PERRspectives: Unicornomics
"Unveiling the Congressional Budget Office's latest long term forecast this week, new CBO Director Keith Hall made an unremarkable statement. "The evidence," Hall explained, "is that tax cuts do not pay for themselves." For the overwhelming majority of economists or just about anyone with a passing familiarity with the U.S. budget since Ronald Reagan first took the oath of office in 1981, Hall's inescapable conclusion is about as close to a self-evident truth as his profession can offer.
But for Republicans and their conservative water carriers, Hall's remark came as an unpleasant surprise indeed. After all, Congressional Republicans chose Hall over incumbent Douglas Elmendorf precisely to implement "dynamic scoring" models which would show their tax-cutting schemes wouldn't hemorrhage red ink (or at least as much), thanks to amped-up economic growth the cuts themselves would magically produce. Worse still, virtually every one of the 2016 GOP presidential candidates is counting on Arthur Laffer's 40 year-old myth and other fictions to produce economic growth no one's seen, tax revenue that has never materialized and balanced budgets that simply cannot come to pass.
Call it Unicornomics."
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