2 Economists With Opposing Views Weigh In On Trump's Economic Plan
STEVE INSKEEP, HOST:
This week, members of President-elect Trump's economic team take questions at Senate confirmation hearings. One of them is Wilbur Ross, the billionaire investor who's the choice for commerce secretary. Another is Steven Mnuchin, the hedge fund investor who's the pick for secretary of the Treasury. We brought in part of our own economic team. Jared Bernstein is a former chief economist to Vice President Biden, author of the book "The Reconnection Agenda." Good morning to you again, sir.
JARED BERNSTEIN: Good morning.
INSKEEP: And also Peter Morici, a conservative economist who writes for The New York Post, among many other publications. Thanks to you as well for coming in.
PETER MORICI: Nice to be with you.
INSKEEP: So how do these Cabinet choices compare with what the president-elect promised while campaigning? Peter, you can start.
MORICI: Well, he didn't really promise much in terms of who he would put there. But essentially, we're getting generals, billionaires and people with PR experience, not a lot of economics, not a lot of policy expertise. And it draws concern as to whether he's really going to put together a coherent plan that reflects what he campaigned on.
INSKEEP: But did he promise disruption when he was campaigning? Is it fair to say this is a disruptive set of choices, Jared?
BERNSTEIN: Well, you know, I very much agree with Peter's assessment of the Cabinet's experience. But what I would see differently is that I actually think he did very much make a set of promises to a group of people who were instrumental in his getting elected, and that's working-class folks who've been on the wrong side of globalization, on the wrong side of inequality. I think many of those would be rightly very surprised to see a Cabinet that was largely billionaires, that as far as I can tell right now is talking mostly about big, fat tax cuts for rich people.
INSKEEP: They're also talking about protectionist policies and that sort of thing, though. They are talking about trying to shift the way the United States approaches globalization.
MORICI: But it seems to be deal-making. Let's lean on General Motors. Let's lean on Carrier. Let's lean on United Technology. You know, all the deals in the world are not going to give you the kind of turnaround and jobs growth that he needs. For example, 100,000 more jobs a month would mean a hundred deals a month.
MORICI: That's absurd. Instead, he needs to create a suitable environment for trade. And he's pooh-poohing congressional proposals to change the tax structure and things of that nature. It doesn't seem like he's interested in the kinds of holistic solutions that will give rise to fundamental change and incentives to locate here.
INSKEEP: He did talk about changes to the health care system over the weekend. He talked with Robert Costa of The Washington Post. And he claimed, although he did not give any details, that he was very close to having a replacement ready, his own plan to replace Obamacare. Wouldn't say what it was, but he said it would be "insurance for everybody" - that's a quote - lower prices for the insurance, lower deductibles for the insurance, lower drug prices. What do you make of all this, gentlemen?
BERNSTEIN: Well, look, I mean, this is - it sounds a little bit like Medicare, by the way, Medicare for All, which is something Ted Kennedy was for years ago.
INSKEEP: Socialized medicine.
BERNSTEIN: Yeah. So, I mean, it's very - it's a very important set of statements because it flies in the face of what we're actually seeing from folks like Tom Price, his designee for Health and Human Services, the kinds of plans that depend on cost shifting back on to people. So high deductibles - so, you know, these high-risk pools, plans that shift costs back on to folks that the Affordable Care Act was actually trying to take off of them.
So it really goes the opposite way. One other quick point on this. One - another piece of this is that when you get rid of the ACA - when you get rid of the Affordable Care Act, you're implementing a huge tax cut for millionaires and actually a tax increase for people who were formerly getting the premium subsidy tax cuts.
INSKEEP: Oh, because there were a lot of tax changes as part of Obamacare.
BERNSTEIN: Exactly. Well...
INSKEEP: Peter Morici, what do you think, as a conservative economist, of what the president-elect set out as principles that he wants, insurance for everybody, et cetera, et cetera?
MORICI: A fundamental problem that Donald Trump has to address - the Democrats have to address, the Republicans have to address, everyone has to address - is that we pay substantially more for specific health care services, drugs, medical devices and so forth than the Europeans, about 50 percent more. It sounds to me like he is circling around a European system where they regulate prices. The only way he can deliver on what he promised is to regulate prices.
