Earlier this week, Maya MacGuineas, a fiscal policy expert at the New America Foundation, ranked Congress’s options in addressing the pending expiration of the 2001 and 2003 tax cuts. A little more than two months remain before an automatic tax hike on all American earners sets in, and Congress has yet to act. Here, we compare MacGuineas’s rankings to our own solutions. Above all, MacGuineas favors sweeping tax reform, describing the current system as “outdated, overly complex, a drag on economic growth, and as leaky as an old fisherman’s dingy.” …
Congressional Budget Office (CBO) Director Douglas Elmendorf recently testified before the Senate Budget Committee on policies that might give the economy a helpful lift in the near term. Congress is right to be concerned. But for an inventory surge last winter, the economy remains stuck in low gear at about 1 percent growth. This is too slow even to prevent unemployment from rising over time, let alone helping the ranks of the unemployed find new jobs. As the muddling economy shows painfully clearly, what Congress has wrought so far—massive stimulus …
Reducing budget deficits by cutting government spending has a stronger record of economic stimulus than either reducing the deficit with tax increases or increasing government spending. That’s what Harvard economists Albert Alesina and Silvia Ardagna have found in their recent research. They examined 107 instances of large reductions (at least 1.5 percent in one year) in budget deficits as well as 91 instances of large increases (over 1.5 percent in one year) in budget deficits over the past 40 years. They found that when an economy expands following deficit reduction, …
By now it’s obvious that the government’s “stimulus” spending spree has failed to achieve its intended results—just as critics of Keynesian economic theory predicted. Compounding the policy blunder is the failure of officials to properly vet some of the costly public works projects. Case in point is the $7.2 billion broadband deployment scheme: Federal officials failed to determine whether targeted communities actually lack Internet service options. In a number of cases, in fact, the government subsidies will put existing private service providers at a competitive disadvantage.
The front page of The New York Times yesterday featured a very long story on the state displacing the market within the Chinese economy. Hats off to the Times for getting it right, but they’re late. Very late. In fall 2002, a new Chinese government, led by current President Hu Jintao and current Premier Wen Jiabao, came to power. From the beginning, this government was bent on reversing market-oriented economic reform and started immediately by sharply expanding state-orchestrated lending and investment. Indications of the reversal were plain by September 2003—seven …
When President Barack Obama was selling his economic stimulus plan to the American people, he promised that, if enacted, the legislation would prevent unemployment from rising above 8%. $3 billion in Cash for Clunkers bailouts, $10 billion in government union bailouts, $16 billion in Medicaid bailouts, $13 billion in home buyer tax credits, and $814 billion in stimulus act spending later the nation’s unemployment rate stands at 9.5%. And now the Congressional Budget Office (CBO) says that number is not going to come down any time soon. Yesterday, the CBO released …
The immediate effects of Obama’s policies are easily seen. We can observe the workers of which billions of dollars have been spent to employ. We are aware of the entitlement checks given by the pen stroke of congress. It is inferred that the recovery plan actually recovers. However, Obama’s legislative activism has farther reaching consequences. Unfortunately, this administration is not able to see beyond the immediate results of its policy proposals. It is the opportunities forgone, those that are not seen, which prove the truly destructive aftermath of such policies. …
According to reports, Christina Romer, Chairman of the President’s Council of Economics Advisers (CEA) is calling it quits. Why does this matter? Another ignored economist leaves Washington with a slightly tattered professional reputation to be received joyously back in the arms of her colleagues in academe having served in a glorious cause—pass the brie and chablis. Well, it matters, at least a little. It matters because the notice given means the CEA still matters. As a CEA alum, I’m encouraged that even in this Administration the outward appearance, at least, …
Sens. Tom Coburn (R-OK) and John McCain (R-AZ) have put out an excellent report on the 100 most wasteful projects funded in President Obama’s $862 Stimulus plan. The report, Summertime Blues, is important for conservatives to read from cover to cover. This report contains some of the most egregious and wasteful programs ever recorded. One project that has been the subject of much discussion is a Wake Forest University Study on how Monkeys react under the influence of cocaine. This project received $144,541 in Stimulus funds and produced only a …
By the only objective standard available, President Barack Obama’s $862 billion economic stimulus has been a complete failure. His administration promised the American people that if the stimulus passed unemployment would never be higher than 8%. It blew past that and hit 10.1% in March 2009 and currently stands at 9.5%. Faced with this inconvenient truth the President is now falling back on the same failed Keynesian models that betrayed him the first time to make the case that the recession would have been even worse without his policies. So …
