Last month, in a speech to the Financial Services Roundtable, GOP “budget guru” Rep. Paul Ryan floated a few ideas for the assumed 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.” Wait. Say what?
To explain, 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.” The CBO then projects the future effects from the proposed policy without accounting for feedback effects or changes to the overall economy caused by the proposal itself. Sounds reasonable, right? Well, not to Paul Ryan.
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.
Now what Ryan wants is a process called dynamic scoring—which, of course, does just 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. In other words, Ryan wants to cook the books to fit his policy change. This is typically known as a sham, a gimmick, a lie; get the idea?
The problem with dynamic scoring is it’s impossible to do it with any accuracy. To make a fair estimate with dynamic scoring, one would have to make huge assumptions (guesses, assumed results pulled out of one’s ass, etc.) about a policy and its relationship to the broader economy. Given the countless moving parts in a macroeconomic (governmental) setting, it’s practically impossible to do this without adding bias, ideological, political, 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. Wow, accurate measurements. Why would the GOP go for that?
But for the fact-manipulators like Ryan, Reagan, and other bogus supply-side “economists”, the imprecision, easily manipulated nature 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; a theory disproved as hogwash time and again by economists worldwide but sold to gullible Americans like snake oil to rubes.
In fact, the real harm of dynamic scoring is that it makes tax cuts the free lunch of public policy. Ironic, yes?
But supply-side hacks go further to argue that low taxes always spur enough employment, investment, and growth to expand the tax base and grow revenue beyond the size of the tax cut. To Ryan, and the Republican Party 1%ers, this type of economic hucksterism allows them to have their cake (and yours by the way), and eat it, too.
For example, in his 2012 Path to Prosperity, Ryan said that his tax cuts and budgetary policies would create “nearly 1 million new private-sector jobs,” bring the unemployment rate down to “4 percent by 2015,” and increase “real GDP by $1.5 trillion over the decade.” The proof? A dynamic score calculated by the right-wing Heritage Foundation.
Like snake oil salesmen at a medicine show, conservatives have long used dynamic scoring to make extraordinary claims about the alleged power of tax cuts. As a candidate for the 2012 Republican presidential nomination, Texas Gov. Rick Perry proposed a $1 trillion tax cut as a cure for the sluggish economy.
“Gov. Perry is confident that the economic growth that results from this plan will generate the necessary revenue to balance the budget by 2020,” said the campaign in an interview with the Washington Post, citing its dynamic score for the plan. According to an independent analysis, however, the Perry plan would have been a huge revenue loser, starving the government of tax dollars and forcing cuts to a wide variety of programs, of which he himself could famously only remember two out of three in the laughing stock debate never to be forgotten regardless of the fake glasses he now uses to give himself the appearance of being a thoughtful academician.
Likewise, Republicans used dynamic scoring to sell the 2003 Bush tax cuts as a lunch that would pay for itself—the tonic for a slow-moving economy. “The president’s growth package will reduce the tax burden on the American people by $98 billion this year, $670 billion over the next 10 years,” said Vice President Dick Cheney. “But the actual impact on the deficit will be considerably smaller than the static projections, because the president’s package will generate new growth, it will expand the tax base, and thus increase tax revenue to the federal government ultimately.”
Of course, none of this came to pass; quite the opposite. Far from broad-based gains, the Bush tax cuts added trillions to long-term debt, worsened economic inequality, and set the stage for the next five years of sluggish growth, culminating in a massive recession. Despite this example, Republican governors like Kansas’ Sam Brownback have embarked on an orgy of supply-side tax cutting, and congressional Republicans have pushed bills to establish dynamic scoring for the Congressional Budget Office.
Which brings back to Lyin’ Paul Ryan. For the House Budget Committee chairman, it’s still tax cuts that are the cornerstone for his most recent budget, in which he proposed a whole new round of tax cuts, along with huge reductions to spending on low-income Americans. The only way to make this work as public relations—let alone policy—is to paint a picture of prosperity and success. Give us these tax cuts, the argument goes, and we’ll supercharge the economy with growth.
For this, dynamic scoring is necessary.
So if Republicans win control of Congress, we can count on a growing number of proposals utilizing nonsense numbers, as the GOP seeks to confuse issues and the public with bad policies and loads more snake oil.
Harvey A. Gold