Type to search

The Great Big Fight Over Bernie Sanders’s Economics

Campaign 2016 Economy Featured Post Politics

The Great Big Fight Over Bernie Sanders’s Economics

Share
U.S. Democratic presidential candidate Bernie Sanders addresses supporters at his caucus night rally in Des Moines

The liberal policy wonks have their sights set on Bernie Sanders.

After Professor Gerald Friedman of the University of Massachusetts at Amherst published an analysis of Sanders’s economic proposals, projecting unprecedented levels of economic growth under a Sanders administration, he received plenty of flack for his numbers. He says — as do many other economists who’ve taken a look at his draft paper, “What would Sanders do? Estimating the economic impact of Sanders programs” — that the criticism is largely based on his results, not his methods:

“It’s interesting that I’m being criticized by people like Paul Krugman and the ‘Gang of Four.’ I used fairly standard economic modeling,” he said in an interview, referring to the letter posted by four former chairs of the Council of Economic Advisors (CEA). “Their criticisms are more of the outcomes of my analysis than the process by which I got them.”

Sanders, who has previously come under scrutiny for his apparent lack of foreign policy advisors, has been rebuked by many economists these past few weeks for the math used to support his economic proposals. In their open letter to Sanders, the former CEA chairs, all of who served under Barack Obama and Bill Clinton, said Sanders’s stimulus-minded plan “exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.”

“We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence,” the letter stated. In an interview with the Washington Post, Austan Goolsbee, one of the signatories of the letter, said his critique was of Friedman’s lack of “real economic data” — “To be clear, our letter wasn’t a critique of his study,” Goolsbee wrote. “It was a plea that we not invent a Vermont version of voodoo economics.”

Bernie Sanders’ policy director, in turn, told NPR that the CEA Chairs who signed the letter are “the establishment of the establishment.”

A few days ago, Paul Krugman piled on, saying of Friedman’s job growth numbers: “For wonks like me, it is, frankly, horrifying.”

Friedman’s write-up of the outcomes of Sanders’ plan does in fact sound ambitious: a 5.3 percent GDP growth rate, a $22,000 increase in median household income, replacing a huge debt with “a growing surplus,” and more than $15 trillion in new revenue — a financial transaction tax, carbon tax, ending fossil fuel subsidies, and much more.

The crux of this inter-economics spat, however, is just that: the economics. As Mother Jones’s Kevin Drum pointed out last week, these aren’t necessarily value judgments. You can be for Sanders’ proposals (many of these liberal economists have advocated for them for their entire professional lives) and against the numbers Friedman used to support them. Then again, Drum recently re-visited his skepticism.

For his part, Friedman says the disagreement is a common one in economic circles: how much can government spending stimulate the economy?

“[My critics] say that unemployment is low — the number they’re looking at is called the U1 unemployment rate — and say that spending to stimulate government growth may ultimately fuel inflation,” he said. “I and others see people who have retired, or have stopped looking for jobs, or are working as greeters at Walmart or something, and think that increased spending would help people like that to get back into the labor market. Of course, there are economists in the Chicago school [an infamously conservative economic ideology] that say that the economy is always at full employment and that government spending won’t change that.”

Ezra Klein reminded readers recently that, at this point in the campaign, policy proposals are more like chess moves: candidates anticipate the political battles they will face if elected, and they make proposals aimed at triangulating political attacks.

“And, hell, let’s just be honest: All this policy talk is just a way to pass the time between now and the election. It doesn’t matter how strong Bernie Sanders’s single-payer health care plan is — it’s not going to pass, just like Donald Trump isn’t going to get Mexico to pay for a wall and Hillary Clinton isn’t going to get universal pre-K past a Republican Congress and Ted Cruz isn’t going to set up a value-added tax.

It’s obvious that debating the details of campaign proposals is, on some level, fantasy football for wonks. Events will intercede, bureaucracies will weigh in, Congress will balk, promises will be broken. Remember when Barack Obama ran for president opposing an individual mandate and then flip-flopped and supported one? So what’s the point of paying attention to any of this at all?”

