October 4, 2004
Dear Mr. President:
As professors of economics
and business, we are concerned that U.S. economic policy has taken a dangerous
turn under your stewardship. Nearly
every major economic indicator has deteriorated since you took office in
January 2001. Real GDP growth during your term is the lowest of any
presidential term in recent memory. Total non-farm employment has contracted
and the unemployment rate has increased. Bankruptcies are up sharply, as is our
dependence on foreign capital to finance an exploding current account deficit.
All three major stock indexes are lower now than at the time of your
inauguration. The percentage of Americans in poverty has increased, real median
income has declined, and income inequality has grown.
The data
make clear that your policy of slashing taxes primarily for those at
the upper reaches of the income distribution has not
worked. The fiscal
reversal that has taken place under your leadership is so extreme that
it would have been unimaginable just a few years ago. The federal
budget surplus of over $200 billion that we enjoyed in the year 2000
has disappeared, and we are now facing a massive annual deficit of
over $400 billion. In fact, if transfers from the Social Security
trust fund are excluded, the federal deficit is even worse -- well in
excess of a half a trillion dollars this year alone. Although some
members of your administration have suggested that the mountain of new
debt accumulated on your watch is mainly the consequence of 9-11 and
the war on terror, budget experts know that this is simply false. Your economic policies have played a
significant role in driving this fiscal collapse.
And the economic proposals you have suggested for a potential second
term from diverting Social Security contributions into private
accounts to making the recent tax cuts permanent only promise to
exacerbate the crisis by further narrowing the federal revenue
base.
These sorts of
deficits crowd out private investment and are politically addictive.
They also place a heavy burden on monetary policy and create
additional pressure for higher interest rates by stoking inflationary
expectations. If your economic advisers are telling you that these
deficits can be defeated through further reductions in tax rates, then
you need new advisers. More robust economic growth could certainly
help, but nearly every one of your administrations economic forecasts
both before and after 9-11 has proved overly optimistic. Expenditure
cuts could be part of the answer, but your record so far has been one
of increasing expenditures, not reducing
them.
What is
called for, we believe, is a dramatic reorientation of fiscal policy,
including substantial reversals of your tax policy. Running a budget deficit in response to a
short bout of recession is one thing. But running large structural
deficits over a long period is something else entirely. We therefore
urge you to consider the fiscal realities we now face and the
substantial burden they are placing on our
economy.
We also urge you
to consider the distributional consequences of your policies. Under
your administration, the income gap between the most affluent
Americans and everyone else has widened. Although the latest data
reveal that real household incomes have dropped across the board since
you took office, low and middle income households have experienced
steeper declines than upper income households. To be sure, the general
phenomenon of mounting inequality preceded your administration, but it
has continued (and, by some accounts, intensified) over the past three
and a half years.
Some degree of
inequality is inherent in any free market economy, creating positive
incentives for economic and technological advancement. But when inequality becomes extreme, it can be
socially corrosive and economically dysfunctional. Problems
of this sort are visible throughout much of the developing world. At
the moment, the most commonly accepted measure of inequality the
so-called Gini coefficient is far higher
in the United States than in any other developed country and is
continuing to move upward. We dont know
where the breakpoint is for the U.S., but we would rather not find
out. With all due respect, we believe your tax policy has
exacerbated the problem of inequality in the United States, which has
worrisome implications for the economy as a whole. We very much hope
you will take this threat to our nation into account as you consider
new fiscal approaches to address the nations most pressing economic
problems.
Sensible
and farsighted economic management requires true discipline, compassion, and
courage not just slogans. Given the tenuous state of the American economy, we
believe that the time for an honest assessment of the problem and for genuine
corrective action is now. Ignoring the fiscal crisis that has taken hold during
your presidency may seem politically appealing in the short run, but we fear it
could ultimately prove disastrous. From a policy standpoint, the clear message
is that more of the same wont work. The warning signs are already visible, and it is incumbent
upon all of us to pay attention.
