Former Dem CEAs Write Open Letter to Sanders

by on February 17, 2016 at 9:23 am in Current Affairs, Economics | Permalink

A strongly worded letter from Krueger, Goolsbee, Romer and Tyson to Sanders and his economic team chastising them for unrealistic, unscientific numbers. (No indent).

Dear Senator Sanders and Professor Gerald Friedman,

We are former Chairs of the Council of Economic Advisers for Presidents Barack Obama and Bill Clinton. For many years, we have worked to make the Democratic Party the party of evidence-based economic policy. When Republicans have proposed large tax cuts for the wealthy and asserted that those tax cuts would pay for themselves, for example, we have shown that the economic facts do not support these fantastical claims. We have applied the same rigor to proposals by Democrats, and worked to ensure that forecasts of the effects of proposed economic policies, from investment in infrastructure, to education and training, to health care reforms, are grounded in economic evidence.  Largely as a result of efforts like these, the Democratic party has rightfully earned a reputation for responsibly estimating the effects of economic policies.

We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.

As much as we wish it were so, no credible economic research supports economic impacts of these magnitudes. Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic. These claims undermine the credibility of the progressive economic agenda and make it that much more difficult to challenge the unrealistic claims made by Republican candidates.


Alan Krueger, Princeton University
Chair, Council of Economic Advisers, 2011-2013

Austan Goolsbee, University of Chicago Booth School
Chair, Council of Economic Advisers, 2010-2011

Christina Romer, University of California at Berkeley
Chair, Council of Economic Advisers, 2009-2010

Laura D’Andrea Tyson, University of California at Berkeley Haas School of Business
Chair, Council of Economic Advisers, 1993-1995

1 Heorogar February 17, 2016 at 9:28 am

Sanders =/=Clinton.

2 dearieme February 17, 2016 at 10:44 am

What a bunch of pompous asses they sound.

3 Ray Lopez February 17, 2016 at 11:10 am

+1 The don’t call economics “political economy” for nothing. It’s politics and largely unscientific b.s. masquerading as objective science, not unlike the Marxists.

4 j r February 17, 2016 at 9:18 pm

Not really. At some levels, economics is highly speculative. At a more basic level though, it’s just second-order accounting. The fiscal ledger has to balance. Just because the government calls something investment, it doesn’t magically mean that the economic return will make it fiscally sustainable.

5 Two Parts Gin February 17, 2016 at 9:43 am

“Largely as a result of efforts like these, the Democratic party has rightfully earned a reputation for responsibly estimating the effects of economic policies.”

As I’ve always suspected and they have definitively confirmed: I obviously live in a universe separate from that inhabited by my blue-yuppie Democrat neighbors cultivating their urban-cooperative organic farm in Brooklyn.

6 (Not That) Bill O'Reilly February 17, 2016 at 10:03 am

I would love to see some citations for that assertion. To my memory, every single signature policy under the current administration–stimulus, PPACA, and Dodd-Frank most notably–has had economic effects well outside the predicted range of outcomes.

7 dearieme February 17, 2016 at 10:45 am

the Democratic party has rightfully earned a reputation for responsibly estimating the effects of economic policies and then ignoring those lessons.

8 Jonathan February 17, 2016 at 11:42 am

Very nice.

9 Soho February 17, 2016 at 11:43 am

Good thing, too. They’re probably getting lead poisoning from the soil there…

10 John Thacker February 17, 2016 at 9:44 am

Goolsbee’s changed his message a bit from #3 here (as Sanders has gotten attention in the polls.) Back in November he made a similar criticism but was most interested in playing for the team and saying that to be sure, it wasn’t unrealistic like how Republicans are.

However, now there’s a competitive primary, so attacks have to be more focused.

11 Brian Donohue February 17, 2016 at 10:00 am

Heh. I liked this:

“Every one of the big welfare states in Europe, for example, has a VAT/Sales tax in the 20-25% range and has high income tax rates that apply to large segments of the population, not just the top. Ordinary workers in those countries bear a larger share of the government bill than we do in the US, not a smaller share.”

12 Daniel in VA February 17, 2016 at 11:05 am

Can’t it be argued that the VAT taxes are an accepted form of protectionism? VAT is charged to imported goods and services, so replacing taxes on income and capital with VAT taxes should make imports relatively more expensive, right?. Also, I think I read somewhere that exporters are refunded VAT charged to their supply chains, but I couldn’t find evidence for that just now except in the case of China.

13 Boonton February 17, 2016 at 11:47 am

Not a tax expert but doesn’t VAT apply to domestically produced goods as well? So assuming imported widgets cost as much as domestically made widgets the VAT tax would impact both equally.

14 Daniel in VA February 17, 2016 at 12:12 pm

To clarify, VAT is charged to both domestically produced and imported goods and services, whereas income taxes and taxes on capital used in production are charged only domestically.

