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Martin Feldstein: Economy Worse Than You Think

Wednesday, 08 Jun 2011 10:06 AM

Economist Martin Feldstein says the economy is far worse than most people realize.

"The policies of the Obama administration have led to the weak condition of the American economy," Feldstein writes in The Wall Street Journal.

"The administration's most obvious failure was its misguided fiscal policies: the cash-for-clunkers subsidy for car buyers, the tax credit for first-time home buyers, and the $830 billion 'stimulus' package," he said.

The drop in GDP growth from 3.1 percent in the final quarter of last year to just 1.8 percent in the first quarter of 2011 understates the extent of the decline, Feldstein says.

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President Barack Obama
(Getty Images photo)
The economy will continue to suffer until there is a coherent and favorable economic policy, says Feldstein, by which he means bringing long-term deficits under control without raising marginal tax rates, cutting government outlays and limiting the tax expenditures that substitute for direct government spending.

“It means lower tax rates on businesses and individuals to spur entrepreneurship and investment,” says Feldstein. “And it means reforming Social Security and Medicare to protect the living standards of future retirees while limiting the cost to future taxpayers."

"All of these things are doable. But the Obama administration has not done them and shows no inclination to do them in the future."

Budget and Tax News reports that the United States has the highest statutory corporate tax rates of the major developed countries and requires all but the smallest businesses to do vast amounts of paperwork to figure out what they owe.

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Economist Martin Feldstein says the economy is far worse than most people realize. The policies of the Obama administration have led to the weak condition of the American economy, Feldstein writes in The Wall Street Journal. The administration's most obvious failure...
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Wednesday, 08 Jun 2011 10:06 AM
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