New in the Economists' Voice: Mike Boskin is annoyed at Democratic claims that Bush has generated the "worst economy since Hoover," that the Bush tax cuts have harmed the economy, that Kerry's rollback of Bush tax cuts would be superior tax policy, that Kerry will better control the deficit, and that Kerry has a better long-run health care plan:
Economic Illiteracy on the Campaign Trail: All candidates and Presidents make some statements that make economists cringe, often put into speeches by political advisors unconstrained by economic literacy. From its description of the state of the economy to its policy prescriptions, much of the Kerry-Edwards campaign’s pronouncements are at odds with economic reality and basic economic principles. While their first term was far from perfect (too much spending, steel tariffs), Bush-Cheney policies and proposals are much closer to textbook economics, both micro and macro. The article discusses several such areas: the description of the economy; countercyclical fiscal policy; and price regulation.
I have to concede Mike's point on the "worst economy since Hoover." What the talking point is supposed to be (in my mind, at least) is that employment growth during Bush's term has been lower than for any president since Hoover--which is true, but the insinuation that employment growth is a sufficient statistic for economic performance is not, and it hardly raises the level of the debate. But at least it's more accurate than Larry Kudlow.
On taxes I also have to concede Mike's point, but plead the extenuating circumstance that the problem is only one of tense: the tax cuts have not yet harmed the economy (and have done some good, albeit with a low bang-for-buck ratio), but the will harm the economy as we approach full employment and they begin to crowd out investment.
For the rest, I think that Mike is comparing Kerry policies to an idealized version of what Bush policies would be if Marty Feldstein or Bob Zoellick (or Mike Boskin) were Treasury Secretary and were given the baton to create a reality-based economic policy. I hope, in my own judgments, that I have a realistic vision of what Kerry's policies would be--am not comparing Bush to an idealized vision that a Kerry administration would fall far short of.
Certainly back in 2000 Mike Boskin was looking forward to helping to elect a Bush who would promote free trade (as opposed to slapping tariffs on steel), curb agricultural subsidies (rather than boosting them), preserve the surpluses, and reform entitlements to bring the American government's long-run commitments into balance with funding. The moral, I think, is that we should all be very careful of what we wish for--for we might get it, and it might turn out to be not what we want at all.
Posted by DeLong at November 1, 2004 08:49 PM | TrackBackWhy isn't it sufficient? Or are you trying to say that just relying on it, and ignoring everything else, isn't good?
Posted by: Brian at November 1, 2004 10:44 PMMike Boskin wrote, "Bush-Cheney policies and proposals are much closer to textbook economics..."
Huh. When I took econ in college years ago, "Bankrupting the federal treasury" wasn't mentioned in the texts.
Posted by: liberal at November 2, 2004 03:28 AMdear Kudlow, bush DID mention jobs. He sent John Snow to Ohio and tokd the people the lost jobs was a myth. They didn't buy it, Kerry hammered Bush on it, and won the election. Get your face out of the white powder Kudlow.
Posted by: me at November 2, 2004 06:20 AM
Brad,
Don't take this the wrong way, but what the heck are you talking about?
We can all agree that employment growth isn't the ultimate measure, but then Boskin turns around and uses the unemployment rate and the "misery index"...And while we have a difficult time finding the right metric, it really is not unreasonable to say that this is the worst mismanagement of the economy since Hoover.
On the taxes, what are you conceding? You go into a battle with one bullet in the chamber. You fire the bullet...into the ground...and now have no bullets. You aren't dead yet, but your useless action has made you worse off. Boskin needs a lesson on opportunity cost and how the Bush tax policy is a waste. A temporary rebate isn't the ultimate solution? Oh, Michael...and repealing the estate tax is a solution? Remember this is the same Michael Boskin who foolishly signed that petition supporting the Bush tax cuts...the one that must former Republican CEA members would not sign.
If you have a recession from a temporary excessive demand for liquidity...you don't go repealing the estate tax. If you have a recession from an institutional lack of confidence in policymakers...you don't go running up debt.
Moreover, and this is again where Boskin is disingenuous...tax policy without changes in spending involves intertemporal shifts and shifts among classes of taxpayers. You want to avoid crowding out of private formation of capital? you run your house reponsibly. Was Boskin asleep for the last ten years?
The Bush economic policies show contempt for textbook economics. Was Boskin awake when Paul O'Neill was Secretary of the Treasury?
aah..I need to go do something else....
"...employment growth during Bush's term has been lower than for any president since Hoover--which is true, but the insinuation that employment growth is a sufficient statistic for economic performance is not..."
This is why economists have a hard time being taken seriously among the general public. For most Americans, who rely on employment to earn their living, the tightness of the labor market is the single most important indicator of their economic well-being. Public policy should aim toward a tight labor market and full employment at all times, and the Shrub regime has done exactly the opposite.
- Firebug
Posted by: Firebug at November 2, 2004 07:40 AMIt seems to me that the economic policies - tax cuts skewed toward the wealthy, relaxed environmental regulation, etc. - promulgated by the Bush Aministration are based more on ideology than on textbook economic principles. In my view, Bush's economic policies have been designed to transfer economic wealth from the lower and middle income classes to the upper income class.
To accomplish this the Bush Administration is not really interested in implementing policies to protect the environment, to create jobs and to boost average wages.
Posted by: bncthor at November 2, 2004 08:43 AMSure Bush screwed up on the Steel Tariffs. Protectionist policies is a leftie idea that never works in the long run. The good news is that when the WTO held against it, the Steel Tariffs were quashed.
Sure Bush signed on to the McCain Feingold Campaign finance reform law. I thought they were unconstitutional, but the Supreme Court held differently. Certainly the 527 organizations have made a significant contribution to the debate, so I guess that free speech was not all that inhibited.
Statistics don't lie, but liars figure. Jobs are pretty steady, and unemployment is pretty constant at less than 6%. That used to be thought of as full employment. Complaining about insuffient employment growth when 95% of all workers are there already is disingenuous.
Afganistan: Wow, we worked with allies, and took our enemy down in a month. Not too bad.
Iraq: Gee, after years of sanctions that didn't work, we took the chief violator out, and found that the UN was on the take. Quelle suprise! things go bad in war, but check around. There are lots of reports of the WMD going to Syria, being cleaned out by the Russians. WMD programs are what made the potential danger, and it is smart to fix the problem before, rather than after we kill a few million. As usual, US forces conducted a precision operation. As usual, Muslims violate all the rules of war, and for that Lefties blame the US.
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