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Question of the Day
The Democratic presidential front-runners, expecting the economy to be a pivotal issue in 2008, have drawn together teams of top business leaders and economists from Wall Street to academia to help them draft policies on trade, taxes, jobs and economic growth.
But despite the mostly liberal economic positions these contenders have taken in the course of their careers, urging higher taxes and more restrictive trade policies, some of their advisers are more market-oriented centrists, pro-trade and deficit hawks. One of them is pushing personal Social Security retirement accounts that invest in the stock market, a conservative idea backed by the Bush administration.
New York Sen. Hillary Rodham Clinton’s advisers are drawn heavily from President Clinton’s administration, including former Treasury Secretary Robert E. Rubin, now a Wall Street financier; former deputy Treasury Secretary Roger Altman, who is playing a prominent policy role in her campaign, former White House economic adviser Gene Sperling, and former House Democratic leader Richard A. Gephardt, a fierce opponent of free-trade pacts.
Democratic economists say the ideological makeup of her team signals an economic policy resembling her husband’s — pushing a balanced budget, trade agreements with labor-friendly provisions, and raising taxes on wealthier Americans.
“Her trade policies would probably be very similar to Bush’s trade policies, which were similar to Clinton‘s. My guess is she would say what she had to say to get labor’s support, but at the end of the day it’s going to be the same thing. I don’t see her changing course on the policies,” said David Baker, co-director of the Center for Economic and Policy Research, a liberal think tank.
On taxes, “she would raise taxes on one or two of the top brackets to where Clinton raised them, pushing the top income-tax rate back up to 39.6 percent. She’d keep the rest of the rates where they are now,” Mr. Baker said.
Like Mrs. Clinton, Illinois Sen. Barack Obama, her strongest rival for the nomination, has carved out a left-leaning voting record in the Senate, but he has a philosophically broader and in some ways more eclectic group of economic advisers, principally trained economists drawn from major universities.
Among them, Harvard economist David Cutler, who served on Mr. Clinton’s Council of Economic Advisers, and Austan Goolsbee, an economics professor at the University of Chicago who calls himself “a centrist, market economist.” Mr. Obama, despite his liberal voting record, “approaches issues with a respect for the way markets work,” Mr. Goolsbee said in an interview.
“He has objectives you would expect a Democrat to have, but also market-based approaches to reach those Democratic goals. Every time I talk to him he respects and understands that you must take the market into account,” he said.
An example of his approach, he explained, is Mr. Obama’s health care plan. “He was very explicit that he doesn’t want to do it in ways that forces everyone to take it, with price controls on the entire country.”
“I don’t want to scoop the policies he might reveal. But I would not be surprised if he were for tax cuts for various things, though mindful of the need for fiscal responsibility,” he added.
Unlike many if not most of his rivals for the nomination, Mr. Obama appears open to contrary views on his team, his advisers say. One of the key members of his advisory board is professor Jeffery Liebman, an economist at Harvard’s John F. Kennedy School of Government who supports the idea, bitterly opposed by Democrats, of allowing workers to invest a portion of their Social Security payroll taxes in the stock market.
“He’s very concerned about how we get the savings rate higher and has been exploring ways to do that,” he said.
Former Sen. John Edwards, the Democratic vice presidential nominee in 2004, has made economic issues and health care, especially among lower-income Americans, the chief focus of his campaign. He has called for raising the top tax rate to pay for his health care plan. The former North Carolina lawmaker is being advised by Robert Gordon and James Kvall, his policy director, both former economic policy aides in the Clinton White House.
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