“A-Dynamic Scoring”: Republicans Don’t Like The CBO, Except For When They Do
Rep. Tom Price (R-Ga.) has no shortage of charts, bullet points and studies to back up the GOP’s tax strategy, all of which he laid out Tuesday afternoon before a room of reporters. But, perhaps most prominently, Price wielded numbers from the Congressional Budget Office to make the case for extending all the Bush tax cuts permanently, as the House is poised to vote on this week.
“As the Congressional Budget Office has said, the growth rate if these [tax hikes] go into effect is 0.5 percent,” Price told reporters. “If we’re able to keep the rates the same, the growth rate is 4.4 percent.”
It’s not surprising that a legislator would rely on numbers from the CBO, given the office’s long-standing reputation as a non-partisan, independent scorekeeper. But in the next breath, Price dismissed another major finding from the very same number crunchers.
When asked how the GOP would make up for the huge increase in the deficit that would result from making the Bush tax cuts permanent—which the CBO estimates will reduce revenues by $4.6 trillion—Price flatly denied that the numbers were valid. “We don’t believe that keeping tax rates as they are right now costs money,” he said. Instead, he explained, preserving all of the Bush tax cuts would spur tremendous economic growth that would quickly fill the deficit gap. “What happens when the economy grows, is the federal government actually gets more tax revenue.”
So how is it possible to tell which CBO numbers to trust? I asked Price, pointing out the discrepancy. “The CBO is constrained by rules, in some instances,” he explained. “Sometimes the rules allow them to have more accurate information, in others they don’t.” When it comes to analyzing tax revenue, the CBO must follow the guidance of the 1974 Budget Act, which Republicans like Price believe is flawed. Instead, they’ve long advocated for what’s known as “dynamic scoring” to account for the revenue impact of the economic growth they believe that tax cuts will accelerate.
Why, then, were the 1974 rules for scoring taxes imposed in the first place? Were people just misinformed? Price shrugged, pointing out that Republicans on the Budget committee have tried to change the rules 10 separate times.
In fact, the Bush administration tried using the GOP’s preferred dynamic scoring method to look at the very same Bush tax cuts in 2006. But the results disappointed conservatives: There wasn’t the strong correlation between growth and tax cuts they had expected, and there were far lower levels of growth attributed to the tax cuts than Republicans had claimed, particularly when they weren’t offset by other budget cuts. Even Doug Holtz-Eakin, then a GOP-appointed CBO director, didn’t clamor for more dynamic scoring thereafter.
But that hasn’t stopped Republicans from using the logic of dynamic scoring to make the case for tax cuts that aren’t offset by anything else, as they’re proposing once more. It’s a position that everyone from Tom Price to Mitt Romney has embraced, whatever CBO says to the contrary.
By: Suzy Khimm, The Washington Post, August 1, 2012
“Implausible Assumptions”: Mitt Romney’s Tax Promises Are Mathematically Impossible
The sub-campaign to define Mitt Romney’s tenure at Bain Capital, as I never tire of pointing out, is merely about softening up the Republican nominee for the major fight of the campaign: Obama’s charge that his economic program is merely a retread of the Bush-era program of tax cuts for the rich. Over several months, Romney has laid the groundwork for his own defense. He has promised that his tax plan will not cut taxes for the rich (below the levels established under Bush). Recall that Romney’s old campaign line about how he wasn’t concerned about the very poor was also packaged with a supposedly parallel line about not being concerned about the very rich — neither group would receive any particular targeted benefit from his program.
Romney’s plan has been to hold together these promises by shrouding his tax and budget plans in a veil of secrecy. Romney has promised to reduce tax rates across the board by 20 percent, which would offer huge tax cuts for the rich. But he has promised to close unspecified deductions in the tax code so as to offset the cost, and leave the rich paying the same effective tax rate. Indeed, Romney has boasted about his strategy, noting that its lack of detail means it “can’t be scored,” and thus Obama can’t prove that his plan really would cut taxes for the rich.
But oh yes, he can.
