Today, 100 distinguished economists at major American universities and research organizations, including five Nobel Prize winners, put out a joint statement explain why Barack Obama’s proposals including “misguided tax hikes,” would “decrease the number of jobs in America.”
Below is the entire statement:
Barack Obama argues that his proposals to raise tax rates and halt international trade agreements would benefit the American economy. They would do nothing of the sort. Economic analysis and historical experience show that they would do the opposite. They would reduce economic growth and decrease the number of jobs in America. Moreover, with the credit crunch, the housing slump, and high energy prices weakening the U.S. economy, his proposals run a high risk of throwing the economy into a deep recession. It was exactly such misguided tax hikes and protectionism, enacted when the U.S. economy was weak in the early 1930s, that greatly increased the severity of the Great Depression.
We are very concerned with Barack Obama’s opposition to trade agreements such as the pending one with Colombia, the new one with Central America, or the established one with Canada and Mexico. Exports from the United States to other countries create jobs for Americans. Imports make goods available to Americans at lower prices and are a particular benefit to families and individuals with low incomes. International trade is also a powerful source of strength in a weak economy. In the second quarter of this year, for example, increased international trade did far more to stimulate the U.S. economy than the federal government’s “stimulus” package.
Ironically, rather than supporting international trade, Barack Obama is now proposing yet another so-called stimulus package, which would do very little to grow the economy. And his proposal to finance the package with higher taxes on oil would raise oil prices directly and by reducing exploration and production.
We are equally concerned with his proposals to increase tax rates on labor income and investment. His dividend and capital gains tax increases would reduce investment and cut into the savings of millions of Americans. His proposals to increase income and payroll tax rates would discourage the formation and expansion of small businesses and reduce employment and take-home pay, as would his mandates on firms to provide expensive health insurance.
After hearing such economic criticism of his proposals, Barack Obama has apparently suggested to some people that he might postpone his tax increases, perhaps to 2010. But it is a mistake to think that postponing such tax increases would prevent their harmful effect on the economy today. The prospect of such tax rate increases in 2010 is already a drag on the economy. Businesses considering whether to hire workers today and expand their operations have time horizons longer than a year or two, so the prospect of higher taxes starting in 2009 or 2010 reduces hiring and investment in 2008.
In sum, Barack Obama’s economic proposals are wrong for the American economy. They defy both economic reason and economic experience.
In the extended entry is the list of economists who signed on:
Robert Barro, Harvard University
Gary Becker, University of Chicago
Sanjai Bhagat, University of Colorado
Michael Block, University of Arizona
Brock Blomberg, Claremont-McKenna University
Michael Bordo, Rutgers University
Michael Boskin, Stanford University
Ike Brannon, McCain-Palin 2008
James Buchanan, George Mason University
Todd Buchholtz, Two Oceans Fund
Charles Calomiris, Columbia University
Jim Carter, Vienna VA
Barry Chiswick, University of Illinois at Chicago
John Cogan, Hoover Institution
Kathleen Cooper, Southern Methodist University
Ted Covey, McLean VA
Dan Crippen, former CBO Director
Mario Crucini, Vanderbilt
Steve Davis, University of Chicago
Christopher DeMuth, American Enterprise Institute
William Dewald, Ohio State University
Frank Diebold, University of Pennsylvania
Isaac Ehrlich, State University of New York at Buffalo
Paul Evans, Ohio State University
Dan Feenberg, NBER
Martin Feldstein, Harvard University
Eric Fisher, California Polytechnic State University
Kristin Forbes, MIT
Timothy Fuerst, Bowling Green State University
Diana Furchtgott-Roth, Hudson Institute
Paul Gregory, University of Houston
Earl Grinols, Baylor University
Rik Hafer, Southern Illinois University Edwardsville
Gary Hansen, UCLA
Eric Hanushek, Hoover Institutions
Kevin Hassett, American Enterprise Institute
Arlene Holen, Technology Policy Institute
Douglas Holtz-Eakin, McCain-Palin 2008
Glenn Hubbard, Columbia University
Owen Irvine, Michigan State University
Mike Jensen, Harvard University
Steven Kaplan, University of Chicago
Robert King, Boston University
