…because I’m an economist and a mom–that’s why!

You Know Yoga’s Gone Mainstream When It Reaches the Front Page of the Wall Street Journal

July 24th, 2008 . by economistmom

I just have to express my glee at seeing today’s front page of the Wall Street Journal.  Not over the sad story about how the states are being “slammed by tax shortfalls” (which I’m reading this morning)–but over the story on “yoga bears” and how yoga has done wonderful things for the well-being of financial professionals, who would otherwise be stressed out, angry, overweight, and dealing with back pain.  (AngryBears, take note?)

Luciano Cortese, a broad-shouldered 48-year-old hedge-fund manager, says he used to bang his desk, throw things or yell at someone when his job became particularly stressful. But since starting yoga in January, he has been taking the stock market’s jolts in stride, he says. “I just say to myself tomorrow is another day.”

Yoga is, after all, another hugely important part of my life; I teach yoga because I love to introduce it to others having been lucky enough to find it myself years ago.  Yoga’s the only way I let myself get “twisted up” over anything these days.  (Yep, that’s me up there, in “garudasana”–eagle pose.)  You should really think of me as “EconomistYogiMom.”  Ask any of my former colleagues on Capitol Hill if they valued me more as their economist or as their (bipartisan) yoga teacher! 

UPDATE (midnight, 7/26):  I don’t know how I could have let this get past me when I first posted… That WSJ article mentions a particularly enthusiastic yogi who I’ve accused of “gross exaggeration” here on this blog before:

Billionaire fund managers Paul Tudor Jones and William Gross both practice Ashtanga, an active form of yoga that involves flowing through a set series of poses. Bond-fund guru Mr. Gross, a founder of Pimco, does yoga five days a week and says some of his best ideas come when he is standing on his head, or sirsasana, supported by the forearms on the floor.

Must be all that oxygen rushing to Bill Gross’ brain during headstands, stimulating his creative thinking!

Obama’s “Net Tax Cut”

July 23rd, 2008 . by economistmom

I attended a Tax Policy Center event today (audio recording available at that link) which featured Obama economic advisor, Austan Goolsbee and McCain economic advisor, Doug Holtz-Eakin, and at which Len Burman, director of the nonpartisan Tax Policy Center, unveiled the TPC’s latest analysis of the candidates’ tax plans.  Bob Reischauer, president of the Urban Institute and former director of CBO (another former boss of mine!), moderated.

Apart from showing slightly lower revenues (larger tax cuts) under the plans of both candidates, the updated TPC analysis is not much different from their earlier version released in June, which I have discussed previously here (the qualitative jist of that still applies).  The only more specific thing I learned at this event came when I was called on to ask the last question of the event (thanks, Bob), and I got Austan to more specifically discuss where the Obama campaign estimated the budget deficit would be in 2013 under an Obama Administration.  I interpreted his response to suggest an answer of around $400-$450 billion (or something smaller than the current fiscal year deficit, in nominal dollar terms), but you can listen and see how you interpret it. 

(Here’s a Financial Times story on the candidates’ deficit reduction plans, by reporter Krishna Guha who attended today’s event…note that $400 bil is about 2 1/4% of an $18 trillion 2013 economy, $450 bil is about 2 1/2% as cited in the article.)

But the question I found most interesting today was one that Doug asked Austan, because it was the second event where I heard Doug question a claim of the Obama campaign regarding their tax plans, and the second time I thought the Obama advisor’s response was less than crystal clear.   (The first event was that AARP event I spoke at, where the Obama advisor was Jeff Liebman.)  Doug questioned the Obama campaign’s claim that the Obama economic plans represent a “net tax cut”–that is, a reduction in total federal revenues collected.  Austan insisted that yes, the Obama tax plan is a net tax cut, and I think he said when you count the health care subsidies (the targeted, refundable tax credits to low-income families for health insurance), which I believe the TPC included in their estimates.  So just based on the TPC estimates, I want to take a crack at answering Doug’s question:  Is Obama really proposing a “net tax cut”?

