At a Monitor-hosted breakfast for reporters, Jason Furman, the president’s top economist, also offered a relatively upbeat assessment for the US economy in 2014 and for Congressional passage of a debt-ceiling increase when the current borrowing authority runs out in February. He also offered a spirited defense of having a pathway to citizenship be part of any immigration reform legislation that Congress passes.
The Harvard-trained economist was asked about the prospect for having a discussion of income inequality and diminished economic mobility without lapsing into the language of class warfare or paranoia. In his State of the Union address Tuesday, Mr. Obama said “inequality has deepened. Upward mobility has stalled.”
Silicon Valley investor Tom Perkins argued in a Wall Street Journal op-ed piece this week that there was “a rising tide of hatred of the successful one percent,” which he compared to the Nazi persecution of Jews. He later apologized for that comparison.
Politico’s Ben White wrote this week that “the nation’s wealthiest … appear to be having a collective meltdown.” Symptoms that he cited included Home Depot co-founder Ken Langone’s recent warning to Pope Francis that papal comments about income inequality could lead to reduced charitable contributions.
Some of the response by the wealthy to the discussion of income inequality “is just hyperventilation around not paying attention to specific facts and data,” Mr. Furman said.
He noted that “one can just take a look at facts.” He said that the tax rate on the top 1 percent, despite an increase at the beginning of the year, “is still lower than it was in the mid-1990s, because, for example, the capital gains and dividends rates are both lower than they were then.”
The Council of Economic Advisers’ revised economic forecast for 2014 will not be released until March when the president’s 2015 budget is published. But, Furman said, if Congress passes a debt-ceiling increase “without ransom or hostage-taking, then we will be in a position that if the private sector can repeat what it did in 2013 that we could have strong growth, potentially stronger growth in 2014.” The government reported this week that in the final quarter of 2013, the US economy grew at a 3.2 percent pace.
When asked if he expected Congress to pass a debt-ceiling increase in a timely fashion, Furman said, “I certainly hope so…. There is no reason they shouldn’t be able to do it with less drama” than in 2013 when there was a government shutdown.
Furman was asked whether there was a strong economic argument for including a path to citizenship in any immigration reform legislation. The immigration reform principles discussed at a House Republican retreat this week in Maryland did include such a path, but only for children brought to the US by undocumented parents. “Everything I know from economic logic would tell me that you want a pathway to citizenship,” Furman said.
“The more you bring people in from the shadows, the more you give them certainty, the better that is for the economy,” he added. “The more certainty you have, the more you are able to invest … in education and creating jobs and setting up a business.”