As Congress begins more focused work on tax reform, senior staff responsible for estimating the revenue effects of reform proposals recently emphasized that their purpose is to provide key information to lawmakers without taking politics into consideration.
In a July 14 interview of senior Joint Committee on Taxation staff, Chief of Staff Thomas A. Barthold told Tax Analysts, “I am always willing to explain how we arrived at the results that we arrived at. . . . It’s my belief — but I hope that the members respect — that we’re trying to give a good, unbiased presentation and analysis.” Barthold added that the JCT’s job “is to try and give the members information. And then the members act on information as they see fit.”
White House Office of Management and Budget Director Mick Mulvaney has criticized estimates from the Congressional Budget Office on healthcare legislation. “The days of relying on some nonpartisan Congressional Budget Office to do [estimating] work for us has probably come and gone,” Mulvaney said in a May 31 interview with The Washington Examiner.
Barthold said the JCT’s modeling was the subject of a 2011 House Ways and Means Committee hearing, and that in 1989 the Senate Finance Committee held a hearing with the JCT regarding a provision for which the JCT had produced a revenue-negative estimate but Treasury had produced a revenue-positive estimate.
“Congress created the Joint Committee, they created . . . the Congressional Budget Office, because they wanted an independent look at things from that of the Treasury,” Barthold said.
While the JCT uses the CBO’s macroeconomic baseline for its models, Treasury uses the OMB’s baseline, Barthold said. As part of its baseline, the JCT does not assume any factor will be constant, he said.
Asked what assumptions might mislead readers of revenue estimates, Barthold said, “A lot of people think when they see a reported revenue estimate that it is a receipts forecast.” He gave as an example a provision estimated to cause the growth of federal receipts to be $100 billion less, saying, “It can be the case that we say there’s negative revenue effect, but federal receipts will be higher next year, and the year after that will be higher than they are presently.”
“Revenue estimates are estimates of change relative to a baseline,” Deputy Chief of Staff David L. Lenter said. He added that it’s important to use a current law baseline because a proposal might still raise “money relative to present law even if the taxpayer didn’t do the targeted thing.”
Barthold said the JCT explains the uncertainty of revenue estimates to members but provides specific estimates so members can add them “across different proposals.” Senior Economist Christopher Giosa said that members also want to be able to rank the order of different proposals in terms of how expensive they are.
Barthold said, “They’ll weigh the cost, but they’ll weigh the distributional effect, [and] they’ll weigh what they think the policy outcomes [are] and the other objectives that they’re trying to get at. And so it’s a way to help them in a multidimensional sense with one number. But we’ll discuss the behaviors that underlie the estimate.”