Should Congress Abolish the Joint Committee on Taxation?

Should the Joint Committee on Taxation cede its key role as scorekeeper for tax bills to the Congressional Budget Office? A former boss of JCT suggests that maybe it should, at least for a big chunk of the tax code.

To outsiders, these arbiters of the budget implications of tax and spending bills are something of a mystery. CBO tracks the costs of spending bills and, as we've seen in the debate over health reform, its influence can be enormous. At the same time, JCT performs a parallel task by doing revenue estimates of tax bills (JCT also has a staff of lawyers who provide lawmakers with technical tax-writing advice) . But behind the scenes, the two offices have been rivals for many years.

Now, in a footnote (#111) to a new paper on tax expenditures, former JCT chief of staff Ed Kleinbard gives a big shout out to---CBO. This office, he says, is better suited to some key roles because of its “relative stature and independence.” Ed is not criticizing the quality of the JCT staff, but rather the nature of its relationship with tax-writing committees. Still, this is akin to former Yankee manager Joe Torre saying the Red Sox are the better team.

Then, Ed goes a step further. He asks whether the tax legislative process could be improved by incorporating the JCT staff into CBO. He doesn’t answer his own rhetorical question, but he doesn’t have to. His message is pretty clear.

Now a professor at USC's Gould School of Law, Kleinbard has never been a shrinking violet. And I suspect he found his own 2007-2009 tenure as Joint Committee chief of staff to be more than a bit frustrating. He wouldn’t be the first high-profile outsider to feel that way after spending a couple of years watching congressional sausage-making up close.

In the paper, Tax Expenditure Framework Legislation, that he will present Friday at a joint TPC/USC conference in LA, Ed raises an issue with important practical and symbolic meaning. Tax expenditures, soon to reach a staggering $1 trillion-a-year, are an odd hybrid. These subsidies--for health insurance, retirement savings, home ownership, alternative energy, oil and gas production, and just about every other social and economic activity imaginable-- are structured to look like tax law provisions. But economically, they are often indistinguishable from spending. Congress designs them as tax breaks because, well, these days cutting taxes sounds so much better than increasing spending.

By turning the scorekeeping over to CBO, Kleinbard would send a powerful signal that these subsidies are, in fact, spending. But what about the broader point? Is CBO more objective than JCT, as Kleinbard suggests?

I’m not so sure. To an outside observer, JCT has almost always seemed to be a pretty honest arbiter. I can think of only one period, when the staff was directed by Ken Kies more than a decade ago, when many considered JCT more partisan than objective. Similarly, CBO has been remarkably immune from political pressure. Certainly, the current incarnation, headed by Doug Elmendorf, has not been shy about making its best calls about the costs and consequences of health reform. The Democrats who appointed Doug can’t be thrilled, but like his predecessors, Elmendorf has called ‘em as he’s seen ‘em. But so did JCT under Ed and so it does now under his successor, long-time career staffer Tom Barthold.

It would not be the end of the world if JCT’s revenue estimating were folded into CBO, but I think Ed’s judgment of his old shop is a bit harsh.

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