A quiet revolution in public policy happened last week. So quiet, in fact, you probably didn’t hear about it. But the launch of the American Enterprise Institute’s Open Source Policy Center (OSPC) could fundamentally reshape how Washington crafts the policies that impact jobs and wages across the country.
OSPC is a new initiative exploring groundbreaking ways of evaluating and understanding public policy through open-source models. Matt Jensen, the managing director of OSPC, describes the first product, TaxBrain, as a unique open-source simulator to help policy reformers, journalists, and citizens access a variety of tax models. Previously, this type of processing power was only available to a couple large think tanks and government agencies, including the Joint Committee on Taxation, and all closed to public scrutiny. The inputs and models were proprietary and required dedicated computer servers, and everyone — from lawmakers, journalists, citizens, and other tax economists — had to trust the results of the models based off the reputation of the organization publishing the study, despite the fact that these models were the basis of critical policy that impacted every working American.
The Left has long cornered the market, shaping media narratives rooted in an arrogant premise that our dynamic economy could be easily understood with a static model where burdensome government taxes have little to no impact on the decisions of taxpayers. This wrong-headed assumption has long set the parameters for the tax policy debate. Several excellent organizations, including the non-partisan Tax Foundation, have pushed back on this false idea in recent years, producing credible analyses that more accurately reflect our dynamic and changing economy. Other groups, including the Center for Health and Economy, have joined this fight in other policy areas.
AEI’s Open Source Policy Center could fundamentally reshape how Washington crafts the policies that impact jobs and wages across the country
AEI’s OSPC builds upon this positive trend. But their breakthrough transcends the important “dynamic” versus “static” debate, and opens a new frontier: “open” versus “closed.” Until now, everyday citizens unfamiliar with econometrics, acronyms, and DC-based organizations had little besides ideological grounds to trust one source over another. As a result, tax policy debates unfortunately fell into an almost “he said, she said” level of detail, and many voters who were genuinely intrigued by policy debates simply tuned out.
This was particularly pronounced when, in the heat of the 2012 presidential campaign, the Tax Policy Center released a study harshly critical of Governor Mitt Romney’s tax proposal, saying it would hike taxes on the middle class. The Obama campaign immediately cut ads highlighting the report. The Romney campaign (disclosure: I served on Romney’s policy staff) strongly disagreed with the results, saying that the numbers generated by the Tax Policy Center did not include economic growth and made false assumptions about some of details in the Romney plan. The back-and-forth made clear the lack of trust and accountability and the ease at which wonky intellectual arguments can have political potency. The Tax Policy Center had become politicized, and efforts to set the record straight suffered from the lack of an objective, credible alternative model. Good policy lost out to politics.
Fortunately, open-source tools such as TaxBrain have the potential to change the game. Anyone with enough interest can input policy changes into the program and see the results for themselves. Anyone with enough economic knowledge can run simulations with different economic assumptions and data. And anyone with enough coding or programming expertise can go into the actual source code and see the underlying computations involved. Every aspect of the analysis is available to the public. The open source approach to policy analysis could be, in Jensen’s words on Thursday, “an antidote” to the polarization and distrust in government and politics today.
The models behind TaxBrain currently include a static model and three dynamic tax models, allowing different approaches to analyzing the impact of tax changes on growth, prices, revenue, and other factors. TaxBrain is capable of adding other dynamic simulations to the list as well, and the creators plan to expand the tool to include business and consumption taxes. Eventually it will become a comprehensive tool to analyze any aspect of tax reform, and potentially more.
Every cycle, candidates pledge all sorts of tax cuts and credits designed to appeal to the wallets of middle-class voters. And while some enterprising voters do enough work to get a solid estimate, proposals like value-added taxes, partially refundable child credits, and income phase-outs make the task extremely difficult. And no everyday citizen is capable of running a dynamic economic analysis of a tax plan and adding in estimated wage gains from wider economic growth, combined with their unique income and family profiles, to get a personalized tax estimate, and then repeat the process for each presidential candidate.
The open source approach to policy analysis could be an antidote to the polarization and distrust in government and politics today
But by next cycle, TaxBrain, or programs created by outside developers but based off its code, will most likely be able to do all that and more, allowing voters to cut right through the rhetoric and see how various presidential candidates will help or hurt their family’s take-home pay. (The Tax Foundation recently released a version of this idea, allowing a quick comparison based off income tax rate changes, and to their immense credit have done detailed examinations of all the presidential candidate tax plans.)
The AEI team and other open source contributors behind the Open Source Policy Center hope it moves the debate from “Organization A vs Organization B” to more substantive discussion of actual policy details. And while tax policy is the first and most obvious area for this type of tool, eventually the Open Source Policy Center (and other groups taking up the open source challenge) could disrupt other subject areas. Every year, for example, the government continually underestimates the number of people enrolling in Obamacare, with the Congressional Budget Office’s June 2015 estimate off by an incredible 40%, or nine million enrollees. Outside expertise and a healthy dose of daylight are sorely needed to challenge the status quo and force the bureaucracy to be more accountable to citizens and outside experts. As Matt Jensen told Opportunity Lives, “The public should know how and why governments are actually making decisions. If we can improve the decision making process, we can fundamentally improve outcomes for millions of people.”
TaxBrain and the Open Source Policy Center are a welcome threat to the status quo. Jensen and his team will hopefully set a new standard on transparency, consistent with our 21st century demand for openness and a growing distrust of elites. AEI’s commitment to this project has the potential to not only produce more sound, pro-growth economic policy, but also revitalize a bottom-up, participatory democracy.
Andrew Eilts is a contributor for Opportunity Lives and a Republican policy expert based in Washington DC. You can follow him on Twitter @andreweilts.