15 (Not That) Bill O'Reilly February 17, 2016 at 1:09 pm

But in both cases, taxes are limited to just affecting economic activity that falls within a given country’s jurisdiction. Whether an importer pays the VAT on items resold in the U.S. or a resident has to pay tax on income before spending that income on the same item is immaterial.

16 Daniel in VA February 17, 2016 at 1:51 pm

But many governments provide welfare, so a resident may have some income to pay for imports that is not taxed, meaning a country with a trade deficit accounting for a large fraction of its economy could strengthen its fiscal position by shifting its tax burden to a VAT.

17 Daniel in VA February 17, 2016 at 1:58 pm

Furthermore, the income tax on the consumer and no taxes on imports still means that an overseas supplier will have a lower tax burden than the domestic supplier.

18 prior_test February 17, 2016 at 11:51 am

‘exporters are refunded VAT charged to their supply chains’

German companies are most definitely given benefits in terms of not paying VAT when exports to non-EU countries are involved – and that definitely includes their supply chains, though the paperwork is a bit involved.

19 say what? February 17, 2016 at 12:34 pm

I don’t know where you get that idea? VAT is charged on all goods and services purchased in a country. For example, it is 25% in Sweden (12% for food) and 19% in Germany (7% for food). VAT is not collected on exported goods — hence ‘tax free for tourists’, but it is collected on imported goods.

VAT is indeed collected along the supply chain, which can give some advantages in enforcement. For example, if I buy a widget for $8, I pay $10 for it ($8 + $2 (25% VAT). I turn the widget into a gadget and and the purchaser pays $15 = $12 + $3 (25% VAT ) for my gadget. I owe the $3 in taxes, but I can claim back $2 VAT that I paid for the widget. That is, I pay net tax only on the value that I added (hence VAT) to the widget by turning it into a gadget ($1 = 25% of $12 – $8). If the value leaves the country (i.e. export), there’s no VAT since the “value” leaves the country; if the value enters the country i.e. import) the “value” enters the country and the importer pays VAT.

20 Peter Schaeffer February 20, 2016 at 4:03 pm


“Can’t it be argued that the VAT taxes are an accepted form of protectionism?”

VATs are just sales taxes with a more complex implementation. They are not a form of protectionism. They apply equally to domestically produced and imported goods.

“VAT is charged to imported goods and services, so replacing taxes on income and capital with VAT taxes should make imports relatively more expensive, right?”

VATs make all goods (imported and domestic) more expensive. They do not make imports relatively more expensive.

A (minority) of Democrats favor a VAT as a means of massively expanding the welfare state. A (minority) of Republicans favor a VAT as a way of eliminating (or greatly reducing) taxes on the wealthy and corporations. In my opinion, the idea we can make America a better place by massively expanding the welfare state and slashing taxes on the 1% (0.1%) is absurd. However, other people disagree.

21 prior_test February 17, 2016 at 11:48 am

‘Ordinary workers in those countries bear a larger share of the government bill than we do in the US, not a smaller share.’

With the scary result, at least from the perspective of the rich in America, that a larger share of government expenditures goes to the non-rich, instead of making rich Europeans richer.

Corporate welfare in Europe, to give a concrete example, is much more about making sure that employees keep a job than it is tax breaks for a company to relocate its factory. Not that German auto companies, to give one very concrete example, aren’t willing to suck down hundreds of millions in tax breaks to locate a factory in an American municipality – just that they aren’t allowed to do the same in the EU with its strict supervision of such anti-market subsidies.

22 msgkings February 17, 2016 at 12:25 pm

German auto companies, you mean the ones run by lying sociopaths?

23 Willyboy February 17, 2016 at 4:32 pm

After taking away the cost of personal health insurance for both individuals and businesses, no more deductibles or co pays, drop tuition costs from the family tax bill and Bernie starts looking quite good. Don’t mind paying a few hundred more per year and getting lots more for it.

24 Cliff February 18, 2016 at 12:12 am

lol, how would a few hundred per year pay for all that?

25 Mm February 18, 2016 at 6:38 am

The proverbial other person pays it for him

26 Peter Schaeffer February 20, 2016 at 4:05 pm


$20-30K per year is more like it. Health care runs around $12 per hour for every hour worked in America (last time I checked, probably higher now).

A few hundred per year isn’t even a drop in the bucket.

27 Alan February 17, 2016 at 9:50 am

Alex has his riding orders.

28 anon February 17, 2016 at 9:57 am

Interfluidity had an interesting take:

29 Roger Sweeny February 17, 2016 at 10:05 am

Interfluidity says,

“It is not that I am for Bernie Sanders, but that Bernie Sanders is for me. Bernie Sanders, more than any politician who has ever had a serious shot at the office of United States President, represents my interests and values.”