The Brookings Institution and the Tax Policy Center today released a study of Romney’s proposals, insofar as they are known. The finding was simple. Romney’s promises, it found, are mathematically impossible. The amount of revenue available from tax deductions for the rich is smaller than the amount of revenue lost by cutting tax rates for the rich. Even if Romney sincerely scoured the tax code and wiped out every last tax break for the rich that he hasn’t promised to preserve (he has promised to keep in place tax incentives for saving, like the capital gains tax break), the rich will pay lower rates and a lower share of the tax burden.
It’s worth noting that the study embraces implausibly friendly assumptions as to how Romney would go about this. It assumes he would ruthlessly purge the tax code of breaks for the rich, even highly popular ones like the charitable deduction. It further assumes that, in order to wring every last penny out of the rich, Romney would cut off all deductions immediately for every dollar in income over $200,000 a year. (In reality, nobody would create a tax code that meant going from $200,000 a year to $200,001 would jack up your taxes by thousands of dollars — you would ramp up the tax deduction phase-in, which would reduce taxes for the rich even more. But the paper bends over backwards to grant Romney this implausible assumption.)
What’s more, the paper assumes that Romney’s plan would increase economic growth, meaning it wouldn’t have to find dollar-for-dollar replacements for all its lost income. To measure this cheerful scenario, the paper adopts a model created by Greg Mankiw — who is, of course, a Bush administration veteran and one of Romney’s main economic advisers.
Piling implausibly optimistic assumption upon implausibly optimistic assumption, the paper nonetheless concludes that Romney will cut taxes for the rich. That means it would result in some combination of higher taxes for the middle class or higher deficits. If you take Romney at his word that he would hold tax revenue steady at its current levels, then he would be implementing a significant shift in the tax burden from the rich to the middle class. 95% of all taxpayers would pay more taxes, in order to finance a tax cut for the most affluent.
And remember, this is assuming the most favorable possible case for Romney. Under more realistic assumptions — that he won’t close every single penny in tax deductions benefitting the rich, and that his plan won’t spur economic growth to the degree a Republican like Mankiw hopes it would — then the transfer from the non-rich to the rich would be even higher. All of which shows why, despite the constant drumbeat of conservative pleas for him to unveil more policy specifics, Romney is going to keep his proposals as vague as possible.
By: Jonathan Chait, Daily Intel, August 1, 2012
“The Double Reversal”: Why Did Romney Double Down On Anti-Palestinian Comments?
Mitt Romney has mastered the art of an impressive maneuver worthy of an Olympic gymnast: the double reversal. Within two days he has changed positions twice on why Palestinians in the Occupied Territories live in abject poverty.
After initially walking back his comments attributing Israel’s prosperity and its neighbors’ lack thereof to their respective cultures, Romney has decided to double down, posting an item on National Review’s website defending his statement.
It all started on Sunday, when Romney said the following at a fundraiser in Jerusalem:
The GDP per capita for instance in Israel which is about $21,000 and you compare that with the GDP per capita just across the areas managed by the Palestinian Authority which is more like $10,000 per capita, you notice a dramatic, stark difference in economic vitality. And that is also between other countries that are near or next to each other. Chile and Ecuador, Mexico and the United States.… Culture makes all the difference. And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things. One, I recognize the hand of Providence in selecting this place.
Naturally, some Palestinians took exception to the implication that they are culturally deficient or disfavored by God. Speaking to the Associated Press, Saeb Erekat, a senior aide to Palestinian President Mahmoud Abbas, said: “It is a racist statement and this man doesn’t realize that the Palestinian economy cannot reach its potential because there is an Israeli occupation.”
Romney ignored the much more obvious culprits than culture, such as security restrictions, in suppressing Palestinian economic growth. As Ashley Parker wrote in the New York Times:
The Palestinians live under deep trade restrictions put in place by the Israeli government: After the militant group Hamas in 2007 took control of Gaza—home to about 1.7 million Palestinians—the Israelis imposed a near-total blockade on people and goods in Gaza. The blockade has been eased, and now many consumer goods are allowed in. But aid organizations say the restrictions still cripple Gaza’s economy. The West Bank, where 2.5 million Palestinians reside, is also subject to trade restrictions imposed by the Israelis.
