Tilting the Budget Process to the G.O.P.

C.B.O.: Bush tax cuts reduced revenues by $3 trillion through 2011, adding that amount to national debt

By BRUCE BARTLETT
New York Times Economix, Feb. 7

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

The House of Representatives voted last week to tilt the budgetary process in favor of the Republican economic agenda. On Feb. 3, the House passed H.R. 3582, the Pro-Growth Budgeting Act of 2012. Innocuous on the surface, its long-term purpose is to institutionalize Republican economic policy into the very fabric of budgetary analysis.

The legislation would require that the Congressional Budget Office and Joint Committee on Taxation do a “dynamic” analysis of major legislation – defined as that with a gross budgetary impact greater than 0.25 percent of the gross domestic product. Such an analysis would calculate the impact on real G.D.P. growth, the capital stock and labor supply.

The dynamic calculation would be supplementary and not replace the current official scoring methodology, but the obvious long-term goal is to require official revenue estimates to incorporate “Laffer curve” effects in order to make it easier to cut taxes and harder to raise them.

The Laffer curve, named for the economist Arthur Laffer, posits that tax rates may be so high that a tax-rate reduction will raise revenue to the government and a tax-rate increase will lower revenue.

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