That is, of course, exactly what Trump supporters say of him.

30 RG February 17, 2016 at 10:13 am

Who cares about reality when a candidate can send tingles up your leg?

31 Jeff R. February 17, 2016 at 11:16 am

He holds all the same prejudices and misconceptions that I do!

32 chuck martel February 17, 2016 at 11:37 am

What about William Jennings Bryan?

33 The Original D February 17, 2016 at 2:11 pm

As Scott Adams says, identity trumps rationality.

34 Alain February 17, 2016 at 11:20 am

Who gives a fuck about what thinks? His claim to fame is that he uses coarse language and worships the left. Wow. I’m impressed.

Color me surprised that he likes Bernie Sanders. Also color me surprised that he thinks that Bernie’s policies would be beneficial.

35 Fruehof February 17, 2016 at 9:59 am

So ‘evidence-based economics’ & ‘credible economic research’ is the standard for Clinton/Obama/Democrat economic policy ??

It’s not even the standard for the current economics profession generally.
Ideology dominates economics and politics.

36 JB February 17, 2016 at 10:02 am

I think it’s less ‘evidence-based economics’ & ‘credible economic research’ and more “Lack of obviously farcial assumptions in our economic forecasting.”

No doubt the moderate wing of the Democrats is strongly driven by ideology, but there is a significantly lower ratio of complete bunkum to be found there than in the socialist wing or the one remaining Republican wing.

37 Brian Donohue February 17, 2016 at 11:03 am

This sounds right to me. Lots of sturdy, stolid BS issued by moderate Democrats, as opposed to lots of wing nut stuff elsewhere.

38 anon February 17, 2016 at 10:03 am

Not saying they are there yet, but “Obama’s Budget Lays Out an Ambitious Evidence-Based Policy Agenda”

39 Boonton February 17, 2016 at 10:35 am

No political party will ever fully embrace ‘evidence based economics & credible research’ all the way (and even if a party was willing, economics cannot really deliver accurate short term estimates of intricate policy changes). However it is a fact the Democratic Party is more friendly towards evidence based wonkery than the Republican Party and the current Republican Party ahs managed to move even more against reality based policy making (for example, I believe Donald Trump is most recently asserting the ‘true’ unemployment rate is something like 40% but of course ‘they’ are covering that up from ‘the people’ so it must be true).

40 TMC February 17, 2016 at 10:56 am

“it is a fact the Democratic Party is more friendly towards evidence based wonkery than the Republican Party”

You really need to look up the definition of fact because you are in no way using this word correctly.

Funny that “higher wages don’t increase unemployment” Krueger has the gaul to comment on anyone’s past policies.

41 Boonton February 17, 2016 at 11:18 am

Fact is it is often very difficult to find direct evidence of increased unemployment when you look at small increases in min. wage and sometimes the reverse has been found.

42 TMC February 17, 2016 at 11:31 am

Fact is that Kruegers work and works generated from Krueger’s data are the overwhelming bulk of data that supports this.

Virtually all other studies and even a more comprehensive look at Kruegers study (gathering of better data) support the economic laws of price and quantity.

43 Boonton February 17, 2016 at 12:04 pm

Since the min. wage is not indexed to inflation, it has been naturally dropping every year inflation was positive but there was no offsetting increase enacted by law. Despite some recent increases, the min. wage is lower now than it was decades ago. As a result net unemployment should therefore be lower.

The ‘economic laws’ of price and quantity only refer when all other variables are held constant. Dynamic systems cannot be held constant so secondary effects can confound the operation of ‘the law’.

It also isn’t clear to me that unemployment offsets increased income. For example, if a modest increase in the min. wage causes some teens who were otherwise content to hang out at home to try to go out and get fast food jobs, you may detect an increase in unemployment but would that be a true welfare loss or welfare neutral event?

44 Dan Weber February 17, 2016 at 12:12 pm

As a result net unemployment should therefore be lower.

It’s at five percent. That’s great.

45 Boonton February 17, 2016 at 12:51 pm

5% is indeed great, however that doesn’t tell us much about the unemployment rate since most people employed and unemployed are above the min. wage rate.

46 Dan in Euroland February 17, 2016 at 3:00 pm

Not really, you just don’t want to look:

The Left has an incentive to maximize the number of people on the dole because the Left can credibly commit to re distributive policy. Its simply false that the Left wants to help people. They want to achieve power plain and simple.

47 Boonton February 17, 2016 at 9:40 pm

Yea not seeing it. The paper you cite says employment fell 4-8 pts following an increase in the wage but they neglect to note the wage rose by 40%. It still doesn’t follow we have a net welfare loss. If 92 min. wage workers see 40% more income but 8 leave the labor market that may or may not be a positive thing (keep in mind some might leave the labor market because higher wages open up the room needed, say, for a spouse to stay home with a child).