The preface to the answer is another question–a “net tax cut” relative to what?  Because here is another case where the “baseline” matters, because of the bizarre specification of current tax law, with an ever-growing Alternative Minimum Tax and the Bush tax cuts expiring at the end of 2010, that makes the path of current law very different from the path of current policy extended (the Bush tax cuts and AMT relief going on forever).

So, for taxpayers as a whole, the answer is “yes” compared with current tax law.  TPC’s Table R3 shows that under current tax law (Bush tax cuts expiring), revenues as a share of GDP are 19.9% in 2013 and 19.8% over the next ten years (2009-2018).  Under Obama’s tax proposals, revenues as a share of GDP are just 18.2% in 2013 and 18.3% over ten years.  (Coincidentally, this is about or slightly below the famous 40-year historical average of revenues as a share of GDP.)

But the answer is “no” compared with current policy extended.  The same Table R3 shows that under permanent Bush tax cuts and permanently extended AMT relief, revenues as a share of GDP are 18.0% in 2013 and 18.2% over the next ten years.  So at 18.2% and 18.3% of GDP for 2013 and ten-year revenue levels respectively, Obama’s tax proposals produce a small net tax increase relative to current policy extended.

Now, it’s certainly true that under the Obama tax proposals, most households (all but those in the top 20%) would enjoy a tax cut compared to either baseline, so for most households individually, the answer is “yes”–President Obama would give them a net tax cut.  (For example, the average tax cut received by a household in the middle 20% of the income distribution is $2,132 compared with current law (see Table 2), and $970 compared with current policy extended (see Table 3).)  But for the richest of households (those with incomes in the top 1% or above around $600,000), the answer is clearly “no”–President Obama would raise taxes signficantly on these households, whether compared to current law or to current policy.  (For example, a top 1% household would pay $38,419 more in taxes compared with current tax law (Table 2), but $133,383 more compared with current policy extended (Table 3).)

Doug, does that help?

Later I’ll get to the kind of spending discipline implied by combining these TPC revenue estimates with the stated 2013 deficit targets of the candidates (those zero and $400 billion targets we heard about today). 

Oh, the Irony!

July 22nd, 2008 . by economistmom

I was signed up to attend this New America event this morning, called “Are Today’s Teens Better Off Than Their Parents?”  In fact, I had arranged to bring my 16-year-old daughter with me who sounded mildly interested when I invited her.  But my best laid plans fell through when I had to adjust to the last-minute changes in my daughter’s social calendar (I won’t elaborate).  So I ended up missing the event as well.  Oh, the irony!

I hope they’ll post a transcript so I can see what the consensus answer of the experts is.  I only know the answer to that question as it applies in my own family!

How Much Will It Cost to Rescue Fannie and Freddie?

July 22nd, 2008 . by economistmom

I have no idea, but the Congressional Budget Office took a crack at that question today, releasing a letter to my former boss, House Budget Committee Chairman John Spratt.  CBO concludes that while there’s a small probability that the direct cost to the government could turn out to be around $100 billion, the “expected federal budgetary cost” is just $25 billion (over fiscal years 2009-10)–because there’s a better than 50-50 chance that the proposed new Treasury authority (what can be thought of as an available ”line of credit”) would not be exercised.  (Here’s a nice report by Jeanne Sahadi at CNN-Money.)

Whatever the officially estimated budgetary cost or the actual effect on the level of the federal debt turns out to be, however, these figures grossly understate the financial commitment implicit in this effectively unlimited “line of credit”–that is, grossly understates the value to Fannie Mae and Freddie Mac in being able to say to the market, “don’t worry, we’re good for it.”  As CBO Director Peter Orszag explains on his blog (emphasis added):

CBO’s estimate reflects the current budgetary treatment and existing scorekeeping conventions for federal credit assistance and equity purchases and does not necessarily measure the underlying change in the federal government’s financial condition as a result of this legislation. On the one hand, the acquisition of financial assets like equities is recorded as an outlay in the budget even though such purchases may not change the government’s underlying financial condition. On the other hand, even if enacting this legislation would not result in outlays over the near term, it might effectively strengthen the linkages between the GSEs and the federal government and thereby increase the government’s underlying exposure to the risks associated with the GSEs’ activities.

