<Two weeks until the election...what are the candidates promising and what does America really need?
My chat with one of our nation's leading economists
This election cycle I’ve been focused on our nation’s biggest public policy challenges — immigration, abortion, the budget, you name it. I’m writing a column for the Dallas Morning News. I’m also hosting a podcast called Beyond Talking Points, where I bring on experts to sort through the nuance of policy — NOT to endorse a specific candidate; you can get that anywhere.
I believe that a better understanding of public policy is vital for our country. Like many of you, I am so saddened by the level of dysfunction and polarization. I believe that there are better ways forward, and I am trying to draw those out in my writing in an insightful way.
I’ll be using this newsletter to bring you my perspective on important policy issues. I hope you enjoy. And if you do, please consider sharing it with your friends….
Abby
Below is my most recent column for the Dallas Morning News.
My Beyond Talking Points podcast episode with former chair of the Council of Economic Advisers Glenn Hubbard can be found here.
Harris and Trump need an economics primer
Oct. 19, 2024
Most of my political life has been spent in the GOP. While I’ve worked on many bipartisan projects over the years and have even advised a Democrat candidate running for president as an independent, I’d still put myself squarely in a center-right economic camp.
I got my policy chops as a member of the economics policy team of the American Enterprise Institute. Friedrich Hayek’s The Road to Serfdom is one of my favorite books. I believe that economic freedom — by which I mean a relatively low level of regulation and taxation and sustainable budget outlook — unleashes the economy and persons to flourish and grow.
As long as I’ve been alive, the Republican Party has been the party committed to a limited government and a free economy. Voters have seen this too. For more than a decade, the GOP has consistently held an advantage for being the party entrusted with economic prosperity.
It was in this spirit that I wrote a National Affairs essay, “Beyond Growth,” during Donald Trump’s first presidential term. I wrote how the previous two years had been some of the best in memory from the standpoint of job creation, GDP growth and the stock market. I credited Trump with some of this growth, in terms of his regulatory restraint — eliminating two regulations for every new one introduced — and tax policy (although his tax cuts should have been paid for).
But the nature of my essay was to encourage Republicans (and Donald Trump) to go beyond growth. It was — and remains today — my belief that too many people have been excluded from the American economy for immigration status, low wages, criminal records that are difficult to expunge, a defunct educational system or lack of support for working parents.
I wrote about how more support should be given to our most vulnerable members of society. I very much subscribe to Nobel Prize winner Edmund Phelps’ philosophy, presented in his magisterial book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change, that humans are at their best when they are allowed to create and innovate without unnecessary structural barriers or an oppressive government thumb pushing them down. While Democrats often get the rhetoric around an inclusive economy right, their policies don’t always get there because they’re too heavy-handed.
I say this as a long-winded introduction to my readers who might still assume, as has long been the case, that the Republican Party is still the party of economic growth.
This is not the Trump economic agenda of 2024. It is nowhere close.
Nonpartisan economic estimates from Goldman Sachs to Moody’s anticipate a significant economic contraction should Trump win the presidency. For those who immediately discount this as elite liberal cahoots, these organizations projected an early economic rally in Trump’s first term.
Trump’s promises for massive tariffs on imports and mass deportations are a recipe for a weaker economy. That’s because an economy grows on labor and capital, and his agenda restricts both. His economic platform will eat away at wages and raise costs, which always tends to disproportionately impact lower-income households that don’t have economic margin to spare. Trump’s promise to protect Social Security without making necessary reforms to preserve its solvency is also a drag on growth.
To be clear, Trump 2024 has vestiges of Trump 2016. He’s likely to preserve his tax cuts when they come up for extension next year. He’s promised to bring on Elon Musk to improve the efficiency of (aka shrink) the federal government. I imagine Musk will do so with gusto, as a position in a Trump administration would be Musk’s debut for political power to match his Mars aspirations.
But these steps are likely not enough to counter the negative drag of his agenda. Voters see this too. The gap is closing between Trump and Vice President Kamala Harris on who would be better for the economy.
But just because one candidate is bad doesn’t mean the other is good. Both candidates can leave growth on the table. And they are.
The Harris agenda is not a recipe for unleashing the American economy either. The statistics of eye-popping job gains and economic growth during the Biden administration are in large part from starting from a very low base during the COVID pandemic when the economy essentially shut down, and artificially pumping it back up with outlandish levels of government spending beyond what was needed to stabilize things.
The economic impact of a Harris presidency is estimated to be essentially more of the same — holding steady, with a slight bump perhaps. But she, too, is not promising to get us on a sustainable fiscal path and is promising populist economic goodies, like $25,000 for homebuyers, which will further dampen growth if not paid for.
A recent calculation by the nonpartisan Committee for a Responsible Federal Budget finds that Harris’ economic plans would add $3.5 trillion to the debt. Trump’s economic plans would add $7.5 trillion. Neither candidate is showing much prudence.
So what would a more positive economic agenda look like, one that accounts for growth and opportunity and better serves the most vulnerable among us? That is what I ask one of our nation’s leading economists, Glenn Hubbard, on this week’s Beyond Talking Points podcast. Hubbard has served as chairman of the Council of Economic Advisers as well as dean of Columbia’s business school.
Hubbard bemoans — and I join him — the lack of economic rigor this election cycle. The populist talking points employed now on both sides of the political aisle are doubly painful: They set expectations high and deliver the opposite. Just look south of the border to see the inflationary spirals populist demagogues have produced while ignoring economic realities. There’s a reason why economists of all political stripes tend to support worker visas, budget reform and free and fair trade, all of which are falling out of favor.
The bedrock of our country is the economy. A vibrant and growing economy is square one for providing benefits at home and projecting strength abroad. This is not to be taken for granted.
In the old days, there was assurance that at least one political party would prioritize the nation’s dynamism and economic growth. I wished it was more inclusive and focused on opportunity, but the basics were right. Now, growth is out the window.