The Flawed CBO Economic Model

First, we need the CBO as it is a neutral nonpartisan organization. But:The CBO’s model is built on a whole host of false and outdated assumptions, including that public investment is less productive than private investment, that taxes — especially progressive ones — tend to have a negative effect on economic growth and that externalities like climate change don’t factor into the economic impact of legislation. This flawed model has routinely sunk attempts to invest in the economy and the American people, rein in the wealthy and eradicate poverty.

Today’s federal minimum wage is half it would if it kept with productivity. Proposals to increase the minimum wage because:The CBO, however, wrongly reports that raising the minimum wage will lift 900,000 people out of poverty but put 1.4 million people out of work and prove costly for the economy overall.

Why has the US failed in upgrading or even maintaining existing infrastructure?
the scorekeepers assume public investment is far less productive than private investment. But take their word for it, not mine: “CBO further estimates that productive federal investment has an average annual rate of return of about 5%, or half of the agency’s estimate of the average rate of return on private investment.”
This estimate, however, isn’t grounded in empirical literature; in fact, empirical evidence shows that public investment often has a higher economic rate of return than private investment.

More at the link:…

“All models are wrong,” the great British statistician George Box wrote in 1987, “the practical question is how wrong do they have to be to not be useful.”
Perhaps it time for an overhaul of the CBO economic assumptions.


There is another flaw you omitted.

The CBO is required (RWNJ law passed when they controlled Congress + Pres) to use the premises/presumptions of the proposed change in policy. So, if the presumption of the new policy is 8% compounded economic GDP growth upon passage of the policy, then the CBO is required to use that compounded growth rate no matter how irrational it is.

In other words, CBO is not independent or able to use “best realistic values” to evaluate new policies.