Saturday, October 15, 2011
A Dangerous Idea In The Deficit-Reduction Supercommittee from The Baseline Scenario by Simon Johnson
Can tax cuts “pay for themselves” – inducing so much additional economic growth that government revenue actually increases, rather than decreases? The evidence clearly says no.
Nevertheless, a version of this idea, under the guise of “dynamic scoring,” has apparently surfaced in the supercommittee charged with deficit reduction – the joint congressional committee with 12 members. Dynamic scoring sounds technical or perhaps even scientific, but here the argument means simply that any pro-growth effect of tax cuts should be stressed when assessing potential policy changes (e.g., reforming the tax code). For anyone seriously concerned with fiscal responsibility, this is a dangerous notion.
Posted by Michele Kearney at 9:15 AM