Meir Kohn, Dartmouth
Marvin Kosters, American Enterprise Institute
Anne Krueger, Johns Hopkins University
Phil Levy, American Enterprise Institute
Larry Lindsey, The Lindsey Group
Paul W. MacAvoy. Yale University
John Makin, American Enterprise Institute
Burton Malkiel, Princeton University
Bennett McCallum, Carnegie-Mellon University
Paul McCracken, University of Michigan
Will Melick, Kenyon College
Allan Meltzer, Carnegie-Mellon University
Enrique Mendoza, University of Maryland
Jim Miller, George Mason University
Michael Moore, George Washington University
Robert Mundell, Columbia University
Tim Muris, George Mason University
Kevin Murphy, University of Chicago
Richard Muth, Emory University
Charles Nelson, University of Washington
Bill Niskanen, Cato Institute
June O’Neill, Baruch College, CUNY
Lydia Ortega, San Jose State University
Steve Parente, University of Minnesota
William Poole, University of Delaware
Michael Porter, Harvard University
Barry Poulson, University of Colorado, Boulder
Edward Prescott, Arizona State University
Kenneth Rogoff, Harvard University
Richard Roll, UCLA
Harvey Rosen, Princeton University
Robert Rossana, Wayne State University
Mark Rush, University of Florida
Tom Saving, Texas A&M University
Anna Schwartz, NBER
George Shultz, Stanford University
Chester Spatt, Carnegie-Mellon University
David Spencer, Brigham Young University
Beryl Sprinkle, Former Chair Council of Economic Advisers
Houston Stokes, University of Illinois in Chicago
Robert Tamura, Clemson University
Jack Tatum, Indiana State University
John Taylor, Stanford University
Richard Vedder, Ohio University
William B. Walstad, University of Nebraska
Murray Weidenbaum, Washington University in St. Louis
Arnold Zellner, University of Chicago
Tags: 2008 Campaign, conservative truth, oil price, taxes
October 7th, 2008
Before becoming a state legislator and then U.S. Congresswoman for MN CD-6, Michele Bachmann was a tax lawyer; so when it comes to things financial, unlike other congresscritters, she didn’t just fall off the turnip truck.
In the following press release, Michele has laid out the beginnings of what I think is the best plan yet put forward:
Bachmann Statement on the $700 Billion Wall Street Bailout Bill"
Today marks a historic moment for America as a solid bipartisan majority of Congress rejected the fatally flawed Paulson Plan. Standing shoulder to shoulder with taxpayers, we declared that we can do better.
"As I’ve stated previously, this plan was rushed, unworkable, and short-sighted. A majority of House Republicans have parted ways with President Bush on this plan and we demand that alternative proposals be put on the table. There is universal agreement that this plan was bad, but its supporters claimed it was the only option. There were alternatives available, but Speaker Pelosi and the Administration chose to ignore them and used every parliamentary trick in the book to stifle debate. Now, they will have to listen to the voices of American taxpayers who refuse to open their checkbooks to Wall Street to write a $700 billion check with no strings attached.
"I support a plan that would have Wall Street bail itself out, not hardworking taxpayers, by requiring institutions to insure troublesome assets that are causing today’s credit crunch. It would suspend mark-to-market accounting, which forces companies to take losses on artificially devalued assets on an artificial timetable, to give investors more confidence.
"The plan I support would break up Fannie Mae and Freddie Mac — government sponsored enterprises that are at the heart of this crisis — so that the encumbered taxpayer no longer backs them — implicitly or explicitly — and so that they do not artificially grow larger than the market will allow. We cannot pass legislation that sets America up for a Groundhog Day reprise of this mess and that means changing the problem at its core - the GSEs.
"Furthermore, the plan I support suspends capital-punishing tax rates to bring more capital into the U.S. markets rather than our foreign competitors. And, the plan ensures the Federal Reserve’s attention is focused on long-term price stability rather than short term economic growth. Finally, it requires the US Treasury to write rules keeping executives who made the risky decisions from personally profiting from them with excessive compensation or golden parachutes all at the expense of taxpayers. We can’t have a market that only condones risky behavior. The balance between risk and reward is an important part of the free market.
"My colleagues and I stand ready and willing to negotiate with any parties on a plan that will help stabilize our financial markets and relieve the liquidity crisis without exposing taxpayers to a $700 billion bailout debacle."
