By in Rhode Island’s FutureSpeaker of the House Nicholas Mattiello has been making statements demonstrating his support for “dynamic analysis,” (also known as “dynamic scoring“) a fiscally irresponsible and economically discredited accounting trick supported nationally by congressional Republicans that amounts to little more than rebranded trickle-down economics.
At Saturday’s 2015 Small
Business Summit, held at Bryant University, Mattiello defended the $20
million tax break on social security income he’s proposed as a short term
economic hit for long term economic gain.
“What I’ve been saying lately,” says
Mattiello in the clip below, “is that everything we look at in state
government, we look at the wrong way. We look at it from a very static point
of view. ‘What is it going to cost us?’ ‘Oh, this year it’s going to cost us
$20 million so forget it, we’re not going to do it. If we don’t have room in
the budget to do it we’ll kick that issue out. Well, we have a structural
deficit in Rhode Island, folks, so under that analysis we’re
never going to do anything in Rhode Island to make our economy better.
Sometimes you have to prioritize and you have to do what the economy needs to
do to move forward.”
Then,
in GoLocalProv, Mattiello said, “I
know that keeping people in Rhode Island, with more discretionary income in
their pockets, will be a significant long-term gain for our economy. This
initiative comes with a short-term cost in our state budget. But, we need
to start using a more dynamic analysis that takes into consideration
long-term benefits, instead of a static analysis that only looks at how much things
cost.”
Mattiello has invested a lot of
political capital to pass his signature tax break. And to make these tax breaks
work, he’s going to cut the state budget accordingly. The cuts are most likely
to be in the areas of social services, which the Speaker has repeatedly signaled his
willingness to cut.
But in order to pass his tax break, the Speaker needs an economic analysis
friendly to his idea. Conventional, or what is known as static analysis, does
not look kindly on Mattiello’s idea, but dynamic analysis does.
The economic analysis Mattiello wants
to use here in Rhode Island is the same as what is being proposed nationally by
the Republicans now in control of Congress, and it’s scarily reminiscent of the
policies Kansas Governor Sam Brownback instituted in 2012 thateviscerated the economy of that
state.
Congressman Chris Van Hollen of
Maryland and Congresswoman Louise Slaughter of New York penned a piece criticizing dynamic analysis,
writing that Republicans “are rigging the rules in favor of windfall tax breaks
to the very wealthy and big corporations who can hire high-priced, well-funded
lobbyists—once again choosing to leave behind working families.
Their plan would further distort the nation’s fiscal outlook by
applying this scoring model only to tax cuts—not the economic impact of
investments in education, healthcare, infrastructure, and other areas. That
means that the value of tax cuts to the economy would be exaggerated, and the
value of investments in the middle class would be undercut.”
Shaun Donovan,
Director of the Office of Management and Budget at the White House, outlines three reasons why dynamic analysis is little more
than a ruse and it’s worth quoting from at length.
First, dynamic scoring requires CBO and JCT to make
assumptions in areas with unusually great uncertainty. While all budget
estimates are uncertain, there is substantially more disagreement among economists
and experts about how policy changes affect the macroeconomy than about most
other scoring issues. This helps explain why estimates from different CBO
models of the long-run growth effects of a 10 percent tax cut differed by a
factor of 15 – and ranged from positive to negative – when dynamic scoring was
used.
“Second, and more fundamentally, dynamic scoring
would require CBO and JCT to make assumptions about policies that go beyond the
scope of the legislation itself. For example, when a tax cut or spending
increase is deficit financed, its long-term effect on the economy depends
heavily on how and when its costs are ultimately recouped – whether through
higher taxes or lower spending, and after how large an increase in debt. When
the legislation itself is silent on these questions, Congressional scorekeepers
would have to make an assumption – potentially putting scorekeepers in the
game, rather than just referees. Moreover, in standard models, these
assumptions are often the difference between a positive or negative effect on
the economy.
“Finally, dynamic scoring can create a bias favoring
tax cuts over investments in infrastructure, education, and other priorities.
While the House rule would require dynamic scoring for legislation making large
changes in revenues and/or mandatory spending, and makes it permissible at the
option of leadership for any such legislation (even if modest), it would not
apply to discretionary spending, ignoring potential growth effects of
investments in research, education, and infrastructure. More insidious,
economic models that find large growth effects of tax cuts are often based on
the assumption that they would be paid for entirely through reduced spending –
without taking into account at all the economic consequences the reduction in
government investment.”
Speaker Mattiello seems intent on
implementing the kind of economic policy here in Rhode Island that has long
benefited the rich and connected over the middle class and the poor.
These
policies have led to massive wealth acquisition by the very few amid crushing
poverty for many. In doing so Mattiello has aligned himself with the Republican
Party and against the Democratic Party of which he claims to be a member.
Steve Ahlquist is a writer, artist and current president of the
Humanists of Rhode Island, a non-profit group dedicated to reason, compassion,
optimism, courage and action. The views expressed are his own and not
necessarily those of any organization of which he is a member.
His photos and video are usable under
the Creative Commons license. Free to share with credit.
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"We must take sides. Neutrality
helps the oppressor, never the victim. Silence encourages the tormentor, never
the tormented.” - Elie Weisel
