With less than a month to go before election day, two leading economists offered their analyses of competing economic plans proposed by presidential candidates President George W. Bush and Sen. John Kerry (D-Mass.) during an Oct. 7 visit to the Faculty Club.
In a 90-minute discussion before audience members that paid $50 each to attend the UCSD Economics Roundtable, UC Berkeley professor of economics Brad DeLong and MIT Sloan School of Management Dean Richard Schmalensee agreed in calling the Bush administration’s economic policies unsatisfactory for both liberals and conservatives.
Sponsored by the campus economics department, the event brings together community leaders and national experts.
“I think the Democratic side is on the side of the angels 80 to 90 percent of the time, but … Republicans are occasionally necessary so they can do things for the country that the Democrats have a very hard time of doing,” said DeLong, a self-professed liberal who worked under former president Bill Clinton.
Citing what he sees as the failure of the Bush administration’s fiscal policy, DeLong said he believes Kerry will do a better job as president.
DeLong also criticized the Bush administration’s support of steel tariffs.
“On the governmental process, the Bush administration has been worse than I would have imagined,” he said. “More people lost their jobs because their employers had to buy higher priced steel and, as a result, their products were at a cost disadvantage to foreign countries.”
Calling himself a moderate Republican and conservative on economic policy, Schmalensee said that, while he worked on the 2000 campaign to elect Bush, he no longer agrees with the way the president is running the country.
“I found the first Bush administration congenial on economic policy, and at the start, I found this president, when he was campaigning, congenial,” Schmalensee said. “[It was a] class of smart people, but I’m not backing it now.”
He said he was uneasy with the size of the tax cuts signed by Bush and pointed out that, while Ronald Reagan cut taxes in 1981 and brought down the top tax rates, taxes were raised several times later on. Schmalensee said there is no such flexibility now in America.
“We are in a situation where our deficits are being financed by the Japanese and Chinese central banks. This is not a terribly comfortable position,” Schmalensee said.
DeLong closed his prepared remarks with a message to Republicans.
“In the short run, I think what is to be done is to vote for John Kerry,” DeLong said. “John Kerry not only has all the natural advantages of being a Democrat over a Republican, but Bush has the natural disadvantage of being an extremely lousy Republican. Many of you are what ought to be the Republican base. Take it back for people who care about getting policies right. Make it very clear it doesn’t please you.”
Schmalensee expressed surprise over conflicts between Bush economic policy and traditional conservative guidelines.
“What I find shocking is in the Republican rhetoric,” Schmalensee said. “Nobody can live with long-term structural deficits, so you cut taxes and that forces a cut in spending … This administration has absolutely not restrained spending.”
Of the roughly $125 billion increase in spending between the 2000 and 2004 fiscal years, about $20 billion went to homeland security, according to Schmalensee.
“What a good conservative Republican does is cut spending under these conditions, and what this administration has done is to spend more and more,” Schmalensee said. “I think the answer has to be higher taxes.”
Like DeLong, Schmalensee concluded by endorsing Kerry.
“On balance, I think the choice is between a liberal Democrat … who at least tries to think through issues, and a conservative Republican who governs not from the center, but from the right, who has made disaster after disaster in policy area after policy area and doesn’t seem capable, on the evidence we have, of running a thoughtful policy,” Schmalensee said. “I think this is a reasonably easy choice, if not necessarily a pleasant one.”
