If the New York Times is going to add an economist as a columnist, who do you think they’re going to pick? Perhaps someone like Thomas Sowell, whose free-market arguments could balance the neo-Keynesianism of Paul Krugman?
Of course not. They bring aboard Peter Orszag, who until recently was Obama’s director of the White House Office of Management and Budget, and a former Clinton administration economic adviser. His track record? In a classic of shortsightedness, Orzag co-authored a 2002 policy paper that asserted “the risk to the government from a potential default on [Fannie Mae/Freddie Mac] debt is effectively zero.”
Orzag’s Monday column urged Congress to “continue the [Bush] tax cuts for two years but end them for good in 2013.” Francis Cianfrocca responds at the New Ledger:
For some reason, I had thought Peter Orszag was an economist. But his arguments in today’s New York Times at every turn are based only on political calculations, particularly as regards the difficulty of getting Dems and Reps to agree on anything. His plan (extending the Bush tax cuts for everyone for two years) is attractive not for any economic sense it might make, but because it’s possible. Serendipitously, the tax cuts will end automatically, while every other outcome requires a vote in Congress.
And there’s not a nod given to the raging policy debate, which is: why isn’t the economy actually recovering, despite a huge stimulus and zero interest rates? His plan simply assumes a strong traditional recovery will be underway by 2013. If you can’t raise taxes now because of the hurt you’re putting on consumption, then on what basis do you think you’ll be able to in two years? Things might not be much better by then. Just like the “Summer of Recovery” marketing plan, this is based on assuming that a recovery will simply materialize. . . .
Please read the whole thing. Orzag assumes as a premise of his syllogism what is, in fact, a dubious thesis: That Keynesian stimulus actually works. Orzag further seems to assume that “tax cuts for the rich” cause deficits when, in fact, the federal deficit is caused by overspending, rather than by undertaxation.
By offering political assertions under the guise of economic “expertise,” Orzag is engaged in propaganda. Glad somebody called him out on it.