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“Varieties Of Voodoo”: Undermining The Credibility Of The Progressive Economic Agenda

America’s two big political parties are very different from each other, and one difference involves the willingness to indulge economic fantasies.

Republicans routinely engage in deep voodoo, making outlandish claims about the positive effects of tax cuts for the rich. Democrats tend to be cautious and careful about promising too much, as illustrated most recently by the way Obamacare, which conservatives insisted would be a budget-buster, actually ended up being significantly cheaper than projected.

But is all that about to change?

On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers. The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”

That’s harsh. But it’s harsh for a reason.

The claims the economists are talking about come from Mr. Friedman’s analysis of the Sanders economic program. The good news is that this isn’t the campaign’s official assessment; the bad news is that the Friedman analysis has been highly praised by campaign officials.

And the analysis is really something. The Republican candidates have been widely and rightly mocked for their escalating claims that they can achieve incredible economic growth, starting with Jeb Bush’s promise to double growth to 4 percent and heading up from there. But Mr. Friedman outdoes the G.O.P. by claiming that the Sanders plan would produce 5.3 percent growth a year over the next decade.

Even more telling, I’d argue, is Mr. Friedman’s jobs projection, which has the employed share of American adults soaring all the way back to what it was in 2000. That may sound possible — until you remember that by 2026 more than a quarter of U.S. adults over 20 will be 65 and older, compared with 17 percent in 2000.

Sorry, but there’s just no way to justify this stuff. For wonks like me, it is, frankly, horrifying.

Still, these are numbers on a program that Mr. Sanders, even if he made it to the White House, would have little chance of enacting. So do they matter?

Unfortunately, the answer is yes, for several reasons.

One is that, as the economists warn, fuzzy math from the left would make it impossible to effectively criticize conservative voodoo.

Beyond that, this controversy is an indication of a campaign, and perhaps a candidate, not ready for prime time. These claims for the Sanders program aren’t just implausible, they’re embarrassing to anyone remotely familiar with economic history (which says that raising long-run growth is very hard) and changing demography. They should have set alarm bells ringing, but obviously didn’t.

Mr. Sanders is calling for a large expansion of the U.S. social safety net, which is something I would like to see, too. But the problem with such a move is that it would probably create many losers as well as winners — a substantial number of Americans, mainly in the upper middle class, who would end up paying more in additional taxes than they would gain in enhanced benefits.

By endorsing outlandish economic claims, the Sanders campaign is basically signaling that it doesn’t believe its program can be sold on the merits, that it has to invoke a growth miracle to minimize the downsides of its vision. It is, in effect, confirming its critics’ worst suspicions.

What happens now? In the past, the Sanders campaign has responded to critiques by impugning the motives of the critics. But the authors of the critical letter that came out on Wednesday aren’t just important economists, they’re important figures in the progressive movement.

For example, Alan Krueger is one of the founders of modern research on minimum wages, which shows that moderate increases in the minimum don’t cause major job loss. Christina Romer was a strong advocate for stimulus during her time in the White House, and a major figure in the pushback against austerity in the years that followed.

The point is that if you dismiss the likes of Mr. Krueger or Ms. Romer as Hillary shills or compromised members of the “establishment,” you’re excommunicating most of the policy experts who should be your allies.

So Mr. Sanders really needs to crack down on his campaign’s instinct to lash out. More than that, he needs to disassociate himself from voodoo of the left — not just because of the political risks, but because getting real is or ought to be a core progressive value.


