H. Rept. 112-377 - 112th Congress (2011-2012)
January 30, 2012, As Reported by the Budget Committee

Report text available as:

Formatting necessary for an accurate reading of this legislative text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.




House Report 112-377 - PRO-GROWTH BUDGETING ACT OF 2012




[House Report 112-377]
[From the U.S. Government Printing Office]


112th Congress                                            Rept. 112-377
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1
_______________________________________________________________________

                                     

 
                    PRO-GROWTH BUDGETING ACT OF 2012

                               __________

                              R E P O R T

                                 of the

                        COMMITTEE ON THE BUDGET

                        HOUSE OF REPRESENTATIVES

                              to accompany

                               H.R. 3582

                             together with

                     MINORITY AND DISSENTING VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


January 30, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed
                        COMMITTEE ON THE BUDGET

                     PAUL RYAN, Wisconsin, Chairman
SCOTT GARRETT, New Jersey            CHRIS VAN HOLLEN, Maryland,
MICHAEL K. SIMPSON, Idaho              Ranking Minority Member
JOHN CAMPBELL, California            ALLYSON Y. SCHWARTZ, Pennsylvania
KEN CALVERT, California              MARCY KAPTUR, Ohio
W. TODD AKIN, Missouri               LLOYD DOGGETT, Texas
TOM COLE, Oklahoma                   EARL BLUMENAUER, Oregon
TOM PRICE, Georgia                   BETTY McCOLLUM, Minnesota
TOM McCLINTOCK, California           JOHN A. YARMUTH, Kentucky
JASON CHAFFETZ, Utah                 BILL PASCRELL, Jr., New Jersey
MARLIN A. STUTZMAN, Indiana          MICHAEL M. HONDA, California
JAMES LANKFORD, Oklahoma             TIM RYAN, Ohio
DIANE BLACK, Tennessee               DEBBIE WASSERMAN SCHULTZ, Florida
REID J. RIBBLE, Wisconsin            GWEN MOORE, Wisconsin
BILL FLORES, Texas                   KATHY CASTOR, Florida
MICK MULVANEY, South Carolina        HEATH SHULER, North Carolina
TIM HUELSKAMP, Kansas                PAUL TONKO, New York
TODD C. YOUNG, Indiana               KAREN BASS, California
JUSTIN AMASH, Michigan
TODD ROKITA, Indiana
FRANK C. GUINTA, New Hampshire
ROB WOODALL, Georgia

                           Professional Staff

                     Austin Smythe, Staff Director
                Thomas S. Kahn, Minority Staff Director


                            C O N T E N T S

                                                                   Page
Pro-Growth Budgeting Act of 2012.................................     1
    Introduction.................................................     3
    Summary of Proposed Changes..................................     3
    Legislative History..........................................     5
    Hearings.....................................................     5
    Purpose and Need.............................................     5
    Section by Section...........................................     6
    Votes of the Committee.......................................     8
    Committee Oversight Findings.................................    10
    Budget Act Compliance........................................    10
    Performance Goals and Objectives.............................    11
    Constitutional Authority Statement...........................    11
    Committee Cost Estimate......................................    11
    Advisory Committee Statement.................................    12
    Applicability to the Legislative Branch......................    12
    Federal Mandates Statement...................................    12
    Advisory on Earmarks.........................................    12
    Changes in Existing Law Made by the Bill, as Reported........    12
    Jurisdiction.................................................    15
    Views of Committee Members...................................    15
        Minority Views...........................................    16
        Dissenting Views.........................................    18


112th Congress                                            Rept. 112-377
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================




                    PRO-GROWTH BUDGETING ACT OF 2012

                                _______
                                

January 30, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on the Budget, submitted the 
                               following

                              R E P O R T

                             together with

                     MINORITY AND DISSENTING VIEWS

                        [To accompany H.R. 3582]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Budget, to whom was referred the bill 
(H.R. 3582) to amend the Congressional Budget Act of 1974 to 
provide for macroeconomic analysis of the impact of 
legislation, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Pro-Growth Budgeting Act of 2012''.

SEC. 2. MACROECONOMIC IMPACT ANALYSES.

  (a) In General.--Part A of title IV of the Congressional Budget Act 
of 1974 is amended by adding at the end the following new section:
          ``macroeconomic impact analysis of major legislation
  ``Sec. 407.  (a) Congressional Budget Office.--The Congressional 
Budget Office shall, to the extent practicable, prepare for each major 
bill or resolution reported by any committee of the House of 
Representatives or the Senate (except the Committee on Appropriations 
of each House), as a supplement to estimates prepared under section 
402, a macroeconomic impact analysis of the budgetary effects of such 
bill or resolution for the ten fiscal-year period beginning with the 
first fiscal year for which an estimate was prepared under section 402 
and each of the next three ten fiscal-year periods. Such estimate shall 
be predicated upon the supplemental projection described in section 
202(e)(4). The Director shall submit to such committee the 
macroeconomic impact analysis, together with the basis for the 
analysis. As a supplement to estimates prepared under section 402, all 
such information so submitted shall be included in the report 
accompanying such bill or resolution.
  ``(b) Economic Impact.--The analysis prepared under subsection (a) 
shall describe the potential economic impact of the applicable major 
bill or resolution on major economic variables, including real gross 
domestic product, business investment, the capital stock, employment, 
and labor supply. The analysis shall also describe the potential fiscal 
effects of the bill or resolution, including any estimates of revenue 
increases or decreases resulting from changes in gross domestic 
product. To the extent practicable, the analysis should use a variety 
of economic models in order to reflect the full range of possible 
economic outcomes resulting from the bill or resolution. The analysis 
(or a technical appendix to the analysis) shall specify the economic 
and econometric models used, sources of data, relevant data 
transformations, and shall include such explanation as is necessary to 
make the models comprehensible to academic and public policy analysts.
  ``(c) Definitions.--As used in this section--
          ``(1) the term `macroeconomic impact analysis' means--
                  ``(A) an estimate of the changes in economic output, 
                employment, capital stock, and tax revenues expected to 
                result from enactment of the proposal;
                  ``(B) an estimate of revenue feedback expected to 
                result from enactment of the proposal; and
                  ``(C) a statement identifying the critical 
                assumptions and the source of data underlying that 
                estimate;
          ``(2) the term `major bill or resolution' means any bill or 
        resolution if the gross budgetary effects of such bill or 
        resolution for any fiscal year in the period for which an 
        estimate is prepared under section 402 is estimated to be 
        greater than .25 percent of the current projected gross 
        domestic product of the United States for any such fiscal year;
          ``(3) the term `budgetary effect', when applied to a major 
        bill or resolution, means the changes in revenues, outlays, 
        deficits, and debt resulting from that measure; and
          ``(4) the term `revenue feedback' means changes in revenue 
        resulting from changes in economic growth as the result of the 
        enactment of any major bill or resolution.''.
  (b) Conforming Amendment.--The table of contents set forth in section 
1(b) of the Congressional Budget Act of 1974 is amended by inserting 
after the item relating to section 406 the following new item:

