1. The unemployment rate is stuck at 9.1%. The U.S. isn’t adding enough jobs to keep up with the growth of the labor force. What’s done is done — the fiscal stimulus, the Federal Reserve’s quantitative easing, etc. What specific policies would you adopt today to quicken the pace of economic growth and hiring?
First, I would suspend all payroll taxes for 12 months, and the phase them back in over the next 12 months. No attempt would be made to “pay for this”
Second, I would open up immigration. My preferred policy is that anyone can come to the US who is willing to pay a $5000 fee and have a background check. The fee is per person. It is sent to the local government that the immigrant moves to as an impact fee to allow them to build out support infrastructure
I image that a private network of lenders will emerge to support paying this fee for just about anyone who has a decent prospect of being able to get a job. Many skilled workers will be able to borrow enough to move their whole family at once. Less skilled workers may have to work and save to bring more family members over.
Once in through this channel a person has legal rights as a permanent resident.
2. If raising taxes would be bad for the economy, how would cutting spending and eliminating government jobs now be good for the economy?
It’s not “good for the economy” in a stabilization sense, though some people might prefer a smaller government.
Its important, however, to understand what the government actually does. Nearly half of all civilian government employees work in education. The majority of total federal government employees work in the military.
While I am for less wars and more school choice these are not changes that can occur overnight and so restructuring government employment will not happen overnight.
3. Housing remains a major drag on the U.S. economy. About one in five Americans with a mortgage owes more than the value of his or her house. More than half Americans with equity in their home have a mortgage with an interest rate above 5%, but hasn’t refinanced. Home-building is at historic lows. Can government policy do more to rescue housing? If so, what?
Yes, but indirectly. The best thing for housing is a growing economy. As the economy picks up the housing market will heal and there will be a self-reinforcing boom.
We could help this process along by allowing more immigrants into the country and by temporarily reducing taxes.
4. Several of you have expressed displeasure with Federal Reserve Chairman Ben Bernanke? Who would you prefer to see in that job?
I don’t think the Chairman is “the problem.” While the central bank is far more timid than I would like I think this is a structural issue due to the nature of powerful bureaucratic organizations.
We don’t put passionate men and women in charge of the money supply for a reason. Unfortunately that has negative as well as positive consequences.
5. Will the middle class have to bear some of the burden — either in higher taxes or fewer government benefits — to bring the federal deficit under control?
Yes, most likely in the form of higher taxes. No country that I am aware of has significantly decreased the path of government benefit expenditures, in part because they are so dominated by health care and spending on the elderly.
The sick and the old are incredibly sympathetic constituencies. I do not think it likely that the United States will cut these expenditures in a purposeful way, though health care has a lot of uncertainty attached to its future cost numbers.
The likelihood is that taxes will need to rise over the coming decades and the middle class will have to pay that.
6. Are there any tax increases of any kind that you would accept over the next decade?
Yes, I would prefer scrapping the current tax system and imposing a flat tax on all personal income sources, capital gains adjusted for inflation and business profits. To cover all expenses for the government in the coming decades this tax rate will have to slowly rise into at least the mid 20% range depending on how many immigrants we have.
Obviously the more immigrants the lower the tax rate as military and past debt expenditure are spread over a larger base. Also, it would lower the current cost of medicine and retirement spending as the average age of the population is likely to fall dramatically in the wake of large immigration.
To introduce progressivity into the system I would work towards federalizing and expanding Medicaid, thus reducing state taxes that tend to be even more regressive than a national flat tax. I would also push for voucherization of K12 paid for through the federal tax.
This will cause the flat tax rate to rise to around 30% or so, but would allow State and Local taxes to collapse, and give lower income folks a huge break, relative to income, on health and education expenses.
7. What’s the best way to slow the growth of health care costs in the U.S. over the next quarter-century?
Reduce barriers to entry in medicine and pharmaceuticals. Allow more nurses to write scripts with only limited educational requirements. Push for OTC of more medicine. Do not require that new procedures and pharmaceuticals show efficacy, only safety. Allow IT to develop tech for medicine without facing heavy regulation or large civil liabilities.
This is a fine line to walk but I would reduce the “consumer protections” in medicine as far as the public would tolerate. I think they would tolerate a significant reduction if it was done slowly and carefully.
8. Mitt Romney backs the imposition of U.S. tariffs on Chinese imports if China doesn’t allow its currency to float freely on international markets. The Senate is taking up similar legislation. Do you support the pending Senate bill?
I am hesitant. I think there are better ways to boost Aggregate Demand than straining relations with China
9. The living standards of our children and our grandchildren’s generation depend on investments we make today that pay off in future productivity later. What, if anything, should the government spend money on today with that objective in mind?
Developing prizes for achieving goals in computer science and engineering; particularly along the road map to artificial intelligence. One might also want prizes for “electric power storage” or “generation of electric power from solar radiation” setting objectives for efficacy and cost in terms of raw materials.
The conditions of the prize are that the tech has to be made freely available to anyone who wants to implement it.
10. How specifically, if at all, should government policy respond to the persistent widening of the gap between winners and losers in the U.S. economy?
Strengthening the safety net by providing increased humanitarian benefits to the losers like guaranteed health care, education and retirement.
No specific effort should be made to reduce the winnings of the winners.