The International Monetary Fund has observed the correlation between Israeli restrictions on trade and movement in the West Bank and Gaza and economic growth in the territories.
Even the people Romney was trying to compliment, Jews, might have been unnerved. Shalom Goldman wrote in Religion Dispatches, “It’s not only the Palestinian leadership that should be aghast at his remarks. Essentially, what the GOP’s candidate for president was saying is that ‘Jews are good with money.’… Students of Jewish history, and of Christian-Jewish relations, can’t help but being horrified by the tone-deafness of such language.”
Romney responded to the criticism by doing what he always does: he changed his position and lied about what he had said before. In an interview with Fox News on Tuesday morning Romney said, “I did not speak about the Palestinian culture or the decisions made in their economy.… That is an interesting topic that perhaps can deserve scholarly analysis but I actually didn’t address that. I certainly don’t intend to address that during my campaign.”
But by Tuesday night Romney had changed his mind again, deciding that the effect of culture on economic outcomes is, in fact, central to his campaign. At 8 pm National Review posted a commentary by Romney:
What exactly accounts for prosperity if not culture? In the case of the United States, it is a particular kind of culture that has made us the greatest economic power in the history of the earth. Many significant features come to mind: our work ethic, our appreciation for education, our willingness to take risks, our commitment to honor and oath, our family orientation, our devotion to a purpose greater than ourselves, our patriotism. But one feature of our culture that propels the American economy stands out above all others: freedom.…
Israel is also a telling example. Like the United States, the state of Israel has a culture that is based upon individual freedom and the rule of law. It is a democracy that has embraced liberty, both political and economic. This embrace has created conditions that have enabled innovators and entrepreneurs to make the desert bloom.
Romney redefines cultures to include precisely the external factors—democracy, the rule of law, economic freedom—that liberals would agree are sources of prosperity. So now the Palestinians’ lack of economic freedom, at the hands of the Israeli occupation, is categorized by Romney as somehow a failing of Palestinian culture.
There are countries under no foreign occupation that also lack democracy, the rule of law and economic freedom, and their economies suffer accordingly. But to describe that as a national cultural characteristic—sort of the inverse of American work ethic—is absurd. North Koreans aren’t poor because their culture abhors economic freedom, while South Korean culture celebrates it. They are poor because they live in a totalitarian state that restricts it.
It is hilarious to see Romney pretend that Israel is some Republican paradise of free market policies. While in Israel Romney praised Israel’s healthcare system for being innovative and far more cost-effective than America’s. Israeli healthcare is, of course, completely socialized.
Romney’s intellectual dishonesty aside, it is curious that he even chose to do this at all. Why would he want to extend the life what is widely considered a gaffe? I’ve come up with three possibilities.
§ He wants to show strength. Romney has a well-earned reputation for flip-flopping and lacking core convictions. The current issue of Newsweek features a cover story by Michael Tomasky arguing that Romney is a wimp. Perhaps Romney wanted to show that he is capable of confronting critics and defending his turf for once. The only problem with this theory is that he would have been much wiser to do so on an issue where he had not already backed down.
§ He really believes this. It’s hard to fathom, since Romney seems to believe so little. But it’s the answer I got from every political professional I asked. Perhaps Romney does not lack a political spine but simply has his in an unusual place. Romney clearly lacks convictions on social issues, foreign policy and regulatory questions, so he makes the most politically expedient pander. But he does show conviction on certain vague economic principles. For example, he will not back down from saying that corporations are composed of people and they are not some evil abstraction. Perhaps the idea that economic benefits accrue to societies that are blessed with cultural virtue, rather than advantageous circumstances, is a similarly deeply held belief for Romney. It would make a clear corollary to his view that his own vast wealth is attributable to personal virtue rather than luck or greed.
