Posted on 01/24/2002 10:11:17 PM PST by JohnHuang2
TownHall.com: Conservative Columnists: Mark Tapscott
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Mark Tapscott (back to story)
January 25, 2002
Is Congress blindfolded on the Economy?
Would you cross a minefield wearing a blindfold? Congress does every time it makes decisions about the economy, yet most senators and representatives dont even know it.
If that sounds hard to believe, come with me now to the inner sanctum of government decision making and let me show you one of Uncle Sams dirty little secrets. Officially, its called scoring but it would be more truthful to refer to it as fortune telling. They do it behind closed doors on Capitol Hill and in the federal bureaucracy.
Whenever Congress considers a tax bill, federal law requires that the proposal first be considered by the Joint Committee on Taxation, which includes members of the Senate and House. Though little known outside the Beltway, the JCT is one of the most influential committees of Congress.
Before the JCT votes, its staff analyzes tax proposals to determine their likely impact on federal revenues. This process can be done using either of two rather arcane methods known as "static" and dynamic scoring. Many state and local governments, as well as the private sector, use dynamic scoring to estimate things like how much future pensions will cost. Most economists prefer dynamic scoring because it measures economic trends over time in response to changes in the incentive structure created by government tax and spending policies. Policymakers thus get a more accurate body of facts on which to make vital decisions like how much you and I should pay in taxes.
Now, heres the dirty little secret the JCT insists on using the static scoring method, even though there is growing professional, corporate, academic and political support for using dynamic scoring instead. In fact, all of the federal governments tax scoring groups, including the Congressional Budget Office and the U.S. Treasurys Office of Tax Analysis, doggedly stick with static scoring.
Why? Because static scoring is a key tool Washington politicians use to keep taxes high and government spending growing. Tax cut proposals are especially hard-hit because static scoring always shows the government will lose revenue if your taxes are cut. How government can lose money it never owned is beyond me, but thats a topic for another day.
The Washington politicians also love static scoring because it tells them little or nothing about how many new jobs would be created by a tax cut proposal, how much individual incomes would increase or whether welfare costs would go down. With static scoring, the only issue that counts is how much revenue would the government lose?
Remember the proposal last year to eliminate the estate tax? Most Americans support killing the death tax but the proposal died after the JCT said it would cost the government more than $660 billion in tax revenues over the next decade. Thats roughly twice as much revenue as the estate tax generated in the first place! What made this episode even more galling is that JCT refused to make public its methodology, saying only that its estimate included significant revenue effects that result from a variety of income tax avoidance opportunities made possible with the repeal of the estate and gift tax. Since only the JCT staff knew how it did its work, nothing like the peer review routinely allowed by academic and corporate economists could be done.
Put another way, every time somebody in Congress or the White House proposes a tax cut, the JCT goes to work and out come those blindfolds. And more often than not, there goes any chance that you and I will get to keep more of our money to spend on what we need instead of Congress spending it the way the politicians want.
The solution here, as it is in so much of government, is to rip off those blindfolds and let the light shine on this dark secret. Let the public see how the system works. Let the experts outside of government do peer review studies on those inside government. Thats part of what government of the people, by the people and for the people is all about.
By the way, when was the last time your local newspaper wrote about this egregious example of the publics business being done behind closed doors?
CLARIFICATION:
Last weeks column on teacher unions spending disclosed by IRS Form 990s inadvertently dropped an important sentence that should have appeared after the line reporting that the average spent on collective bargaining by all of the unions in our survey was four percent of their average total annual dues income.
The missing sentence would have read: Take out the unions that didnt include a figure for collective bargaining spending and the average goes to 10 percent of dues. I apologize for the error.
Mark Tapscott is Director of the Center for Media and Public Policy at The Heritage Foundation, a TownHall.com member group. Contact Mark Tapscott
©2002 The Heritage Foundation
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