Watching Democrats and Republicans
hash out their differences in the public arena, it’s easy to get
the impression that there’s a deep disagreement among reasonable
people about how to manage the U.S. economy.

Nothing could be further from the truth.

In reality, there’s remarkable consensus among mainstream
economists, including those from the left and right, on most
major macroeconomic issues. The debate in Washington about
economic policy is phony. It’s manufactured. And it’s entirely
political.

Let’s start with Obama’s stimulus. The standard Republican
talking point is that it failed, meaning it didn’t reduce
unemployment. Yet in a survey of leading economists conducted by
the University of Chicago’s Booth School of Business, 92 percent
agreed that the stimulus succeeded in reducing the jobless rate.
On the harder question of whether the benefit exceeded the cost,
more than half thought it did, one in three was uncertain, and
fewer than one in six disagreed.

Or consider the widely despised bank bailouts. Populist
politicians on both sides have taken to pounding the table
against them (in many cases, only after voting for them). But
while the public may not like them, there’s a striking consensus
that they helped: The same survey found no economists willing to
dispute the idea that the bailouts lowered unemployment.

No Support

Do you remember the Republican concern that Obama had
somehow caused gas prices to rise, a development that Newt Gingrich promised to reverse? There’s simply no support among
economists for this view. They unanimously agreed that “market
factors,” rather than energy policy, have driven changes in gas
prices.

How about the oft-cited Republican claim that tax cuts will
boost the economy so much that they will pay for themselves?
It’s an idea born as a sketch on a restaurant napkin by
conservative economist Art Laffer. Perhaps when the top tax rate
was 91 percent, the idea was plausible. Today, it’s a fantasy.
The Booth poll couldn’t find a single economist who believed
that cutting taxes today will lead to higher government revenue
even if we lower only the top tax rate.

The consensus isn’t the result of a faux poll of left-wing
ideologues. Rather, the findings come from the Economic Experts
Panel run by Booth’s Initiative on Global Markets. It’s a
recurring survey of about 40 economists from around the U.S. It
includes Democrats, Republicans and independent academics from
the top economics departments in the country. The only things
that unite them are their first-rate credentials and their
interest in public policy.

Let’s be clear about what the economists’ remarkable
consensus means. They aren’t purporting to know all the right
answers. Rather, they agree on the best reading of murky
evidence. The folks running the survey understand this
uncertainty, and have asked the economists to rate their
confidence in their answers on a scale of 1 to 10. Strikingly,
the consensus looks even stronger when the responses are
weighted according to confidence.

The debate in Washington has become completely unmoored
from this consensus, and in a particular direction: Angry
Republicans have pushed their representatives to adopt positions
that are at odds with the best of modern economic thinking. That
may be good politics, but it’s terrible policy.

The disjunction between the state of economic knowledge and
our current political debate has important consequences. Right
now, millions of people are suffering due to high unemployment.
Our textbooks are filled with possible solutions. Instead of
debating them seriously, congressional Republicans are blocking
even those policy proposals that strike most economists as
uncontroversial.

Raw Politics

This inaction has no basis in economics. Instead, it’s raw
politics — a cynical attempt to score points in a phony
rhetorical war or a way of preventing their opponents from
scoring a policy win.

The debate about the long-run challenge posed by the
federal budget deficit has also become divorced from economic
reality. The same panel of economists was almost unanimous in
agreeing that “long run fiscal sustainability in the U.S. will
require cuts in currently promised Medicare and Medicaid
benefits and/or tax increases that include higher taxes on
households with incomes below $250,000.” Only one in 10 was
uncertain. None objected.

Likewise, popular tax deductions such as that for mortgage
interest didn’t fare well in the surveys and would be on almost
any economist’s list of targets for reform. Yet neither party is
willing to propose such policies.

The consensus, of course, can be wrong. On the probable
consequences of economic reforms, though, leading economists are
more likely to be right than politicians running for re-
election. Their solidarity needs to be taken seriously. Too much
of what passes for economic debate in Washington is the product
of faith, not evidence.

It’s time to put economics back into the economic debate.

(Betsey Stevenson is associate professor of public policy
at the University of Michigan. Justin Wolfers is associate
professor of business and public policy at the University of
Pennsylvania
, and a non-resident senior fellow of the Brookings
Institution
. Both are Bloomberg View columnists. The opinions
expressed are their own.)

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To contact the writers of this article:
Betsey Stevenson at [email protected].
Justin Wolfers at [email protected].

To contact the editor responsible for this article:
Mark Whitehouse at [email protected].

About Betsey Stevenson & Justin Wolfers

Betsey Stevenson and Justin Wolfers are, respectively, an assistant professor and an associate professor in the Business and Public Policy Department at the University of Pennsylvania's Wharton School.

More about Betsey Stevenson & Justin Wolfers