Klein’s answer is the obvious one, to anyone following this campaign: Bernie Sanders actually believes this stuff. And his refusal so far to surround himself with more “establishment” economists — whatever that means, given most “establishment” analyses completely underestimated the impact of the Great Recession — is a decision that deserves its own discussion.

Sanders’s mind, apparently, is not easily changed: Ralph Nader, one of Sanders’ few prospective political allies with any sort of name recognition, told U.S. News “[t]here’s a problem with getting good ideas to him and strategic changes and tactical advice … But that’s part of his charm: I haven’t had a call returned or a letter answered in 15 years.” Nader continued: “He’s really a lone ranger, and that’s a drawback when you run for president because I’m not the only one he’s not returning calls to.”

Understandably, Gerald Friedman is not happy about the skepticism with which his work as been received. And neither are his supporters, a growing group of economists and other academics who point out that, for all of the hubbub over Friedman’s numbers, his critics haven’t crunched their own.

“It is not fair or honest to claim that Professor Friedman’s methods are extreme,” writes James K. Galbraith, economics and government professor at the University of Texas at Austin, in a letter to Friedman and Sander’s critics. “On the contrary, with respect to forecasting method, they are largely mainstream. Nor is it fair or honest to imply that you have given Professor Friedman’s paper a rigorous review. You have not.”

Plenty of others have actually taken their own dives into the data: Narayana Kocherlakota, professor at the University of Rochester and former president of the Federal Reserve Bank of Minneapolis, wrote that historical trends suggest that Friedman’s projections — specifically, the enormous growth in GDP and worker productivity — are at least possible. Mark Thoma of the University of Oregon has suggested something similar. And so has Matthew Klein, writing for the Financial Times.

Their arguments in support of Friedman’s analysis reveal the uncertainties inherent even in thorough economic research: it’s difficult to project how overall worker productivity will be affected by rapid changes in government spending. It’s even more difficult to tell how much of the changes in GDP growth after the recession were due to a recovering housing market or the dysfunctional process by which our federal government cobbles together budgets. And it’s even more difficult than that to determine how labor markets will respond to things like universal healthcare or a radically different tax code.

Suffice it to say: Sanders’ economics — just like every other politician’s — are aspirational.

Photo: Bernie Sanders addresses supporters at his caucus night rally in Des Moines, Iowa February 1, 2016. REUTERS/Mark Kauzlarich 

Tags:

17 Comments

  1. Julia February 25, 2016

    Why do all of the pundits assume that the Congress will not change in 2017 when people are so disgusted with them all! The obstructionist Republicans will be tossed by any American who is even half knowledgable about their intentional dysfunction.

    Reply
    1. dtgraham February 25, 2016

      They assume that because of the rigged Congressional districts that were gerrymandered after the 2010 mid terms. One political talk show host referred to it as being structurally impossible for the Democrats to regain control of Congress.

      Democratic Congressional candidates received about 5 million more votes than Republican Congressional candidates in 2012, and it barely budged the needle. That could change in the 2020’s.

      Reply
      1. Matt February 25, 2016

        This^^ It would take a ‘political revolution’ to address gerrymandering and campaign finance (the failure of which is part of Trump’s appeal, as a note), before anything else. Then again, this cycle’s been pretty nuts. Who knows.

        Reply
        1. dtgraham February 25, 2016

          I understand that some states are now considering taking this process (or have taken) out of the hands of politicians and making gerrymandering impossible.

          That’s fine for the bluer states that haven’t done this in the first place, but the ones that have also did the same type of map debauchery at the state level as well. Republicans in those states have ensured that they’ll control the state Houses for years, and will therefore have enough clout to prevent a correction of federal Congressional districts in the next census year of 2020. That would seem to follow if I’m reading this right.

          It was the 2010 mid terms that put the GOP in new found control of so many of these states, and allowed them to concoct their so-called Red map strategy the following year.

          I’m not sure what the answer is here.

