Dynamic modeling at CBO--wonkish

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Recently Wendy Edelberg, Assistant Director for CBO’s Macroeconomic Analysis Division, made a presentation at the Conference of Business Economists on “Dynamic Scoring” on May 14, 2015. Bunches of people who already know all about it and don’t want to be bothered with the details can safely ignore this post. People seriously interested in how CBO makes it estimates should be interested.

The 2016 Budget Resolution altered the procedures for scoring bills by instructing the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) to incorporate to the greatest extent practicable the budgetary effects of changes in macroeconomic variables resulting from legislation (other than appropriations acts) that either has a gross budgetary effect of 0.25% of GDP in any year over the next ten years (currently about $45 billion) or is designated by the Chairman of one of the Budget Committees. The estimates are to also include the budgetary effects including macroeconomic effects for the subsequent 20 year period.

Prior to this most legislation was subject only to “static” scoring which ignored macroeconomic effects of budgetary measures. Dynamic scoring has been used for the President’s Budget, the annual long term budget outlook, analysis of fiscal policy scenarios, and one specific piece of legislation (S. 744, the Immigration Act).

What dynamic scoring means is that the budget estimates will include “feedback” mechanisms. In addition to the direct effects of fiscal policy, the CBO will estimate the effects stemming from changes in behavior of consumers, businesses, and investors as they react to those changes. For example, if Congress were to approve a program to spend $1 trillion over ten years to rebuild highways, bridges, and tunnels, there would be a direct effect from the spending of $1 trillion. But such an increase in demand would also increase employment, and the new employees would spend much of those increased wages and businesses would spend more on raw materials and equipment. These effects are measured by a “demand multiplier”.

In addition to these fiscal effects, some measures, such as S. 744, would have significant impact on the labor supply. So would changes in the Social Security retirement age or benefit formula, rules for SSA disability benefits, government and military pensions, and so forth. Energy, environmental, and agricultural measures also would have impact through substitution effects. A “cap-and-trade” regime on carbon emissions would encourage CO2 sequestration to replace fracking, power plants to retool to use gas rather than coal, and nuclear, wind, and solar energy to substitute for fossil fuels. So almost any kind of legislation can have macroeconomic effects, even if it is “revenue-neutral”.

CBO analyzes each proposal in at least two time frames. The short term analysis focuses on changes in direct demand for goods and services, taking into account the gap between production and maximum sustainable (“potential”) GDP. When the economy is very close to capacity, increases in demand in the short term are likely to increase price levels for the goods and services involved, while when there are wider gaps the effect is mainly in increased production as underutilized capacity is put back into production. Personally I am skeptical of this kind of narrative by itself. Different industry structures can create inflation in some markets while not others as a result of the same project. Suppose we implement a major highway program. In terms of the labor market, the main effect could be increased employment and production with little inflationary impact. But at the same time, it could cause prices to rise in “bottleneck” resources such as heavy equipment production. In the long term fiscal policies affect production mainly through altering the savings rate, federal investment, long term business investment, and household decisions regarding work and education.

For the short term analysis, changes in government spending focus on the “demand multiplier”. This measures the increase in spending secondary to the initial spending. CBO makes a case that this indirect spending is highly sensitive to monetary policy. They estimate that if there is minimal monetary policy response (no tightening of credit by the Fed) that over four quarters the demand multiplier will range from 0.5 to 2.5 with a central estimate of 1.5. So over a year a $10 billion spending program can be expected to result in $25 billion of total demand. When monetary policy is more restrictive, when the Fed tightens money, the four quarter demand multiplier will range from 0.4 to 1.9 with a central estimate of 1.2.

For the longer term, CBO uses two models of potential output to estimate fiscal effects over the longer haul; a “Solow”-type growth model” and a life-cycle growth model, which are complementary. These link economic growth to the size of the labor force, the amount of capital, the growth of technology and the efficiency of organizational structure. In a Solow-type model, there is a “wage elasticity” of after-tax income, i.e. how much the labor supply will grow due to a 1% increase in earnings. CBO estimates this figure to be about 0.19 (composed of a substitution elasticity of .24 and an income elasticity of -.05). So if total wages increase by 1%, the labor force should increase 0.19%. In a Solow-type model, as income (not just earned income) increases, so does the savings. This component is very sensitive to distributions of income as the savings rate varies by income group.

