Immigration, Dynamic Scoring, and CBO

By :: May 3rd, 2013

Immigration policy poses an unusual challenge for the Congressional Budget Office and the Joint Committee on Taxation. If Congress allows more people into the United States, our population, labor force, and economy will all get bigger. But CBO and JCT usually hold employment, gross domestic product (GDP), and other macroeconomic variables constant when making their budget estimates. In Beltway jargon, CBO and JCT don’t do macro-dynamic scoring.

That non-dynamic approach works well for most legislation CBO and JCT consider, with occasional concerns when large tax or spending proposals might have material macroeconomic impacts.

That approach makes no sense, however, for immigration reforms that would directly increase the population and labor force. Consider, for example, an immigration policy that would boost the U.S. population by 8 million over ten years and add 3.5 million new workers. If CBO and JCT tried to hold population constant in their estimates, they’d have to assume that 8 million existing residents would leave to make room for the newcomers. That makes no sense. If they allowed the population to rise, but kept employment constant, they’d have to assume a 3.5 million increase in unemployment. That makes no sense. And if they allowed employment to expand, but kept GDP constant, they’d have to assume a sharp drop in U.S. productivity and wages. That makes no sense.

Because increased immigration has such a direct economic effect, the only logical thing to do is explicitly score the budget impacts of increased population and employment. And that’s exactly what CBO and JCT intend to do. In a letter to House Budget Committee Chairman Paul Ryan on Thursday, CBO Director Doug Elmendorf explained that the two agencies would follow the same approach they used back in 2006, the last time Congress considered (but did not pass) major immigration reforms.

In scoring the 2006 legislation, JCT estimated how higher employment would boost total wages and thus increase income and payroll taxes, and CBO estimated how a bigger population would boost spending on programs like Medicaid, Food Stamps, and Social Security. They found that the legislation would boost revenues by $66 billion over the 2007-2016 budget window and would boost mandatory spending by $54 billion; various provisions also authorized another $25 billion in discretionary spending subject to future appropriations decisions.

I remember that estimate well since I was then CBO’s acting director. At the time, I thought this was a pretty big deal, doing a dynamic score of a major piece of legislation. I expected some reaction or controversy. Instead, we got crickets. It just wasn’t a big deal. The direct economic effects of expanded immigration—bigger population, bigger work force, more wages—were so straightforward that folks accepted this exception from standard protocol. I hope the same is true this time around.

Note: The approach CBO and JCT will use in scoring immigration legislation is only partially dynamic. It accounts for the direct effects of increased immigration, such as a bigger population and labor force, but not indirect effects such as changing investment. In other words, it follows the standard convention of excluding indirect changes in the macroeconomy; the innovation is accounting for the direct effects. We used the same approach in 2006, analyzing indirect effects in a companion report separate from the official budget score. CBO and JCT will take the same approach this time around.

 

 

 

 

23Comments

  1. Tax Roundup, 5/6/2013: « Roth & Company, P.C  ::  9:24 am on May 6th, 2013:

    […] Donald Marron,  Immigration, Dynamic Scoring, and CBO (TaxVox) […]

  2. jeromeveys.com  ::  4:52 pm on June 4th, 2013:

    You can buy a relatively cheap one or you buy one that cost a couple hundred
    dollars. The latest Electric Tooth Brushes have options for brush heads and they allow different types and shapes of Brush
    heads to be used as per the user’s preferences. When you brush too hard or incorrectly you expose the roots of the teeth, which are supposed to be below the gums and therefore insulated.

  3. The Cost of Undocumented Immigrants Questioned | Reforma Centro  ::  8:24 pm on June 6th, 2013:

    […] Donald. “Immigration, Dynamic Scoring, and CBO.” Tax Policy Center. 3 May […]

  4. Verificacion de Datos: Legislacion de Inmigracion: ‘Costo =$ 6.3 mil millones’ | Reforma Centro  ::  8:44 pm on June 6th, 2013:

    […] Donald. “Immigration, Dynamic Scoring, and CBO.” Tax Policy Center. 3 May […]

  5. Verificacion de Datos: Legislacion de Inmigracion: ‘Costo =$ 6.3 mil millones’ | Reforma Centro  ::  10:29 pm on June 6th, 2013:

    […] Donald. “Immigration, Dynamic Scoring, and CBO.” Tax Policy Center. 3 May […]

  6. Verificacion de Datos: Legislacion de Inmigracion: ‘Costo = $6.3 mil millones’ | Reforma Centro  ::  10:38 pm on June 6th, 2013:

    […] Donald. “Immigration, Dynamic Scoring, and CBO.” Tax Policy Center. 3 May […]

  7. El Costo de Los Inmigrantes Indocumentados Interrogado | Reforma Centro  ::  7:11 pm on June 7th, 2013:

    […] Marron del Centro de Política Tributaria, que actuaba director CBO en 2007, explicado por […]

  8. http://blog.ifeng.com/article/28566693.html  ::  6:05 am on June 29th, 2013:

