January 14, 2003
Dynamic Scoring

The National Journal's budget expert, Stan Collender, is extremely, extremely unhappy with the prospect of "dynamic scoring."

It's easy to see why he is unhappy. As it is existing estimates of program costs and tax revenues are likely to underestimate the amount by which they will increase the deficit. "Dynamic scoring" creates the potential for additional fudge factors that will further widen the gap between what the estimates are and what the true likely outcome is.

The CBO and the Joint Tax Committee staff are simply not sufficiently insulated from political pressure to do good dynamic scoring estimates. So I'm on Stan Collender's side: unless we get a Fiscal Stabilization Policy Board as independent of Congress as the Federal Reserve Board to do the estimates, our successors and descendants will curse those of us who argued for it if we introduce "dynamic scoring."


Budget Battles (01/14/2003) ...Why am I worried about dynamic scoring? First, the most recent evidence is not terribly compelling. For example, the $300 per taxpayer rebate put in place as part of the 2001 tax cut was not spent to the extent we were told to expect. As a result, economic activity did not increase as assumed and the rebate's actual impact on the deficit was far greater than anticipated. Second, the vast majority of Republican and Democratic budget analysts ("geeks" would be appropriate here) I have worked with on budget matters for over a quarter century think dynamic scoring is wrong. These are people who care less about the outcome of the budget debate than that it is conducted with correct information. They simply are not convinced this is an accurate way to do budget estimates. Third, as far as I can tell, no CBO director has ever supported dynamic scoring to the extent it is about to be implemented. This is true regardless of whether they were Republicans or Democrats, were appointed by a Republican- or Democratic- controlled Congress, were fiscal conservatives or liberals, or had technical rather than political backgrounds.

Sixth, at what point do spending proponents realize that dynamic scoring can work for them as well? It is not hard to make the case that additional spending can stimulate the economy and therefore increase the amount of federal revenues collected in much the same way as a tax cut. It is also not hard to make the case that a deal could be in the offing between tax cutters and spending increasers to use dynamic scoring for both at the same time. Finally, everything above points directly to dynamic scoring leading to much higher-than-expected deficits -- deficits for which no one may ever have to take responsibility. That means that the most dynamic thing in the years ahead will be the easier politics in most federal budget votes...

Posted by DeLong at January 14, 2003 01:29 PM | Trackback

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Doesn't bother any of us out here in the cold, cruel world. That's because, at this point, everybody I know would take Miss Cleo's budget estimates over that of the so-called professionals. We really don't care what particular set of smoke and mirrors they base it on, it's all crap.

Now we've got 5 trillion, oops, now we don't. Jesus H. Christ.

Posted by: a different chris on January 14, 2003 02:39 PM

In November 1997, he was appointed by President Clinton to be a member of the new presidential commission to study whether the United States should have a capital budget. Mr. Collender holds a master’s degree in public policy from the University of California, Berkeley

http://www.pta.org/events/legconf2/collender.htm


A Berkeley-trained Clinton appointee raining on a GOP budget? Shocking.

Posted by: Bucky Dent on January 14, 2003 05:34 PM

It's interesting that the same people who are so gungho about dynamic scoring for deficits, based more on theology than reality, are opposed to statistical adjustments to the U.S. census that are based on much firmer scientific ground.

Posted by: Jack on January 14, 2003 05:45 PM

I'm no expert, but I suspect that a far amount of fudging already exists in estimating the future costs of proposed programs. How often has the cost of a new spending program been overestimated, compared to how often they have been underestimated? I'm not necessarily conferring bad faith here, although no doubt it exists to some degree, but just pointing out that the political dynamic of this country tends to ratchet spending upward beyond what was estimated. Yeah, dynamic scoring will make for more mischief, but the mischief already exists in favor of ever-greater spending, and, up to now, that doesn't seemed to have much bothered those who are objecting to this new source of mischief.

Posted by: Will Allen on January 14, 2003 05:55 PM

statistical adjustments to the U.S. census

If only that darned constitution wasn't so specific on this point.

Posted by: Bucky Dent on January 14, 2003 05:58 PM

Bucky,

Your statement "Berkeley-trained economist" betrays a great deal about your level of intelligence.

Cheers!

Posted by: SavageView on January 15, 2003 06:11 AM

Did I mis-spell Berkeley? :)

What would you assume to be the agenda of, say, a University of Chicago-trained economist, ex-of the Reagan Administration, hammering a Democratic Party budget process? And being cited, without the political history context, on the blog of a U. Chi. econ prof?

Posted by: Bucky Dent on January 15, 2003 07:22 AM

Interesting that, when somebody comes along who has tons of expertise on a subject, many of us tend to ask first whether he supports our side of a given argument, then snoop around for "evidence" he is good, or bad, depending on the answer.

Without knowing (or caring) where he would stand on the Bush tax package, I have long been aware that Stan Collendar is sort of a national treasure. He has been making the budget process accessable to non-specialists for years through his writing, in a pretty non-denominational way. Brad's intro is a bit too modest for the man. He has a long career as a federal budget analyst for investment banks, where being objectively right pays lots better than politically right, at least in his line of work.

