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Friday, August 13, 2010

70% of Economists Favor Extension of Bush Tax Cuts to Those Making >250k/Year

Wall Street Journal, Economists Want Policy Makers to Back Off Now:

Economists are getting more pessimistic about the strength of the U.S. recovery, but they don't think policy makers should do anything more to support it, according to the latest Wall Street Journal forecasting survey.

The 53 surveyed economists, not all of whom answered every question, offered a bleak picture of tepid growth and high unemployment. ...

The economists, though, generally didn't support the idea of ending Bush-era tax cuts, which will expire at the end of this year unless Congress acts. Just three respondents said that the tax cuts on individual income should be allowed to expire for everyone. Thirty-two economists said they should all be extended, while 11 said they should be extended for people making less than $250,000 a year—the policy option backed by the Obama administration.

WSJ 
Many of the economists said any extension should be temporary while the recovery still is struggling to gain traction. But amid concerns about the deficit, 23 respondents said the extension should be offset with spending cuts or other taxes. "It is irresponsible nonsense to claim that tax cuts 'pay for themselves,' " said Nicholas Perna of Perna Associates.

Although concerns about the deficit persist, more than half of the respondents—28 economists—don't think the U.S. will adopt a value-added, or consumption, tax over the next decade. "Political pressure against is too strong," said David Wyss of Standard & Poor's Corp.

But some economists see a VAT as one of the few ways to bring down long-term deficits. "It is not politically feasible to slow federal spending growth enough to bring the debt accumulation to a sustainable pace. A VAT is a clever way to increase tax revenues paid by middle- and lower-income households without increasing their marginal income-tax rates," said Paul Kasriel of Northern Trust.

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Comments

"It is not politically feasible to slow federal spending growth enough to bring the debt accumulation to a sustainable pace"

Is this just a coded way of saying its not going to happen under a Democrat-controlled congress and White House?
I think its becoming more and more politically feasible every day, in fact.

And if cutting spending isn't politically feasible, then how feasible is enacting a major consumption based tax de novo?


Posted by: Looking closely | Aug 13, 2010 2:50:15 PM

'A VAT is a clever way to increase tax revenues paid by middle- and lower-income households without increasing their marginal income-tax rates," said Paul Kasriel of Northern Trust.'

LOL

I suspect he will be quoted in more than a few political campaigns, should VAT become a hot issue...

Posted by: Barry D | Aug 13, 2010 2:56:42 PM

A word combination that makes me very nervous: "Clever" and "way to increase tax revenues..."

Posted by: JoeDon | Aug 13, 2010 2:58:00 PM

To Perna I would say, "They.Don't.Have.To" ... its our money not the governments ...

Posted by: Jeff | Aug 13, 2010 3:02:05 PM

Worked for a 'rich' guy who owned a small business when Bush 41 was suckered into raising taxes on the rich. He had two ex wives and seven kids on the payroll, so to speak, so when they cut his income he called in all the managers and had them reduce staff. I had to let five people go. Yeah, that 'tax the rich' thing really worked out for them.

Posted by: GRW3 | Aug 13, 2010 3:06:56 PM

Well, this just goes to show that seventy percent of economists are racists.

Posted by: Woody | Aug 13, 2010 3:27:38 PM

as bad as things are, I kinda look foward to the tax increase.

it will look like dems throwing a kegger to celebrate the start of our next and near recession.

saw some critique from the left about laffer...
he wrote a pretty solid piece recently explaining how the tax increase would devastate our economy.

when I read it, it struck me as a worse case scenario. now it seems pretty prescient. by the fact that the dems are willing to gamble with our economy, for a 75 billion projected revenue for 2011, placing their ENTIRE economic crediblity on the line:

go ahead, make my day.

I understand that their failure will be america's failure, but the long term product will be the complete alienation of the american public, in regard to democrat economic philosphy.

if krugman et al. are wrong, they are going to be laughed of the pages of history.

regardless, I would still prefer to have the laffer legacy of 25 million jobs being created. When it comes to dealing with unemployment, if the liberal economists can't concede that supply side manages unemployment far better than keynesian crap, they will be stuck explaining their 'flat earth' theories til the day they die.

I wish them a long life.

Posted by: mark l. | Aug 13, 2010 3:35:34 PM

I can't believe that anyone really believes that increasing taxes can close a spending gap. Ithas never happened in u.s. history. You want to close a spending gap? Quit spending. Surely the general revenue, without SS taxes, brings in enough money to fund the most important function of the federal government. Cutting several federal agencies would release a great number of highly educated workers into the work force where they can produce something other than chaos.