Now, as for cutting taxes on billionaires, you know, some of his taxes kick in on families that make $250,000 a year. That is a substantial income. But to say it's just tax cuts for billionaires is wrong. The thing is is that he is willing to take on the issues that neither Obama nor the conservatives and Republicans - conservative Republicans are.
INSKEEP: I want to ask one other question, though. Is he taking them on realistically? Philip Klein, managing editor of the Washington Examiner, which is a conservative-leaning publication, said this over the weekend. Quote, "what Trump said on health care is like we're going to Mars without fuel for the price of a Popsicle stick. NASA is figuring out details." Is the president-elect wrestling seriously with the issues here?
MORICI: That was demagoguery. My feeling is that he is wrestling with - seriously by entertaining those solutions because the Europeans have a range of systems. Some have a single provider system...
MORICI: ...Some have a single-payer system, some have private insurance.
BERNSTEIN: So I just, look, I...
MORICI: Hold on. What - they all deal with pricing, and he seems to be willing to take that on.
BERNSTEIN: So I don't think he's willing to take on any of that stuff. I think he's just - I don't think he actually has a plan. I think he's just making stuff up as he goes along, and I don't believe what he's talking about. What I think is particularly important here, though, is that he is completely at odds with his Republican caucus, who, again, has a plan that shifts costs back on to individuals much in the way that the Affordable Care Act was trying to take cost back the other way.
In fact, what Donald Trump is talking about is much closer - and I agree with Peter on this - is much closer to the type of health care reform that Democrats have been trying to move forward for years.
MORICI: In his press conference, he specifically talked about drug pricing. He specifically talked about it.
BERNSTEIN: Yeah, true.
INSKEEP: Negotiating for drugs, yeah.
MORICI: And that's not the first time. He's also talked about...
BERNSTEIN: It's actually a good idea.
MORICI: He's also talked about a single-payer system in the past. The real question for Democrats then is, are you willing to work with him, or are you going to criticize everything he says or does? 'Cause he's embracing some of your ideas, and you're trashing him right now.
BERNSTEIN: No, no. I just say that - there's no question that Democrats would be happy to work with him if that's the direction he's going in. No one believes that that's really the direction he's going in.
INSKEEP: Let me ask about one other thing, gentlemen. The inauguration is coming up on Friday. Perhaps you've noticed. And The New York Times reports that more than $100 million has been raised by the Trump Inaugural Committee. More than $100 million, that's a record. It's more, I believe, than both of Obama's inaugurations combined.
Now, that doesn't necessarily mean a lot because the prices of all these things always go up. But it's a lot of money, including from corporations like Boeing. And here's a detail from the Times article. For the most important guests, his new hotel, blocks from the White House, will serve as a defacto home base. How are you feeling about this man's relationship to business?
BERNSTEIN: Well, the last point you made sounds like it generates constitutional problems 'cause you're not supposed to take gifts that way. But to me, this is just part and parcel of his whole resistance to actually divest and to put his assets in a blind trust. And I think the conflicts of interest here are deep. I recognize that he doesn't have to, by law, do much about them. But I think optically, he absolutely should.
INSKEEP: Peter Morici.
MORICI: Well, these things are always becoming more expensive. But I think this notion that presidents have to go out and raise money for their own party their first day in office is silly. And we really do need reform in that regard.
INSKEEP: Do you think that this man is going to - this man - do you think the president-elect, as president, is going to be independent of the special interests that he's now collecting money from?
MORICI: Well, he's going to be more independent than other presidents 'cause he certainly has - is going to have to worry about where his money's going to come from when he leaves office. He's so incredibly wealthy that he - that's one advantage of having an incredibly wealthy guy.
BERNSTEIN: Yeah, I see nothing but downside from that perspective. I mean, I understand that it's difficult to divest that kind of a fortune, but he absolutely should try to do it. And the fact that he hasn't suggests deep conflicts of interest. He actually owes money to the Chinese. I mean, this is a serious problem.
INSKEEP: Hundreds of millions of dollars. Gentlemen, thanks very much, always a pleasure talking with you. Jared Bernstein of the Center on Budget and Policy Priorities, and Peter Morici, an economist at the University of Maryland. Glad that you came by.
MORICI: Thank you.
BERNSTEIN: Thank you.
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