Check it out. The hosts are incredulous that this is coming from a conservative.
Bruce Bartlett is a genuine, country first conservative. He does not adhere to current right wing radical ideology that is griping the nation.
http://video.cnbc.com/...
Here is the transcript.
unemployment, taxes, loop holes, and an election in just a little more than a year. but which party has the better plan to get the economy back ontrack?
joining us now is bruce bartlett. he served in both the reagan and george h.w. bush administrations and is the author of several books on tax reform with one more on the way called the benefit and the burden.
great to have you on the broadcast. given your background, it might be surprising, some of your views on all this. but i'm actually curious. which administration do you think is the way to go in 12 months from now given the politics of the moment?
well, gee. none of the candidates, including president obama, have given us much of a reason to vote for them. but i can't really say to be honest. one of the things we've been talking about this morning as we've seen the adp numbers come out and challenger numbers earlier is the idea that we're cutting and that's, a lot of people want to have smaller government. but at the same time we're cutting and seeing in the jobs numbers.
you say we should be doing what?
well, i believe the problem of the economy is and has been since the beginning a lack of aggregate demand. i think this is principally a problem for fed policy but i think that there are times when interest rates get so low such as now that you need fiscal policy to drive spending in the economy, but, unfortunately, we had only one bite of the apple with fiscal stimulus. there's virtually no possibility whatsoever of doing more of that. and the fed also looks like it's sitting on its hands so
-- so the obama plan, which includes infrastructure, includes payroll tax holidays, you think that would do the trick? are you happy with that? i know that you like -- you're okay with raising taxes i think.
well, i think that in the long run we'll have to raise taxes to stabilize the debt/ ratio. i have no problem with that. in the very short run we have to get off debt center and get the economy growing. personally i would like to see a really big public works program.
i think we could be rebuilding every school and road and bridge in the country.
but how do you want to pay for that? hold on. to your point, andrew, bruce, i actually quoted you in my book because you wrote a great piece once on medicare. i always teasingly say to andrew you can have 20,000 keynesian bridges if we would just reform medicare. is that a good enough trade-off in terms of how we fix -- two different problems. i realize that. but in terms of the long-term spending problem in this country doesn't it come to entitlements?
well, it is essentially medicare. social security is not a long-term problem.
right. that's right.
i think if we were to do something to reform medicare, maybe that would allow us some short-term flexibility to do some fiscal stimulus and sort of do, you know, easy and tight, you know, at the same time. but given the gridlock in congress i just don't see any possibility of that.
so how do we pay for all of this? what is the best approach?
well, borrowing it virtually zero percent interest is a pretty good way to finance public works. if you believe the social rate of return is anything above zero, and i certainly do, then, you know, we should be borrowing like crazy. there is actually an unmet worldwide demand for treasury securities that is not being fulfilled. we really need to be spending more and borrowing more in the short run while simultaneously tightening in the long run
my good friend joe is wincing. no, no. i'm not wincing.
i was just going to ask you about the demand situation because we talk about that a lot and we're just trying to -- it is a chicken/egg thing trying to figure out why demand is not there. i think, bruce, you bought -- you think it's like a new normal based on the financial crisis i think, right? i mean, it's rogoff, rinehart view that it really is different and i know that you don't believe that regulations or dodd/frank or the nlrb or obama care, you write that off completely as a -- what did you call it -- a -- a red herring. a kenard of the republicans to try to take back the white house or something.
well, look. nobody denies that regulations are an important cost of doing business. but to make the argument that this is the cause of our problem, you'd have to show that there has been a significant increase in regulation over the last four years. and that's not the case.
all of the surveys of business people don't show business -- dodd/frank and obama care, that doesn't -- there's not enough there -- 2,000 pages aren't enough for you? i'll help him. they haven't been implemented yet. some of them. people are looking forward to it.
yeah. the length of a piece of legislation is a very poor guide to its burden unless you happen to be a lawyer.
even greenspan talks about just the durbin amendment.
he's done some work where he's tried to actually quantify the -- how the government activism has pushed long-term investment into the future where the long-term stuff they used to do they're just not doing it now. i guess he connected the dots, you know, in a rigorous way with some of the recent papers. we'll talk to him on friday about this again.
