Deficits are often used as reason for higher taxes, such as in 1993 and 1982. But to believe in higher taxes as sound economic policy in coming years, you also have to believe in the CBO’s cheery forecast that hundreds of billion of dollars in new taxes will have little or no effect on economic growth. Now you don’t have to be an acolyte of supply-side guru Arthur Laffer to find that sort of “static analysis” a little weird. Most Americans probably would. So, apparently, did the economic team at Goldman Sachs, the old employer of Robert Rubin, President Bill Clinton’s second treasury secretary. Thus the firm’s econ wonks decided to try and simulate the real-world effect of letting the Bush tax cuts expire at the end of 2010. Using the respected Washington University Macro Model, Goldman reset the tax code to its pre-Bush status, assumed all tax cuts expired, and watched how the economy reacted as 2011 began. What did the firm see? Well, in the first quarter of 2011 the economy dropped 3 percentage points below what it would have been otherwise. “Absent a tailwind to growth from some other source,” the analysis concludes, “this would almost surely mark the onset of a recession.”
Featuring Holly Bell, Associate Professor (Business), University of Alaska Anchorage; and Hester Peirce, Senior Research Fellow, Mercatus Center; moderated by Louise C. Bennetts, Associate Director, Financial Regulation Studies, Cato Institute.
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In this issue of Regulation, Jonathan H. Adler and Nathaniel Stewart make the case for property-based fishery management, utilizing territorial or catch-share allocation among fishery participants. Also in this issue, Michael L. Wachter explores the relationship between the much-maligned National Labor Relations Act and the decline in union membership.
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