Why PAYGO Isn’t Enough–But Why We’ll Take It
February 4th, 2010 . by economistmomWith the successful but one-sided vote in the House, Congress passed a version of statutory pay-as-you-go budget rules today. It’s not an ideal version of PAYGO, because it allows very costly policies to be exempted. The fact that the bulk of these exempted tax policies are the Bush tax cuts, makes it all the more surprising (based on principle alone) that not a single House Republican supported it. In the Washington Post, Lori Montgomery explains:
The budget that Obama laid out this week would add $8.5 trillion to the debt by 2020, some of it explicitly permitted under the new PAYGO rules. For example, the rules allow Obama to extend tax breaks for the middle class enacted during the George W. Bush administration without covering the cost. Over the next decade, that extension would add $1.3 trillion to the debt by Democratic estimates or as much as $1.9 trillion according to Republicans.
The rules also permit lawmakers to protect taxpayers from the expansion of the alternative minimum tax for two years, lower the estate tax for two years and protect doctors who serve Medicare patients from a scheduled pay cut through 2014.
OK–so it’s not perfect, but a weak PAYGO is still probably better than no PAYGO. Today, the Concord Coalition issued this policy statement supporting even this imperfect version, explaining why the exemptions in the PAYGO rule make it all the more important that other tools of fiscal discipline (including those proposed by the Obama Administration in their budget) serve complementary roles:
Regardless of political reality, the economic reality remains the same. Persistent deficits of the size now projected under the President’s budget would harm the economy, increase our reliance on foreign borrowing, crowd out domestic investments, and lead to a spike in interest costs. Thus, if statutory PAYGO is adopted in the form currently proposed, policymakers must acknowledge the economic consequences of its exemptions and be prepared to deal with them. The cost of these policies will not go away simply because they are exempted from PAYGO. If not paid for now, they will be paid for later at a higher cost in interest payments and a less robust economy. That is why a fiscal commission with a broad mandate to tackle the structural deficit is a logical complement to PAYGO. Moreover, exempting any existing policies from PAYGO does not enact them into law. Legislation must still pass to extend these policies and those who advocate strict compliance with PAYGO can, and should, uphold this principle by voting against any extensions that are not paid for.
Finding a cure for the nation’s dire fiscal outlook will obviously require a lot more than a new budget rule, but enactment of statutory PAYGO would send a very positive signal that the federal government is beginning to take the problem seriously…
The Concord Coalition supports statutory PAYGO and believes that it must be assessed for what it is, not for what it isn’t. PAYGO is not a deficit reduction tool. It is not a spending freeze. It does not apply to discretionary spending or automatic increases in entitlement programs and tax expenditures. Holding PAYGO to a standard that assumes it is intended to do all these things (reduce the deficit, freeze spending, control “pork barrel” appropriations or rein in entitlements) sets up a conclusion that the rule would do no good. That is a false standard. PAYGO’s real value comes from its deterrent effect on entitlement expansions and tax cuts that would widen our structural deficit. This is certainly worth doing, even if other things are left to be done.
It’s basically what I was trying to say in this CNN-Money “panel” on what the President “got right” and “got wrong” in his budget–even though it might seem that my “wrongs” (and my worries) outnumber the “rights.” I feel that the spirit and intent of the legislation (”in theory”) is often good, even if the execution (”in practice”) is far from flawless.
Jim Glass / All,
I see that today Paul Krugman doubles down on his hyperpartisan hypocrisy regarding the level of costs and risks posed by our projected long-term fiscal imbalance at http://www.nytimes.com/2010/02/05/opinion/05krugman.html?ref=opinion . He first erects the straw man that all those worried about our fiscal imbalance are focused only on deficits in the short term, then speaks incessantly of “deficit hysteria”, “fear-mongering”, and “scare tactics”, and adds that although the long-term outlook is “problematic”, “even the long-term outlook is much less frightening than the public is being led to believe.”
Jim, since you commendably shared that 2003 Krugman column and pointed out the blatant hypocrisy vs. his 2009 comments, I’d like you to have first shot at a fuller “hypocrisy update” to include and comment on his column today, so I’ll hold off until at least tomorrow.
