U.S. economic policy debate is a sham, driven by politics

'Leading economists are more likely to be right than politicians running for re-election.'

Guest Column: Betsey Stevenson & Justin Wolfers
Watching Democrats and Republicans hash out their differences in the public arena, it’s easy to get the impression that there’s a deep disagreement among reasonable people about how to manage the U.S. economy. More

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OP-ED

U.S. economic policy debate is a sham, driven by politics

'Leading economists are more likely to be right than politicians running for re-election.'

Guest Column: Betsey Stevenson & Justin Wolfers
Posted 7/30/12

Watching Democrats and Republicans hash out their differences in the public arena, it’s easy to get the impression that there’s a deep disagreement among reasonable people about how to manage the U.S. economy.

Nothing could be further from the truth.

The debate in Washington about economic policy is phony. It’s manufactured. And it’s entirely political.

Let’s start with Obama’s stimulus. One standard 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.

Or consider the widely despised bank bailouts. Populist politicians on both sides have taken to pounding the table against them. 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.

Do you remember the Republican concern that Obama had somehow caused gas prices to rise? There’s simply no support among economists for this view. They unanimously agreed that “market factors” have driven gas prices.

How about the oft-cited claim that tax cuts will boost the economy so much that they will pay for themselves? 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.

The consensus isn’t the result of a faux poll of left-wing ideologues. 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 United States and across the political spectrum. The only things that unite them are their first-rate credentials and their interest in public policy.

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