In honor of the prospective double-dip recession, I made double-dip buttermilk fried chicken for dinner a couple nights ago. Looks prescient. (It was yummy, too.) Another punk jobs report today: a net loss of 131,000 jobs, with job levels from previous months revised downward slightly.
Meanwhile, taxes are scheduled to go up a lot on January 1, when the Bush tax cuts expire. So I note with interest a 2007 academic paper I have in my files that studied tax increases and concludes:
"tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes. The large effect stems in considerable part from a powerful negative effect of tax increases on investment... In terms of consequences, our results indicate that tax changes have very large effects on output. Our baseline specification suggests that an exogenous tax increase of one percent of GDP lowers real GDP by roughly three percent..."
The author: Christina Romer (along with her husband Paul Romer, also a UC Berkeley economist of substantial reputation), chair of President Obama's Council of Economic Advisers.