The Economics

Economics Have you ever made a mistake that was so big and so public that you just wanted to crawl under your bed' If so, you can imagine how Michael Boskin feels these days. Boskin, a highly respected Stanford University economist who was head of the Council of Economic Advisers under George H.W. Bush, electronically circulated a startling paper to fellow economists this summer. He argued that the future tax payments on withdrawals from tax-deferred retirement accounts, such as 401(k)s and employer pension plans, were being drastically undercounted. That meant federal budget revenues could potentially be in for a huge, unforeseen windfall. The underestimate over the next 40 years was so big, Boskin wrote at the time, that is was “larger than the sum of the 75-year actuarial deficits in Social Security and Medicare plus the national debt.” Being that Boskin was such a reputable economist; the sweeping claims of his paper quickly drew widespread attention. Business Week reported that “Boskin’s paper has the potential to shake up the budget debate.” As the paper received increasing scrutiny, it sparked a huge controversy and came under sharp criticism from fellow economists who argued that the savings would be nowhere near what Boskin predicted. He boskin, paper, economists, being, under, savings, mistake, fellow, business, budget, years, windfall, trillion, tax, revenues, received, projections, over, out, huge, future, even, economist, economic, debate, complicated, calculations, big, argued, about, 40, $12, wrote, withdrawals, wiping