Give Jeb Bush some credit: he's ignited a lively debate that positions himself and the Republican Party in the pro-growth camp.
My only qualm is that, with his 4 percent target, he's perpetuating what his brother George W. might call the "soft bigotry of low expectations."
In case you missed it, Jeb Bush, announcing his entry into the presidential campaign, named the number. "So many challenges could be overcome if we just get this economy growing at full strength. There is not a reason in the world why we cannot grow at a rate of four percent a year," he said. "And that will be my goal as president—four percent growth, and the 19 million new jobs that come with it."
The 4 percent number was greeted with immediate derision from the left, which ridiculed it as excessively ambitious. The New York Times' "Upshot" department, edited by the same genius who was warning back in August of 2011 that "stocks are still expensive" (the index he was writing about is up 75 percent since then) ran out an article under the headline "Economists on Bush's Promise: Close to 0 Percent Chance of 4 Percent Growth." It earnestly reported that "even right-of-center economists I spoke with had trouble sketching a path to 4 percent for Mr. Bush."
The Times followed up with an opinion column by its Nobel laureate economist, Paul Krugman, who called the 4 percent growth target "irresponsible" and "voodoo economics," describing it as worse than a false promise of a weight-loss cure featuring neither diet nor exercise.
Politico, for its part, trotted out a news article by Timothy Noah. Noah is the author of a 2012 book, The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It, that called for increasing the top federal tax rate on income and capital gains to 70 percent. A review in the Nation said the book also "stresses the importance of electing Democratic presidents." Noah's news article said Bush's 4 percent growth was "a goal that many economists regard as ambitious at best and most likely unrealistic for any lengthy sustained period."
The defense of Bush's growth goal came from the right. Lawrence Kudlow pointed out that the economy averaged 5.2 percent growth from 1963 to 1969, 4.5 percent between 1982 and 1989, and 4.3 percent between 1994 and 1999. Writing in The Wall Street Journal, the dean of Columbia Business School, Glenn Hubbard, and a former Federal Reserve governor, Kevin Warsh, reported that "The average growth rate was 4% or higher 17 times in the rolling four-year periods since 1950." At the Grumpy Economist blog, a professor at the University of Chicago's Booth School of Business, John Cochrane, wrote, "4% might be too low a target!"
Professor Cochrane's point is the one where I have some historical context to bring to bear, relating to the 1960 presidential campaign. That story begins in 1958 with a report issued by the special studies project of the Rockefeller Brothers Fund. The project was chaired by Nelson Rockefeller, a Republican who was elected the same year as governor of New York. Its staff director was Henry Kissinger. Panelists included Arthur Burns, who would later become chairman of the Federal Reserve, and Eugene Rostow, who was then dean of Yale Law School. It set the bar higher than 4 percent. "A growth rate of 5 per cent is possible if we realize fully our impressive opportunities for economic expansion," the report said. "With the 4 per cent rate of growth, our capacity would be far below our desirable objectives — which is to say, below our aspirations."
As I recount in my book JFK, Conservative, it was this 5 percent growth goal that became part of the Democratic Party platform in 1960. That platform said, "We Democrats believe that our economy can and must grow at an average rate of 5% annually, almost twice as fast as our average annual rate since 1953. We pledge ourselves to policies that will achieve this goal without inflation."
It was an issue on the campaign trail. Walter Heller, an economist at the University of Minnesota who became an adviser to President Kennedy, recalled meeting the candidate in a hotel suite. Kennedy was running an hour late to speak to a crowd of 15,000 waiting for him outside. As the senator changed his shirt, he scratched his chest and asked the professor, "Tell me, do you really think we can make this 5 percent growth rate we talk about into a platform?"
On September 6, 1960, during a statewide television appearance in the state of Washington, Kennedy took a question from a Seattle voter: "How do you plan to obtain 5 percent economic growth?" JFK replied, in part, "We can aim for the goal of 5 percent."
Back then, it was Richard Nixon's camp mocking what Eisenhower's budget director, Maurice Stans, called "the cult of growth," and what Nixon, Kennedy's 1960 opponent, himself knocked as "growthmanship."
Jeb Bush's growth focus is welcome and is cast optimistically. But it says something sad, too, that over the course of the past 60 years 4 percent growth has gone from "far below" our aspirations, in the words of that 1958 Rockefeller Brothers report, to something that Paul Krugman and Timothy Noah now assure us is so unrealistically ambitious as to be borderline delusional. Sixty years from now, will 3 percent growth seem too ambitious? Or might a successful Jeb Bush presidency enable some future candidate again to set five percent growth, or something even higher, as an aim?
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