As for power, please. The Reddest of states are also the ones with larger numbers of working poor and those collecting from the gov’t. If collecting food stamps, disability, Medicaid etc. made a state blue explain Louisiana, Mississippi, West Virginia, and so on.

48 Cliff February 18, 2016 at 12:18 am

The poor are in fact more likely to vote Democrat, including in the states you mention.

It should be very obvious why it is somewhat difficult to find DIRECT evidence of increased unemployment when you look at a SMALL increase in min. wage, right?

It also seems very unlikely that a min wage increase is causing unemployment by enabling workers to stay home with their kids (by the way, that wouldn’t be counted as unemployment)

49 Boonton February 18, 2016 at 2:24 pm

I’m not really clear what your conspiracy is? If the goal is to get people unemployed so they go on welfare (and then vote Democratic)…well what good are small increases in the min. wage? If welfare makes states more Blue, then it should follow the higher a state’s dependency on program the bluer it should be. That pattern does not hold.

Also your theory does not square with the expansion of the Earned Income Tax Credit during the Clinton administration and the Obama administration’s fighting to preserve cuts in the payroll tax. Both of these programs provide the most direct benefit to those who take jobs (even low wage ones) and work them as hard as they can as opposed to those who opt to try to collect on programs unless/until the ‘perfect’ job offer arrives.

In fact it was the Republican’s refusal to support expansion of the EITC and attempts to undercut it that probably spurred a return to advocacy of increased min. wage and ‘living wage’ movements on the left.

“It also seems very unlikely that a min wage increase is causing unemployment by enabling workers to stay home with their kids (by the way, that wouldn’t be counted as unemployment) ”

Your paper cited the employment to population ratio so a person who moved from, say, a full time job to just a part time one because a min. wage hike provided her with the income her family needed to keep their heads above water would be captured there as a ‘loss’ in employment even though to her it might be a welfare gain.

50 gab February 17, 2016 at 12:24 pm

Krueger not only has “gaul,” I hear he’s moving on Aquitania next.

51 John February 17, 2016 at 11:20 am

Donald is playing games but he can defend the 40% figure. The key is his use of “true”. In his definition “true” represents people who work versus people who do not work. So your 90 year old grandmother is unemployed as is your 2 year old son. Employment to population is likely somewhere around this 40% figure.

52 Boonton February 17, 2016 at 11:45 am

“Donald is playing games but he can defend…”

Of course he can defend, that’s how sophistry works. As long as there is some halfway plausible argument that can be made for your absurd claim, you can hand waive it away and pretend it’s a really technical issue that the experts endless debate.

53 Cliff February 17, 2016 at 12:55 pm

You have it exactly wrong. Trump is making an honest argument. You might disagree but it’s not BS or lies. It’s very clear what he is saying.

54 steatopygia February 17, 2016 at 5:40 pm

@Cliff It’s disingenuous, and the people who told him the number almost certainly know it, but they also know that tribal alignments will force otherwise sensible people to latch onto it simply to avoid the pain of cognitive dissonance.

55 Cliff February 18, 2016 at 12:19 am

I am neither Republican nor voting for Trump but I do not consider it to be disingenuous. Of all the incredibly jerky things he has said, that’s not one of them.

56 kevin February 17, 2016 at 5:22 pm

There’s no way to defend that. Unemployment has an objective definition (someone looking for a job that doesn’t currently have one). Just like its indefensible to change the definition of the word purple and claim the sky is purple, its indefensible to change the definition of unemployment to the labor participation rate and claim that infants are unemployed because they don’t have a job

57 Cliff February 18, 2016 at 12:22 am

There are various measure of unemployment. It was clear he was using an alternative measure, right? Do you consider infants to be employed?

58 Boonton February 18, 2016 at 2:32 pm

You are free to use an alternative measure but then you have to reframe the debate. The purpose of switching to the participation rate is to shock people who are used to unemployment being in a band of 5%-9% by the 40% figure. But 40% is, actually a norm. In fact right now the participation rate actually looks quite ‘normal’ when you look back nearly a century

But as we know Trump is not an honest person so the purpose of the rhetoric is to confuse people into thinking the *unemployment* rate is really 40%. No doubt if Trump was elected President he would switch to the conventional measure at the end of his first term and trumpet “unemployment of only 5%” or whatnot.

59 kevin February 18, 2016 at 5:57 pm

Cliff, yes, there are various measures of unemployment. And those all have objective definitions too, such as “discouraged workers–someone who would like a job but has given up searching for one”. The labor force participation rate is an entirely different concept. Stating the LFPR as the unemployment rate is akin to confusing a dog with a bird and saying dogs can fly. Regardless of whether this mistake was due to ignorance or intentional misleading, its important to point out the flaw. Even though I know he is wrong, not every one does. Additionally they may not know how wrong, or what Trump is actually referencing. Pointing out the mistake allows others to view the economy in an accurate manner.

