After yesterday’s post I assumed someone would come up with a link showing which candidate has the most support from independent economists. Unless I missed it, no one came up with such a link.
But I am fascinated by the comments to yesterday’s post that got the most up votes. The authors of those comments came up with what appear to be the best and simplest common sense answers to who would be the better president for growing the economy.
The most popular answer was that Obama would reduce the national debt by raising taxes while McCain would increase the debt by lowering them. No one wants debt, therefore Obama is better for the economy. Common sense, right?
First, if it were that easy, all the independent economists would be supporting Obama. It really would be that simple. But there is no evidence that independent economists are lining up with Obama. What do those experts know that the people with common sense don’t?
For starters, the economy has grown for decades without a clear link to debt levels. The deficit went down during Clinton’s term largely because the economy was hot by coincidence, thanks to the dot-com era.
Second, debt isn’t bad per se. The best indicator of a healthy economy is that everyone who can repay a loan gets one. The whole point of debt, either personal or government, is that it stimulates the economy more than it puts a drag on it. Obviously there is a point where debt can be too much, but would McCain reach that point where Obama would not? I don’t see the experts lining up behind that prediction.
And how much do you think the deficit will be reduced under Obama’s plan of increasing taxes on the rich while reducing taxes on the poor? Isn’t that largely shuffling things from one pocket to another? I don’t know the answer to my own question, and the bigger point is that you don’t either. But we both know Obama plans to increase spending in a number of social areas whereas McCain might be stingier. Or would McCain just spend more on the military so both candidates spend about the same in the end? I don’t know. Neither do you.
Can Obama convince a bunch of rich law makers to increase taxes on themselves and their major donors? I doubt it. Can McCain convince a bunch of law makers who depend on pork to cut the pork out of the budget? I doubt it. So assume both candidates haven’t made the math work and are over-promising on the debt. Common sense tells me I can’t tell the difference between the candidates.
A comment from Real Live Girl was interesting. She noted that the economy is fueled by optimism, and Obama brings more of that. Those are two true statements. But is all optimism the same? Wall Street veterans believe the market would go up if McCain gets elected. Lower taxes make the titans of business the most optimistic. Raising their taxes and transferring the money to worthy social services might make lots of people feel optimistic, but that isn’t the optimism that fuels economies. An unemployed guy can’t get too optimistic until a rich guy gets optimistic first and builds a factory he can work in. McCain makes rich guys optimistic. Obama makes students optimistic. Which approach stimulates the economy more? Beats me. You don’t know either.
Another comment noted that McCain’s support of the gas tax holiday was criticized by almost all economists. Therefore McCain is both clueless about economics and likely to ignore expert advice on the subject. That seems like a common sense way to look at it, until you consider that politicians do things in campaigns that are intended to be symbolic. McCain was sending a message that he’s a tax cutter. The gas tax holiday was always intended to be temporary. Message received.
McCain’s actual economic ideas – the ones that would matter – involve free trade, taxes, and keeping the homeland safe. Those are either good for the economy or bad, and overwhelm the importance of something like a campaign promise involving gas taxes for a few months. So if you make a decision based on the gas tax holiday, you are basing your decision on trivia.
So which candidate would be better for the economy? I don’t know. But I do know that common sense doesn’t tell me anything useful, and neither do the experts.