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Macro Advisors is a highly respected macro analysis firm. It studied the Heritage model that was used to support the Ryan budget plan. Their response is highly technical but its conclusions are easy to understand. The Heritage model showed that the economy would grow immediately in response to fiscal austerity. Macro Advisors did not believe this finding. They concluded that the model was manipulated to produce a result that would not otherwise be produced by the model they used.
The Heritage simulation also showed a result that Macro Advisors considered hilarious. The simulation showed that 4 million unoccupied houses would be built by 2021. They would be unoccupied because new household formation is not growing fast enough to occupy them!!
Macro Advisors was concerned that the legislature would use a flawed and contrived model to conclude that the economy would not suffer from the implementation of the Ryan plan. That of course, is exactly what the GOP House has just done. We should take a lesson from this. Conservative think tanks like Heritage, Cato, American Enterprise exist for a reason. They provide the analytical cover for conservative game plans. If you go to Heritage's website and read its mission statement, you will find that its analysis of the Ryan budget plan is consistent with its mission.
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