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Fun with numbers

Thursday, May 5, 2016

* Let’s circle back to the Illinois Department of Revenue’s use of dynamic scoring that helped kill off a progressive income tax. You’ll recall that the scoring came up with these results

After 14 years of implementation of this tax policy (year 2030) the main economic effects of this tax policy are:

* Disposable Personal Income decreases $2.8 Billion per year compared with the baseline scenario (current conditions and economic trend).

* Real Gross Domestic Product of the state decreases $1.7 Billion compared with the baseline scenario (current conditions and economic trend).

* Total Employment decreases almost 18,000 jobs compared with the baseline scenario (current conditions and economic trend).

* Governing magazine

While dynamic models do not generate a margin-of-error estimate for dynamic effects, research has shown that traditional revenue estimates carry an error rate of around 3 percent.

* Wordslinger did the math

The projections from “Gov. Rauner’s Department of Revenue” are ridiculously precise, given the scales of the base numbers and all the dynamics that go into economic forecasting.

    GRDOR estimates a job loss of 43,000 from a current base of 6,100,000. That’s .7 of 1%.

    GRDOR estimates a GDP loss of $2B from a current base of $736.3B. That’s .27 of 1%.

Wow, those guys are goooooood. Who’s doin’ the modelin’ and projectin’ — freakin’ sharks with freakin’ lasers on their heads?

Yet not even ballpark projections on the ROI for The Turnaround Agenda. Go figure. Or not, in this case.

I’m thinking they just made it up on the fly and nobody put the “work” to the Absurdity Test. They were supposed to add some zeroes on the back ends of those “projections.”

And he didn’t even factor into the equation that these projections cover a time period of 14 years.

There is simply no way to say with any sort of authority that these statistically tiny predicted changes have any solid significance.

- Posted by Rich Miller        

  1. - Commander Norton - Thursday, May 5, 16 @ 10:56 am:

    I’m sure there are a lot of people who’d like to know with that degree of certainty what the economy will be doing 14 years from now. Did anyone see the Great Recession coming in, say, 1994?

  2. - Formerly Known as Frenchie M - Thursday, May 5, 16 @ 10:58 am:

    … that these statistically tiny predicted changes have any solid significance.

    Maybe not statistical significance. But rhetorical significance?

    In spades.

  3. - Beaner - Thursday, May 5, 16 @ 10:59 am:

    “How to Lie with Statistics” is a book written by Darrell Huff in 1954 and reading it should be required in High School Consumer Economic or Government classes.

  4. - Linus - Thursday, May 5, 16 @ 11:00 am:

    Thanks to Word for teasing-out the math a bit. Here are a few more calculations to add to the mix -

    – Loss of 43,000 jobs over 14 years averages about 260 jobs/mo, which the Guv thinks is a terrible tragedy

    – IL gained almost 80,000 jobs over the last year, which averages to about 6,500/mo …. which the Guv’s office wants to ignore, as it undercuts his “we’re all going to hell/let’s do the Turnaround” motif.

  5. - Old and In the Way - Thursday, May 5, 16 @ 11:01 am:

    Exactly. That is the margin of syatistical error on the “traditional model” and not the REMI Dynamic model. So it’s actually even more prone to error. The whole dynamic modeling approach was invented by supply siders to justify the “trickle down theory” which David Stockman famously derided as “voodoo economics.” They get away with this garbage because no one bothers to check it out and actually research the data and validity. A big thanks to Word!

  6. - very old soil - Thursday, May 5, 16 @ 11:03 am:

    Since the margin of error includes positive values, we could be adding a whole lot of jobs and be making billions if we did adopt a progressive income tax.

  7. - Rufus - Thursday, May 5, 16 @ 11:06 am:

    If you can’t dazzle them with brilliance, then baffle them with …

  8. - RNUG - Thursday, May 5, 16 @ 11:06 am:

    I wonder if they bothered to factor in the the increased comsumer spending from vendors and employees actually getting paid what they are owed by the State?

  9. - cdog - Thursday, May 5, 16 @ 11:06 am:

    Who allows themselves to be manipulated by such garbage?

    I really am disappointed that I allowed myself to be hopeful there really was a Grand Compromise.

    Once again not even numerical truth is safe.

  10. - 47th Ward - Thursday, May 5, 16 @ 11:07 am:

    ===There is simply no way to say with any sort of authority that these statistically tiny predicted changes have any solid significance.===

    And yet Team Rauner will state it as fact, incontrovertible, unvarnished, plain as the nose on your face truth. They have their reality. End of discussion.

    This should be called dagnabbit scoring.