I fought through the confusion, spin or whatever of a Krugman defender in my (long) exchange with commenter “knocienz” starting at http://swordscrossed.org/story/20090917/hey-guys#comment-113232 (As a note, on other occasions knocienz was a pretty good commenter; I guess he just really, really wanted to defend Krugman)
As a note, several times I’ve posted comments on Krugman’s blog asking him (in a civil way) to reconcile the views he expressed in that 2003 column with his 2009 comments, and the comments appear on screen as awaiting moderation, but then are not posted on the blog. And this has happened even when I submitted my comment within an hour of his commentary being posted.
If I can be forgiven for a tangential (but very relevant and I think important) comment, I’d really like to draw attention to the column in today’s WaPo by Warren Rudman advocating passage of the Fair Elections Now Act, which I’ve advocated many times in comments on this blog and elsewhere, to move us toward a largely publicly funded campaign finance system. http://www.washingtonpost.com/wp-dyn/content/article/2010/02/04/AR2010020403624.html?sub=AR As I’ve explained previously, I see such change as not only desirable in itself (as an improvement in our democratic process) but also as a very important factor in achieving fiscal responsibility (to achieve savings from elimination of subsidies/special tax breaks, etc., and to achieve an increase in trust so people are more willing to accept sacrifice rather than being more suspicious that they are being asked to sacrifice excessively so some big-money special interest doesn’t have to sacrifice).
And I’m thrilled ( although not unrealistic about the odds of success) to see that Rudman…
chairs the bipartisan citizen initiative Americans for Campaign Reform with former senators Bill Bradley (D-N.J.), Bob Kerrey (D-Neb.) and Alan Simpson (R-Wyo.). They are leading a federal push for voluntary public funding of congressional and presidential elections
I think it’s no coincidence that a guy (Rudman) who is a long-time true advocate of fiscal responsibility (and who advocated for a S.A.F.E. budget commission years ago
http://www.washingtonpost.com/wp-dyn/content/article/2006/08/27/AR2006082700557.html ) is leading an effort to move us toward a largely publicly funded campaign finance system.
Back to the central point, I’m still far from convinced that this version of PAYGO is a good thing. Let’s look at the major budget changes projected by CBO from 2010 to 2015. They are, as I see it.
Ending tax cuts == more than 2/3 excluded (Bush and Obama tax cuts under $250,000
Entitlement increases (>$400 billion) == completely excluded
Defense spending ($40 billion) included
Interest (>$250 billion) excluded
Corp taxes (<-$200 billion) included (I think but I’m not sure)
So, most of the major changes that affect the budget forecast (except for tax increases in the evil rich and corporations which don’t require offsets to begin with are excluded).
In effect, PAYGO gives us almost nothing except a potential brake on parts of the budget that are not projected to grow materially anyway (discretionary spending).
So Congress gets to claim they are fiscally responsible and the vehicle they are using for it does very little other than keeping them from being more irresponsible.
Steve,
It’s a weak version of the rule “If you find yourself in a hole, stop digging.” It’s like “We’re in a hole, so we’re going to first dig a bit deeper, then we’ll only dig in some ways but not every possible way, and if we find a way to stack some stones around us so we can step atop them and maybe get out of the hole, we’ll dig deeper first and call the stacked stones ‘offsets’ rather than using them to help us get out of the hole”.
I know Brooks but I don’t think that’s very much and I think it gives politicians a lot more cover than its worth, witness Speaker Pelosi praising herself and her colleagues as “fiscally responsible” for passing it.
And with the exceptions, it’s more like saying we’re in a hole but we have 3 shovels, but, because we don’t want to make the hole deeper, we’re only going to dig with 2 of the shovels
Because the minute we want to use the 3 shovels again, we can. We didn’t even break the third shovel, we just voluntarily put it down
Steve,
Although this PAYGO is better than nothing in itself, it is much, much less than advertised, as I’ve tried to mockingly assert above, and yes, there is the risk/cost of relieving political pressure on some actors or on Congress and the president in general to get fiscally responsible, and the greater the disparity between the actual benefit of this very weak version of PAYGO and the public perceptions of it that politicians are able to achieve, the greater the chance that it does more harm than good once the politics are factored in. Additionally there is the potential opportunity cost of any possible stronger version of PAYGO that perhaps could have been achieved had the weak version been rejected.