60 Alain February 17, 2016 at 11:25 am

You are zeroing in on the exact purpose of this letter: to improve the brand of the Democratic Party, by demonstrating that they care about ‘science’ so much that they are willing to chastise their own.

Of course you won’t hear anything about the democrats green policies, or the effects of extended unemployment insurance, or the increase in regulatory burden under his administration.

61 James McCarthy February 17, 2016 at 10:03 am

And their “evidence-based economic policy” worked so for for whom?

62 Ray Lopez February 17, 2016 at 11:13 am

Limousine Liberals of course. Right next to their close cousins, crony-capitalist Republicans.

63 Luis February 17, 2016 at 1:48 pm

Well, the Bill Clinton years were the best for median income growth in the last decades: “median household income during the Bush administration dropped from $50,557 in 2000 to $50,233 in 2007, a decline of $324. Under Bill Clinton, median household income rose from $44,359 in 1992 to $50,557 in 2000, an increase of $6,198.”

64 Nick February 17, 2016 at 2:46 pm

And there were less pirates and more climate change in those years as well. QED.

65 MIkea. February 17, 2016 at 3:29 pm

Why does Bill get to 2000, but George only gets to 2007?

66 TMC February 18, 2016 at 12:29 pm

Well Bill left a recession behind, as much as you can blame a president for this. How much of Bush’s decline was from Bill’s popped bubble?

67 JB Smooth February 18, 2016 at 2:44 pm

I think you’re forgetting how Bush left it in ’08…

68 ladderff February 17, 2016 at 10:11 am

This year people are taking this democracy thing a little too seriously and it’s got some people nervous. I’m sure they can right the ship before November though.

69 Daniel February 17, 2016 at 10:12 am

Is this legit? The open letter website looks very sketchy and I couldn’t find trustworthy attribution through a cursory Google search.

70 Joël February 17, 2016 at 11:38 pm

I have no doubt that the letter is legit, but I agree it is difficult at this point to find any strong evidence that this letter has really been written and sent (to whom,
by the way?) by its 4 affirmed authors.

For instance I have looked on the professional webpage of the four authors and didn’t find any mention of it. And Google didn’t give me anything more convincing that the sketchy link given by Tabarrok.

But Paul Krugman also mentions this letter in his last two posts on his NYT blog, and I think that’s enough to remove any reasonable doubt. Indeed I suppose that Krugman knows well (better than Tabarrok does) the four purported authors of the letter, and that he would have known or guessed if this letter was some kind of hoax.

I say this not to engage in any conspiracy theory (not my cup of tea), but to observe
that it is difficult to find primary sources in this debate. In particular, something I haven;t been able to find is the very analysis by Friedman of Sander’s policies that is criticized in that letter. Neither the letter itself, nor Tabarrok, nor Krugman give a link to that analysis. When you criticize something, you should make sure that it is available to your reader…. So, does anyone know where I can find it? Thanks…

71 Nurerawady Nawawi February 17, 2016 at 10:18 am

These former Dem CEAs did a great job advising Bill Clinton on financial deregulation.

I’d like to see their proof and explanation on how is that working out for the people.

72 Dan Weber February 17, 2016 at 12:10 pm

Clinton’s deregulations were fine. Glass-Steagal is irrevelant.

He did pursue “let’s get more people to be home-owners” and Bush 43 continued that same play, which was a big (but not only) cause of the housing bubble. But that’s not deregulation, and a policy that’s still pursued by large contingencies in each party, drawbacks be damned.

73 Inigo Montoya February 17, 2016 at 10:27 am

Now that this is out of their system, perhaps they can evaluate democratic proposals for minimum wage legislation that assume the same purchasing power in both Manhattan and Wyoming. Following, they could evaluate how democratic-led legislation has codified Too Big To Fail. They can start with the number of new bank charters granted in the last few years.

74 Hadur February 17, 2016 at 10:30 am




What a wonderfully autistic letter! These people actually think that voters are out there saying “well, I’m going to vote for the Democratic Party, because they accurately estimate the economic impact of legislation”. Maybe a few miserable excuses for human beings say this, as they push their thick glasses up their nose and neurotically tug at the cuff of their checkered brown sportcoats.

The vast majority of people who vote for the Democratic Party – or any political party – are doing it because they buy the big picture vision sold by that party, a vision that is grander than “evidence based policies” or “accurate estimates” or any of that wonky stuff. And whatever you may think of his policies, Sanders is selling a bigger vision than Clinton, and I think that contributes to his surprising performance so far.

Neoliberalism is the nihilism of our day. In George Orwell’s day, mainstream parties espousing capitalism and socialism used to promise voters a good time, while fascism promised a struggle. Today, Donald Trump is offering a struggle, while the mainstream parties are promising…accurate estimates of economic policy?

