Washington Post
Both Republicans and Democrats have put forward a flurry of ideas to tackle America’s affordability problem, but economists don’t particularly like most of what’s on offer.
Republicans have floated capping credit card interest rates and stretching out mortgages to 50-year terms. A GOP law has ended taxes on tips, car-loan interest and overtime pay.
Democrats, meanwhile, have proposed freezing rents and utility rates and capping the price of groceries. Some also want to suspend the gas tax and cut seniors’ property taxes.
Many economists are appalled by all of it.
“You can come up with a laundry list of these things that are very attractive to normal humans but that repulse economists,” said Scott Lincicome, vice president of general economics at the libertarian Cato Institute.
The problem, as many economists view it, is that despite voters’ desires for relief from the rising cost of living, it’s fundamentally difficult to bring down prices. And when politicians try creative ways to do it, they often cause other problems.
“What policymakers are doing is scrambling around to show they care about this, in individual markets,” said Ryan Bourne, Cato’s chair for the public understanding of economics. “And that is leading to a lot of bad policy and a lot of confused policy.”
Harvard economist Jason Furman, who led President Barack Obama’s Council of Economic Advisers, concurred that raising wages is a better goal than tamping down prices — but said that income growth has actually been good recently.
I bet not as well as CEO’s pay increases.
“I think we are seeing more bad economic ideas than before, and I think some of it is because people are trying to solve a problem that doesn’t have a solution,” Furman said.
Oh yes. The rich get richer and the poor poorer. Cannot fix that. Harvard huh. Perhaps the best and brightest don’t inhabit ivy league schools.