It is my fervent hope that cooler heads prevail, and a rush-to-action without forethought will not be the order of the day. But at the same time, we need to hold those who are accountable, accountable. As I commented on Noodles’ post:
If something is to be done, the blame game needs to be played. If we do not take stock of what was done wrong, history will invariably repeat itself. I’m just not willing to fork over 700 billion dollars and then forget about it, and go on back to "business as usual" only for the same thing to happen again 10 years down the road. Today, the stock market gained much of what it lost yesterday.. (so I don’t believe that a depression-era crash is imminent) Rome wasn’t built in a day, and this mess wasn’t created overnight. To go ahead and "do something" just because it’s expected is a fools’ errand. Time must be taken to come up with a comprehensive plan that will avoid the gladhanding and other crap that got us into this mess.
The bottom line is that the CEOs, congresscritters and their close allies who were involved in and complicit with creating this mess need to literally do a perp walk. This ‘closure’ of the issues will serve a two-fold purpose; first, it will let investors and retirement fund holders know that those who are guilty have been brought to justice; second, it will send a clear message that further abuses will not be tolerated.
As for the solution to actually getting out of this mess, I believe that Congresswoman Bachmann’s plan provides an effective roadmap toward economic recovery.
Tags: Fannie and Freddie, Fannie Mae
September 30th, 2008
The liberal side of the aisle is wasting no time in casting the CEO’s as the bad guys and then attempting to tie the GOP to the CEO’s. This is clever politics and we can’t complain about the Democrats trying this - even though they are far more connected to said CEO’s than we are. What we GOPers need to do is get out in front of this and get the people on our side. I propose the following, with acknoweldgement to Nevada Pundit, from whom I have ripped off part of the ideas:
Golden Parachutes
There is nothing quite so absurd or aggravating for Joe and Jane Average than to see the CEO of a failed or deeply troubled corporation getting out of Dodge with millions of dollars in bonuses and other compensation. The flimsy-as-all-get-out corporate justification for the huge executive compensation is that if the CEO’s, etc don’t feel ownership for the corporation they won’t ensure it performs at peak efficiency. This is utter BS, but lets take them at their word - and rather than going the Big Government, Democrat route of capping CEO compensation, lets enact a law which allows a corporation to pay its executives whatever it wishes, but such compensation decreases 5 percentage points for each 1 percentage point of stock valuation lost in any given fiscal year beyond a 10% reduction (10% can happen for all sorts of reasons outside the control of the executives - but once you get past that loss, you’re starting to get into CEO Bonehead territory).
Corporate Bankruptcy
Everyone with who’s title includes “chief”, “president”, “senior”, “executive” or “chairman” gets compensated at $25 per hour for each hour worked during the fiscal year the corporation filed bankruptcy. Nothing else.
Corporate Layoffs
For each 10 workers laid off the people with the titles noted in “Corporate Bankruptcy” lose one tenth of one percent of their annual compensation for the fiscal year in which the layoffs occured. A corporate boss can layoff workers all he wants, as long as he feels the pain.
Worker Benefits
Cut them all you want, bosses - as long as you lose them, too and, additionally, lose your bonus for the year in which you make the benefit cut, as well as the two years following it. Have a care when passing out the bennies, ’cause cutting back on them will be painful.
These proposals will retain the free market principle, allow generous compensation to corporate executives who score big profits while keeping workers on the payroll, discourage outsourcing of American jobs and encourage corporate executives to seek other routes than bankruptcy when the going gets rough. In addition to this, there’s the simple justice in ensuring that when a corporation falters, everyone from top to bottom takes a hit, not just the worker bees. And, finally, these are nicely populist proposals which will make the American people stand up and cheer without any appeal to envy or hatred, as the Democrats routinely do with their class warfare nonsense.
The fundamental principle missing in corporate America - and its also missing in government-bureaucrat America - is a connection with the concerns of average Americans; there is a lack of empathy for those who are effected by a corporate downsize or a pettifogging bureaucratic regulation. In addition to what I’ve proposed here, government employees should only get pay increases tied to the growth in personal income, less government transfers, amongst the American people - regulate us into stagflation and you’ll only be hurting yourselves, bureaucrats. Bill Clinton said he felt our pain - which was nonsense as he was insulated from any pain other than the self-inflicted wounds of his immoral actions. I say: lets make everyone feel the pain, and while we won’t eliminate pain, we’ll at least get people who will think carefully before they cause any.