75 Dan Weber February 17, 2016 at 12:16 pm

It’s definitely a fact that voters tend to vote for outlandish promises and then act like it’s not their fault when the outlandish promises fail to happen. “Well, I did my part: I voted!”

This leads to dangerous failure modes, though, so instead of just sitting around talking about how dumb voters are, we need to fight against it. Voters need to realize that voting for good outcomes is not enough, and sometimes is the worst course of action.

76 rayward February 17, 2016 at 10:47 am

What Sanders learned from the Republican candidates for president is that there is no down side to either (1) making ridiculous claims about tax policy or (2) opposition from the Establishment.

77 Urso February 17, 2016 at 10:55 am

Great, now let’s see them also challenge the veracity of Clinton’s economic projections. *crickets* Oh right I forgot this is just typical partisan shilling.

78 Yog Sothoth February 17, 2016 at 11:05 am

I find this argument convincing. I don’t mind Sanders’ ideology and have been tempted to vote for him, but the tether connecting promises to reality is just too loose.

79 prior_test February 17, 2016 at 11:59 am

Like the tether relating to how single payer health care would reduce American health costs by at least a third, reflecting the fact that the most expensive single payer health care systems in the world are at least a third less expensive than the current American system?

Certainly, that America is unable to reduce its health costs remains one of the more touching concerns cited by Prof. Cowen, but really, as an American, I still remain unconvinced that the U.S. cannot do better than France or the UK. That the U.S. is unlikely to approach Swiss or German standards – both countries with health care costs above those of France or the UK, and with health care measurably superior to that of the U.S. – is unsurprising, of course.

80 MOFO February 17, 2016 at 12:49 pm

“with health care measurably superior to that of the U.S”

Im a bit suspicious of that. Ive learned that direct comparisons of countries without taking into account confounding variables leads to wrong conclusions. I dont know much about health care, but im guessing that americans driving more and shooting each other more might be a few potential confounders in a health care comparison.

81 Nathan W February 17, 2016 at 6:52 pm

Average American health results are worst on almost every single indicator compared to almost any remotely wealthy country. AND they spend more than anyone else regardless of how the figure is calculated.

I agree with being suspicious about cross-country comparisons about a lot of things, but I think this one is pretty clear.

82 TMC February 18, 2016 at 12:34 pm

When you allow for differing definitions countries use for for births and such, the US comes out better.

Hint: if a metric in use is life expectancy the paper is garbage.

83 Nathan W February 18, 2016 at 3:33 pm

TMC – let me know if you’re indifferent about life expectancy at age 75, looking at the prospect of living to 80

84 Cliff February 17, 2016 at 1:01 pm

How would such cost reductions come about? By magic? By Democrats stabbing their allies in the back and legislating lower prices?

85 prior_test February 17, 2016 at 3:37 pm

‘How would such cost reductions come about? By magic?’

Maybe by reducing the extreme overhead which marks the American health insurance industry?

Or possibly, as Dean Baker constantly points out, by letting the free market work to reduce the extremely high costs associated with American doctors by allowing competition from equally well trained doctors from other countries. I’m sure that most loyal readers of this web site would be in complete agreement with that proposal to let the free market reign, of course.

Though of course, if one wishes to argue that the U.S. is woefully inadequate in being able to understand, much less emulate any of the models used by other countries to provide essentially all citizens health care at significantly lower cost with comparable outcomes, I won’t disagree. America is truly an outlier in many ways, after all.

86 AIG February 17, 2016 at 5:48 pm

prior_test, here again we have evidence of “evidence based” reasoning: i.e. pull s**t out of your a** and throw it at the wall till it sticks.

If US healthcare is so expensive because of overhead and lack of competition on medical labor markets…how do you think these factors are in the UK or France or Germany?

If you attribute costs to things in which the US is likely better than the low-cost countries you compare, then you’re just arguing BS.

US healthcare costs more because it costs a LOT more to get 99% colon cancer survival rates, than getting 60% survival rates in the UK. Ya think that costs a bit of extra money?

87 Cliff February 18, 2016 at 12:26 am

Yes, I’m sure everyone on this site does agree with allowing more competition from foreign doctors. But there is no way in hell the dems would even propose that. So we can rule that one out.

88 AIG February 17, 2016 at 5:44 pm

“but really, as an American, I still remain unconvinced that the U.S. cannot do better than France or the UK. That the U.S. is unlikely to approach Swiss or German standards – both countries with health care costs above those of France or the UK, and with health care measurably superior to that of the U.S. – is unsurprising, of course.”

What a load of nonsense. For healthcare outcomes where healthcare money is actually spend, I suspect you would not want to live in UK where you have a 60% chance of surviving colon cancer vs. 99% in the US.

