In his New York Times column yesterday, economist Paul Krugman criticized the “bad faith economics” of those “reaching for any stick they can find with which to beat proposals for increased government spending.”
In response, American Enterprise Institute scholar Phil Levy wrote a blog post for Foreign Policy today, calling himself a “Bad Faith Economist” who considers the stimulus plan “bad news” because the proposed spending would occur too slowly.
To back his conclusion, Levy wrote:
If one compared a tax cut now to spending years down the road, then it would be no contest -– tax cuts would win. In fact, that’s pretty much the choice we face. According to press reports of an unreleased CBO study, only $26 billion of $355 billion in new spending would occur in the current fiscal year. Another $110 billion would come in Fiscal 2010. That’s less than 40 percent of the total by September 2010.
We agree that Levy is a bad faith economist, but not for the reason he cited.
The problem is that Levy used numbers from “an unreleased CBO study” that is not an actual study. It was simply “a preliminary calculation of the spending schedule for one portion of the stimulus bill.”
Levy is hardly the only one parading this incomplete report around. ThinkProgress found that the TV media alone cited it 81 times in the last six days, and the Wall Street Journal and the Washington Times also hopped on board. But Levy’s post is extra laughable because it came out the day after the CBO released its complete assessment of the stimulus plan.
The official CBO analysis of the entire stimulus bill found that it “would cost the federal government about $816 billion over the next 10 years and that approximately $526 billion, or about 65 percent, would be spent by the end of September 2010.” And as Kevin Drum added, “most of the spending that comes in FY2012 or later is either for projects that simply take more than two years to complete (highways, school repairs) or infrastructure improvements that have long-term paybacks (renewable energy programs).”
As CBO Director Doug Elmendorf wrote regarding yesterday’s report, “This is the first cost estimate that CBO has prepared for [the stimulus plan] in its entirety.” Perhaps next time, Levy will take his cues from the actual office that he is citing, instead of Glenn Beck and Lou Dobbs.