The Romney Economic Whitepaper bunfight

US politics is already making folks mad. It is only August and we already have one of those confusing arguments where everyone appears to be at cross purposes.

This one is about the Romney Economics Team’s ‘white paper’.

A bit of background. The Romney economics team has released a white paper – the Authors are Hubbard, dean of Columbia Business School; Mankiw, chair of economics at Harvard; Taylor, of Stanford (and Taylor Rule fame), and Kevin (Dow 36000) Hasset, who has been attached to a Republican Presidential campaign each election season since 2000.

The paper makes a bunch of standard conservative arguments about the recovery – these claims are not new, and are what you would expect.

Next Klein writes an article that claims the three academic heavies misquoted or misrepresented the research they quoted in their white paper (which would be out of character for these three).

However, then you read the article, and no one is quoted saying that they have been misquoted, or misrepresented. The closest he gets to disagreement on the record is:

So I e-mailed Auerbach the relevant quote from the Romney campaign’s paper, and added two questions: “Given what we know and don’t know of the Romney plan, is it reasonable to attach these kinds of dynamic estimates to it? Do you think that reporters like me should assume that the 0.5-1% gdp boost is a reliable base case?”

His response came quickly. “I did not see the [Romney campaign’s] paper, but from your description the basic answer to both of your questions is ‘no’,” he replied. His paper looked at “a much bigger tax change than Romney is proposing.” It also “assumed that all tax changes were revenue-neutral on an annual basis; the size of the Romney tax cuts makes this a questionable assumption.”

Most academics are nuts about being misrepresented, so I would think that where there is no smoke, there is no fire.

Next Krugman puts his oar in, saying that economists have been misquoted, that research has been cherry picked, and that research shows that GOP brinkmanship is the cause of damaging policy uncertainty.

Taylor replies, pointing out that others have said that the quotes are accurate, that their advocacy of supply side reforms aimed at boosting growth are a pure good so it is not inconsistent with other work which finds that demand factors are an issue, and that the Baker et al. paper does not mention ‘GOP brinkmanship’.

Got that? I think it means that the Romney team has a supply side reform plan, and they are fudging it to make out that the present slow recovery is due to supply side issues.

It is almost always true that a better supply side yields a better economy – so the fudge is not a bad one. However, it is a fudge none-the-less to claim that a weak supply side is the reason this recovery in particular is weak.

I wrote this post because it took me over an hour to figure out what was going on, and who was saying what … I hope it saves you all some time.

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6 Responses to The Romney Economic Whitepaper bunfight

  1. Manny C says:

    So are you saying that we NGDP future targeting monetary policy? Lol.

    • Ricardo says:

      Can’t see Taylor signing up for that one… An interesting question regarding QEIII is if it will ease monetary conditions at all no that Ryan is on e Romney ticket. It may just convince people that the Bernanke Fed end in Jan 2014.

  2. On your Marx says:

    Romney’s ‘plan’ is simply a larger deficit alah Bush. fr those with long memories there are remarkable similarities with the ‘arguments’ put out by the Reagan team.

    Higher Income types save more than they consume.

    I think charlatan is a mild criticism of this paper.

    • Ricardo says:

      I think that’s your judgement of the outcome they will obtain, rather than a fair summary their plan. It is hard to see a Romney/Ryan ticket getting away with a big increase in the deficit. We shall see…

  3. On your Marx says:

    On the most charitable scoring their plan increases the deficit without any great boost to GDP.

    Thus you get the worst of both worlds.

    some of the academics used to be good now they are simply selling their souls.

    • Ricardo says:

      Has the CBO scored the plan? They do a pretty fair job.

      It is sad how US politics gets so many of them. I think the Bush win in 2000 sent Krugman mad.

      Anyhow, my point is that none of what anyone said is new. The posts seem like a deliberate attempt by both sides to muddy the waters.

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