Looking at pointless measures like longevity etc, yes the US does worst. Guess what, Brits live in UK, French live in France, Germans live in Germany and Switzerland. Who lives in America? Hmm…30% third world origin, 20% disconnected from that third world origin by only 1-2 generations. You think maybe controlling for race and ethnicity might account for some of those differences? Ya think?

“Evidence based” reasoning from Democrats, right here.

89 Nathan W February 17, 2016 at 7:02 pm

“60% chance of surviving colon cancer vs. 99% in the US.”

Citations? There are very few health outcomes for which the USA does not to worse than basically all wealthy countries. This would be a rather curious anomaly, to say the least, if true.

” pointless measures like longevity etc”

Are you suicidal? Or, how else to explain your indifference to lifespan? It might be easy, at the age of 50, to believe that you are indifferent between living to 75 or 80. But come back to you at 80? I imagine you would prefer 80.

“30% third world origin, 20%…”

You must have a different definition of “third world” than I do.

“You think maybe controlling for race and ethnicity might account for some of those differences”

I imagine they would do that if it was actually known, like, science stuff, that there were differences relating to so “race” (biological race is not confirmed by elementary statistical comparison of genomes) and ethnicity.

90 ad*m February 17, 2016 at 8:47 pm

Nathan W,

you don’t want citations, because they disagree with your priors. Concord-2 is clearly showing that the best place to have cancer treated is the US, this goes for breast, prostate etc.

Here is Figure 1, one of the key graphics from the paper:

I am physician who has practiced / is licensed to practice both in Europe and the US and the differences on the ground are even sharper than as shown by this study.
We had these discussions on this blog before, when it was all about passing Obamacare. It showed that all sort of examples brought up by the left dont survive scrutiny, and that different outcomes are genetic, not monetary in character. Another example was the Oregon Medicaid randomized ‘trial’, reviewed by Megan McArdle here

Enough, evidence will not change your mind anyway.

91 Nathan W February 17, 2016 at 10:16 pm

First, thank you for the information. Very interesting results. I wouldn’t have asked for citations if I didn’t want them. I would have disregarded what you said and walked off into a corner to pretend that I have never read it.

I don’t WANT to think that America spends more and gets worse results. It’s a fact. Anyways, prostate cancer is basically never used as a GENERAL indicator of health care quality. This is a very interesting exception, and I’m quite curious to understand the causes of it. My assumption is that it’s related to the fact that health care is very expensive in the USA, and can therefore attract higher than average quality doctors, and the price includes lots of fancy diagnostic tools, etc. etc. It strikes me as slightly odd that cancer survival rates are not generally included in GENERAL indicators of health care quality. One might propose a conspiracy to make the US private system look bad. But I suggest an easy alternative: since cancer generally occurs much much later in life, survival may not be seen as being as relevant as other indicators. BUT, with such astonishingly better results, I immediately agree that this is a relevant part of the picture. Revising priors: cancer treatment is far better on average in the USA across the board.

“Enough, evidence will not change your mind anyway.”

Where’d you get that idea from?

From the Oregon article: “this reduction in services “had no adverse effect on participants’ health.” ”

Good luck replicating that one. Hypothesis: Health is invariant with level of health services provided. If true, we should shut down the health care industry as a whole, since it’s wasting trillions and trillions of dollars a year for no benefit. Given how many Republicans would just LOVE to shut down Medicaire, I’m sure there will be no shortage of support in seeking funds to replicate the study.

Thanks again for the info.

92 Cliff February 18, 2016 at 12:32 am


Your ignorance is showing. How many times do we have to go over basic science and well-accepted scientific facts with you?

Far from it being the scientific consensus that the U.S. has a worse healthcare system in every way than every other developed nation as you claim, the U.S. is widely accepted to predominantly have the best health outcomes and most especially in the area of cancer care. This is basic stuff.

The race thing you are being deliberately idiotic about. We have given you numerous links to prove that you are wrong but you put the words of one professor who you did not even understand above any other scientific evidence you come across in the rest of your life so there is no hope for you. You are a closed-minded conservative in that area.

Regarding health being largely invariant with the level of services provided, that is again a very, very basic fact that is well-accepted in the scientific field. The level of healthcare has a small effect on health, genes and lifestyle have large effects.

The fact that all the things you think are scientific facts are actually received wisdom, popular misconceptions and left-wing agitprop is striking.

93 Nathan W February 18, 2016 at 3:15 am

Cliff, no one denies that the best health care in the world can be BOUGHT in America.

The problem is that most people cannot afford that quality of healthcare.

Leading to fact that most health care outcomes compare very poorly to most other wealthy countries in most general indicators of health. Check Exhibit 9 in the following:

The US has low numbers in the good stuff and high number in the bad stuff.

“The race thing you are being deliberately idiotic about.”

