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federal budget Archive

Tuesday

22

November 2011

0

COMMENTS

Super Committee Succeeds in Not Raising Taxes

Written by , Posted in Big Government

Where others see failure, I see success. Limited success, for sure, but $1.2 trillion in “cuts” with no tax increases is better than any of the “grand bargains” that kept being floated to the media.

Now let’s put this sad business behind us and get back to openly debating where real savings can be found and cut.

UPDATE: As a further illustration of what I mean when I put “cuts” in quotation marks, I provide this chart from Veronique de Rugy:

Sunday

10

April 2011

0

COMMENTS

Some More Perspective on Government Spending

Written by , Posted in Big Government

Following the deal to keep the government funded and avert a shutdown, politicians are unsurprisingly patting themselves on the backs. They came together to get responsible spending cuts, they say. But just how “responsible” have these so-called adults actually been?

For a little perspective, here‘s what government currently spends over various periods of time (graphic from AEI blog The American).

The $38.5 billion being cut from the rest of the year’s budget  amounts to 4.06 days worth of government spending. From another perspective: the debt increased by $54.1 billion in the 8 days preceding the deal.

How responsible can we take these politicians to be when getting them to cut even that puny amount is like pulling teeth?

Tuesday

8

February 2011

0

COMMENTS

Friday

7

January 2011

1

COMMENTS

What You Need to Know About CBO Scoring

Written by , Posted in Big Government, Health Care, Welfare & Entitlements, Taxes

Claims that Obamacare would reduce the deficit ought never to have passed the laugh test, but because the bill was written specifically to game the CBO score, many think repealing it will actually add to the deficit. This is wrong. To understand why, you need to know a little bit about how CBO operates.

First, CBO stands for the Congressional Budget Office. It is part of the legislative branch. It is not, therefore, independent of politics. Both chambers of Congress appoint the Director of the CBO, but he can be removed by a simple resolution of either chamber. In other words, he has a strong incentive to ensure that his organization produces research that pleases politicians. This means, among other things, a heavy bias toward tax and spend policies.

Here’s an example of a CBO double standard that favors big government. When it comes to tax rates, CBO uses a baseline known as current law. This means, for instance, that when the Bush tax rates were extended, CBO said this “cost” money because they were set to expire under existing law, even though the rates were not changed from what they were last year. But when it comes to government spending, CBO takes an entirely different approach. Rather than current law, they use current policy. If a spending program is set to expire under current law, CBO will go ahead and count it as being continued in the baseline because that is the current policy, thus ensuring that there is no “cost” to extending the program. CBO may be “non-partisan,” but that doesn’t prevent its methodology from being ideological.

Second, CBO is significantly constrained in what it can analyze by law. It must respond to requests and bills as they are presented by Congress. It doesn’t matter, for instance, if Congress tells CBO they will not pass some recurring expense down the road despite the fact that they always have in the past, CBO must take them at their word and score any current legislation in front of them accordingly. It is a garbage-in-garbage-out organization. As you can imagine, this can lead to analysis that is near useless in the real world where politicians routinely say one thing and do another.

Third, CBO’s analytical methodology is opaque and historically inaccurate. Despite the current level of unemployment, for instance, CBO has constantly claimed ridiculous job creation numbers as a result of Obama’s stimulus. These same models have failed to accurately predict the observed data.  CBO’s Director confessed that they used Keynesian models to score the stimulus, which guarantees the result merely based on the policy, and not from any observed data. It doesn’t matter what the real world data shows, CBO’s model will always show the stimulus as producing millions of jobs. Who are you going to believe, so to speak, their Keynesian models or your lying eyes?

Yet here we sit, with the faux-authority of the CBO being used to beat anyone over the head who understands that you can’t nationalize health care and expand coverage without significantly increasing costs. I’d suggest that CBO is in need of serious reform, but that’s been the case for decades and it hasn’t happened. Given the likelihood that it won’t happen in the decades ahead either, it’s probably best to just abolish the organization altogether. Between Congressional offices and non-profit think-tanks, there are more than enough outfits capable of analyzing the economic costs of legislation, and at least when these other organizations do it, there isn’t a false pretense that their numbers are beyond reproach. No numbers are beyond reproach and no is methodology above criticism, no matter how desperately the proponents of big government try to claim otherwise.