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Dynamic Insecurity
Author: Raine    Date: 01/08/2015 13:49:05

This week we welcomed in the 114th Congress. Both the House and the Senate are now controlled by the Republican party. As with every new congressional session the House and the Senate pass parliamentary rules to guide them for the year.

In the new rules is this:
Cost Estimates for Major Legislation to Incorporate Macroeconomic Scoring. Subsection © requires the Congressional Budget Office and Joint Committee on Taxation, to the extent practicable, to incorporate the macroeconomic effects of “major legislation” into the official cost estimates used for enforcing the budget resolution and other rules of the House. The subsection requires, to the extent practicable, a qualitative assessment of the long-term budgetary and macroeconomic effects of “major legislation”, which is defined to cover legislation that causes a gross budgetary effect in any fiscal year covered by the budget resolution that is equal to or greater than 0.25 percent of the projected GDP for that year. This subsection also allows the chair of the Committee on the Budget, or in the case of revenue legislation the House member serving as the Chair or Vice Chair of the Joint Committee on Taxation, to designate “major legislation” for purposes of this rule.

This subsection also repeals the existing provision in clause 3(h)(2) of rule XIII that requires a macroeconomic impact analysis of revenue legislation, which is superseded by the new rule.
This is also known as Dynamic Scoring. The Hill elaborates a little more on this rules change.
The House on Tuesday adopted a controversial rule to require macroeconomic scoring on major legislation in the new Congress, which opponents say will politicize impartial budget analyses.

The provision, part of the rules package that the House considers at the start of every new Congress, passed largely along party lines by a vote of 234-172. Rep. Mick Mulvaney (R-S.C.) voted "present."

So-called "dynamic scoring" typically offers a more favorable view of cutting taxes, which is part of why Republicans support the method,

GOP lawmakers argued that emphasizing macroeconomic scoring, which factors in economy-wide impacts like the rates of inflation and employment, simply provided a more comprehensive assessment of a bill's impact on the federal budget.
Dynamic Scoring has been called Voodoo Economics, Supply-side Economics and wait for it — Reaganomics.

George HW Bush actually coined the term.
It was left to later Republicans to "end welfare as we know it". The social security system of retirement benefits was actually strengthened by a bi-partisan report which called for higher taxes and a later retirement age.

George Bush senior famously called Mr Reagan's ideas "voodoo economics" before he became vice-president of the United States. While challenging Mr Reagan in the Republican presidential primaries, he said he did not believe that supply-side reforms like ending regulation would be enough to rejuvenate the economy.
Never mind that 'Supply Side' theory of economics has long been proven to be a failure, the GOP is pushing it thru. The link above statistically proves the following statements, with info graphics at this link.

• Investment growth was weaker under supply-side policies
• Productivity growth was weaker under supply-side policies
• Overall economic growth was weaker under supply-side policies
• Employment growth was weaker under supply-side policies
• Income growth for middle-class households was lackluster under supply-side policies
• Hourly earnings were flat or declined under supply-side policies
• Our nation’s fiscal health deteriorated under supply-side policies

Dynamic Scoring is actually fuzzy math.

I don't even have time to go into all the problems this could be from a programming/technological POV, so here is a link to explain that can of worms.

The Center on Budget Policy and Priorities is very against this economic model. Dynamic Scoring is easily manipulated.
Including macroeconomic feedbacks in the cost estimate for a budget or tax reform proposal would impair the credibility of both the proposal and the budget process itself. Congressional leaders could cherry-pick the model and assumptions that give the most favorable estimates.

Chairman Camp, for example, chose to tout the JCT’s most optimistic estimate of the revenue his plan would generate, which was more than ten times larger than the most modest results. He also relied on estimates of the plan’s distributional impacts that omitted the cuts in transfer programs (a category that includes programs such as Social Security and SNAP, formerly food stamps) that were assumed in the dynamic estimates he chose to highlight. The distributional analysis of the plan would have been much less favorable if it included those cuts.
The CBPP "is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals". Their agenda is to keep an eye out for the middle and lower class.
The Center conducts research and analysis to help shape public debates over proposed budget and tax policies and to help ensure that policymakers consider the needs of low-income families and individuals in these debates. We also develop policy options to alleviate poverty.

In addition, the Center examines the short- and long-term impacts of proposed policies on the health of the economy and the soundness of federal and state budgets. Among the issues we explore are whether federal and state governments are fiscally sound and have sufficient revenue to address critical priorities, both for low-income populations and for the nation as a whole.

Over the past 30 years, the Center has gained a reputation for producing materials that are balanced, authoritative, accessible to non-specialists, and responsive to issues facing the country.
That is their agenda. It is completely opposite from the GOP's agenda.

I mentioned at the top of the blog, the new rules that Congress has set for itself. Included in those rules, the Republicans are once again setting the stage to slash Social Security.
The House on Tuesday passed legislation laying out parliamentary rules for the year. The bill included a little-noticed provision blocking Congress from shifting funds to prevent a 2016 shortfall in Social Security's disability insurance program.

The Social Security Administration's actuaries have projected that the disability insurance program's trust fund will run out of money next year, resulting in a 20 percent benefit reduction for nearly 11 million Americans. Since last year, Social Security advocates have been calling on lawmakers to shift funds from the retirement program to make up the difference -- something Congress has done 11 times since the 1950s. (snip)

Congress could prevent the shortfall by raising taxes, cutting benefits, or both -- though cuts are a favored GOP option. Many Republicans have lamented the rise in disability rolls, which they have suggested is something of a welfare sham. Johnson described the program as "fraud-plagued."

Sen. Sherrod Brown (D-Ohio) sharply criticized the measure in a Tuesday statement that argued shifting Social Security funds from retirement insurance to disability insurance has been routine in the past.
Once again, conservatives are misleading people about disability fraud. here are some instances of deceit from the press .

You see, Dynamic Scoring and its use will certainly make it far easier for the new majority to slash Social Security (along with other social safety nets) needed for the poor and middle class.
In addition, the rule could lead to misleading mismatches between the cost estimates used for tax proposals and distributional analyses of those proposals that the House might separately request. As noted above, the economic growth and budgetary estimates that Chairman Camp touted of his tax reform plan came from a model that assumes future Congresses will take controversial deficit-reduction actions that policymakers have long resisted. Those estimates assumed not only that Congress will subsequently act to cut future deficits enough to stabilize the debt as a share of the economy, but also that all of this deficit reduction will come from cuts in transfer payments, a category that includes programs such as Social Security, unemployment insurance, and SNAP (formerly known as food stamps). Yet the distributional impacts that Chairman Camp relied on in presenting his bill failed to include any of these cuts in transfer payments, showing only the tax changes. The distributional analysis of his plan would have looked very different — and much less favorable — had it incorporated the cuts in benefit programs that Camp’s favored dynamic scoring estimate assumed.


Everything old is new again. It's nothing more than Reaganomics and the "welfare queen" cleaned up and given a new name, and it's nothing more than a sham on the middle class.

It's a shame the media is too lazy to tell you this.

and
Raine

36 comments (Latest Comment: 01/08/2015 21:29:26 by Raine)
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