As House Republicans’ push to pass President Donald Trump’s sweeping tax-and-spending bill, the latest Congressional Budget Office (CBO) score only intensified the debate — arming both sides with new ammunition in an already bitter fiscal fight.
The CBO provides an estimate of how much legislation will cost or save over time and what it will do to the federal deficit and the nation’s gross domestic product (GDP).
However, how the CBO projects these figures is at the center of a long-running Washington debate, because these estimates often become the tip of the spear in partisan warfare.
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With some caveats, Republicans often push for dynamic scoring to emphasize projected economic growth from tax cuts or deregulation, while Democrats tend to prefer static scoring to avoid optimistic forecasts that may never materialize.
At the heart of this divide is how each method models the economy: static scoring offers a snapshot in time, while dynamic scoring aims to capture a more fluid, video-like narrative of economic ripple effects.
Because both approaches rely on forecasts and assumptions, they offer ample room for lawmakers to cherry-pick the projections that best suit their political arguments.
In addition to the CBO, organizations like the Tax Foundation, the Joint Committee on Taxation and the University of Pennsylvania’s Wharton School also release fiscal policy evaluations. Experts say that while the numbers in these estimates may differ, many of the underlying models are largely similar.
“It’s like if we all bought the same make and model of car, but with slightly different trim packages,” said Richard Stern, acting director of the right-leaning Heritage Foundation think tank’s Thomas A. Roe Institute for Economic Policy Studies, told FOX Business.
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Stern added that averaging the estimates can offer yet another useful perspective in understanding a bill’s potential impact.
At the center of these models is a key divide: whether they rely on static or dynamic scoring — two very different approaches to forecasting how policy changes ripple through the economy.
Comparing static and dynamic scoring
The CBO projects that the Senate version of Trump’s “big beautiful bill” will add a little more than $3.4 trillion in budget deficits during the next 10 years. To get these numbers, the CBO generally uses a static scoring method in its modeling. Static scoring is straightforward, more predictable and less speculative.
However, it assumes that behavior does not change in response to the policy. For example, if Congress cuts taxes, the static model simply suggests less revenue. The model does not capture a scenario where people may work more or invest differently because of a lower tax rate.
The alternative is a dynamic scoring method — usually preferred by Republicans.
Dynamic scoring looks to include behavior in its modeling to paint a broader picture of how policy will shape the overall economy. Factors like changes to investment, labor supply, interest rates and tax revenue are considered in this method.
The Tax Foundation’s dynamic scoring estimates that the “big, beautiful bill” will add $2.9 trillion to the federal deficit over a period of 10 years.
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“Ideally, we should look at both,” Adam Michel, the director of tax policy studies at the libertarian-leaning Washington think tank Cato Institute, told FOX Business.
“Static to understand direct budget impacts and dynamic to understand broader economic effects,” Michel said, adding that “transparency and a range of estimates are important.”
One key difference with the Wharton School model is that it does not use the CBO’s baseline to make its projections.
Kent Smetters, a professor of Business Economics and Public Policy at Wharton, explained that almost every other group uses the CBO’s figure as a starting point for its estimates. He also described some of the modeling carried out in Washington as “so divorced from mainstream economists.”
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Meanwhile, the Trump administration has slammed the CBO’s assessment that the president’s sweeping tax and spending bill will add trillions of dollars to the federal deficit. The administration has specifically called out the CBO’s baseline for its projections and failure to consider an extension of Trump’s 2017 tax cuts.
“They can’t see the forest for the trees,” Office of Management and Budget Director Russ Vought said, adding that CBO uses an “artificial baseline” for its estimates.
“They assume that all spending is eternal, but tax relief in 2017 was to sunset and, as a result, when you just extend tax relief, you’re in a situation where it looks like this major cost, and, of course, that’s not a cost,” Vought told “Fox News Sunday’s” Shannon Bream.
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In June, White House press secretary Karoline Leavitt called the CBO “an institution in our country that has become partisan and political.”
She has previously cited the White House’s Council of Economic Advisors projections as an alternative to the CBO’s numbers.
According to the Council of Economic Advisors, Trump’s tax and spending measures will produce “real economic growth and restore fiscal sanity.” The White House agency projects a 4.6% to 4.9% higher GDP, a raise in investment up to 10.2%, and a boost to the economy to a tune of 5.2% in the first four years of passing the bill.
The White House has also said that Trump’s bill “does not add to the deficit” and would actually save more than a trillion dollars through spending cuts.
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