CBO’S ELMENDORF TELLS REPUBLICANS WHAT THEY DON’T WANT TO HEAR…. I recall a David Brooks column from early last year — the week of the inauguration, in fact — in which the columnist insisted that President Obama is “going to have to prove the hard way that he meant what he said about being pragmatic and evidence-based. That means he won’t sweep a C.B.O. study under the rug simply because the findings are inconvenient.”
The president and Democrats have proceeded, of course, to do nothing of the sort. Reports from the Congressional Budget Office have been taken very seriously by Dems on both ends of Pennsylvania Avenue, and often, legislation has been written entirely with CBO scores in mind.
For Republicans, it’s a little trickier. When the Congressional Budget Office tells the GOP what it wants to hear, the party loves the office and finds it credible. When analyses offer discouraging news, Republicans consider the CBO useless.
With this in mind, I’d be surprised if Republicans didn’t try to shut down the CBO entirely, or at least fire its director, after today.
CBO Director Doug Elmendorf testified before the Senate Budget Committee today and dropped something of a bombshell. Extending the Bush tax cuts, he said, will “probably reduce income relative to what would otherwise occur in 2020.” The reason is simple: Debt.
Elmendorf doesn’t deny that tax cuts stimulate the economy. But they don’t stimulate it that much, he says, and over the long run, the net economic growth from the tax cuts will be quite small. The net deficit impact won’t be. “Lower tax revenues increase budget deficits and thereby government borrowing,” Elmendorf said, “which crowds out investment, while lower tax rates increase people’s saving and work effort; the net effect on economic activity depends on the balance of those forces.” […]
So the bottom line is that extending the tax cuts indefinitely would hurt the economy. The less you extend the tax cuts, the less damage you do to the economy.
Remember, Republicans tend to consider the judgment of the CBO the key factor in any debate involving the budget.
And before the right dismisses this entirely, I’d encourage conservatives to consider a hypothetical: if the CBO chief had reached the opposite conclusion, and said the Republican proposal was a great idea for economic growth and fiscal responsibility, would the right consider it good news? If so, at least a modicum of intellectual consistency suggests today’s testimony should not be dismissed out of hand.
Nevertheless, I can only assume the Republican trashing of Elmendorf will commence immediately.