``Sec. 407. Macroeconomic impact analysis of major legislation.''.

SEC. 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

  Section 202(e) of the Congressional Budget Act of 1974 is amended by 
adding at the end the following new paragraphs:
          ``(4)(A) After the President's budget submission under 
        section 1105(a) of title 31, United States Code, in addition to 
        the baseline projections, the Director shall submit to the 
        Committees on the Budget of the House of Representatives and 
        the Senate a supplemental projection assuming extension of 
        current tax policy for the fiscal year commencing on October 1 
        of that year with a supplemental projection for the 10 fiscal-
        year period beginning with that fiscal year, assuming the 
        extension of current tax policy.
          ``(B) For the purposes of this paragraph, the term `current 
        tax policy' means the tax policy in statute as of December 31 
        of the current year assuming--
                  ``(i) the budgetary effects of measures extending the 
                Economic Growth and Tax Relief Reconciliation Act of 
                2001;
                  ``(ii) the budgetary effects of measures extending 
                the Jobs and Growth Tax Relief Reconciliation Act of 
                2003;
                  ``(iii) the continued application of the alternative 
                minimum tax as in effect for taxable years beginning in 
                2011 pursuant to title II of the Tax Relief, 
                Unemployment Insurance Reauthorization, and Job 
                Creation Act of 2010, assuming that for taxable years 
                beginning after 2011 the exemption amount shall equal--
                          ``(I) the exemption amount for taxable years 
                        beginning in 2011, as indexed for inflation; or
                          ``(II) if a subsequent law modifies the 
                        exemption amount for later taxable years, the 
                        modified exemption amount, as indexed for 
                        inflation; and
                  ``(iv) the budgetary effects of extending the estate, 
                gift, and generation-skipping transfer tax provisions 
                of title III of the Tax Relief, Unemployment Insurance 
                Reauthorization, and Job Creation Act of 2010.
          ``(5) On or before July 1 of each year, the Director shall 
        submit to the Committees on the Budget of the House of 
        Representatives and the Senate, the Long-Term Budget Outlook 
        for the fiscal year commencing on October 1 of that year and at 
        least the ensuing 40 fiscal years.''.

                              Introduction

    H.R. 3582, the ``Pro-Growth Budgeting Act of 2012'' was 
introduced by Representative Price of Georgia. Economists from 
across the ideological spectrum agree that legislation 
considered by Congress can have significant effects on economic 
growth. While the Congressional Budget and Impoundment Control 
Act of 1974 (Congressional Budget Act) requires that the 
Congressional Budget Office (CBO) provide Congress with 
information on the fiscal impact of all legislation reported 
from committee, there is no systematic requirement for analysis 
of the economic impact of legislation. This bill remedies that 
shortcoming.
    The economic recovery from the recession in 2008 and 2009 
has been unsatisfactory on nearly all fronts despite the 
unprecedented amount of debt-financed government spending aimed 
at boosting output and creating jobs. Real gross domestic 
product (GDP) grew by just 1.6 percent last year, roughly half 
the historical trend rate of U.S. growth and just a fraction of 
the growth pace observed in a typical recovery from recession. 
The unemployment rate, although it has ticked down recently, 
remains unacceptably high at 8.5 percent and of the 8.6 million 
jobs lost during the recession and aftermath, less than one-
third have been recovered.
    Economists now estimate that with such subpar economic 
growth the unemployment rate will probably not return to its 
pre-recession level until very late in the decade. It is clear 
that one of the key drags on the economy is the enormous amount 
of policy uncertainty generated by Washington, which makes 
businesses unable to predict their future costs, tax liability 
and profits, making them wary about investing, expanding and 
hiring. This uncertainty has been generated by a host of tax 
and legal mandates soon to take effect as a result of recently-
passed health care legislation as well as the new regulatory 
burdens, some of which have yet to come into effect, contained 
in the Dodd-Frank Wall Street and Consumer Protection Act.

