Nobelists for Harris Are Unburdened by Proof

Economists who sign letters of support for the Democrat should be ready to present their evidence

By Kevin Hassett and Casey B. Mulligan. Excerpts:

"For Mr. Trump, there is ample evidence that his tax cuts and deregulatory efforts had salutary effects. In their recent paper reviewing the academic research on those policies, economists Michael Faulkender and Aaron Hedlund concluded that “pro growth tax reform works.”"

"To advance equality, environmental protection and other social goals, Mr. Biden and Ms. Harris in 2020 proposed an ambitious lineup, particularly in taxes, health insurance, regulation and energy policy. They mostly got their way in all these areas but taxes."

"The redistribution elements, including redistribution to favored interest groups, would primarily discourage work, we found. The green energy and other productivity-reducing regulations would reduce real wages. Altogether, we expected the U.S. economy to be put on a path with 5% less inflation-adjusted per capita income from work by 2025 relative to the Trump-policy baseline. Half of this would come from a failure of employment and work hours to keep up with the population of people 16 or older. The other half would come from reduced real hourly wages.

The nearby chart shows what actually happened to inflation-adjusted real employee compensation per person 16 or older. It is an index taking the value of 100 for the first quarter of 2017. Although we don’t know for sure what would have happened if Mr. Trump had begun a second term in 2021, our chart shows a linear trend from the first quarter of 2017 through the fourth quarter of 2019. The trend is a good model of what happened after the second full quarter of the pandemic into late 2021. 

Then inflation hit and employee compensation—and national income more broadly, which isn’t shown in the chart—couldn’t keep up. That’s when we began to see the deleterious effects of Mr. Biden’s policies. By the second quarter of 2024 (the most recent national accounts), real per capita income from work remained 4.6% below the trend. That’s remarkably close to the 5% we predicted.

Also as we predicted, the 4.6% shortfall is due to both low employment and low real wages. But the real-wage part accounts for three-fourths of the shortfall, whereas we expected it to be half."