Tuesday, October 17, 2017

WAR: Baghdad Hassett vs. Larry Summers

Baghdad Hassett

Former Treasury Secretary Larry Summers has responded to the charge by President Trump's chairman of the Council of Economic Advisers, Kevin Hassett, that Summers doesn't know what he is talking about and that he is just making ad-hominem attacks.

Summers writes at his personal webpage:
Kevin Hassett accuses me of an ad-hominem attack against his economic analysis of the Trump Administration’s tax plan.  I am proudly guilty of asserting that it is some combination of dishonest, incompetent and
absurd.  TV does not provide space to spell out the reasons why, so I am happy to provide them here.

I believe strongly in civility in public policy debates, and prior to the Trump administration do not believe I have ever used words like dishonest in disagreeing with the policy analyses of other economists.  Part of my rationale for speaking so strongly here is that Kevin called into question the integrity of the Tax Policy Center, a group staffed by highly respected former civil servants, by calling their work “scientifically indefensible” and “fiction”.

Then, Kevin invokes Art Okun as support for his spurious arguments.  To paraphrase Lloyd Bentsen—I worked with Art Okun; I knew Art Okun; Art Okun was my friend. Kevin, you are no Art Okun.

As CEA chair, Art stood for honest, objective economic analysis rooted in the professional consensus. In the last year of his life, he made clear how dubious he found the claims of supply side economics. In contrast, Kevin throws around the terms scientific and peer-reviewed, yet there is no peer-reviewed support for his central claim that cutting the corporate tax rate from 35 to 20 percent would raise wages by $4000 per worker.

The claim is absurd on its face...

 [I]f a Ph.D student submitted the CEA analysis as a term paper in public finance, I would be hard pressed to give it a passing grade.  I predict that as debates on tax policy unfold there will be many serious Republican economists who endorse parts of the Trump plan.  I doubt that any will associate themselves with the CEA analysis.  If Kevin wishes to preserve the CEA’s reputation and his own, next time he will not attack honest analysts and will himself be much more careful.
Only a Trump economist could make a Keynesian house economist sound reasonable and Summers does sound reasonable here.

-RW

1 comment:

  1. Well, not entirely reasonable. Consider these two gems:

    "Kevin called into question the integrity of the Tax Policy Center, a group staffed by highly respected former civil servants, by calling their work “scientifically indefensible” and “fiction”." -- I don't know anything about these folks, but which civil servants are ever due high respect and, if they were civil servants, isn't it pretty likely that their work IS "scientifically indefensible" and "fiction" (unless some Austrians snuck into the government)?

    "As CEA chair, Art stood for honest, objective economic analysis rooted in the professional consensus." -- Since the "professional consensus" is Keynesian, isn't that incompatible with "honest, objective economic analysis"?

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