                      Summary of Proposed Changes

    The bill requires CBO to produce a supplemental 
macroeconomic analysis for major legislation that would 
describe the likely impact of such legislation on key economic 
variables such as business investment, the capital stock, 
employment, labor supply, and real Gross Domestic Product 
(GDP). Importantly, this analysis would reflect both the short-
term and long-term economic impact as the specified horizon for 
the analysis would be four decades (i.e. three decades beyond 
the typical 10-year budget window), allowing policymakers to 
judge whether or not considered policies would have a net 
positive or net negative economic impact over time. Likewise, 
the analysis would include estimates of revenue increases or 
decreases resulting from changes in real GDP, which, as a 
supplement to a traditional cost estimates, would help 
policymaker's better understand the full budget, as well as 
economic, impact of legislation.
    The Act defines major legislation by the gross changes in 
fiscal aggregates the legislation would cause as a percentage 
of the economy. It defines a ``major bill or resolution'' as 
legislation causing a change in revenues, outlays, deficits, or 
debt in excess of 0.25 percent of GDP within the 10-year budget 
window. The Act relies on the analysis CBO is already required 
to conduct under section 402 of the Congressional Budget Act 
which uses the so-called current law baseline.
    Once it is established that legislation is ``major'' for 
the purposes of the Act, CBO is required to conduct its 
macroeconomic impact analysis relative to a ``current policy'' 
baseline, which assumes that current tax policies are continued 
into the indefinite future, much like CBO's ``alternative 
fiscal scenario'' baseline.
    CBO already has the necessary analytical tools and 
expertise to produce the macroeconomic reports envisioned by 
this legislation for Congress. CBO has occasionally provided 
such reports for certain legislation or policies (e.g. ``An 
Analysis of the President's Budgetary Proposals for Fiscal Year 
2012 (April 2011), Congressional Budget Office) though 
currently this analysis is done on an ad hoc basis, or by 
request only. One key aim of this legislation is to formalize 
the process of producing such analysis for each major bill or 
resolution before Congress, thereby providing Members with 
useful information on a consistent basis.
    In its macroeconomic analysis, CBO has typically used a 
number of economic models which focus, respectively, on 
different timeframes (e.g. short term vs. long term) and 
contain different assumptions about how individuals, and the 
overall economy, respond to policy changes. While it is clear 
major legislation has a significant impact no one economic 
model gives a complete picture of how the economy would 
actually respond to a major government spending or tax policy 
change. Generally speaking, CBO uses a pair of traditional 
macroeconomic forecasting models developed by private-sector 
companies (Macroeconomic Advisers and IHS Global Insight) to 
gauge the short-term economic impact of policies. These models 
are driven by traditional Keynesian economic relationships that 
emphasize the influence of aggregate demand on output in the 
short term.
    CBO also uses a pair of other models to gauge the medium 
and long-term economic impact of policies. These so-called 
growth models (a Solow-type growth model and a life-cycle 
growth model) concentrate on the supply-side factors in the 
economy. The elements driving economic output in these models 
are labor supply, the size and composition of the capital 
stock, and productivity (the interaction between labor and 
capital). With these diverse economic models, CBO produces a 
range of possible economic effects, reflecting the diversity of 
assumptions inside the models.
    To the extent practicable, this legislation envisions that 
CBO will use a wide variety of economic models as well as the 
broad spectrum of empirical economic research and academic 
scholarship to inform the assumptions and parameters within 
these models (e.g., how people's work hours and employment 
decisions would respond to changes in marginal tax rates) in 
order to reflect the full range of possible economic outcomes 
resulting from a bill.
    The legislation requires CBO to provide detailed 
explanations of the models used and the bases for its analysis 
in order to promote greater understanding by policymakers and 
the public of the strengths and weaknesses of the analysis 
provided. To further this transparency, the Committee requests 
that CBO provide to the House and Senate Budget Committees a 
report within one year of enactment outlining the economic 
models they will be using and the procedures they will follow 
in implementing this bill.

                          Legislative History

    On December 7, 2011, Members of the House Budget Committee 
introduced a comprehensive package of ten legislative budget 
process reform bills designed to fundamentally reform the 
budget process. Included in this package was H.R. 3582, the 
``Pro-Growth Budgeting Act of 2011,'' introduced by 
Representative Tom Price [R-GA-6].

                                Hearings

    In 2011, the House Budget Committee held two budget process 
reform hearings to examine the budget process.
    The first hearing, ``The Broken Budget Process: 
Perspectives from Former CBO Directors,'' was held on September 
21, 2011, with former CBO Directors Rudolph Penner and Alice 
Rivlin testifying.
    The second hearing, ``The Broken Budget Process: 
Perspectives From Budget Experts,'' was held on September 22, 
2011, with Philip Joyce (University of Maryland), the Honorable 
Jim Nussle (Chairman of the Committee on the Budget, 2001 
through 2007, United States House of Representatives) and the 
Honorable Phil Gramm (former United States Senator, 1985-2002) 
testifying.

                            Purpose and Need

    A frequent criticism of CBO is its cost estimates do not 
capture the economic impact of legislation. Since the scoring 
of legislation is done on a ``static'' basis, it does not take 
into account the degree to which policies might impact the 
overall economy (i.e. GDP) in a positive or negative way.
    According to the traditional scoring method used by CBO and 
the Joint Committee on Taxation (JCT), scorekeepers implicitly 
assume that the size of the economy (and therefore key economic 
variables such as labor supply and investment) remain fixed 
throughout the considered budget horizon. Many economists 
believe that fundamental tax reform, that is to say a broader 
tax base and lower tax rates, would lead to greater labor 
supply and increased investment, which, over time, would have a 
positive impact on total national output.
    Likewise, sharp increases in marginal tax rates would 
generally be expected to lead to lower national output over 
time. These so-called ``dynamic'' macroeconomic effects are 
left out of the traditional cost estimates provided to 
policymakers. The estimates incorporate certain dynamic 
behavioral effects at the microeconomic, or individual, level 
but they do not incorporate dynamic macroeconomic effects that 
are associated with changes in economic performance.
    Some have therefore advocated that CBO should switch from 
``static'' to ``dynamic'' scoring in order to provide 
policymakers with a more accurate picture of the economic 
reality that might result from policies under their 
consideration. Several complications have been identified with 
such an approach. For instance, there would be technical 
difficulties in generating consistent and objective dynamic 
scores as these scores would rely heavily on a host of 
sometimes contentious assumptions about the presumed 
macroeconomic response to a given policy. Static scores 
typically produce a point estimate which then becomes the 
single, agreed-upon ``cost'' of legislation for policymakers. 
To accurately reflect the range of opinion about the 
assumptions in a dynamic score, scorekeepers would likely need 
to provide a range of cost estimates, which could complicate 
budget enforcement.
    The consensus of the economic community is that traditional 
``static'' scoring methods leave out essential information 
about real-world macroeconomic effects that should inform 
policymakers' thinking about legislation. However, the same 
community cautions that a switch to ``dynamic'' scoring of a 
sort that would be objective and consistent is not technically 
feasible at this time. The ``Pro-Growth Budgeting Act of 2012'' 
seeks to bridge this divide by providing policymakers with a 
greater amount of information about the likely economic impact 
of policies under their consideration while at the same time 
preserving traditional scoring methods and reporting 
conventions.
    In H. Res. 5 of the 105th (January 7, 1997) Congress 
amended the Rules of the House of Representatives by adding a 
requirement that a macroeconomic analysis be done and included 
in a report effecting federal revenues. The analysis, though, 
was only done for major legislation so designated by the 
Majority Leader, after consultation with the Minority Leader, 
and then requested by the chair of the Committee on Ways and 
Means. Before the House recodified its rules in the 106th 
Congress, the provision was found in former clause 7(e) of rule 
XIII (H. Res. 5, January 6, 1999).
    H. Res. 5 of the 108th Congress (January 7, 2003) amended 
the previous rule by requiring the macroeconomic analysis be 
done, if practicable, rather than only at the request of the 
chair of the Committee on the Ways and Means. A point of order 
lies against any bill if its report does not include such an 
analysis or a statement explaining why a macroeconomic impact 
analysis is not calculable.
    This language may be found in section (2)(A) of clause 3 of 
Rule XIII of the House of Representatives for the 112th 
Congress.