In other words, the unlimited line of credit is worth a lot even if it’s never tapped into.  And I say it’s effectively an unlimited line of credit, because just like anything else in the federal budget that we’re willing to deficit finance (borrow to pay for), the line of credit defined by the “statutory debt limit” (currently set at $9.815 trillion, which we’re about $360 billion away from today) can be increased at any time by act of Congress, at the request of the Treasury Department.  Congress routinely (albeit reluctantly) votes to increase this limit whenever the existing limit is about to be breached.  So this Politico story (by David Rogers, no relation) about the “bonus” of an increase in the debt limit that might be hastened by the passage of a Fannie-Freddie rescue bill, is a bit misleading, in saying:

From Paulson’s standpoint, [Congress raising the debt limit] would solve another problem of appeasing Congress’s concerns about his rescue plan. To be effective, the secretary has argued that no cap should be put on his new authority, nor should it be subject to the debt ceiling [i.e., count as debt subject to the debt limit]. 

But Paulson appears willing to accept that condition now, since he would be assured that the ceiling will be raised to a level giving him enough room to assist Fannie and Freddie if needed.

Secretary Paulson and David Rogers make it sound as if the statutory debt limit is a binding constraint or a real limit, when it’s not.  It’s a sort of self-discipline device–an acknowledgment and reminder of the debt problem which gives understandable heartburn to the members of Congress when they have to vote on it.  But regardless of whether this legislation adds to the “debt subject to limit” or the debt not subject to limit, any eventual outlays will add to the real public debt.  And regardless of the budgetary impact of this legislation, we know the debt limit will be increased later this year (whether before the election or during a “lame duck” session), because it will have to be, with or without this legislation.

It’s Lonely in the Center

July 21st, 2008 . by economistmom

I’m fascinated by the ideological chart that Brad DeLong features in this post.  Brad’s point is that Barack Obama is not very liberal relative to other Democrats, and insignificantly more liberal than Hillary Clinton.  But what fascinates me, besides the relatively huge difference between Bush and McCain in how conservative they are, is how far apart the Democrats and Republicans are–that is, the tiny, tiny fraction of Democrats and Republicans who overlap on the ideological spectrum, in the center.

No wonder why we’re having such a hard time with “bipartisanship” and working together with our common concerns and priorities to come up with consensus policy solutions.  There’s not much there in common after all.

I always thought politicians had the incentive to move toward the center when it comes to winning elections, but maybe that model doesn’t work in practice.  I suppose the most vocal participants in the political process tend to come from the extremes and try to lure the politicians and policymakers toward those extremes, not toward the center.  And if you’re someone who tries to stay in the center, well, maybe you’re not exactly in the “middle” of lots of friends.

This polarization of opinions seems especially apparent in the blogosphere.  I noticed that in today’s Washington Post article about Netroots Nation, the liberal bloggers convention which took place this past weekend, Obama is made to sound ”not liberal enough.”

Of course, we at the Concord Coalition are used to being lonely and unpopular in staying in the center of fiscal policy, pointing out that getting the fiscal outlook in order will require everything to be on the table–both revenue increases and spending restraint.  We get conservative, supply-siders who accuse us of wanting to close the fiscal gap entirely through raising taxes and who say we don’t care about crippling the economy for the sake of deficit reduction.  And we get liberal champions of Social Security accusing us of laying all the blame on entitlement spending and wanting to destroy the programs.   Honestly, we are at neither extreme because neither extreme would produce a realistic, thoughtful strategy to reduce the budget deficit.  Only a centrist approach can get us there.  

