is another area where estimates could be improved by incorporating macroeconomic effects into these analyses. The preparation of cost estimates incorporating macroeconomic effects is frequently more complex and requires more time than the preparation of conventional cost estimates. Committees should therefore build in additional time to allow for the completion of the cost estimate. Both CBO and JCT should strive to promptly produce the estimates required by this rule. To the extent it is not practicable for CBO and JCT to produce the required estimates. the rule provides an accommodation in this instance. Two possible circumstances may arise when it is not feasible to produce the required analysis. First. committees and the House may be operating under tight deadlines and it is not possible for CBO or JCT to complete the analysis prior to the legislations consideration. Second. while CBO and JCT have developed a great deal of expertise and experience in producing these analyses. there may be situations where it is not possible for CBO and JCT to produce the required analysis. The material previously referred to by Ms. SLAUGHTER is as follows: