Sen. Rob Portman's plan eked out a narrow victory in budget votes Saturday. Conservatives score tax victory

Here’s one Republican victory that went virtually unnoticed in the slew of budget votes last week: The Senate told the Congressional Budget Office it should give more credit to the economic power of tax cuts.

It won’t have the force of law, but it was a big symbolic win for conservatives — because it gave them badly needed moral support in an ongoing war to get Washington’s establishment number crunchers to take their economic ideas more seriously.


The amendment endorsed a model called “dynamic scoring,” which assumes that tax cuts will pay for at least part of their cost by generating more economic activity. The measure by Sen. Rob Portman (R-Ohio) called on CBO and the Joint Committee on Taxation to include “macroeconomic feedback scoring” in all future estimates of tax legislation.

( PHOTOS: Rob Portman's career)

The amendment originally failed in committee on a party-line vote, but Portman eked out a narrow 51-48 victory in the final series of budget votes that started around 3 a.m. on Saturday.

He won the support of six Democrats: Mark Begich of Alaska, Kay Hagan of North Carolina, Heidi Heitkamp of North Dakota, Tim Kaine of Virginia, Joe Manchin of West Virginia, and Claire McCaskill of Missouri.

It’s not the kind of message amendment you see all the time.

Senators love to use budget resolutions as fodder for amendments that can be easily turned into 30-second attack ads. So what did Republicans hope to gain by forcing a vote on dynamic scoring?

In this case, the vote appears to have been aimed at an audience inside the Beltway — and at the conservative groups that support Republicans’ biggest economic ideas, from tax cuts to health care.

The vote was a symbolic victory for the think tanks and lawmakers on the right who have been fighting for years to force CBO and JCT to officially endorse the idea that people spend more and invest more when they owe the government less.

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But there’s a larger battle that goes beyond dynamic scoring.

Conservatives’ ideas, including revenue-generating tax cuts and a more market-oriented health care system, can only work if tax policy changes people’s behavior — and that’s just not how CBO views the world.

And with the first Senate budget resolution in four years, conservatives had a unique chance to put dynamic scoring back on Washington’s radar screen by showing how many lawmakers support it — including a handful of Democrats.

“This is something that remains important to us,” said James Valvo, policy director at Americans for Prosperity, which is aligned with the tea party.

Dynamic scoring has been a kind of pet issue for Portman, a former White House budget director. He has pushed the idea in nearly every fiscal and budget debate since joining the Senate in 2011, but never gained much traction until the budget resolution hit the floor last week.

“Virtually all economists agree that tax policy affects economic growth, which in turn affects the revenue impact of tax legislation, but the Senate currently deprives itself of information on the macroeconomic revenue impact of its tax policies,” Portman told POLITICO in an email. “Requiring that CBO release dynamic scores of tax legislation for information purposes can help lawmakers better judge the possible budget impact of tax legislation.”

The problem for conservatives is that many economists view dynamic scoring as a bit of a shaky way to gauge the impact of government policies.

“We really don’t understand the science well enough to do it right,” said Roberton Williams, a former deputy assistant director for tax policy at the Congressional Budget Office and current fellow at the Tax Policy Center. “The assumption built into the model determines, in large part, what comes out of the mode. There’s going to be conflict unless there’s some agreement on what ought to go in.”

There are benefits to the scoring approach, but the question is how long the positive impact from tax cuts last, said Donald Marron, former acting director of the Congressional Budget Office and director of economic initiatives at the Tax Policy Center.

Dynamic scoring has been fairly effective in short-term models, he said, but it gets harder to know how people will respond in the long-term. There also is the issue of how much the economy is impacted over time if the government cuts back on spending due to deficit concerns resulting from the decrease in revenues.

“There’s a great deal of uncertainty,” Marron said. “There’s less agreement in the long term about the right way to model things.”

The Portman amendment highlights some of the broader tensions that have been building for years between conservatives and CBO.

Conservatives have also been frustrated with the way CBO views proposals to change the health care system by giving people individual tax credits rather than providing their coverage through the workplace.

That idea — which John McCain pushed during his presidential campaign — assumes the health insurance marketplace will adapt to offer cheaper coverage to people if they’re not getting it through their employers. But conservatives could never get CBO to see it that way, so the estimates always showed that the tax credits would barely cover a fraction of what people would have to pay for health insurance.

The bottom line, according to Mike Franc of the conservative Heritage Foundation, is that CBO never gives credit to the idea that people and markets will change their behavior depending on the tax incentives they’re offered.

“You end up with the status quo becoming a tyranny of sorts,” Franc said. “Tax increases are not viewed as harmful. … People just go ahead and behave like they’ve always behaved, even if there’s another 8 to 12 percent coming out of their pockets. We feel like that’s kind of silly.”

For now, Marron says he thinks the traditional scoring system is safe. The budget resolution is dead in the water and the White House is far from backing any dynamic proposals.

“People always get upset with the CBO,” Marron said. “They like it when it’s helping them and they don’t like it when it’s not helping them.”

This article first appeared on POLITICO Pro at 1:40 p.m. on March 28, 2013.