Thursday, 13 September 2012

AFR 'quality'

In today's AFR  John Roskam has a somewhat rambling tome and  attempts to do a number of things.

He asserts Obama has had a policy of higher spending and higher taxes. Unfortunately for the reader he provides no evidence for his assertion.
(see here and here for a different line.)
He writes about the memo Romer and Bernstein wrote for the incoming president, indeed he quotes some of it. It is therefore somewhat surprising he doesn't say the final 'stimulus' package was made up of mainly tax cuts and fiscal relief to the States. Indeed 40% was made up of tax cuts.
He doesn't say the deficit that Obama inherited was $1.2t. Nor does he say the recommendation was for much larger stimulus.

At no stage does he say that public sector employment fell dramatically because state and local Governments cut their workforces. If only they had increased them like in the Reagan years unemployment could be falling to 6%!

Also at no stage does he state the economic contraction was greater than anyone had contemplated. The December quarter 2007 GDP statistics fell by about 9% in annualised terms whereas non-farm payrolls were contracting by around 900,000 when the President came to office.

He, of course, completely omits any reference to the IMF material that shows that austerity makes an economy worse if the economy is slowing.  ( here).( The time for austerity as Keynes said and the IMF proved, is in good times ).

He implies that the Romney team will cut spending, taxes and the deficit but again we do not know how. Given the Romney tean has not released enough detail to make such a suggestion we have no idea of how Roskam can be so certain of his implication.

Finally he compares the recovery under Obama with that under Reagan. He again doesn't tell anyone that the recession was the prescription Paul Volker used to bring down inflation. In other words high interest rates.
One would expect a recovery under these conditions to be faster than one where there was a financial crisis.
He also does not say interest rates did not get anywhere near the zero bound level under Reagan.
Finally he does not mention the deliberate deficit spending under Reagan which Roskam asserts does not work.

All in all we can conclude either Roskam does not understand his subject area which is highly likely given the IPA's history or he does and is being what somewhat euphemistically 'misleading.

Either way it isn't a good look.