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“Making Congress More Stupider”: Making Congress Dumber Has Not, In Fact, Made Government Smaller

You may recall Paul Glatris and Haley Sweetland Edwards’ cover article, “The Big Lobotomy,” from the June/July/August 2014 issue of the Washington Monthly. It documented how congressional Republicans had worked for decades to reduce Congress’ capacity for intelligent decision-making–while making it vastly more dependent on lobbyists and special interests–via reductions in appropriations for staff and committees and research initiatives.

The article clearly made an impression on Harry Stein and Ethan Gurwitz of the Center for American Progress, who cited it in reporting the latest self-lobotimizing effort in Congress in the FY 2016 appropriations process:

As Congress writes spending bills that attempt to implement the first year of its budget resolution, it is clear that the legislative branch intends to continue operating with one hand tied behind its back.

On June 12, 2015, the Senate Appropriations Committee advanced the fiscal year 2016 legislative branch appropriations bill, which would cut funding for the legislative branch by 17 percent from inflation-adjusted FY 2010 levels. The House of Representatives has already passed its version of the FY 2016 legislative branch appropriations bill, which makes roughly the same overall funding cuts as the Senate bill. These cuts may seem like a good way to score cheap political points at a time when Congress is deeply unpopular, but in the long run, they only increase congressional dysfunction and make the federal government less efficient and responsive to the American people.

The fact remains that the legislative branch includes much more than just members of Congress. When members vote to slash legislative spending, they undermine the professional staff and independent agencies that make it possible for Congress to oversee federal programs and understand complex policy questions. As funding and staffing levels for these legislative branch institutions have declined, Congress has become increasingly dependent on privately funded lobbyists and outside policy experts.

As the CAP article notes, the cuts include those unique legislative branch entities the Congressional Budget Office and the Government Accountability Office–both essential for understanding and reforming government spending.

The House’s FY 2016 legislative branch appropriations bill cuts the GAO budget by 15.4 percent from its FY 2010 inflation-adjusted level, while the Senate bill cuts GAO funding by 14.9 percent. If every $1 cut from the GAO equates to $15.20 of unexposed waste, fraud, and abuse, cuts of this magnitude could result in about $1.4 billion in missed opportunities for government savings, or between $7 billion and $8 billion based on the larger return-on-investment ratio of 80 to 1.

Even for conservatives who want a smaller federal government, Glastris and Edwards note that “making Congress dumber has not, in fact, made government smaller.” It just makes government less effective.

If you don’t really believe in any legitimate mission for the federal government beyond national defense, of course, this this is a distinction without a difference. But the rest of us are saddled with big, dumb government.

 

By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, June 16, 2015

June 18, 2015 Posted by | Congress, Conservatives, Federal Budget | , , , , , , | 1 Comment

“Completely Erroneous Impressions”: The Race Between Slander And Reality On Obamacare

Speaking of million pixel images, Sarah Kliff has an important piece at Vox today about perceptions of Obamacare five years in, and the big takeaway is how little has changed, in no small part because people with no direct experience of the new system have internalized the (mostly negative) propaganda they’ve heard. That is particularly true with respect to completely erroneous impressions of the net cost of Obamacare:

Forty-two percent of Americans think Obamacare has gotten more expensive over the past five years. Only 5 percent of poll respondents hit on the right answer: budget estimates for the Affordable Care Act have consistently fallen since it became a law.

Make no mistake: Obamacare spends a lot of money on its tax credits and Medicaid expansion. It recoups some, but not all, of that new spending with hundreds of billions of dollars in Medicare cuts, which reduce federal health spending. The bulk of the remainder is made up with tax increases. But back when the law was passing, Republicans argued up, down, and sideways that the Congressional Budget Office was sharply underestimating the amount of money Obamacare spends.

