Why Oh Why Are We Ruled by These Morons?

Jason Furman writes:

The administration's first official foray into dynamic scoring isn't very promising. The [budget] M[id ]S[ession ]R[eview] (http://www.whitehouse.gov/omb/budget/fy2007/) includes a box on a "dynamic analysis" of the tax cuts. It argues that they have made major contributions to job growth and GDP in recent years. The small print explains that these results are based on the assumption that the folks at the Federal Reserve are asleep at the wheel: "These results assume interest rates followed the same path as they did historically from 2001 forward."

The MSR also presents long-run results (national income up 0.7 percent) but doesn't explain the financing assumption. I doubt this is robust: JCT (e.g., http://www.house.gov/jct/x-19-06.pdf) and CBO modeling show that the sign of the long-run growth effect is dependent on the financing assumption and that, in most delayed financing scenarios, the sign is negative.

I've always thought the biggest hurdle to adopting dynamic scoring is that you can play games with the monetary and fiscal policy reaction functions. This new analysis does nothing to reassure me.