                           Section by Section

SECTION 1. SHORT TITLE.

    This section establishes the short title of the bill as the 
``Pro-Growth Budgeting Act of 2012''.

SECTION 2. MACROECONOMIC IMPACT ANALYSES.

    Subsection (a) amends Title IV of the Congressional Budget 
Act (CBA) by adding at the end of Part A, a new section 407 
that requires CBO to perform a macroeconomic impact analysis of 
``major legislation''. The macroeconomic impact analysis is a 
supplement to the cost estimates CBO prepares pursuant to 
section 402 of the CBA. The analysis is required to address the 
10-year budget window and each of the next three 10-year 
fiscal-year periods resulting in an analysis that covers a 
total of 40 years. The analysis is required to be conducted 
relative to a baseline that assumes the continuation of current 
tax policies.
    Subsection 407(b), as added by this section, provides that 
the macroeconomic impact analysis will describe the potential 
economic impact of the applicable bill or resolution on major 
economic variables, including real gross domestic product 
(GDP), business investment, the capital stock, employment, and 
labor supply. The analysis is also to describe the potential 
fiscal effects of the bill or resolution, including any 
estimates of revenue increases or decreases resulting from 
changes in GDP. The analysis should, to the extent practicable, 
use a variety of economic models to reflect the full range of 
possible economic outcomes resulting from the bill. This 
analysis is required to be conducted relative to a baseline 
that assumes the continuation of current tax policies. Unlike 
the current law baseline, the current policy baseline 
established in section 3 of the Act assumes a more realistic 
future trajectory of fiscal policy as it does not assume the 
expiration of trillions of dollars of tax relief that is 
supported by neither the President, his party's leaders in 
Congress, nor House and Senate Republicans.
    Subsection 407(c) of this section defines the terms used:
    ``Macroeconomic impact analysis'' means estimates of the 
changes in economic output, employment, capital stock, and tax 
revenues expected to result from enactment of the proposal. In 
addition, it is a statement identifying critical assumptions 
and the source of data underling that estimate.
    ``Major bill or resolution'' means any bill or resolution 
if the gross budgetary effects for a fiscal year which an 
estimate is prepared under section 402 are estimated to be 
greater than 0.25 percent of the current projected GDP for any 
such fiscal year. If CBO estimates under its traditional 
estimating methodology that the legislation will change direct 
spending outlays, revenues, deficits, or debt by an amount 
greater than 0.25 percent of GDP in that year, then it is a 
major bill or resolution under this definition. CBO's 
determination of whether a bill is major for the purposes of 
the Act relies on nearly 700 formal cost estimates cost 
estimates CBO routinely performs each year (not to mention the 
thousands of informal estimates CBO provides). These cost 
estimates are conducted relative to the current law baseline 
required by statute. Thus legislation extending current tax 
policy would be measured relative to the current law baseline 
and if the budgetary effects of such legislation exceeded the 
0.25 percent of GDP threshold then that legislation would be a 
major bill or resolution under the Act.
    ``Budgetary effect'' when applied to a major bill or 
resolution means the changes in revenues, outlays, deficit, and 
debt resulting from that measure.
    ``Revenue feedback'' means changes in revenue resulting 
from changes in economic growth as the result of the enactment 
of any major bill or resolution.
    Subsection (b) amends the table of contents for the CBA 
(section 1(b)) to reflect the addition of section 407.

SECTION 3. ADDITIONAL CBO REPORT TO BUDGET COMMITTEES.

    This section amends section 202(e) of the CBA by requiring 
the Director of the CBO to submit, together with the analysis 
of the President's budget submission, a supplemental budget 
projection that assumes the extension of the Economic Growth 
and Tax Relief Reconciliation Act of 2001; the Jobs and Growth 
Tax Relief Reconciliation Act of 2003; extension of the 
``Alternative Minimum Tax fix''; and the extension of the 
estate, gift, and generation-skipping transfer tax provisions 
of title III of the Tax Relief, Unemployment Insurance 
Reauthorization, and Job Creation Act of 2010.
    The section requires the Director of the CBO submit the 
agency's Long-Term Budget Outlook on or before July 1 of each 
year and that the outlook cover at least the ensuing 40 fiscal 
years.

