October 14, 2012

WE ARE ALL NEOCONOMISTS NOW:

Romney's Go-To Economist (DAVID SEGAL, 10/12/12, NY Times)

Mr. Hubbard received his master's and Ph.D. at Harvard and became a hugely productive scholar with a wide range of interests. Fellow conservatives view his work with pure reverence. From the left, you hear grudging caveats like, "He'll never win the Nobel Prize." He is best known for research in tax policy and government spending programs. One influential study quantified the major role that cash flow plays in driving corporations to invest.

"The lesson," says James Poterba, an economist at the Massachusetts Institute of Technology and an admirer of Mr. Hubbard, "is that if someone is looking for policy instruments that might raise investment, then lower corporate rates could do it because you change the current availability of cash for firms."

On behalf of the Romney campaign, Mr. Hubbard has argued that the Obama administration has "stuck the economy in a slow growth trap," as it was put in a recent position paper, "The Romney Program for Economic Recovery, Growth and Jobs," of which he was a co-author.

The way out of this trap, he and his co-authors wrote, is to reduce federal spending, cut marginal income tax rates by 20 percent across the board and gradually reduce the growth in Social Security and Medicare benefits for more affluent seniors. He would also like to repeal the Dodd-Frank financial legislation and the Affordable Care Act.

That paper, of course, is a campaign document, but if Mr. Hubbard has any differences with Mr. Romney on economic matters, he won't name them. "I support Governor Romney's economic program," he wrote when asked if his candidate had any taken positions he does not support.

If Mr. Hubbard becomes Treasury secretary, cutting taxes would very likely be his highest priority. Altering the tax code to encourage savings and bolster investment has been one of his favorite causes. While serving under President Bush as chairman of the Council of Economic Advisers, he pushed to reduce dividend taxes to zero. (Ultimately, the top tax rate on dividends was cut by more than half, to 15 percent.)

While Mitt Romney is hardly a revolutionary, a transition from taxing income/investment to taxing consumption, so that you force the sort of savings that enable you to reduce social welfare spending, would continue the revolution that W began.

Posted by at October 14, 2012 7:59 AM
  

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