The life cycle model adds increased savings due to the household sector protecting itself against future drops in income or large expenses. With a rapidly growing older population, this effect is pronounced.

So is “dynamic” scoring better than static scoring? In theory the answer has to be yes. For small projects, it really makes little difference, but for large changes over 10 to 20 years, the effects can be dramatically different. Of course, the further out we go, the less reliable the predictions become. And with the passage of time technology changes and the behavioral assumptions underlying economic models change. I don’t think that anything over ten years is worth much (except for certain demographic projections, the cohort of 20-year olds will be the cohort of 40-year olds in another 20 years!)With dynamic scoring, we are introducing economic modeling and parameters which are difficult to measure and increase the anticipated degree of error. So what’s the answer? My instinct tells me that properly done, dynamic modeling is a good first approximation of what we are trying to get at. I anticipate that compared to static modeling, dynamic modeling will give us answers in the same direction with a slightly higher amplitude. Any other result would tend to call into question the design of the particular dynamic modeling itself.
 
Recently Wendy Edelberg, Assistant Director for CBO’s Macroeconomic Analysis Division, made a presentation at the Conference of Business Economists on “Dynamic Scoring” on May 14, 2015. Bunches of people who already know all about it and don’t want to be bothered with the details can safely ignore this post. People seriously interested in how CBO makes it estimates should be interested.

The 2016 Budget Resolution altered the procedures for scoring bills by instructing the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) to incorporate to the greatest extent practicable the budgetary effects of changes in macroeconomic variables resulting from legislation (other than appropriations acts) that either has a gross budgetary effect of 0.25% of GDP in any year over the next ten years (currently about $45 billion) or is designated by the Chairman of one of the Budget Committees. The estimates are to also include the budgetary effects including macroeconomic effects for the subsequent 20 year period.

Prior to this most legislation was subject only to “static” scoring which ignored macroeconomic effects of budgetary measures. Dynamic scoring has been used for the President’s Budget, the annual long term budget outlook, analysis of fiscal policy scenarios, and one specific piece of legislation (S. 744, the Immigration Act).

What dynamic scoring means is that the budget estimates will include “feedback” mechanisms. In addition to the direct effects of fiscal policy, the CBO will estimate the effects stemming from changes in behavior of consumers, businesses, and investors as they react to those changes. For example, if Congress were to approve a program to spend $1 trillion over ten years to rebuild highways, bridges, and tunnels, there would be a direct effect from the spending of $1 trillion. But such an increase in demand would also increase employment, and the new employees would spend much of those increased wages and businesses would spend more on raw materials and equipment. These effects are measured by a “demand multiplier”.

In addition to these fiscal effects, some measures, such as S. 744, would have significant impact on the labor supply. So would changes in the Social Security retirement age or benefit formula, rules for SSA disability benefits, government and military pensions, and so forth. Energy, environmental, and agricultural measures also would have impact through substitution effects. A “cap-and-trade” regime on carbon emissions would encourage CO2 sequestration to replace fracking, power plants to retool to use gas rather than coal, and nuclear, wind, and solar energy to substitute for fossil fuels. So almost any kind of legislation can have macroeconomic effects, even if it is “revenue-neutral”.

CBO analyzes each proposal in at least two time frames. The short term analysis focuses on changes in direct demand for goods and services, taking into account the gap between production and maximum sustainable (“potential”) GDP. When the economy is very close to capacity, increases in demand in the short term are likely to increase price levels for the goods and services involved, while when there are wider gaps the effect is mainly in increased production as underutilized capacity is put back into production. Personally I am skeptical of this kind of narrative by itself. Different industry structures can create inflation in some markets while not others as a result of the same project. Suppose we implement a major highway program. In terms of the labor market, the main effect could be increased employment and production with little inflationary impact. But at the same time, it could cause prices to rise in “bottleneck” resources such as heavy equipment production. In the long term fiscal policies affect production mainly through altering the savings rate, federal investment, long term business investment, and household decisions regarding work and education.

