San Diego Union-Tribune (Sunday)
JOE BIDEN AND THE ECONOMY
Economists, executives tell us what they hope the new administration can accomplish.
ECONOMISTS
STEP BACK AND FULLY UNLEASH THE ECONOMY: But that, of course, is fully the opposite of what Biden will do. Massive additional government spending “crowds out” more efficient private sector investments. How spending is financed will not be seriously considered, nor the effects deficits (commitment to more taxes) and inflation impose. Government faces far inferior incentives as “investor” using others’ resources with no way to verify whether projects are worthwhile.
INFRASTRUCTURE INVESTMENTS: In the short term, speeding up the rollout of vaccines is the most critical action the new administration can take to help the country return to normal and to boost employment. But policies that foster long-term growth, especially investing in infrastructure, need to be a priority. Biden’s plans to repair highways, bridges, and roads; transit projects; clean energy projects; and public school facilities would enhance productivity and long-term economic growth.
ACHIEVE A SUSTAINABLE PATH FOR GOVERNMENT DEBT: Job No. 1 is to get the vaccines out as quickly as possible — solving the medical problem is the best way to address our economic problems. Looking further ahead, I hope the president is careful about how much extra debt the government racks up. Net federal debt is already 100 percent of GDP. If it climbs far above that, we could face real problems making the annual interest payments.
GLOBAL TRADE RESET: President Biden should re-engage other nations on issues of trade and investment, rather than hiding behind tariffs and other barriers. The U.S. should work with other countries on the environment and the digital economy. Relations with China need to be reset, finding opportunities for cooperation and negotiating over clearly defined expectations. Trade will raise the well-being of both the U.S. and the world, although worker retraining will be key to prevent some from being left behind.
EXECUTIVES
CALMING OF THE NATION: After years of irrational behavior from the White House, it is time to bring sensibility. Although being pro-business may be too much to ask for, he can at least not be anti-business. For our economy to grow and heal we need to get millions of Americans back working. Business is not the enemy. Social spending is not the cure. A balanced approach to reenergizing the American economy by encouraging devastated industries like hospitality and small businesses needs to be a priority.
RESOLVE SEVERAL COVID-19-DRIVEN ISSUES WEIGHING ON THE ECONOMY: Biden must usher an effective government response to the pandemic, including the vaccine process. He needs to shore up support to states and cities to assist communities. The president must also get a strong safety net passed for millions with job loss, housing insecurity and the likelihood of not returning to work given business failures. Here is where his proposed infrastructure program is important.
TAX JUSTICE: Today, the largest corporations and wealthiest individuals pay the least taxes as a percentage of what they earn. Trump’s cuts have cost us trillions in lost taxes, funneled money away from public schools, repealed renewable energy incentives. Proposals on the table to increase the corporate tax rate, discourage offshore tax subsidiaries, make the wealthiest pay Social Security tax, and increase capital gains on income over $1 million all seem directionally correct moves towards tax justice.
MODERATE RESPONSE TO THE ECONOMY: Raising taxes on business will potentially cost jobs and yet there are clearly programs — especially the pandemic response — which must be managed. The burden of funding the recovery must be shared by all — individuals and businesses. I still recommend a flat tax approach — the more you make, the more you pay — but all pay something.