Newt vs. the CBO

You can tell the left is afraid of someone when they bring out the big guns.  Relying on his credentials as a former conservative, Bruce Bartlett has come out attacking Newt Gingrich for policies from over a decade and a half ago that Bartlett claims are responsible for today’s Congressional malaise.  Apparently, Ginrich’s reforms were not so terrible that Nancy Pelosi would want to change them when she had the chance.

One of Bartlett’s grips is that Gingrich consistently calls for an end to the CBO because of the way the CBO does projections.  Unfortunately for Bartlett, his faith in the CBO does not have a great track record to back it up.  After recalculating Obamacare costs and tax savings of all the various bi-partisan deals that have come out, the CBO has recently had to come out and admit they blew their projection of how much Obama’s stimulus was going to save the economy, and the number of jobs saved.

The problem with the CBO is that they don’t do dynamic budgeting.  They do projections.  In other words, Bartlett points out that the CBO figured the losses from the Bush tax cuts to be $3 trillion, but those losses are calculated based on the growth during Bush’s presidency and assumes that growth would have happened no matter what.  On the other hand, dynamic budgeting would look at this prolonged Obama recession and see that we have lost close to a trillion dollars a year in tax revenues because of stagnant growth and 9% unemployment.  The CBO, and Bartlett, are not smart enough to figure that out.

Bartlett thinks the CBO is smarter than Newt.  Actually, they just use different processes.  CBO processes are the perfect product of government bureaucracy economics that assume all things are equal and that policies will have no effect beyond the typed text of the bill.  On the other hand, Newt attempts to anticipate how ideas will affect other areas of the economy.  It’s more of a successful business approach where the results of the study mean more than giving one party ammo to sell a bill, like Obamacare.  For more info on the CBO’s recent record, there is a less than flattering article over at Biggovernment.com.

So which budgeting approach is better?  Depends on if you actually care about the results, or if you are a jaded former conservative writing for the New York Times.

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