Apr 12, 2024 - Economy

Biden alums want to change how we measure a bill's financial impacts

Illustration of the capitol dome cracking open to show a piggy bank inside

Illustration: Natalie Peeples/Axios

One of the peculiar obsessions in U.S. fiscal policymaking is the "score." That is, what will a particular tax or spending bill, in the judgment of Congress' impartial bean-counters, mean for deficits and GDP over the next 10 years?

Why it matters: Three former Biden administration officials argue that the conventions of legislative scorekeeping are at best too narrow, and at worst stand in the way of sensible policymaking.

  • On Friday, they launched a new project aimed at letting anyone — lawmakers, experts, and civilians alike — project a fuller range of impacts of changes in areas like tax policy or family assistance.

Driving the news: The Budget Lab at Yale, led by Natasha Sarin, Martha Gimbel, and Danny Yagan, kicks off with analysis of various approaches to handling the expiration next year of most provisions of the 2017 Tax Cut and Jobs Act.

  • If nothing is done, taxes will go up dramatically at the end of next year, so deciding what comes next will be a major focus of domestic policy in 2025, no matter the results of November elections.
  • You can build your own TCJA extension package here and see how it would — based on the Yale team's model — affect deficits, income inequality and more.

State of play: When Congress considers legislation on taxes and spending, it is scored by the Congressional Budget Office and/or Joint Committee on Taxation, which model the fiscal and economic implications.

  • This tends to limit the analysis in terms of the time horizon (to a decade) and scope (to deficits and growth).
  • "What struck us was the primacy of these scores and revenue estimates in the legislative process," says Sarin, a former Treasury official and president of the Yale Budget Lab.
  • For example, there is academic evidence that investments in early childhood education can make for a better-educated, more productive workforce over time — but those economic benefits don't show up until well outside the 10-year window commonly used for scoring.

What they're saying: "You can count how much something will cost over a particular time horizon," Sarin says. "But when you invest in kids or climate, those benefits don't pay off in that 10-year window, and the right way of measuring them is not through short-term GDP effects."

  • "It's not the scorekeepers' fault," Sarin says. "It's just what their mandate is. They've been asked to do a very precise thing. We're trying to build out the aperture of how you do holistic policy analysis."

Go deeper: Here is a meaty piece from Sarin and Safia Sayed on what they see as the limitations of current scoring practices.

Go deeper