Tax reform — scaling back tax credits, deductions, and other preferences in order to cut tax rates without increasing the deficit — is harder than it looks. Just ask outgoing House Ways and Means Chairman Dave Camp, R-Mich., whom I praised here this year for approaching the task seriously but, as a result, drafting a plan that fell flat with his own party.

The reality of tax reform, as Camp discovered, is that any politically feasible plan to scale back tax benefits doesn’t generate enough money to significantly cut tax rates without increasing the deficit. That’s because the most expensive tax benefits are enormously popular, such as the tax-free treatment of employer-provided health care, the mortgage interest deduction and various tax preferences for savings and investment. Rather than grapple with this reality, Camp’s heir apparent, current House Budget Committee Chairman Paul Ryan, invoked the last refuge of supply-side tax cutters in recent comments about how to proceed with tax reform.

“Our rules in Congress require that we don't take into consideration behavioral changes or economic effects as a result of tax reform,” he told Politico. “What we want to do is change our measurement.” He also told Tax Notes, “People say it’s dynamic scoring; I really call it reality-based scoring.” What a misnomer!

Ryan wants to change long-established methods for estimating the revenue effects of proposed tax changes that the Congressional Budget Office and Joint Committee on Taxation use to “score” the budgetary effects of such legislation. Ryan echoes a common complaint among tax cutters, but he badly mischaracterizes existing revenue estimation methods while ignoring the fatal flaws in requiring budget crunchers to use so-called dynamic scoring.

His assertion that current revenue estimates don’t account for behavioral changes reflects a popular misunderstanding, as CBO explains here: “CBO’s analysts try to judge whether proposed policies would affect people’s behavior in ways that would generate budgetary savings or costs, and those effects are routinely incorporated in the agency’s cost estimates … Similarly, in its estimates of the budgetary impact of tax legislation, the staff of the Joint Committee on Taxation accounts for behavioral responses to changes in the tax system — for example, changes in the timing and amount of capital gains realizations when the tax rate applicable to capital gains is modified.”

Ryan is right, however, that CBO and JCT do not include in their official revenue and cost estimates possible “macroeconomic feedback” effects on the budget due to changes in the overall level of economic activity that might result from proposed legislation — and there are good reasons why. First, estimates of the macroeconomic effects of tax changes are highly uncertain. Second, the most credible estimates usually show changes that are quite small. Finally, and quite importantly, dynamic scoring would impair the credibility of the budget process because the resulting budget estimates will inevitably be controversial and subject to political manipulation.

For major legislation like tax reform, CBO or JCT may well issue a companion economic analysis that includes estimates of macroeconomic feedback effects. Unlike an official budget estimate, however, these economic analyses typically report a range of estimated economic and budgetary effects, often because the analysis includes results from disparate underlying models that provide disparate results. That raises a key question: How would Congress incorporate dynamic scoring into a budget estimate when there’s not even an established method to determine macroeconomic feedback effects?

Dynamic-scoring advocates will point to CBO’s estimates of the budgetary effects of recent immigration proposals, in which CBO departed from its standard practice and incorporated the significant direct effects of the legislation on population, employment and taxable compensation into the official cost estimates. But CBO incorporated only those direct effects into the budget estimate. It treated the more uncertain macroeconomic effects akin to those that can occur under any major legislation, including tax reform, as it usually does — in a companion economic analysis.