Saturday, January 3, 2015

Dynamic Duo

The job comes with a very nice desk
When the 111th Congress was seated in January of 2009, the Congressional majority leaders Harry Reid and Nancy Pelosi appointed Douglas Elmendorf to head the Congressional Budget Office. The CBO is responsible for providing non-partisan economic and budgetary analysis to the Congress, including the critical process of "scoring" economic legislation - that is, providing a factual baseline for both its impact on revenues and deficits. This is very important in modern budgetary debates because it limits the ability of political operations to make wild, irrational claims about their given economic agendas. In fact, because it is so utterly non-specific about where the revenues will come from, the CBO was unable to score Paul Ryan's infamous "Path to Prosperity" budget, which prevented the Republican Party from making any actually credible claims.

Which brings us to the 114th Congress, to be seated next week. With Republicans in the majority in both houses, as you might expect, fact-based legislative analysis isn't a priority. The Republican Party has brought exactly the same legislative agenda to every single Congressional session since at least Ronald Reagan's Presidency - lower taxes on businesses and the wealthy, fewer regulations on businesses, reductions in spending on social safety net and community support programs. The problem they have always confronted is finding a "good government" based justification for this agenda. They claim these policies are necessary when the economy is good, when the economy is bad, when unemployment is high and when unemployment is low, when deficits are high or when the budget is in surplus. That makes their challenge hard enough - but claiming that the net upward transfer of wealth coupled with reductions in government spending will create significant GDP and jobs growth is almost impossible using some kind of fact-based presentation.

Enter the concept of "dynamic scoring". Dynamic scoring is an analytic process, championed by Republicans, supply-siders and Laffer-Curve aficionados.  It means that the analyst is expected to take into account the positive feedback loop supposedly created by lower taxes and fewer regulations, recognizing that the very economic processes that reduce direct revenues create GDP and employment growth that must be factored into the overall analysis. The problem is that, even if you believe such an effect occurs, there is no formula or algorithm for determining how significant such an effect might be. Much worse than that is there is no historical evidence for such an effect at all, but Republicans are in the majority, so that's not going to be an important consideration. And the aforementioned Doug Elmendorf was never amenable to such proposals, but our new Congressional leadership has a solution for that.

All they need to do is, as the incoming leadership, replace him with a more ideologically compliant economist and just like that the CBO, long a respected non-partisan analytic organization, will become the kind of low-budget party apparatchik that the Supreme Court is becoming. And make no mistake, they will have no problem finding an economist who claims to know precisely how to measure the growth-stimulative effects of tax cuts and account for the associated indirect revenue growth. What will this get them? Just like that, no less an august and respected body than the Congressional Budget Office will be unhesitatingly declaring that tax cuts for the wealthiest 1% will be economically beneficial to the middle class and even the poor. Everybody wins, everybody gets a pony.

And so we begin 2 years under the economic and legislative stewardship of John Boehner and Mitch McConnell. Harry Reid is sharpening his filibuster, and President Obama is filling his veto pen with rich black ink. We know the political tactic in play - insert toxic provisions in 'must pass' legislation and dare the White House to veto the bill - and now we're starting to see what the political messaging will look like. Confronted with a growing economy, a booming stock market, falling unemployment, small deficits and low interest, the Republicans will have a hard time telling too many whoppers, but with the help of a compliant CBO they can still offer up some pretty big fibs.


  1. I think it is interesting the Obama and his political team are apparently orienting themselves to troll the Repub majority. If nothing else, it puts them into an unexpected defensive position; And while they are seemingly unable to coalesce into a single Action Focus Team (kinda like Democrats, ain'a hey?) in the meantime, OPbama makes some strides on some actual, real, productive aims.

  2. There is a reason they call it the Laugher Curve...