By: Paul Krugman, Op-Ed Columnist, The New York Times, February 19, 2016

February 22, 2016 Posted by | Bernie Sanders, Economic Policy, Gerald Friedman, Progressives | , , , , , , , , , | 1 Comment

“A Failure To Hold Congress Accountable”: Economic Policy Is Largely Being Driven By Obstructionism, Not Economic Advisers

President Obama is reportedly planning to nominate economist Jason Furman to replace Alan Krueger as the head of the Council of Economic Advisers. Like Krueger and, for that matter, Austan Goolsbee and Christina Romer who previously served this administration in the same capacity, Furman boasts an impressive resume, with a Harvard economics doctorate as well as stints at the Brooking Institution, the Center on Budget and Policy Priorities (CBPP), and the CEA under President Clinton, among others. If you’re still of the incorrect belief that tax cuts largely pay for themselves (looking at you, Senate Minority Leader Mitch McConnell), do yourself a favor and read his CBPP report explaining the mechanics and empirics of “dynamic scoring” (pdf) and why invoking it as a talisman doesn’t mean one can claim anything one finds politically expedient.

The Beltway coverage of this news is overly focused on the inside baseball politics between the CEA and the National Economic Council, where Furman has been serving as Deputy Director since January 2009. But it’s important to step back and remember that economic policy in recent years has been principally driven not by well-qualified economists with the CEA, NEC, or elsewhere in the executive branch, but instead by conservative congressional obstructionism. Jason Furman’s appointment to the CEA will not alter the troubling reality that the United States is on an autopilot course of premature, excessive austerity and intentionally poorly designed sequestration spending cuts. But even if the ghost of conservative saint Milton Friedman rose up and warned the GOP against such austerity, today’s conservatives in Congress would declare him an apostate and continue their destructive course.

Consequently, the U.S. economy will almost certainly continue muddling through an adverse equilibrium of anemic growth, severely depressed output, massive underemployment, large cyclical budget deficits, subdued price inflation, widespread real wage deflation and low interest rates. It’s really quite simple: a steep aggregate demand shortfall continues to keep the economy’s performance well below potential, and the Federal Reserve has been and will continue to be incapable of fully ameliorating this shortfall so long as contractionary fiscal policy is being pursued. (See this paper for a thorough treatment.)

In short, the intellectual debate over austerity vs. stimulus has been totally decoupled from the policy debate and, more importantly, policy outcomes in Washington—despite having been resolved in a virtual TKO by those opposed to foisting austerity on depressed economies. The United States doesn’t face, or, perhaps more accurately, no longer faces a deficit of economists capable of opening up an intermediate macroeconomics textbook and relearning liquidity trap/depression economics. But the U.S. Congress faces a depressing deficit of members who seem to care about empiricism or evidence-based policy, never mind their unemployed constituents.

My colleague Josh Bivens and I have chronicled the ways the GOP has routinely and frequently obstructed economic recovery since 2009—much of which should inform any debate this summer regarding much needed reform of the Senate’s filibuster rules, as well as the inevitable political fight over the debt ceiling. Conservatives, particularly the Tea Party caucus, are to blame for exploiting every piece of leverage available (including the nation’s credit worthiness) to extract premature spending cuts, filibustering just about anything that would boost aggregate demand, watering down the Recovery Act, hamstringing monetary policy and demanding counterproductive legislative ‘pay fors’—stipulated to never, ever include revenue increases. The frequently espoused pox-on-both houses punditry is not just off-base, but is also somewhat complicit in this sad state of affairs.

Does it matter who advises the president? Absolutely. But the distressing state of the U.S. economy is, at root, a failure of our representative democracy and institutions to hold Congress accountable for its decisions preventing economic recovery, not a failure of technical advice given to the president. Realistically, the Constitution and budgetary process outlook afford the administration scant leverage to force more deficit-financed government spending, the most effective policy lever for digging out of this Lesser Depression. Under this backdrop, the United States needs more than qualified economic advisers to the president—a majority of representatives and (barring meaningful filibuster reform) super-majority of senators who heed evidence, as well as a press corps holding them accountable, jump to mind.


By: Andrew Fieldhouse, Economic Policy Institute, May 29, 2013

June 3, 2013 Posted by | Congress, Economic Recovery | , , , , , , , | 2 Comments


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