ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

Subcommittee on Oversight

Houghton Announces Hearing on Modeling the Economic Effect of Changes in Tax Policy

Congressman Amo Houghton (R-NY), Chairman, Subcommittee on Oversight of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on modeling the economic effect of changes in tax policy. The hearing will take place on Tuesday, May 7, 2002, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 2:00 p.m.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. Witnesses will include Lindy Paull, Chief of Staff of the Joint Committee on Taxation (JCT) and the Honorable R. Glenn Hubbard, Chairman of the Council of Economic Advisers. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

The JCT and the U.S. Department of the Treasury, Office of Tax Analysis (OTA), provide revenue estimates to inform policymakers' decisions on contemplated changes in tax policy. Prior to reporting a tax legislative measure to the U.S. House of Representatives, the Committee on Ways and Means must obtain a revenue estimate of each proposal.

The JCT and OTA economists rely on sophisticated economic models and assumptions about future economic conditions to arrive at conclusions about the revenue effect of tax legislative proposals up to 10 years into the future. The workings of these models and the nature of economists' assumptions are therefore important to understanding the tax legislative process. These offices generally rely on the work of the Congressional Budget Office or the Office of Management and Budget, as well.

Some economists have argued that it would improve the accuracy of the estimating process if the JCT and OTA took into account certain macroeconomic effects that are likely to result from changes in tax rates on businesses and individuals. Others have argued that it would be too difficult to model these effects with an acceptable degree of accuracy.

In announcing the hearing, Chairman Houghton stated: "Looking into the future is next to impossible. However there are trends and economic roadmaps we can use to more scientifically tell us probabilities. To have an understanding of legislation one must use these methods. There is no alternative other than to fly blind."

FOCUS OF THE HEARING:

The Subcommittee will review the economic models and assumptions that are used for the current estimating process, and explore ways to improve overall forecasting and analysis regarding legislation before the Committee on Ways and Means and Congress.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note: Due to the change in House mail policy, any person or organization wishing to submit a written statement for the printed record of the hearing should send it electronically to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225-2610 by the close of business, Tuesday, May 21, 2002. Those filing written statements who wish to have their statements distributed to the press and interested public at the hearing should deliver their 200 copies to the Subcommittee on Oversight in room 1136 Longworth House Office Building, in an open and searchable package 48 hours before the hearing.  The U.S. Capitol Police will refuse sealed-packaged deliveries to all House Office Buildings. 

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below.  Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1.   Due to the change in House mail policy, all statements and any accompanying exhibits for printing must be submitted electronically to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a total of 10 pages including attachments.  Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record. 

2.  Copies of whole documents submitted as exhibit material will not be accepted for printing.  Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3.  Any statements must include a list of all clients, persons, or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each statement listing the name, company, address, telephone and fax numbers of each witness.

Note: All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.