  11. - Coach - Thursday, May 5, 16 @ 11:07 am:

    CK from the Governor’s Office doesn’t want to respond on this! Only things she can twist to their advantage. What will the Governor do next year if the Democrats gain seats in the house or Senate and gain a increase with the super majority. Do we have any projections on whether they have a chance of gaining seats in the House or Senate?

  12. - Markus - Thursday, May 5, 16 @ 11:12 am:

    ==Who allows themselves to be manipulated by such garbage?==

    Answer- Mark Batinick, 97th Dist. State Rep

  13. - wordslinger - Thursday, May 5, 16 @ 11:22 am:

    My guess is some math-challenged political Superstar just made up the numbers, claimed they were done by IDOR, but didn’t realize how absurdly minuscule they were.

    There were supposed to be more zeroes on the end of those projections for them to bite.

  14. - Ducky LaMoore - Thursday, May 5, 16 @ 11:23 am:

    ===And yet Team Rauner will state it as fact, incontrovertible, unvarnished, plain as the nose on your face truth. They have their reality. End of discussion.===

    Are we surprised? The guy hires Laffer disciples.

  15. - JS Mill - Thursday, May 5, 16 @ 11:24 am:

    I am shocked, just SHOCKED, that their BS math is really BS, supporting a BS narrative.

    Seriously shocked……/s

  16. - Norseman - Thursday, May 5, 16 @ 11:25 am:

    Thanks Word for doing the work.

    Trust has not been an issue with Rauner of late. There is none.

    That being said. The politically timid (bi-partisan) ruled the day.

  17. - D.P.Gumby - Thursday, May 5, 16 @ 11:26 am:

    Auditioning for T-Rump campaign

  18. - illini97 - Thursday, May 5, 16 @ 11:26 am:

    Is it coincidence that the “loss” they came up with sufficient to erase the projected $2B bump in revenue? Has to be, right? This is math and numbers don’t lie.

  19. - illini97 - Thursday, May 5, 16 @ 11:30 am:

    Again, I am elated we’ve elected a sharp mind to run the state like a business.

    If this level of BS was exposed at a corporation, the stock tanks and executives get walked out. If a corporation just flat out doesn’t pay it’s bills for a year, they stop doing business.

    Stop electing anyone who tells you they’ll run the government like a business. It is not a business. It’s inherently different.

  20. - wordslinger - Thursday, May 5, 16 @ 11:31 am:

    The more I think about it, the release of this ridiculous “analysis” reminds me of the “Stonehenge” scene in “This is Spinal Tap.”

    Remember? To great fanfare, they lowered their Stonehenge props on the stage, but they had been scaled in inches, rather than feet?

  21. - Austin Blvd - Thursday, May 5, 16 @ 11:32 am:

    The Rauner folks just don’t care what it takes to “win” as long as they win.
    Is it any wonder that Madigan discouraged his members from trusting him?

  22. - Honeybear - Thursday, May 5, 16 @ 11:39 am:

    This smells of Darth Arduin. She is an associate of Arthur Laffer, of Laffer curve/supply side infamy. This analysis has her smell all over it.

  23. - siriusly - Thursday, May 5, 16 @ 11:44 am:

    Laser sharks - good one!

  24. - 39th Ward - Thursday, May 5, 16 @ 11:45 am:

    It’s really not hard to come up with a precise number for events far off in the future and with a number of assumptions. Actuaries do that all the time. For instance, a prediction can be set at the 50% confidence level, the point where half of the possible outcomes come in over and half the outcomes come in under. I have no idea whether Revenue’s predictive model is any good in this instance, but the mere fact that it generates a precise number may not be very troublesome at all.

  25. - Louis G. Atsaves - Thursday, May 5, 16 @ 11:45 am:

    The article also states:

    “None of this is to suggest that dynamic scoring can’t be useful in comparing economic tradeoffs among different tax-policy choices or even among different tax and expenditure mixes. States such as Nebraska that have approached dynamic models in this spirit — using the model as a source of information rather than a budget tool — have had a much more successful and productive experience. These models can also be customized to show the distributional effects of tax-policy changes across income classes or industry types.”

    May explain why this method is still around after a quarter of a century.

  26. - AC - Thursday, May 5, 16 @ 11:48 am:

    A great many people need to read up on the Laffer Curve before they start reaching ridiculous conclusions (the Rauner administration) or think that Laffer Curve is invalid (most commenters here). The bottom line is, Illinois would have to increase taxes on the wealthy well above the highest tax rate I’ve seen proposed, higher than California’s rates, before we reached the revenue maximizing point on the Laffer Curve.

