Report from the RNC Tax Policy Forum with Austan Goolsbee and John Taylor

For true tax policy geeks, here's the video from the forum last week in Minnesota with Obama economic adviser Austan Goolsbee, McCain adviser John Taylor, and tax policy experts Len Burman and Joel Slemrod. The forum was ably moderated by Howard Gleckman . (To see the video, you have to click "High Speed" and then choose "Panel C")

This was the best discussion of the candidate's tax proposals I've witnessed. In part this was because Taylor was standing in for Doug Holtz-Eakin, McCain's former economic adviser, who has been dispatched to help Susan Palin cram on domestic policy talking points. Taylor is clearly not well-versed in the candidates' proposals or the analysis of the Tax Policy Center, but this actually made for a better, more big-picture discussion.

The speakers generally agreed on the fundamental difference between McCain and Obama on tax policy: McCain wants to double down on the Bush policy of tax cuts for corporations and the top 2% of high earners, while Obama wants to largely return to Clinton-era policies and reduce taxes for the middle class. As Goolsbee said, McCain's tax cuts would be twice as regressive as Bush's, and the deficits would be twice as large. Taylor didn't argue the point.

In Joel Slemrod's presentation, he asked how a non-economist could evaluate the potential effects of the candidates' proposals on the economy. (By the way, Joel's book Taxing Ourselves, A Citizen's Guide to the Debate over Taxes is by far the best popular guide to the topic.) He said that an imperfect but plausible approach is just to compare the records of the Clinton and Bush presidencies.

Here are two slides from Joel's talk:




Joel didn't draw any explicit conclusions from this comparison, but the facts speak for themselves. By every measure, the economy has performed far worse under Bush than Clinton. This is echoes the comparison highlighted in Alan Blinder's recent column: incomes consistently rise more under Democratic presidents than under Republicans.

Joel acknowledged that of course many other things have changed during the Bush years other than tax policy, in particular the international environment. But, he noted, the decline in economic performance has been more severe in the United States than in all other major developed countries. This suggests that U.S.-specific factors--and maybe even tax policy--have been responsible for the deterioration of economic performance in the Bush years.