    [275] Luo thing did not end

  9. Jordans For Sale online  ::  8:26 am on June 29th, 2013:

    Yang Shu, a Chinese professor who studies unrest in Xinjiang, said the recent violence reflected Uighur grievances about social inequalities and dislocation driven by economic modernization, the spreading influence of militant currents of Islam and the deterioration of ethnic relations since 2009. In July 2011, 18 people died when rioters in Hotan stormed a police station. Jordans For Sale online http://www.bookyards.com/jordan/index.php

  10. Retro Jordans for Cheap  ::  5:52 pm on July 2nd, 2013:

    Government restrictions on mosques and Muslim practices have also become a growing source of tension, especially with Uighurs attracted to more conservative forms of Islam. The latest violence occurred less than two weeks before the start of Ramadan, the Muslim holy month. Some local governments in Xinjiang have sought to discourage Uighurs from their usual fasting at that time.

  11. http://www.szxbqs.com/home.php?mod=space&uid=46820  ::  11:33 am on July 4th, 2013:

    Qiang out of the hall, but with just a few people met at the Great Wall Hotel Liu hit his less! But Qiang has been tight head down, coupled with his tight bag to protect the computer, the other did not recognize him.

  12. http://www.hidg.net/bbs/home.php?mod=space&uid=23131  ::  11:35 am on July 4th, 2013:

    Qiang made a gag gesture. Said: Do not bother other people, I just wanted to ask a few questions, answer questions on my left, does not affect you recuperate

  13. Juanita Carl  ::  9:34 am on July 5th, 2013:

    I do believe that the above list of comments have been attached to the wrong article

  14. chainsaw reviews  ::  8:07 am on July 19th, 2013:

    They cannot be large or they would bind and stall from contact with the wood.
    This achievement materialized in 1950, even though the tool was rather bulky.
    Modern saw technology offers potential owners two distinctly different paths
    when it comes to what type of technology they
    want their saw to operate with.

    Feel free to surf to my homepage chainsaw reviews

  15. Florida  ::  12:25 am on August 1st, 2013:

    They cannot be large or they would bind and stall from contact
    with the wood. Emissions laws are presently resulting in cleaner,
    more efficient gas models that are also easier to start.
    So when those branches are on the verge of being intrusive the electric chainsaw
    provide the solution many gardeners are looking for to keep their gardens in
    tip top condition.

    Here is my weblog – chainsaw buying guide [Florida]

  16. Flossie  ::  1:57 pm on August 1st, 2013:

    Sold conveniently everywhere and all you need to do
    is clip it on your shaving handle and shave. They guarantee an instant cut to the hair and never give chance of any pulling or tugging.
    Purchase your electric shaver after carefully considering this buying guide.

    Feel free to surf to my blog: best electric shaver (Flossie)

  17. 腕時計 高級  ::  8:39 pm on September 11th, 2013:

    marni バッグ

  18. phoenix carpet cleaning  ::  12:31 am on February 4th, 2014:

    of course like your web site but you have
    to check the spelling on several of your posts.
    Several of them are rife with spelling problems and I in finding it very troublesome to tell the reality however
    I’ll definitely come back again.

    Also visit my webpage phoenix carpet cleaning

  19. online betting football odds  ::  8:08 am on February 22nd, 2014:

    Thanks for sharing your ideas with this blog. Likewise, a misconception regarding the banking companies intentions when talking about foreclosed is that the lender will not getreceive
    my payments. There is a fair bit of time the bank will require payments every now
    and then. If you are very deep inside the hole,
    they’ll commonly demand that you pay that
    payment entirely. However, that doesn’t mean that they will have
    any sort of installments at all. When you and the lender can find a way to work one
    thing out, this foreclosure practice may stop.
    However, if you continue to miss payments underneath the new approach, the foreclosure process can pick up
    where it left off.

  20. Lawn Service Tampa  ::  8:44 am on March 21st, 2014:

    It’s going to be end of mine day, but before ending I am reading this enormous piece
    of writing to increase my know-how.

    Look into my webpage :: Lawn Service Tampa

  21. la violin lessons  ::  3:48 pm on April 7th, 2014:

    Nice post. I learn something totally new and challenging on websites I stumbleupon every day.
    It’s always helpful to read articles from other authors and use something from other sites.

    Stop by my website – la violin lessons

  22. video clip websites  ::  8:09 am on June 20th, 2014:

    I think this is among the most important info for me. And i’m glad reading your
    article. But want to remark on few general things,
    The web site style is perfect, the articles is really nice :
    D. Good job, cheers

  23. gregstargell.com  ::  12:38 am on September 6th, 2014:

    Definitely believe that which you said. Your favorite justification seemed to be on the web the easiest thing to be aware of.
    I say to you, I definitely get annoyed while
    people consider worries that they plainly don’t know about.
    You managed to hit the nail upon the top and also
    defined out the whole thing without having side effect , people could take a signal.
    Will likely be back to get more. Thanks