To be honest, I’m quite surprised that Concord is so strongly supportive of this version of PAYGO. Maybe that’s how it is to be a group like Concord, you praise even the semblance of responsibility in the hope of encouraging more.
From my perspective, this is far less than half a loaf. It is more comparable to the “freeze” that the administration has proposed. Sounds good when you hear it, a lot less good when you understand it.
Personally, I don’t think a statutory PAYGO law is worth the paper it’s printed on. Congress has demonstrated that it will ignore PAYGO (or Graham/Rudman) when it wants to so I’m not sure the benefit.
Steve,
Re: Congress has demonstrated that it will ignore PAYGO (or Graham/Rudman) when it wants to so I’m not sure the benefit.
Speaking just generically (not of this PAYGO or any other process change in particular), it’s true that no process change is really binding on a subsequent Congress if that Congress wishes to remove it or weaken it (with more exceptions, budget gimmicks, etc.), but the idea is to affect the political calculus — to increase the political cost of greater fiscal irresponsibility by drawing more attention to it and making it seem like an abandonment of fiscal responsibility in principle or as an overall objective. If greater fiscal irresponsibility would require removal or legislative weakening of a strong version of PAYGO, for example, perhaps that step would bring political costs/risks to those supporting it, at least directionally (I’m not speaking of magnitude, nor implying that the political cost would be greater than the political gain from lower taxes and/or higher spending).
I can’t get excited about this debate either way. I see it as irrelevant. As I recently paraphrased Christopher Bergin at tax.com, “Nothing will change until everything changes”.
One very important clarification — the PAYGO bill approved by the House would apply to ALL new tax cut or spending policies as well as extension of the “Obama” middle class tax cut (the Make Work Pay tax credit). The only tax cuts that would be exempted are extension of most, but not all, of the tax cuts enacted in 2001 and 2003 that are currently in place.
I understand and respect those who sincerely believe that extending those current policies instead of allowing them to expire as scheduled under current law should be subject to PAYGO, but prior votes on exending the middle class tax cuts have made it clear that a paygo bill that applied to extension of current policy on those areas would not pass and if it did would be violated.
But while some of the critics of the exemptions are sincere in their view, I get frustrated by hearing that criticism from those who would turn around and argue that allowing those provisions to expire constitutes a tax increase. Most Republicans have argued that extending those tax cuts shouldn’t be counted as a “cost” because the costs of continuing them should be included in the baseline. It is therefore rather ironic to listen to Republicans criticize the PAYGO bill for exempting costs they don’t believe exist.
Brooks:
Krugman is all yours. He’s America’s!
Go get him!
Krugman is all yours. He’s America’s!
Didn’t Norway buy him from us a while back?
“Krugman is all yours” reminds me of the scene in the old Woody Allen movie “Take the Money and Run” in which Allen’s character, a prisoner, is punished by being locked in “the hole” for three days with an enthusiastic insurance salesman. (no offense to any insurance salesmen; it is/was just a stereotype)
BlueDog,
Please see my post upthread as to what is included and excluded. Effectively, PAYGO covers new legislation (except the Bush tax cuts below $250K of course) but the bulk of our spending issues are statutory increases in existing programs (which aren’t covered). So PAYGO is something like a freeze on discretionary spending and “new” tax cuts at best.
Your second paragraph is interesting. You appear to be saying that if Congress had been forced to vote on a PAYGO bill that would materially change their behavior, they either wouldn’t have voted for it or would have violated it. So what’s the point in voting for the existing bill.
Understand why you’re so frustrated in the last point. Effectively allowing the provision to expire is allowing a tax increase to happen. By the way, the fact that it applies to some parts of the 01 and 03 tax reductions and not all of them is blatently illogical. Either apply or don’t apply. It’s back to politics pure and simple.
My favorite insurance salesman stereotype is the guy in Groundhog Day who Bill Murray eventually decks in one of the replays of the day.
Perfect stereotype imo
Steve,
Yes, I remember that character: “Am I right or am I right…or am I right?”
In a world where the health care bill has all the Republicans against and all the Democrats for, the term hyperpartisan seems to have little meaning. Nonetheless, I can hardly claim Krugman to be less partisan than the Senate.
