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Open Letter to Bush from Business Professors

Old 10-16-04, 10:09 AM
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Open Letter to Bush from Business Professors

Here is the text of an open letter to GWB that was sent by business professors at some of the leading business schools in the country (Harvard, Wharton, and many more). For the sake of brevity, I am not including the list of signatories, but it (along with the text of the letter) can be found here http://maxspeak.org/mt/archives/000818.html#more The number of signatories varies between different sources: 169 at some 200 at others, but that may be because it is still incirculation and others are adding their signatures.

It's a pretty damning indictment of Bush's economies. I don't think Dubyah will be making any financial contributions ot his alma mater anytime soon.

Open Letter to President George W. Bush

"October 4, 2004

Dear Mr. President:

As professors of economics and business, we are concerned that U.S. economic policy has taken a dangerous turn under your stewardship. Nearly every major economic indicator has deteriorated since you took office in January 2001. Real GDP growth during your term is the lowest of any presidential term in recent memory. Total non-farm employment has contracted and the unemployment rate has increased. Bankruptcies are up sharply, as is our dependence on foreign capital to finance an exploding current account deficit. All three major stock indexes are lower now than at the time of your inauguration. The percentage of Americans in poverty has increased, real median income has declined, and income inequality has grown.


The data make clear that your policy of slashing taxes ? primarily for those at the upper reaches of the income distribution ? has not worked. The fiscal reversal that has taken place under your leadership is so extreme that it would have been unimaginable just a few years ago. The federal budget surplus of over $200 billion that we enjoyed in the year 2000 has disappeared, and we are now facing a massive annual deficit of over $400 billion. In fact, if transfers from the Social Security trust fund are excluded, the federal deficit is even worse ? well in excess of a half a trillion dollars this year alone. Although some members of your administration have suggested that the mountain of new debt accumulated on your watch is mainly the consequence of 9-11 and the war on terror, budget experts know that this is simply false. Your economic policies have played a significant role in driving this fiscal collapse. And the economic proposals you have suggested for a potential second term ? from diverting Social Security contributions into private accounts to making the recent tax cuts permanent ? only promise to exacerbate the crisis by further narrowing the federal revenue base.

These sorts of deficits crowd out private investment and are politically addictive. They also place a heavy burden on monetary policy ? and create additional pressure for higher interest rates ? by stoking inflationary expectations. If your economic advisers are telling you that these deficits can be defeated through further reductions in tax rates, then you need new advisers. More robust economic growth could certainly help, but nearly every one of your administration?s economic forecasts ? both before and after 9-11 ? has proved overly optimistic. Expenditure cuts could be part of the answer, but your record so far has been one of increasing expenditures, not reducing them.

What is called for, we believe, is a dramatic reorientation of fiscal policy, including substantial reversals of your tax policy. Running a budget deficit in response to a short bout of recession is one thing. But running large structural deficits over a long period is something else entirely. We therefore urge you to consider the fiscal realities we now face and the substantial burden they are placing on our economy.

We also urge you to consider the distributional consequences of your policies. Under your administration, the income gap between the most affluent Americans and everyone else has widened. Although the latest data reveal that real household incomes have dropped across the board since you took office, low and middle income households have experienced steeper declines than upper income households. To be sure, the general phenomenon of mounting inequality preceded your administration, but it has continued (and, by some accounts, intensified) over the past three and a half years.

Some degree of inequality is inherent in any free market economy, creating positive incentives for economic and technological advancement. But when inequality becomes extreme, it can be socially corrosive and economically dysfunctional. Problems of this sort are visible throughout much of the developing world. At the moment, the most commonly accepted measure of inequality ? the so-called Gini coefficient ? is far higher in the United States than in any other developed country and is continuing to move upward. We don?t know where the breakpoint is for the U.S., but we would rather not find out. With all due respect, we believe your tax policy has exacerbated the problem of inequality in the United States, which has worrisome implications for the economy as a whole. We very much hope you will take this threat to our nation into account as you consider new fiscal approaches to address the nation?s most pressing economic problems.

