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

H.R. 3582

Pro-Growth Budgeting Act of 2012

Rep. Tom Price

February 2, 2012 (112th Congress, 2nd Session)

Staff Contact

Floor Situation

On Thursday, February 2, 2012, the House is scheduled to consider H.R. 3582, the Pro-Growth Budgeting Act of 2011, subject to a rule.  The rule provides one hour of debate, equally divided and controlled by the chairs and ranking minority members of the Budget Committee. The rule also makes eight amendments in order, each of which is debatable for up to ten minutes. A full summary of the amendments made in order under the bill is forthcoming. The bill was introduced on December 7, 2011, by Rep. Tom Price (R-GA) and referred to the House Budget Committee.  On January 24, 2012, the Committee held a mark-up on the bill and the legislation was amended.  The bill was reported, as amended, on January 30, 2012.

Bill Summary

H.R. 3582 would require the Congressional Budget Office (CBO) to prepare a supplemental estimate of the macroeconomic impact of any major bills reported by a House or Senate committee. Under H.R. 3582, a “major bill” would be defined as legislation with any one-year estimated budgetary effect of more than one-fourth of a percent (0.25%) of the U.S. Gross Domestic Product (GDP) in that year. (For example, according to the Bureau of Economic Analysis, U.S. GDP in 2011 was $15.087 trillion. Therefore, any legislation—excluding appropriations—that CBO estimated to have a budgetary impact of $37.7 billion or more would require a macroeconomic impact analysis.)  Once it is established that legislation is “major,” CBO would be 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.

Under the bill, the macroeconomic impact analysis would have to include the effect of the legislation on real GDP, business investment, the capital stock, employment, and labor supply. The analysis would also have to describe the potential fiscal effects of the bill on any estimates of revenue increases or decreases resulting from changes in GDP. H.R. 3582 would require the impact assessment to cover the ten fiscal-year period beginning with the first fiscal year for which a CBO cost estimate was prepared, as well as the next three ten-year periods, for a total period of four decades.

H.R. 3582 would also require the CBO Director to prepare a new annual report containing budgetary projections that assume the extension of current tax policy. This report would be required in addition to the current-law baseline projections.  “Current tax policy” would mean assuming the extension of the Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, the alternative minimum tax as in effect for taxable years beginning in 2011, and the estate and gift taxes. The bill would require the Director of the CBO to 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.


According to Committee Report 112-377, 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) 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. Therefore, 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 CBO, implementing H.R. 3582 would cost about $2 million over the 2012-2017 period, assuming appropriation of the necessary amounts.  CBO states 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. 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.