Earlier this week on The Daily Ticker, Christina Romer made the case for Keynesian economics. President Obama's policies "were certainly a big help" and the Recovery Act, which Romer helped construct, "made a difference, helped to strengthen growth and bring down the unemployment rate." (See: U.S. Economy Needs More Fiscal Stimulus: Christina Romer Defends Keynesian Economics)
And now for something completely different.
In the accompanying video, Dan Gross and I chat with Grover Norquist, president of Americans for Tax Reform, who has a very different view of things. Along with U. of Chicago professor John Lott, Norquist has written a new book, Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain Our Future, with the central premise that the stimulus package "not only failed to improve the economy but, worse, has also harmed the lives of everyday working-class Americans."
By almost any measure, the recovery from the 2008 crisis has been one of the weakest in the post-war era. Romer would argue that's a function of the depths of the crisis and the fact it was an atypical downturn, with the bursting of the housing and credit bubbles at its core.
Norquist couldn't disagree more, arguing the recession was "created by government policy" -- specifically Fannie Mae, Freddie Mac and too much banking regulation.
"What Obama did to fix it made the economy worse and gave us the weakest recovery we've had this century," he continues. "You've got a lousy recovery and every reason to fear whether it will continue because of the amount of debt and possibility interest rates or inflation come back."
Norquist's book offers a "12-step plan" designed to undo the damage being done by Obama's policies. As you might expect from the man who challenges politicians to sign the Taxpayer Protection Pledge, the steps are heavily weighted toward lowering taxes and reducing the size of government.
"What we need to do is move toward what the Paul Ryan budget does," including a 25% top rate for corporate and individual taxes, full expensing for new business investment and territoriality, meaning a tax regime that taxes domestic income but not foreign income. Territoriality would be a huge boon to U.S. multinationals, which generated around 46% of 2011 earnings from international operations, but are keeping the bulk of the profits overseas.
Obama's failure to address that issue, either with a tax holiday or outright change to the tax code, is another major gaffe, according to Norquist. "If I were running for President, I would like $800 billion to $1 trillion to flow back in during the two years prior to my running for reelection and Obama chose no. "
Finally, Norquist says lowering the top tax rate to 25% "isn't really good enough to get the economy going again" but refers to it as "the first bite at the apple" of his larger goal to radically reform the tax code.
- Grover Norquist
- President Obama
- Christina Romer