1115.org

When you think of the Distorter-in-Chief talking about the economy, presumably the first thing that comes to mind is the fable of how his tax cuts have spurred the economy to vibrant and vigorous growth, and thereby paid for themselves. He has practically made a career out of announcing this at regular intervals, serenely untroubled by what might be described as the truth.

Given this administration’s and this president’s penchant for lying even about things that the population at large has no trouble understanding, it is hardly surprising they would chose to lie repeatedly about something that so many people frankly admit they don’t have a clue about, namely economics.

Despite all the jokes about on-the-other-hand economists, most respectable economists care far too much about the respect of their peers to be caught dead endorsing politicians’ self-serving lies, no matter what the cost in terms of political appointability. And, fortunately for America, most of the economists who matter when it comes to setting and evaluating public policy are respectable economists. Unlike, say, Homeland Security and Counterterrorism experts, economists seem to regard government assignments as temporary sojourns from which they will return to whence they came. For that reason, short-term rewards in the world of politics for endorsing expedient lies are typically viewed as insufficient compensation for permanent erosion in professional credibility.

And this is the reason why, even though this administration has no trouble finding experts who will readily endorse military lies or national security lies or disaster management lies or legal fictions, they have a devil of a time finding respectable economists to endorse their economic lies.

In fact, respectable economists with past illustrious associations with the Bush administration have taken this attitude one step further. They don’t even maintain a tactful, team-player silence about the administration’s most cherished economic lies. To their eternal credit, they seem to subscribe to the archaic belief that such silence is akin to a white lie. And so they come right out and publish studies or make categorical public statements slamming those lies.

For example, in the recent past we have several times drawn attention to how the President’s own economists have roundly dismissed presidential claims and made it clear that tax cuts can never be expected to even come close to paying for themselves. Without mincing words, people like Douglas Holtz-Eakin (chief economist for Bush’s Council of Economic Advisers in 2001 and 2002) and former Treasury Secretary John Snow and Gregory Mankiw (head of Bush’s Council of Economic Advisers from 2003 to 2005) have made it clear that no one in her right mind who knows the first thing about economics should expect this, or will be caught dead saying it.

Not that President Bush or Vice President Cheney or any of the other folks who proudly propagate these economic lies have ever acknowledged these remarks. But even without acknowledging them, Vice President Cheney has suggested that studies which show tax cuts don’t come close to paying for themselves are flawed because they count only the static effects of today’s tax cuts on future revenues. What is missing is a dynamic analysis, which will properly take into account how today’s tax cuts spur economic growth and thereby increase future tax revenues.

As a recent post by Jason Furman at Slate explains,

In a February speech, Vice President Cheney said, “It’s time to re-examine our assumptions and to consider using more dynamic analysis to measure the true impact of tax cuts on the American economy.”… Cheney proposed creating a new unit within Treasury to conduct this dynamic analysis and confidently predicted that it would find that tax cuts increase government revenues.

Someone on the sidelines thumped a staff on the ground, and went “So let it be written. So let it be done.” And in the fullness of time, it came to pass in the kingdom of George the Second that the Treasury conducted a dynamic analysis as it had been bidden.

It should come as no surprise to anyone other than Cheney and his economic groupies that what the Treasury Department found was not quite what Cheney had confidently predicted. (Why should he be any more right about tax cut economics than he was about WMDs?)

Six months later, Treasury’s first dynamic analysis of the president’s policies is out. It belies the claim that the Bush proposal to make his tax cuts permanent will either pay for itself or galvanize the economy.

The Furman post provides a summary of the Treasury’s dynamic analysis. And it is well worth reading. But the part that I liked best was when he talks of how “the intellectually rigorous, professional economists who sit across the street from the White House at the Treasury Department, who were tasked with carrying out Cheney’s “dynamic analysis” of President Bush’s proposal to make the tax cuts permanent” had no compunctions about contradicting “the supply-sider in chief, who recently abandoned six years of somewhat more cautious statements on the subject to proclaim that tax cuts really do raise revenues:

Some in Washington think the choice is between cutting taxes and cutting the deficit. This week’s numbers show that this is a false choice. The economic growth fueled by tax relief has helped send tax revenues soaring.”

The Treasury’s analysis pulls no punches. And what it says is that on this topic too the President has just been selling snake oil all this time.

And that is why, when this administration is finally history, and when it starts to reap its well-deserved harvest of shame and ridicule, the only professional group peripherally associated with the Bush administration that will be able to hold its collective head high will be the economists. (And let me take the opportunity to make it clear that the fact that I have been a professional economist in my time did absolutely nothing to influence this opinion. There is nothing I would have enjoyed more than knowledgably sniping at quisling economists, if only I had been able to find any.)

It is worth pointing out that no matter how many times even the administration’s own economists debunk the contention that tax cuts pay for themselves through growth, people continue to claim the opposite. Remember Mike, for example, who tried to pass himself off as an economist from Stanford? He recently revealed to us:

Tax cuts produce more revenue because they create more jobs equaling more taxpayers, and more taxpayers contribute more tax revenue while the aggregate tax payment per person comes down. It works every time it is tried, if the top rate that you are reducing is not too low. You reach a point where you are not going to raise revenue if your tax rate is zero. There is a formula for this.

This notion manages to endure with the same mysterious force as an urban legend. So what if it’s total bullsh**? People still swear by it. Just as they swear by intelligent design. All anyone can do there is to keep putting out Darwin’s side of the story, and to keep pointing out the difference between real science and fake science. The tax cuts urban legend seems to call for exactly the same approach.

Meanwhile, I suggest that true patriots everywhere consider replacing the sign-off phrase “God Bless America!” with “God Bless Economists!”