Because I’ve been sharing good news recently – which definitely is not my normal style, I joked the other day I must be on coke, in love, or rolling in money. For example:
- The fiscal cliff was a smaller loss than I expected.
- The sequester was a real victory.
- We have good evidence that the Tea Party has made a positive difference.
- The Democratic-controlled Senate rejected a permanent expansion of funds for the IMF.
- The burden of government fiscal policy has been reduced since the 2010 elections.
Well, the drugs, love, and money must still be in my system because I’m going to share some more good news. Our lords and masters in Washington have taken a small step in the direction of recognizing the Laffer Curve.
Here are some details from a Politico report.
Here’s one Republican victory that went virtually unnoticed in the slew of budget votes last week: The Senate told the Congressional Budget Office it should give more credit to the economic power of tax cuts. It won’t have the force of law, but it was a big symbolic win for conservatives — because it gave them badly needed moral support in an ongoing war to get Washington’s establishment number crunchers to take their economic ideas more seriously. The amendment endorsed a model called “dynamic scoring,” which assumes that tax cuts will pay for at least part of their cost by generating more economic activity. The measure by Sen. Rob Portman (R-Ohio) called on CBO and the Joint Committee on Taxation to include “macroeconomic feedback scoring” in all future estimates of tax legislation. …Portman eked out a narrow 51-48 victory in the final series of budget votes that started around 3 a.m. on Saturday.
Just in case you missed it, this modest victory for common sense took place in the Senate. You know, the place controlled by Harry Reid of Cowboy Poetry fame.
To be sure, it’s not quite time to pop open the champagne.
The vote was a symbolic victory for the think tanks and lawmakers on the right who have been fighting for years to force CBO and JCT to officially endorse the idea that people spend more and invest more when they owe the government less. …Conservatives’ ideas, including revenue-generating tax cuts and a more market-oriented health care system, can only work if tax policy changes people’s behavior — and that’s just not how CBO views the world.
P.S. Chuck Asay has a good cartoon mocking the CBO.
P.P.S. I’ll repeat, for the umpteenth time, that we want to recognize the insights of the Laffer Curve in order to facilitate lower tax rates, not because we want to maximize revenue for the government.
P.P.P.S. Dynamic scoring is a double-edged sword. If the statists control everything, they’ll use the process to justify more spending using discredited Keynesian economics.