Conservatives want to add fantasy thinking to the budget

In yet another seemingly boring yet dramatic consequence of the midterm elections, Republicans and even some conservative Democrats are keen on adding “dynamic scoring” to the future budgeting process.

Top Republicans, eyeing full control of Congress next year, are considering changing the rules of the budget process so as to make tax cuts appear less harmful to the deficit.

They want to adopt a method called “dynamic scoring,” popular among conservatives since the 1970s, which scores budgets under the controversial assumption that tax cuts generate economic growth and make up for lost revenue — something critics have likened to “fairy dust.” The nonpartisan Congressional Budget Office, the official scorekeeper, does not use the method, but Republicans, and even some conservative Democrats, want it to.

“In practice, dynamic scoring is just another way for Republicans to enact tax cuts and block tax increases,” economist Bruce Bartlett argued in the New York Times in 2013. “It is not about honest revenue-estimating; it’s about using smoke and mirrors to institutionalize Republican ideology into the budget process.”

Of course, tax cuts do not, in fact, generate revenue. Tax cuts almost invariably cost revenue. The fantasy that tax cuts increase revenue is based on a back-of-a-napkin gimmick called the Laffer Curve, which states that at a certain point of unreasonably high taxes, cutting taxes will generate more revenue due to higher growth. The sleight of hand, of course, is in the inflection point of the curve. The tax rate would have to be ludicrously high for tax cuts to have enough of a stimulative effect to generate enough growth actually increase government revenue. We don’t even have to speculate about whether we’re anywhere close to that inflection point in the United States: the example of other social democracies demonstrates that higher rates do lead to higher government revenues, and the experience of the budget-busting Bush tax cuts demonstrates the inverse.

Conservatives have the problem that reality continues to be punishing to their worldview. Abstinence education doesn’t prevent teen pregnancy; tax cuts don’t generate revenue; climate change is real; supply-side economics doesn’t create sustainable growth; etc.

Their usual answer to being battered by the way the world actually works is to spend oodles of money telling voters convenient fantasies. Dynamic scoring is just another way of inserting their self-serving and misguided wishful thinking into the reality-based budget system.

David Atkins

David Atkins is a writer, activist and research professional living in Santa Barbara. He is a contributor to the Washington Monthly's Political Animal and president of The Pollux Group, a qualitative research firm.