Mankiw Defends Tax Cut Stance, Faces Online Flak

N. Gregory Mankiw is not unfamiliar with the demands that come with being one of the foremost economists in the country.

After all, the Beren Professor of Economics survived a stint in the very public domain of Washington politics, serving as the Chairman of the Council of Economic Advisors from 2003 to 2005. But now, he’s facing a new and perhaps even more public challenge—the wrath of online bloggers.

Several professors and economists have called on Mankiw to explain what they see as his changing views on tax cuts from before he began advising President George W. Bush to when he served as Bush’s top economic advisor.

According to an online blog post by Jared Bernstein of the Economic Policy Institute, Mankiw had previously criticized certain supply-side arguments—namely, that lowering tax rates could actually generate more tax revenue—and then reversed his opinion while working in Washington.

But Mankiw said that he never made such a policy switch.

“[Bernstein] made a claim that I’d been inconsistent about the tax cuts and I don’t think I had been,” Mankiw said. “Being opposed to a tax cut as a policy and being critical of an argument for tax cuts are two different things.”

Mankiw clarified on his own online blog that he opposed only the supply-side argument for tax cuts but that he thought the 2003 Bush tax cuts were justified for other reasons—though he himself was not actually an advisor to the President when those tax cuts were implemented.

But Brendan J. Nyhan, a political science graduate student at Duke University and frequent blogger, points out that while Mankiw said he was “skeptical” of the claim that tax cuts could pay for themselves during his Senate confirmation hearing, Mankiw also denied that the administration had used “self-financing” arguments.

Nyhan then lists on his blog specific quotes from then-Press Secretary Ari Fleisher, Vice President Dick Cheney, and President Bush, all of whom said in the early months of 2003 that the tax cuts would lead to more tax revenue.

“Mankiw failed to get the Bush administration to say things that were accurate about the effects of tax cuts on revenue and other economic issues,” Nyhan said. “That Mankiw is unwilling to acknowledge that the Bush administration made these claims is exemplary of White House experts who are unwilling to publicly contradict their bosses in the administration.”

J. Bradford Delong ’82, a prominent economist at UC Berkeley, also weighed in on the debate on his blog, questioning whether it is “worth the sacrifice of the economics profession’s outside credibility and the further confusion of the public that is entailed when good economists defend bad policies on the outside that they are working to change on the inside.”

No one outside the administration may ever know whether Mankiw privately advised Bush that the tax cuts would not be self-financing. But Mankiw announced in late 2006 that he had signed on as an advisor to the presidential campaign of former Massachusetts Gov. Mitt Romney, and the Republican candidate seems to be employing these very same supply-side arguments.

“If you lower taxes enough, you create more growth,” Romney said in a video excerpt on his Web site from a closed-door presentation he made to the Club for Growth, a political organization that favors low taxes, in March 2007.

“And if you create growth, you get more jobs,” Romney continued. “You get more jobs, more people are paying taxes. You get more taxes paid, the government has more money by charging lower tax rates.”

It would appear that this is the very same argument for taxes that Mankiw has said he opposed.

Nyhan said that economists with ties to politicians need to be more honest with the public regarding their actual views, whether or not they clash with the prominent figures they’re advising.

“We need to drive this idea out of the mainstream, because it is not accurate,” Nyhan said.

—Staff writer Nathan C. Strauss can be reached at strauss@fas.harvard.edu.