For the short term analysis, changes in government spending focus on the “demand multiplier”. This measures the increase in spending secondary to the initial spending. CBO makes a case that this indirect spending is highly sensitive to monetary policy. They estimate that if there is minimal monetary policy response (no tightening of credit by the Fed) that over four quarters the demand multiplier will range from 0.5 to 2.5 with a central estimate of 1.5. So over a year a $10 billion spending program can be expected to result in $25 billion of total demand. When monetary policy is more restrictive, when the Fed tightens money, the four quarter demand multiplier will range from 0.4 to 1.9 with a central estimate of 1.2.

For the longer term, CBO uses two models of potential output to estimate fiscal effects over the longer haul; a “Solow”-type growth model” and a life-cycle growth model, which are complementary. These link economic growth to the size of the labor force, the amount of capital, the growth of technology and the efficiency of organizational structure. In a Solow-type model, there is a “wage elasticity” of after-tax income, i.e. how much the labor supply will grow due to a 1% increase in earnings. CBO estimates this figure to be about 0.19 (composed of a substitution elasticity of .24 and an income elasticity of -.05). So if total wages increase by 1%, the labor force should increase 0.19%. In a Solow-type model, as income (not just earned income) increases, so does the savings. This component is very sensitive to distributions of income as the savings rate varies by income group.

The life cycle model adds increased savings due to the household sector protecting itself against future drops in income or large expenses. With a rapidly growing older population, this effect is pronounced.

So is “dynamic” scoring better than static scoring? In theory the answer has to be yes. For small projects, it really makes little difference, but for large changes over 10 to 20 years, the effects can be dramatically different. Of course, the further out we go, the less reliable the predictions become. And with the passage of time technology changes and the behavioral assumptions underlying economic models change. I don’t think that anything over ten years is worth much (except for certain demographic projections, the cohort of 20-year olds will be the cohort of 40-year olds in another 20 years!)With dynamic scoring, we are introducing economic modeling and parameters which are difficult to measure and increase the anticipated degree of error. So what’s the answer? My instinct tells me that properly done, dynamic modeling is a good first approximation of what we are trying to get at. I anticipate that compared to static modeling, dynamic modeling will give us answers in the same direction with a slightly higher amplitude. Any other result would tend to call into question the design of the particular dynamic modeling itself.
I'd say its next to worthless given all the variables and all the demand side lunatics who would undoubtedly be doing much of the scoring. If it worked we'd be 100% sure liberalism was stupid. Society has not concluded that thus testifying to the fact that dynamic scoring has not worked yet.
 
Recently Wendy Edelberg, Assistant Director for CBO’s Macroeconomic Analysis Division, made a presentation at the Conference of Business Economists on “Dynamic Scoring” on May 14, 2015. Bunches of people who already know all about it and don’t want to be bothered with the details can safely ignore this post. People seriously interested in how CBO makes it estimates should be interested.

The 2016 Budget Resolution altered the procedures for scoring bills by instructing the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) to incorporate to the greatest extent practicable the budgetary effects of changes in macroeconomic variables resulting from legislation (other than appropriations acts) that either has a gross budgetary effect of 0.25% of GDP in any year over the next ten years (currently about $45 billion) or is designated by the Chairman of one of the Budget Committees. The estimates are to also include the budgetary effects including macroeconomic effects for the subsequent 20 year period.

Prior to this most legislation was subject only to “static” scoring which ignored macroeconomic effects of budgetary measures. Dynamic scoring has been used for the President’s Budget, the annual long term budget outlook, analysis of fiscal policy scenarios, and one specific piece of legislation (S. 744, the Immigration Act).

What dynamic scoring means is that the budget estimates will include “feedback” mechanisms. In addition to the direct effects of fiscal policy, the CBO will estimate the effects stemming from changes in behavior of consumers, businesses, and investors as they react to those changes. For example, if Congress were to approve a program to spend $1 trillion over ten years to rebuild highways, bridges, and tunnels, there would be a direct effect from the spending of $1 trillion. But such an increase in demand would also increase employment, and the new employees would spend much of those increased wages and businesses would spend more on raw materials and equipment. These effects are measured by a “demand multiplier”.

