What Have The Nonpartisan Research Agencies Ever Done For Us?

(For the youth of today, here is the reference.)

I see Americans for Tax Reform is against reappointment of Doug Elmendorf as CBO head. It is a remarkable document, insofar as it is so full of factual errors that the head spins. Montgomery at WaPo provides a point-by-point rebuttal of each of Grover Norquist’s assertions. Here’s a debunking of one of the most hysterical assertions:

…the agency promotes a “Failed Keynesian Economic Analysis,” Norquist says, that asserts that “higher taxes are good for the economy, even to the point of implying that growth is maximized when tax rates are 100 percent.”

Did the CBO really say that a 100 percent tax rate would be good for the economy? As evidence, Norquist points to a 2010 post by the Cato Institute’s Dan Mitchell, titled “Congressional Budget Office Says We Can Maximize Long-Run Economic Output with 100 Percent Tax Rates.”

“I hope the title of this post is an exaggeration,” Mitchell writes, “but it’s certainly a logical conclusion based on” CBO’s claim that paying down the national debt — regardless of whether it’s through higher taxes or lower government spending — would be a good thing for the economy.

In other words, Norquist can’t be bothered to critique an actual CBO document — he relies on a paranoid fantasy of a CBO analysis.

My guess is that Mr. Norquist would want all tax provisions dynamically scored. I discuss an instance of CBO dynamic scoring of President Bush’s budget in this post. In that instance, dynamic scoring did not result in large differences. However, if dynamic scoring were to be applied to tax provisions, then I would say at a minimum, spending provisions should be also scored. Auerbach cites one criticism of only dynamically scoring revenues thus:

Dynamic effects of revenue legislation would come not only through supply-side incentive
effects, but also through budgetary effects. For example, tax cuts that encourage economic
activity could still have negative macroeconomic effects through the crowding out of capital
formation. Thus, all revenue provisions, not just those with significant incentive effects, would
need to be evaluated. The same argument applies to changes on the expenditure side.

My additional guesses are that (1) Mr. Norquist would not be amenable to scoring spending provisions such as investment in infrastructure, education, R&D in renewable energy, etc., and (2) would welcome dynamic scoring à la the Heritage Foundation’s Center for Data Analysis. See examples of their approach [1][2], and [3]. For a discussion of the challenges in implementing dynamic scoring correctly (i.e., not in the Heritage Foundation CDA style), see here.

Update, 10:50AM 11/23: Erickson/RedState argues against reappointment; I think his definition of “leftist” is anybody who essentially relies upon mainstream economics as found in textbooks. Subtext: burn the textbooks.

Disclosure: None.

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