Digest

This podcast episode delves into the potential economic implications of the upcoming US presidential election. It features interviews with top economists from both parties, Jared Bernstein (current CEA chair under Biden) and Kevin Hassett (former CEA chair under Trump), who discuss their perspectives on the economic landscape, key policy proposals, and the government's financial outlook. The episode begins by examining the economic conditions the next president will inherit. Bernstein describes a solid expansion with inflation near target and low unemployment, while Hassett highlights the recent volatility and uncertainty surrounding the economy, questioning whether it's truly on a path to recession. The discussion then shifts to tariffs, a major point of contention between the two parties. Hassett advocates for a more aggressive approach, including potentially kicking China out of the WTO, while Bernstein supports targeted tariffs to address unfair trade practices but cautions against sweeping tariffs that could harm consumers and producers. The episode delves into the debate over corporate tax rates. Bernstein supports raising the rate to 28%, arguing for a more sustainable fiscal path, while Hassett warns against a significant increase, citing potential negative economic consequences. The podcast explores the controversial proposal to tax unrealized capital gains. Bernstein argues for a prepayment tax on future realizations for high-income earners, emphasizing fairness and the economic activity generated by these assets. Hassett, however, views this as a wealth tax with potentially harmful effects on economic growth. The episode examines the potential economic impact of expanding child and earned income tax credits. Both economists agree on the positive effects of these programs in reducing child poverty and boosting economic opportunity, but differ on the optimal size and scope of such expansions. The podcast concludes by discussing the importance of reducing the deficit. Both Bernstein and Hassett acknowledge the need for a more sustainable fiscal path, but disagree on the best approach. Bernstein emphasizes the need for action before a crisis occurs, while Hassett highlights the potential for a budget showdown between the two parties.

Outlines

00:00:00

The US Presidential Election and its Economic Impact

This podcast episode explores the potential economic implications of the upcoming US presidential election. It features interviews with top economists from both parties, Jared Bernstein (current CEA chair under Biden) and Kevin Hassett (former CEA chair under Trump), who discuss their perspectives on the economic landscape, key policy proposals, and the government's financial outlook.

00:00:43

Economic Landscape and Policy Debates

The episode examines the economic conditions the next president will inherit, with Bernstein highlighting a solid expansion and Hassett emphasizing volatility and uncertainty. It then delves into key policy debates, including tariffs, corporate tax rates, taxing unrealized capital gains, and expanding tax credits.

00:13:23

Fiscal Sustainability and the Future

The podcast concludes by discussing the importance of reducing the deficit, with both economists acknowledging the need for a more sustainable fiscal path but disagreeing on the best approach.

Keywords

Q&A

• What are the key economic challenges the next US president will face?

  The next president will inherit a complex economic landscape with both strengths and weaknesses. While the economy is currently expanding with low unemployment and inflation near target, there are concerns about potential recession, rising housing costs, and the impact of extreme weather events.

• How do the two economists differ in their views on tariffs?

  Bernstein supports targeted tariffs to address unfair trade practices but cautions against sweeping tariffs that could harm consumers and producers. Hassett advocates for a more aggressive approach, including potentially kicking China out of the WTO, citing concerns about intellectual property theft and national security.

• What are the potential economic consequences of raising the corporate tax rate?

  Bernstein argues that raising the corporate tax rate to 28% would help achieve a more sustainable fiscal path, while Hassett warns that such a significant increase could harm economic growth and investment.

• What are the arguments for and against taxing unrealized capital gains?

  Bernstein supports a prepayment tax on future realizations for high-income earners, emphasizing fairness and the economic activity generated by these assets. Hassett views this as a wealth tax with potentially harmful effects on economic growth, arguing that it could discourage investment and lead to a decline in capital formation.

• How do the two economists view the importance of reducing the deficit?

  Both Bernstein and Hassett acknowledge the need for a more sustainable fiscal path, but disagree on the best approach. Bernstein emphasizes the need for action before a crisis occurs, while Hassett highlights the potential for a budget showdown between the two parties.

Show Notes