Support is growing on and off Capitol Hill for major changes in the way the Congressional Budget Office (CBO) does its politically sensitive projections, or “scoring,” of costs and economic effects of proposed legislation like the Big Beautiful Bill Act (BBB) now being considered in the Senate.

Speaker of the House Mike Johnson (R-La.) focused attention on the CBO during an interview on “Fox News Sunday,” telling host Shannon Bream that “some of the estimates by the CBO are wildly inaccurate. They’re assuming an historically low growth rate in the economy of 1.8 percent.”

Passage of the BBB would provide “jet fuel for the U.S. economy … to get job creators, and risk takers moving again, expanding their businesses, adding more jobs, wages will go up, we’ll have more factories in the U.S. because of the policies we put in this bill.”

Johnson’s comments brought to the fore of the national political discussion about Trump’s second massive tax cut proposal a debate that has been ongoing mostly behind the scenes for several decades, and in the process, renewed discussion of drastic reforms critics say are desperately needed to boost the CBO’s credibility.

The CBO was established as a congressional research agency in 1974 “to provide objective, nonpartisan information to support the congressional budget process and to help the Congress make effective budget and economic policy. The agency offers an alternative to the information provided by the Office of Management and Budget (OMB) and other agencies in the executive branch.”

Shortly after Johnson’s comments aired, Rep. Ralph Norman (R-Ga.), for example, told The Washington Stand, that “the CBO has needed restructuring for many years due to partisan scoring leading to inaccurate budgeting. The result has been a total lack of confidence in the scoring reports.”

And American Accountability Foundation (AAF) Chairman Tom Jones told TWS that “the CBO needs a full-scale make over. The CBO is recruiting from woke left-wing universities for staff from analysts to directors. With the decades of left-wing rot in America’s universities, using these universities as feeders for the CBO gets you exactly what you’d expect, a cadre of credentialed leftists who undercut conservatives at every turn. The CBO needs to be completely torn down and rebuilt with objective staff.”

Essentially, the key issue in the scoring debate is the issue of “static” versus “dynamic” in CBO scoring of legislation. The former approach assumes basic factors in the economy will remain constant regardless of changes on the policy side, such as tax cuts and hikes. The dynamic approach seeks to factor into projection, for example, the revenue effects of a changed tax rate, the costs of regulatory compliance, investment patterns, and a host of other factors.

This is an esoteric academic debate, to be sure, but it is one with huge implications that can shape and reshape national economic policies and alter public perceptions of the Democratic and Republican parties, particularly when the legislation in question raises or lower tax rates, provides new tax credits or cuts or kills existing ones, or revises rules regarding allowable exemptions.

Typically, Democrats claim, based largely on static CBO projections that ignore the positive impacts lower levies typically have on government revenues, that tax cuts must be “paid for” with reductions in spending elsewhere in the federal budget.

By contrast, Republicans counter that tax cuts “pay for themselves” because they produce more government revenue because of increased economic growth that results from allowing individuals and corporations to keep and invest more of their income, thus expanding the economy and building up the number of dollars being collected by the government.

Federal data shows the government received $3.32 trillion in total revenues in 2017, then increased to $3.33 trillion in 2018, the first year after President Donald Trump’s first tax cut package was in effect. And in 2019, total revenues were up to $3.46 trillion. Revenues declined in 2020, the first year of the COVID pandemic.

Similarly, the overall U.S. economic growth rate, as measured by gross domestic product (GDP), in 2017 was 2.3% and it increased to 2.97% the following year. The economy grew at a 2.47% rate in 2019, then suffered a 2.2% decline in 2020.

The BBB now before Congress extends the 2017 tax cuts that had been scheduled to expire at the end of this year. Keeping those cuts in place, the CBO projected earlier this year, would add $470 billion annually to the government’s deficit, for a total of $4.7 trillion in the next decade.

A key illustration of flaws in the CBO’s scoring models, according to former Bureau of Labor Statistics (BLS) Director William Beach, is the assumption that economic growth must always follow historical trends, regardless of changes in policy from one year to the next.

Beach argues that the agency’s current scoring models, “which CBO has employed for years, say history dominates and will always bring us back to where we have been before. Those are called structural models. They say, ‘Here’s the structure of the economy, it works in the following ways and no matter what you do on policy, it will return to that same shape.’”

