Recently, I wrote a brief reminder about how pundits who can’t even understand the basic arithmetic of electoral horse race reporting (that is, polling) have no business opining about more complex things like federal budgets and tax policy. Well, let’s add conservative think tanks to the mix. For those who don’t follow the ins and outs of the budget debates, one of the key issues the expiration of the Bush tax cuts enacted in 2001. Here’s what two analysts at the conservative Heritage Foundation wrote at the time (boldface mine):
To assess the plan’s economic and budgetary effects and to help frame this debate, analysts in The Heritage Foundation Center for Data Analysis (CDA) conducted a dynamic simulation of the proposals in the President’s tax relief plan. The final results show that the Bush plan would significantly increase economic growth and family income while substantially reducing federal debt. For example:
•Under President Bush’s plan, an average family of four’s inflation-adjusted disposable income would increase by $4,544 in fiscal year (FY) 2011, and the national debt would effectively be paid off by FY 2010.
•The net tax revenue reduction, after accounting for the larger tax base that would result from higher employment and faster economic growth under the Bush plan, is $1.1 trillion from FY 2002 to FY 2011, 33.4 percent less than conventional static estimates.
•The plan would save the entire Social Security surplus and increase personal savings while the federal government accumulated $1.8 trillion in uncommitted funds from FY 2008 to FY 2011, revenue that could be used to reform the Social Security and Medicare systems and reduce the payroll tax.
Ok, then. Didn’t quite work out that way. Also, this:
•Create more job opportunities. As Chart 1 shows, over 1.6 million more Americans would be working at the end of FY 2011, compared with the CBO baseline forecast. Moreover, the unemployment rate would average just 4.7 percent instead of 4.9 percent from FY 2002 to FY 2011.
Just something to keep in mind when the Very Serious People tell you what you should be thinking about fiscal cliffs, Social Security’s supposed ‘insolvency’ and so forth.
Our supposed betters are fools and sociopaths.
mikethemadbiologist
Has a fiscal projection 10 or more years out from the present from any agency or think tank ever been remotely accurate? If not, on what time scale have they been accurate? 5 years? 2?
The Social Security forecasts for longevity and productivity made when it was being implemented proved extremely accurate.
A lot of FDR-era forecasts were very accurate, actually. There was a taste for actual science in that administration.
The following video might help, to fight some of this nonsense. It is a serious cartoon animation of the CBO’s projection. It gives all the necessary info about the deficits and debt, in a simple, clear and useful way. If you like it, please blast it to everyone you know. The deficit hawks are dishonest, and this is war:
Lee, I follow your presentation above except for your claim that the publicly held debt goes to zero percent of gdp from the accumulation of surpluses down the road of baseline projections. I know that enough surpluses would indeed have this effect on the publicly held debt, but I have never heard any claim that any set of baseline assumptions/predictions yields ANY surpluses, let alone so consistent such surpluses as to zero out the debt. The most optimistic baseline projections I’ve seen are a stabilization of debt/gdp ratios at around the 80 to 90% levels (slightly different from a 0% of gdp situation).
Could you please explain what that part is based upon? Thanks in advance.
Those are the graphs in the CBO Long-Term Budget Outlook 2012, Appendix B, figures B1 and B2 (pp. 98-99). That is “current law”, not “current policy” (a distinction that is explained in chapter 1, p. 6). The CBO Outlook is available in PDF formats, linked on this page:
http://www.cbo.gov/publication/43288
Mad Biologist: Disemvoweled for excessive stupidity
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What baloney, typos don’t reduce the importance of the argument. Saying 2 + 2 = 5 does.
Mad Biologist: Disemvoweled for excessive stuipidity and off-topic nitpicking
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I missed this idiotic comment, but you are a pedantic, nitpicking jackass. If you want to establish my track record, you could always read some other posts.
Besides, who is Ezra Abrams when he’s not at home?