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October 26, 2004

The Economists' Voice: Michael Boskin: Economic Illiteracy on the Campaign Trail

Economists' Voice: Economic Illiteracy on the Campaign Trail

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 October 26, 2004 02:51 PM