Obama has named a woman from UCal Berkeley Christina Romer as head of the Council of Economic Advisors, perhaps on the mistaken assumption that anyone from Berkeley had to be a left-wing economist. Luckily for the country, she isn't. Last year she and her husband published the results of a study they had done which concluded this:
"The most striking finding of this exercise is that tax increases have a large negative effect on investment."Estimating the cumulative impact of a tax increase of 1% of GDP, they found that "over the next three years output is on average 1.8% lower than it otherwise would have been."
This "is followed by a large and highly significant rise in the unemployment rate." How much job loss? "The estimated output effect after 12 quarters is a decrease of 2.9%," the Romer study found.
Also, another Romer report issued last year found that "a tax cut of 1% of GDP increases real output by 3% over the next three years."
Will Obama listen to this wisdom?
All Roads Lead To Romer
