Ryan’s House Budget Committee has a new budget blueprint which promises to eliminate the deficit in decade or so through tax cuts, and a new accounting trick. The budget plan contains the first reference to a line item labelled "macroeconomic fiscal impact," and it refers to the economic growth created by cutting the deficit. Simply put, as the federal deficit decreases, economic growth increases, and at a predictable rate. People are calling its use in budget predictions “dynamic scoring.”
Some, like Slate writer Jordan Weissman, describe the line item as a “gimmick.” But it’s far less a gimmick to include a reasonable estimate of economic growth impact in a budget than it is to call inflating the budget less than previously estimate a budget cut, as both spending-happy Republicans and Democrats are fond of doing.
What isn’t a gimmick at all is the reality that cutting the deficit leads to economic growth, and the deficit is now so large that economic growth is our only hope to avoid total economic collapse. According to the CBO, “Federal debt held by the public now exceeds 70 percent of the nation’s annual output (gross domestic product, or GDP) and stands at a higher percentage than in any year since 1950.”
Any plan which can credibly reduce the deficit is a good one. However, this one may not be it. Ryan’s budget plan fails to address the two biggest contributors to the federal deficit: entitlements and military spending.