  27. - JS Mill - Thursday, May 5, 16 @ 11:54 am:

    @Louis G Atsaves- is this the modeling they have used so successfully in GOP dominated Kansas? Nice results there /s

  28. - Abe the Babe - Thursday, May 5, 16 @ 11:59 am:

    @ Louis

    So what’s your point? that quote seems to suggest that the model is simply another data point or consideration and not something to write a full year budget around.

    My guess is that goes triply true for whether or not to keep an inequity enshrined in our constitution into perpetuity. Sheesh. You are proving the wrong point.

  29. - Ducky LaMoore - Thursday, May 5, 16 @ 12:00 pm:


    No doubt their have to be significantly high taxes before a reduction could actually grow the tax base. My criticism of Laffer people is that they fully acknowledge that point, and then counter intuitively sign off on Brownback/Rauner type state policies that in way have anything to do with a prohibitively high federal tax.

  30. - Earnest - Thursday, May 5, 16 @ 12:04 pm:

    The only numbers that appear to count are campaign $$ Rauner controls. House Republicans, turn your eyes to the number of hurting social service providers in your community, state vendors, higher education institutions. Everything else is a smokescreen.

  31. - Louis G. Atsaves - Thursday, May 5, 16 @ 12:04 pm:

    @JS Mill, they also still use these models to project economic rippling effects of publicly financed stadiums, arenas, auditoriums, museums, exhibition halls, etc.

    Dismissing these models as total failures? After a quarter of a century? I don’t know what is more absurd at the moment, using the word absurd to describe this analysis form (as happened yesterday), or just dismissing it out of hand.

  32. - Chicago 20 - Thursday, May 5, 16 @ 12:11 pm:

    Louis - May explain why this model has been around for a quarter of a century….

    Please give us examples when this model successfully predicted outcomes.

  33. - Joe Biden Was Here - Thursday, May 5, 16 @ 12:12 pm:

    This is what’s known as false precision. It adds up to no measurable impact.

  34. - burbanite - Thursday, May 5, 16 @ 12:22 pm:

    Thank you Wordslinger!

  35. - Natalie - Thursday, May 5, 16 @ 12:28 pm:

    For anyone who is interested in reading about the REMI model’s strengths and weaknesses - this is a good summary article written last year.

  36. - Mouthy - Thursday, May 5, 16 @ 12:30 pm:

    Rauner’s words to the Dept of Revenue:

    I want a want a report on Progressive taxes and I want it to show ___________…

  37. - Old and In the Way - Thursday, May 5, 16 @ 12:52 pm:

    The study was done by undergraduate students at the University of Vermont under the supervision of two professors. Not a reviewed journal nor a peer reviewed article. This is more of a review of the literature on the model (referred to as lit reviews) as opposed to a critical analysis of the model.

    I have had two court cases involving this and I can point to a host of analysis on both sides.. It’s really pretty well divided between great and garbage so take your pick. The
    point is less about the validity of the model and more to the indisputable fact that the data was cherry picked and made to appear even more conclusive than even the REMI model suggests. No context for the numbers and no mention of the margin of error. Even a margin of error of 3% plus or minus invalidates their assertion since each was well below 1%. “Sharks with lasers” or “Weasels with calculators” take your pick.

  38. - Honeybear - Thursday, May 5, 16 @ 1:01 pm:

    So let me clarify. I think the Laffer curve is certainly valid, if not sound in certain situations. However it is simply a theory, in my opinion, that is utilized mostly for it’s political outcomes. But look at Kansas. Look at Louisiana. One can see the real effects of the Laffer curve on social policy and the social safety net. That’s not theory. That’s reality. What is happening in my beloved Southern Illinois is a reality. The wealthy are getting wealthier at an astounding rate while the rest are sinking fast. Not only that corporations, the beneficiaries of the Laffer curve (actually the owner/investor class) are pocketing the money, not plowing it back into the economy, not reinvesting, not creating jobs (the term “job creator” 100 times more offensive to me than the f-bomb), not expanding businesses. They are holding the profits from the Laffer curve in investments which only serve to enrich them or the park it offshore to get away from taxes. So yes the Laffer curve is valid, but NOT sound for Illinois. It is a libertarian self centered welfare check for the privileged and undeserving.

  39. - AC - Thursday, May 5, 16 @ 1:13 pm:

    Ducky LaMoore - agreed, Brownback/Rauner policies are a failure. Now, if we were contemplating a 50% state income tax on the wealthy, in addition to federal taxes, we might receive less revenue, but no one is suggesting that. I’m also quite confident that the impact of not having a budget far exceeds that of any reasonable tax proposal.

  40. - skeptic - Thursday, May 5, 16 @ 1:21 pm:

    Rauner’s IDOR director appointee, Connie Beard, “is best known for her long service as head of the Illinois State Chamber of Commerce Tax Institute.”

