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From the Way-Back Machine: Heavy Hitters for McCain-onomics

by Tom Bozzo

Time to pile on regarding the 300 economists for the McCain economic plan. I thought it was pretty funny that Douglas Holtz-Eakin signed on — ‘look, boss, I approve of my own plan!’ — and the presences of the likes of Phil Gramm, Kevin Hassett, and John R. Lott Jr. should be viewed as each constituting minus a large number of good economists, so the net number of signatories is close to zero.

The opportunity for confusion, as even Felix Salmon exhibits some, is the presence of undeniably prominent economists on the list. To help in evaluating the significance of there presence, here’s a prediction from quasi-Nobel laureate Gary Becker (signer of the McCain statement), current CEA chair Edward Lazear, and John Bates Clark medalist Kevin Murphy of the Chicago GSB (Lazear and Murphy did not sign):

The evidence is clear: Cutting taxes will have beneficial effects. Tax cuts will keep government spending in check and will provide the incentives necessary to produce a highly skilled, productive work force that enables high economic growth and rising standards of living.

That was from “The Double Benefits of Tax Cuts,” published on the W$J op-ed page on October 7, 2003. Goes to show that the line between being a real economist and a “policy entrepreneur” is a fine one. For some indications of how that has worked out, see e.g. here, here, here, and here from the AB archives.

Meanwhile, leave it to the Rude Pundit to get right to the fundamental contradiction of the list (a very extended, and actually non-rude, excerpt is required):

So John McCain proposes a gas tax holiday and economists almost universally say it’s a stupid idea. In June, McCain, being a reasonable man, chooses to mock the economists: “If you want to call it a gimmick, fine. You know the economists? They’re the same ones that didn’t predict this housing crisis we’re now in.”…

Now McCain has put forth a great and mighty economic plan. Did it yesterday, less than a month after dissing the poindexters. And his campaign has released a letter from, well, who else? Economists who support it. Oodles of them. Guess they know a lot about economics, eh?

…[T]he Rude Pundit chose one of the names at relatively random. University of Chicago’s Gary Becker, who does a blog on, you know, economics… [B]ack in December 2007, Becker says, “The vast majority of economists, including me, were surprised by the extent of the subprime mortgage crisis.”

So, to conclude: for John McCain, economists who didn’t predict the mortgage crisis don’t know what they’re talking about when it comes to a gas tax holiday, but when it comes to his entire economic plan, they’re a-ok. What fun.

Does that qualify as straight talk?

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Broken Clock Day

Yves Smith quotes Thomas Friedman accidentally telling the truth:

Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.

Please explain this in the context of the “savings and investment boost” that was supposed to come from the 2001 and 2003 tax cuts.

That means you, Bob McTeer.

Bulldog to bulldog, as it were.

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The Price of Gas will soon be $1.50, right?

This will teach them, right?

H.R. 6377 directs CFTC to use all its authority, including its emergency powers, immediately to curb the role of excessive speculation in the energy and swaps futures markets and take other corrective actions as necessary to eliminate any market disturbance that prevents energy markets from accurately reflecting the forces of supply and demand.

And what long-term supply (h/t Mark Thoma) is that?

As has been noted elsewhere, regulation at the CFTC isn’t in itself a bad idea. Indeed, it’s long overdue. But I’ll go back to Krugman and the FT:

The case for such a policy is based on a flawed concept of how these markets work. Those pushing for restrictions argue that an artificially high demand for essential commodities such as oil and corn has been created by the institutions’ purchase of long positions in futures contracts….

Now, if it were true that pension funds, insurance companies, evil hedge fund managers etc, were all buying large quantities of physical products such as silos of grain and storage tanks of oil, then the peasants with the torches, and their leaders, would have a point. But the investors aren’t buying physical product. [Nonsense about Lieberman being a Democrat omitted; italics mine]

So, if this bill passes the Senate and is ultimately enacted, the CFTC either will prevent some people from buying futures (by some miracle, unless they’re going to do this only for crude contracts, which would mean Lieberman is even stupider than I think he is) or, more likely, change some requirements in the booking, reporting, and buying of such contracts which will make it more difficult for outright speculators.

Now, don’t get me wrong: I fully expect to be paying $1.50 for gasoline in a couple of months: but that will be C$1.50/litre. The odds of those of you staying in the States being able to pay that per gallon—well, I wouldn’t take them. Even if I were “speculating.”

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