Romney economic advisor Glen Hubbard penned an op-ed today in the Wall Street Journal that is rather infuriating. Let’s look at Hubbard’s first assertion on policy uncertainty:
In response to the recession, the Obama administration chose to emphasize costly, short-term fixes—ineffective stimulus programs, myriad housing programs that went nowhere, and a rush to invest in “green” companies.
As a consequence, uncertainty over policy—particularly over tax and regulatory policy—slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone, and that returning to pre-crisis levels of uncertainty would add about 2.3 million jobs in just 18 months.
To the study we go! Here’s the graph of economic policy uncertainty:
Uncertainty rose a bit during the stimulus debate, though that also coincided with the crisis as a whole and TARP occurred right as Lehman Brothers collapsed. It’s certainly not fair to say that those policies did not cause any uncertainty – any policy change is going to make things more uncertain. But look what is responsible for “this uncertainty [that] reduced GDP by 1.4% in 2011 alone.” It’s the debt ceiling dispute! And who was responsible for it? The Republicans! They held the economy hostage for months. That 1.4 percent reduction is exactly what Obama tried to avoid by repeatedly calling for a clean increase of the debt ceiling. Yet, Hubbard is trying to lay the blame on the President! (And by the way, can we stop with this “ineffective stimulus” idea already? It wasn’t.)
Not surprisingly, the remainder of Hubbard’s op-ed focuses on Obama’s tax policies:
Moreover, the Obama administration’s large and sustained increases in debt raise the specter of another financial crisis and large future tax increases, further chilling business investment and job creation. A recent study by Ernst & Young finds that the administration’s proposal to increase marginal tax rates on the wage, dividend and capital-gain income of upper-income Americans would reduce GDP by 1.3% (or $200 billion per year), kill 710,000 jobs, depress investment by 2.4%, and reduce wages and living standards by 1.8%.
Hubbard complains about “large and sustained increases in debt” and then proposes policies that would either lead to greater debt or force middle-and lower-class Americans to shoulder a greater share of the load. If Hubbard wants to reduce the debt as is implied in his criticism of Obama and not raise taxes on upper-class Americans, he’s going to have to find the money somewhere else. Where is that money going to come from? The middle- and lower-class of course. Look at the non-partisan Tax Policy Center’s findings yesterday:
Our major conclusion is that a revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed – including reducing marginal tax rates substantially, eliminating the individual alternative minimum tax (AMT) and maintaining all tax breaks for saving and investment – would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower-income taxpayers
The fact of the matter is that both candidates want to reduce the deficit and doing so is going to require some pain. Obama’s plan starts with upper-class Americans (as the conservatively-funded Ernst & Young study points out) while Romney’s starts with middle- and lower-class ones. Also, looking at the spending side of things does not help Romney either.
As Hubbard continues on:
And according to the Congressional Budget Office, the large deficits codified in the president’s budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law.
This conveniently leaves out the sentence before it in the CBO report:
By CBO’s estimate, under the President’s proposals, the nation’s real output during the 2013–2017 period would be, on average, between 0.2 percent lower than the amount under current law and 1.4 percent higher than under current law.
So, Obama’s policies actually lead to greater growth in the next five years than under current law. Hubbard must have forgotten that part.
The entire piece picks and chooses facts as it wants. The beginning part really infuriated me. He deliberately mischaracterized the policy uncertainty study to mislead readers. I called out the Obama campaign when it mislead people as well. The goal of a political campaign should not be to trick readers into voting for you. It should be to convince them to vote for you. Hubbard’s entire piece is focused on tricking, not convincing and it’s irritating to read such blatant dishonesty.