(These are highlights from my conversation with an economist who graduated from an elite university, served on public policy staffs during the administrations of Richard Nixon and Gerald Ford, and later consulted international businesses.)
George Thomas Clark – Okay, I read your recent newspaper columns about economics and foreign policy, respectively. You emphasize what President Donald Trump daily brags about: the economy is growing, unemployment continues to decline, black and Hispanic unemployment are at historic lows, and the stock market remains robust. That’s great. But Trump inherited a healthy economy from the Barack Obama administration that had to deal with the domestic and foreign policy catastrophes of the George W. Bush presidency.
Economist – I quibble a little with your assessment that Bush is to blame for the colossal house of cards of 2008. Congressman Barney Frank, a Democrat, was head of the House Banking Committee that allowed a Fannie Mae Ponzi scheme that strangled lending institutions. During that period some government employees were making millions of dollars a year based on their sales of mortgage backed securities. How did a public employee make that kind of money?
GTC – That’s outrageous. I hadn’t heard. Who were the government employees getting that kind of compensation?
E – I don’t have the names at hand. That’s something you could easily look up online.
GTC – I’ve looked at unemployment figures for every month of the Obama administration. After recovering from the avalanche he inherited from Bush, Obama presided over steady decreases in unemployment that led to a rate of about four-point-nine when he left office.
E – Unemployment’s at about four percent now. And the latest growth rate, four-point-one percent, is much more sustainable than under Obama.
GTC – Obama had two quarters of four-point-six percent growth and another at five-point-two.
E – Growth now is attributable to tax cuts that create good jobs. Corporations had parked two trillion dollars overseas to avoid high taxes, and that money’s come home and is helping the economy. Under Obama there was a massive increase in spending. The national debt rose from four to seventeen trillion dollars. The Federal Reserve Bank was pushing free money out the door. The Fed is tightening a little now and that’s healthy.
Tax cuts are a much better way to generate revenue. That’s the Faustian bargain. If you cut taxes, the economy improves and wages go up. Many say it’s unfair that the rich get richer. But, if you tax the rich, the poor get poorer, and that’s not an option. Remember, John F. Kennedy cut taxes. That’s how you grow the economy.
GTC – The George W. Bush administration slashed taxes, and look at the results.
E – One of the key reasons Bush drove up the debt was because of spending for Medicare Part D. It was a lot more expensive than they’d projected.
GTC – Money spent on Medicare Part D is vital. I know because I just got my Medicare card several months ago. I earned it. Conservatives always want more money for defense and less for social programs.
E – Trump has made the country stronger by increasing the defense budget. He’s forced NATO to spend more, and the United States and the European Union appear to be ready to cooperate on lower tariffs. Russia’s less dangerous than when Obama was president. Trump told Putin he was going to increase the defense budget because of new Russian cruise missiles that violated an agreement. China’s also less dangerous. If you can move past Trump’s rhetoric and style, the results aren’t bad. Strength leads to peace.
GTC – The United States spends more on defense than the next seven countries combined. That makes military spending more of an economic issue than one of defense.
I wanted to ask you about the phrase you used regarding the path this country must choose: “America or Venezuela?” Venezuela’s a failed state.
E – That’s an extreme comparison I made because Venezuela sold the notion of soaking the rich. Socialism just doesn’t work. Look at Spain, Italy, and Greece and their unemployment and economic issues. Meanwhile, in northern Europe, Germany, specifically, they’re working more hours and becoming more conservative.
GTC – In one column you write, “Democrat’s open-border policy is a knife in the heart of the economic prospects” of minorities, women, and young people. I taught English as a Second Language for adults for twenty-four years, and I guarantee that the people coming to this country are working hard and contributing to society. I was always impressed by their high rate of home ownership. More than ten years ago I debated this subject several times with right-wing bloggers and made the point that people come here from Latin America to work. Millions have become farmworkers. Who owns the big agribusinesses that hire them? The wealthy. The Republicans.
E – At this stage almost as many people are coming in from Asia as Latin America. I think immigration is a great thing when it’s controlled but problematic when it’s uncontrolled and too many unskilled workers come in. We need to manage the economy and manage immigration. Otherwise, minorities and the poor will be the ones who get hurt.
GTC – Thank you very much for your time.