It seems to me that until we get more of our politicians willing to come to the middle, there’s not going to be any common ground from which to work.  And until ordinary people (the voters) encourage politicians to come toward the middle, the politicians will be more inclined to listen to those loudest voices who are trying to pull them toward the extremes.

What? We’re Being Marked Down?

July 19th, 2008 . by economistmom

Fascinating story in the Washington Post this morning, coming a day after a very related conversation I was having with a friend regarding how economists analyze environmental policy.  We humans have been devalued/marked down! 

Last week, it was revealed that an Environmental Protection Agency office had lowered its official estimate of life’s value, from about $8.04 million to about $7.22 million. That decision has put a spotlight on the concept of the “Value of a Statistical Life,” in which the Washington bureaucracy takes on a question usually left to preachers and poets.

This value is routinely calculated by several agencies, each putting its own dollar figure on the worth of life — not any particular person’s life, just that of a generic American. The figure is then used to judge whether potentially lifesaving policy measures are really worth the cost.

A human life, based on an economic analysis grounded in observations of everyday Americans, typically turns out to be worth $5 million to $8 million — about as much as a mega-mansion or a middle infielder.

Now, for the first time, the EPA has used this little-known process to devalue life, something that environmentalists say could set a scary precedent, making it seem that lifesaving pollution reductions are not worth the cost.

As I was explaining to my friend, who was asking why we typically see estimates of the economic costs of climate change policy but not estimates of the economic benefits, it’s never really possible to get a true ”apples to apples” comparison in the cost-benefit analysis of environmental policy, because the costs of policy are usually much easier to measure (via actual market values/prices) than are the benefits (which usually involve valuing things where no market exists).

My very first economics publication was during my first government job at the Interior Department during the Reagan Administration in the mid 1980s (remember James Watt?).  My boss and I worked with the U.S. Fish and Wildlife Service to try to come up with an economic measure of the costs of allowing the Army Corps of Engineers to dredge and fill wetlands for conversion to agricultural land.  The benefits of destroying the habitat were easy to quantify, based on the profits that could be earned in farming the land.  The costs, up until then, were demonstrated by the Fish and Wildlife Service’s photos of dead ducks.  My boss and I tried to quantify the value of avoiding the habitat destruction by, rather ironically, measuring the value that sportsmen placed on being able to hunt for (i.e., kill) the ducks on that habitat.  Obviously that’s not the only value people would have attached to preserving the habitat, but it was the most reliable market value we could gather.  You can hold up photos of dead ducks and ask people what they’d be willing to pay to avoid those ducks dying, but it turns out it’s hard to know whether those answers would be honest (when we wouldn’t actually go back to those people and ask them to pay up once the habitat was saved).  So the costs of habitat preservation always seem more concrete than the benefits.

I told my friend that with climate change policy, it’s SO much tougher than that small wetlands issue, because the already wide range of possible estimates on how much people value avoiding too much climate change has to be multiplied by the (even wider?) range of uncertainty on the science of climate change.  And while it’s clear that images of the polar bears stranded on floating ice rafts evokes strong emotions from people, I’m not sure economists have translated those feelings into dollars yet.  (I’m sure John Whitehead on the Environmental Economics blog knows the latest on this.)  If we have a hard enough time keeping the value of a human life straight, could we value a polar bear life with much confidence?

Of course, all these policies with benefits that stretch very far into the future are difficult for policymakers to deal with–not just because politicians are understandably nearsighted, but because the value we place on such policies is not just sensitive to how much we value a human life, but on how much we value the well-being of future human lives relative to the well-being of current human lives–what economists like to call the “social discount rate.”  In policy evaluation, gains to future generations are usually “discounted” relative to gains to current generations, and how the cost-benefit calculus works out is very sensitive to the choice of this discount rate.  But this is a whole can of worms that I don’t want to open up right now, fearing it could lead to another heated discussion about Social Security.

