`Dynamic' Scoring Finally Ends Debate On Taxes, Revenue

Wall Street Journal | April 1, 2003 | Alan Murray (CNBC)

[NutmegDevil]

Allan Murray sits down to pee. His show on CNBC is a Democrat Party fest.

[Steve Schulin]

There's surely many serious issues related to the use of models by policymakers. My interest has grown in this subject over the past couple of years as it relates to the modeling of climate. I've become persuaded that such models can be very useful for understanding various interconnections, but they are inherently of dubious predictive value. "Validation" of the model as a whole doesn't rule out possible non-uniqueness of the results, so the changes in the particular variable you're interested in may be quite incorrectly handled. Is this a problem with macroeconomic models, too?

[RAT Patrol]

Let me make a prediction of my own. All persons using this model will miraculously come to the conclusions that their previous opinions were dead on accurate.

[RAT Patrol]

it took 35 government analysts a month and a half to complete the work -

For a follow-up study, let's examine what effect high-cost government studies that frequently contradict each other and admittedly depend on your starting "assumptions" have on the economy.

[Steve Schulin]

Actually, the lack of apparent tweaking of the models (to produce clearly favorable results for the majority) is one aspect of this latest development that gives folks of good faith reason to cheer.

[ggekko]

Typical Alan Murray; what a beltway-centric spin on this issue.

What Murray neglects to mention is that EVERY single major tax increase in the last 30 years has underperformed on its revenues to the Treasury versus what was forecast by the CBO static model. What is hugely important about the move to dynamic scoring is that TAX INCREASES will now be seen to have the economic deadening effect that they truly produce in practice. Under the old CBO static model it was always assumed that an increase in the marginal tax rates produced no compensating change in business and consumer behavior. In the real world this is a ridiculous assumption.

As a result of this change it will be MUCH HARDER to raise taxes in the future. Bravo to the Pubs!

[Arthur McGowan]

According to local lore, Mr. Laffer sketched a curve on a cocktail napkin suggesting that a cut in income taxes could provide such a spark to the economy that government revenues would rise, not fall. The free lunch was born.

To my knowledge, NO reporter has ever properly explained the Laffer Curve. For the curve to "work" the ECONOMY AS A WHOLE does NOT have to grow or be "stimulated." SOME tax rates might be at the point where they are collecting the most revenue, while other rates may be higher than that point. Thus, for the curve to "work," it isn't necessary for the economy to grow, it is only necessary to cut the rates that are too high. Revenue will increase instantly. The economy WILL grow, and revenues will increase as a result of that, too.

You can always tell a reporter who hasn't bothered to think about the issue, and who understands that a tax rate is a price, charged by the government. Reporters who don't think always just spew out well-worn phrases like "stimulate the economy," etc.

[Lancey Howard]

Consider the source. Alan Murray is a dem hack who has a wife lobbying dems on Cap hill.

My first thought exactly.
I will wait for a more credible analysis.

Not that any analysis matters anyway, since the confiscation of money from the people who earn it, and the subsequent spending of that money by the scumbag Democrats to buy the votes of society's parasites, is immoral on its face.

[RAT Patrol]

It seems to me that the private sector's goal of making money is different than the government's goal of maintaining the general welfare of the people. (cough!) Any project the government takes on is pretty much guaranteed to not be cost effective because it has none of the fiscal checks and balances the private sector has. For example: Education. The govermnet sets goals based on the competing ideologies of relvolving door politicians who are long gone before they can be held accountable. The systems becomes very divisive and that division itself adds costs. Call it "squabble fees." Each concept is sold on its campaign soundbite value. That is where accountablility ends.

The private sector is held accountable with profit goals and competition. If they don't perform they don't survive. They cannot force the public to pay for their failures.

Every dollar in the govermnet system, spent on things other than what government should be doing -- like keeping the peace -- is going to partially be squandered. Because of its political nature it can't work. Imagine if businesses were run like the gov't.

Additionally, every dollar that goes to the government rather than the private sector represents lost freedom. We are only free to the point that we control our own circumstances. When the government takes our earnings against our will that's not freedom. If I pay 40% of my earnings to the government then I am 60% free. So the one effect tax cuts will always have is the rise of personal freedom and the lowering of government control. Put a price value on that.

[Rifleman]

yah. Expecting to get meaningful qualitative results out of a model of a nonlinear system over more than the short term is a sign of someone who doesn't understand the math.