Gresham’s law for revenue estimates

“Gresham’s law is a monetary principle stating that ‘bad money drives out good.’ For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will disappear from circulation.” That’s from wikipedia.

The same phenomenon applies to official revenue estimates, it seems to me.

Say an industry has a friendly Member lined up to do its bidding. The ideal tactic for the industry might be to have the Member propose a number of different tax cuts, and get the official scorekeeper to produce revenue estimates for all of them. Then the industry can see which tax cut proposals get lower revenue cost estimates than they believe. Say the industry figures, based on confidential information that the scorekeeper can’t readily discover, that proposal A would benefit the industry by $3 billion, proposal B would benefit it by $6 billion, and proposal C would benefit it by $9 billion. Say the scorekeeper comes back with estimates (to make this very simple) that they all cost $6 billion. So the Member abandons A and B, and gets C enacted.  The bad estimate has driven out the good.

Surely people have discussed this, but I googled
Gresham’s law “revenue estimates”
and nothing came up.



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