Respectfully
submitted,
Francis Aguilar
Professor of Business Administration, Emeritus
Harvard Business School
Ramon J. Aldag
Glen A. Skillrud Family Chair in Business
School of Business, University of Wisconsin-Madison
Teresa M. Amabile
Edsel Bryant Ford Professor of Business
Administration
Harvard Business School
Kenneth R. Andrews
David K. Donald Professor of Business Administration, Emeritus
Harvard Business School
James E. Austin
Eliot I. Snider and Family Professor of Business Administration
Harvard Business School
Joseph L. Badaracco
John Shad Professor of Business Ethics
Harvard Business School
Lotte Bailyn
T. Wilson (1953) Professor of Management
MIT Sloan School of Management
George P. Baker
Herman C. Krannert Professor of Business
Administration
Harvard Business School
Louis B. Barnes
John D. Black Professor, Emeritus
Harvard Business School
James N. Baron
Walter Kenneth Kilpatrick Professor of Organizational Behavior and Human
Resources
Graduate School of Business, Stanford University
Jean M. Bartunek
Robert A. and Evelyn J. Ferris Chair, Professor of Organization Studies
Carroll School of Management, Boston College
Yehuda Bassock
Professor
Marshall School of Business, University of Southern California
Thomas A. Bausch
Professor
College of Business Administration, Marquette University
Max H. Bazerman
Jesse Isidor Straus Professor of Business
Administration
Harvard Business School
Cynthia Beath
Professor Emeritus
McCombs School of Business, University of Texas at Austin
Michael Beer
Cahners-Rabb Professor of Business Administration,
Emeritus
Harvard Business School
Jack N. Behrman
Luther Hodges Distinguished Professor, Emeritus
Kenan-Flagler Business School, University of North
Carolina
Norman A. Berg
MBA Class of 1958 Professor of Business Administration, Emeritus
Harvard Business School
Barbara Bird
Associate Professor of Management
Kogod School of Business, American University
John E. Bishop
Professor of Business Administration, Emeritus
Harvard Business School
Robert B. Bostrom
L. Edmund Rast Professor of Business
Terry College of Business, University of Georgia
Joseph L. Bower
Donald K. David Professor of Business Administration
Harvard Business School
Stephen P. Bradley
William Ziegler Professor of Business Administration
Harvard Business School
Arthur P. Brief
Lawrence Martin Professor of Business
Freeman School of Business, Tulane University
Philip Bromiley
Curtis L. Carlson Chair in Strategic Management
Carlson School of Management, University of Minnesota
Alfred D. Chandler
Isidor Straus Professor of Business History, Emeritus
Harvard Business School
Chao C. Chen
Professor
Rutgers Business School, Rutgers University
Charles J. Corbett
Associate Professor of Operations Management and Environmental Management
UCLA Anderson School of Management
Thomas G. Cummings
Professor
Marshall School of Business, University of Southern California
Michael Cusumano
Sloan Management Review Distinguished Professor
MIT Sloan School of Management
Fariborz Damanpour
Professor
Rutgers Business School
Jose de la Torre
Dean, Chapman Graduate School of Business
Florida International University
John A. Deighton
Harold M. Brierley Professor of Business
Administration
Harvard Business School
Rohit Deshpande
Sebastian S. Kresge Professor of Marketing
Harvard Business School
Nancy DiTomaso
Professor
Rutgers Business School--Newark and New Brunswick
Jane E. Dutton
Professor
University of Michigan Business School
Amy C. Edmondson
Professor
Harvard Business School
Benjamin C. Esty
Professor of Business Administration
Harvard Business School
Ronald F. Faria
Associate Professor
Daniels College of Business, University of Denver
Ann E. Feyerherm
Associate Professor of Organization and Management
Graziadio School of Business and Management, Pepperdine University
James A. Fitzsimmons
William H. Seay Centennial Professor of Business
McCombs School of Business, University of Texas at Austin
James W. Fredrickson
Tom E. Nelson, Jr. Regents Professor of Business
McCombs School of Business, University of Texas at Austin
Sherwood C. Frey, Jr.
Ethyl Corporation Professor of Business Administration
Darden Graduate School of Business Administration, University of Virginia
Cynthia V. Fukami
Professor
Daniels College of Business, University of Denver
Pankaj Ghemawat
Jaime and Josefina Chua Tiampo Professor of Business
Administration
Harvard Business School
Stephen M. Gilbert
Associate Professor
McCombs School of Business, University of Texas at Austin
James R. Glenn, Jr.
