In 2009, President Obama famously declared, “There is no difference of opinion that we need action from our government, a recovery plan that will help get the economy going.” And Vice President Biden said: “As I said, every economist, from conservative to liberal, recognizes that direct government spending on a direct program is now the best way to create economic growth and create jobs.” And the Cato Institute famously pointed out that these allegations are false.
Now, as president, Joe Biden is once again doing the following: ‘The American rescue plan … will bring economic growth for the whole country. That is why big economists – left, right and center – support this plan, “he said in the White House on Monday. And also last Friday: “Every major economist out there – left, right and center – supported this plan.” Clearly, he likes this claim.
And again, with all due respect, Mr President, that is not true.
It is easier to claim this time that there is widespread support for the actual Covid-related measures in the bill regarding testing, vaccination and relief. But the $ 1.9 trillion wish list of unrelated government expansions, in addition to another $ 4.1 trillion over the past year? There are many economists who are opposed to it.
Start with Lawrence H. Summers, winner of the John Bates Clark Medal and former World Bank chief economist, treasurer for President Clinton and director of President Obama’s National Economic Council. He wrote in the Washington Post that the total size of the package is ‘at least three times the size of the production deficit’ and thus six times the relative size of Obama’s 2009 stimulus bill. He warned that the massive injection of borrowed money into the economy could spur inflation, and that it would displace further democratic wish list programs.
And then we find that the main economists of left, right and center are also against the plan as proposed and passed. Like Greg Mankiw, chief economic adviser to President George W. Bush. And Olivier Blanchard, former chief economist of the IMF. Michael Strain of the American Enterprise Institute. David Henderson and John Cochrane of the Hoover Institution. Constance Hunter, chief economist at KPMG, and the vast majority of business economists. Tyler Cowen of George Mason University. Nobel laureate Eugene Fama. Even Jason FurmanFormer President of President Obama’s Council of Economic Advisers, while saying he would base the plan on a ‘yes or no’ vote, warned that there was a risk of causing inflation and better design .
The point of this post is not to criticize the bill, but my colleague Scott Lincicome has published a fairly comprehensive publication. My point here is just that President Biden should not make false claims. And today, as in 2009, it is false to claim that “every single big economist” supports this $ 1.9 billion debt-financed, heavily regulated plan.