Wannabe Economic Policymakers

We were recently privileged to attend a gathering of the economic advisors to the major U.S. presidential candidates. With the primary season in full swing, it was an enlightening — and, it seems, symbolic — event.

The symbolism started with the absence of anybody from Bill Bradley’s camp. Nothing could speak more eloquently to the fact that Bradley is essentially out of the race. Only when a candidate has a chance of winning, after all, is it necessary to be ready to answer mundane questions about what your candidate plans to do with the burgeoning U.S. surplus.

Al Gore and George W. Bush were ably represented by economic heavy hitters. Former Fed Governor Alan Blinder was in Gore’s corner, while another former Fed Governor, Lawrence Lindsay, was there for Bush. Their command of the numbers was not only proof of their own expertise on the U.S. economy — but was indicative of a large and well-prepared staff.

The breathless whirlwind of numbers was less informative than it might seem, however. After all, using the same data, Blinder proved that the tax cuts proposed by George Bush are clearly unaffordable — while at the same time, Lindsay showed that they are easily affordable. Such performances unfortunately do not enhance the overall reputation of economists.

On the other hand, Kevin Hasset, the McCain advisor, was clearly in another league. He has described the McCain policy team as “me and my laptop and three English majors and some economist friends.”

In this forum, he had little command of the actual numbers — and had certainly not planned his talk very well. And yet, the substance of his proposal was easily the most sensible of the three.

The McCain plan is to privatize part of Social Security. Unlike previous privatization enthusiasts, however, McCain recognizes that such reform will cost money — and so he proposes using the surplus to pay for it.

The brilliance of the plan is that it might actually be politically viable. It appeals to the young — because it gets them out of a system they perceive to be loaded against them. And it appeals to the old — because it does not endanger their present benefits.

Watching these economists debate suggests that it is certainly possible to lose sight of the forest for the trees. Using the surplus to finally and completely fix Social Security beats — in imagination and in common sense — either of the other candidates’ proposals. Even if McCain doesn’t have the staff to “run the numbers.”