Reporters seem to think they have found something others have
been trying to find for years -- a consensus among economists.
Journalists in both the print and broadcast media are reporting that
"most economists" are against Dole's tax cuts. But a recent study
that actually surveyed economists finds much less agreement than the
media are conveying.
"Bob Dole says his new economic plan will carry America `to the
threshold of a breathtaking future.' But to many economists, it
looks like `Back to the Future,'" wrote the Boston Globe's Peter G.
Gosselin on August 6. "For all Dole's claims about the
innovativeness of his proposal analysts said that it relies on two
tried-and-troubled ideas -- spending cuts like those balked at by
the public last year, and an economic payoff largely missing from
the nation's last experiment with substantial tax cuts under Ronald
Clay Chandler, in the August 6 Washington Post, agreed:
"Economists, investors and budget experts yesterday questioned the
validity of those assumptions and the budget numbers underlying
Dole's ambitious claims." He quoted Norwest Corp.'s chief economist,
Song Won Sohn, as saying, "If we were to put in a package like this,
I'm concerned that income growth effects would be negative, not
Broadcast reporters were equally adamant. NBC's David Bloom, on
August 5, said: "Most economists say the Reagan tax cuts did worsen
the budget deficit and many are skeptical of Dole's plan."
It turns out not to be so clear, though. Professor William C.
Adams of George Washington University conducted a nationwide survey
of 700 members of the American Economics Association. According to
Adams, the survey found "an unexpected degree of sympathy for tax
cuts" as well as "an enormous diversity of opinion and no
profession-wide consensus on these key issues." (See box.)
About the same percentage of economists, for instance, think
federal spending caused the increased deficits of the 1980s (52) as
think Reagan's tax cuts were the culprit (48). More than eight out
of ten, though, agree that Reagan's tax cuts increased economic
growth. A sizable minority of economists (41 percent) think Dole's
plan to recapture 30 percent of the revenue lost from his tax cut
through faster economic growth -- the classic supply-side argument
-- is plausible.
According to the survey, the closest thing to a consensus among
economists concerns reining in spending. When asked their preferred
priorities for the next Congress, a plurality (42 percent) picked
cutting taxes and restraining spending. Thirty four percent chose
restraining spending. In other words, a full 76 percent favor
restraining spending, a story still waiting to be told in the news.