Yesterday, White House press secretary Jay Carney said:
It is unfortunate but true that so far the Republicans, while they have put forward plans, economic plans, have not put forward a plan that in any way would have a positive impact or measurably positive impact on economic growth or job creation in the next 12 to 18 months. That’s simply a fact. It’s been assessed that way by outside economic analysts and many other observers, including journalists.
Unquestionably, Republicans have put out plans. The House plan can be seen at www.jobs.gop.gov . Senate Republicans, led by John McCain, Rand Paul, and Rob Portman, announced the “Jobs Through Growth Act” last week.
It is equally true that these plans contain provisions that the president considers important. The House Republicans’ plan includes a serious review of costly regulations, which the president has referred to as an important goal (although his executive order has produced little more than oratory to date). It contains a call for more trade agreements; the president called on Congress numerous times to pass existing trade agreements (although he did not bother to send them up for ratification until he needed a signing ceremony during the state visit of South Korean president Lee Myung-bak). The Republicans call for patent reform. The president did as well, and Congress passed it in a timely fashion.
And both plans call for a move to a lower corporate-income-tax rate, as well as a reduced rate on repatriated earnings — allowing American dollars to make the American economy stronger — as steps toward fundamental tax reform. My analysis and a recent one by Laura Tyson and co-authors both suggest strong, short-run effects that would raise GDP and jobs substantially.
So maybe the problem is that the plans don’t contain enough government spending in general and “temporary, targeted” Keynesian stimulus in particular. After all, there is a certain class of popular business-cycle models that rewards only this kind of policy. If so, Mr. Carney would be well served to look beyond this narrow segment of the economics profession.
Certainly he would be well served to choose his words more accurately.