In fact, the CBO overestimated the cost of Obamacare — and by quite a lot. In April 2014, it marked down its Obamacare projection by more than $100 billion. Much of the revision comes down to the fact that health-care costs have grown very slowly during 2009, meaning it’s less expensive for the government to help millions of Americans purchase coverage. Just this month, CBO released new projections showing that Obamacare’s subsidies would cost 20 percent less over the next decade than initially expected.

The government is now spending less on health care than CBO had projected back in January 2010 — a projection that didn’t include any Affordable Care Act spending at all.

Another problem is that people attribute to the Affordable Care Act phenomena that would have occurred anyway, especially rising (though more slowly rising) premiums and disruption of individual insurance policies–and even the long, long trend away from fee-for-service medicine delivered by doctors of one’s own choice.

Assuming it is not crippled by the U.S. Supreme Court or repealed by a Republican Congress and president, Obamacare will slowly or surely chip away at the misconceptions. It is, sad to say, a sign of progress that (according to the Vox survey) that only 26% of self-identified Republicans believe in the “death panel” meme. The bigger question is how long it might take for Republican politicians to end their propaganda and treat Obamacare as part of the national landscape–as something to change, not kill–and whether that will precede their next turn in real power.

 

By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, March 23, 2015

March 24, 2015 Posted by | Affordable Care Act, Conservatives, Obamacare | , , , , , , | Leave a comment

“Dynamic Scoring Isn’t A Magical Tool”: Here’s How Conservatives Rig The Budget Game In Washington

When Republicans decided not to retain Doug Elmendorf as head of the Congressional Budget Office (CBO), Democrats became concerned that conservatives would try to rig the budget process. When the GOP required the CBO to use dynamic scoring for its legislative scores, Democrats became even more concerned. Those fears have proven overblown. The new CBO chair, whom Republicans announced last week, is Keith Hall, an economist at the Mercatus Center who was the commissioner of the Bureau of Labor Statistics under President Barack Obama. He’s a credible economist, not a partisan hack.

If you still want to see the budget gamed, though, look no further than the Tax Foundation’s score of Senators Marco Rubio and Mike Lee’s tax plan. The Foundation says that under a static scoring model, which doesn’t account for macroeconomic effects of the plan, the plan would cost the federal government $414 billion annually. That’s a huge amount of money. The government collects about $3 trillion a year in tax revenue, meaning the Rubio-Lee plan would be a 12.5 percent cut, a bold but unsurprising figure. Before Lee teamed up with Rubio, he released a first draft of his tax plan that reduced government revenue by an average of $240 billion a year. The new plan has even more tax cuts.

But when the Tax Foundation applies a dynamic scoring model to estimate the revenue effects of Rubio-Lee, the findings get downright wild. The Foundation projects that once the economy adjusts to the changes, it will grow enough to generate $508 billion (in 2015 dollars) in additional revenue each year. That would leave the American taxpayer with a cool $94 billion net annual gain.

To understand why this is so ridiculous, look at the Joint Committee on Taxation’s dynamic scoring estimates for the tax plan former Representative Dave Camp released last year. (The JCT produces revenue estimates for CBO.) The JCT used eight different dynamic scoring models and provided eight different estimates. “The increase in projected economic activity is projected to increase revenues relative to the conventional revenue estimate by $50 to $700 billion, depending on which modeling assumptions are used, over the 10-year budget period,” the report concluded. Now, $700 billion is nothing to sneer at, but that’s over a ten-year period. The Tax Foundation’s dynamic scoring model raised nearly that amount of additional revenue every single year.1

This is a slightly different comparison, because JCT’s numbers come from the 10-year period while the economy adjusted to the tax plan versus the Tax Foundation’s numbers, which are from after the economy full adjusted. The difference is still stark.

Once the Foundation releases the full report Monday, Rubio and Lee will surely cite the numbers ad nauseam to gin up favorable coverage and analyses of the proposal. The Tax Foundation is giving Rubio and Lee a major political boost by producing such a friendly score.