But in your example articles: Take a look at the history of mortgage rates. 2003 was clearly about the best time anyone could have chosen to refinance. Krugman got that part right. Next question - with Bush just having cut taxes and ready to take on the costs of a war, what were the chances that we were going to see a movement toward lower deficits? Did we see a movement in that direction? Krugman got that part right.
Krugman agrees about letting all the tax cuts expire. He says we should be out of the wars. He says we need to control health care costs. All of those go a long way toward reducing the deficit and they are all in a totally different place than in 20003. The primary reason it sounds hypocritical to you is that you really have not looked past the surface. Don’t let his partisan rhetoric make you miss what is valid.
Take a look at the history of mortgage rates. 2003 was clearly about the best time anyone could have chosen to refinance.
Not really. When he wrote that the 30-year rate 5.75%. One year later it was down to 5.45%.
From then until 2008 it bounced around up and down from about 5.4% to 6.2%, sometimes higher than 5.75 and sometimes lower. Then rates got *a lot lower*, of course, and still are. So his “call” was no great bargain.
Besides, perhaps more on point, his call wasn’t based on mortgage market conditions …
Now he’s denying any such threat to govt solvency at all — and he was totally 100% wrong about rates going “sky high” for five years, after which they plunged.
Next question - with Bush just having cut taxes and ready to take on the costs of a war, what were the chances that we were going to see a movement toward lower deficits?
Our starting point now is *much worse* than 2003. What are the chance we are going to see a movement to lower deficits now now? Aren’t the deficit projections today all much worse than in 2003?
Yet Krugman is has reversed himself to become mister “not to worry”.
Krugman agrees about letting all the tax cuts expire.
Where? As far as I’ve seen he’s signed on to Obama-Democratic plan to renew the bulk of the Bush tax cuts, and assured people that the resulting budget projections show things will be no worse in 2019 than 1950 (disregarding the $40 trillion liability for Medicare and SS that will be maturing then, obviously.)
He says we need to control health care costs.
Well, yeah. So do I, and so do you. In fact, we all agree, just keep entitlement costs from going up and the problem is over. Assume we’ll do that and there’s no problem.
And as the joke about ecomomists goes, assume a can opener and we can all eat.
This is in fact the big bait-and-switch from Krugman the 2003 hysteric to Krugman the 2010 sanguine.
In 2003 he says explicitly that retiree costs are going to destroy everything:
BTW, the big change in the entitlement picture since then is for the worse — SS today is running at a deficit 10 years before it was projected to. Good-bye to that famous surplus.
So, the essence…
2003: Because of the off-budget Medicare - Social Security entitlement liabilities, “the true budget picture is much worse than the conventional deficit numbers suggest” … and coping with these liabilities is “simply impossible”.
2010: The conventional debt numbers for 2019 will be no worse than for 1950. What’s so bad about that? Assume we fix the Medicare-Social Security problem, then we can shrink the debt with economic growth afterward, as during the 1960s.
What happened to it is “simply impossible” to do that?
Maybe, change the party running the gov’t … and assume that can opener!
Krugman [says] let all the tax cuts expire … we should be out of the wars … we need to control health care costs. All of those go a long way toward reducing the deficit and they are all in a totally different place than in 20003. The primary reason it sounds hypocritical to you is that you really have not looked past the surface. Don’t let his partisan rhetoric make you miss what is valid.
But Obama is renewing the bulk of the tax cuts (with no objection I’ve seen from PK) … and expanding one war while keeping the other going … while nobody has any plan anywhere to control health costs.
Also, the debt, deficit and all projections are massively worse today than in 2003 — that’s how we are in a different the place now than then.
So really, what’s behind the surface that I’m missing that validates his swinging from being “terrified” of the “simply impossible” forces driving “the looming threat to the federal government’s solvency” … to being ‘don’t worry, be happy’?
He said back in 2003 that “the train wreck” had already started. What un-started it, retroactively?
Arne,
In a world where the health care bill has all the Republicans against and all the Democrats for, the term hyperpartisan seems to have little meaning.
