WSJ: Doesn't Anyone Know the Score? CBO ignores growth impact of personal accounts for SS

Wall Street Journal ^ | September 26, 2005 | NEWT GINGRICH and PETER FERRARA

[OESY]

While Katrina relief has now jumbled the numbers, the rapidly declining federal deficit projections this past summer revealed a critical challenge for national economic policy making. Once again, they showed that the scoring of the effects of major policy changes performed by the Office of Management and Budget and the Congressional Budget Office were highly erroneous.

The errors were not random. They were strongly and consistently biased against pro-market, pro-growth reforms, and they are the long-recognized results of outdated methodologies employed by federal scoring agencies. The end result is that such errors greatly hamper or prevent Congress from adopting policies that would maximize economic growth and personal prosperity.

In February, for example, OMB projected a federal budget deficit of $427 billion for the current 2005 fiscal year (ending in October). A few months later, in July, OMB projected the deficit at $333 billion. The February projection was off by almost $100 billion, or 28%. This episode is not unique....

CBO is no different. In March, CBO projected a deficit of $394 billion for the current fiscal year. Last month, its projected deficit was $331 billion. CBO's numbers changed by $63 billion in five months. The changes in these federal deficit projections resulted because OMB and CBO had projected massive losses from the 2003 Bush tax cuts. Those losses never happened. Thus, in February 2003, OMB projected federal revenues of $2.135 trillion for fiscal year 2005. That was before the Bush tax cuts. Now OMB projects that, with the tax cuts, federal revenues for 2005 will be $2.140 trillion-- slightly more than the revenues it projected before the tax cut....

The methodologies used by analysts across the federal government to score the impact of legislation still do not take into account the dynamic, pro-growth effects of policy changes....