Pioneer Press columnist explores election economics

By Sean Ryan

Edward Lotterman, economics columnist for the Pioneer Press and former regional economist at the Federal Reserve Bank of Minneapolis, spoke in Weyerhaeuser Boardroom on Nov. 1 about national economic issues and their relation to the presidential election. His lecture, titled “Lies, Damned Lies and Presidential Campaign Promises,” was sponsored by the Macalester chapter of the National Economic Honor Society, Omicron Delta Epsilon (ODE). Yacoub Shomali ’13, the president of the Macalester chapter, opened the event by introducing Lotterman and placing his arguments within the context of the national presidential election. “A few days from now, most of you will get in the opportunity to vote in the upcoming presidential election,” Shomali said. “Throughout the previous weeks, President Obama and Governor Romney have presented ideas about their economic policy to steer the nation in the right direction. Our event for today aims to clarify and highlight the important economic issues at this election.” Lotterman, who previously taught an economics course at Macalester and was also an adjunct professor at Augsburg College, spoke specifically about the ways in which presidential candidates have framed and discussed relevant economic issues over the last few months of the campaign. “We’re experiencing an extended period of economic sluggishness that typically follows a severe financial crisis or popping of an asset bubble,” Lotterman said. “I’ve been following presidential campaigns since the Kennedy/Nixon race in 1960, when I was 10,” Lotterman said. “And this one is easily the least substantive in terms of candidates actually talking about the issues. This is not a campaign that will go down as a sterling one in American history. The title ‘Lies, Damned Lies’ may seem quite strong, but it’s also quite accurate.” After summarizing the impact of the financial crisis on the election so far, Lotterman went on to analyze the views of the candidates on a wide range of economic issues related to the election, focusing specifically on fiscal issues. He repeatedly emphasized the difficulty of finding meaningful distinctions between the candidates’ views. Lotterman focused the majority of his lecture on the economic policies of candidates as related to the growing federal deficit, especially entitlements like social security, Medicare and Medicaid. “If Obama wins, he will be very defensive [on health policy] because he did spend so much political capital on this in his first term. He will be forced to launch a rear-guard strategy to keep the Affordable Care Act as intact as possible,” Lotterman said. “Romney, on the other hand, has said he would immediately repeal the act but keep the most popular components, including the ability of parents to keep children on their plans until they are 26, or that you can’t deny coverage because of preexisting conditions. Exactly how you would keep Obamacare while peeling out certain parts from it, I’m not sure.” Lotterman was also interested in the refusal of both candidates to speak at length about any possible changes they would make to social security in order to reduce the deficit. “Obama has not been as categorical as Joe Biden,” Lotterman said. “Biden has said that there will absolutely be no changes in social security. They probably won’t do anything.” “Romney also isn’t saying much about Social Security. If there was a stronger Republican majority, he may try to privatize the system and switch to personal accounts, but I doubt he would make it the center of fiscal reform, especially since he would want to be reelected in 2016.” Lotterman emphasized the elements of entitlements like social security and Medicaid that are not commonly considered parts of those programs, like survivor and disability insurance (which comprises 35 percent of social security outlay) and nursing homes (which in some states are 70 percent funded by Medicaid. He argued that Obama would mostly maintain the status quo for entitlements like Temporary Assistance (TA), welfare, Section 8 housing, the Supplemental Nutrition Assistance Program (SNAP) and other programs, whereas Romney would reduce states’ autonomy to make decisions about such programs and cut certain parts of the SNAP program. However, concerning monetary policy, bilateral trade agreements, agricultural policy, and important regulation of financial instruments, Lotterman largely expressed an inability to distinguish between the positions of the candidates. According to Lotterman, Obama’s position on tax policy was to raise the personal income tax on those making over $250,000 by letting Bush’s tax cuts lapse while leaving the middle class alone. “Romney, on the other hand, is all over the place,” he said. “He’s suggested a 20 percent marginal tax cut on all levels, or a 20 percent total tax cut (which is different), but he also doesn’t want to lower the total amount of tax paid by upper-income people if it would raise it for lower. He wants to cut the corporate income tax, but knows he also needs to broaden the larger tax base, which he is not enthusiastic about.” Ethanol policy, along with agricultural policy in general, including farm subsidies, were off-limit topics for both candidates, Lotterman explained. “They are bipartisan issues in that both parties include important people to whom these programs mean a lot,” he said. “Obama won’t be able to do anything, he won’t touch this.” Climate change was largely left unmentioned during the campaign, as well. Lotterman expressed his belief that both candidates will maintain the status quo in regard to financial regulation of derivatives and high-frequency trading, two financial instruments often related to the subprime mortgage collapse of 2008 and the ensuing economic difficulties. The lecture, which filled about half of the boardroom, largely appeared to be attended by economics professors and students. “I enjoyed his talk,” Cory Stern ’16 said, who attended the event after it was suggested to him by his Principles of Economics professor. “It was surprising to me to see how similar the views of the candidates were on so many different issues.” “These kinds of things are always fun to do,” said Lotterman. “It’s great to speak to students.” refresh –>