I think your reasoning is that because both moderates and extremists of each party lined up together as a party block on healthcare “reform” legislation, it doesn’t matter that there are extremists. I disagree. Extremists on both sides who refuse to accept compromise on a solution to our fiscal imbalance problem — even though a pure solution per their ideological extreme is not politically plausible, meaning that there will be no solution and we’ll keep heading toward the cliff of a fiscal and economic crisis — killed the legislation for a statutory, Congressional budget commission. (e.g., McCain flipping and voting against it just because jack*ss J.D. Hayworth is a primary threat from the right).
Also, I should clarify what I usually mean when I call someone a “hyperpartisan”. I don’t just mean having an extreme ideology, but also an unwillingness to make necessary compromises and/or presenting analysis that reflects extreme bias and/or dishonesty or other “bad faith” as part of advocacy (overt or hidden in the guise of supposedly good-faith analysis) for some policy position, general ideology, party, candidate, etc.
As for Krugman’s hypocrisy, what I am talking about is the inconsistency of Krugman’s view of the long-term harm/risk associated with a given level of projected long-term fiscal imbalance. So we are talking about Krugman’s view of the probability that a given level of projected long-term fiscal imbalance (the projection as of 2003 vs. that of 2009) will lead to X level of adverse consequences.
In 2003 Krugman was expressing great worry/fear over the projected long-term fiscal imbalance (deficits and debt-to-GDP) once the Bush tax cuts were factored in (making an already severe and extremely difficult-to-solve problem downright impossible to solve and thus putting us firmly on course for extremely adverse consequences), telling readers that he is “terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits… we’re looking at a fiscal crisis that will drive interest rates sky-high”, describing this fiscal outlook as a “really scary…threat to the federal government’s solvency”, saying “the conclusion is inescapable. Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible. The accident, the fiscal train wreck, is already under way”.
In 2009 (and as he wrote his column the other day) Krugman was looking at a significantly WORSE projected long-term fiscal imbalance in terms of the numbers and in terms of the difficulty of solving it and avoiding extremely adverse consequences, and, in response to (legitimate) worry about this fiscal outlook, he insists emphatically and persistently that, while the outlook is “bad”, it is clearly something we “can handle”, and that those who were expressing a level of concern similar to his in 2003 were “hysterical” and that the only way “to make the debt look scary” is to ignore the clear lesson of history to the contrary – a comparison with the post-WWII era which is not only absurd, but moreover was a history with which he was undoubtedly quite familiar when writing in 2003, so if the only way to “make the debt look scary” is to ignore that history, why did he express such fear about the fiscal outlook back in 2003?
And as I said in my initial comment, a couple of days ago Krugman doubled down on his hyperpartisan hypocrisy regarding the level of costs and risks posed by our projected long-term fiscal imbalance, speaking incessantly of “deficit hysteria”, “fear-mongering”, and “scare tactics”, and adds that although the long-term outlook is “problematic”, “even the long-term outlook is much less frightening than the public is being led to believe.”
I submitted my comment above before seeing and reading Jim’s. Sorry for the overlap, and hopefully my elaboration/additions to parts helps make even more obvious Krugman’s self-contradiction — his deceit of his readers in his effort to support particular policies and people and/or to maintain his “brand” by telling a target audience what it wants to hear.
Regarding refinancing. I did not mean to imply that Krugman miraculously hit the perfect month to refinance, but rates did not drop enough after March 2003 to make someone want to refinance again. It WAS about the best time.
Hyper compared to what. Compared to Diane, sure. Compared to the Senate? How would you tell? Compared to the voices most people listen to, not so much. Just partisan.
I do not believe Krugman is signed on for Obama’s extension of the Bush tax cuts.
The story in 2003 was that cutting taxes was a bad idea. Do you disagree?
The story now is that pulling back on the deficit while unemployment is still high is a bad idea. That is not actually contradictory do what I think I hear Diane saying.
His presentation IS partisan, but his basic premise in 2009 and 2010 is NOT inconsistant with his basic premise in 2003.
Arne,
I opposed the Bush tax cuts and I have never stopped thinking they were bad policy, but you are missing my point, so I’ll say it again: The hyperpartisanship I’m talking about in the case of Krugman 2003 vs. Krugman 2009/10 is an apparently deliberate misrepresentation of one’s analytical view to serve the purpose of adcancing some agenda (and/or pleasing some audience of a particular ideology, preference of particular party, politician, etc.). Re-read the bolded explanation in my comment that follows “As for Krugman’s hypocrisy, what I am talking about is…” (I bolded it in hopes that it wouldn’t be missed and it would be clear to you what I was talking about).
