House Republicans Are About to Change the Budget Rules. Here's Why It Matters.

The GOP wants to use dynamic scoring to make its tax policies look more appealing.

Republicans and Democrats will have plenty of fights in the next two years over tax and spending bills. But first, they'll have to squabble over how much those bills actually cost.

Democrats are decrying a proposed rule change that they say would obscure the economic impact of major legislation dealing with taxes and the budget. At issue is a process known as dynamic scoring. A House rules package for the 114th Congress—expected to pass on a party-line vote Tuesday—includes a provision that would direct the Congressional Budget Office and the Joint Committee on Taxation to use dynamic scoring when calculating the economic impact of major legislation.

The change is arcane, but it matters. Republicans prefer dynamic scoring because it offers a macroeconomic analysis of their legislation, meaning it takes into account what changes to the size of the overall economy the proposed legislation would bring about, and how that would ultimately affect the cost of the legislation and the impact on spending and revenues.

So if a proposed tax cut is predicted to help the economy grow, then more revenues would flow into government coffers and the tax cut "costs" less than it would under the more traditional way bills are scored.

"Using macroeconomic analysis will not solve every problem. All it will do is give members of Congress a better understanding of how their decisions affect the economy," according to a GOP Budget Committee explainer on the proposed rule change.

The method will be particularly useful to incoming House Ways and Means Committee Chairman Paul Ryan, who is seeking to reform the tax code. Dynamic scoring could provide a more beneficial analysis of the kind of tax cuts he wants to incorporate into a tax-reform proposal.

But Democrats and other critics of dynamic scoring are crying foul. They say the practice is unreliable because it relies heavily on assumptions about how the economy will look in years to come, and that it unduly favors Republican policies, particularly tax cuts.

"This is a partisan, misleading attempt to tilt the playing field in favor of more trickle-down economic policies, and the public shouldn't buy it," Budget Committee ranking member Chris Van Hollen and Rules Committee ranking member Louise Slaughter said in a joint statement. "We should not let smoke-and-mirrors budget gimmicks threaten our continuing economic recovery and progress on shrinking our nation's budget deficit."