In addition to these fiscal effects, some measures, such as S. 744, would have significant impact on the labor supply. So would changes in the Social Security retirement age or benefit formula, rules for SSA disability benefits, government and military pensions, and so forth. Energy, environmental, and agricultural measures also would have impact through substitution effects. A “cap-and-trade” regime on carbon emissions would encourage CO2 sequestration to replace fracking, power plants to retool to use gas rather than coal, and nuclear, wind, and solar energy to substitute for fossil fuels. So almost any kind of legislation can have macroeconomic effects, even if it is “revenue-neutral”.

CBO analyzes each proposal in at least two time frames. The short term analysis focuses on changes in direct demand for goods and services, taking into account the gap between production and maximum sustainable (“potential”) GDP. When the economy is very close to capacity, increases in demand in the short term are likely to increase price levels for the goods and services involved, while when there are wider gaps the effect is mainly in increased production as underutilized capacity is put back into production. Personally I am skeptical of this kind of narrative by itself. Different industry structures can create inflation in some markets while not others as a result of the same project. Suppose we implement a major highway program. In terms of the labor market, the main effect could be increased employment and production with little inflationary impact. But at the same time, it could cause prices to rise in “bottleneck” resources such as heavy equipment production. In the long term fiscal policies affect production mainly through altering the savings rate, federal investment, long term business investment, and household decisions regarding work and education.

For the short term analysis, changes in government spending focus on the “demand multiplier”. This measures the increase in spending secondary to the initial spending. CBO makes a case that this indirect spending is highly sensitive to monetary policy. They estimate that if there is minimal monetary policy response (no tightening of credit by the Fed) that over four quarters the demand multiplier will range from 0.5 to 2.5 with a central estimate of 1.5. So over a year a $10 billion spending program can be expected to result in $25 billion of total demand. When monetary policy is more restrictive, when the Fed tightens money, the four quarter demand multiplier will range from 0.4 to 1.9 with a central estimate of 1.2.

For the longer term, CBO uses two models of potential output to estimate fiscal effects over the longer haul; a “Solow”-type growth model” and a life-cycle growth model, which are complementary. These link economic growth to the size of the labor force, the amount of capital, the growth of technology and the efficiency of organizational structure. In a Solow-type model, there is a “wage elasticity” of after-tax income, i.e. how much the labor supply will grow due to a 1% increase in earnings. CBO estimates this figure to be about 0.19 (composed of a substitution elasticity of .24 and an income elasticity of -.05). So if total wages increase by 1%, the labor force should increase 0.19%. In a Solow-type model, as income (not just earned income) increases, so does the savings. This component is very sensitive to distributions of income as the savings rate varies by income group.

The life cycle model adds increased savings due to the household sector protecting itself against future drops in income or large expenses. With a rapidly growing older population, this effect is pronounced.

So is “dynamic” scoring better than static scoring? In theory the answer has to be yes. For small projects, it really makes little difference, but for large changes over 10 to 20 years, the effects can be dramatically different. Of course, the further out we go, the less reliable the predictions become. And with the passage of time technology changes and the behavioral assumptions underlying economic models change. I don’t think that anything over ten years is worth much (except for certain demographic projections, the cohort of 20-year olds will be the cohort of 40-year olds in another 20 years!)With dynamic scoring, we are introducing economic modeling and parameters which are difficult to measure and increase the anticipated degree of error. So what’s the answer? My instinct tells me that properly done, dynamic modeling is a good first approximation of what we are trying to get at. I anticipate that compared to static modeling, dynamic modeling will give us answers in the same direction with a slightly higher amplitude. Any other result would tend to call into question the design of the particular dynamic modeling itself.
I'd say its next to worthless given all the variables and all the demand side lunatics who would undoubtedly be doing much of the scoring. If it worked we'd be 100% sure liberalism was stupid. Society has not concluded that thus testifying to the fact that dynamic scoring has not worked yet.

Uh, Ed, you do know that the proponents of dynamic scoring are basically Republican conservatives lead by Paul Ryan and the critics are mainly liberals?
 
