Washington, DC…Congressman McClintock spoke on the House floor on the HR 1874 (Price) Pro-Growth Budgeting Act.  “The question before the House is whether we are going to continue to ignore the economic consequences of the major actions we take – or start recognizing that incentives matter and that the legislation we pass has profound economic consequences that must be taken into account.

Why does Amsterdam have the narrowest houses on earth?  It is because they tax by street frontage.  Incentives matter.

What would happen to our revenue if we taxed all of a person’s $100,000 income?  Static scoring upon which we currently depend says that we will raise $100,000.

But we all know the correct answer is that we will raise ZERO dollars, because that person now has no incentive to work at all.

Macroeconomics gives us tools to anticipate the real-world affect of major policy changes, and we ought not to be blind to them.  It’s not perfect, but it comes far closer to the mark than a static model that assumes people are automatons whose behavior never varies despite major changes in the economic environment that our laws create.

This measure doesn’t presume to tell the CBO how to do its job or what formulae to use in its analysis.  We will still get the static scoring, the same as before.

But on major legislation that greatly impacts the overall economy, this bill says, “give us the complete picture.”  If a proposal is going to affect the economy by more than a quarter percent – for good or ill – tell us.  Tell us what you think and show us why you think so.

For too long, Congress has blundered from one economic policy to another with its eyes wide shut, and it is time we got the complete picture and took into account the real-world consequences of our actions. “

# # #