Professor of Management
College of Business, San Francisco State University
Leslie E. Grayson
Isidore Horween Research
Professor, Emeritus
Darden Graduate School of Business Administration, University of Virginia
Jerry R. Green
Daniel A. Wells Professor of Political Economy,
John Leverett Professor in the University
Harvard Business School
Leonard Greenhalgh
Professor of Management
Tuck School of Business at Dartmouth
Douglas T. Hall
Professor of Organizational Behavior
Boston University School of Management
Donald C. Hambrick
Smeal Chaired Professor of Management
Smeal College of Business Administration, The Pennsylvania State University
Rebecca M. Henderson
Eastman Kodak LFM Professor
MIT Sloan School of Management
Linda A. Hill
Wallace Brett Donham Professor of Business
Administration
Harvard Business School
Raymond Hogler
Professor of Management
College of Business, Colorado State University
Yasheng Huang
Associate Professor of International Management
MIT Sloan School of Management
Mariann Jelinek
The Richard C. Kraemer Professor of Business Strategy
School of Business, College of William & Mary
David B. Jemison
Foster Parker Centennial Professor of Management and Finance
McCombs School of Business, University of Texas at Austin
John M. Jermier
Exide Professor of Sustainable Enterprise Research
College of Business, University of South Florida
Shulamit Kahn
Associate Professor
Boston University School of Management
Kate M. Kaiser
Associate Professor
College of Business, Marquette University
Rosabeth M. Kanter
Ernest L. Arbuckle Professor of Business Administration
Harvard Business School
Steven O. Kimbrough
Professor
The Wharton School, University of Pennsylvania
Stephen J. Kobrin
Wurster Professor of Multinational Management
The Wharton School, University of Pennsylvania
Thomas A. Kochan
George Maverick Bunker Professor of Work and Employment Relations
MIT Sloan School of Management
Nancy F. Koehn
James E. Robison Professor of Business Administration
Harvard Business School
Howard Kunreuther
Cecilia Yen Koo Professor of Decision Sciences and
Public Policy
The Wharton School, University of Pennsylvania
Rajiv Lal
Stanley Roth, Sr. Professor of Retailing
Harvard Business School
Theresa Lant
Associate Professor of Management
Stern School of Business, New York University
Paul R. Lawrence
Wallace Brett Donham Professor of Organizational
Behavior, Emeritus
Harvard Business School
Carrie R. Leana
Professor of Business Administration and of Public and International Affairs
Katz Graduate School of Business, University of Pittsburgh
Dorothy A. Leonard
William J. Abernathy Professor of Business Administration, Emerita
Harvard Business School
Herman B. Leonard
Professor of Business Administration
Harvard Business School
Donald R. Lessard
Epoch Foundation Professor of International Management
MIT Sloan School of Management
Daniel A. Levinthal
Julian Aresty Professor of Management and Economics
The Wharton School, University of Pennsylvania
David Levy
Professor of Management
Department of Management, University of Massachusetts, Boston
E. Allan Lind
Thomas A. Finch Professor of Business Administration
Fuqua School of Business, Duke University
Richard M. Locke
Alvin J. Siteman Professor of Entrepreneurship and
Political Science
MIT Sloan School of Management
George C. Lodge
Jaime and Josefina Chua Tiampo Professor of Business
Administration, Emeritus
Harvard Business School
Jay W. Lorsch
Louis E. Kirstein Professor of Human Relations
Harvard Business School
Michael Magazine
Professor
College of Business, University of Cincinnati
Michael R. Manning
Professor of Management
College of Business Administration & Economics, New Mexico State University
Theodore R. Marmor
Professor of Public Policy and Management
Yale School of Management and Political Science Department
Joanne Martin
Merrill Professor of Organizational Behavior