Recently Wendy Edelberg, Assistant Director for CBO’s Macroeconomic Analysis Division, made a presentation at the Conference of Business Economists on “Dynamic Scoring” on May 14, 2015. Bunches of people who already know all about it and don’t want to be bothered with the details can safely ignore this post. People seriously interested in how CBO makes it estimates should be interested.

The 2016 Budget Resolution altered the procedures for scoring bills by instructing the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) to incorporate to the greatest extent practicable the budgetary effects of changes in macroeconomic variables resulting from legislation (other than appropriations acts) that either has a gross budgetary effect of 0.25% of GDP in any year over the next ten years (currently about $45 billion) or is designated by the Chairman of one of the Budget Committees. The estimates are to also include the budgetary effects including macroeconomic effects for the subsequent 20 year period.

Prior to this most legislation was subject only to “static” scoring which ignored macroeconomic effects of budgetary measures. Dynamic scoring has been used for the President’s Budget, the annual long term budget outlook, analysis of fiscal policy scenarios, and one specific piece of legislation (S. 744, the Immigration Act).

What dynamic scoring means is that the budget estimates will include “feedback” mechanisms. In addition to the direct effects of fiscal policy, the CBO will estimate the effects stemming from changes in behavior of consumers, businesses, and investors as they react to those changes. For example, if Congress were to approve a program to spend $1 trillion over ten years to rebuild highways, bridges, and tunnels, there would be a direct effect from the spending of $1 trillion. But such an increase in demand would also increase employment, and the new employees would spend much of those increased wages and businesses would spend more on raw materials and equipment. These effects are measured by a “demand multiplier”.

In addition to these fiscal effects, some measures, such as S. 744, would have significant impact on the labor supply. So would changes in the Social Security retirement age or benefit formula, rules for SSA disability benefits, government and military pensions, and so forth. Energy, environmental, and agricultural measures also would have impact through substitution effects. A “cap-and-trade” regime on carbon emissions would encourage CO2 sequestration to replace fracking, power plants to retool to use gas rather than coal, and nuclear, wind, and solar energy to substitute for fossil fuels. So almost any kind of legislation can have macroeconomic effects, even if it is “revenue-neutral”.

CBO analyzes each proposal in at least two time frames. The short term analysis focuses on changes in direct demand for goods and services, taking into account the gap between production and maximum sustainable (“potential”) GDP. When the economy is very close to capacity, increases in demand in the short term are likely to increase price levels for the goods and services involved, while when there are wider gaps the effect is mainly in increased production as underutilized capacity is put back into production. Personally I am skeptical of this kind of narrative by itself. Different industry structures can create inflation in some markets while not others as a result of the same project. Suppose we implement a major highway program. In terms of the labor market, the main effect could be increased employment and production with little inflationary impact. But at the same time, it could cause prices to rise in “bottleneck” resources such as heavy equipment production. In the long term fiscal policies affect production mainly through altering the savings rate, federal investment, long term business investment, and household decisions regarding work and education.

For the short term analysis, changes in government spending focus on the “demand multiplier”. This measures the increase in spending secondary to the initial spending. CBO makes a case that this indirect spending is highly sensitive to monetary policy. They estimate that if there is minimal monetary policy response (no tightening of credit by the Fed) that over four quarters the demand multiplier will range from 0.5 to 2.5 with a central estimate of 1.5. So over a year a $10 billion spending program can be expected to result in $25 billion of total demand. When monetary policy is more restrictive, when the Fed tightens money, the four quarter demand multiplier will range from 0.4 to 1.9 with a central estimate of 1.2.

For the longer term, CBO uses two models of potential output to estimate fiscal effects over the longer haul; a “Solow”-type growth model” and a life-cycle growth model, which are complementary. These link economic growth to the size of the labor force, the amount of capital, the growth of technology and the efficiency of organizational structure. In a Solow-type model, there is a “wage elasticity” of after-tax income, i.e. how much the labor supply will grow due to a 1% increase in earnings. CBO estimates this figure to be about 0.19 (composed of a substitution elasticity of .24 and an income elasticity of -.05). So if total wages increase by 1%, the labor force should increase 0.19%. In a Solow-type model, as income (not just earned income) increases, so does the savings. This component is very sensitive to distributions of income as the savings rate varies by income group.