§ Conservatives really believe this, and so Romney is trying to excite them. Typically, Romney reverses himself under pressure from conservative pundits. In this case, while conservatives were defending Romney’s original statement, there had not been a right-wing backlash against him for going wobbly on it. But perhaps Romney realized that standing on this principle would energize his base. “This is something that conservatives actually believe,” wrote Soren Dayton, a Republican political strategist, in an e-mail. “And, in many ways, it is clear that Arabs do too, reading the UN’s 2002 Arab Human Development Report, in which Arab scholars ask the same question that Romney did. To run away under pressure from Saeb Erekat and the political correctness police would be intellectually bankrupt and counter to a decade of debate within the Arab world itself.” (You can find a summary of the report Dayton references here.)
As the late, great Senator Daniel Patrick Moynihan (D-NY) observed, “The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.”
By: Ben Adler, The Nation, August 1, 2012
“It’s Not A Gaffe”: When Culture, Context, And Cowardice Collide
Mitt Romney caused quite a stir this week, appearing at an Israeli fundraiser where he argued Palestinians have a weaker economy because of its “culture.” The comments have drawn sharp rebukes on both sides of the Atlantic and made an already-disastrous foreign trip even worse.
What’s more, as Kevin Drum explained this morning, it wasn’t a gaffe. “This was a deliberate pander to the conservative base in the U.S., which pretty strongly believes that the Palestinian culture is indeed corrupt, indolent, and sullen,” Kevin noted. “Romney knows this perfectly well. He was demonstrating once again, in a very concrete way, that he’s no RINO.”
Today, however, Romney insisted with Fox News that he didn’t say what he actually said.
“I’m not speaking about it, did not speak about the Palestinian culture or the decisions made in their economy,” Romney told Carl Cameron. “That’s an interesting topic that deserves scholarly analysis, but I actually didn’t address that. Certainly don’t intend to address that in my campaign. Instead, I will point out are that the choices that a society makes has a profound impact on the economy and the vitality of that society.”
As far as the Republican is concerned, the media is simply engaged in a coordinated effort to “divert from the fact that these last four years have been tough for our country.”
Apparently, Romney’s foreign screw-ups are the result of a pro-Obama media conspiracy.
As you might have noticed, there are a few problems with this.
First, when Romney told Fox he “did not speak about the Palestinian culture,” he’s simply not telling the truth. NBC’s Mark Murray and Garrett Haake, relying on the transcript released by the Romney campaign itself, published a report that removes all doubt. The presidential hopeful was talking about the relative size of national economies, and he made the direct connection to competing cultures.
It’s not even a close call. The relevant portion of the speech is a little long, but since Romney is denying the facts, it’s worth setting the record straight:
“I was thinking this morning as I prepared to come into this room of a discussion I had across the country in the United States about my perceptions about differences between countries. And as you come here and you see the GDP per capita for instance in Israel, which is about 21,000 dollars, and you compare that with the GDP per capita just across the areas managed by the Palestinian Authority which is more like 10,000 dollars per capita, you notice a dramatic, stark difference in economic vitality. And that is also between other countries that are near or next to each other. Chile and Ecuador, Mexico and the United States. […]
“I noted that part of my interest when I used to be in the world of business is I would travel to different countries was to understand why there were such enormous disparities in the economic success of various countries. I read a number of books on the topic. One, that is widely acclaimed, is by someone named Jared Diamond called ‘Guns, Germs and Steel,’ which basically says the physical characteristics of the land account for the differences in the success of the people that live there. There is iron ore on the land and so forth. And you look at Israel and you say you have a hard time suggesting that all of the natural resources on the land could account for all the accomplishment of the people here. And likewise, other nations that are next door to each other have very similar, in some cases, geographic elements. […]
“But then there was a book written by a former Harvard professor named ‘The Wealth and Poverty of Nations.’ And in this book Dr. Landes describes differences that have existed — particularly among the great civilizations that grew and why they grew and why they became great and those that declined and why they declined. And after about 500 pages of this lifelong analysis — this had been his study for his entire life — and he’s in his early 70s at this point, he says this, he says, if you could learn anything from the economic history of the world it’s this: Culture makes all the difference. Culture makes all the difference. And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things.”
Romney “did not speak about the Palestinian culture”? Please.