Graduate School of Business, Stanford University
Thomas K. McCraw
Isidor Straus Professor of Business History
Harvard Business School
Anita M. McGahan
Professor and Everett W. Lord Distinguished Faculty Scholar
Boston University School of Management
Kathleen L. McGinn
Cahners-Rabb Professor of Social and Organizational
Psychology
Harvard Business School
Robert P. McGowan
Professor
Daniels College of Business, University of Denver
Robert C. Merton
John and Natty McArthur University Professor
Harvard Business School
David M. Messick
Kaplan Professor of Ethics and Decision in Management
Kellogg School of Management, Northwestern University
Alan D. Meyer
Charles H. Lundquist Professor of Entrepreneurial Management
Lundquist College of Business, University of Oregon
Marshall W. Meyer
Richard A. Sapp Professor, Professor of Management and Sociology
The Wharton School, University of Pennsylvania
Richard F. Meyer
Thomas D. Casserly, Jr. Professor of Business
Administration, Emeritus
Harvard Business School
Ian Mitroff
Harold Quinton Distinguished Professor of Business Policy
Marshall School of Business, University of Southern California
Cynthia A. Montgomery
Timken Professor of Business Administration
Harvard Business School
David A. Moss
John G. McLean Professor of Business Administration
Harvard Business School
J. Keith Murnighan
Harold H. Hines, Jr. Distinguished Professor of Risk Management
Kellogg School of Management, Northwestern University
Steven Nahmias
Professor
Leavey School of Business, Santa Clara University
Barry Nalebuff
Milton Steinbach Professor of Management
Yale School of Management
Das Narayandas
Professor of Business Administration
Harvard Business School
Paul Newman
Clark W. Thompson, Jr. Chair in Accounting
McCombs School of Business, University of Texas at Austin
William Ocasio
John L. and Helen Kellogg Distinguished Professor of Management and
Organizations
Kellogg School of Management, Northwestern University
Paul Osterman
NTU Professor of Human Resources and Management
MIT Sloan School of Management
Lynn S. Paine
John G. McLean Professor of Business Administration
Harvard Business School
Johannes M. Pennings
Marie and Joseph Melone Professor
The Wharton School, University of Pennsylvania
Margaret Peteraf
Associate Professor of Business Administration
Tuck School of Business at Dartmouth
Joel Podolny
Novartis Professor of Leadership and Management
Harvard Business School
John W. Pratt
William Ziegler Professor of Business Administration, Emeritus
Harvard Business School
Drazen Prelec
Professor of Management Science
MIT Sloan School of Management
Keith G. Provan
Eller Professor of Public Administration & Policy
Eller College of Management, University of Arizona
Ronald E. Purser
Professor of Management
College of Business, San Francisco State University
Roy Radner
L. N. Stern School Professor of Business
Stern School of Business, New York University
Daniel Raff
Associate Professor of Management
The Wharton School, University of Pennsylvania
Howard Raiffa
Frank Plumpton Ramsey Professor of Managerial
Economics, Emeritus
Harvard Business School
V. Kasturi
Rangan
Malcolm P. McNair Professor of Marketing
Harvard Business School
Stefan H. Robock
R. D. Calkins Professor of International Business, Emeritus
Graduate School of Business, Columbia University
David Rogers
Professor Emeritus of Management and Sociology
Stern School of Business, New York University
John W. Rosenblum
Dean Emeritus
Darden Graduate School of Business Administration, University of Virginia
Lori Rosenkopf
Associate Professor of Management
The Wharton School, University of Pennsylvania
Walter J. Salmon
Stanley Roth, Sr. Professor of Retailing, Emeritus
Harvard Business School
Carol Saunders
Professor of MIS
College of Business Administration, University of Central Florida
Melissa A. Schilling
Associate Professor
Stern School of Business, New York University
Arthur Schleifer,
Jr.