As background, policy choices are made essentially based on (1) assumptions regarding what the trade-offs are between Policy A vs. Policy B or C, etc., and (2) which trade-offs best reflect our values and priorities. We non-experts rely to a large extent on the analysis of experts to gain an understanding of what the trade-offs are of choosing one policy vs. another (i.e., Step #1), and we often also listen to other views regarding #2 (appropriate values and priorities), but ultimately #2 is an application of our personal values and priorities. But a hyperpartisan will often try to mislead us about #1 — what the trade-offs are — rather than giving us his good-faith analytical (and/or theoretical) view of what the trade-offs are (either with or without his additional commentary regarding #2) and then giving us the opportunity to apply our values and priorities. It’s like someone who is in a much better position to know how many calories a particular candy bar in front of you has and who is pretty sure it is 300 calories telling you it’s 5,000 calories because he thinks you shouldn’t eat it. That’s very different from telling you what he truly believes — that it’s 300 calories — and then making the case for why you should not eat it in hopes that you’ll agree.
This cartoon from the WSJ is funny http://gregmankiw.blogspot.com/2010/02/two-economists-walk-into-bar.html but the Concord Coalition has proven that it doesn’t have to go down like that
OK, rereading the bolded text I find that Brooks’ reading of context is more shallow than I thought. Brooks believes he is making a meaningful comparison (risk associated with long-term imbalance) when nothing could be further from the truth.
In 2003 Krugman is slamming policy choices which (along with events) have increased the 10-year projection of the deficit by $8.4T in just 2 years. In 2009 Krugman is talking academically about how large the current deficit is - not considering policy. In 2010 Krugman is talking about short term policies that relate to deficit during a recession.
Three DIFFERENT topics.
Arne,
Are you saying you don’t see in each of Krugman’s columns an assertion about the level of risk/cost associated with the long-term fiscal imbalance?
Just a note if this helps: If in one case someone makes assertions regarding A, B, and C to comment on Policy X, and in another case he makes assertions regarding A, D, and E to comment on policy Y, he IS making an assertion regarding A in both cases.
I must condess the late recognition of the irony in my needing the reread something to recognize that it was not as deep as it could have been.
While I see there has been a question directed at me, I already addressed it and Diane’s blog in a post about PAYGO is hardly the place for a debate about the meaning and context of Paul Krugman’s words on a different subject.
Diane, you might want to blog on Keith Hennessy’s latest article explaining why arguments over what baseline to choose are irrelevant except for political posturing. I think you and everyone else here will agree with this article:
http://keithhennessey.com/2010/02/08/deficit-reduction-or-deficits/
Excerpt: “Whether the President’s budget represents an improvement or harm isn’t that important to me. Arguing about deficit reduction is something of a distraction. We should instead focus on the deficits that would result from a particular set of policy changes. If the resulting deficits are too big, then we need to make bigger policy changes so that the resulting deficits are acceptable.”
Arne,
I’ll take that as a cop-out. Not surprising, considering the apparent indefensibility of your (bold) assertion.
Your own hypocrisy (in addition to Krugman’s) is also noteworthy, given that you injected yourself into the discussion re: the Krugman topic and are now copping out — refusing to give a straight answer to a relevant, straight-forward question pertaining to your argument — under the pretext that such discussion is very inappropriate.
Anyway, it’s not surprising that you wouldn’t want to say clearly and explicitly that you “don’t see in each of Krugman’s columns an assertion about the level of risk/cost associated with the long-term fiscal imbalance” (per my question), nor that you wouldn’t wan’t to acknowledge that Krugman was indeed making such assertions and then either admit you were wrong or try to come up with some reason why you had some valid criticism of my charge re: Krugman. Unfortunately, the norm in the blogosphere is for people to cop out in one way or another when they realize they erred, particularly when they’ve done so boldly/snarkily. But I hope if you come around again you’ll try to bring a better form of engagement.