Tags: recession
September 23rd, 2008
Just an excellent statement:
There are certainly plenty of places to point fingers, and it may be hard to pinpoint the original event that set it all in motion. But let me give you an educated guess. The financial crisis we’re living through today started with the corruption and manipulation of our home mortgage system. At the center of the problem were the lobbyists, politicians, and bureaucrats who succeeded in persuading Congress and the administration to ignore the festering problems at Fannie Mae and Freddie Mac.
These quasi-public corporations lead our housing system down a path where quick profit was placed before sound finance. They institutionalized a system that rewarded forcing mortgages on people who couldn’t afford them, while turning around and selling those bad mortgages to the banks that are now going bankrupt. Using money and influence, they prevented reforms that would have curbed their power and limited their ability to damage our economy. And now, as ever, the American taxpayers are left to pay the price for Washington’s failure.
Two years ago, I called for reform of this corruption at Fannie Mae and Freddie Mac. Congress did nothing. The Administration did nothing. Senator Obama did nothing, and actually profited from this system of abuse and scandal. While Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money. He got more, in fact, than any other member of Congress, except for the Democratic chairmen of the committee that oversees them. And while Fannie Mae was betraying the public trust, somehow its former CEO had managed to gain my opponent’s trust to the point that Senator Obama actually put him in charge of his vice presidential search.
This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses for services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation. Another CEO for Fannie Mae, Mr. Raines, has been advising Senator Obama on housing policy. This even after Fannie Mae was found to have committed quote “extensive financial fraud” under his leadership. Like Mr. Johnson, Mr. Raines walked away with tens of millions of dollars.
Senator Obama may be taking their advice and he may be taking their money, but in a McCain-Palin administration, there will be no seat for these people at the policy-making table. They won’t even get past the front gate at the White House.
My friends, this is the problem with Washington. People like Senator Obama have been too busy gaming the system and haven’t ever done a thing to actually challenge the system.
We’ve heard a lot of words from Senator Obama over the course of this campaign. But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was square in the middle of it.
As Matt and I detailed in Caucus of Corruption, there is this nexus of money and power in DC which confounds the efforts of the honest and hard working to build a better future. There is, indeed, plenty of blame to go around and there are GOPers who played a dishonorable role here, but the fundamental revolves around the way business is done on Washington, DC; and the business culture of DC is almost entirely the creation of the Democrats, who essentially ran the DC show for the better part of 60 years.
While I did (and do) oppose McCain’s campaign finance reform, he was on the right track with it - while Money shouts for the attention of Power, the quiet words of the People are drowned out. I know that Obama and his Democrats are continuing to advance the narrative that they are for the little guy and will kick Money out of the loop, the pragmatic facts of life are that Democrats set up the system where Money has to wait upon government and, in order to preserve and/or advance itself, Money is forced to play the money and power game of DC. Unless there is a fundamental shift in how things are done, the best we can hope for is a band-aid designed to do no more than get the nation past the next election cycle before everything goes to heck in a handbasket.
The problem with Obama - as evidenced by the very large amount of money he swiftly amassed from the very same interests at the center of the financial meltdown - is that he isn’t an agent of change and he can’t ever be as long as he’s a liberal Democrat. Over the years the confluence of money and politics has become very tight…and a lot of the people running banks into the ground are people who have been high up in Democratic politics, and these people are not about to allow Democrat Obama to mess up their lucrative game. In the end, only a McCain/Palin Administration gives us a shot at real change in the way DC does business.
Neither McCain nor Palin are enthralled to any particular pressure group. Both McCain and Palin seem to take delight in kicking in the doors of political consensus and allowing enough light to force the cockroaches to scatter. Imbued with a love of country which knows no bounds, connected with average Americans by grace of suffering, poverty and struggle in their own lives, McCain and Palin will batter down the walls of corruption and bring about real change - not in a century have we had a prospective President so keen to help the average American and so contemptuous of what Theordore Roosevelt termed the “malefactors of great wealth”. We can have real change - but only from someone who is entirely uninterested in whether or not some of his fellow politicians will have to lose office; that thing which is the only bad thing as far as Democrats are concerned.
Tags: liberal lies, Obama Deceptions, recession, Sarah Palin
September 20th, 2008
