What am I, chopped liver or something? I was deeply hurt when I read Monday that 10 Nobel Prize-winning economists and 400 others signed a statement opposing President Bush’s tax proposals.
I gladly would have signed it, and I think if the organizers tried a little harder, they could get many times the 400 signatures achieved so far. I looked over the list of Minnesota-based signatories and noted the absence of at least 20 Ph.D. economists in the Twin Cities who probably would have signed if asked.
Of course, a petition signed by hundreds of economists plus $3.89 will get you the No. 2 value meal at McDonald’s but not much more. In 1929, more than 1,000 members of the American Economic Association signed a petition urging President Herbert Hoover to veto the Smoot-Hawley tariff bill. Hoover signed it anyway.
A few weeks ago, Bush gathered a handful of economics who support his plan to be photographed with him. The group included two, Alan Meltzer and Martin Feldstein, who are well known and respected for their scholarship by their fellow economists.
But over the past two days, Federal Reserve Chairman Alan Greenspan has told Congress the Bush tax plan would result in rising budget deficits that would harm the economy.
V.V. Chari, a professor economics at the University of Minnesota and adviser to the Federal Reserve Bank of Minneapolis, thoughtfully evaluated Greenspan’s comments and voiced his own misgivings of the Bush plan on Minnesota Public Radio Wednesday.
And Sung Won Sohn, chief economist at Well Fargo in Minneapolis, told the Associate Press Wednesday, “I don’t think the Bush plan is dead, but without the blessing of Chairman Greenspan and lingering doubts among some Republicans, the program will have to go through substantial modification in Congress before it becomes law.”
People need to weigh these views carefully along with other evidence as they decide what actions to recommend to elected representatives. This can be difficult when opponents wheel up platoons of gurus.
Here are some suggestions to help you make sense of the dueling punditry:
- Numbers do matter. the 1,000-plus economist who signed the anti-tariff petition in 1929 demonstrated that the vast majority of economists thought the bill was a bad idea. History vindicated them. It’s now becoming clear that most economists oppose most aspects of the Bush tax proposal. Many would support some tax reductions, especially the double taxation of stock dividends, but most would prefer to offset cuts with increased taxes elsewhere or lower spending to prevent the deficit from expanding.
- Winning a Nobel Prize does not make one a tax expert. Ten laureates have come out against the Bush plan. bush may be able to mobilize a few who would favor it. But while Nobel winners are very bright, they may not have better insights about tax issues than a less recognized colleague teaching at Podunk State.
- Economists have political biases just like anyone. At least four of the 10 laureates signatories are well known as Democrats. On the other hand, Greenspan’s Republican sympathies are deep and well known. His comments should trouble Bush supporters.
- While academic economists are perceived as divorces from the real world, I give them more credence than the economists on Wall Street. Most business economists may be people of high integrity, but when I hear them speak, I’m often struck by how their opinion matches the business interests of their employers.
© 2003 Edward Lotterman
Chanarambie Consulting, Inc.