Economists Statement on Barack Obama's Risky Economic Proposals

100 Economists Warn That With Current Weak Financial Conditions Barack
Obama's Proposals Run A High Risk Of Throwing The US Into A Deep
Recession

ARLINGTON,
VA -- Today, McCain-Palin 2008 released the following statement signed
by 100 distinguished and experienced economists at major American
universities and research organizations, including five Nobel Prize
winners Gary Becker, James Buchanan, Robert Mundell, Edward Prescott,
and Vernon Smith. The economists explain why Barack Obama's proposals,
including "misguided tax hikes," would "decrease the number of jobs in
America." The prospects of such tax rate increases under Barack Obama
are already harming the economy. The economists conclude that "Barack
Obama's economic proposals are wrong for the American economy." The
proposals "defy both economic reason and economic experience."

The full economists' statement on Barack Obama's economic proposals and a complete list of economists who support it follows:

Barack
Obama argues that his proposals to raise tax rates and halt
international trade agreements would benefit the American economy. They
would do nothing of the sort. Economic analysis and historical
experience show that they would do the opposite. They would reduce
economic growth and decrease the number of jobs in America. Moreover, with
the credit crunch, the housing slump, and high energy prices weakening
the U.S. economy, his proposals run a high risk of throwing the economy
into a deep recession. It was exactly such misguided tax hikes and
protectionism, enacted when the U.S. economy was weak in the early
1930s, that greatly increased the severity of the Great Depression.

We
are very concerned with Barack Obama's opposition to trade agreements
such as the pending one with Colombia, the new one with Central
America, or the established one with Canada and Mexico. Exports from
the United States to other countries create jobs for Americans. Imports
make goods available to Americans at lower prices and are a particular
benefit to families and individuals with low incomes. International
trade is also a powerful source of strength in a weak economy. In the
second quarter of this year, for example, increased international trade
did far more to stimulate the U.S. economy than the federal
government's "stimulus" package.

Ironically,
rather than supporting international trade, Barack Obama is now
proposing yet another so-called stimulus package, which would do very
little to grow the economy. And his proposal to finance the package
with higher taxes on oil would raise oil prices directly and by
reducing exploration and production.

We
are equally concerned with his proposals to increase tax rates on labor
income and investment. His dividend and capital gains tax increases
would reduce investment and cut into the savings of millions of
Americans. His proposals to increase income and payroll tax rates would
discourage the formation and expansion of small businesses and reduce
employment and take-home pay, as would his mandates on firms to provide
expensive health insurance.

After
hearing such economic criticism of his proposals, Barack Obama has
apparently suggested to some people that he might postpone his tax
increases, perhaps to 2010. But it is a mistake to think that
postponing such tax increases would prevent their harmful effect on the
economy today. The prospect of such tax rate increases in 2010 is
already a drag on the economy. Businesses considering whether to hire
workers today and expand their operations have time horizons longer
than a year or two, so the prospect of higher taxes starting in 2009 or
2010 reduces hiring and investment in 2008.

In
sum, Barack Obama's economic proposals are wrong for the American
economy. They defy both economic reason and economic experience.

Robert Barro, Harvard University

Gary Becker, University of Chicago

Sanjai Bhagat, University of Colorado

Michael Block, University of Arizona

Brock Blomberg, Claremont-McKenna University

Michael Bordo, Rutgers University

Michael Boskin, Stanford University

Ike Brannon, McCain-Palin 2008

James Buchanan, George Mason University

Todd Buchholtz, Two Oceans Fund

Charles Calomiris, Columbia University

Jim Carter, Vienna VA

Barry Chiswick, University of Illinois at Chicago

John Cogan, Hoover Institution

Kathleen Cooper, Southern Methodist University

Ted Covey, McLean VA

Dan Crippen, former CBO Director

Mario Crucini, Vanderbilt

Steve Davis, University of Chicago

Christopher DeMuth, American Enterprise Institute

William Dewald, Ohio State University

Frank Diebold, University of Pennsylvania

Isaac Ehrlich, State University of New York at Buffalo

Paul Evans, Ohio State University

Dan Feenberg, NBER

Martin Feldstein, Harvard University

Eric Fisher, California Polytechnic State University

Kristin Forbes, MIT

Timothy Fuerst, Bowling Green State University

Diana Furchtgott-Roth, Hudson Institute

Paul Gregory, University of Houston

Earl Grinols, Baylor University

Rik Hafer, Southern Illinois University Edwardsville

Gary Hansen, UCLA

Eric Hanushek, Hoover Institutions

Kevin Hassett, American Enterprise Institute

Arlene Holen, Technology Policy Institute

Douglas Holtz-Eakin, McCain-Palin 2008

Glenn Hubbard, Columbia University

Owen Irvine, Michigan State University

Mike Jensen, Harvard University

Steven Kaplan, University of Chicago

Robert King, Boston University

Meir Kohn, Dartmouth

Marvin Kosters, American Enterprise Institute

Anne Krueger, Johns Hopkins University

Phil Levy, American Enterprise Institute

Larry Lindsey, The Lindsey Group

Paul W. MacAvoy. Yale University

John Makin, American Enterprise Institute

Burton Malkiel, Princeton University

Bennett McCallum, Carnegie-Mellon University

Paul McCracken, University of Michigan

Will Melick, Kenyon College

Allan Meltzer, Carnegie-Mellon University

Enrique Mendoza, University of Maryland

Jim Miller, George Mason University

Michael Moore, George Washington University

Robert Mundell, Columbia University

Tim Muris, George Mason University

Kevin Murphy, University of Chicago

Richard Muth, Emory University

Charles Nelson, University of Washington

Bill Niskanen, Cato Institute

June O'Neill, Baruch College, CUNY

Lydia Ortega, San Jose State University

Steve Parente, University of Minnesota

William Poole, University of Delaware

Michael Porter, Harvard University

Barry Poulson, University of Colorado, Boulder

Edward Prescott, Arizona State University

Kenneth Rogoff, Harvard University

Richard Roll, UCLA

Harvey Rosen, Princeton University

Robert Rossana, Wayne State University

Mark Rush, University of Florida

Tom Saving, Texas A&M University

Anna Schwartz, NBER

George Shultz, Stanford University

Chester Spatt, Carnegie-Mellon University

David Spencer, Brigham Young University

Beryl Sprinkle, Former Chair Council of Economic Advisers

Houston Stokes, University of Illinois in Chicago

Robert Tamura, Clemson University

Jack Tatum, Indiana State University

John Taylor, Stanford University

Richard Vedder, Ohio University

William B. Walstad, University of Nebraska

Murray Weidenbaum, Washington University in St. Louis

Arnold Zellner, University of Chicago

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