I’m sure the Foundation’s economists would disagree that they are doing the two senators a huge favor. They would say that the Rubio-Lee plan is far friendlier to economic growth than Camp’s plan was. Maybe they’re right. But it’s not that much friendlier. These numbers are far beyond any realistic estimate of Rubio-Lee’s macroeconomic effects. And it’s basically impossible to produce realistic estimates to start. “Theoretically dynamic scoring is the right thing to do,” Peter Orszag, who was director of CBO under President Barack Obama from 2007 to 2008, told me in January. “Just practically, it’s problematic. When you’re forced to pick one model, you’re pushing scientific knowledge beyond reality. You’re forcing the organization to pick one ‘true’ model when the economic science hasn’t produced a single model that works.”

Many conservative economists agree. Douglas Holtz-Eakin, a former CBO director, has frequently said that dynamic scoring isn’t a magical tool to make huge tax cuts look fiscally responsible. Greg Mankiw, who was the top economist for President George W. Bush from 2003 to 2005, recently wrote in the New York Times that while dynamic scoring is theoretically correct, “there are also good reasons to be wary of the endeavor.”

If Republicans had required that the CBO and the JCT use the Tax Foundation’s dynamic scoring model, it would have been a major problem. At least now the two parties accept the CBO’s score as legitimate. If they demand a bill to be deficit-neutral, the CBO is the final arbiter. That would all change if the Tax Foundation’s models were used. Of course, the actual likelihood of that happening was never clear. But if Republicans had required such changes, Democrats would never have trusted any score on any legislation—and rightfully so.

The two sides have enough trouble agreeing to pass anything today. It would be that much harder if they couldn’t even agree on the scores of legislation. You can understand why Democrats were so nervous as Republicans debated how to change the agencies.

1This is a slightly different comparison, because JCT’s numbers come from the 10-year period while the economy adjusted to the tax plan versus the Tax Foundation’s numbers, which are from after the economy full adjusted. The difference is still stark.

 

By: Danny Vinik, The New Republic, March 5, 2015

March 6, 2015 Posted by | Conservatives, Dynamic Scoring, Federal Budget | , , , , , , , , | Leave a comment

“Absurdity Of The Argument Is It’s Greatest Strength”: Republicans Know Their Obamacare Case Is Bogus; Here’s The Proof

On Thursday, the government filed its brief to the Supreme Court in the case that will determine whether Obamacare subsidies disappear in three dozen states. Its argument is comprehensive, but one part of it speaks directly to the political history of the law, and the fact that everybody, including Republicans in Congress who now claim out of convenience that the law plainly limits subsidies to states that set up their own exchanges, always understood it to authorize subsidies everywhere.

The government confines this part of its argument to the legislative debate in the run up to the law’s passage in early 2010, but it could make the point more succinctly (and perhaps convincingly) by fast forwarding to early 2011. These days, Republicans up to and including Senate Majority Leader Mitch McConnell confidently pronounce that “the language of the law says … subsidies are only available for states that set up state exchanges.” But that’s not what they believed four years ago.

When Republicans took over the House in 2011, the political environment in Congress changed dramatically. Obamacare couldn’t be repealed, but it became fair game for damaging modifications, and the GOP took aim at it and other domestic spending programs whenever opportunities to offset the cost of new legislation arose. One of the first things Congress did back then was eliminate an Affordable Care Act provision that would have significantly expanded the number of expenses businesses are required to report to the IRS. Even before the law passed, business associations were livid about the “1099” requirement, and created such an uproar over it that the question quickly became how, not if, it would be repealed. Even Democrats wanted it gone.

The only problem was that the reporting requirement was expected to raise over $20 billion. Under GOP rule, it could only be offset with spending cuts elsewhere in the budget. As it happens, they found those spending cuts elsewhere in the ACA itself. Specifically, Republicans paid for repealing the 1099 provision by subjecting ACA beneficiaries to stricter rules regarding when they have to reimburse the government for subsidy overpayments. Make more money than you anticipated, and the government will claw back your premium assistance come tax season.

