cbo

The Republican's Magical Mystery Tour (Starting Next Week)

According to reports, one of the first acts of the Republican congress will be to fire Doug Elmendorf, current director of the non-partisan Congressional Budget Office, because he won’t use “dynamic scoring” for his economic projections.

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.

Incoming House Ways and Means Chairman Paul Ryan (R-Wis.) calls it “reality-based scoring,” but it’s actually magical scoring – which is why Elmendorf, as well as all previous CBO directors have rejected it.

Few economic theories have been as thoroughly tested in the real world as supply-side economics, and so notoriously failed.

Ronald Reagan cut the top income tax rate from 70 percent to 28 percent and ended up nearly doubling the national debt. His first budget director, David Stockman, later confessed he dealt with embarrassing questions about future deficits with “magic asterisks” in the budgets submitted to Congress. The Congressional Budget Office didn’t buy them.

George W. Bush inherited a budget surplus from Bill Clinton but then slashed taxes, mostly on the rich. The CBO found that the Bush tax cuts reduced revenues by $3 trillion.

Yet Republicans don’t want to admit supply-side economics is hokum. As a result, they’ve never had much love for the truth-tellers at the Congressional Budget Office.

In 2011, when briefly leading the race for the Republican presidential nomination, Newt Gingrich called the CBO “a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that has not been internally generated.”

The CBO has continued to be a truth-telling thorn in the Republican’s side.

The budget plan Paul Ryan came up with in 2012 – likely to be a harbinger of what’s to come from the Republican congress – slashed Medicaid, cut taxes on the rich and on corporations, and replaced Medicare with a less well-funded voucher plan.

Ryan claimed these measures would reduce the deficit. The Congressional Budget Office disagreed.

Ryan persevered. His 2013 and 2014 budget proposals were similarly filled with magic asterisks. The CBO still wasn’t impressed.  

Yet it’s one thing to cling to magical-mystery thinking when you have only one house of Congress. It’s another when you’re running the whole shebang. 

Now that Elmendorf is on the way out, presumably to be replaced by someone willing to tell Ryan and other Republicans what they’d like to hear, the way has been cleared for all the magic they can muster.

In this as in other domains of public policy, Republicans have not shown a particular affinity for facts.

Climate change? It’s not happening, they say. And even if it is happening, humans aren’t responsible. (Almost all scientists studying the issue find it’s occurring and humans are the major cause.)

Widening inequality? Not occurring, they say. Even though the data show otherwise, they claim the measurements are wrong.

Voting fraud? Happening all over the country, they say, which is why voter IDs and other limits on voting are necessary. Even though there’s no evidence to back up their claim (the best evidence shows no more than 31 credible incidents of fraud out of a billion ballots cast), they continue to assert it.  

Evolution? Just a theory, they say. Even though all reputable scientists support it, many Republicans at the state level say it shouldn’t be taught without also presenting the view found in the Bible.

Weapons of mass destruction in Iraq? America’s use of torture? The George W. Bush administration and its allies in Congress weren’t overly interested in the facts.

The pattern seems to be: if you don’t like the facts, make them up.

Or have your benefactors finance “think tanks” filled with hired guns who will tell the public what you and your patrons want them to say.

If all else fails, fire your own experts who tell the truth, and replace them with people who will pronounce falsehoods.

There’s one big problem with this strategy, though. Legislation based on lies often causes the public to be harmed.

Not even “truthiness,” as Stephen Colbert once called it, is an adequate substitute for the whole truth. 

Does a CBO report really say Obamacare means 2 million will lose their jobs? In a word, no.

Or at least, only if you misunderstand it —which, sadly, is easy to do when major news outlets are misreporting the story. The right is, of course, running wild with the story and it seems no one has actually bothered to sit down and read the damned thing. There’s a rampant misunderstanding of how jobs are measured in the Congressional Budget Office’s report and this is resulting in confusion — which the right and Republicans are running in to exploit. TPM’s Dylan Scott has the skinny (emphasis mine):

What the CBO really found was that the numbers of hours worked would decrease under Obamacare, by roughly 1.5 percent to 2 percent between 2017 and 2024. The report then translated those lost hours into the equivalent of 2.5 million jobs. But that doesn’t mean 2.5 million jobs are going to disappear from the U.S. economy.

The CBO report, in fact, specifically undermines that claim.

Those lost hours will “almost entirely” be the result of people choosing to work fewer hours because of Obamacare — not because they lost their jobs or can’t find a full-time job.

"The report explicitly says that Obamacare isn’t going to force businesses to cut jobs on any grand scale," Scott reports. "What it is going to do is change how much Americans work." Obamacare will actually free people to work less, since insurance coverage won’t be dependent on full-time hours. 35 hours a week is better fit for your family? Great. Knock yourself out. It’s not like you’ll lose your health coverage or anything.

No wonder the GOP is eager to spin this thing right out of the gate; if Americans find out what it really means, they’re not going to be interested in messing with Obamacare at all, much less repealing it.

From Bloomberg News: “U.S. health spending in 2019 will be $4 trillion, the Centers for Medicare and Medicaid Services said this week, or $500 billion less than the agency projected in 2010 when President Barack Obama’s health-care overhaul became law. That announcement followed by a week a report from the Congressional Budget Office lowering its five-year cost estimates.”

Republicans will just shout “socialism” and “Benghazi” and their voters will not remember these facts. Conservatives can not stand positive outcomes delivered by Obama. 

When You Don't HAVE to Depend On Your Job For Benefits - Ending The Insurance Trap

"A liberating result of the law."  - NYT

2.5 million people will get health insurance and will not HAVE to work to get their benefits due to the Affordable Care Act:

.. what [the CBO report] actually says is that the ACA will create 2 million job openings. No net loss, actually a big gain.

Josh Barro explains how this is good for workers:

"When an employee is dependent on his job not just for a wage but for health insurance, he is less able to threaten to leave if he doesn’t get a raise. Severing the work-insurance link strengthens the employee’s hand in bargaining — which is bad for employers and good for workers…. This helps explain why so many business owners have been apoplectic about the law."

Fascinating analysis……apparently, the ‘income inequality has never been higher’ statistic only applies to household income; individual income inequality has been surprisingly flat over the past 20 years. How could that happen? 

In other words, if rising inequality is limited to households and families and does not extend to individuals then the causes might have less to do with greedy capitalists in the American economy and more to do with other factors in the American society. These include: diminished social contact between the rich and the poor; rising divorce rates and the breakdown of families; fewer income earners in a household because of a lack of education, death or incarceration and so on.

CBO: 500,000 Americans will lose their jobs if minimum wage is hiked to Obama's $10.10 number

This is President Obama.  He knows even less about economics than he does about dancing, which isn’t very much, believe me.  It is because of a basic lack of economic literacy that President Obama has been promoting a raise in the minimum wage to $10.10/hour, something the non-partisan CBO says would be very, very bad for our already tepid jobs market.

from Reuters:

Raising the U.S. federal minimum wage to $10.10, as President Barack Obama and Democrats in Congress are proposing, could result in about 500,000 jobs being lost by late 2016, the Congressional Budget Office (CBO) estimated on Tuesday.

The non-partisan CBO also said that increasing the hourly wage could reduce U.S. budget deficits by a small amount for several years, but then increase them slightly in later years.

The current minimum wage is $7.25 an hour.

read the rest

President Obama should really leave the economics stuff alone and stick to dancing.  Unfortunately, he’s not a professional dancer, he’s in charge of steering our national economy over a cliff.