Academic

GREG MANKIW: A Warning About The CBO Scoring. There has been a lot of talk lately about the CBO ?

By Glenn Reynolds

GREG MANKIW: A Warning About The CBO Scoring.

There has been a lot of talk lately about the CBO scoring of the health bill. Here is one thing people should understand about their numbers: When they estimate the budget impact of a bill like this, they assume the path of GDP is unchanged.

Recall that the bill raises taxes substantially. Some of these tax hikes are the explicit tax increases on capital income to pay for the insurance subsidies. Some of these tax hikes are the implicit marginal rate increases from the phase-out of the insurance subsidies as a person’s income rises. Both of these would be expected to reduce GDP growth.

Indeed, to be very wonkish about it, these tax changes could have especially large GDP effects.

Not positive ones, either.

Full post as published by Instapundit.com on March 20, 2010 (boomark / email).