The Republicans haven’t taken over yet but they’ve made their plans known and it won’t come as much of a surprise that their top priorities are tax cuts. One of the very first changes will be gaming the system that tracks whether or not tax cuts work. By every legitimate measure, including common sense, they don’t. The Pubs are going to change all that.
AS Republicans take control of Congress this month, at the top of their to-do list is changing how the government measures the impact of tax cuts on federal revenue: namely, to switch from so-called static scoring to “dynamic” scoring. While seemingly arcane, the change could have significant, negative consequences for enacting sustainable, long-term fiscal policies.
Whenever new tax legislation is proposed, the nonpartisanCongressional Budget Office “scores” it, to estimate whether the bill would raise more or less revenue than existing law would.
[The] conventional estimates do not, however, include any indirect feedback effects that tax law changes might have on overall national income. In other words, they do not incorporate macroeconomic behavioral changes.
Dynamic scoring does. Proponents point out, correctly, that if a tax proposal is large enough, then those sorts of feedback effects can aim the entire economy on a slightly different path.
“Dynamic scoring” basically allows the injection of unjustified assumptions about the future performance of the economy. IOW, adding a baseline article of faith from Reaganomics that all tax cuts on the wealthy raise revenues and if they don’t, it’s because they weren’t deep enough.
Federal deficits are on an unsustainable path (as it happens, because of undertaxation, not excessive spending). Simply cutting taxes against the headwind of structural deficits leads to lower growth, as government borrowing soaks up an ever-increasing share of savings.
The most optimistic dynamic models get around this by assuming that the world today is in fiscal equilibrium, where the deficit does not grow continuously as a percentage of gross domestic product. But that’s not true. If you add the reality of spiraling deficits into those models, they don’t work.
To make these models work, scorekeepers must arbitrarily assume either that we tax more and spend less today than is really the case — which is what they did for the Camp bill — or assume that a tax cut today will be followed by a spending cut or tax increase tomorrow. Economists describe such a move as “making counterfactual assumptions”; the rest of us call it “making stuff up.”
Again IOW, they’re going to enshrine in law a faith-based assessment mechanism guaranteed in advance to justify both their rosy predictions and their brutal get-tough-on-the-poor cuts to human services along with their go-easy-on-corporations cuts to everything from the SEC to the FDA. They will now be able to point to government-authorized conclusions that everything is fine even as it collapses around ordinary folk not rich enough to protect themselves from it.
The Republicans’ interest in dynamic scoring is not the result of a million-economist march on Washington; it comes from political factions convinced that tax cuts are the panacea for all economic ills. They will use dynamic scoring to justify a tax cut that, under conventional scorekeeping, loses revenue.
When revenues do in fact decline and deficits rise, those same proponents will push for steep cuts in government insurance or investment programs, because they will claim that the models demand it. That is what lies inside the Trojan horse of dynamic scoring.
A win-win. When their tax cuts make the economy worse, their scoring model will demand more tax cuts as a fix.
Priority #2 is likewise financially related: further weakening if not killing outright Dodd-Frank, once again allowing banks to rig their own scams.
The Dodd-Frank financial reform law was supposed to curb speculation in swaps. But as The Journal has reported, hedge funds are increasingly using swaps to wager on whether weak firms will live or die. RadioShack, the troubled consumer electronics retailer, is one of several prominent examples. In December, RadioShack’s total debt came to about $1.4 billion, but swaps outstanding on the performance of the debt totaled $23.5 billion. Similarly, J.C. Penney, the ailing department store chain, had total debt of some $8.7 billion, but swaps outstanding on the debt totaled $19.3 billion.
Those gaps suggest excessive speculation, though it is hard, if not impossible, to gauge the precise exposure of funds to big losses. What is known is that a hedge fund that is betting on a company’s default has an incentive to push it over the edge. Conversely, a fund that is betting a troubled company will not default has an incentive to keep it afloat, at least long enough to avoid a big payout. Either way, the company becomes a pawn in a financial game.
Speculative activity is likely to increase. Last month, Congress repealed an anti-speculation provision of Dodd-Frank that would have prevented federally insured banks from conducting several types of swap transactions. In addition, the Federal Reserve recently gave the banks two extra years to meet a Dodd-Frank provision requiring them to sell their investments in private equity funds and hedge funds.