                         Votes of the Committee

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires each committee report to accompany any 
bill or resolution of a public character to include the total 
number of votes cast for and against each rollcall vote, on a 
motion to report and any amendments offered to the measure or 
matter, together with the names of those voting for and 
against.
    Listed below are the actions taken in the Committee on the 
Budget of the House of Representatives on the Pro-Growth 
Budgeting Act of 2012.
    On January 24, 2012, the committee met in open session, a 
quorum being present.
    Chairman Ryan asked unanimous consent to be authorized, 
consistent with clause 4 of rule XVI of the Rules of the House 
of Representatives, to declare a recess at any time during the 
committee meeting.
    There was no objection to the unanimous consent request.
    Chairman Ryan asked unanimous consent to dispense with the 
first reading of the bill and the bill be considered as read 
and open to amendment at any point.
    There was no objection to the unanimous consent request.
    The committee adopted and ordered reported the Pro-Growth 
Budgeting Act of 2012.
    The committee took the following votes:

Amendment in the Nature of a Substitute Offered by Mr. Price

    1. The amendment was offered in the nature of a substitute 
to H.R. 3582 and made in order as original text. The bill 
requires CBO to prepare an analysis for all major legislation 
and of the effect that legislation would have on the U.S. 
economy. Major legislation is defined as any legislation 
estimated by the CBO to have a budgetary effect of at least 
0.25 percent of annual GDP in any year within the ten-year 
budget window. The analysis must cover forty years and also 
include an estimate of the legislation's potential fiscal 
impact, including any changes in tax revenues resulting from 
changes in GDP. The macroeconomic impact analysis is 
supplemental information, in addition to the official 
congressional cost estimate of the legislation. The bill 
requires CBO to submit a statement identifying critical 
assumptions and sources of data underlying the estimate.
    The amendment was agreed to by voice vote.

Amendment Offered by Mr. Amash

    2. The amendment requires CBO to specify the economic and 
econometric models used when performing the supplemental 
analysis.
    The amendment was agreed to by voice vote.
    3. Mr. Garrett made a motion that the committee report the 
bill as amended and that the bill do pass.
    The motion was agreed to by a rollcall vote of 21 ayes and 
11 noes.

                                H.R. 3582
------------------------------------------------------------------------
 Name &                      Answer    Name &                    Answer
 State     Aye       No     Present     State     Aye     No     Present
------------------------------------------------------------------------
RYAN        X                         VAN                  X
 (WI)                                  HOLLEN
 (Chair                                (MD)
 man)                                  (Rankin
                                       g)
------------------------------------------------------------------------
GARRETT     X                         SCHWARTZ
 (NJ)                                  (PA)
------------------------------------------------------------------------
SIMPSON     X                         KAPTUR
 (ID)                                  (OH)
------------------------------------------------------------------------
CAMPBEL     X                         DOGGETT              X
 L (CA)                                (TX)
------------------------------------------------------------------------
CALVERT     X                         BLUMENAU             X
 (CA)                                  ER (OR)
------------------------------------------------------------------------
AKIN        X                         McCOLLUM             X
 (MO)                                  (MN)
------------------------------------------------------------------------
COLE                                  YARMUTH              X
 (OK)                                  (KY)
------------------------------------------------------------------------
PRICE       X                         PASCRELL             X
 (GA)                                  (NJ)
------------------------------------------------------------------------
McCLINT     X                         HONDA
 OCK                                   (CA)
 (CA)
------------------------------------------------------------------------
CHAFFET     X                         RYAN                 X
 Z (UT)                                (OH)
------------------------------------------------------------------------
STUTZMA     X                         WASSERMA             X
 N (IN)                                N
                                       SCHULTZ
                                       (FL)
------------------------------------------------------------------------
LANKFOR     X                         MOORE                X
 D (OK)                                (WI)
------------------------------------------------------------------------
BLACK       X                         CASTOR
 (TN)                                  (FL)
------------------------------------------------------------------------
RIBBLE      X                         SHULER
 (WI)                                  (NC)
------------------------------------------------------------------------
FLORES      X                         TONKO                X
 (TX)                                  (NY)
------------------------------------------------------------------------
MULVANE     X                         BASS                 X
 Y (SC)                                (CA)
------------------------------------------------------------------------
HUELSKA     X                         ........
 MP
 (KS)
------------------------------------------------------------------------
YOUNG       X                         ........
 (IN)
------------------------------------------------------------------------
AMASH       X                         ........
 (MI)
------------------------------------------------------------------------
ROKITA      X                         ........
 (IN)
------------------------------------------------------------------------
GUINTA      X                         ........
 (NH)
------------------------------------------------------------------------
WOODALL     X
 (GA)
------------------------------------------------------------------------

    Mr. Honda, made a unanimous consent request to let the 
record reflect he would have voted no on the rollcall vote.
    There was no objection to the unanimous consent request.
    Mr. Garrett made a motion that, pursuant to clause 1 of 
rule XXII of the Rules of the House of Representatives, the 
Chairman be authorized to offer such motions as may be 
necessary in the House to go to conference with the Senate, and 
staff be authorized to make any necessary technical and 
conforming changes to the bill.
    The motion was agreed to without objection.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee on the Budget's 
oversight findings and recommendations are reflected in the 
body of this report.

                         Budget Act Compliance

    The provisions of clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974 (relating to estimates of new 
budget authority, new spending authority, new credit authority, 
or increased or decreased revenues or tax expenditures) are not 
considered applicable. The estimate and comparison required to 
be prepared by the Director of the Congressional Budget Office 
under clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and sections 402 and 423 of the Congressional 
Budget Act of 1974 submitted to the committee prior to the 
filing of this report are as follows:

                       Congressional Budget Office,
                                             U.S. Congress,
                                  Washington, DC, January 27, 2012.
Hon. Paul Ryan, Chairman,
Committee on the Budget, U.S. House of Representatives, Washington, DC 
        20515.
    Dear Mr. Chairman: The Congressional Budget Office has prepared the 
enclosed cost estimate for H.R. 3582, the Pro-Growth Budgeting Act of 
2012.
    If you wish further details on this estimate, we will be pleased to 
provide them. The CBO staff contact is Jared Brewster, who can be 
reached at 226-2880.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.