Maybe, just this once, there is something to be learned from somebody who knows a ton about a subject that is often obscured by politics. Can we, just maybe, assess the strength of his argument before we try to mau-mau the guy into insignificance?

Posted by: K Harris on January 15, 2003 07:53 AM

I've seen people who quote academic studies on this blog called racist, and now the citing of someone's CV is "mau-mau"ing.

For those who don't know the players in this field as you all do, characterizing an analyst as the "National Journal's budget expert" without mentioning his likely political bent is to omit relevant contextual information.

Public antagonism toward the pretense of press and academic objectivity tends to deepen when a) key facts are left out, and, b) mentioning of those facts generates not contrition but hositility.

Posted by: Bucky Dent on January 15, 2003 08:21 AM

How about "find a goddamn bit of supposed bias other than his college and who appointed him?" I haven't been able to even find a reference to Stan Collender that doesn't have "nonpartisan expert" attached to it.

Posted by: Jason McCullough on January 15, 2003 09:35 AM

My bullshit detector goes off whenever I see a glowing “neutral” characterization of someone who happens to provide support for a particular contentious notion. It rings doubly loud when it is easily determined that the expert in question is likely to support an agenda relevant to his area of expertise, based on his past pattern of employment.

I literally know nothing about this guy. Based on KH’s characterization, he’s likely a prince, and bright to boot.

But, again, why are people so offended when honest, accurate contextual information is supplied? Is the appearance of neutrality so critical to one side’s tactics, that information calling its objectivity into question must be, to use KH’s term, “mau-mau"ed off the stage?

Posted by: Bucky Dent on January 15, 2003 10:52 AM

Bucky, relax. This isn't a serious discussion. It's entertainment!

Posted by: wetzel on January 15, 2003 11:02 AM

Stan Collender's livelihood depends on his being perceived as a neutral, non-partisan budget expert--that's how he makes his living.

IMHO, his desire to make sure he keeps this reputation has led him to pull his punches a time or two when criticizing Republicans, but by and large he succeeds at being an effective, non-partisan budget expert.


Brad DeLong

Posted by: Brad DeLong on January 15, 2003 12:35 PM

Prof. DeLong

Largely, I agree that government revenue projections are a lot of smoke and mirrors and that there are too many games played for them to have very much value.

However, last summer, you posted an entry that excoriated conservative commentators for suggesting that the Bureau of Economic Analysis might have slanted its projections of corporate profits during Mr. Clinton's last year in office. As I recall the facts, the BEA overstated profits for eight quarters running by about 10% per quarter (which error rose to some 25% in the last year), reporting rising profits throughout a period when they were actually falling substantially.

The conservative critics suspected that the BEA economists might have been prevailed upon to slant their predictions that way to keep the stock bubble as inflated as possible (the air was already leaking out of it at the time) until Mr. Clinton got out the door. You argued, rather heatedly, that this could not have happened, that the BEA economists were above such manipulations, and that the critics were acting in bad faith to suggest such a thing.

I do not know enough about the federal bureaucracy to know whether the CBO is substantially more or less subject to political pressures than is the BEA. However, since you so strongly asserted the infallible purity of the BEA's independence, it seems that you would want to at least explain why it is above suspicion, when you note today that the CBO is unreliable on the same type of suspicions.

R Wood

Posted by: RWood on January 15, 2003 03:10 PM

Like a modern Will Rogers, all I know is what I read on the web.

Two people I respect, Dr. DeLong and K Harris, say Mr. Collender's expertise is not colored by partisanship.

Then I learn that Mr. Collender's legislative experience includes service on the staffs of Representatives Fortney Stark, Jr., Elizabeth Holtzman, and Thomas Downey three quite "liberal" Democrats. Nothing wrong with that. I personally campaigned for Holtzman, in the day.

His CV is lengthy, and is dominated by posts lacking a particular politcal party's banner, and many assignments specifically labelled bi-partison.

All that said, it is not unreasonable for an outside observer to note that the only "side" Mr. Collender seems to have served on was that of the Democrats, and that his analysis does buttress that party's current stance on matters budgetary.

Is he honest and thorough? Yes. But for people like me, who aren't intimate with "the players", it is useful to know what "teams" they've played on, and hence, what their predisposition/assumption matrix is.

Posted by: Bucky Dent on January 15, 2003 05:37 PM

as you can see from my other post on interest rates, the one thing i am quite sure of is that "static" budget estimates will always be wrong. On the other hand, i have a pretty strong feeling that while on occasion, dynamically scored budget estimates will be more accurate, on average the standard deviation of "dyanmic" will be higher than "static".

I think for me it really comes down to 2 points:

#1 there really is no such thing as a "static" estimate. its a farce. there are so many assumptions in any economic or financial model that calling them static just because they stay "constant" (to what?) over time is absurd. e.g. do you assume that corporate taxes will be the same % of GDP each year, or the same % of all federal tax receipts? the same % growth, or the same % of what(s).