No. I studied lots of genetics in undergrad and easily understand that the fact that there are identifiable genetic markers in different groups does therefore mean that the groups are systematically different.

“Regarding health being largely invariant with the level of services provided, that is again a very, very basic fact that is well-accepted in the scientific field.”

Then let’s close all the hospitals. They are clearly useless. Who accepts this as a “well-accepted” fact? Not even the Oregon study claimed that. They seemed more perplexed by the results than suggesting that the results could be considered as generalizable.

94 Rich Berger February 17, 2016 at 11:06 am

“When Republicans have proposed large tax cuts for the wealthy and asserted that those tax cuts would pay for themselves, for example, we have shown that the economic facts do not support these fantastical claims.”

I would like to know who these individuals are, with quotes and citations. Since these economists are evidenced-based, should be easy.

95 Ray Lopez February 17, 2016 at 11:18 am

Maybe you were too young to remember ex-Buffalo Bill quarterback and sometime politician Jack Kemp and his journalist side-kick Jude Thaddeus Wanniski? I am almost too young to remember, but know enough about history to understand the reference.

96 Rich Berger February 17, 2016 at 11:50 am

Of course I do, and I do not remember them saying that tax cuts pay for themselves. The economists writing this letter claimed to have worked for the Clinton and Obama administrations, so if they were debunking any such claims, I would expect them to be in the last 23 years.

I do remember that the top tax rate went down from 70% to 28% during the Reagan administration and revenues were higher at the end than the beginning, in nominal terms and also in inflation adjusted terms.

97 prior_test February 17, 2016 at 12:03 pm

‘nominal terms and also in inflation adjusted terms’

Not to mention this – ‘The Tax Reform Act of 1986 was given impetus by a detailed tax-simplification proposal from President Reagan’s Treasury Department, and was designed to be tax-revenue neutral because Reagan stated that he would veto any bill that was not. Revenue neutrality was targeted by decreasing individual income tax rates, eliminating $30 billion annually in loopholes, while increasing corporate taxes, capital gains taxes, and miscellaneous excises.[1] The act raised overall revenue by $54.9 billion in the first fiscal year after enactment [2] As of 2014, the Tax Reform Act of 1986 was the most recent major simplification of the tax code, drastically reducing the number of deductions and the number of tax brackets (for the individual income tax) to three.’

98 The Original D February 17, 2016 at 2:16 pm

I remember them saying the CBO should use dynamic scoring because their proposed tax cuts projected huge deficits.

Later some of those people probably helped W estimate the cost of the Iraq War.

99 Dan Weber February 17, 2016 at 12:17 pm

Republicans didn’t claim this (tax cuts pay for themselves) in the 1980s.

They may well have believed it in the 2000s, though.

100 GeoffBr February 17, 2016 at 8:09 pm

One example: Marco Rubio to CNBC:

John Harwood: “Wait – your plan creates a surplus because of the dynamic effect?”
Rubio: “Absolutely.”

101 Rich Berger February 19, 2016 at 11:44 am

I know this thread has grown cold, but your citation is simply wrong. Rubio has not claimed that his tax cuts pay for themselves. He claims that it will generate a surplus in 10 years. Here it the Tax Foundation analysis -

I am not a Rubio supporter, but I thought it was important to call you on this falsehood. As if I needed a reminder, John Harwood is a real dick.

102 derek February 17, 2016 at 12:19 pm

Numbers in South Carolina and Nevada must be looking pretty bad for Clinton.

Get out the scientists!

103 Moreno Klaus February 18, 2016 at 7:46 am

+10 😉

104 Maximum Liberty February 17, 2016 at 8:02 pm

I agree with the content of their statement.

I just wanted to add that I had Laura Tyson for Econ 1 at Berkeley and was hugely underwhelmed. I came away from it wondering whether she actually understood economics. I should have skipped her lectures and just read the book, which was fine, if anodyne.

105 j r February 17, 2016 at 9:23 pm

I think the appropriate thing for Sanders to do would be to answer back in the form of a diss track with features by Killer Mike and Bun B. The overwhelming emo of millennials have ruined rap beefs, so I look forward to econ beefs filling the void.

106 Ann Onymous February 18, 2016 at 7:31 am

I wonder what is their fact-based take on Clinton’s plans. I don’t think we’ll see it, though.

107 stan February 19, 2016 at 12:03 pm

How four economists took the shreds of their remaining credibility and blew them up.

108 Floccina February 23, 2016 at 12:58 pm

“Largely as a result of efforts like these, the Democratic party has rightfully earned a reputation for responsibly estimating the effects of economic policies.”

I think Julian Simon would have disagreed with them on that. BTW Trump is closer to the Democrats on trade issues.
And what about GMO’s, Nuclear power, Pesticides, Herbicides? Speak the name Monsanto around Democrats and will not get a cool scientific reaction.

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