Enclosure:
    cc: Hon. Chris Van Hollen, Ranking Member.
               congressional budget office cost estimate
                            january 27, 2012

              H.R. 3582: Pro-Growth Budgeting Act of 2012

As ordered reported by the House Committee on the Budget on January 24, 
                                  2012

                                summary
    H.R. 3582 would require the Congressional Budget Office to provide 
a macroeconomic impact analysis for bills that are estimated to have a 
large budgetary effect. The bill would also require CBO to provide 
supplemental budget projections that assume certain tax policies are 
extended.
    Under H.R. 3582, CBO would be required to provide--to the extent 
practicable--an analysis of the impact on the economy of any bill that 
would have an estimated budgetary effect of greater than 0.25 percent 
of gross domestic product (GDP) in any fiscal year. (Currently, that 
threshold would be about $40 billion, based on GDP of about $16 
trillion.) The macroeconomic analysis would include the estimated 
effect on revenues and outlays of a change in GDP resulting from the 
legislation being evaluated. Those estimates would have to assume that 
certain tax policies not currently in CBO's baseline are extended. 
Furthermore, CBO would be required to publicly provide the assumptions 
and models underlying those analyses.
    CBO estimates that implementing H.R. 3582 would cost about $2 
million over the 2012-2017 period, assuming appropriation of the 
necessary amounts. Enacting H.R. 3582 would not affect direct spending 
or revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 3582 contains no intergovernmental or private-sector mandates 
as defined in the Unfunded Mandates Reform Act (UMRA).
                estimated cost to the federal government
    The estimated budgetary impact of H.R. 3582 is shown in the 
following table. The costs of this legislation fall within budget 
function 800 (general government).


                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                              2012   2013   2014   2015   2016   2017  2012-2017
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level..............................      *      *      *      *      *      *          2
Estimated Outlays..........................................      *      *      *      *      *      *          2
----------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

                           basis of estimate
    For this estimate, CBO assumes that the bill will be enacted in 
fiscal year 2012, that the necessary funds will be provided for each 
year, and that spending will follow historical patterns for similar 
activities.
    CBO estimates that in order to prepare for the macroeconomic impact 
studies, as called for in H.R. 3582, the agency would probably need two 
or three additional staff members. (The amount of extra personnel 
resources needed is uncertain, as it would depend on how many pieces of 
legislation with budgetary effects greater than 0.25 percent of GDP in 
a fiscal year are considered by the Congress in each year.) In addition 
to taking the lead on new macroeconomic impact studies, the additional 
CBO staff members would be responsible for preparing the descriptions 
of underlying assumptions and models for the public (as required by the 
bill). Based on current average costs (including salaries and 
associated benefits), adding two or three staff members could have a 
small cost in fiscal year 2012 and would cost between $300,000 and 
$500,000 per year beginning in fiscal year 2013, resulting in a six-
year cost of roughly $2 million.
                      pay-as-you-go considerations
    None.
              intergovernmental and private-sector impact
    H.R. 3582 contains no intergovernmental or private-sector mandates 
as defined in UMRA and would not affect the budgets of state, local, or 
tribal governments.
                          estimate prepared by
    Federal Costs: Jared Brewster.
    Impact on State, Local, and Tribal Governments: Elizabeth Cove 
Delisle.
    Impact on the Private Sector: Paige Piper/Bach.
                         estimate approved by:
    Theresa Gullo, Deputy Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    With respect to the requirement of clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of this legislation are to 
provide for systematic requirements for analysis of the 
economic impact of major legislation.

                   Constitutional Authority Statement

    Pursuant to clause 7 of rule XII of the Rules of the House 
of Representatives, the committee finds the constitutional 
authority for this legislation in Article I, section 9, clause 
7.

                        Committee Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the committee report incorporates the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to sections 402 and 423 of the 
Congressional Budget Act of 1974.

                      Advisory Committee Statement

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                Applicability to the Legislative Branch

    The committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act (Public Law 
104-1).

                       Federal Mandates Statement

    The committee adopted the estimate of Federal mandates 
prepared by the Director of the Congressional Budget Office 
pursuant to section 423 of the Unfunded Mandates Reform Act 
(Public Law 104-4).

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 3582 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI 
of the Rules of the House of Representatives.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                    CONGRESSIONAL BUDGET ACT OF 1974

                    SHORT TITLES; TABLE OF CONTENTS

  Section 1. (a) * * *
  (b) Table of Contents.--

Sec. 1. Short titles; table of contents.
     * * * * * * *

      TITLE IV--ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

                       Part A--General Provisions

     * * * * * * *
Sec. 407. Macroeconomic impact analysis of major legislation.

           *       *       *       *       *       *       *


TITLE II--CONGRESSIONAL BUDGET OFFICE

           *       *       *       *       *       *       *


                          DUTIES AND FUNCTIONS

  Sec. 202. (a) * * *

           *       *       *       *       *       *       *

  (e) Reports to Budget Committees.--
          (1) * * *

           *       *       *       *       *       *       *

          (4)(A) After the President's budget submission under 
        section 1105(a) of title 31, United States Code, in 
        addition to the baseline projections, the Director 
        shall submit to the Committees on the Budget of the 
        House of Representatives and the Senate a supplemental 
        projection assuming extension of current tax policy for 
        the fiscal year commencing on October 1 of that year 
        with a supplemental projection for the 10 fiscal-year 
        period beginning with that fiscal year, assuming the 
        extension of current tax policy.
          (B) For the purposes of this paragraph, the term 
        ``current tax policy'' means the tax policy in statute 
        as of December 31 of the current year assuming--
                  (i) the budgetary effects of measures 
                extending the Economic Growth and Tax Relief 
                Reconciliation Act of 2001;
                  (ii) the budgetary effects of measures 
                extending the Jobs and Growth Tax Relief 
                Reconciliation Act of 2003;
                  (iii) the continued application of the 
                alternative minimum tax as in effect for 
                taxable years beginning in 2011 pursuant to 
                title II of the Tax Relief, Unemployment 
                Insurance Reauthorization, and Job Creation Act 
                of 2010, assuming that for taxable years 
                beginning after 2011 the exemption amount shall 
                equal--
                          (I) the exemption amount for taxable 
                        years beginning in 2011, as indexed for 
                        inflation; or
                          (II) if a subsequent law modifies the 
                        exemption amount for later taxable 
                        years, the modified exemption amount, 
                        as indexed for inflation; and
                  (iv) the budgetary effects of extending the 
                estate, gift, and generation-skipping transfer 
                tax provisions of title III of the Tax Relief, 
                Unemployment Insurance Reauthorization, and Job 
                Creation Act of 2010.
          (5) On or before July 1 of each year, the Director 
        shall submit to the Committees on the Budget of the 
        House of Representatives and the Senate, the Long-Term 
        Budget Outlook for the fiscal year commencing on 
        October 1 of that year and at least the ensuing 40 
        fiscal years.