The life cycle model adds increased savings due to the household sector protecting itself against future drops in income or large expenses. With a rapidly growing older population, this effect is pronounced.

So is “dynamic” scoring better than static scoring? In theory the answer has to be yes. For small projects, it really makes little difference, but for large changes over 10 to 20 years, the effects can be dramatically different. Of course, the further out we go, the less reliable the predictions become. And with the passage of time technology changes and the behavioral assumptions underlying economic models change. I don’t think that anything over ten years is worth much (except for certain demographic projections, the cohort of 20-year olds will be the cohort of 40-year olds in another 20 years!)With dynamic scoring, we are introducing economic modeling and parameters which are difficult to measure and increase the anticipated degree of error. So what’s the answer? My instinct tells me that properly done, dynamic modeling is a good first approximation of what we are trying to get at. I anticipate that compared to static modeling, dynamic modeling will give us answers in the same direction with a slightly higher amplitude. Any other result would tend to call into question the design of the particular dynamic modeling itself.
I'd say its next to worthless given all the variables and all the demand side lunatics who would undoubtedly be doing much of the scoring. If it worked we'd be 100% sure liberalism was stupid. Society has not concluded that thus testifying to the fact that dynamic scoring has not worked yet.

Uh, Ed, you do know that the proponents of dynamic scoring are basically Republican conservatives lead by Paul Ryan and the critics are mainly liberals?

Yes, as long as the models he and conservatives use show the conservative supply side result.
If they actually did in a scientific way liberalism would be dead.
 
Dynamic scoring was used to create some comically bad estimates in Kansas concerning tax decreases. These estimates were largely supported by right wing think tanks that developed the methodology and have been widely criticized by economists. So the first thing to think about when talking about dynamic scoring will always be is to ensure that the people making the estimate are non-partisan and competent.

The second problem with dynamic scoring is that it can be hard to create an estimate that has real world value. For example a tax increase that has dynamic scoring will struggle to score the benefit of that tax revenue being spent by the government.

Where dynamic scoring could work best in my opinion is when comparing like things. For example I think it would be worthwhile to dynamically score multiple tax changes and compare them to one another. So if you want to change tax revenue by $100 million to address a budget issue then various proposals may look better or worse once you take into consideration their impact on the economy and not just the immediate budget concern.
 
to ensure that the people making the estimate are non-partisan and competent.
100% idiotic and liberal. How would the moron do that? Too bad you were not here in the above case to tell them to hire non partisan and competent folks. I'm sure it never crossed their minds.
 
For example a tax increase that has dynamic scoring will struggle to score the benefit of that tax revenue being spent by the government.

Dear,
1) dynamic scoring is usually concerned with how govt action changes money flows not intangibles.

2) notice how the fool liberal is more concerned with the benefits gained from lib soviet spending and not with the benefits lost from libsoviet taxing!
A liberal soviet bureaucrat always knows better how to spend money than the people who earned it -right??
 
Where dynamic scoring could work best in my opinion is when comparing like things. For example I think it would be worthwhile to dynamically score multiple tax changes and compare them to one another. So if you want to change tax revenue by $100 million to address a budget issue then various proposals may look better or worse once you take into consideration their impact on the economy and not just the immediate budget concern.

yes dear that's precisely what its always been designed to do. And did you know that 1+1=2??
 
to ensure that the people making the estimate are non-partisan and competent.
100% idiotic and liberal. How would the moron do that? Too bad you were not here in the above case to tell them to hire non partisan and competent folks. I'm sure it never crossed their minds.

It is well established that the Kansas estimates were done by partisans and they were incompetent. Whether it occurred to them or not wasn't really up for debate.
 
For example a tax increase that has dynamic scoring will struggle to score the benefit of that tax revenue being spent by the government.

Dear,
1) dynamic scoring is usually concerned with how govt action changes money flows not intangibles.

