Back in 2009 President Obama famously proclaimed, “There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.” And Vice President Biden chimed in: “Every economist, as I’ve said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs.” And the Cato Institute famously pointed out that those claims were false.
Now, as president, Joe Biden is at it again: “The American Rescue Plan … will generate economic growth for the entire nation. That’s why major economists — left, right, and center — support this plan,” he said Monday at the White House. And also last Friday: “Every single major economist out there — left, right, and center — supported this plan.” Obviously, he loves this claim.
And once again, with all due respect, Mr. President, that is not true.
It’s easier to claim this time that there’s widespread support for the actual Covid‐related measures in the bill regarding testing, vaccination, and relief. But the $1.9 trillion wish-list of unrelated expansions of government, on top of another $4.1 trillion in the past year? There are plenty of economists opposed to that.
Start with Lawrence H. Summers, winner of the John Bates Clark Medal and former chief economist of the World Bank, Treasury Secretary for President Clinton, and director of President Obama’s National Economic Council. He wrote in the Washington Post that the total size of the package “is at least three times the size of the output shortfall” and thus six times the relative size of Obama’s 2009 stimulus bill. He warned that the massive injection of borrowed money into the economy might well spur inflation and would surely crowd out further Democratic wish‐list programs.
And then we find major economists from left, right, and center also opposing the plan as proposed and passed. Like Greg Mankiw, chief economic adviser to President George W. Bush. And Olivier Blanchard, former chief economist of the IMF. Michael Strain of the American Enterprise Institute. David Henderson and John Cochrane of the Hoover Institution. Constance Hunter, chief economist at KPMG, and the vast majority of business economists. Tyler Cowen of George Mason University. Nobel laureate Eugene Fama. Even Jason Furman, former chairman of President Obama’s Council of Economic Advisers, while saying he would support the plan on a “yes or no” vote, warned that it risked triggering inflation and should be better designed.
The point of this post is not to lay out a critique of the bill, but my colleague Scott Lincicome published a pretty comprehensive one. My point here is just that President Biden should not make false claims. And it is false today, as it was in 2009, to claim that “every single major economist” supported this $1.9 trillion debt-financed, heavy-regulation plan.
