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Tuesday, February 21, 2006

Finding the Evidence That's Already In

The Washington Post joins those with suspicions over the motives behind the creation of the Division of Dynamic Analysis:

Undynamic Analysis, Editorial, Washington Post Online: "The evidence is in, it's time for everyone to admit that sensible tax cuts increase economic growth, and add to the federal treasury." That was Vice President Cheney the other day.... But Mr. Cheney is the one who needs to reexamine his evidence. Yes, tax policies can help promote economic growth. But no matter how many times the vice president and his tax-cutting allies proclaim their belief in the tax-cut fairy, she doesn't exist. Tax cuts do not magically pay for themselves...

Proponents of the magic tax cut have long argued that, if only the growth-enhancing effects of cuts were accounted for in the budgetary equation, this cost-free boon would become clear. Trouble is, responsible economists who have attempted to engage in this kind of "dynamic analysis" haven't come up with the unalloyed positive conclusion the administration wants...

Now the administration is moving to commission its own evidence, creating a "Division on Dynamic Analysis" in the Treasury Department. ... This measly budget item -- $513,000 -- may be just a sop to conservatives; after all, though Mr. Cheney may not know it, Treasury professionals have been doing dynamic analysis for some time. But it could be something more pernicious: an office set up in pursuit of a particular result. After all, Mr. Cheney says the evidence is in.

    Posted by on Tuesday, February 21, 2006 at 12:41 AM in Economics, Politics, Taxes | Permalink  TrackBack (0)  Comments (7)

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