I liked this line by Dean Baker:
Fortunately, the media do not hold economists responsible for their failures. The NYT gives us yet another example of non-accountability.
Later in the same post, he adds:
Being off by 300 percent might be considered a serious problem in other lines of work, but apparently not for economists.
I have no problems with people being wrong, even spectacularly wrong… in situations which are outside our experience, and/or where the data is missing or incomplete. But in situations where its not…
I often quote President Bush’s Economic Blueprint, released in February of 2001:
The President’s plan will accelerate this trend to record rates by retiring an historic $2 trillion in debt over the next 10 years. Under the President’s budget, the national debt will be only seven percent of Gross Domestic Product (GDP) in 2011, its lowest share in more than 80 years.
Then there are a couple charts, the first of which is this one:
The Blueprint continues
Indeed, the President’s Budget pays down the debt so aggressively that it runs into an unusual problem—its annual surpluses begin to outstrip the amount of maturing debt starting in 2007. This means that the United States will be effectively unable to retire any more debt than what is assumed in the Administration’s Budget over the next 10 years—the President achieves “maximum possible debt retirement” in his budget.
Obviously that hasn’t happened. In fact, debt held by the public as a share of GDP (which are the debt figures the White House likes to use – and which I also like to use) has increased slightly, from 35.1% in 2000 to a bit over 37% in 2006. Now, the White House projections are for it to be 35.2% in 2010, 0.1% more than it was 2000 and almost five and a half times greater than GW planned.
Now, this discrepancy between the forecast and reality is sometimes blamed on the stock market bubble… but that got punctured early in 2000. Presumably by February of 2001, Bush and Company should have been able to spot something that had happened a year earlier. Its also sometimes blamed on the recession… but the recession was actually pretty shallow. The recovery was slow and inadequate, but the recession itself was not atypical. Ike had three of them and still cut the debt he inherited from 61.6% of GDP to 45.7%. Nixon faced two recessions, the collapse of the Gold Standard, and the Oil Embargo, and cut the debt from 33.4% of GDP to 23.9%. Carter dealt with a recession, oil issues, economic malaise, disco and polyester, and he too reduced the debt from 27.1% to 26.1% of GDP. The 2001 recession is not an excuse for the discrepancy between the forecast and reality either.
And then there’s 9/11 and the assorted wars in Afghanistan and Iraq. But… the people who use this excuse are the same ones who tell you the Great Depression only ended because of Pearl Harbor and the American entry into World War 2.
The real reason for the discrepancy between the forecast and reality is that the administration insisted that cutting taxes was going to make the economy boom, and that would lead to massive increases in tax receipts. The problem is, that approach had been tried before. It didn’t work in the Reagan years, it was actually the opposite of what did work in the Clinton years, and there was no reason to believe it would work this time. It was predictable… but they did it anyway.
This is not to say you shouldn’t have cut taxes. If that was what they wanted to do, that was their right, after all, but making crazy assumptions about what the result of their policies would be when those assumptions contradicted all available facts is inexcusable. Put another way – its lying. And yet, we know where the “economists” who peddled and implemented and justified and cheer lead these policies ended up. A governor’s mansion (Daniels), a deanship (Hubbard), etc.
Because its not just the press that turns a blind eye. Its not just the public. Its those of us who know something about economics, for treating them with respect. For not calling them what they are.