Beach is also the former Senate Budget Committee’s chief economist and before that founded the Center for Data Analysis (CDA) at the Heritage Foundation. He has worked with the CBO on multiple projects and is among the most experienced advocates of dynamic economic scoring models in the nation’s capital.

“The CBO really needs to break with its past, and it’s going to be hard for it to do that,” Beach added.

The way to bring such a break about, he contends, is the creation of a blue-ribbon commission made up of independent outside macroeconomic analysis experts to conduct a top-to-bottom audit of how the CBO does its work and to recommend needed changes. The commission would be created by and report to the chairmen of the Senate and House budget committees. Key aides to Rep. Jodey Arrington (R-Texas), who chairs the House panel, have been briefed on the approach, Beach said.

Beach is far from alone in his critique of the CBO. During a February hearing before a House Ways and Means Committee oversight panel, Hayden DuBlois, data and analytics director for the Foundation for Government Accountability (FGA), described four additional flawed assumptions used by the CBO:

• CBO assumes discretionary appropriations will continue even without statutory budget authority.

• CBO assumes all discretionary appropriations will grow with inflation — even emergency or one-time appropriations.

• CBO assumes mandatory spending program will continue beyond their statutory expiration dates.

• CBO assumes that Social Security and Medicare payments will continue at their scheduled levels, even after their trust funds are depleted and there is no statutory authority to make payments at those levels.

Ironically, CBO agrees with its critics that its projections are not always accurate. In a report released January 25, 2025, the congressional agency said its 2024 projections underestimated the $1.7 trillion annual federal deficit by $306 billion, as well as its projections on revenues, mandatory and discretionary outlays, and net outlays for interest.

Regarding the static vs. dynamic scoring controversy, a CBO spokesman pointed TWS to the agency’s FAQ page that states the agency “includes effects related to changes in the size of the economy and other macroeconomic variables — or dynamic analysis — in its baseline budget and economic projections, in addition to reports about the effects of illustrative policies. By long-standing convention, CBO does not include such effects in cost estimates for proposed legislation, unless required or requested to do so by the Congress.”

But in an apparent affirmation of Beach’s critique, the same FAQ page acknowledges that “CBO’s cost estimates focus on the federal budgetary consequences of proposed legislation and typically reflect the expectation that the size of the economy remains unchanged.”

Even among analysts who support calls for reform in the CBO’s processes, there are those who acknowledge that the agency does high-quality work, including key analyses that are based in whole or part on dynamic scoring approaches, despite having to operate under limitations established by Congress.

Richard Stern, acting director of the Heritage Foundation’s Thomas A. Roe Institute for Economic Policy Studies and director of the conservative think tank’s Grover M. Herman Center for the Federal Budget, told TWS he supports a reform commission.

“But one of the interesting things that I think gets missed a lot in the conversations about a commission is that the CBO has its hands tied by Congress in terms of how they have to score certain things,” Stern said. “For example, the CBO has been attacked a lot for having ‘missed’ the growth that came out of the original Trump tax cut. But what happened is they didn’t, it was congressional rules that actually prevent dynamic scoring from being used.”

Stern added that the CBO did both static and dynamic analyses of the bill and then published an economic outlook soon after the Trump proposal became law in 2017 that included the growth effects. “And it was pretty spot-on, even out eight years to now, and that’s impressive,” he said.

Additionally, Jones concedes to a nagging suspicion about blue-ribbon commissions.

“Blue ribbon commissions strike me as Washington’s tried and true way to spinning a lot of wheels and doing absolutely nothing,” he said, adding that “the speaker and majority leader should take control of the CBO, appoint a new director and DOGE the place.”

A spokesmen for the speaker did not respond to TWS’s request for comment.

Regardless of where the blue-ribbon commission audit idea goes, Beach told TWS that he is moving forward with the establishment of a new tax-exempt research foundation, the Fiscal Lab on Capitol Hill, for which he is now interviewing prospective employees.

“It will directly compete with the CBO,” Beach said. “It’s amazing how many people realize how important it is that there be competition on Capitol Hill.”