Open Letter to President George W. Bush   openlettertothepresident.org   Monday 04 October 2004    HOME from 169 business and economics professors

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 administration's 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 don't 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 nation's 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 won't work.     The warning signs are already visible, and it is incumbent upon all of us to pay attention.

Francis Aguilar Professor of Business Administration, Emeritus Harvard Business School

Ramon J. Aldag                                                              Harvard Business School Glen A. Skillrud Family Chair in Business                                                                                                            Kenneth R. Andrews                                                                                 James E. Austin Eliot I. Snider and Family Professor of Business Administration Harvard Business School

Respectfully submitted,

Joseph L. Badaracco John Shad Professor of Business Ethics Harvard Business School

Louis B. Barnes John D. Black Professor, Emeritus 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

Yehuda Bassock Professor Marshall School of Business, University of Southern California

Thomas A. Bausch Professor College of Business Administration Marquette University

James N. Baron Walter Kenneth Kilpatrick Professor Organizational Behavior and Human Resources Graduate School of Business, Stanford University

Michael Beer    Cahners-Rabb Professor, Business Administration, Emeritus      Harvard Business School

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

Barbara Bird Associate Professor of Management Kogod School of Business American University

Norman A. Berg MBA Class of 1958 Professor of Business Administration, Emeritus Harvard Business School

Jack N. Behrman     Luther Hodges Distinguished Professor, Emeritus Kenan-Flagler Business School University of North Carolina

John E. Bishop Professor of Business Administration, Emeritus Harvard Business School

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

Robert B. Bostrom L. Edmund Rast Professor of Business Terry College of Business University of Georgia

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 Operations Management and Environmental Management UCLA Anderson School of Management

Fariborz Damanpour Professor Rutgers Business School

Michael Cusumano Sloan Management Review Distinguished Professor MIT Sloan School of Management

Jose de la Torre Dean, Chapman Graduate School of Business Florida International University

Thomas G. Cummings Professor Marshall School of Business, University of Southern California

Rohit Deshpande Sebastian S. Kresge Professor of Marketing  Harvard Business School

John A. Deighton Harold M. Brierley Professor of Business Administration Harvard Business School

Amy C. Edmondson Professor Harvard Business School

Ronald F. Fariña Associate Professor Daniels College of Business University of Denver

Jane E. Dutton Professor University of Michigan Business School

Benjamin C. Esty Professor of Business Administration Harvard Business School

Nancy DiTomaso Professor Rutgers Business School--Newark and New Brunswick

Ann E. Feyerherm Associate Professor of Organization and Management Graziadio School of Business and Management, Pepperdine University

James W. Fredrickson Tom E. Nelson, Jr. Regents Professor of Business McCombs School of Business, University of Texas at Austin

James A. Fitzsimmons William H. Seay Centennial 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

Donald C. Hambrick Smeal Chaired Professor of Management Smeal College of Business Administration, The Pennsylvania State University

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

Rebecca M. Henderson Eastman Kodak LFM Professor MIT Sloan School of Management

Jerry R. Green Daniel A. Wells Professor of Political Economy, John Leverett Professor in the University Harvard Business School

Leslie E. Grayson Isidore Horween Research Professor, Emeritus Darden Graduate School of Business Administration, University of Virginia

Douglas T. Hall Professor of Organizational Behavior Boston University School of Management

Linda A. Hill Wallace Brett Donham Professor of Business Administration Harvard Business School

Leonard Greenhalgh Professor of Management Tuck School of Business at Dartmouth

John M. Jermier Exide Professor of Sustainable Enterprise Research College of Business, University of South Florida

Yasheng Huang Associate Professor of International Management MIT Sloan School of Management

Raymond Hogler Professor of Management College of Business, Colorado State University

Mariann Jelinek The Richard C. Kraemer Professor of Business Strategy School of Business, College of William & Mary

Stephen J. Kobrin Wurster Professor of Multinational Management The Wharton School, University of Pennsylvania

David B. Jemison Foster Parker Centennial Professor of Management and Finance McCombs School of Business, University of Texas at Austin