On “RedShirting” My Son

July 18th, 2008 . by economistmom

Johnny with milkshake(photo of son Johnny, by daughter Emily)

The Wall Street Journal blog, “Real Time Economics“, points to a new economic analysis that is very interesting to me–more from my “mom” perspective than from my “economist” perspective.  The NBER working paper on “The Lengthening of Childhood”, by David Deming and Susan Dynarski, suggests that delaying the start of kindergarten might actually reduce overall human capital accumulation in the U.S., because, as WSJ blog paraphrases:

Kids who start school a year late have one year less schooling before they reach the age at which they’re allowed to drop out, decreasing their average educational attainment and widening the gap in learning between rich and poor. (Low-income teenagers are more likely to drop out.) And those who do stay in school enter the labor force a year later — decreasing their average lifetime earnings as well as their contribution to Social Security.

I am one of those who “redshirted” a child from school–having chosen to delay my son’s entry into kindergarten until he had turned 6 (in late July).  (The cut-off in Fairfax County, VA is September 30.)  Given my “mom” experience going through a decision process that was heavily influenced by my son’s preschool teacher (who made the compelling case that my son was not emotionally ready having been the youngest in his preschool class and the youngest, and only boy, at home–and didn’t I want to give him some chance of being a leader instead of a follower somewhere in his life?…), and then seeing the benefits of having given him that extra year (he’s been a strong leader in school ever since), I have to think that the NBER analysis, at least as described by the WSJ above, is missing a couple important factors in the suggestion that delaying school is a bad thing:

  1. It assumes the annual productivity of schooling for the kid is independent of the extra year of maturity (or other psychological benefit from being an “older” kid rather than a “younger” kid in one’s grade)–so the kid might get one year less on a path that’s otherwise the same.  I would argue that there’s evidence (ok, at least my casual evidence) that a given amount of education provided to a more mature kid leads to a larger amount of “human capital” accumulated in that kid (higher quality “learning”), so that the human capital production function gets a sort of technology boost when kindergarten is delayed.
  2. It assumes that the decreased years of schooling caused by drop out is caused by allowing the delay on the front end, rather than allowing the truncation on the back end.  In other words, if the problem is drop out, why can’t the rules for minimum drop-out age be changed to correspond to a minimum number of years of school–so that kids who delay kindergarten until age 6 would not be legally permitted to drop out of school until the usual age plus one

Oh, I know I should read the full paper and all the other analyses by education experts before I leap to these conclusions, but like I said at the start, I’m talking more from my “mom” perspective than from my “economist” one here, and I need to get home to my redshirted son, who I’m sure will graduate from high school (and hopefully, even more schooling) and be a very productive worker some day–I’m convinced even more productive than had I started him in school a year earlier.

CBO Shows That Refusing to Pay for Tax Cuts Is Fiscally Irresponsible

July 17th, 2008 . by economistmom

At Senate Budget Committee Chairman Kent Conrad’s request, CBO just issued an analysis of the long-term budget outlook under deficit-financed tax cuts–answering the following:  What happens to budget deficits and the economy over the longer run (or even over the not-so-long run) if we go along with repeated violations/waivers of PAYGO as has been insisted on by the Bush Administration and many members of Congress (most recently, the Senate Republicans in the report I cited yesterday)?

Check out Table 1 on page 3 of the report.  Under current law (with expiring tax cuts OR with extended tax cuts that comply with PAYGO), the deficit as a share of the economy (GDP) would actually fall from 1.2% in 2007 to 1.0% in 2030, but would then start to grow (even with expired tax cuts) to 4.6% by 2050, and to 18.1% by 2082.  (The dramatic rise of the deficit in later years, despite revenues as a share of GDP growing from 18.8% in 2007 to 25.5% by 2082, shows that the longer-term problem is much more from rising health care costs than from deficient revenue.)  But under the scenario where extension of the Bush tax cuts and AMT relief is entirely deficit financed, deficits/GDP rise to 6.1% in 2030 (more than 6 times the 1.0% when paid for), 15.0% in 2050 (more than 3 times the 4.6% when paid for), and 39.3% by 2082 (more than 2 times the 18.1% when paid for).   (Note the difference shrinks over time when health costs become the far largest challenge.)

