Tiberi oversimplified path for growth

U.S. Rep. Pat Tiberi’s May 3 letter “Taxes, regulations hold back US” raises some serious questions about his understanding of basic economic analysis.

For example, he asserted that raising tax rates on businesses will lead them to invest, produce, and hire less. It is not that simple. There is not a perfect correlation between tax cuts and increases in business investment spending.

Tiberi failed to define “pro-growth policies.” Economic policies that are “pro-growth” might not be the same as “pro-business.” Many policies that can help spur economic growth do not immediately benefit business.

He pointed to “historical evidence” but offers oversimplified analyses. For example, he claimed that President Ronald Reagan’s tax cuts led to a flourishing economy, but he ignored other factors that contributed to the economic expansion of the 1980s. He also ignored that when Reagan increased taxes, the economy continued to expand.

Similarly, Tiberi blamed the 1990–91 recession on tax increases. He seems unaware of the Federal Reserve’s contractionary monetary policy at the time.

In reference to job-creating startups, he suggested that “tax-and-spend” policies slow economic growth. However, there is growing evidence that there are fewer start-ups, especially in technology, because of drastic cuts in government-funded basic research.

If Tiberi really wants this country to “return to prosperity” as he puts it, we need economic policies that are based on a sound understanding of economic analysis. We can only hope that he becomes much better informed before he votes on legislation.

Michael Brandl Economist Columbus