Wednesday, August 13, 2003

A Nobel Prize winning economist is speaking out about how the Bushies handleing of the USA economy isn't FAIR AND BALANCED. In fact, he calls it pretty much a disaster......
SPIEGEL ONLINE reached George A. Akerlof, co-winner of the 2001 Nobel Prize in economics, on the phone while he was vacationing in New England. Following are excerpts of the conversation:

SPIEGEL ONLINE: And secondly, you disagree with giving tax relief primarily to wealthier Americans. The GOP argues that those voters deserve it for working hard.

AKERLOF: The rich don't need the money and are a lot less likely to spend it - they will primarily increase their savings. Remember that wealthier families have done extremely well in the US in the past twenty years, whereas poorer ones have done quite badly. So the redistributive effects of this administration's tax policy are going in the exactly wrong direction. The worst and most indefensible of those cuts are those in dividend taxation - this overwhelmingly helps very wealthy people.


SPIEGEL ONLINE: When campaigning for an even-larger tax cut earlier this year, Mr. Bush promised that it would create 1.4 million jobs. Was that reasonable?

AKERLOF: The tax cut will have some positive impact on job creation, although, as I mentioned, there is very little bang for the buck. There are very negative long-term consequences. The administration, when speaking about the budget, has unrealistically failed to take into account a very large number of important items. As of March 2003, the CBO estimated that the surplus for the next decade would approximately reach one trillion dollars. But this projection assumes, among other questionable things, that spending until 2013 is going to be constant in real dollar terms. That has never been the case. And with the current tax cuts, a realistic estimate would be a deficit in excess of six trillion.

SPIEGEL ONLINE: So the government's just bad at doing the correct math?

AKERLOF: There is a systematic reason. The government is not really telling the truth to the American people. Past administrations from the time of Alexander Hamilton have on the average run responsible budgetary policies. What we have here is a form of looting.


SPIEGEL ONLINE: It seems that the current administration has politicized you in an unprecedented way. During the course of this year, you have, with other academics, signed two public declarations of protest - one against the tax cuts, the other against waging unilateral preventive war on Iraq.

AKERLOF: I think this is the worst government the US has ever had in its more than 200 years of history. It has engaged in extraordinarily irresponsible policies not only in foreign and economic but also in social and environmental policy. This is not normal government policy. Now is the time for people to engage in civil disobedience.

SPIEGEL ONLINE: Of what kind?

AKERLOF: I don't know yet. But I think it's time to protest - as much as possible.