Monday, January 12, 2004

The Long Memory of Brad DeLong

In addition to not being very honest, our press corps has a bit of a memory problem. Brad DeLong reminds them of what they've forgotten:

The most puzzling thing about Andrews's story is that Andrews appears to have no memory at all. A year ago--remember--the administration was having an internal debate over economic policy. And the administration decided to use the concern about employment as fuel to pass a dividend tax cut--not a tax cut that would get lots of money to those likely to spend it and so boost employment, but a tax cut that would enrich the well-off five, ten, twenty years from now.

The thinking inside the administration was (i) we want to tilt the distribution of wealth in favor of the rich this way, (ii) the current worries about unemployment give us an opportunity to do so if we claim that the dividend tax cut is really a jobs program, and (iii) employment will probably recover on its own anyway so we really don't need an actual jobs program.

That was the administration's thinking: pass the dividend tax cut rather than a real stimulus program and bet that job growth would accelerate on its own. It was a risky bet to make. They made it. They now appear to have crapped out.

Why isn't this backstory worth including in the article?