Innovation policy has a budget problem. Here’s how Congress can fix it.
Odd that you two did not talk about the history of the prohibition on dynamic scoring.
As I understand it, Congress tied its own hands in order to avoid distorted and unrealistic boosterism ("monorail!") that would promise miracle growth from every tax-cut, or from every increase in immigration.
Republicans have spent the last 50 years lying about the economic benefits of tax-cuts for the wealthy ("trickle-down," "Laffer curve," etc.), so Democrats have a reason not to allow them to use "dynamic scoring" i.e. to make shit up. And Republicans are pretty sure that highly educated immigrants will vote Democratic, so they have a reason not to allow your proposal to be dynamically-scored.
Both sides suspect that it is just too easy to use this method to lie for partisan advantage when a party has captured the House. So they grudgingly forgo using it so as not to let the other side abuse it. What does your proposal do to change that underlying dynamic?
Like I feel like there’s an assume a can opener quality that’s untested here.
Can the cbo accurately predict these consequences to a level acceptable to everyone. Like one of the first things I learned about economics is unintended consequences are a real thing that plagues policy making immemorially. How confident are we that the cbo can predict the consequences of things in the economy if we let them try.
Like of course if they can this would be a good thing for them to do but I’m unsure if they can.
obviously we should dynamically score ideas that I already agree with and not use it for my ideological opponents' ideas
I can't see such scores being very persuasive to people who are not already in favor of what is being proposed.
The piece mentions dynamic effects of cutting taxes. Will progressives believe a score that claims large positive dynamic effects? Or how would they react to a report that tax hikes on high income earners have a significant negative impact on growth?
Or take social spending on families with children. A progressives economist will argue that such spending pays a dividend in terms of more productive workers, lower healthcare costs, less crime, etc. I expect that a conservative economist would estimate these effects as small and uncertain.
Basically, any estimate of dynamic effects will depend strongly on your ideological priors; much more so than the current scores. I doubt you can create a process that's broadly trusted.
It would be so much better to just eliminate the filibuster and let the Senate govern by simple majority. This whole legislative Cirque de Soleil is brought about by that Byrd Amendment and the possibility of special reconciliation rules that might let something or other pass 51-49, if only they can “score” it won’t increase the deficit after 10 years.
The authors cite GOP efforts to use dynamic scoring to push through tax cuts. Can't we retroactively apply dynamic scoring and see what the outcomes were? Or are there too many variables to isolate the effects of the tax cuts... in which case, wouldn't the same objection apply to the authors' proposal?
Dynamic scoring seems better than the current approach, but who is the target audience for these analyses?
I've seen people use CBO/JCT projections as evidence for positions they already agree with, but I get the impression that most people consuming their reports _to learn something_ are already familiar with their methodological shortcomings.
I don’t think the issue of appropriately scoring the economic impact of high skilled immigration is the real blocker to legislation passing. Congress has shows almost exclusively over the past two decades that they will pass huge laws without regard for budget implications if the political will or necessity arises. It’s just tied to immigration generally and so negatively coded for the right, that won’t change soon.
As an economist who builds models, any attempt at qualifying impact of things like immigration and R&D is so impricise that if you present the error bands you get laughed out of the room. You're better off saying there is unquantified upside benefit in addition to the static score or you can provide a demonstrative example of the upside: if we assume x and y positive impact, the resulting revenue is z.
Going to plug my hobby horse. If conservatives (correctly) want to point out that SOME of the revenue losses from tax cuts will be recouped from increased revenues due to higher growth, there are $20 bills on the sidewalk to be picked up by eliminating welfare cliffs. Granted, this is more of a blue state problem, red states just tend to have fewer welfare benefits to begin with. For instance, the city of Chicago and the state of Illinois could save themselves some money by coordinating as to not create this clusterfuck of incentives:
Nope, I'm not buying this argument.
Two quotes jumped out at me:
"it’s an open secret that proposals to increase the number of high-skilled immigrants are currently tabulated by the U.S. government as being a net cost to the U.S. economy rather than a net benefit. . . The [CBO and JCT] tabulated that it would cost the federal government $3.1 billion over 10 years."