2) notice how the fool liberal is more concerned with the benefits gained from lib soviet spending and not with the benefits lost from libsoviet taxing!
A liberal soviet bureaucrat always knows better how to spend money than the people who earned it -right??

Spending can also be scored dynamically. If you only score the cost (taxes) and not the benefit (spending) then when you compare the long term costs and benefits you will be comparing apples to oranges. This is just a mathematical reality.
 
Where dynamic scoring could work best in my opinion is when comparing like things. For example I think it would be worthwhile to dynamically score multiple tax changes and compare them to one another. So if you want to change tax revenue by $100 million to address a budget issue then various proposals may look better or worse once you take into consideration their impact on the economy and not just the immediate budget concern.

yes dear that's precisely what its always been designed to do. And did you know that 1+1=2??

In RI they compare both spending and revenue.

In Kansas they compared both but used a broken scoring method for both spending and revenue.
 
For example a tax increase that has dynamic scoring will struggle to score the benefit of that tax revenue being spent by the government.

Dear,
1) dynamic scoring is usually concerned with how govt action changes money flows not intangibles.

2) notice how the fool liberal is more concerned with the benefits gained from lib soviet spending and not with the benefits lost from libsoviet taxing!
A liberal soviet bureaucrat always knows better how to spend money than the people who earned it -right??

Spending can also be scored dynamically. If you only score the cost (taxes) and not the benefit (spending) then when you compare the long term costs and benefits you will be comparing apples to oranges. This is just a mathematical reality.

dear, taxing and spending cancel each other out,right??
 
Depends on the time frame being discussed and what the money is being spent on.

For example, spending on education is a long term investment but the failure to spend that money will have an impact in both the short term and the long term that would have to be dynamically scored.
 
Depends on the time frame being discussed and what the money is being spent on.

For example, spending on education is a long term investment but the failure to spend that money will have an impact in both the short term and the long term that would have to be dynamically scored.

ah, good point, I think I get it, so,... if govt spending on education continues to rise as it has and our kids continue on toward becoming the absolute dumbest kids in the civilized world we would reduce our GDP to parallel their anticipated decline in productivity? Do I have that right?
 
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Depends on the time frame being discussed and what the money is being spent on.

For example, spending on education is a long term investment but the failure to spend that money will have an impact in both the short term and the long term that would have to be dynamically scored.

ah, good point, I think I get it, so,... if govt spending on education continues to rise and our kids continue toward becoming the absolute dumbest kids in the civilized world we would reduce our GDP to parallel their anticipated decline in productivity? Do I have that right?

No. You do not have that right.
 
Depends on the time frame being discussed and what the money is being spent on.

For example, spending on education is a long term investment but the failure to spend that money will have an impact in both the short term and the long term that would have to be dynamically scored.

ah, good point, I think I get it, so,... if govt spending on education continues to rise and our kids continue toward becoming the absolute dumbest kids in the civilized world we would reduce our GDP to parallel their anticipated decline in productivity? Do I have that right?

No. You do not have that right.
so then please tell me where I made my mistake. it seemed to follow exactly from what you said. I mean, spending is now at 4 trillion which is higher than ever and incomes are declining so it seems to be a clear correlation for anyone doing dynamic scoring to see- right??
 
That is why it is important to get very competent and non-partisan people to make the estimates.
 
That is why it is important to get very competent and non-partisan people to make the estimates.

you mean people who see that $4 trillion in spending/investments has left us with a booming economy and hardly anything left to spend on??
 
That is why it is important to get very competent and non-partisan people to make the estimates.

you mean people who see that $4 trillion in spending/investments has left us with a booming economy and hardly anything left to spend on??

I think your attempts to understand how dynamic scoring works doesn't really reflect a competency level appropriate for the job.
 
That is why it is important to get very competent and non-partisan people to make the estimates.

you mean people who see that $4 trillion in spending/investments has left us with a booming economy and hardly anything left to spend on??

I think your attempts to understand how dynamic scoring works doesn't really reflect a competency level appropriate for the job.

you mean people who see that $4 trillion in spending/investments has left us with a booming economy and hardly anything left to spend or invest our tax money on??
 

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