GOP Rule Change in Congress Signals New Dawn for 'Voodoo Economics'
'Few economic theories have been as thoroughly tested in the real world as supply-side economics, and so notoriously failed.'
A seemingly arcane rule change passed by the House of Representatives on Tuesday night signals that a new wave of tax cuts for the wealthy and what has long been criticized as "voodoo economics" will again be in vogue as the new Republican-controlled Congress sets the agenda in the new session.
Along with a host of other rules changes that will govern procedural issues in the House over the next two years, at issue here is a rule that will force both the Congressional Budget Office (CBO) and the Congressional Joint Committe on Taxation (JCT), the two nonpartisan groups tasked with scoring the economic impacts of proposed legislation, to use projection models that include what is called "dynamic scoring."
According to current lawmakers opposed to the change, the impact could be devastating. That view is also shared by outside economists and progressives who say that demanding the CBO to make expansive and unsupported predictions about the possible macroeconomic implications of new laws is akin to "cooking the books" and a proven failure when it comes to obtaining accurate, unbiased analysis on behalf of the American people.
Voicing objection ahead of the rule change on Tuesday, Rep. Chris Van Hollen (D-Maryland) and Rep. Louise Slaughter (D-NY) wrote an op-ed in Politico in which they argued that recent decades have clearly shown that the GOP's "trickle down" economic policies have failed. "But instead of changing their approach to budgeting," the pair wrote, "Republicans want to change the evidence." They continued:
It may be tempting to dismiss this change as just an accounting issue. But they are rigging the rules in favor of windfall tax breaks to the very wealthy and big corporations who can hire high-priced, well-funded lobbyists—once again choosing to leave behind working families. Their plan would further distort the nation’s fiscal outlook by applying this scoring model only to tax cuts—not the economic impact of investments in education, healthcare, infrastructure, and other areas. That means that the value of tax cuts to the economy would be exaggerated, and the value of investments in the middle class would be undercut.
Though the Senate has yet to vote on new rules for its new session, expectations are that it will impose matching rules on the CBO and the tax committee. In a statement released just ahead of the rule change in the House, Sen. Bernie Sanders (I-Vt.) called the move a dangerous "gimmick" and vowed to fight the effort in the Senate.
"They call it ‘dynamic scoring.’ In fact, it’s a gimmick to help justify more tax cuts for the wealthy and profitable corporations. It’s what the first President Bush called voodoo economics—and he was right," Sanders said. "The purpose of dynamic scoring is to conceal—not reveal—how Republican policies will affect the economy."
As former Secretary of Labor and professor of public policy at UC Berkeley Robert Reich explained recently:
Dynamic scoring is the magical-mystery math Republicans have been pushing since they came up with supply-side “trickle-down” economics.
It’s based on the belief that cutting taxes unleashes economic growth and thereby produces additional government revenue. Supposedly the added revenue more than makes up for what’s lost when Congress hands out the tax cuts.
Dynamic scoring would make it easier to enact tax cuts for the wealthy and corporations, because the tax cuts wouldn’t look as if they increased the budget deficit. [...]
Few economic theories have been as thoroughly tested in the real world as supply-side economics, and so notoriously failed.
In a recent op-ed for the New York Times voicing his opposition to dynamic scoring, Edward D. Kleinbard, a law professor at the University of Southern California and a former chief of staff of the JCT, said the Republican Party's interest in the controversial model "is not the result of a million-economist march on Washington," but rather, "comes from political factions convinced that tax cuts are the panacea for all economic ills." The GOP, he continued, will "use dynamic scoring to justify a tax cut that, under conventional score-keeping, loses revenue."
Sen. Sanders, however, says you don't need a new measuring stick to show what happens when you cut taxes for the wealthy and powerful. "What history shows," Sanders said, "is that when you give tax breaks to the rich and large corporations, the rich get richer, corporate profits climb and the federal deficit soars. In these difficult times, we need realistic economic projections, not discredited theories, not voodoo economics.”