Wednesday, January 7, 2015

If You Can't Win, Cheat

Jonathan Chait details the vote to impose conservative ideology on the formerly impartial Congressional Budget Office in New York Magazine.

The first substantive act of the new, all-Republican Congress was a telling one: House and Senate leaders, now in partisan accord and able to impose an undiluted partisan imprint upon the institution, struck a blow in their decades-long struggle on behalf of low taxes for the rich and against the bookkeeping standards that have stood in their way. In a rapid vote yesterday, the House directed the Congressional Budget Office to use “dynamic scoring” — a Washington term of art to describe imposing conservative ideology upon the once-neutral task of measuring the budgetary impact of legislation.

The Congressional Budget Office is a 40-year-old institution that has acquired enormous clout within Washington by virtue of its reputation for ideological neutrality. It furnishes Congress and the public with budgetary estimates that, if necessarily imperfect (as all predictions must be), are arrived at fairly. It is also a perfect modern expression of an old Progressive Era–ideal: that policymakers should be informed by the work of impartial experts. That the conservative majority has set out to corrupt this institution as one of its first major acts is, therefore, perfectly fitting.

“Dynamic scoring” allows the Republican majority to impose its own ideological terms on the process of scoring legislation. Many credible economic forecasters would argue that debt-financed tax cuts actually reduce economic growth, and thereby cost the government more, not less, than their static cost. (For instance, a paper by the Brookings Institution concludes that the Bush tax cuts slightly reduced economic growth, because the negative impact of higher debt outweighed the positive incentive impact of lower rates.)

Indeed, two decades' worth of experience would point toward the same conclusion. When Bill Clinton raised the top tax rates, conservatives predicted it would trigger another recession. Instead the economy boomed. When George W. Bush reduced the top tax rates, conservatives predicted it would usher in new heights of prosperity. Instead the economy produced a tepid recovery that was itself inflated by a bubble, culminating in a devastating collapse. The current recovery has picked up speed after the Bush tax cuts for the rich expired. These events do not prove that cutting taxes for the rich causes economic decay and that raising them causes growth. They do suggest that tax rates on the rich have, at best, extremely little impact on underlying growth rates. Republicans are enshrining their doctrine into congressional law at a moment when real-world evidence on its behalf is at a low ebb.

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