AMT,
To borrow a concept from elsewhere, in managerial accounting (as opposed to financial accounting) the appropriate/best method of calculating costs, profit, etc. all depends on what decision(s) the calculations are going to be used for.
If the question is “How good is the president’s proposed budget relative to the problem we need to solve?”, then baselines — and differences in their selection/creation based on subjective analytical views, political purposes, etc. — are essentially irrelevant. What matters is just what is expected to result and the extent to which it solves/mitigates the problem, not the result compared to what would be expected under any alternative set of assumptions.
But if the question is “Is the president’s proposed budget better/worse (and to what degree) vs. what we’d expect if we continue on our current course (either policy or law, whichever one chooses, as long as the meaning and distinction is clear to the audience)?”, then the relevant baseline has a role. A representation of the difference vs. the current law baseline tells one how much better/worse the president’s budget is vs. if no relevant legislation is passed. And vs. “current policy” baseline (assuming it is clearly defined) tells one how much better/worse it is vs. continuation of the way things are (rather than changes in policy coming from policy changes already scheduled in law to take place in the future). There is obviously substantial danger in such analyses being used for misleading political purposes, but as a purely analytical matter, all of the above can be useful to answer their associated questions.
AMT,
CFRB calls out the Obama Administration for not just using a “current policy baseline” (to avoid being seen as responsible for increasing debt by extending the Bush tax cuts), but also sneaking other stuff into that baseline — stuff they got in the budget, and did so as temporary stimulus measures:
The Administration is taking two tax provisions from the 2009 stimulus bill — expansions of the child tax credit and the EITC — and claiming them as part of the “current policy” Bush tax cuts. And they are doing something similar for Pell grants: assuming that they will receive sufficient funding to pay out the maximum grant level set in the stimulus bill.
The Administration didn’t inherit these policies, they created them. And worse, still, they created them as explicitly temporary, under a stimulus bill which they claimed was meant only to help bring us out of this recession.
Yet the White House wants to continue these policies, and they don’t want to pay for them. So what do they do? They hide these policies in their baseline
http://crfb.org/blogs/still-budgeting-through-footnotes-fy-2011
CRFB, that is.
I confess to my own hypocrisy and I apologize. Although I did not know my comment would lead to a debate, I should have known. Any further comments on my hypocrisy may be posted here. http://swordscrossed.org/diary/20100208/using-other-peoples-blogs-debate-forums
Arne,
You will fit in well with what remains of the once good SwordsCrossed. There used to be a good number of participants who presented intelligent arguments and moreover who engaged in good faith, responding to one another’s relevant questions/arguments rather than engaging in evasive tactics when their assertions were challenged (and didn’t talk out their respective butts in the first place). But a few participants who were hyperpartisans (two on the right, two on the left) and who had no ability and/or no desire to engage in such good faith came to dominate the site, and the good participants backed away from participation mostly or completely. Now there are only about a half dozen regular participants (and by regular, I mean the average seems to be about one comment from someone a day, not counting robo-spam), including the three or four of those individuals who ruined the site plus just a couple who were not like that but who have stuck around.
Before it went completely downhill I unsuccessfully urged change to prevent the behavior of those individuals from ruining the site, but perhaps by that time it was just too late. Not surprisingly, those few who ruined the site and who are now almost the only remaining participants, will generally jump at any chance to say something nasty about the guy who called out and criticized their commenting behavior, which is probably why you chose to post there — hoping folks here will go there, see comments concurring with you that I’m some kind of unreasonable jerky jerk on blogs, and get the false impression that the problem is probably me rather than those folks or you.
But do feel free to answer my question there if you wish, since you no longer have the pretext there that you used here to avoid answering my question once you realized you couldn’t defend your assertion.
I’m not surprised that you usually hang out on ideologically hyperpartisan echo chamber blogs like Mark Thoma’s where all you need to do is agree with the core beliefs, positions, etc. of the group rather than engage in critical thinking or real discussion/debate when an argument of yours is challenged. I was surprised to see you pop up here.
Arne,
And I should add to “hoping folks here will go there”: and perhaps also hoping those folks there whom I criticized in the past will come here to concur with you.
You really went out of your way to try to save face. I guess just answering a simple question was too much for you to bear if it would mean exposing the invalidity of an assertion of yours.