Catastrophe - Dick Morris [13]
ERNIE GROSS, PROFESSOR OF ECONOMICS, CREIGHTON UNIVERSITY:
“We’re creating a real problem for 2010 and beyond in terms of inflation, tax rates, and certainly in terms of debt.”41
GEORGE REISMAN, AUTHOR OF CAPITALISM: A TREATISE ON ECONOMICS:
“That [increasing government spending to stimulate growth] is a view held by a large school of economists, perhaps the majority school, for the last 60 years or so. That’s the Keynesian school, but there are other economists, like the Austrian school, which holds a very different position…. In their view, an essential requirement to a sound economy is balanced budgets with small government.”42
ROBERT BARRO, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY:
“This is probably the worst bill that has been put forward since the 1930s. I don’t know what to say. I mean it’s wasting a tremendous amount of money. It has some simplistic theory that I don’t think will work, so I don’t think the expenditure stuff is going to have the intended effect. I don’t think it will expand the economy. And the tax cutting isn’t really geared toward incentives. It’s not really geared to lowering tax rates; it’s more along the lines of throwing money at people.”43
ARNOLD KLING, MERCATUS CENTER FINANCIAL MARKETS WORKING GROUP:
“[T]he risks of a large stimulus, compared with a small stimulus, are:
It is harder to spend larger amounts quickly and cost-effectively.
There is a greater risk that we will run into a “sudden stop,” in which foreign investors are no longer willing to fund our deficits.
There is a risk that fiscal stimulus, large or small, is actually ineffective, so that a large stimulus only means a large failure.
There is a risk that much of the spending will kick in after a recovery is underway.
The government’s capacity to deal with an emergency, such as a major natural disaster or a foreign attack, will be limited, because its credit worthiness will be damaged.
There is a risk that government will absorb a permanently higher share of GDP. Policymakers will be reluctant to cut public spending for fear of causing a downturn. Moreover, it will be difficult politically to cut public spending.”44
THOMAS SARGENT, PROFESSOR OF ECONOMICS, NEW YORK UNIVERSITY:
“The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last sixty years of macroeconomic research.”45
GREG MANKIW, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY:
“My advice to Team Obama: Do not be intellectually bound by the textbook Keynesian model. Be prepared to recognize that the world is vastly more complicated than the one we describe in Econ 101. In particular, empirical studies that do not impose the restrictions of Keynesian theory suggest that you might get more bang for the buck with tax cuts than spending hikes.”46
EUGENE FAMA, PROFESSOR OF FINANCE, UNIVERSITY OF CHICAGO BOOTH SCHOOL OF BUSINESS:
“Unfortunately, bailouts and stimulus plans are not a cure. The problem is simple: bailouts and stimulus plans are funded by issuing more government debt. (The money must come from somewhere!) The added debt absorbs savings that would otherwise go to private investment. In the end, despite the existence of idle resources, bailouts and stimulus plans do not add to current resources in use. They just move resources from one use to another.”47
JOHN TAYLOR, PROFESSOR OF ECONOMICS, STANFORD UNIVERSITYV
“The theory that a short-run government spending stimulus will jump-start the economy is based on old-fashioned, largely static Keynesian theories.