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This is one of those times that I fear for the future of the republic: "dynamic scoring" is about to become a part of the federal budget process.

Dynamic scoring is the technique that assumes that the revenue loss from a tax cut will be offset by increased revenues from the faster-growing economy caused by the tax cut. This reduces the apparent impact on the budget, makes tax cuts more politically palatable and makes it less necessary for Congress and the president to come up with offsetting spending reductions.

It is not surprising that dynamic scoring is about to be implemented now. The Bush administration and many Republicans in Congress see tax cuts as a cornerstone of their economic and political futures. Dynamic scoring makes tax cuts easier to pass and, therefore, becomes their vastly preferred route.

But other moons, stars and planets have also aligned in 2003 to make dynamic scoring possible:

• Sen. Pete Domenici, R-N.M., who for years has voiced concerns about dynamic scoring, has been replaced as Senate Budget Committee chairman by Sen. Don Nickles, R-Okla., who is a big proponent of both tax cuts and most things that make them more likely to be enacted.
• Dan Crippen, the latest in a long line of Congressional Budget Office directors who had questions about thought dynamic scoring, is being replaced by Douglas Holtz-Eakin, the current chief economist for the White House Council of Economic Advisers and a dynamic scoring proponent.
• The Joint Committee on Taxation, which has the responsibility for estimating the costs of all tax code changes, is controlled by members who think that dynamic scoring is the way to go.

Why am I worried about dynamic scoring?

First, the most recent evidence is not terribly compelling. For example, the $300 per taxpayer rebate put in place as part of the 2001 tax cut was not spent to the extent we were told to expect. As a result, economic activity did not increase as assumed and the rebate's actual impact on the deficit was far greater than anticipated.

Second, the vast majority of Republican and Democratic budget analysts ("geeks" would be appropriate here) I have worked with on budget matters for over a quarter century think dynamic scoring is wrong. These are people who care less about the outcome of the budget debate than that it is conducted with correct information. They simply are not convinced this is an accurate way to do budget estimates.

Third, as far as I can tell, no CBO director has ever supported dynamic scoring to the extent it is about to be implemented. This is true regardless of whether they were Republicans or Democrats, were appointed by a Republican- or Democratic- controlled Congress, were fiscal conservatives or liberals, or had technical rather than political backgrounds.

Fourth, some change in economic activity has always been taken into account in the past when tax bills were scored. Current proponents of dynamic scoring think those estimates have been far too timid, however, and want more aggressively optimistic projections to be used.

Fifth, we won't know until long after a tax cut has been enacted that it did not cause the increase in economic activity and the additional revenues as promised. At best, it will be months before we know, and by then it will be too late to force the people who pushed the tax cuts either to own up to their mistake or do anything about it.

Indeed, we may never know whether it really works. Dynamic scoring proponents are likely to say that however badly the economy is doing, it would have been worse without the tax cut. They will also be able to say that an increased deficit is the result of other factors such as a war, oil price increase, worldwide economic slowdown or interest rate increase by the Federal Reserve.

Sixth, at what point do spending proponents realize that dynamic scoring can work for them as well? It is not hard to make the case that additional spending can stimulate the economy and therefore increase the amount of federal revenues collected in much the same way as a tax cut. It is also not hard to make the case that a deal could be in the offing between tax cutters and spending increasers to use dynamic scoring for both at the same time.

Finally, everything above points directly to dynamic scoring leading to much higher-than-expected deficits - deficits for which no one may ever have to take responsibility. That means that the most dynamic thing in the years ahead will be the easier politics in most federal budget votes.

Question Of The Week

Last Week's Question. The deficit is determined by comparing federal spending to... receipts. It's not just taxes because "receipts" includes fees and other income. It is definitely not gross domestic product - as almost a quarter of everyone who sent in a response said. The winner of the all-new "I Won A 2003 Budget Battle" mouse pad is Penny Terrell, executive director of the Polk County Housing Authority in Mena, Ark. (Note: The mouse pads will be ready around Feb. 1, so please be patient.)

This Week's Question. Is your computer itching to get one of these gorgeous "I Won A 2003 Budget Battle" mouse pads before any of the other computers in your office? Do you need to win one to show everyone in your office that you are actually doing something work-related when you are on the Internet? If so, read on.

The question: What is a federal budget "function?" Send your response to scollender@nationaljournal.com by 5 p.m. on Saturday, Jan. 18, 2003, and you could win a mouse pad of your own that will make your computer hum and your colleagues envious. You must include your mailing address so the mouse pad can be sent if you win. If more than one person submits the correct answer, the winner will be selected at random from all those with the right response.