"Tax Cuts Uber Alles"

[applegrove]

Tax Cuts Uber Alles

By Jamelle Bouie at Slate

http://www.slate.com/articles/news_and_politics/politics/2014/10/paul_ryan_wants_dynamic_scoring_for_tax_policy_republicans_want_to_change.html

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Last month, in a speech to the Financial Services Roundtable, GOP budget guru Rep. Paul Ryan floated a few ideas for the prospective Republican Senate majority. “Our rules in Congress require that we don't take into consideration behavioral changes or economic effects as a result of tax reform,” he said. “What we want to do is change our measurement.”

This is worth a little explanation. Typically, when lawmakers want to know the costs and benefits of a tax proposal, they take it to the Congressional Budget Office for a “score.” To do this, the CBO projects forward from the proposed policy without accounting for feedback effects or changes to the economy caused by the proposal itself. As the office explains, “CBO’s cost estimates generally do not reflect changes in behavior that would affect total output in the economy, such as any changes in labor supply or private investment resulting from changes in fiscal policy.” That is called static scoring. What Ryan wants is a process called dynamic scoring—that does the opposite: It estimates the effects of a new policy on the economy itself, and uses that to make projections on the eventual costs and benefits of the policy.


The main problem with dynamic scoring is it’s extremely difficult to do it with real accuracy. To make a fair estimate with dynamic scoring, you have to make big assumptions about a policy and its relationship to the broader economy. And given countless moving parts in a modern economy, it’s hard to do this without adding bias, ideological or otherwise. For the CBO and other mainstream analysts, it’s more reliable to give a static score of the direct effects of a policy and leave it at that.

For Ryan, however, the fuzzy imprecision of dynamic scoring is a point in its favor. Like the late Jack Kemp—his former boss and mentor—Ryan has a firm belief in supply-side economics, which sees a tight connection between marginal tax rates and economic growth. On its own, this isn't controversial. Economists have long said that—depending on circumstances—high tax rates can have a negative effect on growth.




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[applegrove]

1. Maybe this is what the democrats should run on this month.

[JEFF9K]

2. Is it me, or? ...

Is it me, or do Republicans cut only PROGRESSIVE taxes?