Wither the Economy?
MCCAIN AND OBAMA STAKE OUT DIFFERING VISIONS
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who’ll be on first?
Sad but (un)true—the policies espoused during the election cycle may never make it to the Oval Office. However, each candidate’s economic team does foreshadow the actions of his administration. To figure out what policies Obama and McCain will actually support if elected, we examine their economic advisors and their business supporters.
If Barack Obama’s economic team is alarmingly untested, John McCain’s is drearily familiar, drawing on many of the same people who have populated Washington under Republican administrations and in Congress.
Obama’s Team
Obama’s economic advisory team is packed with economists, which is more unusual than it sounds. Democrats on the left would prefer a more political team focused on social-justice issues, such as the mediation of income gaps between rich and poor, significantly increased funding of social-welfare programs, and a single-payer health-care system.
But that won’t be the theme of an Obama administration, according to the positions he has articulated and those espoused by his advisors. The development of his economic thinking was heavily influenced by the free-market ideas of the more moderate academic economists at the University of Chicago. He encountered these ideas while on the faculty of that institution’s law school, where he taught for more than a decade.
So while Obama and his team are courting Main Street on such bread-and-butter issues as unemployment, rising food and fuel costs, and the housing-market debacle, he’s not forgetting about Wall Street. He’s wooing CEOs, financiers, and analysts, by establishing his free-market credentials. He believes in the power of government to intervene when markets fail and he promises relief for struggling families in terms of tax cuts and help for the housing market. But he isn’t proposing to dismantle or even seriously curb our market-based economy.
“I think Obama will be extremely friendly to Wall Street because he is very much aware of the incredible amount of political power on Wall Street,” says poli-sci academic Christopher Dolan. “I don’t think he’s an institutional reformer. I think he’s someone who is going to replicate what he and the public think have been successful economic policies, like those that worked during the Clinton years.”
Here’s a rundown of Obama’s chief economic advisors:
Austan Goolsbee, PhD, is Robert P. Gwinn Professor of Economics at the Graduate School of Business, the University of Chicago. Goolsbee serves as a columnist for the New York Times. He is a research fellow at the American Bar Foundation and a research associate at the National Bureau of Economic Research.
Jason Furman, PhD, is a senior fellow at Brookings Institute (on leave) and a visiting scholar at New York University’s Wagner Graduate School of Public Service. Previously, Furman served as an economic advisor to the Kerry–Edwards and Gore–Lieberman Democratic tickets and was the special assistant to the president for economic policy during the Clinton administration.
Jeffrey Liebman, PhD, is the Malcolm Wiener Professor of Public Policy, John F. Kennedy School of Government at Harvard University; and a research associate at the National Bureau of Economic Research. From 1998 to 1999, Liebman served as the special assistant to the president for economic policy and coordinated the Clinton administration’s technical working group for reform of Social Security. He coedited Distributional Aspects of Social Security and Social Security Reform (University of Chicago Press, 2002).
Business supporters of Obama’s economic policies include: Warren Buffett, chairman and CEO of Berkshire Hathaway; Paul Volcker, former chairman, US Federal Reserve; and Arthur Levitt, former chairman of the SEC.
McCain’s Team
It’s anyone’s guess whether McCain’s reputation as a maverick or his more recent Republican orthodoxy would prevail in his presidency.
McCain was on record opposing both the 2001 and 2003 Bush tax cuts, but has come out in favor of renewing the provisions that are due to expire between now and 2010, claiming that to allow them to expire would be tantamount to a tax increase. On other core conservative issues, McCain has tended to toe the party line, supporting free trade, spending cuts, and partial privatization of Social Security.
During his 22 years in the Senate, he has reached across party lines to work with Democrats on a variety of issues. With regard to Social Security, he said he would couple partial privatization with tax increases to solve funding shortfalls. When necessary, he has voted in favor of regulation, as in the case of Sarbanes–Oxley. He is a proponent of increased offshore drilling, but opposes drilling in the Alaska National Wildlife Refuge.
For his economic team, McCain drew on Republicans from current and past administrations, as well as conservative leaders in economics and business. Here’s a summary of top McCain advisors:
Douglas Holtz-Eakin, PhD, is a senior fellow at the Peterson Institute for International Economics, president of DHE Consulting, and policy director for the McCain campaign. Previously, he was the director of the Maurice R. Greenberg Center for Geoeconomic Studies and held the Paul A. Volcker Chair in International Economics at the Council on Foreign Relations. He served as the director of the Congressional Budget Office from 2003 to 2005 and as chief economist of the President’s Council of Economic Advisors from 2001 to 2002.
Phil Gramm, PhD, is a vice president at UBS Investment Bank and a former professor of economics at Texas A&M University. Previously, Gramm served three terms in the US Senate and three terms in the US House of Representatives, as a Republican. A fervent free-market economist, Gramm originally ran for Congress as a Democrat and served his first two terms in the House as a Democrat.
Kevin Hassett, PhD, is a resident scholar and the director of economic-policy studies at the American Enterprise Institute and a columnist for Bloomberg. Previously, he was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at the Graduate School of Business of Columbia University. Hassett has written and contributed to numerous books and scholarly articles, including Toward Fundamental Tax Reform (AEI Press, 2005).
Jack Kemp is a principal of Kemp Partners and a nationally syndicated columnist. Formerly a candidate for vice president, a US congressman, and secretary of the US Department of Housing and Urban Development, Kemp is an advocate of tax simplification and free markets. He was the coauthor and sponsor of the 1981 Kemp–Roth tax-cut bill. Prior to entering politics, he was an NFL quarterback.
McCain’s business advisors and supporters include former eBay CEO Meg Whitman, former Hewlett-Packard CEO Carly Fiorina, and John Thain, former CEO of Merrill Lynch and former head of the NYSE.
