Christina Romer: Obama's Secret Tax Cutter?

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"Bottom line: Cutting taxes good. Raising taxes bad."
Um, no. For those who want to read what the Romers wrote rather than the crude caricature presented by James Pethokoukis, the article is available here:
http://www.econ.berkeley.edu/~cromer/draft1108.pdf
It closes with the following caveat:
"A more promising route for extending the analysis is to investigate the importance of the characteristics of tax changes for their macroeconomic effects. There are strong reasons to expect the effects of a tax change on output to depend on such features of the change as how far in advance it is expected, its perceived permanence, its impact on marginal tax rates, and how it affects the tax treatment of investment. By systematically gathering information about these features of our exogenous tax changes, one could investigate whether the output consequences of tax changes depend not only on their size, but on their other characteristics as well."
Earlier in the paper they state that "[w]e also find suggestive evidence that tax increases to reduce an inherited budget deficit do not have the large output costs associated with other exogenous tax increases."

Foobar 5:46AM November 27, 2008

he got a B.
;)
Go Cal!

Freddy M. of CA 2:48AM November 25, 2008

It I take your simplistic assessment of the Romers' research as fact, we see why the Bush administration as utterly failed to deliver economic prosperity over the last 8 years, and why McCain's economic plan condemned him to wear the label of Bush's Third Term. The Republican's traditionally talk a big game about tax cuts (always to the wrong people in the misguided belief that "trickle down" is realistic) but then fail to deliver on the other, critical half of this equation, which is to cut spending. It was famously said that Bush (almost) never saw a spending bill he didn't love and passed almost every one as he continues to do today. When Republicans reward the rich doubly with both tax cuts and economic gifts in the form of rich government programs, we see how they sow the seeds of widespread economic failure for the country as a whole.

GS of IL 8:13PM November 24, 2008

Christina Romer’s appointment means that we will have at the Council of Economic Advisers an economist with a background in highly relevant economic history and with moderate Keynesian sympathies - just what we need. It is to be hoped that she underatands that one of the key lessons of Keynes is the importance of constructive US leadership in international economic cooperation - including in the international coordination of key economic policies, in building up effective international economic institutions, and in safeguarding free trade. She will be familiar with literature like Donald Moggridge’s biography of Keynes and Donald Markwell’s “John Maynard Keynes and International Relations”, which I think are very helpful in thinking and working our way - nationally and globally - through the present muddle.

D S Lamont of CA 7:49PM November 24, 2008

I think Obama's plan was to lower taxes on some and raise it on others not to just raise taxes on rich people. Also Mr.Pethokoukis' rather facile analysis ignores the other fundamental conclusion of the Romer's paper; that tax cuts for the purposes of shrinking the size of government generally lead to tax increases (to pay for the ensuing deficit later). Also, while the insight is nice, if you've read the paper, the assumptions that are used to create the analysis lead to a degree of impreciseness which might give one pause as to generalize about extending the analysis to larger generalizations. Given the extremely limited dataset and the ensuing difficulty in looking at the tax cuts ceterus paribus, it is unwise to draw conclusions like "cutting taxes good: raising taxes bad" but then again Mr. Pethokoukis is nothing but unwise.

of NV 5:19PM November 24, 2008

Wasn't that McCain philosophy during the whole Presidential race while Obama was going to hammer people making $250k or more(or whatever his last number was, maybe $150k).

DV of IL 5:01PM November 24, 2008