Live from Souvenir on Claremont: (Early) Monday Smackdown: Tax Reform Intellectual Garbage Cleanup Edition:
1) I am informed—by “persons who say they are familiar with the matter”—that Barro, Boskin, Cogan, Holtz-Eakin, Hubbard, Lindsey, Rosen, Shultz, and Taylor are not lying when they say on Wednesday “we did not offer claims about the speed of adjustment to a long-run result….” even though the previous Saturday they had written about a raise in “the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year…”
Why aren’t they lying on Wednesday?
Because the “if” does not mean: “it could be the case that…”
Instead, the “if” means: “for illustrative purposes, if you have trouble converting from changes in levels to growth rates, as an illustrative example, suppose that in a counterfactual world (which is definitely not this world)…”
If this is indeed their rationalization of what [Furman and Summers](increase in the annual rate of GDP growth would be about 0.4% per year.), with excessive politeness, call “backing off” the claim that the “increase in the annual rate of GDP growth would be about 0.4% per year…”, I can say that even though I knew they were unprofessional, they have now managed to plumb depths of unprofessional behavior I would not have imagined.
There are semantic markers attached to “if” whenever it is truly used to mean “for illustrative purposes, if you have trouble converting from changes in levels to growth rates, as an illustrative example, suppose that in a counterfactual world (which is definitely not this world)…” None of those semantic markers are present here. No Turing-class entity could possibly take the passage “If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year…” to mean what I am now told it means.
For whatever remains of your reputations’ sake, Bob, Mike, John, Doug, Glenn, Larry, Harvey, George, and John: retract the letter.
Nine Highly Unprofessional Republican Economists…
2) I continue to be completely flummoxed by Jagdish Bhagwati’s signature on the Hundred or so Unprofessional Republican Economists letter.
Letter signer Bhagwati now says: “I agree with the main thrust of the Letter I signed, but I do not think it is likely that tax cuts will produce revenues that offset the initial loss of revenue from the tax cuts…”
But the main thrust of the letter was: “The enactment… will ignite our economy with levels of growth not seen in generations… produce a GDP boost ‘by between 3 and 5 percent’…. Sophisticated economic models show the macroeconomic feedback… [will be] more than enough to compensate for the static revenue loss…”
There is nothing else in the letter to agree with.
There is nothing else that the “main thrust” of the letter could be.
For your reputation’s sake, Jagdish: retract your signature.
3) By contrast, I am now assured that lead Hundred or So Unprofessional Republican Economists author Douglas Holtz-Eakin was lying last April 26 when he wrote that claims that “trillions of dollars in tax cuts… would ‘pay for itself with growth’, as Treasury Secretary Steven Mnuchin said, is detached from empirical reality…”
But, Doug, if indeed you were lying last April, please tell us one thing: Why were you lying then? What was in it for you? Did you temporarily go on the Soros payroll or something?
4) Larry Lindsey has truly remarkable client letter: “The Swamp’s Last Stand: Hiding Behind a Black Box Model”.
It contains, among its other errors, a striking passage that indicates that he has no clue how the JCT models the Fed.
Anyone in markets or anyone reading various Fed statements knows that this implicit JCT assumption of an ‘aggressive’ [Fed] response is absurd. If anything, the signals and market view have all been that the Fed will be less aggressive. Some members have even speculated about the advantage of raising the inflation target in order to allow a slower response…
He is hopelessly confused, and mixes up two things. The “signals and markets view… members… speculated” is all about what path of interest rates will keep the unemployment rate constant. The JCT’s model is all about how much the Fed will raise interest rates if unemployment falls than it would have along that baseline path. A cautious view of the first could go with an aggressive view of the second. An aggressive view of the first could go with a cautious view of the second. They have nothing to do with each other. That Lindsey thinks they are connected is… unprofessional.
5) Late Breaking: Three Highly Unprofessional Republican Economists: Glenn Hubbard and Larry Lindsey plumb the depths of unprofessionalism to a degree I find genuinely surprising in private (no, I am not surprised by Douglas Holtz-Eakin here): Rich Yeselson: SENATOR SUSAN COLLINS AND THREE HIGHLY UNPROFESSIONAL REPUBLICAN ECONOMISTS
6) Last, I have already given my response to the very sharp Binyamin Appelbaum’s cri de coeur:
I am not sure there is a defensible case for the discipline of macroeconomics if they can’t at least agree on the ground rules for evaluating tax policy…
But may I ask for a commitment to Binyamin? May I beg you to whenever, in the future, you cite Barro, Boskin, Cogan, Holtz-Eakin, Hubbard, Lindsey, Rosen, Shultz, and Taylor—or Bhagwati—can you please, in the story, remind your readers of their unprofessional behavior during the tax “reform” debate, and link to this post?
7) Oh. And I almost forgot about John Cochrane and Casey Mulligan, who were not only unprofessional and misleading but incompetent as well. But I will leave them for next week, for dessert…