Nobel Prize winning, progressive-leaning economist Paul Krugman said in an op-ed on Wednesday that the Bernie Sanders presidential campaign needs to distance itself from unrealistically rosy predictions regarding the potential consequences of his economic proposals, or else risk making Jeb Bush’s policy proposals “look realistic.”
Krugman takes issue with the fact that the Sanders campaign’s policy director praised University of Massachusetts Amherst economics professor Gerald Friedman’s comprehensive analysis of Sanders’ economic proposals as “excellent work.”
According to CNN Money’s Tami Luhby, Friedman predicted that the sum of Sanders’ policies, if passed into law, would push median household income to “$82,200 by 2026, far higher than the $59,300 projected by the Congressional Budget Office.” He suggested that unemployment would drop to 3.8 percent and that the labor participation rate would surge back to 1999 levels.
“In addition, [Friedman claimed that] poverty would plummet to a record low 6%, as opposed to the CBO’s forecast of 13.9%. The U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation’s $1.3 trillion deficit would turn into a large surplus by Sanders’ second term,” Luhby added.
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Following the release of Friedman’s predictions, a group of former chairs of the Council of Economic Advisers under Bill Clinton and Barack Obama, specifically Alan Krueger, Austan Goolsbee, Christina Romer, and Laura D’Andrea Tyson, signed an open letter to Sen. Sanders and Friedman which said, “We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.”
Krugman, in his Wednesday op ed for The New York Times, parroted the fears of the former CEA chairs and wrote, “OK, progressives have, rightly, mocked Jeb Bush for claiming that he could double growth to 4 percent. Now people close to Sanders say 5.3???”
“The point is not that all of this is impossible, but it’s very unlikely — and these are numbers we would describe as deep voodoo if they came from a tax-cutting Republican,” said Krugman, who argued that Friedman’s predictions regarding the growth and unemployment effects of Sanders’ policies are unlikely to take place in the face of a “long-term downward trend” in the labor participation rate due to an “aging population.”
“Sanders needs to disassociate himself from this kind of fantasy economics right now. If his campaign responds instead by lashing out [against the former CEA chairs’ open letter] — well, a campaign that treats Alan Krueger, Christy Romer, and Laura Tyson as right-wing enemies is well on its way to making Donald Trump president,” concluded Krugman.
On February 3, the Committee for a Responsible Federal Budget released a fact check of offsets that Bernie Sanders has proposed in an effort to fund his single-payer healthcare plan, which stated, “By our rough estimates, his proposed offsets would cover only three-quarters of his claimed cost, leaving a $3 trillion shortfall over ten years. Even that discrepancy, though, assumes that the campaign’s estimate of the cost of their single-payer plan is correct. An alternate analysis by respected health economist Kenneth Thorpe of Emory University finds a substantially higher cost, which would leave Sanders’s plan $14 trillion short. The plan would also increase the top tax rate beyond the point where most economists believe it could continue generating more revenue and thus could result in even larger deficits as a result of slowed economic growth.”
Sanders’ chief policy adviser Warren Gunnels called the former CEA chairs “the establishment of the establishment” and told NPR, “[The open letter criticizing Sanders’ embracing of Friedman’s projections] does not bother us at all. What bothers us is the fact that the U.S. has more kids living in poverty than nearly any major country on Earth.”
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