New rule to warp tax cut data



The Congressional Budget Office has been a nonpartisan political institution since its establishment. It has, for decades, researched the effects of legislation on not only the budget, but the rest of the country without political sway.

But a new rule change passed by Congressional Republicans on the first day of the new legislative session could make the results much less reliable.

The change would force the CBO to use a tool called “dynamic scoring” when marking the effects of legislation.

Dynamic scoring simply means that the CBO will measure the effect of tax cuts or spending cuts on the economy as a whole.

But because of statistical modeling limitations, computers cannot work with reality when it comes to tax cuts and the CBO is essentially forced to cook the books.

What happens is that the computers cannot make a computation when our budgetary outlook — now more than $18 trillion in debt — is unstable.

This forces the scorers to input values that would stabilize the debt in the future for their projections.

These arbitrary inputs make the economy look stronger than it actually is, and the computer will spit out predictions that tax cuts will lead to more federal revenue because of the booming economy, even if that isn’t reality.

To give an idea of the difference between dynamic scoring and other prediction models, Rep. Dave Camp, (R-MI) ran a tax cut proposal through multiple systems. Dynamic scoring produced results as much as 16 times better than the other models.

When President Ronald Reagan cut taxes he realized it did not spur economic growth. He passed the largest peacetime tax increase in history the next year and tax increases for five consecutive years after that.

President George H.W. Bush also had to raise taxes. His son, however, passed the famous Bush tax cuts. Federal revenue has not reached its pre-tax-cut level since.

The economy has gained momentum after tax increases by President Obama. On the other hand, states that have slashed taxes, like Kansas, are seriously hurting. To argue that higher taxes would make the economy stronger is, at best, questionable.

However, history is clear that the economy can thrive in spite of higher taxes. The Republican plan has benefited only the rich, while the rest of us suffer.

Non-defense discretionary spending (things like roads, bridges, education, healthcare research and economic development) is at historically low levels. The trickle down economic theory has failed. Incomes for anyone not making seven figures are lower than they were a generation ago, and only slightly better than 50 years ago. Part-time and low wage jobs are at dangerously high levels, and none of the promised benefits of tax cuts have been realized.

Now the policies that brought on these problems will look like they can succeed because of dynamic scoring. What will be the excuse when the problem only gets worse?

Matt Young is a journalism and political science senior.

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