Former economic aide to Obama stresses progressive taxation
Christina Romer, former chairwoman of the Council of Economic Advisers, served as the keynote speaker at Washington University’s Livable Lives Initiative’s first public event. The Livable Lives Initiative is a University-wide program led by the Center for Social Development that seeks to explore the effects of policy changes on Americans in low and middle class income brackets.
Romer’s address highlighted the importance of reducing unemployment in the U.S. She argued that the government needs to do more to boost economic recovery at a faster rate. The speech was followed by a panel discussion with four Washington University professors.
Romer spent much of 2009 and 2010 working on economic policy in Washington, advising President Obama and leading efforts in health care reform and financial recovery.
Her most recently published works concern the effects of tax structures on long-run economic growth, and she holds a research and teaching appointment at the University of California, Berkeley.
Student Life sat down with Romer to talk about tax structures, government spending and the economic policy issues that will face our generation.
Q&A With former Obama economic adviser Christina Romer
In light of this past weekend’s threat of government shutdown, can Congress pass a budget that will allow the U.S. to move forward and strengthen the economy?
The fact that last year’s budget was so hard to settle makes me nervous, because the questions that are looming are much bigger—they’re about the long-run deficit, about what we’re going to do about revenues and about what’s going to happen to entitlement spending on things like Medicare and Medicaid and Social Security. What makes me optimistic is that we are finally talking about the long-run budget problem.
It seems like bargaining between political parties isn’t the most efficient way of arriving at a good outcome. Having worked in Washington, what is your level of faith in our political process? Should we leave policy decisions up to Congress?
Democracy is messy—isn’t that what we often say? It’s not always pretty and the debates are not always at the highest level. I do still think it’s the best way we have to make decisions.
My generation’s coming of age has been characterized culturally and politically by a rapid growth in income inequality since the 1980s. What needs to be done or should be done to reverse that process, and what is plausible for us to see in our lifetimes in terms of that inequality being repaired?
The most fundamental [change] is to make people more equal in terms of their opportunities and their starting point when they enter the labor force. Dealing with educational disparities across communities and making sure that every child has the option of a good education and going to college.
And then I think something we haven’t talked about enough as a country is the role of progressive taxation—that part of the way that you deal with inequality is to tax people more at the top of the income distribution. That was reversed during the Bush administration. That’s something that I certainly don’t agree with, and I know the President thinks that letting taxes go up at the top of the distribution makes sense not only from a macroeconomic standpoint, but also I’m sure from an equality standpoint.
What would you say needs to be in place culturally for that kind of progressive taxation to be supported by a majority of Americans?
What I think is interesting is if you looked at the studies, the majority of Americans were supportive of letting taxes for high-income earners go up. So I think most Americans do see that as sensible policy, especially as our budget deficits become more severe over time. But I think policymakers definitely have a role to play. You referred to culture—we need people out there saying that this is sensible policy. Part of making the case is saying that we’re not talking about going up to very high numbers or what you might see in European countries. We’re talking about going back to what we had during the Reagan years or the Clinton years—times when the economy was doing very well.
What is the most important economic issue for students to be aware of and how should they deal with it after graduating?
Let me start with a short-run issue, which is how important it is to get the unemployment rate down. That’s not just important for students finding jobs—it’s important for everything from our social cohesion to our level of growth to our budget deficit.
But the broader picture that everyone needs to be thinking about is how do we as a country, at least on the economic level, continue to grow and get stronger so that our best days are in front of us and not behind us. The main thing that you’ll hear economists say there is that it’s all about investments—from firms’ investments to investments in education to the government’s investments in basic scientific research. It’s all of those things that matter for our long run health as an economy. I’d love it if a whole new generation of voters took that long-run approach—instead of cutting everything, to preserve the government spending that will make us richer and stronger in the future.