Sensible and farsighted economic management requires true discipline, compassion, and courage ? not just slogans. Given the tenuous state of the American economy, we believe that the time for an honest assessment of the problem and for genuine corrective action is now. Ignoring the fiscal crisis that has taken hold during your presidency may seem politically appealing in the short run, but we fear it could ultimately prove disastrous. From a policy standpoint, the clear message is that more of the same won?t work. The warning signs are already visible, and it is incumbent upon all of us to pay attention."
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Old 10-16-04, 10:17 AM
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a large part of the deficit is growth in entitlements. Get rid of those and you get rid of most of the deficit.
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Old 10-16-04, 11:09 AM
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Originally posted by al_bundy
a large part of the deficit is growth in entitlements. Get rid of those and you get rid of most of the deficit.


Maybe you could give an example of which you would "get rid of"

Maybe reform we both could agree on. But the discretionary spending and the size of government have both radically increase under Bush. This is clearly a fair criticism.
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Old 10-16-04, 11:34 AM
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look at the CBO and OMB numbers.

entitlements and mandatory spending have grown a faster in the last four years than under clinton. no one's fault just a fact of life.

discretionary spending has also grown very fast and it includes 50% increases in education and VA spending.

CBO predict the deficits to decrease until the end of the decade, and if comparing them to 1980's figures they are lower than at most times in our history.
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Old 10-16-04, 12:44 PM
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discretionary spending has also grown very fast and it includes 50% increases in education and VA spending.
I thought we weren't funding edu and the vets...
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Old 10-16-04, 12:51 PM
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Professor is all I need to know about this. The economy is growing at a faster rate in the last 7 quarters than it was when Clinton was running for re-election. We have more home ownership now than at any time before. No country has ever taxed itself to prosperity, ever.
Oh, and Alan Greenspan agrees with Bush that the tax cuts helped the economy grow out of a recession.
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Old 10-16-04, 01:28 PM
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Originally posted by al_bundy
a large part of the deficit is growth in entitlements. Get rid of those and you get rid of most of the deficit.
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Old 10-16-04, 01:42 PM
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http://pnews.org/art/4art/DISparity.shtml
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Old 10-16-04, 02:26 PM
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Originally posted by al_bundy
look at the CBO and OMB numbers.

entitlements and mandatory spending have grown a faster in the last four years than under clinton. no one's fault just a fact of life.
What is considered mandatory spending?
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Old 10-16-04, 02:37 PM
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The federal budget surplus of over $200 billion that we enjoyed in the year 2000 has disappeared, and we are now facing a massive annual deficit of over $400 billion.
That sentence alone earmarks this as simple partisanship. If you disagree with Bush's policies, fine. Make your case. But if you can't make it without spin and distortions like this then one must conclude you have no case worth making.

We only had a "surplus" based on projections based on the bubble economy of the 1990s and some accounting tricks. So if the insane rate of speculative bubble growth, which was by definition unsustainable, had stayed the same, then there would have been a surplus. But of course that didn't happen - the bubble popped and revealed the true fundamental economy underneath the wild internet speculation.

We never had an actual surplus at all. The national debt never shrunk an inch. It grew every year.

When the stock market crashed while Bill Clinton was still in office in 2000, it took a third of the nation's wealth with it almost overnight. So, of course the following year we were going to have huge shortfalls in revenue, as people were paying about a third less in taxes as well! All the sudden your "projected surplus" becomes a big shorfall as people aren't getting near as much income to pay taxes on anymore.

This is all basic and elemental, and these professors must know this stuff. But their ideaology close to an election is more important to them than intellectual honesty. So they base their hit piece on Bush on erroneous and provably false spin rather than an actual accounting of what happened.

