Economics Election
Who's talking about the Federal Reserve?


As the Feds gave help, Bear Stearns got bought, and investors nervously watched their investments, National Review Online asked a group of economics wonks to quickly touch on the future of Washington economic policymaking: Of those running for president, who can help or hurt the economy and why? Here’s what they came back with.

John Hood
What’s striking about the presidential campaign at the moment is that as the markets are dropping and the economy is topping the list of voter concerns, none of the candidates truly seems engaged on the subject. John McCain is off in Iraq — good for him — while Hillary Clinton is scheming about primary re-votes and Barack Obama is running away from his nutty pastor.

Who’s talking about the Federal Reserve? I’m not hearing much from the candidates. It’s too bad. The Fed is in the process of bailing out huge, risk-taking financial institutions, and weakening the dollar with more inflation. It’s a foolish, even dangerous policy mix. I, for one, would like to see one of the candidates clearly stake out a position in opposition to the easy-money Fed.

As for traditional concerns, I suspect that Obama and Clinton are both exaggerating for primary effect their hostility to free trade. Sensible veterans of the Clinton administration would probably populate the higher levels of a new Democratic team, and they won’t try to renegotiate NAFTA (how, indeed, would that be done?) or impose significant new barriers to trade with China and India. The two parties are more clearly defined on taxes, a point that McCain ought particularly to emphasize as public sentiment worsens and the stock market continues to gyrate.

At the moment, it sure looks like the presidential election will be decided on economics, not the war. We’re likely to get a clear choice of action plans by the fall, though perhaps not until then.

– John Hood is chairman and president of the John Locke Foundation.

Raymond J. Keating
The presidency is not about economic cheerleading from the bully pulpit. It’s not about “change” nice talk. Nor is it really about experience. Instead, it’s about getting policies right, particularly on trade, taxes, and regulation.

Reduce trade barriers to expand international opportunities for U.S. businesses, while boosting competition and choice at home, and cut tax and regulatory burdens to boost incentives for working, investing, and entrepreneurship.

On trade, the last time we had a protectionist president — a.k.a. Herbert Hoover — world trade collapsed and a Great Depression resulted. Unfortunately, the two Democratic candidates for president — Barack Obama and Hillary Clinton — apparently have protectionist tendencies, for example, each railing against NAFTA and voting against CAFTA. In contrast, Republican John McCain has been a solid free-trader.

On taxes, last week’s budget resolution votes were revelatory. Obama and Clinton effectively voted for huge tax increases — namely, raising the top personal-income, capital-gains, and dividends tax rates — while McCain voted against these tax hikes. Of course, it should be kept in mind that McCain has flipped, flopped, and flipped again on taxes, going from a tax cutter to opposing the Bush tax cuts, to now favoring tax relief once again.

On regulation, the big mess on the horizon has to do with climate change. All three candidates — Obama, Clinton, and McCain — favor cap-and-trade schemes to reduce carbon-dioxide emissions. The results? Jacking up energy costs even further, and pushing economic activity and jobs overseas.