The congressional budget office scored the plan as essentially deficit neutral, and Republicans voted for it overwhelmingly. But you see the problem here. If the ACA plainly prohibits subsidies in states that didn’t set up their own exchanges, then there would be no subsidies in those states to claw back. And by April 2011, when the clawback passed, we already knew that multiple states were planning to protest ACA implementation and let the federal government set up their exchanges, including giant states like Florida, which now has a million beneficiaries. They would have needed a different, or additional, pay-for.

Obamacare’s legal challengers might chime in here to insist that their case is impervious to revelations like these. CBO’s analyses were premised on the idea that every state would set up its own exchange, and Republicans (and many Democrats) based their votes on what CBO told them. Other Democrats who actually understood the scheme may have simply pretended not to notice the problem. Nevertheless, they’d say, the law was designed to withhold subsidies from people whose states didn’t establish exchanges, and to ruin the individual and small-group insurance markets in those states, without providing any notice to either. In a perverse way, the absurdity of the challengers’ argument is it’s greatest strength. Because the scheme they insist Congress intentionally created was so far from Congress’ mind, it’s hard to find contemporaneous evidence that Congress absolutely didn’t mean to condition these subsidies. In much the same way, we can’t be sure that Congress didn’t mean to denominate those subsidies in Canadian dollars. A $ isn’t necessarily a $ after all.

But this familiar line of defense crumbles here. It is facially plausiblethough incorrectto posit that at the time the law passed, CBO believed subsidies would be available everywhere because it simply assumed every state would set up an exchange. But that assumption didn’t hold in April 2011. Something else must explain CBO’s 1099-repeal score, and the Republican votes that followed it. What we have in the form of this bill is clear evidence that everyone who voted for it (including every single Republican, save the two GOP congressmen and one GOP senator who weren’t present) understood the Affordable Care Act to provide subsidies everywhere.

Congress repealed the 1099 provision at an important momentafter multiple states announced that they would step back and let the federal government establish their exchanges, but before the IRS issued its proposed rule stipulating that subsidies would be available on both exchanges. The only thing Congress had to go on when it stiffened the clawback mechanism was its own reading of the Affordable Care Act, and Congress behaved exactly as you would expect. It operated with the understanding that subsidies were universal.

Today, many Republicans will tell you that the law plainly forecloses subsidies through the federal exchange. Six senatorsJohn Cornyn, Ted Cruz, Orrin Hatch, Mike Lee, Rob Portman, and Marco Rubioand nine congressmenMarsha Blackburn, Dave Camp, Randy Hultgren, Darrell Issa, Pete Olson, Joe Pitts, Pete Roskam, Paul Ryan and Fred Uptonhave even filed an amicus brief with the Supreme Court, which begins, “The plain text of the ACA reflects a specific choice by Congress to make health insurance premium subsidies available only to those who purchase insurance from ‘an Exchange established by the State….’ The IRS flouted this unambiguous statutory limitation, promulgating regulations that make subsidies available for insurance purchased not only through exchanges established by the States but also through exchanges established by the federal government.”

All of them, save Cruz, who was elected in 2012, voted for 1099 repeal.

In its brief, the government argues that “it was well understood that the Act gave ‘States the choice to participate in the exchanges themselves or, if they do not choose to do so, to allow the Federal Government to set up the exchanges.’ And it was abundantly clear that some States would not establish their own Exchanges.“ It was more than well understood. Congress actually endorsed that very proposition.

 

By: Brian Beutler, The New Republic, January 23, 2015

January 24, 2015 Posted by | Affordable Care Act, Obamacare, Republicans | , , , , , , | Leave a comment

“Making Stuff Up”: A Republican Ruse To Make Tax Cuts Look Good

As Republicans take control of Congress this month, at the top of their to-do list is changing how the government measures the impact of tax cuts on federal revenue: namely, to switch from so-called static scoring to “dynamic” scoring. While seemingly arcane, the change could have significant, negative consequences for enacting sustainable, long-term fiscal policies.