Shulamit Kahn Associate Professor Boston University School of Management

Rosabeth M. Kanter Ernest L. Arbuckle Professor of Business Administration Harvard Business School

Kate M. Kaiser Associate Professor College of Business, Marquette University

Nancy F. Koehn James E. Robison Professor of Business Administration Harvard Business School

Steven O. Kimbrough Professor The Wharton School, University of Pennsylvania

Thomas A. Kochan George Maverick Bunker Professor of Work and Employment Relations MIT Sloan School of Management

Rajiv Lal Stanley Roth, Sr. Professor of Retailing Harvard Business School

Howard Kunreuther Cecilia Yen Koo Professor of Decision Sciences and Public Policy The Wharton School University of Pennsylvania

Theresa Lant Associate Professor of Management Stern School of Business, New York University

Carrie R. Leana Professor of Business Administration and of Public and International Affairs Katz Graduate School of Business, University of Pittsburgh

Daniel A. Levinthal Julian Aresty Professor of Management and Economics The Wharton School, University of Pennsylvania

Paul R. Lawrence Wallace Brett Donham Professor of Organizational Behavior, Emeritus Harvard Business School

Donald R. Lessard Epoch Foundation Professor of International Management MIT Sloan School of Management

Herman B. Leonard Professor of Business Administration Harvard Business School

Dorothy A. Leonard William J. Abernathy Professor of Business Administration, Emerita Harvard Business School

Richard M. Locke Alvin J. Siteman Professor of Entrepreneurship and Political Science MIT Sloan School of Management

E. Allan Lind Thomas A. Finch Professor of Business Administration Fuqua School of Business, Duke University

David Levy Professor of Management Department of Management, University of Massachusetts, Boston

Michael Magazine Professor College of Business, University of Cincinnati

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

Joanne Martin Merrill Professor of Organizational Behavior Graduate School of Business, Stanford University

Theodore R. Marmor Professor of Public Policy and Management Yale School of Management and Political Science Department

Michael R. Manning Professor of Management College of Business Administration &Economics, New Mexico State University

Thomas K. McCraw Isidor Straus Professor of Business History Harvard Business School

Kathleen L. McGinn Cahners-Rabb Professor of Social and Organizational Psychology Harvard Business School

Anita M. McGahan Professor and Everett W. Lord Distinguished Faculty Scholar Boston University School of Management

Robert P. McGowan Professor Daniels College of Business, University of Denver

David M. Messick Kaplan Professor of Ethics and Decision in Management Kellogg School of Management, Northwestern University

Robert C. Merton John and Natty McArthur University Professor Harvard Business School

Richard F. Meyer Thomas D. Casserly, Jr. Professor of Business Administration, Emeritus Harvard Business School

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

Cynthia A. Montgomery Timken Professor of Business Administration Harvard Business School

Ian Mitroff Harold Quinton Distinguished Professor of Business Policy Marshall School of Business, University of Southern California

Steven Nahmias Professor Leavey School of Business, Santa Clara University

Barry Nalebuff Milton Steinbach Professor of Management Yale School of Management

J. Keith Murnighan Harold H. Hines, Jr. Distinguished Professor of Risk Management Kellogg School of Management, Northwestern University

Das Narayandas Professor of Business Administration Harvard Business School

Paul Osterman NTU Professor of Human Resources and Management MIT Sloan School of Management

Paul Newman Clark W. Thompson, Jr. Chair in Accounting McCombs School of Business, University of Texas at Austin

David A. Moss John G. McLean Professor of Business Administration Harvard Business School

William Ocasio John L. and Helen Kellogg Distinguished Professor of Management and Organizations Kellogg School of Management, Northwestern University

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

Joel Podolny Novartis Professor of Leadership and Management Harvard Business School

John W. Pratt William Ziegler Professor of Business Administration, Emeritus Harvard Business School

Margaret Peteraf Associate Professor of Business Administration Tuck School of Business at Dartmouth

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

Drazen Prelec Professor of Management Science MIT Sloan School of Management

Howard Raiffa Frank Plumpton Ramsey Professor of Managerial Economics, Emeritus Harvard Business School