Nice try, guys.
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Old 10-16-04, 03:41 PM
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Originally posted by bfrank


Maybe you could give an example of which [entitlements] you would "get rid of"
...
Let me take a crack at this one:

All of them.
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Old 10-16-04, 04:02 PM
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I've been tempted to comment on this a few times since it was posted, but didn't want to get into it. I'll just say that coming from economists that letter is severely lacking in any economic rationale.
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Old 10-16-04, 05:17 PM
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Professor is all I need to know about this.
I second that.
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Old 10-17-04, 04:35 PM
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Good god ... almost the entire HBS staff.

None from the University of Chicago ... wonder why?

Last edited by ChiTownAbs, Inc; 10-17-04 at 04:38 PM.
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Old 10-17-04, 04:42 PM
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Originally posted by ChiTownAbs, Inc
Good god ... almost the entire HBS staff.

None from the University of Chicago ... wonder why?




No you don't.
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Old 10-17-04, 06:42 PM
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Originally posted by Mrs.Nesbit
What is considered mandatory spending?
anytime the government has to send a check to someone

SS benefits
medicare
welfare
government employee paychecks
any other entitlement where the law says someone has to be paid even if the government has to borrow money
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Old 10-17-04, 07:02 PM
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Originally posted by bhk
We have more home ownership now than at any time before.
Home ownership is encouraged by low interest rates. Low interest rates are a sign of a weak or fragile economy. I don't see how continuing to state that is a badge of honor for the Bush campaign?
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Old 10-17-04, 07:18 PM
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Originally posted by joshd2012
Home ownership is encouraged by low interest rates. Low interest rates are a sign of a weak or fragile economy. I don't see how continuing to state that is a badge of honor for the Bush campaign?
The rates have been going up, if you haven't noticed.

So if that's your measure, are we not in an improving economy?

Of course interest rates go low in a recession. The recession Bush inherited is no different.
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Old 10-17-04, 07:25 PM
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Originally posted by natesfortune
The rates have been going up, if you haven't noticed.

So if that's your measure, are we not in an improving economy?

Of course interest rates go low in a recession. The recession Bush inherited is no different.
1. Yes the interest rates have been going up, but the bulk increase in homeownership occured when the rates bottomed out.

2. Yes, the economy is improving, just not as steadily as one would want.

3. Exactly, its not Bush's fault that interest rates are low, and its not his causing that homeownership is up.
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Old 10-17-04, 07:59 PM
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Originally posted by joshd2012
1. Yes the interest rates have been going up, but the bulk increase in homeownership occured when the rates bottomed out.

2. Yes, the economy is improving, just not as steadily as one would want.

3. Exactly, its not Bush's fault that interest rates are low, and its not his causing that homeownership is up.
I would agree with all except probably number two with some little details here and there.

But if Bush wants to point out Home Ownership as a "the sky isn't falling" thing against the Democrats insistence that we're in the "worst economy since Hoover", I say let him.

It's also impossible for a President to get you a job, but Kerry seems to be promising that and all sorts of other economic miracles.

And Kerry is blaming the President for some economic data that clearly has nothing to do with the President as well. So if that game is going to be played, I can see how the President would likewise want to take credit for those sorts of things he can take credit for as well, since he gets the unfair blame for other things.
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Old 10-17-04, 08:30 PM
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Originally posted by joshd2012
1. Yes the interest rates have been going up, but the bulk increase in homeownership occured when the rates bottomed out.

2. Yes, the economy is improving, just not as steadily as one would want.

3. Exactly, its not Bush's fault that interest rates are low, and its not his causing that homeownership is up.
if you're looking for 4% unemployment to come again, then keep waiting. It's going to be a long time since it happens again.
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Old 10-17-04, 11:25 PM
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Originally posted by ChiTownAbs, Inc
Good god ... almost the entire HBS staff.

None from the University of Chicago ... wonder why?
Not surprising there are none from Auburn or George Mason either.
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Old 10-17-04, 11:29 PM
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Originally posted by joshd2012
Home ownership is encouraged by low interest rates. Low interest rates are a sign of a weak or fragile economy. I don't see how continuing to state that is a badge of honor for the Bush campaign?
I agree. It is only when home ownership is at its lowest that we know that the economy is good.


What?
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