Posted by: ed | Aug 13, 2010 4:10:56 PM

The dems are committed to a higher tax rate on the "rich" (that's a bad joke to anybody actually trying to raise a family on $250K in a big American city) regardless of the economic consequences because it is central to their vision of social justice. We can't change their intentions, that much is clear. So we have to change Congress.

Posted by: Sou'western SongDog | Aug 13, 2010 4:24:21 PM

...seventy percent of economists are racists.... No rather 70 % of economists make more than 250K.

Posted by: dorf | Aug 13, 2010 4:28:43 PM

Wait, 80 percent of academics are liberals, but 70 percent support Bush, isn't there a bit of a disconnect here?

Posted by: mike livingston | Aug 13, 2010 5:34:07 PM

"Many of the economists said any extension should be temporary while the recovery still is struggling to gain traction."

What do you want to bet that number is more than 50%?

Posted by: Michael Blumenthal | Aug 13, 2010 7:00:54 PM

Macroeconomics is Astrology, Not Science

Frank J. Tipler is Professor of Mathematical Physics at Tulane University.
= = = = = = = = = =
He says: "Our leaders are being advised by macroeconomists who haven’t got a clue where they are leading us. Their actions may lead us out of the current recession, or they may lead us into a depression as bad as the Great Depression."

Science is about prediction and precise explanation. It is not enough to construct a different explanation about each past event. Science must produce a consistent, precise explanation for all of the relevant past events.

Then, real science predicts the future and is testable according to those predictions. If a "science" cannot predict what will happen, then it is clear that it does not understand enough about what is going on, and of course it is of no practical use in arranging for a better life.

Real scientists bend over backwards to make their data, methods, and results available for review and criticism. This corrects for personal bias, and allows for quickly sorting out the truth. A true scientist tries to examine all possible explanations that could explain his results, before believing that his new analysis is correct.

You often hear about a supposed scientist withholding data or methods. He may complain that it is beneath him to release data to people outside his field, or complain that he has no time to give information to his critics. This is an indication of a closed mind, or someone afraid that his results won't survive review. It is the mark of a pretend scientist who cannot be trusted.
= = = = = = = = = =

We don't know what the effect of the "stimulus" was, because our government did not give details ahead of time, about what would be helped and how much. We only have the fact that Obama predicted 8% unmeployement and got 10%. Then, he offers the excuse that these things are hard to predict. (laugh)

It is easy to do things at random (that happen to give you power), then claim the world is complicated and would be even worse without your actions. Anyone can say that at any time.

Where is the government's analysis and economic models for public examination? Public policy is vastly more important than the average science experiment. Public policy transfers money and changes lives. We should expect our politicians to develop sound policy and then reveal the details so that we can agree or criticise.

The WSJ is polling economists to recommend policy. What could be more idiotic?

I support lowering taxes. There is a lot of data and a plausible mechanism for greater wealth for everyone when marginal rates are lowered on everyone. But, polling for policy is silly.

Posted by: Andrew_M_Garland | Aug 13, 2010 7:12:02 PM

I think it is politically feasible to cut spending dramatically if you're a Republican. Not so much if you're a Dem.

What we need is the fiscal equivalent of the Manhattan Project to cut spending and make government smaller, more efficient, and more effective.

Posted by: MikeS | Aug 13, 2010 9:09:20 PM

One would think the 70% polling data from the economists would qualify as "settled science" in the eyes of our liberal elite know-it-alls. It works for them on cap and trade.

Posted by: Galt | Aug 14, 2010 9:03:00 AM

70% are for keeping the tax cuts? That settles it Otraitor will repeal them for sure now. 70% don't want death care he is for it. 70% are for the Az law and want to seal the border he is against it. 70% want to keep the tax cuts he is against it. 70% don't want a Mosque at Ground Zero he is for it. Anyone see a pattern here? Also 70% of his time he is either on vacation the golf course or plain not doing his job. What a great President..

Posted by: Harley2002 | Aug 14, 2010 10:54:41 AM

Rollback government salaries, benefits and pensions along with staff and entitlements and call it a targeted tax hike.

Posted by: cubanbob | Aug 14, 2010 8:25:09 PM

However, 99% of far-left economists, (i.e.Krugman), favor implementing them. This is the number the White House will make up.

Posted by: James | Aug 15, 2010 12:43:18 PM

I think it is politically feasible to cut spending dramatically if you're a Republican. Not so much if you're a Dem.
What we need is the fiscal equivalent of the Manhattan Project to cut spending and make government smaller, more efficient, and more effective.

Posted by: cheap nfl jerseys | Aug 16, 2010 10:23:36 PM