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What The Media Tell Americans About Free Enterprise

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August 1996


Economists Unanimous on Taxes?
Reporters Ignore Those Who Support Tax Cuts

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 Reagan."

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 positive."

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.


Rich Noyes


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