Sluggish Economy: Recovery Gone Wrong -- AEI's Hassett and Hubbard

"[T]he administration's economics suggest mistakes of diagnosis or cure, or both." –Kevin Hassett and Glenn Hubbard

In case you missed it, American Enterprise Institute (AEI) economists Kevin Hassett and Glenn Hubbard recently explained in the Washington Post why President Obama's excuse narrative for the sluggish economic recovery -- that countries typically take up to 10 years to recover from financial crises -- makes policies such as his 2009 stimulus and proposed higher taxes hard to justify.

The authors explain:

Wrong diagnosis: Despite the campaign message of slow recovery, the president's economic team continues to predict strong GDP growth (over 4% in 2015) and has based policy proposals -- such as the 2009 stimulus -- on these rosy assumptions. Since economic growth has been sluggish, President Obama's excuse narrative on the campaign trail attempts to avoid blame even though "the more likely explanation is the failure of his own policies."

Wrong prescription: If the president is correct in his claims that economic recovery is always slow after financial crises, then proposed policies such as increasing taxes on the wealthy are questionable. Policy solutions that promote long term growth such as fiscal consolidation and tax reform are clearly preferable to the administration's suggestions, which would be more appropriate for a short recession that is followed by strong growth.

Read the full article here.

Kevin Hassett is director of economic policy studies at AEI. He previously served as a senior economist at the Federal Reserve Bank and a policy consultant to the Treasury Department. Glenn Hubbard is a visiting scholar at AEI, dean of the Columbia Business School, and a former chairman of the President's Council of Economic Advisers. Both are economic advisers to Mitt Romney and are available through veronika.polakova@aei.org / 202.862.4880

For additional help, other media inquiries, or to reserve AEI's in-house TV studio or ISDN facilities, please contact:

TV Jesse Blumenthal jesse.blumenthal@aei.org / 202.862.4870

Radio Michael Pratt michael.pratt@aei.org / 202.862.5823

Print or Web Jesse Blumenthal jesse@aei.org / 202.862.4870, Michael Pratt at michael.pratt@aei.org / 202.862.5823, or Veronique Rodman at vrodman@aei.org / 202.862.4871

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About the Author

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

  • Phone: 202-862-7157
    Email: khassett@aei.org
  • Assistant Info

    Name: Emma Bennett
    Phone: 202-862-5862
    Email: emma.bennett@aei.org

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