In a major recent New York Times article, the Ford School’s Betsey Stevenson and Justin Wolfers represented the center-left in a discussion on economics with center-right economic advisors from the Trump administration, Jay Clayton and Gary Cohn. In the article, What Washing Machines Can Tell Us About America’s Economic Future, Stevenson and Wolfers offered suggestions for economic growth, concerns about tariff increases, and gaps in housing policy.
Commenting on economic priorities, Wolfers and Stevenson stated, “People are angry about the economy. Whether they blame educated elites, billionaires or immigrants, their anger comes from the same place: The system feels rigged… Public anger reflects the challenges that people face paying for essentials such as food, gas, health care, housing and child care. Politicians talk a lot about food and gas. The others are bigger challenges, and the federal government can fix them.” They also shared requests for the next president: “Our plea to the next president is to tune in to the public’s anger. Understand and empathize, and you’ll come to see it not as a political constraint, but as the fuel that can power a once-in-a-generation presidency.”
While discussing housing policy, Stevenson and Wolfers found common ground with their center-right counterparts: “We all appear to agree the housing market has two core problems. Unfortunately they are pretty broad: housing demand and housing supply… The longer-run problem is more pressing, and that’s where we and our opponents part ways... Housing policy rests with the wrong level of government. It’s a national problem demanding national solutions. That’s tricky because the federal government has no direct role in local planning decisions. And it’s why Jay and Gary suggest the federal government create incentives for local communities. We’ll put aside the details on how to do this, and agree they’ve got the right idea. To be fair, we should make it a ‘refundable tax credit,’ which is a wonkish way of saying that each home buyer should get the same help.” Stevenson and Wolfers claimed, “A good housing policy would increase and reshape supply. On both fronts, the United States is getting it wrong.”
The two professors raised concerns about tariff increases in the next presidency. They argued, “The biggest lie about tariffs is that they’re a tax on other countries… Economists have studied who bears the burden. Spoiler: It’s often American consumers.” Stevenson and Wolfers stressed that, “Tariffs fed through into higher prices for American consumers, roughly dollar for dollar… Donald Trump has said he will use tariff revenue to fund the federal government. That’s going to be hard… Tariffs are a costly way to raise revenue. They also hit lower-income people harder.”
Stevenson and Wolfers mentioned much of the national debt can be attributed to the Republican Party. “From the Reagan through Trump administrations, Republican presidents have largely busted the budget with tax cuts that didn’t pay for themselves, leaving their Democratic successors to clean up the mess. If you know what comes next, we get it. Mr. Trump is running on a grab bag of tax cuts accompanied by evidence-free claims that they’ll stimulate enough growth to pay for themselves. This pattern — of Republicans creating fiscal chaos for their successors to deal with — is not a coincidence. It’s a strategy. For generations, Republicans have spent freely while shrinking the tax base. They’ve promised voters they can have the goods and services but without paying for them… A program such as Mr. Trump’s that increases spending while cutting revenue simply shifts the tax burden to your old age, or to the next generation." Reiterating their claim about Republican policy impacts, Stevenson and Wolfers stated, “The Trump program may well bring in less revenue by cutting taxes on the wealthy and corporations, while also raising the burden for 95 percent of Americans.” They proposed “Instituting the global minimum tax, joining the rest of the world in taxing carbon and enforcing a fair tax code would be good steps [to decreasing the national debt]."
When asked by the NYT, “What did we leave out?”, Stevenson and Wolfers concluded, “If we stick with our economic fundamentals — democracy, the rule of law and inclusive institutions — we can expect our prosperity to continue. Threatening these pillars risks our economic future.” “In this upside-down moment in American politics, the strongest economic argument in favor of Kamala Harris is that she is the true conservative in the race, offering the best chance of continuity with America’s great democratic traditions.”
