Long-term Fiscal Policy: A Tax Law Professor Flunks Freshman Finance

I have been known to have a few minor disagreements with Max Sawicky on the value of generational accounting aka taking a long-term present value perspective of fiscal policy, but I have to say that the criticism from Daniel Shaviro is just stupid:

With all due respect, which I do have for Max Sawicky, he is wrong, as in w-r-o-n-g. He thinks we shouldn’t do long-term fiscal projections. I hope he doesn’t live his life that way (e.g., is he planning to retire some day? Or send still-young kids to college?).

But Max is not saying that. What he is very sensibly saying is that present value calculations are very sensitive to the assumptions of the discount rate (as well as projected future cash flows). If Shaviro doesn’t get this, maybe he should take Finance 101. Max is also saying good economic policy goes beyond the long-term balance sheet. But hey – Max speaks very ably for himself.
And I was going to give Art Laffer the stupidest man alive award. Silly me.