What difference do these deficits make for the economy?  CBO Director Peter Orszag lifts a couple paragraphs from the analysis onto his blog:

…simulations using one model—a textbook growth model that incorporates the assumption that deficits affect capital investment in the future as they have in the past—indicate that the rising federal budget deficits created by deficit financing of the indexation of the AMT would reduce real GNP per person by 6 percent in 2050 and by about 37 percent in 2080. If both the AMT were indexed and EGTRRA’s and JGTRRA’s personal income tax provisions were extended, and those changes were financed by additional borrowing, the economic costs would be even larger. By CBO’s estimates, real GNP per person would decline by 13 percent in 2050. Beyond 2073, projected deficits under those tax policies would become so large and unsustainable that the model cannot calculate their effects.

Despite the substantial economic costs generated by deficits in that model, such estimates may significantly understate the potential loss to economic growth under deficit financing of the tax changes…

Just as with CBO’s earlier analysis at Congressman Ryan’s request (my commentary on that posted here), the analysis focuses on the macroeconomic effects of budget deficits, rather than the potential microeconomic effects of the particular tax or spending policies on household or firm behavior.  In this particular analysis of deficit-financed vs. paid-for tax cuts, Peter Orszag explains that the microeconomic, incentive effects are the same under both scenarios for the tax cut in question…

To assess the economic effects, CBO compared a scenario with the tax changes financed through deficits with an alternative scenario in which the tax changes were financed fully from the start via changes in other policies. Because the analysis assumes that the tax changes are enacted in either case, the difference between the two scenarios highlights the effects of using deficits to finance them.

…although it should be pointed out that the microeconomic, incentive effects of the mix of policies used to pay for the tax cuts in the paygo-compliant (extended baseline) case are not simulated, just as in the CBO analysis for Congressman Ryan, the potential micro-behavioral effects from the drop in health care spending were not simulated.

A Big Family Infrastructure Day

July 17th, 2008 . by economistmom

Yesterday I was home with the kids (and dogs), and it went like this:

8:00 am:  take kid #1’s car to drop kid #2 off at her summer arts program (cost, $200+/week for 4 weeks, for $800+);

8:30 am:  drop kid #1’s car off at the Ford dealership for badly-overdue tune up/maintenance (initial quote, about $1500; later find out the alternator’s bad, so $2000 (but refuse to raise that to $3500 to get the AC fixed));

10:00 am:  bring kid #3 to her ballet camp (cost, $250+/week for 4 weeks, for $1000+);

10:30 am:  bring kid #1 to the oral surgeon to get 4 impacted wisdom teeth removed per our regular dentist’s orders (cost, $2745 out of pocket before our insurance, which the dentist does not participate in);

1:00 pm:  bring groggy kid #1 home to pick up kid #4 (who’s been home alone for awhile because I couldn’t get him to come with me for kid #1’s appointment), and bring kid #4 to the (same) oral surgeon to get 2 baby molars extracted per our orthodontist’s orders (cost, a mere $490, also out of pocket before insurance);

3:00 pm:  go out to fill prescriptions for kids #1 and #4 (out-of-pocket cost for the generic antibiotics, pain killers, and anti-nausea medicine, a shockingly low $4-$5 TOTAL);

3:10 pm:  while prescriptions are being filled, go to grocery store to buy lots of liquid and otherwise soft foods and somehow end up spending $150+ on juices, yogurt, applesauce, canned soup, and ice cream.

