Mitt Romney's campaign released a paper by four of its top economic advisers on Thursday to back up its assertion that Romney's tax reform and fiscal plan would create "millions of jobs," as an adviser earlier in the day had stated … "The Romney economic program will change the direction of policy to focus on economic growth," the advisers wrote. "Its pro-growth effects will work in two basic ways: It will speed up the recovery in the short run, and it will create stronger sustainable growth in the long run." The paper was less actuarial work with raw data and specific numbers, however, and more of an economic philosophy argument based largely on the premise that simply by undoing much of what President Obama has done since taking office, the economy would recover at a faster pace than it has been from the recession that began in late 2008. "By changing course away from the policies of the current administration and ending economic uncertainty, as proposed by the Romney plan, we expect that the current recovery will align with the average gains of similar past recoveries," the advisers stated. "History shows that a recovery rooted in policies contained in the Romney plan will create about 12 million jobs in the first term of a Romney presidency."http://econospeak.blogspot.com/2012/08/white-paper-on-romney-economic-boom.html
It's quite a murderers row putting together this white paper! John Taylor's most famous legacy is the Taylor Rule for the Fed to focus on inflation targeting. Interestingly he's been a total monetary crank in this recession, one of the inflationistas. ProGrowthLiberal points out that, "Past recoveries have relied on monetary expansion", however, you'd never know that from reading Taylor lately-and he's John Taylor the creator of the Taylor Rule himself...
The others on this white paper are similarly illustrious. Kevin Hassett had promised us "Dow 36000" back in 2000-he still stands by that promise, after all it could happen one day. That's the beauty of those who give no time frame to predictions. It was for people like this that Keynes had in mind when he pointed out that in the long run we're all dead.
Then we have Bushies, Greg Mankiw and Glen Hubbard. This is their body of work as far as predictions about policy making goes:
"Mitt Romney and his economic advisers have spent the week claiming that Romney’s economic plan will create 12 million jobs, as they attempt to change the subject away from a Tax Policy Center report showing that Romney’s tax plan would mean a big tax increase for middle-class families."
"A Center for American Progress Action Fund analysis shows that, far from creating 12 million jobs, Romney’s economic plan would kill 360,000 jobs in 2013 alone. But this discrepancy is perhaps less surprising considering that the same advisers who gave Romney his number — including economists Greg Mankiw and Glenn Hubbard, who both worked for former President George W. Bush — estimated that the Bush tax cuts would lead to massive job growth:
Back in 2001, as chairman of President Bush’s Council of Economic Advisers, Hubbard predicted that tax cuts slanted disproportionately to Americans in the topmost tier of income and wealth distribution would “quickly deliver a boost to move the economy back toward its long-run growth path,” starting with adding 300,000 more jobs and half a percentage point to the 2002 growth rate.
Then in early 2003, as President Bush proposed another round of tax cuts, Hubbard predicted these would add another 1.4 million jobs to the U.S. economy, over and above the 3.1 million jobs the economy would create on its own from natural economic growth in that time. Mankiw — who took over for Hubbard as chairman of the Council of Economic Advisers later in 2003 — co-signed a letter with Hassett (then-economist at the American Enterprise Institute) to President Bush “enthusiastically” endorsing more tax cuts because “it is fiscally responsible and it will create more employment [and] economic growth.”
Unfortunately for American workers, these rosy predictions failed to pan out. In fact, total employment in the U.S. economy created only 2.4 million new jobs by the end of 2004, or less than half of what Hubbard predicted. By 2007 the economy was running nearly 8 million jobs short of what Hubbard predicted.
ProwGrowthLiberal speculates about how they might argue their case in this upcoming white paper:
"Past recoveries have relied on monetary expansion. I guess these four have not figured out we currently are in a liquidity trap. The bit about policies that are both good for the short-run and the long-run have been standard talking points from Team Romney for quite a while. To be honest – I still need to read this paper but before I do, let me tick off four such possibilities. The first two are proposals from the Obama Administration which have been stonewalled by Congressional Republicans: (1) accelerating public investment in infrastructure; and (2) using Federal revenue sharing to insure that state & local governments don’t cut public education. The other two rely on encouraging private investment, which is admittedly still low. We could ask the Federal Reserve to lower interest rates – oh wait, that liquidity trap thing again. Finally, Team Romney is doing its best imitation of Art Laffer saying that tax cuts for high income individuals will somehow encourage investment even as negative real interest rates have not fully succeeded. Isn’t this what the Reagan Administration argued some 30 years ago – which prompted the critique from one of the authors of this white paper that the claim was from “cranks and charlatans”. But let’s also take a read of this white paper and see if there is anything new worth considering."