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Friday, August 08, 2008

Economists weigh in on the Presidential election?

In my email box this morning was a solicitation for my support, as an economist, of John McCain's economic program. The solicitation asked me to support the following "statement":

Economists' Statement in Support of John McCain's Economic Plan

We enthusiastically support John McCain's economic plan. It is a comprehensive, pro-growth, reform agenda. The reform focuses on the real economic problems Americans face today and will face in the future. And it builds on the core economic principles that have made America great.

His plan would control government spending by vetoing every bill with earmarks, implementing a constitutionally valid line-item veto, pausing non-military discretionary government spending programs for one year to stop their explosive growth and place accountability on federal government agencies.

His plan would keep taxes from rising, because higher tax rates are exactly the wrong policy to restore economic growth, especially at this time.

His plan would reduce tax rates by cutting the tax that corporations pay to 25 percent in line with other countries, by completely phasing out the alternative minimum tax, by increasing the exemption for dependents, by permitting the first-year expensing of new equipment and technology, and by making permanent a reformed tax credit for R&D.

His plan would also create a new and much simpler tax system and give Americans a free choice of whether to pay taxes under that simple system or the current complex and burdensome income tax.

His plan would open new markets for American goods and services and thereby create additional jobs for Americans by supporting good free trade agreements such as the one with Colombia and working with leaders around the world to avoid isolationism and protectionism. His plan would also reform education, retraining, and other assistance programs so they better help those displaced by trade and other changes in the economy.

His plan addresses problems in the financial markets and housing markets by calling for increased transparency and accountability, by targeted assistance to deserving homeowners to refinance their mortgages, and by opposing so-called reform plans which would raise the costs of home-ownership in the future.

The above actions, as well as plans to address entitlement programs--especially Social Security, Medicare and other government health care programs--and his regulatory reforms--especially in the area of health care--constitute a broad and powerful economic agenda. Because of John McCain's experience working with the American people in all walks of life, with members of Congress on both sides of the aisle, and with leaders around the world, we are optimistic that these plans will become a reality and will create jobs and restore confidence and strong economic growth.

I am generally reluctant to put my name to such statements because I am not sure that the statement is generally true/correct. As a neo-classical economist I am a firm believer in low marginal tax rates, restrained government spending, free trade, and the reduction of increasing regulatory costs that burden the private sector. Of the two candidates, perhaps McCain is the less likely to raise taxes, increase government spending, and so forth, but I really don't know the man and I don't really know who is advising him. Thus, it seems a little presumptuous for me to sign on to a statement that claims McCain will support such policies when I cannot confirm for myself that he will do so.

Economists have been actively involved with the macro economy for about 80 years but the best we have been able to contribute is to stave off incredibly bad policy ideas. I am not sure whether economists have done much in terms of tangible policies.

I would like to believe that at least one of the Presidential candidates would support the tenets outlined in the statement above, but I don't think they do.

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