          Reply
          1. Matt February 25, 2016

            I still think this is one of the most inspiring moments in politics in recent years: http://www.politico.com/story/2015/06/arizona-redistricting-commission-supreme-court-voting-119543

            Reply
          2. dtgraham February 26, 2016

            Wonderful. Whatever the process is for getting these independent boundary commissions onto ballots as an initiative in some of those red states, there’s the answer. Thanks to Anthony Kennedy.

            I think there’d still be a wait until 2020 for the non independent commissioner states though, unless court challenges can reverse what happened in 2011.

            Reply
  2. plc97477 February 26, 2016

    The polling at the primaries have been showing a drop off of democratic votes. Without dems. getting out and voting there is no way we can make the changes that bernie advocates.

    Reply
    1. A_Real_Einstein February 26, 2016

      There is no way we are going to win the WH or the Senate either. Other than the fact she has a vagina why should anyone vote for her. Goldman Sachs 250k per speech transcripts please?

      Reply
      1. yabbed February 28, 2016

        Do we have transcripts of either President Bushs’ speeches? Do we have Mitt Romney’s transcripts? You’re beating a dead horse with that nonsense. No presidential candidate has ever been asked to release transcripts of their speeches to private groups.

        Reply
        1. A_Real_Einstein February 28, 2016

          We are not interested in their speeches. We already know what they said and they are not running for The Democratic nominee. Between the two of them, the Clintons have earned $140,000,000 in speaking fees from the same banks and special interest groups that destroyed our middle class. What a pathetic excuse for a progressive. She like Bill will make a great Republican President. You have been sold out by the Clinton political machine. A total fool.

          Reply
    2. Grannysmovin February 28, 2016

      Could the drop off be because the Media and Democrats continue to say – Hilary is a shoe in to be the Nominee and Sanders doesn’t stand a chance. Perhaps they feel why bother to show up if it is already predetermined she will be the Nominee. Clinton and her supporters, the Democratic Party leaders better find a way to light a get Democrats united and excited. Perhaps they just don’t want the same old same old and that is why Trump has the Republicans engaging and turning out in the primaries.

      Reply
  3. yabbed February 26, 2016

    It’s amusing to see people hammering President Obama for failing to accomplish all he promised in his campaigns now fall for the nonsensical Sanders’ pie in the sky blabber. Sanders as the nominee would never reach the presidency. The GOP attack ads would show the elderly Sanders with the flag of the USSR behind him and remind Americans what the USSR stood for: United Soviet Socialist Republic. Sanders has so much antiAmerican baggage out there that the GOP would win in a landslide.

    Reply
    1. A_Real_Einstein February 26, 2016

      Goldman Sachs 250k+ per speech transcripts please? Hillary would make a great Republican President if she is not jailed first. What is Hillary promising us? Nothing.

      Reply
      1. dtgraham February 26, 2016

        She now flat out refuses to release those Goldman Sachs transcripts because she says that no other paid speaker of theirs has ever been asked to. Good excuse Hillary. Right.

        Can’t imagine where those untrustworthy polling numbers of hers come from.

        Reply
      2. yabbed February 28, 2016

        I’ve seen one of her speeches. It was a badgering for Wall St to offer opportunities to women and minorities.

        Reply
        1. A_Real_Einstein February 28, 2016

          Sure it was! That explains why she refuses to release them. She sold you out and has played you for a fool. She feeds you crap and you eat it.

          Reply
      3. Eleanore Whitaker February 28, 2016

        Nice Try Einstein…But, all those nice “small” donors of Sanders? Look no further than J.P. Morgan Chase, Goldman Sachs and Citibank as reported a week ago in the NY Times.

        Sanders is Jewish..he has a bunch of Jewish men and women desperate to get their “first” Jewish president. So tell us? Something wrong with Sen. Schumer? Or is Sugar Daddy Sanders the man who will spawn a new generation of freeloaders who can’t face the fact like Madoff that you can’t take from others to make yourself $67 billion using help from your “small donors” at the SEC and the Big 6 banks. Religion has NO place in an election. Grow the hell up.

        Reply

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.