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What's the Fix: Kevin Hassett
Kevin Hassett, director of economic policy studies at the American Enterprise Institute
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TEXT OF INTERVIEW
Steve Chiotakis: Over the past few weeks, we've been asking folks "What's the Fix" for our ailing economy. Today, it's Kevin Hassett's turn at the mic. He's the director of economic policy studies at the American Enterprise Institute and Senator John McCain's top economic policy advisor during the presidential campaign.
Kevin Hassett: I think that when we're in a tough time like we are right now, then it's actually something of a good thing if your fiscal policy, if your government policy, is a little bit out of control. Because it gives you an easy thing to fix that can help move the economy in the correct direction. So imagine if there were two worlds -- one world where we were headed into a deep recession and we had perfect tax policy, and another where we're headed into a deep recession and we have terrible tax policy. Well, you'd rather have the latter world, because in that world you can adjust some things easily and make the economy better. It's kind of like if someone shows up at the emergency room and you know exactly what they have, it's kind of good news, because you know how to fix it.
Chiotakis: But you have this ideology in Washington of bailout, and we're talking about both parties, not just Democrats but also Republicans as well. Do you believe that the government has any business bailing out any industry, any company?
Hassett: No, in fact, I am not sure, even in the beginning with the Bear Stearns bailout, that the government did any good at all. And I think that indeed, historians will likely look back at this episode and blame Bernanke and Paulson to a good extent for making the matter much worse. And the reason is that they've been playing from a play book that changes every day, and it makes it impossible to predict what the government's going to do next.
Chiotakis: Kevin Hassett, senior fellow at the American Enterprise Institute. Thanks for being with us.
Hassett: Thanks, it's been great.
If banks need billions or trillions and Americans are struggling financially, especially to pay debts, then is it not possible to kill two birds with one stone? Give the banks $ through Americans by paying on their debt, at least the credit card debt. I saw it reported that "Americans have more than $900 billion collectively in credit card debt." The govt is spending trillions where the average American won't even experience or perceive. Instead of giving money directly to banks, who Americans don't trust, put that towards American's credit card debt. Less debt = more money on hand; money that people will spend! And we know that the American's with credit debt will spend, that should be obvious :)
I have a suggested "fix". It has two parts.
1. Redo the WPA program from the depression of the 1930's and start a BIG infrastructure building program that would include roads, mass-transit, sewers, etc.
2. In order to pay for the infrastructure program, take advantage of the current "low" price of gas at the pump by increasing the fuel tax by a $1.50/gallon (currently the price at the pump would increase from about $1.80 to $3.30).
These two actions would:
a. put lots of people back to work, these wages would boost the economy.
b. keep the pressure on the car manufacturers and consumers to NOT build/buy inefficient autos.
c. Renew/add important infrastructure for the future.
d. truly benefit "main street", not "market street".
Ron Evens, M.D. a "medical economist" for many years.
