Laffer on the Bush Recovery

Via Paul Krugman, Rob Wile interviews Art Laffer:

"Usually when you find the model this far off, you've probably got something wrong with the model, not that the world has changed," he said. "Inflation does not appear to be monetary base driven," he said.

Paul applauds this bit of intellectual honesty but let’s read further:

"If you look at [the] 2001-2002 [financial crisis], we barely had a decline in GDP, it corrected itself fairly quickly. The only other time we had intervention was in the 1930s. I think we had a Great Recession, and the reason we had a Great Depression, was because of intervention, not in spite of it."

Seriously?! Never mind it took years for the employment to population ratio to crawl back over 63%. Did Laffer forget about how the Federal Reserve lowered interest rates? While I think John Taylor’s rants that monetary policy kept interest rates too low for too long are misplaced, it least he recognizes that monetary policy was expansionary. And Greg Mankiw never tired of excusing Bush’s fiscal expansionism with claims it was needed to offset the prior recession. But I guess we should excuse Laffer as Republican economists are very good at making contradictory claims when cheering for Team Republican.