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The Spectacle Blog
When the Congressional Budget Office and similar entitities churn out their projections on how much revenue a tax policy change will bring in, they often assume that the change won’t have an impact on the economy. This is called “static scoring.” Under static estimates, tax increases necessarily bring in all the expected revenue without damaging the economy while tax cuts are scored as revenue losers without accounting for how they might help the economy grow faster.
The alternative is “dynamic scoring,” which takes into account the fact that the revenue losses from pro-growth tax cuts will be at least partially offset by faster economic growth and the revenue gains from tax increases can be at least partially diminished by slower growth. While the assumptions behind static scoring are demonstrably false, Josh Barro correctly notes that dynamic scoring can be too optmistic about the amount of growth a tax cut will stimulate.
Why does this matter? Throughout the presidential campaign, both parties will be throwing out numbers as to what their tax proposals will do to the long-term budget picture and the economy. Those numbers will be based on static and dynamic estimates. Mitt Romney’s plans will be based in part on the Paul Ryan blueprint, which balances the budget faster under some dynamic scores and assumes that maintaining the historic tax burden will lead to more rapid economic growth. Barack Obama is assuming that higher taxes are compatible with robust growth.
View all comments (7) | Leave a comment
More Blog Posts by W. James Antle, III
http://spectator.org/blog/2012/04/16/scoring-tax-cuts-and-hikes
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Bill| 4.16.12 @ 3:50PM
Veep Music:
1. Gov. Chris Christie: Born this way
2. Gov. Bob McDonald: Sweet home south, all summer long
3. Rep. Paul Ryan: Someone like you
4. Sen. Marco Rubio: Dreaming in Disney Land
5. AG Pam Bondi: Hips don't lie
6. Rep. Allen West: Hello, is it me you're looking for............
7. Gov. Bobby Jindal: It ain't nobody conservative enough
8. Sen. Kelly Ayotte: Rumor has it she's the one be the VP
9.Sen. Rob Portman: Drop-dead penny saver
10. Sen. Pat Toomey: All the anti-tax men's king
11. Gov. Jeb Bush: W's Careless whisper
12. Gov. Mitch Daniel: Rolling in the deep of the Rust-Belt
C Bowen | 4.16.12 @ 7:43PM
The Soviet's five year plans were less insulting to intelligence then the Beltway debate between dynamic and static scoring, when both sides (like the linked article) agree on Big and then Bigger Government as a natural fact.
WL| 4.16.12 @ 11:26PM
Come on AMSPEC!!!! Why are we not seeing more about the GSA Gone Wild?????
Why aren't you people getting all up on Romney to hammer it???
Can you not see an opportunity when it hits us in the face??? Or are we gonna stay on Obama's turf? debating the "war on women" and "buffett rule"........
I swear...sometimes I think my fellow conservatives are like groupies that follow the Democrats around...
aware| 4.17.12 @ 6:47AM
You will find yourself increasingly frustrated as November approaches. This article shows that, yes, the game is rigged. We agree on the State lying, we just debate the best way to lie.
aware| 4.17.12 @ 7:02AM
Here is the take down of "government" bean counters:
http://www.youtube.com/watch?f.....BrJQK010Q#!
fiscal| 4.17.12 @ 9:02AM
Antle, you are clearly on the mark here. However, we do have data that shows that government stimulus does not have any long term effect on growth and the same is true of tax cuts, they are not stimulative. In addition, do you really want people providing dynamic scoring when we have bubbles that very few people can predict? Dynamic scoring of the Bush tax cuts would have failed miserably. Therefore, the only rational approach is static scoring.
And please don't argue that the Ryan tax plan is stimulative. We have a plethora of data that shows otherwise. However, the Ryan plan does attack the debt problem more than Obama -- but not by much because of the political need not to turn off seniors who will vote against anyone who attacks Medicare and Social Security.
The more frustrating problem is that people will actually believe Obama or Romney that their respective "plans" will make a big difference. They won't, because neither plan attacks the structure of our government in a major way. Democrats will believe we can continue to provide extra large safety nets and that we can afford to do so with what they pay in taxes and Republicans will believe the lie that tax cuts will boost the economy.
Actually, U.S. business is doing very well right now -- they are more profitable than they have been in years. But they are not adding jobs in the U.S., they are adding jobs in countries with low labor costs. They are not investing their cash hoard into jobs because that is not how you make hiring decisions -- you hire what you need to meet demand. That's why tax cuts are not stimulative.