In Boston for a special Marketplace live event, host Kai Ryssdal sat down with WGBH’s Jordan Weinstein to explain the candidates’ differing views on how to fix our economy — and why possibly neither candidate would succeed.
JORDAN WEINSTEIN: In the first presidential debate and elsewhere, President Obama has claimed that the standard of living for Americans has improved since he took office. His challenger, former Massachusetts governor Mitt Romney, has painted a very bleak picture of the president’s failures, the terrible state of our economy and the declining American standard of living. Who is right?
KAI RYSSDAL: Neither of them is right. There is a huge chunk of this country that is demonstrably worse off, there’s a small slice of it that’s better off. But speaking in the broadest sense, wages and standard of living and income are flat over time if not negative in this country because of the way this economy’s been going. So I think for either of these guys to say “My vision of what’s going on in America is accurate” is simply not the truth.
But I think there’s something else you need to frame this debate with: How much can the president by himself really do about the economy? We want to believe that presidents can do something. And presidents want us to believe that they can do something, but they really can’t.
JORDAN: What is your take on each candidate’s apparently disparate proposals for getting America back to work and boosting our collective standard of living?
KAI: You have to remember that the president’s stimulus program is 3 years old. Most of that money has come and gone. He has proposed a payroll tax cut and gotten that into effect. The president believes that the government ought to step in where private investment and private spending have failed. Gov. Romney thinks we ought to do it a different way. I have yet to see where tax cuts can demonstrably affect the economy at the scale that things need to be affected right now. We still have consumers who are not spending, we have companies sitting on huge amounts of cash. So in the absence of that spending, where’s it going to come from? President Obama and his allies say, “Listen, we have to do this, we have to backstop this. We have to do that Keynesian approach where nobody else is going to spend the money.”
JORDAN: You’ve spoken with a multitude of economists over the years in your work. Do you have any sense from any of them what might work to boost our standard of living … if Washington were to take their advice?
KAI: This is not happening in a political vacuum. Washington is not listening to what the economy is saying. Washington’s doing its own thing. You talk with Republican economists and to Democratic economists and you get completely varying points of view, and it’s not for me to try to parse that, only to say that no matter what happens in this election, Washington needs to listen to economists. There are experts in this. Whether you favor one side or the other, there are experts. Let’s pick a path, let’s do it. Washington can’t get out of its own way to find something to do with this economy and I think that’s the key thing.
JORDAN: In terms of bread-and-butter issues, gasoline cost about twice as much as it did when President Obama took office. Milk and most foodstuffs are higher. Due to the diverting of corn into ethanol production and other factors, corn and corn-based products are much higher than 4 years ago. Despite the fall in the price of homes since the collapse of the home mortgage market in 2008, house and apartment rents have skyrocketed, especially here in the Boston area. I hate to return to the same question but, again, are Americans better off now than 4 years ago?
KAI: There is a chunk of the people in this economy for whom the recession has been something that happened to other people. But most of the people in this country are still suffering. They’re losing their homes, they’re dealing with 7.8 percent unemployment — which is really high. I think it’s a stretch to say we are better off. It’s also a stretch to say we’re worse off. I think we’re better off than we were in 2009 but we’re not doing as well as we were in 2006, 2007 even though that was a bubble that we all know about.
JORDAN: What are some ideas you have or have heard that make sense in terms of restoring American’s standard of living?
KAI: We need to take care of the fiscal cliff: that uncertainty that’s hanging over the end of the year about the Bush tax cuts and the sequestration, of the budget bill of about a year ago. That’s what American business is worrying about, that’s what the Europeans are worrying about. The managing director of the International Monetary Fund told me that that and the European mess are the two biggest things hanging over the global economy today — the inability of Washington to figure out its fiscal house, if you will.
The other key thing I think that needs to happen is that there has to be a resurgence of consumer demand, however you want to do that. Do you want to reform the tax code as Gov. Romney says he wants to do? Now there are a lot of issues regarding Romney’s tax proposal and a big deficit of specifics. But if there’s true tax code reform in the offing somewhere, that will, I believe work out better for everybody. You take care of rates, you close some loopholes, you lower general rates if that’s what works for the larger economy. And then I think that the business community and consumers in pair and in tandem can get some confidence back. There is a lack of confidence in this economy.
