Two Northwestern professors have gained national attention for their opposition to President Barack Obama’s economic recovery plan.
A full-page ad that appeared in The New York Times, the Washington Post and other national publications last week listed the names of 200 economists who did not support proposals to increase government spending, tax cuts or “Buy American” policies that encourage the use of U.S.-made products. The list included NU School of Law Prof. Henry Butler and Kellogg Prof. Aaron Gellman.
“It is a triumph of hope over experience to believe that more government spending will help the U.S. today, ” stated the ad, which was funded by the CATO Institute, a nonprofit public policy organization.
According to government officials, Obama’s plan could save 3 million to 4 million jobs in the next few years. Last week, the U.S. House of Representatives approved an $819 billion recovery package that also called for increases in unemployment benefits and the creation of public projects to create jobs. The bill failed to receive support from any Republican representatives. The Senate entered discussions on a similar $885 billion economic plan earlier this week.
Opponents of the plan believe there are more effective ways to increase spending and jobs, such as lower tax rates and less government involvement.
“Nothing is probably better than what has passed the House,” Butler wrote in an e-mail. “But, seriously, there are plenty of alternative proposals that focus on solving the problem. I think the most important goal should be to keep the legislation focused on solving the current crisis and to avoid getting diverted by other goals.”
Butler said he would prefer a plan that focuses less on government spending and more on long-term tax changes that could provide incentives to households and businesses, adding that the current package would “impose large debt burden on all Northwestern students.”
The recovery plan is an effort to help the economy out of the country’s worst recession since the Great Depression. The economy shrank by nearly 4 percent last fiscal quarter and, in the last year, more than 2.5 million jobs were lost. The stimulus package is one of the most expensive proposals in the country’s history and will cost about $100 billion more than the plan passed last year to bail out the country’s financial markets.
Restructuring the current “regulatory environment” is one way to attract private investment, Gellman said.
“The first thing we have to do is to make it more attractive for people to invest money in private enterprise,” Gellman said. “That’s the number one step that needs to be taken instead of doling out money to advance a political agenda.”
NU economics Prof. Mark Witte said the economic recovery plan is a “good thing to try,” but agreed that tax cuts could have a bigger impact on the economy and facilitate private spending and employment.
“I hope Congress puts the bigger picture in sight and realizes the slowing economy can take on a momentum of its own,” he said.