    Hans Zigmund, who runs IDOR research office is a devotee of the Austrian school of economics.

    That should tell you all you need to know about the IDOR “study”.

  41. - Natalie - Thursday, May 5, 16 @ 1:30 pm:

    Honeybear, I can not speak to the specifics of this particular analysis, but as a long time (24 years) but infrequent user of REMI, I can assure you that the model is not built on any “theory” from which the Laffer curve is derived. It is based on mainstream economic principles and theory.

  42. - AC - Thursday, May 5, 16 @ 1:30 pm:

    ==One can see the real effects of the Laffer curve on social policy and the social safety net.==

    Honeybear - it’s just a theory, but it explains a lot. For example, when taxes were lowered at the federal level in the 60’s from a stratospheric 90% at the highest marginal rate, more revenue was collected. This even helped fund new social programs at the time. When the same thing was tried in the 2000s it didn’t work. The Laffer Curve provides an answer for that too. The general consensus is the revenue maximizing total tax rate is somewhere around 70%. Of course lowering taxes in Kansas generated less revenue, total taxation was already lower than the revenue maximizing point. It’s even consistent with the theory.

  43. - Mike Cirrincione - Thursday, May 5, 16 @ 1:50 pm:

    How many jobs will be lost if some public universities close, as this Governor is insisting on?

  44. - wordslinger - Thursday, May 5, 16 @ 2:17 pm:

    Louis, what a shock, you’re all in.

    Then, by the governor’s own numbers, you must agree that the purported “impact” over 14 years is statistically insignificant.

  45. - Excessively Rabid - Thursday, May 5, 16 @ 2:37 pm:

    ==the “Stonehenge” scene in “This is Spinal Tap.”==

    “Nobody knows who they were…or what they were doing.”

  46. - hayseed - Thursday, May 5, 16 @ 2:38 pm:

    Well when Good Ol’BR throws out them there big numbers us common folk get feelin’ a bit uneasy. We have a hard time pronouncing statistical significance let alone understandin’ it. But the rhetorical significance he gets is huge!!
    Wish WS’ers math would make the front page!!

  47. - Nazgul - Thursday, May 5, 16 @ 2:51 pm:

    Mean Old Rauner’s Dept of Revenue = MORDOR

  48. - Honeybear - Thursday, May 5, 16 @ 3:12 pm:

    Nazgul- I don’t know if you’ve seen the cut of LOTR with the “Mouth of Sauren” when they come to the Black gate. Here it is…..Goldberg: “My master Rauner the Great bids thee welcome. Is there anyone amongst this route with the authority to treat with me?” I love that thought.

  49. - Daniel Plainview - Thursday, May 5, 16 @ 3:30 pm:

    - Louis, what a shock, you’re all in.

    Then, by the governor’s own numbers, you must agree that the purported “impact” over 14 years is statistically insignificant. -

    Yes Word, but the real impact of Gov. Rauner on the Atsaves household income over the next 3 years is quite significant.

  50. - Mama - Thursday, May 5, 16 @ 5:14 pm:

    Norseman’s quote says it all: “Trust has not been an issue with Rauner of late. There is none.”
    “That being said. The politically timid (bi-partisan) ruled the day.”

  51. - Mama - Thursday, May 5, 16 @ 5:18 pm:

    Keep reminding the voters:

    “Stop electing anyone who tells you they’ll run the government like a business. It is not a business. It’s inherently different.”

  52. - Mama - Thursday, May 5, 16 @ 5:25 pm:

    Rauner does not care if the numbers are false. Why? He knows the general public does not check his numbers.

  53. - Fly On the Wall - Thursday, May 5, 16 @ 10:12 pm:

    Just for the record Hans Zigmund has been doing this for a while and during the Quinn Admin too. I like how the non-professionals here are quick to criticize. I like how you ignore the projections that IDOR has done over the years and most of the time their analysis is proved legitimate. We are in this budget mess from Legislative staffers who think they are better at perdicting revenue projections than the folks who do it for a living with PHDs. Example is the last Cigarette tax increase that the Legislator so inflated the the projections so they could spend the money. IDOR research nailed the projection, but our elected officials don’t let facts stop them from spending more money.

  54. - Rabid - Friday, May 6, 16 @ 5:08 am:

    Wait if my govenor took his cayman cash and created jobs in Illinois things would be different?

  55. - Whatever - Friday, May 6, 16 @ 8:38 am:

    Fly On the Wall - so are you saying that IDOR routinely uses REMI for their revenue projections, and that they routinely turn off the “increased spending” assumption?

Sorry, comments for this post are now closed.

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