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Four former top economists in Democratic administrations signed a letter taking Bernie Sanders's campaign to task for touting a document by University of Massachusetts economist Gerald Friedman that purports to show that Sanders's policies would boost the American growth rate to more than 5 percent.
Alan Krueger, Austan Goolsbee, Christina Romer, and Laura D'Andrea Tyson all served at one time or another as chairs of the Council of Economic Advisers under either Barack Obama or Bill Clinton; their letter isn't signed by three other CEA chairs from Clinton's tenure: Janet Yellen (who's busy running the Fed), Joseph Stiglitz (who's well to the left of this group), and Martin Baily (who tells me he didn't know anything about it).
The letter cites Friedman's assumption that the economy would grow by 5.3 percent under Sanders, and comments, "No credible economic research supports economic impacts of these magnitudes." Further, the economists argue that making this kind of claim undermines "our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic."
Somewhat ironically, this group of empirically minded wonks doesn't actually offer an empirical critique of the study they are worried about — relying simply on their authority as Democratic Party luminaries to bat it down.
This controversy is, on one level, almost totally meaningless. No president in any era operating under any set of circumstances has managed to pass a complete legislative agenda, and the combination of partisan polarization, an entrenched House GOP majority, and the extremely ambitious nature of Sanders's agenda makes it totally inconceivable that a Sanders administration would pass all of its policy proposals.
Asking what would happen if the entire Sanders agenda is enacted is a little like asking what would happen if Sanders brought his mid-range game to the Golden State Warriors. To the extent that anyone is backing Sanders because they have read Friedman's paper, the fact that none of this is going to happen is a bigger problem than any questions about Friedman's forecasts.
However, on another level, the Friedman paper and the attacks on it from Democratic Party wonks are an interesting window into how the primary is playing out behind the scenes. Clinton has achieved such overwhelming party insider support that the Sanders campaign is largely cut off from access to the kind of para-party policy wonk universe that would allow Sanders to release campaign proposals that pass muster by the traditional rules of the game.
But he's managed to make a virtue out of this weakness and harness it to the larger significance of the Sanders project — an effort to turn the Democratic Party into a more ideological party that operates more like a progressive mirror image of the conservative Republican Party and less of a broad coalition of interest groups mediated by technocrats.
Gerald Friedman has a very optimistic view of the Sanders agenda
The headline conclusion of Friedman's paper is that under Bernienomics, "the growth rate of the real gross domestic product will rise from 2.1% per annum to 5.3% so that real GDP per capita will be over $20,000 higher in 2026 than is projected under the current policy."
That is a very high rate of growth.
When Jeb Bush promised 4 percent growth, centrist-to-liberal economists were derisive, and even the most Jeb-friendly economists wouldn't quite endorse the claim. Friedman is promising even more than that, and the CEA letter reflects a similar level of skepticism.
I asked Dean Baker from the Center for Economic and Policy Research, one of the more left-wing and Sanders-friendly economists in the Washington policy world, what he thought of the 5.3 percent target. He, in the nicest possible way, suggested it is unrealistic:
Well, there is still plenty of slack in the economy, so having a year of 5.3 percent growth is not impossible (Fed willing), but if he said this was a sustainable rate, that seems pretty hard to imagine. (It's not clear to me from this piece, that he said 5.3% was sustainable.) My view is that we can probably have somewhat better productivity growth if we had a stronger economy (firms try to economize on labor), but getting much over 2.0 percent is hard to imagine. And once we get back to full employment, we should be looking at relatively modest labor force growth (@0.5%), which means that getting much over 2.5 percent growth on a sustained basis is pretty questionable.
Obviously opinions differ considerably about the merits of various aspects of Sanders's agenda. But it's on these questions of slack, full employment, and labor force growth where Friedman departs most clearly from the economic consensus.
Consider this chart, laying out Friedman's view of how Bernienomics will impact the employment rate, or the share of the adult population that has a job:
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Reasonable people can (and will) disagree about how Sanders's plans would impact the labor market. But virtually every expert I've ever discussed this with believes that one reason the employment rate has declined since 1999 is that old people are a larger share of the population today than they were 17 years ago. The main reason the CBO expects the employment rate to fall in the future is that this aging process is set to continue. This means the "full employment" level of employment is simply lower than it was in the past.
Friedman, by contrast, appears to believe that the full employment level is right where it was in the waning days of the Clinton administration, and that with good policy we can get back there.
Bernienomics and the labor force
Friedman does not, however, discuss the demographic change issue at all in his paper. Instead, in a footnote he argues that "women’s employment will be encouraged by the Paycheck Fairness Act, which will raise the wages of women, encouraging more to seek paid employment." No empirical evidence is offered that such a modest piece of legislation will have an impact this large, nor is much made of the fact that a large share of the growth benefit of the Sanders agenda is being attributed to this consensus Democratic policy, rather than to his more unusual positions.
