Christina Romer: Obama's Secret Tax Cutter?

"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