Politicians who advertise themselves as “fiscal conservatives” sometimes campaign on crowd-pleasing pledges to cut taxes and simultaneously reduce budget deficits. These are difficult promises to deliver on in practice, since the budget deficit equals government spending minus tax revenue.
Aspiring fiscal conservatives may be interested in learning four innovative tricks that are commonly used by American politicians who like to promise what seems impossible. Each of these feats has been perfected over three decades or more. Indeed they first acquired their colorful names in the early years of the Ronald Reagan presidency:
Senator Obama is on a vist to the Middle East and Europe.Senator McCain went to visit Colombia earlier in July.These trips suggest a seriousness of purpose that American presidential candidates often lack.They offer us hope that the candidates want to learn how to do the job well.Furthermore, they offer a hyper-attentive world grounds for hope that the next president will have a higher level of interest in other countries than did his predecessor.
So far as I know, it is unprecedented for the two party candidates to do foreign policy trips before the election. I can think of three reasons why we are seeing this now.First, because the primary elections started early this year, there is a hiatus between the end of the primaries and the party conventions.Thus the candidates can spare the time to go abroad.Second, foreign policy has risen much higher on the agenda of concerns of typical American voters, since September 11, 2001, and since the invasion of Iraq. (And of course Obama wants to put to rest McCain’s past jibes about not having visited Afghanistan and Iraq.)Third, Barack Obama and John McCain are not the usual inward-looking, domestically-oriented parochial governors that we all too often get as presidential candidates.Both are US Senators, and both in their youths had very formative adventures in foreign countries (both in Southeast Asia, as it happens).Thus both, if nothing else, have the cosmopolitan outlook that a world leader needs.
Economists frequently complain that even when 98% of the profession agrees on something (say a free-trade proposition), the media will go to lengths to dig up an economist from the 2% minority in order to balance one from the 98% majority, in their feverish and misguided attempt to appear unbiased and balanced on every issue, even issues that don’t really have two sides. The New York Times op-ed page has outdone itself today by publishing “The 18-cent Solution” by Bryan Caplan. The “callout” heading is “Found: an economist who backs the summer gas-tax holiday.” The impetus, of course, was the question posed to Hillary Clinton by a reporter: can you name a single economist who supports the idea of a summer suspension of the federal gasoline tax? Newshourgave up on trying to find one.
So Arthur Laffer — still arguing the improbable “supply side” proposition that cutting income tax rates generally raises total tax revenue — is apparently now a special adviser to John McCain. And McCain has taken on a big consignment of the snake oil, to Greg Mankiw’s dismay. The political temptation for a Republican candidate to promise both lower tax rates and higher revenues is irresistible. The policy-makers who cut taxes when Ronald Reagan and George W. Bush, respectively, came to power subscribed to this claim. Remarkably, at the same time, the economists who were the chief economic advisers to Reagan and Bush during these tax cuts disavow the proposition that they increase revenue (Murray Weidenbaum, Martin Feldstein, Glenn Hubbard, Mankiw…) . Almost all serious economists – let us say Ph.D. economists – disagree with this proposition, with only a microscopic handful of exceptions like Laffer. Indeed some of the advisers who defend the Reagan and Bush economic policies claim that this formulation of supply side economics is a caricature, and was not the true rationale of the tax cuts. This wishful thinking is directly at odds with quotes from the presidents themselves and their Treasury secretaries and other economic officials, to the effect that tax cuts stimulate income so much as to produce more tax revenue. Laffer is not a straw man. (See my next post.)