For that matter, it’s kind of amusing to hear the former governor suggest news reports had taken him out of context, given that his entire campaign message is based on rhetoric that’s been taken out of context.
As for Romney’s suspicion of a media conspiracy, it wasn’t news organizations’ fault when he insulted the British; it wasn’t news organizations’ fault when he misquoted the Australian finance minister; it wasn’t news organizations’ fault when his campaign kinda sorta gave the green light on a unilateral strike on Iran; it wasn’t news organizations’ fault when he used borderline-racist language at his Israeli fundraiser; it wasn’t news organizations’ fault when he praised a socialized health care system he claims to abhor; and it wasn’t news organizations’ fault when his press secretary said, “Kiss my ass. This is a Holy site.”
Take some responsibility, Mitt. Blaming the media is lazy and wrong.
By: Steve Benen, The Maddow Blog, July 31, 2012
“He’s Not One Of Us”: Why Mitt Romney Is Organizing His Entire Campaign Around “You Didn’t Build That”
Now that we’re having a real debate about the fundamentals of capitalism and success, it’s worth considering another part of the now-infamous “You didn’t build that” speech President Obama recently gave. When he was accused of taking Obama’s words out of context, Mitt Romney’s defense was that “The context is worse than the quote.” As evidence, he cited not the actual context of “You didn’t build that” but what Obama said a paragraph before, about the role of fortune in success. And it’s that idea—that success has to do not only with hard work and talent but also with luck—that really got Mitt Romney steamed. Here’s the passage in question:
There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there
You might think that this would be hard to argue with, but as David Frum observed, many successful people find the idea that luck played a part in their success to be deeply offensive. And it makes me wonder whether Mitt Romney himself believes that the fact that his father was a wealthy industrialist and governor had nothing to do with his financial success. Does he think that if he been born to a poor single mother in backwoods Appalachia, he would have grown up to be the same private equity titan he turned out to be?
I’m guessing he does, but it would be interesting to hear what he said if someone asked him, “Governor, what role do you think luck played in your success? Do you think you had more of a chance to succeed because of who your parents were?”
Don’t know about you, but I’m happy to admit that luck played a large part in whatever success I’ve had. I was fortunate in my parents; we weren’t rich, but they valued education highly, created an environment with lots of opportunities for learning, and moved us to a town with excellent public schools. Had I been born in more deprived circumstances, I’m quite sure I wouldn’t have had anything like the opportunities I did, and I seriously doubt I would have pulled myself up by my bootstraps unless some other piece of luck fell my way. Luck played some part in getting most of the jobs I had, even if it was just knowing someone who knew someone who had an opening. I work hard enough, but I’m not such a jerk that I don’t understand how lucky I am to have a career as a writer, which is absurdly cushy compared to the jobs of people who stand on an assembly line or run around a distribution center or change bedpans. In my youth I had just enough exposure to a series of not-particularly-pleasant jobs like waiting tables and working a cash register in a supermarket to make me never forget how absurdly lucky I am to make a living doing what I do.
Mitt Romney is right about one thing: it’s hard to start and maintain a business. And it’s particularly hard if, unlike someone like Mitt Romney, you can’t live off your stocks when you do it. So I understand why some business owners would get their backs up when Romney tells them that Barack Obama told them they didn’t actually build their business. I’d hope they’d take the time to figure out that Romney is actually lying to them about that, but what can you do. But what I struggle to understand is the rich guy who thinks that luck played absolutely no part in him getting where he is. Maybe I’m wrong, but I don’t hear that coming from a guy who built up a construction business from the ground up. People like that have usually had exposure to enough bad luck to know good luck when they see it. It’s only the people whose entire lives have been nothing but a string of good luck who so angrily assert that there’s no such thing. It’s the Wall Street tools who got six-figure jobs in their uncle’s firm fresh out of Wharton who insist so vehemently that everything they have is because of their own talents. Only if you think that could you genuinely believe that an increase in your income tax of a few points constitutes some kind of communist attack on success.
By: Paul Waldman, Contributing Editor, The American Prospect, July 31, 2012
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