Tuesday, January 13, 2015

Krugman notes some things aren't considered so dynamic

Economist Paul Krugman has a great blog post out today that not only discusses the one-sidedness of dynamic scoring (i.e., making the Congressional Budget Office literally change the laws of math to argue tax cuts have bigger effects than they do), but also noting that some scoring is apparently more dynamic than others. I’ll also include the links that Professor Krugman is referencing, so you can check those out.
A good piece in yesterday’s [New York Times] Upshot reports on a recent study of the effects of Medicaid for children; it shows that children who received the aid were not just healthier but more productive as adults, and as a result paid more taxes. So Medicaid for kids may largely if not completely pay for itself. It’s a good guess that the Affordable Care Act, by expanding Medicaid and in general by ensuring that more families have adequate health care, will similarly generate significant extra growth and revenue in the long run. Do you think the GOP will be interested in revising down estimates of the cost of Obamacare to reflect these effects?

And what about the damage to potential output caused by cutting spending in a depressed economy? The evidence that austerity reduces output and raises unemployment is overwhelming — and there’s now pretty good evidence that sustained high unemployment inflicts long-term damage on the economy’s potential. So will CBO now be instructed to include these effects in its estimates?

The point is that we’re not just looking at a possible mandate for using voodoo in budget estimates, we’re talking about selective voodoo, which incorporates some supposed dynamic effects while ignoring others for which there is if anything stronger evidence. Tax cuts for the rich: good! Spending that makes ordinary workers more productive? Bad!
But when did right-wingers ever care about what the real-world effects of policies were anyway? Their M-O is all about creating an alternate reality where you can argue that Obamacare hasn’t significantly reduced the uninsured rate (even though it has) and where the US budget deficit hasn’t shrunk by 2/3 in the last 5 years (even though it has).

The oligarchs and their GOP puppets know better than the BS they try to peddle, but they count on your ignorance to keep their Big Lies going. Always remember that.

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