It is a great honor to be asked to testify before the Joint Economic Committee today, especially because I served with Chairman Coats for many years in the Senate and Vice-chairman Brady is an old friend of mine from Texas.
During my time in the House and Senate, I focused mostly on the economy and the budget. Anyone who spends any significant time studying the US budget comes to realize that changes in America’s economic performance have a profound impact on the budget of the country. Economic changes often overwhelm the expected static impact of even the largest policy changes.
Until we learn how to incorporate the impact of our policy changes on the economy and the budget, we won’t have a real understanding of the costs and benefits of our proposed policy changes. When we have a strong reason to believe that a policy change is likely to affect the economy, based upon a logically consistent theory, and good empirical evidence that similar policies have had significant effects on the economy in the past, we should always attempt to employ dynamic scoring.
Dynamic scoring is about finding a way to gauge the full impact that policies might have in increasing or decreasing government revenues and government expenditures. It seems to me that there are three conditions that should be met before dynamic scoring can be used.
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