More on the President’s Tax-Cut-for-Jobs Trade

July 30th, 2013 at 2:24 pm

Over at the NYT Economix blog.

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4 comments in reply to "More on the President’s Tax-Cut-for-Jobs Trade"

  1. Joe says:

    Seems like Casey Mulligan’s new post in response to your column deserves a retort.

    • Jared Bernstein says:

      And such a retort is forthcoming on the NYT blog. Let me know what you think.

      • Joe says:

        Nicely done.

        The slack in the current economy is such a simple but hugely important point that he overlooked in your original post.

        Or, if I’m allowed to give him the benefit of the doubt, perhaps it has to do with an understanding of what is meant by “growth.”

        Mulligan says, “[o]r maybe now is the time for temporary stimulus rather than pro-growth policies.”

        But the point of temporary stimulus is to increase real GDP, i.e., grow the actual output of the economy, so we can reach potential GDP. That’s essentially what you’re arguing for, isn’t it?

        Whereas his understanding of “growth” seems to be directed to how one can increase potential GDP – the highest level of output that can be, but isn’t necessarily, achieved over the long term.

        Or am I too naive to believe that a professor of economics would make such a simple error?

        • Jared Bernstein says:

          That’s exactly right–I’m arguing for closing the gap between actual and potential GDP which is still around 7% of GDP.