Mankiw Believes in Rubinomics
Employing a startling new tactic that was surely designed to throw opponents off balance, Greg Mankiw took the unprecendented step for a Bush administration economist of sounding like an actual economist yesterday:
“Naturally the budget deficit is a cause for concern,” Gregory Mankiw, chief economic adviser to President George W. Bush, told Germany’s Handelsblatt newspaper. “It could push up interest rates.”
Now Mankiw just needs to hold a Macro 101 class for some other members of the administration, past and present. Earlier this year, Dick Cheney and Mitch Daniels both said that they don’t believe that budget deficits push up interest rates. And Glenn Hubbard thought that this silly idea was just a partisan trick by the Democrats, which he labeled “Rubinomics.”
Who knows, maybe Bush will eventually even let the economists have some say in economic policy making…? Nah.
UPDATE: Brad DeLong points out that Mankiw needs to mention a couple of other well-known economic insights before he sounds like a real economist: budget deficits take a long time to fix, and so we should be starting now; and budget deficits almost never get fixed without a formal enforcement mechanism like the recently expired Budget Enforcement Act. Points well taken.