Daniel Raff Associate Professor of Management The Wharton School, University of Pennsylvania

Roy Radner L. N. Stern School Professor of Business Stern School of Business, New York University

Lori Rosenkopf Associate Professor of Management The Wharton School, University of Pennsylvania

Stefan H. Robock R. D. Calkins Professor of International Business, Emeritus Graduate School of Business, Columbia University

V. Kasturi Rangan Malcolm P. McNair Professor of Marketing Harvard Business School

Walter J. Salmon Stanley Roth, Sr. Professor of Retailing, Emeritus Harvard Business School

John W. Rosenblum Dean Emeritus Darden Graduate School of Business Administration, University of Virginia

David Rogers Professor Emeritus of Management and Sociology Stern School of Business, New York University

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

Carol Saunders Professor of MIS College of Business Administration, University of Central Florida

Michael S. Scott-Morton Jay W. Forester Professor of Management, Emeritus MIT Sloan School of Management

Bruce R. Scott Paul W. Cherington Professor of Business Administration Harvard Business School

Claudia B. Schoonhoven Professor of Organization and Strategy Graduate School of Management, University of California, Irvine

Roy D. Shapiro Philip Caldwell Professor of Business Administration Harvard Business School

Benson P. Shapiro Malcolm P. McNair Professor of Marketing, Emeritus Harvard Business School

James K. Sebenius Gordon Donaldson Professor of Business Administration Harvard Business School

William W. Sihler Ronald E. Trzcinski Professor of Business Administration Darden Graduate School of Business Administration, University of Virginia

John Sterman Jay W. Forester Professor of Management MIT Sloan School of Management

William F. Sharpe STANCO 25 Professor of Finance, Emeritus Stanford Business School

Harbir Singh Edward H. Bowman Professor of Management The Wharton School, University of Pennsylvania

Alvin J. Silk Lincoln Filene Professor of Business Administration, Emeritus Harvard Business School

Jitendra V. Singh Saul P. Steinberg Professor of Management The Wharton School, University of Pennsylvania

Olav Sorenson Associate Professor UCLA Anderson School of Management

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

Debora L. Spar Spangler Family Professor of Business Administration Harvard Business School

William H. Starbuck ITT Professor of Creative Management Stern School of Business, New York University

Richard Staelin Edward and Rose Donnell Professor of Business Administration Fuqua School of Business, Duke University

Bert A. Spector Associate Professor of Human Resources Management College of Business Administration, Northeastern University

Richard S. Tedlow MBA Class of 1949 Professor of Business Administration Harvard Business School

David A. Thomas Naylor Fitzhugh Professor of Business Administration Harvard Business School

Ramkrishnan V. Tenkasi Professor of Organization Change College of Business and Technology Benedictine University

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

Garrett J. van Ryzin Paul M. Montrone Professor of Private Enterprise Graduate School of Business, Columbia University

Karl T. Ulrich Professor of Operations and Information Management The Wharton School, University of Pennsylvania

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

N. Venkat Venkatraman David J. McGrath Jr. Professor of Management Boston University School of Management

David Weil Associate Professor of Economics Boston University School of Management

Richard T. Watson J. Rex Fuqua Distinguished Chair for Internet Strategy Terry College of Business, University of Georgia

Sandra Waddock Professor of Management Carroll School of Management, Boston College

Patricia H. Werhane Ruffin Professor of Business Ethics Darden Graduate School of Business Administration, University of Virginia

Melanie Wallendorf Eller Professor of Marketing Eller College of Management, University of Arizona

Louis T. Wells Herbert F. Johnson Professor of International Management Harvard Business School

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

JoAnne Yates Sloan Distinguished Professor of Management MIT Sloan School of Management

Sid Winter Deloitte and Touche Professor of Management The Wharton School, University of Pennsylvania

Ray Zammuto Professor of Management Business School, University of Colorado at Denver

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

Paul H. Zipkin The T. Austin Finch, Sr. Professor of Business Fuqua School of Business Duke University

The above tenured or emeritus professors have signed in their individual capacities. The letter represents the signers' own views, not those of the institutions with which they are affiliated.