And when the 2 yrs are up, the Fed will extend the deadline for 2 more yrs and then 2 more after that and so on and so on.
The Democrat minority will, of course, “compromise” by unconditionally surrendering when their corporate sponsors tell them to.
And so it goes.
The year before an election year, it is perhaps appropriate to start talking about Democrat hopefuls, party goals, and what the base of the party – liberals – will do when the Third Way Masters decree yet another Republican-lite candidate. If we’re going to have an impact on the process, we’ve got to figure out how to make an elite that believes in coddling corporations for the sake of donations understand that there’s more to democracy than raising $$$ to get elected with.
This will not be easy. (more…)
For several weeks now, the American Legion has been running adds asking for donations – $20 a month – to help wounded veterans from the Iraq war. Nothing wrong with that but this: the core of their pitch is that “we” made promises to take care of them that “we” didn’t keep and now it’s time for “all of us” to step up and keep “our” word to those harmed when they were in “our” service.
The tone is one of finger-wagging accusation and “you oughta be ashamed of ourself” sadness that “we” let down “our” vets by cutting the medical benefits they were supposed to get. Sounds like AL is doing its patriotic duty toward our fighting men, doesn’t it? But here’s the rub: “we” didn’t cut those services. The people who did – Republicans and conservative Democrats in Congress – were universally supported, financially and otherwise, by the same American Legion that is now tut-tutting at us for allowing it to happen. (more…)
Reprinted from 12.24.06 – And it will continue to be printed until the O’Reilly-originated “War on Christmas” BS ends. There’s no antidote to lies except truth.
This would be the time, if ever there was one, to reflect on the meaning of Christmas, but before we can do that to any purpose we need to clear away some of the dead wood by exploding a couple of the myths that have built up around it since the holiday became popular in the late 19th century. Chief among these is the legend that Christmas is Christian, or even religious. (more…)
Democrat support for the Keystone pipeline – a favor to our domestic energy corporations and an outright give-away to a foreign energy company for which Americans will assume all the risks, financial and environmental, while reaping zero benefits for themselves – has become a flashpoint for liberal dissension from the party line, and rightfully so. Support for this pipeline as a “keystone” of US energy policy is inexcusable on every level. Even politically, it makes little sense. There is no constituency in America that’s going to benefit from this project.
Except the oil companies.
If you still doubt that the Dems have deliberately made themselves over as “the other corporate party”, you need to look at the spending bill they’re about to vote on, a bill that has active, arm-twisting support from Obama and his admin. In it are massive govt handouts, and not just to the energy industry. (more…)
I haven’t been reading newspapers for several years but when last I did, the GOP was basically getting a pass from “journalists” when they said one thing and then did something else or criticized the Dems for doing something they themselves – Pubs – had advocated. IOW, when they practiced hypocrisy as a political weapon, they got a free pass from the corporate press. Apparently, in the intervening years the Pubs’ hypo has become so outrageous that even the once-fully-tamed WaPo has been forced to notice. (more…)
Republicans seem to have a monopoly on getting scumbags elected. Sure there’s a corrupt Dem in every other pot but the Pubs have cornered the market on running sleazy, slimebucket, greedhead pervs who promptly get caught perving all over themselves, usually in public.
The latest must make them so proud. Presenting Rep. Scott DesJarlais:
In 2012, Tennessee Republican Representative Scott DesJarlais was exposed as having had extramarrital affairs, having slept with his medical patients, and having supported his ex-wife’s decision to get two abortions before their marriage, despite his staunch public pro-life stance.
A liar, a hypocrite, a sexual predator and an adulterer who is pro-abortion. The pubs hit the trifecta plus 2 with this beauty. Rick Perry will be passing out cigars about now. When your whole political party is dedicated to spookery, slander, and selfishness, a cad like DesJarlais is a real star. Especially when, despite his you’d-think-crippling negatives, he actually wins his primary and is favored in the general against a (heh-heh! *sneer*) retired accountant.
Brilliant. Give him 2 weeks of Fox-attention and 10-1 he’s the Pubs’ next Great White Hope in the GOP presidential lottery.