Economist Gerald Friedman did an analysis of Bernie Sander’s program saying in part
- Real GDP growth of 5.3% through 2026.
- Unemployment rate will fall to 3.8% by 2021.
The Sander's Campaign reflexively used the Friedman analysis to show the promise of a Sander’s Presidency.
Unfortunately, many liberal economist attacked Friedman without thoughtful analysis even Paul Krugman. Four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton issued an an open letter. The letter was short and sweet.
“… An Open Letter from Past CEA Chairs to Senator Sanders and Professor Gerald Friedman
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.
Sincerely,
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 ...”
No footnotes. No analysis. No explanation.
To an non-economist which follows politics and the economy, the 5.3% GDP growth and 3.8% unemployment seems a complete fantasy, BUT data and analysis was needed.
The former chairwoman — Christina Romer and her husband David did a complete analysis of the Friedman study finding
“…
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First, all the effects of Senator Sanders’s policies that he identifies are assumed to come through their impact on demand. However, his estimates of those demand effects are far too large to be credible—even given Friedman’s own assumptions.
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Second, in assuming that demand stimulus can raise output 37% over the next 10 years relative to the Congressional Budget Office’s baseline forecast, Friedman is implicitly assuming that the U.S. economy is (and will continue to be for a long time) dramatically below its productive capacity. However, while some output gap likely still exists, the plausible range for the output gap is much too small to accommodate demand effects nearly as large as Friedman finds. As a result, capacity constraints would likely lead to inflation and the Federal Reserve raising interest rates long before such high growth rates were realized.
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Third, a realistic examination of the impact of the Sanders policies on the economy’s productive capacity suggests those effects are likely to be small at best, and possibly even negative. ...”
One of the things Democrats have going for us is we don’t fudge the facts. President Clinton used the non-partisan CBO estimates for his budget. President GW Bush used his own partisan numbers to double the national debt eliminating the Clinton Surplus.
The current Republican candidates with their standard cut in taxes and spending don’t add up — massive increase in the National Debt.
Bernie Sanders is an inspirational figure. Truely committed to progressive values. Clinton supporters keep attacking his programs for being totally unrealistic. Bernie = idealism. Hillary = pragmatism.
I will not address the policy realism. I will address his figures don’t add up. 5.3% GDP growth and 3.8% unemployment are beyond believe. His campaign in using the Friedman study is showing a lack of seriousness. Bernie is really good at the 10,000 foot “where we should go” but no real numbers behind the ideas.