           *       *       *       *       *       *       *


      TITLE IV--ADDITIONAL PROVISIONS TO IMPROVE FISCAL PROCEDURES

Part A--General Provisions

           *       *       *       *       *       *       *


           MACROECONOMIC IMPACT ANALYSIS OF MAJOR LEGISLATION

  Sec. 407. (a) Congressional Budget Office.--The Congressional 
Budget Office shall, to the extent practicable, prepare for 
each major bill or resolution reported by any committee of the 
House of Representatives or the Senate (except the Committee on 
Appropriations of each House), as a supplement to estimates 
prepared under section 402, a macroeconomic impact analysis of 
the budgetary effects of such bill or resolution for the ten 
fiscal-year period beginning with the first fiscal year for 
which an estimate was prepared under section 402 and each of 
the next three ten fiscal-year periods. Such estimate shall be 
predicated upon the supplemental projection described in 
section 202(e)(4). The Director shall submit to such committee 
the macroeconomic impact analysis, together with the basis for 
the analysis. As a supplement to estimates prepared under 
section 402, all such information so submitted shall be 
included in the report accompanying such bill or resolution.
  (b) Economic Impact.--The analysis prepared under subsection 
(a) shall describe the potential economic impact of the 
applicable major bill or resolution on major economic 
variables, including real gross domestic product, business 
investment, the capital stock, employment, and labor supply. 
The analysis shall also describe the potential fiscal effects 
of the bill or resolution, including any estimates of revenue 
increases or decreases resulting from changes in gross domestic 
product. To the extent practicable, the analysis should use a 
variety of economic models in order to reflect the full range 
of possible economic outcomes resulting from the bill or 
resolution. The analysis (or a technical appendix to the 
analysis) shall specify the economic and econometric models 
used, sources of data, relevant data transformations, and shall 
include such explanation as is necessary to make the models 
comprehensible to academic and public policy analysts.
  (c) Definitions.--As used in this section--
          (1) the term ``macroeconomic impact analysis'' 
        means--
                  (A) an estimate of the changes in economic 
                output, employment, capital stock, and tax 
                revenues expected to result from enactment of 
                the proposal;
                  (B) an estimate of revenue feedback expected 
                to result from enactment of the proposal; and
                  (C) a statement identifying the critical 
                assumptions and the source of data underlying 
                that estimate;
          (2) the term ``major bill or resolution'' means any 
        bill or resolution if the gross budgetary effects of 
        such bill or resolution for any fiscal year in the 
        period for which an estimate is prepared under section 
        402 is estimated to be greater than .25 percent of the 
        current projected gross domestic product of the United 
        States for any such fiscal year;
          (3) the term ``budgetary effect'', when applied to a 
        major bill or resolution, means the changes in 
        revenues, outlays, deficits, and debt resulting from 
        that measure; and
          (4) the term ``revenue feedback'' means changes in 
        revenue resulting from changes in economic growth as 
        the result of the enactment of any major bill or 
        resolution.

           *       *       *       *       *       *       *


                              Jurisdiction

    The following letters were exchanged between the House 
Committee on Rules and the House Committee on the Budget 
regarding committee jurisdiction:

                                                  January 24, 2012.
Hon. Paul Ryan, Chairman,
Committee on the Budget, 207 Cannon House Office Building, Washington, 
        DC 20515.
    Dear Chairman Ryan: On January 25, 2012, the Committee on the 
Budget ordered reported H.R. 3582, the Pro-Growth Budgeting Act of 
2011. As you know, the Committee on Rules was granted an additional 
referral upon the bill's introduction pursuant to the Committee's 
jurisdiction under rule X of the Rules of the House of Representatives 
over the rules of the House and special orders of business.
    Because of your willingness to consult with my committee regarding 
this matter, I will waive consideration of the bill by the Rules 
Committee. By agreeing to waive its consideration of the bill, the 
Rules Committee does not waive its jurisdiction over H.R. 3582. In 
addition, the Committee on Rules reserves its authority to seek 
conferees on any provisions of the bill that are within its 
jurisdiction during any House-Senate conference that may be convened on 
this legislation. I ask your commitment to support any request by the 
Committee on Rules for conferees on H.R. 3582 or related legislation.
    I request that you include this letter and your response as part of 
your committee's report on the bill and the Congressional Record during 
consideration of the legislation on the House floor.
    Thank you for your attention to these matters.
            Sincerely,
                                              David Dreier.
                                 ______
                                 
                                                  January 25, 2012.
Hon. David Dreier, Chairman,
Committee on Rules, H-312, the Capitol, Washington, DC 20515.
    Dear Chairman Dreier: Thank you for your letter regarding H.R. 
3582, the Pro-Growth Budgeting Act of 2012, which the Committee on the 
Budget ordered reported on January 24, 2012.
    I acknowledge that certain provisions in this legislation are in 
your committee's jurisdiction. I appreciate your decision to facilitate 
prompt consideration of the bill by the full House. I understand that 
by foregoing a sequential referral, the Committee on Rules is not 
waiving its jurisdiction.
    Per your request, I will include a copy of our exchange of letters 
with respect to H.R. 3582 in the Congressional Record during House 
consideration of this bill. We appreciate your cooperation and look 
forward to working with you as this bill moves through the Congress.
            Sincerely,
                                                 Paul Ryan,
                                                          Chairman.