James J. Hill Professor of Business Administration, Emeritus
Harvard Business School
Claudia B. Schoonhoven
Professor of Organization and Strategy
Graduate School of Management, University of California, Irvine
Bruce R. Scott
Paul W. Cherington Professor of Business Administration
Harvard Business School
Michael S. Scott-Morton
Jay W. Forester Professor of Management, Emeritus
MIT Sloan School of Management
James K. Sebenius
Gordon Donaldson Professor of Business Administration
Harvard Business School
Benson P. Shapiro
Malcolm P. McNair Professor of Marketing, Emeritus
Harvard Business School
Roy D. Shapiro
Philip Caldwell Professor of Business Administration
Harvard Business School
William F. Sharpe
STANCO 25 Professor of Finance, Emeritus
Stanford Business School
William W. Sihler
Ronald E. Trzcinski Professor of Business
Administration
Darden Graduate School of Business Administration, University of Virginia
Alvin J. Silk
Lincoln Filene Professor of Business Administration,
Emeritus
Harvard Business School
Harbir Singh
Edward H. Bowman Professor of Management
The Wharton School, University of Pennsylvania
Jitendra V. Singh
Saul P. Steinberg Professor of Management
The Wharton School, University of Pennsylvania
Sim B. Sitkin
Associate Professor
Fuqua School of Business, Duke University
William B. Snavely
Professor of Management
Richard T. Farmer School of Business, Miami University
Olav Sorenson
Associate Professor
UCLA Anderson School of Management
Debora L. Spar
Spangler Family Professor of Business Administration
Harvard Business School
Bert A. Spector
Associate Professor of Human Resources Management
College of Business Administration, Northeastern University
Richard Staelin
Edward and Rose Donnell Professor of Business Administration
Fuqua School of Business, Duke University
William H. Starbuck
ITT Professor of Creative Management
Stern School of Business, New York University
John Sterman
Jay W. Forester Professor of Management
MIT Sloan School of Management
Richard S. Tedlow
MBA Class of 1949 Professor of Business Administration
Harvard Business School
Ramkrishnan V. Tenkasi
Professor of Organization Change
College of Business and Technology, Benedictine University
David A. Thomas
Naylor Fitzhugh Professor of Business Administration
Harvard Business School
William R. Torbert
Professor
Carroll School of Management, Boston College
Anne S. Tsui
Motorola Professor
W.P. Carey School of Business, Arizona State University
Michael L. Tushman
Paul R. Lawrence MBA Class of 1942 Professor of Business Administration
Harvard Business School
Karl T. Ulrich
Professor of Operations and Information Management
The Wharton School, University of Pennsylvania
Garrett J. van Ryzin
Paul M. Montrone Professor of Private Enterprise
Graduate School of Business, Columbia University
N. Venkat
Venkatraman
David J. McGrath Jr. Professor of Management
Boston University School of Management
Richard H. K. Vietor
Senator John Heinz Professor of Environmental Management
Harvard Business School
Mary Ann Von Glinow
Research Professor
College of Business Administration, Florida International University
Sandra Waddock
Professor of Management
Carroll School of Management, Boston College
Melanie Wallendorf
Eller Professor of Marketing
Eller College of Management, University of Arizona
Richard T. Watson
J. Rex Fuqua Distinguished Chair for Internet Strategy
Terry College of Business, University of Georgia
David Weil
Associate Professor of Economics
Boston University School of Management
Louis T. Wells
Herbert F. Johnson Professor of International Management
Harvard Business School
Patricia H. Werhane
Ruffin Professor of Business Ethics
Darden Graduate School of Business Administration, University of Virginia
Birger Wernerfelt
J. C. Penney Professor of Management Science
MIT Sloan School of Management
D. Eleanor Westney
Society of Sloan Fellows Chair in Management
MIT Sloan School of Management
James D. Westphal
Ed and Molly Smith Chair in Business Administration
McCombs School of Business, University of Texas at Austin
Robert B. Wilson
Adams Distinguished Professor of Management, Emeritus
Stanford Business School
Sid Winter
Deloitte and Touche Professor of Management
The Wharton School, University of Pennsylvania
JoAnne Yates
Sloan Distinguished Professor of Management
MIT Sloan School of Management
David B. Yoffie
Max and Doris Starr Professor of International Business Administration
Harvard Business School
Abraham Zaleznik
Konosuke Matsushita Professor of Leadership, Emeritus
Harvard Business School
Ray Zammuto
Professor of Management
Business School, University of Colorado at Denver
Paul H. Zipkin
The T. Austin Finch, Sr. Professor of Business
Fuqua School of Business, Duke University.