Whenever new tax legislation is proposed, the nonpartisan Congressional Budget Office “scores” it, to estimate whether the bill would raise more or less revenue than existing law would.

In preparing estimates, scorekeepers try to predict how people will respond to a new tax law. For example, if Congress contemplates raising the excise tax on cigarettes, scorekeepers consider existing trends in cigarette consumption, the likelihood that the higher taxes will induce some smokers to quit, and the prospect that higher prices will increase incentives for cigarette smuggling. There are no truly “static” revenue estimates.

These conventional estimates do not, however, include any indirect feedback effects that tax law changes might have on overall national income. In other words, they do not incorporate macroeconomic behavioral changes.

Dynamic scoring does. Proponents point out, correctly, that if a tax proposal is large enough, then those sorts of feedback effects can aim the entire economy on a slightly different path.

Such proponents argue that conventional projections are skewed against tax cuts, because they do not consider that cutting taxes could lead to higher economic output, which would make up at least some of the lost revenues. They maintain that dynamic scoring will, therefore, be both more neutral and more accurate than current methodologies.

But the reality is more complex. In order to look at the effects across the entire economy, dynamic modeling relies on many simplifying assumptions, like how well people can predict the future or how much they care about their children’s future consumption versus their own.

Economists disagree on the answers, and different models’ predicted feedback effects vary wildly, depending on the values selected for those uncertain assumptions. The resulting estimates are likely to incorporate greater uncertainty about the magnitude of any revenue-estimating errors and greater exposure to the risk of a political thumb on the scale.

Consider the nonpartisan scorekeepers’ estimates of the consequences of a tax-reform bill proposed last year by Representative Dave Camp, Republican of Michigan. Using different models and plausible inputs, the scorekeepers estimated that, under the bill, total gross domestic product might rise between 0.1 percent and 1.6 percent over the next decade — a 16-fold spread in projected outcomes. Which result should be the basis of congressional scorekeeping?

But the bigger problems lie deeper. Federal deficits are on an unsustainable path (as it happens, because of undertaxation, not excessive spending). Simply cutting taxes against the headwind of structural deficits leads to lower growth, as government borrowing soaks up an ever-increasing share of savings.

The most optimistic dynamic models get around this by assuming that the world today is in fiscal equilibrium, where the deficit does not grow continuously as a percentage of gross domestic product. But that’s not true. If you add the reality of spiraling deficits into those models, they don’t work.

To make these models work, scorekeepers must arbitrarily assume either that we tax more and spend less today than is really the case — which is what they did for the Camp bill — or assume that a tax cut today will be followed by a spending cut or tax increase tomorrow. Economists describe such a move as “making counterfactual assumptions”; the rest of us call it “making stuff up.”

In practice, these models are political statements. They show the biggest economic effects by assuming that tax cuts are financed by unspecified future spending cuts. The smaller size of government, not the tax cuts by themselves, largely drives the models’ results.

Further, the models are not a step toward more neutral revenue estimates, because they assume that, while individuals make productive investments, government does not. In reality, government spending contributes significantly to economic output. Truly dynamic modeling would weigh the forgone economic returns of government investments against the economic gains from lower taxes.

The Republicans’ interest in dynamic scoring is not the result of a million-economist march on Washington; it comes from political factions convinced that tax cuts are the panacea for all economic ills. They will use dynamic scoring to justify a tax cut that, under conventional scorekeeping, loses revenue.

When revenues do in fact decline and deficits rise, those same proponents will push for steep cuts in government insurance or investment programs, because they will claim that the models demand it. That is what lies inside the Trojan horse of dynamic scoring.

 

By: Edward D. Kleinbard, Law Professor at the University of Southern California and a former Chief of Staff of the Congressional Joint Committee on Taxation; Op-Ed Contributor, The New York Times, January 2, 2015

January 4, 2015 Posted by | Dynamic Scoring, Federal Budget, Republicans | , , , , , , , | 1 Comment

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