Tax hikes will not boost the economy
Michael J. Boskin, chairman of the Council of Economic Advisors under President George Herbert Walker Bush, testified recently before the Joint Economic Committee of Congress.
He summed up his observations in a piece for The Wall Street Journal:
"President Obama's most recent prescription for economic growth - more government stimulus spending, new social programs, higher taxes on upper-income earners, subsidies for some industries and increased regulation for them all - is likely to have the same anemic results as in his first administration."
* The $825 billion stimulus program "did little economic good at a cost of hundreds of thousands of dollars per job."
* "Cash for Clunkers cost $3 billion merely to shift car sales forward a few months."
* The Public-Private Investment Program for Legacy Assets to buy toxic assets from banks so they would speed up lending generated just 3 percent of the anticipated $1 trillion.
Dud, dud, dud. And now, more duds.
* Universal preschool would cost $25 billion a year without producing lasting educational results.
* Higher minimum wages would increase unemployment among low-skilled workers.
* Higher taxes would have a negative effect on the economy.
Boskin said the fiscal cliff deal arrived at on Jan. 1 included $1 in spending cuts for every $40 in tax hikes.
Now, with automatic spending cuts looming, the president and Senate Democrats are demanding $1 dollar of tax hikes for every $1 cut in spending.
"Since World War II, OECD countries that stabilized their budgets without recession averaged $5-$6 of actual spending cuts per dollar of tax hikes," Boskin wrote.
"Those who are attempting to gradually slow the growth of federal spending while minimizing tax hikes have sound economics on their side," Boskin wrote.
Sound politics, too.