Put Him In Bed With the Captain's Daughter: J.K. Galbraith Binge-Drinks to the Death of the CBO
University of Texas professor James K. Galbraith is a "political economist," a position somewhere between "Christian Scientist" and "Undersea Birdwatcher" on the incompatibility scale. Galbraith's antipathy toward free markets and his fondness for the drunken sailor approach to fiscal responsibility are widely known. And when you don't have to worry about meeting a budget, what could be more pointless than a budget office?
Participating in the Washington Post's "Twelve things the world should toss out" roundup, Galbraith suggests getting rid of the Congressional Budget Office, an agency that (though he doesn't mention it) infuriated supporters of Obamacare with its often terrifying predictions of what the bill would cost. Galbraith blames the CBO for simultaneously predicting that unemployment will fall in the next half decade and that interest rates will rise:
These things cannot happen together. If the CBO's happy growth scenario is right, with low inflation and low unemployment, why would short-term interest rates rise? Conversely, if the CBO's assumptions about health-care costs and interest rates are correct, how can inflation stay low? Ballooning interest payments and health-care spending would spur the economy to full employment and drive up prices—but also slow the rise in debt as a proportion of the nation's gross domestic product.
So where does the CBO get its numbers? That miraculous return to full unemployment and those higher interest rates both come from thin air. More likely, given the passivity of today's banks, high unemployment and low interest rates will linger, unless the government moves on a real jobs program. And that won't happen, because of fear-mongering about the debt—buttressed by the CBO.
If we'd had a CBO in the 1930s, Franklin Roosevelt could never have gotten the New Deal off the ground.
You say that like it's a bad thing! If Galbraith were truly interested in understanding how the CBO can come up with radically different projections, he would 1) consider that the agency's job is to respond to a variety of scenarios that are often mutually exclusive, and 2) read Peter Suderman's masterful (and considerably more nuanced) history of the CBO from the January issue of Reason. Sample:
[E]ven good guesswork is still guesswork. As the George Mason economist Arnold Kling says, "it is literally an impossible task" to accurately make the sort of projections the CBO specializes in. "We don't do controlled experiments in economics," Kling says. "So when you're talking about figuring out the effects of health care policy, it's very difficult."
Part of the difficulty is that the CBO is trying to replicate systems it can't really see. To understand the problems with building an economic model, consider what it takes to make a working scale-model train. To build that train, you'd first need accurate information about how the full-size train works: how big its parts are, at what speed those parts move, its power consumption and control system. Imagine trying to build a model train without ever being allowed to look inside the engine compartment. A smart engineer would be able to make reasonably educated guesses about the internal workings by measuring the outside and by looking at various external controls, but those guesses would almost certainly come with a high margin of error.
Suderman doesn't exactly give a ringing endorsement to the CBO, but Galbraith's motive is sadly obvious. He loves deficits the way drunks love booze, and his vision is of that moment when the bartender steps outside for a smoke and you can slip behind the bar and help yourself. Sure, we've all been there, but it's not something you want to recommend for the whole country.
There are other interesting suggestions in the Post feature. Onion editor Joe Randazzo recommends getting rid of internet memes, Flamin' Jay Rosen says no to Washington Week, and Kara Swisher says it's time to 86 keyboards in favor of touchscreens. (I have a physical reaction against touchscreens and find few things more off-putting than the flamboyant, limpwristed gestures the hand models make in smartphone commercials, but I fear Swisher's right on this one.) Also Ed Begley Jr. wants to take away your front lawn. Maybe we can create a federal department of grass eradication once the CBO's not around to worry about the cost.