Those are two different things: the cost to the government is *not* the cost to the economy.
OK, and #2:
"Moreover, dynamic scoring can evolve as additional economic research emerges."
In other words, this will be a moving target, to be interpreted by each actor as they see fit, and in the meantime we will get numbers parading as metaphysical certainty which will typically be just educated guesses.
Here's the problem: this is arguing for the CBO and the JCT to tell us what policies are good for the US as a whole. But I don't *want* these organizations to do that. I simply want them to tell us, in the simplest terms, what will happen to spending and revenues. It's then up to Congress (and the people) to decide if this policy is good for the nation as a whole
Every time we depart from the KISS model, and add more assumptions, parameters and whatnot to these analyses, we increase the range of uncertainty and reduce the level of confidence. But those approximate answers will have the sheen of science and certainty even when they're anything but. It's fine to be uncertain as to future outcomes, but it's not okay to pretend that's not the case.
Sometimes you just make bets. Had it been subject to CBO investigation, I sure would have hated it had ARPA's packet-switching communication system had a cost-benefit analysis done on it. Would it have concluded that this bit of R&D would eventually return untold trillions of dollars to the US and global economy? Nope. Might that have killed it in the crib? You bet it might have.
(Rolling eyes) I would simply accurately forecast how legislation will affect a $22 trillion economy over a multiyear span, perfectly accounting for all unintended consequences, with the foresight of a modern Nostradamus. Surprised no one's thought of this before.
Actually, scratch that. I would instead take my skills of predicting the future and apply it to the stock market instead, where I will easily make quadrillions of dollars perfectly modeling how extremely complex systems will function over a long time span
What is actually stopping a switch to dynamic scoring? Why didn't the Republican trifecta of 2017-18 make the switch for the TCJA, for example, where presumably it would've made the scores look better for them politically?
The tricky thing about dynamic scoring is that you can end up with model that predicts virtually anything, depending on what assumptions you decide to feel into it. The same is true for really any statistical model that tries to predict hard-to-predict stuff, whether it's population growth, the effect of mask rules on COVID spread, or the effect of some EPA rule on carbon emissions.
In theory, the people doing these models should be dispassionately looking at the data and drawing the honest, best conclusions they can, but often it doesn't work out that way, especially on politically charged topics where lots of powerful people have strong incentives to make the model come out a certain way, in order to enhance an ideological objective.
The fact that there exists no way to make so-called "nonpartisan" institutions really nonpartisan, as long as they are run by humans, makes it really difficult to draw conclusions that everybody on both sides of the aisle can trust.
Is it actually true that a score of $3.1B over ten years was a real cause in the STEM-visa proposal not being included in either of the reconciliation packages the Dems did in 2021-22? Because that seems like a really small number given the size of each of the packages. And I thought the issue with any immigration proposal the Dems proposed was that the Senate Parliamentarian struck them?
I suspect the reason the STEM-visa proposal has not become law is because it takes 60 votes to break a filibuster, and there are not 60 votes for it. Many Democrats want to hold the STEM-visa provision as a chip they can give to Republicans in "comprehensive immigration reform" negotiations. Many Republicans do not want "comprehensive immigration reform" if that includes any concessions on illegal immigrants in the country--and an increasing number do not want any immigration provisions that increase the number of immigrants, as the STEM-visa proposal presumably would.
Slow Boring's essay about immigration raises an interesting question - at least in my mind.
I wonder how much unconscious bias there is in the minds of legislators towards people who are not of European ancestory. We desperately need qualified immigrants. Certin people in Congress are opposed to any immigration not coming from Europe - that is white Christain people.
Examples of tis bias - the problems of Hispanic immigrants from South America, Afgan immigrants have been waiting for almost two years for entry permits, and the difficulties faced by many from South East Asia.
This bias need not be spoken, but merely understood between some people. The politics of racial hatred is hurting our country and must be brought to an end.