A $2 Trillion Error

When tax cuts are proposed, some Members of Congress and outside agencies clamor about how much the cuts will deplete the government coffers. The Wall Street Journal reports, though, that the CBO and Joint Tax Committee managed to underestimate tax revenue by $2.04 trillion over the last ten years. It seems as though their outdated method of forecasting, in which they didn’t take into account the economic growth caused by tax cuts, led them to make this gross underestimation. Perhaps the CBO and JTC should have a look at this article on dynamic analysis and throw their old models out.

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