Conversely, some of Sanders's more distinctive signature ideas would almost certainly depress labor force participation even in a sympathetic view.
For example, if you made college free, some young people who would otherwise work full time would instead go to school and work part time. Some students who currently work part time would reduce their hours or cut back to zero. A proponent of free college would likely describe these as benefits of the free college universe — and certainly foreign countries where college is much cheaper than the United States see fewer school-age people in the labor force.
By the same token, Sanders's "Medicare for all" and expanded Social Security plans would almost certainly increase the number of people who retire early. Free health care would make it easier to be retired for a year or five before Social Security benefits kick in, more generous Social Security would reduce the amount of intact savings people need once the benefits do kick in, and the higher taxes to finance the Medicare-for-all plan would make working slightly less lucrative.
None of that is necessarily a bad thing — reducing old people's need to toil is a very nice idea — but, like free college, it tends to cut against Friedman's view that Bernienomics will create a surge of employment.
Imperious dismissals only make Sanders stronger
It's noteworthy that the former CEA chairs criticizing Friedman didn't bother to run through a detailed explanation of their problems with the paper. To them, the 5.3 percent figure was simply absurd on its face, and it was good enough for them to say so, relying on their authority to generate media coverage.
And to an extent, mission accomplished. The coverage has been generated. But for better or for worse, the entire premise of the Sanders campaign is that the existing Democratic Party establishment needs to be overthrown, so imperious dismissals by establishment figures don't really hurt Sanders. His policy director, Warren Gunnels, told Danielle Kurtzleben that the economists in question are "the establishment of the establishment" and claimed to be unbothered by the criticisms.
"That does not bother us at all," he told her. "What bothers us is the fact that the U.S. has more kids living in poverty than nearly any major country on earth."
Bernie sympathizers like the Week's Ryan Cooper and veteran left-wing political operative Jeff Hauser simply view the letter signers as non-credible, referring to an old Goolsbee column and to Tyson's service on corporate boards.
speaking of W O N K S, here's one Austan Goolsbee w/a 2007 take about how subprime mortgages help the poor https://t.co/wzXczmY6Cc
— ryan cooper (@ryanlcooper) February 17, 2016
@mattyglesias @ryanlcooper Wait, Ryan, you are skeptical of value of critique of Sanders from an actual Morgan Stanley Board of Director?
— Jeff Hauser (@jeffhauser) February 17, 2016
To Sanders skeptics, this style of response is itself worrying. Paul Krugman, for example, wrote about the letter and said, "If your response to these concerns is that they’re all corrupt, all looking for jobs with Hillary, you are very much part of the problem."
Bernie Sanders is building a more ideological party
The dismissals of the critiques of Friedman's praise for Sanders's plan are, in a way, more telling and informative than either the Friedman paper or the critiques of it. Sanders and his core constituency simply don't care.
Sanders is running a style of campaign that's very unusual for a prominent Democrat but extremely common for a Republican. Marco Rubio, for example, has proposed a large tax cut, a balanced budget amendment, an increase in defense spending, and to prevent any cuts in Social Security or Medicare for people currently at or near retirement.
This is, obviously, not possible, but it hasn't been a problem for Rubio in the GOP primary because the 2016 GOP primary — like the 2012, 2008, 2000, 1996, and 1988 primaries — haven't been about who has the best policy plans. It is about how conservative ideology should be defined and — among those who share a similar definition — who is its most effective champion. The 1980 and 1976 GOP primaries were about whether the Republican Party should be a vehicle of the conservative movement or whether it should continue in the Eisenhower/Nixon/Ford model of right-leaning interest group brokerage — with the conservatives winning in 1980 and never letting go.
Democrats for almost all of this time have not defined themselves as a mirror image of the conservative GOP. Instead, they are a left-leaning coalition of interest groups looking for group wins that tends to downplay ideology. This is why, historically, evaluating "plans" has been a very important part of Democratic politics.
Sanders's campaign against Hillary Clinton is more like Ronald Reagan's battle with Gerald Ford than like the Obama-Clinton primary of 2008. As part of his political revolution, Sanders wants to change the Democratic Party (which he historically was not even a member of) into a much more ideological political party. Consequently, for Sanders the point of taking policy positions is much more about showing where he stands and who his friends and enemies are than it is about the details of policymaking. What he would actually do as president, after all, is going to be constrained by political realities and his ability to mobilize the public
To Sanders's critics, of course, this is just gross irresponsibility that neglects the best traditions of the Democratic Party and raises serious questions about Sanders's ability to do serious policy analysis when the time comes to make choices. But to his fans, fetishizing wonky details is just a way of circumscribing policy proposals to what can be uncontroversially modeled in a world where obtaining and deploying concrete political power — not drawing up more and better white papers — is the crucial task for progressive politics.