Let’s see, that’s about $7200 worth of family infrastructure spending!  Not exactly a “typical day” for our family, but it’s proof that one really has to be rich these days in order to have kids (especially that many kids).  (At least I didn’t really spend anything on the dogs yesterday, although my old beagle made sure that I spent time cleaning up his evening “accident”–to make it a pretty typical day in that regard…) 

Fortunately, it turns out our very generous dental insurance (courtesy of the Federal Reserve) will reimburse us for 90% of those dental expenses I paid up front, even though the oral surgeon “does not participate” with any insurance plans.  I didn’t find out the high reimbursement rate until this morning when I called our insurance company.  Yep, I had made and gone through with the appointments knowing in advance that the surgeon did not accept insurance, knowing the cost was estimated at $3000-$3500 for the two kids, and yet not knowing how much our insurance would cover for us.  Why?  Well, the “mom” in me was obviously more in charge than the “economist” in me, going through that simple, irrational, two-question test:  (i) is there any possible benefit associated with the expenditure (is marginal benefit positive)?, and (ii) do I have the money to pay for it? 

A week ago I was at my regular dentist for a checkup and mentioned that our favorite oral surgeon (and the one our dentist had referred us to) was no longer participating in any insurance and how much we had to come up with in advance to pay for the treatments.  My regular dentist said she knew of other oral surgeons that she thought did still participate in insurance that she could refer us to instead.  But then when I mentioned that we already had appointments (with nonparticipating oral surgeon) for the following week (and which I had easily scheduled just the week before) and how both kids were already overdue and could not afford to wait until August when cheerleading and fall baseball started (so it seemed they had to have it done ”now or never”), my dentist said “oh, well, you’ll never get an appointment with that little notice with [that oral surgeon who takes insurance].”

Plus, we already knew and liked this (nonparticipating) oral surgeon–we’ve been his patients for many years.  He’s got such a pleasant chairside manner for someone who’s putting you through torture…

And there you have it–back to my earlier point about why health care will always be unreasonably expensive.  I can’t shop for my family’s health care the way I love to comparison shop for other things.  There will always be people like me who are willing to pay unreasonably high prices for high quality (good and fast, and familiar) health care, even without the reality or awareness of third-party payments to hide the true prices.  And for the others who will not, or cannot, pay those unreasonably high prices– well, they just have to wait an unreasonable amount of time for an appointment.

Senate Republicans Explain Why They’ve Refused to Pay for Tax Cuts

July 16th, 2008 . by economistmom

According to this new policy paper on the Senate Republican Policy Committee’s website, the reason (or rather the latest reason) the Senate Republicans have refused to pay for tax cuts a la the PAYGO rules is not “just because,” and not because they don’t believe in fiscal responsibility, but because PAYGO isn’t fair to tax cuts. 

Apparently they buy into the line of argument made on the Tax Policy Center’s TaxVox blog by Rudy Penner, and maybe didn’t read my post on this topic here on, nor BlueDog’s comment on TaxVox, nor Rudy’s follow-up post.

There’s so much to point out that’s wrong in this piece that I don’t know where to begin.  Most of it should be clear if you reread my earlier post.  But apart from the additional budget geeky things I could point out (like paying for things with cuts in discretionary spending does not “count” as PAYGO compliant–and for good reason), what I really want to scream about is their last couple paragraphs in the executive summary, where they first chastise Democratic lawmakers for not complying with PAYGO “again and again” (gee, why was that?…) and then scold those same lawmakers for complying with PAYGO with increased taxes (aha, there’s the real problem…).

And then the last paragraph in the summary refers to lawmakers using PAYGO as just a “mask of fiscal responsibility.”  Mask?  That would mean a facade–something used to hide one’s true character, as if those members of Congress who have been insisting on PAYGO (such as the Blue Dogs) are actually engaged in some grand deception, fooling the American public into liking them for their popular(?) positions on raising taxes and restraining spending, when all they really want to do is increase the deficit.  Wow.  Really?

I like to think of PAYGO as a “fig leaf” rather than a “mask.”  It seems that it’s the only shred of anything to cover our vulnerable fiscal parts, the only little thing that’s keeping the fiscal situation from getting even more obscene. 

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