                       Views of Committee Members

    Clause 2(l) of rule XI of the Rules of the House of 
Representatives requires each committee to provide two days to 
Members of the committee to file Minority, additional, 
supplemental, or dissenting views and to include such views in 
the report on legislation considered by the committee. The 
following views were submitted:

                             MINORITY VIEWS

    Although there are large differences in budget priorities 
between the parties, we share a common goal of putting the 
federal budget on a fiscally sustainable path. We all want the 
federal government to be efficient, to focus scarce resources 
where they can do the most good, and to not waste a single dime 
of taxpayer dollars. And we want our budget laws to help 
support those goals.
    Budget process rules and laws can make a difference. For 
instance, the PAYGO principle that has been in effect at 
different periods has played a useful role in preventing the 
deficit from getting even worse. But budget process changes 
will never be a substitute for tackling the difficult fiscal 
questions facing us today. It is not that the budget process 
does not work, it is that Congress has failed to follow the 
rules already on the books.
    The Budget Committee has held two hearings on the general 
topic of budget process reform and the recommendations crossed 
party lines. Former Budget Committee Chairman Jim Nussle, a 
Republican witness, testified that ``It may not be that the 
budget process is broken. It may not be, in other words, that 
tools are broken, but it may be the fact that the tools are not 
even being used.'' Similarly, Dr. Philip Joyce, former 
Congressional Budget Office (CBO) staff member and a Democratic 
witness, testified that ``My main message is that most of the 
tools that you need to solve the budget problems faced by the 
country are already in your toolbox. If the goal is to deal 
with the larger fiscal imbalance that faces us, the most 
important thing to do is to make use of them, not search for 
more tools.''
    The reason we are not following the existing budget rules 
is that Republicans have shown a lack of political will and an 
unwillingness to compromise. Until Republicans are willing to 
support a balanced approach, we will never address the urgent 
need to put Americans back to work and to put our nation on a 
path toward long-term fiscal sustainability. Unfortunately, the 
Pro-Growth Budgeting Act of 2012 does nothing to create a 
single job, to reduce the deficit by a single penny, or to put 
the country on a fiscally sustainable path.
    It is clear from the bill's language and approach that it 
is designed to make it easier to enact deficit-increasing tax 
cuts. The bill requires CBO to produce supplementary estimates 
of the economic impact of major bills using dynamic scoring, an 
approach that involves more uncertainty and subjectivity than 
current scoring rules. Former Republican Budget Committee 
Chairman Jim Nussle opposed moving to dynamic scoring, noting 
that CBO ``generally have done a better job than some of the 
dynamic score-keeping. That has been part of the challenge of 
moving to something called dynamic scoring is that we have not 
found anything that was any more accurate than the current 
way.''
    The bill focuses on analyzing qualifying legislation's 
impact on economic growth and employment, while neglecting to 
mention the economic impacts resulting from increased 
government borrowing to finance revenue changes. Existing 
analysis by CBO suggests that the Bush tax cuts would actually 
reduce growth in the long-run because the negative impacts from 
increased borrowing outweigh any benefits from lower tax rates. 
But it is not even clear if under this bill an analysis of 
extending the Bush tax cuts would show any economic impact 
because the bill seems, despite the stated intention of the 
sponsor, to suggest analyzing impacts against a baseline that 
already assumes the tax cuts are extended. In addition, the 
bill explicitly exempts measures reported from the 
Appropriations Committee, meaning there will be no attempt to 
analyze additional economic benefits from investments in 
education, infrastructure, or any other discretionary spending.
    It is imperative that we get Americans back to work and get 
our fiscal house in order. The bill does nothing to achieve 
either goal. Instead, it pretends that budget process reform in 
the form of mandating supplemental dynamic scoring is the 
answer to solve our very real problems.
                                   Chris Van Hollen.
                                   Michael M. Honda.
                                   Earl Blumenauer.
                                   Paul Tonko.
                                   Bill Pascrell, Jr.
                                   Gwen Moore.
                                   Betty McCollum.
                                   Allyson Y. Schwartz.
                                   Debbie Wasserman Schultz.
                                   Karen Bass.

                            DISSENTING VIEW

    During the Budget Committee hearing, I referenced the work 
of Art Rolnick, former Senior Vice President and Director of 
Research at the Federal Reserve Bank of Minneapolis. In March 
2003, he published a paper with his colleague Rob Grunewald 
titled ``Early Childhood Development: Economic Development with 
a High Public Return.'' Their paper applies an economic 
analysis to argue that Minnesota would be best served by 
increasing public investments in quality early childhood 
development programs.
    Reviewing a study of a Michigan preschool, research found 
the benefit-to-cost ratio was as great as 8-to-1. For every 
public dollar spent in 1960, the participants and community 
received more than $8 dollars in benefits. These benefits were 
seen across the board: children had higher graduation rates, 
businesses had a more educated workforce, and courts saw a 
reduction in juvenile delinquency. Investing in early childhood 
development was a win for the child, their families, and the 
community.
    The advantages cited by Mr. Rolnick and Mr. Grunewald of 
early education make it clear that these programs not only pay 
for themselves, but are a strong investment in our society's 
well-being and future. I encourage all my colleagues to review 
their paper.
    As policymakers, we must understand the broader economic 
impact of the bills we consider on the House floor. 
Unfortunately, the Pro-Growth Budgeting Act (H.R. 3582) would 
not provide us with that information. H.R. 3582 specifically 
excludes appropriations bills--which provide key investments in 
our neighborhoods, schools, and economy--while highlighting the 
potential and frequently erroneous impact of reducing federal 
revenues. Ignoring the tangible and quantifiable benefits of 
direct federal investments in our fellow citizens and 
communities may be a scoring strategy and ideological ploy of 
the Majority, but it will ultimately result in very bad public 
policy.
                                   Betty McCollum.

                                   <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>