After winning control of the Senate last year, congressional Republicans moved to put a conservative stamp on the Congressional Budget Office, whose reports had become a source of significant aggravation. Time after time, the agency kept on telling Congress and the rest of the country things that the GOP did not want to hear, and this was their chance to fix it.
So out went Doug Elmendorf as CBO director; in came Keith Hall, a conservative economist who had served as an economic adviser to President George W. Bush and is, among other things, a critic of the Affordable Care Act and of raising the minimum wage. Democrats were unhappy with the change; Republicans were quite pleased.
“Keith Hall will bring an impressive level of economic expertise and experience to the Congressional Budget Office,” House Budget Committee Chairman Tom Price of Roswell said at the time. “His vast understanding of economic and labor market policy will be invaluable to the work of CBO.”
Yesterday, under Hall’s leadership, the revamped CBO released its analysis of President Obama’s proposed 2016 budget. Here’s what it had to say:
“CBO estimates that, under the President’s proposals, the nation’s real (inflation-adjusted) gross national product (GNP) would be 0.4 percent higher, on average, during the 2016–2020 period, and 1.7 percent higher during the 2021–2025 period, than under current law. After incorporating the proposals’ macroeconomic feedback into the budget, CBO estimates that deficits under the President’s proposals would be $1.4 trillion smaller during the 2016–2025 period than in CBO’s baseline, which is a projection of the paths that federal revenues and spending would take over the next decade if current laws generally remained unchanged.”
You read that correctly. Under the president’s proposals, which include more spending on social programs and infrastructure as well as slightly higher taxes on the wealthy and corporations, the country would experience significantly higher growth than under current law, and deficits would be lowered by $1.4 trillion over the next decade. Or so says the conservative-run CBO.
But wait, it gets better, or maybe worse depending on your point of view. The CBO attributes part of that potential improvement to the president’s proposals on immigration reform. (As the agency notes, Obama’s proposals closely mirror the comprehensive immigration-reform package that was passed by the Senate in 2013 but that the House refused to consider.)
According to the CBO, the president’s immigration-reform package, including his deferred-action program on deportation, “would affect the economy more directly than presidential proposals usually would — by increasing the size of the labor force and changing the legal status of some current workers — and the feedback from that increase would result in significantly higher receipts from income and payroll taxes.”
Let me repeat that last part: Immigration reform “would result in significantly higher receipts from income and payroll taxes.”
One final note:
At a press conference Tuesday in which these results were announced, the CBO’s new director was asked by a reporter about the longtime assertion by some conservatives that tax cuts “pay for themselves.”
“No,” Hall said bluntly. “The evidence is that tax cuts do not pay for themselves. And our models that we’re doing, our macroeconomic effects, show that.”