Macroeconomic Implications of Federal Budget Proposals and the Scoring Process

Peter R. Orszag
Peter R. Orszag Vice Chairman of Investment Banking, Managing Director, and Global Co-Head of Healthcare - Lazard

May 2, 2002

Mr. Chairman and Members of the Committee, it is an honor to appear before you to discuss the potential inclusion of macroeconomic effects in the budget scoring process. The scoring process plays an important role in the implementation of fiscal policy, and it is therefore worthwhile to revisit the process periodically to evaluate whether changes are warranted.

As previous witnesses have emphasized, current scoring procedures incorporate many microeconomic behavioral reactions to policy changes. They do not, however, incorporate macroeconomic effects; in evaluating the budgetary impact of new proposals, macroeconomic conditions are assumed to be unaffected by the individual proposals themselves.

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