I commend Greg Mankiw's op-ed in today's Wall Street Journal. Even a generous set of excerpts will leave out a lot of well-phrased analysis.
let's start with a fact about which every serious policy analyst agrees: The government budget is on an unsustainable path...The promises made to my generation for Social Security, Medicare and Medicaid are just not affordable, given the projected path of tax revenue.
...Some supply-siders like to claim that the distortionary effect of taxes is so large that increasing tax rates reduces tax revenue. Like most economists, I don't find that conclusion credible...Yet the supply-siders are right about one thing: Because higher tax rates reduce the size of the tax base, raising taxes generates less revenue that the "static" revenue estimates assumed in Washington would suggest.
...Many economists, including myself, would recommend that the nation consider a gradual but substantial increase in the age at which people become eligible for taxpayer-financed benefits for the elderly, including both Social Security and Medicare...If we raise the age of eligibility for retirement benefits, people could still retire early, but they would do so on their own nickel, rather than the taxpayer's.
...Although the fiscal gap could be completely closed with reduced spending, a realistic political compromise will likely include higher revenues as well. Even here, however, rather than consider a reversal of the Bush tax cuts, the new Treasury secretary should look for more efficient revenue sources.
...A higher tax on gasoline, for example, is better than CAFE standards as a policy to improve the fuel efficiency of the American car fleet. It would also encourage people to drive less by, for instance, living closer to where they work. A tax on carbon is the best way to deal with global warming.
...even if the income tax is to be used to increase revenue, we should broaden the base rather than raise rates.
Mankiw served as the Chairman of the Council of Economic Advisers in 2003-2005. I do not see the policies of the Bush Administration in that period as reflecting the views in Mankiw's op-ed. One has to believe either that (a) Mankiw's views in the op-ed differ from those he expressed as an advisor or (b) he expressed similar views as an advisor, but those views were not embraced by the Administration. I would put a large wager on (b).
If I look back over the last thirty years or so, I think that professional economists, like Mankiw, have given good advice. On average, I think that Democratic Presidents have come closer to taking advice, especially advice that might otherwise have been unwelcome.
I am not saying that Carter and Clinton were grade-A economic policymakers, but they left the country with somewhat better policies than they inherited. I think that they differed more on luck than on skill, and if you average the economic statistics of their two Presidencies you get a good indicator of their performance.
I don't think of Ronald Reagan as someone who listened to academic economists. But he had a hearfelt commitment to markets and individual choice, and that served him fairly well. In terms of the makeup of Congress, Reagan had a less powerful political hand than George W. Bush, but he played that hand much better.
So far, I feel that President Bush has neither a passionate commitment to individual choice nor a willingness to listen to the best advice that the economists have to offer.