Must-Read: Michael J. Boskin: Another Look at Tax Reform and Economic Growth

Must-Read: A strange piece form Michael Boskin. The JCT’s dynamic score assesses the Republican tax “reform” bill as boosting real GDP by 0.2% over the long run. The Tax Foundation—which by excluding any deficit drag greatly highballs the growth effects of tax cuts—sees it as boosting real GDP by 1.3% over the long run. Robert Barro and Michael Boskin, devoting less than 1/20 as much analytical time to the question and with little familiarity with the details and phase-out provisions, say 7%. And they are sticking to it. We are, they say, “not about to cede… professional judgment to others, in or out of government…” That’s all they write. I am, I must confess, somewhat flummoxed. I think the real Boskin position comes in the next sentence I quote: “current reform may well have deviated further from the ideal had we not offered our analysis and advice”, with the nudge-nudge-wink-wink claim that their analysis and advice was only taken because they were willing to say whatever their political masters wanted and endorse the final product. I see it very differently. I see their willingness to say whatever their political masters required at the end as not gaining them a seat but losing them their seat at the policy table. In being willing to make the demanded claims and provide the demanded endorsement, they throw away their ability to influence policy: since they will endorse whatever the sausage-making process produces, others elbow them out of the way and feed the sausage machine. So, then, they should be asking themselves: What’s the point of our being here?: Michael J. Boskin: Another Look at Tax Reform and Economic Growth: “Barro and I have clearly come to a different conclusion than Summers and Furman have about the bill…

…While I certainly respect Summers and Furman’s right to their views, I am not about to cede my professional judgment to others, in or out of government…. I believe that the current reform may well have deviated further from the ideal had we not offered our analysis and advice. The same was true when I and others were advising President Ronald Reagan and congressional leaders on the major tax reforms of 1981 and 1986. Many factors other than economists’ textbook policy proposals affect the final product. Finally, I would emphasize the related point that the actual tax provisions people and businesses will be required to use have yet to be written, and will be determined partly by technical interpretations and regulations in the coming months. In the case of the 1986 reform, I was still getting calls from Committee staff weeks after it had passed, asking me what exactly I thought was meant by this or that provision. No one should expect this time to be different…