well, look. if you want to talk about regulation we should go back and talk about sarbanes oxley. that, too. which is a much more burdensome problem and that was one done by the republicans. so i think there's a lot of dishonesty going on. it doesn't matter
-- so it was -- now we're just deciding whose fault it is. but the demand, there is a notion that maybe the demand is not just from the hangover from the last recession, right? i mean, i agree with mohamed to some extent, too. it wasn't where the fed had to raise rates because things were too hot. it was, you know, took ten years to build up all that leverage and now we're working it off. but i don't know. you don't think there is any -- when these ceos or business people say they feel maligned or persecuted, you just throw that right out. you don't believe that.
yeah. they're just full of crap.
they really are. the real problem is a lack of demand for lending because there is no need to invest because there's no need to expand
-- maybe that's the uncertainty that every ceo tells us that they aren't going to do anything as long as they don't know what it's going to be like a year or two from now.
that is a general macro economic problem.
i don't know what the economy is going to be in a year. right. if i thought the economy was going to be booming then i'd be investing. so i think people just assume that all uncertainty relates to government policy and it doesn't. it relates to the general economic situation. where are your customers going to come from? where is the demand going where is the demand going to come from?
bruce, let me go back to something you said that really surprised me. if i heard you correctly, you said the fed is sitting on its hands.
yes.
most people, most people including me think that the fed has gone so far that there is a question mark now whether the benefits of the actions are not upset by the costs -- the unintended consequences and collateral damage. to hear you say the fed has been sitting on its hands sort of challenges the view that the fed has been incredibly active, so much so that there is a question whether it hasn't gone too far.
well, we have to talk about what exactly the fed is doing and maybe it's gone too far in certain respects but not nearly far enough in another.
what else could it be doing, bruce?
well, it definitely has a very serious problem when you're at the zero bound because it normally operates by -- through an interest rate channel and there clearly isn't much it can do to reduce interest rates when you're already pretty close to zero but the theory, the sort of the milton friedmannish monitorist theory is always that the fed should just buy anything. they should just pump money into the economy. and most importantly, it needs to communicate a different philosophy.
what's the philosophy got to be?
well, i think targeting nominal gdp would be a big change in the way the fed talks about its future plans. instead of unemployment or inflation.
excuse me? instead of unemployment or inflation?
yes. exactly. because i think we quite frankly need a little bit of inflation but the fed is institutionally incapable of saying we want inflation and talking about targeting nominal gdp is one way that many economists think the fed can talk about inflation in a way that won't spook markets.
fair enough. bruce, we have to leave it there. one more thing. bruce, i saw one other thing that you said about the regulatory environment is very similar to what reagan was dealing with now. you actually cited, i forget who you cited -- economic policy institute or someone that the regulations were basically the same. and it's weird the way -- i can see both sides come up with all these really compelling facts. and that's just hard for me to believe. at the beginning of the reagan term or at the end of the reagan term? even at the end, the regulatory environment was still as -- at the end of reagan's term was similar to what we have today in your view?
well, the data i was referring to is a survey from the national federation of independent businesses where they asked small businesses what is your number one problem? and the economic policy, the charter of this data all the way back to nixon or i think carter and if you look at the graph it just shows that the level of concern about regulation among small businesses is about the same today as it was when reagan -- so it's always
-- i thought it was an actual absolute level of regulation because i just can't imagine that we're –
no, no.
we had dunkelberg on. he's that high level you're talkitalk ing about. he says these guys are carping nonstop about regulation.
their own data shows the number one problem is a lack of demand and a lack of sales and a lack of customers.
i wish you could have gotten along with w a little better, bruce. i don't know what happened but he turned you, you went off the deep end after that.
well, it was medicare part d.
that was it, right? they made the problem worse. he was trying to be compassionate and conservative there. he should never have tried to do that.
he was trying to buy votes. he wasn't trying to do anything else and the republicans are all a bunch of damn liars. guys like paul ryan voted for medicare part d.
i know. we talked to him about that. we asked him about that. i don't remember what the answer was. you're headed down to the occupy wall street thing right now aren't you?
i have work to do.
all right. anyway, appreciate it. say good-bye. thanks, bruce. appreciate it.