Excerpt
The politicians grappling over how to pay the nation’s debts have been contributing to the heat of summer with back-and-forth charges that their opponents are disregarding the laws of economics.
Such laws, unfortunately, do not exist. Economists agree that federal borrowing must be reduced, but they do not agree about the proper mix of tax increases and spending cuts. Basic considerations, like the impact of higher taxes on saving and investment, remain the subjects of wide-ranging disagreements despite decades of intensive research.
The absence of a clear mainstream is one underappreciated reason for the standoff between the Obama administration and Congressional Republicans over raising the federal debt limit before Aug. 2, when the Treasury Department says it will run out of borrowing authority.
Washington no longer suffers from a dearth of “one-handed” economists, as Harry S. Truman famously lamented. The problem now is that experts are lined up behind every political position, in part because the decisions are not purely economic. The value of defense or education or justice extends beyond dollars and cents.
“I just don’t think economists have any comparative advantage” in answering these questions, said Joel Slemrod, a University of Michigan professor and a leading expert on taxation. “There are a lot of reasons why sensible people might disagree about the answers to the fiscal questions that we face. It’s a value judgment that the citizens of the country have to make.”
We, the public, should NOT be surprised. Economics is NOT a science. Economics is educated opinion, much like history books.
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