To: bentway who wrote (663809 ) 7/25/2012 1:56:43 AM From: tejek Read Replies (1) | Respond to The U.S. Economic Policy Debate Is a Sham Betsey Stevenson & Justin Wolfers U.S. economy . Nothing could be further from the truth. In reality, there’s remarkable consensus among mainstream economists, including those from the left and right, on most major macroeconomic issues. The debate in Washington about economic policy is phony. It’s manufactured. And it’s entirely political. The standard Republican talking point is that it failed, meaning it didn’t reduce unemployment. Yet in a survey of leading economists conducted by the University of Chicago’s Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate. On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed. But while the public may not like them, there’s a striking consensus that they helped: The same survey found no economists willing to dispute the idea that the bailouts lowered unemployment. Newt Gingrich promised to reverse? There’s simply no support among economists for this view. They unanimously agreed that “market factors,” rather than energy policy , have driven changes in gas prices. How about the oft-cited Republican claim that tax cuts will boost the economy so much that they will pay for themselves? It’s an idea born as a sketch on a restaurant napkin by conservative economist Art Laffer. Perhaps when the top tax rate was 91 percent, the idea was plausible. Today, it’s a fantasy. The Booth poll couldn’t find a single economist who believed that cutting taxes today will lead to higher government revenue-- even if we lower only the top tax rate . Rather, the findings come from the Economic Experts Panel run by Booth’s Initiative on Global Markets. It’s a recurring survey of about 40 economists from around the U.S. It includes Democrats, Republicans and independent academics from the top economics departments in the country. The only things that unite them are their first-rate credentials and their interest in public policy. Washington has become completely unmoored from this consensus, and in a particular direction: Angry Republicans have pushed their representatives to adopt positions that are at odds with the best of modern economic thinking. That may be good politics, but it’s terrible policy. Our textbooks are filled with possible solutions. Instead of debating them seriously, congressional Republicans are blocking even those policy proposals that strike most economists as uncontroversial. Instead, it’s raw politics -- a cynical attempt to score points in a phony rhetorical war or a way of preventing their opponents from scoring a policy win. The debate about the long-run challenge posed by the federal budget deficit has also become divorced from economic reality. almost unanimous in agreeing that “long run fiscal sustainability in the U.S. will require cuts in currently promised Medicare and Medicaid benefits and/or tax increases that include higher taxes on households with incomes below $250,000.” Only one in 10 was uncertain. None objected. tax deductions such as that for mortgage interest didn’t fare well in the surveys and would be on almost any economist’s list of targets for reform. Yet neither party is willing to propose such policies. University of Michigan . Justin Wolfers is associate professor of business and public policy at the University of Pennsylvania , and a non-resident senior fellow of the Brookings Institution . Both are Bloomberg View columnists. The opinions expressed are their own.) bloomberg.com
