The new house rules will go into effect. Among the items are:
Taxes can be cut without bounds. No more CBO reports for tax cuts. Giving up on the tax cuts pay for themselves malarkey.
tax increases cannot be used to offset spending increases. To increase spending in one area, we must reduce spending in another sector.
A tweak here and there to rules wrt ethics probes. Basically, let’s not do those.
So the cards are on the table. If you are voting R because you endorse fiscal responsibility, you might want to change voting habits. If you have a way of interpreting this as something other than a gift to the donor class, please share your thoughts.
Hard to say. The language I’ve seen goes into all that crazy discretionary/mandated gobble-di-gook. In the end it will be whatever the critters want it to mean.
Meanwhile, I posted this bit of news since later this week these same law makers will address the debt ceiling. Methinks the nutballs in the House are going to get all weird over this. I am putting us at defcon 3. Flush the bombers.
To be fair, to the extent that it’s even theoretically possible for tax cuts to pay for themselves, the CBO rules would not allow them to do the calculation showing it.
If we were on the right side of the Laffer curve (we’re not… this is a hypothetical) then tax cuts can and do pay for themselves if you take behavior change into account. But the CBO is not allowed to do that. Like if Congress was debating dropping the top marginal tax rate from 99% to 70% that would pretty clearly pay for itself because it would stimulate a lot more economic activity. But the CBO is required to assume no economic stimulation will occur and the calculation is simply 0.7X < 0.99X.
At present we are clearly on the left side of the Laffer curve. Waaaaaay on the left side. But even being on the left side of the Laffer curve, further tax cuts are still likely to stimulate the economy… just not anywhere near enough to cover the loss in revenue from the lower tax rate. So even in our current climate the CBO scores on tax cuts are still pretty meaningless.
Of course there’s a very obvious solution, and it’s not the one the GOP picked. Remove the handcuffs from the CBO and allow them to apply professional judgment. Actuaries use professional judgment all the time. Economists should be able to do so as well. No, no one has a crystal ball of course and obviously it’s going to get political which assumptions they make. Doesn’t mean that we shouldn’t do something just because it’s hard though.
Maybe they should publish two scores: the current one and the “best guess” one where they’re allowed to use professional judgment. Or even have them publish a range of outcomes: “if the tax cut stimulates a 1% increase in GDP then A. If it stimulates a 2% increase then B, etc. We forecast a 1.7% increase so we project C.”
I mean, I viewed them as the less bad option for a while. But fiscally responsible? Nah, certainly not at the federal level. And anymore not at the state level either… possibly with a couple of exceptions. I’m not familiar enough with the politics of all 50 states to say definitively.