#2 any estimate, so called "static" or "dynamic", is only as good as the assumptions its based upon, so any estimate must be viewed through the prism of its (major) assumptions.

so one of the positives i see about moving to "dyanmic" scoring is that there will be greater emphasis on discussion of underlying assumptions. of course, in the end it just depends on how well its implemented.

Posted by: alex on January 15, 2003 10:49 PM

as you can see from my other post on interest rates, the one thing i am quite sure of is that "static" budget estimates will always be wrong. On the other hand, i have a pretty strong feeling that while on occasion, dynamically scored budget estimates will be more accurate, on average the standard deviation of "dyanmic" will be higher than "static".

I think for me it really comes down to 2 points:

#1 there really is no such thing as a "static" estimate. its a farce. there are so many assumptions in any economic or financial model that calling them static just because they stay "constant" (to what?) over time is absurd. e.g. do you assume that corporate taxes will be the same % of GDP each year, or the same % of all federal tax receipts? the same % growth, or the same % of what(s).

#2 any estimate, so called "static" or "dynamic", is only as good as the assumptions its based upon, so any estimate must be viewed through the prism of its (major) assumptions.

so one of the positives i see about moving to "dyanmic" scoring is that there will be greater emphasis on discussion of underlying assumptions. of course, in the end it just depends on how well its implemented.

Posted by: alex on January 15, 2003 10:58 PM

All that said, it is not unreasonable for an outside observer to note that the only "side" Mr. Collender seems to have served on was that of the Democrats, and that his analysis does buttress that party's current stance on matters budgetary.

And it is MY experience that Democrats consistently appoint non-partisan experts, even Republican experts, but the new crop of Republicans not only reqires loyalty to "The Party" but also requires their appointees to toe the party line with their product. Example - scientists must not report results that conflict with ideology. And they apply strict ideological tests before appointing - Federalist Society must approve of all judicial and DOJ appointees, etc.

Posted by: IssuesGuy on January 16, 2003 01:47 PM

Bucky, let's go back over this:

1) You said he might not be so non-partisan, in spite of evidence, because he a) graduated from Berkeley and b) was appointed by Clinton.
2) You said after that his existing partisan work was entirely for Democrats.

Notice how 2) has a basis, and 1) doesn't? All I'm asking here.

so one of the positives i see about moving to "dyanmic" scoring is that there will be greater emphasis on discussion of underlying assumptions. of course, in the end it just depends on how well its implemented.

If I remember correctly, the number I saw was that "50% of tax cuts will be considered offset by growth." This is complete horseshit.

Posted by: Jason McCullough on January 16, 2003 02:30 PM

scientists must not report results that conflict with ideology

List all the "global warming" opponents appointed by the Clinton administration. Also all the scientists who've linked abortion with heightened breast cancer risk who received govt grants from the Clinton administration.

You are right in saying politics drives policy and personnel, but wrong in attributing the practice to one party.

Posted by: Bucky Dent on January 16, 2003 04:47 PM

Jason: As I thought I said, my bullshit detector goes off when someone neutrally identified is cited and praised backing social democratic positions.

My first quick google netted the Clinton/Berkeley angles, which I posted and got "mau-mau"ed on.

So I did more research, learning he was on the staffs of not one, not two, but three different liberal democrats. Which, is, as I said, fine. I had even supported one of those myself.

I merely wanted to add the context of the cited analyst's political background, which is obviously relevant when the topic under discussion is itself heavily politicized.

This info wouldn't be considered irrelevant if the analyst had worked for Newt Gingrich, Ron Paul and Dick Armey after graduating from U. Chicago and before getting a Reagan administration appointment.

Double standards irk me.

Posted by: Bucky Dent on January 16, 2003 05:05 PM

Your examples of Clinton's (implied ideological) ience appointments are appointments consistent with scientific consensus: the scientific consensus is that there are no links between abortion and breast cancer and that global warming is real.

Posted by: Jason McCullough on January 17, 2003 12:45 AM

Bucky,

Double standards should irk you. An apology is in order, and I offer one sincerely. I did not mean to smack you in the head, but I obviously did.

Perhaps I am just more aware of it now, but it seems to me that getting an honest technical assessment of any issue that is politically important is getting harder, not because there aren't good people to give them, but because politicians and their minions are trying harder every day to kill credibility for any source of information that doesn't support their views. I think Stan Collendar is a pretty reliable source of information and assessment on budget issues, so I want him left standing. Even so, I should choose my words more carefully.

Posted by: K Harris on January 17, 2003 09:11 AM

Jason: The science on global warming is ambiguous, to be gracious, and far from "consensus" one way or the other, regardless of what one reads in the Times. There are real, honest, deep differences of opinion, and even a serious case to be made that the data themselves are inadequate to draw any intelligent conclusion.

That different administrations would support science dovetailing with their ideological frameworks - more vs. less govt influence over private economic decisions - is an unfortunate given of our political system, and is an indictment of the system itself, not of any one actor playing within its rules.

The abortion/cancer story simply parallels this.

KH: Apology accepted. And thanks for spurring me to do the research on Collendar. I didn't know Holtzman staffers were still around!

Posted by: Bucky Dent on January 19, 2003 12:39 PM
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