Few conservative economists have been as influential over the last decade as Glenn Hubbard. He was an architect of President George W. Bush’s tax cuts and of Mitt Romney’s 2012 economic plan. He has preached the importance of permanent, fundamental policy changes -- such as reducing tax rates and simplifying the tax code -- for improving America’s long-run economic growth prospects.
Hubbard still believes in those type of reforms, but he has taken to arguing that Republicans need more to their economic message. As the 2016 campaign begins, Hubbard believes Republicans have to worry more about encouraging people to work -- given that we have an economy with a shrinking number of workers -- and about economy opportunity, which has been stagnant over the last half-century.
“I’m not as vexed about inequality, as I am about opportunity.”
— Glenn Hubbard
The Republican economist's concerns will likely leave a mark on the upcoming presidential election, starting with the Republican primary. Hubbard will not say what candidate he plans to work for, but among conservative economists, there is a strong consensus: He’ll be headlining an all-star economics group for former Florida governor Jeb Bush.
“I think this really is going to be an idea-rich campaign, in the primary and the general election,” Hubbard said in a recent interview, “because the issues – growth and opportunity – are so complicated.”
In the course of a recent discussion, Hubbard laid out a wide range of ideas for how to boost growth, encourage work and improve opportunity. He started, as often is the case with conservative economists, with tax reform. He favors lowering corporate and individual rates and expanding the Earned Income Tax Credit -- a kind of cash bonus -- for single workers. He also suggested an openness to capping some tax deductions for affluent households.
Hubbard said he worries about policies that encourage businesses currying money or carve-outs from Washington, instead of investing in new products or services. He often flies the shuttle between New York, where he is the dean of Columbia Business School, and Washington, and he said he is distressed by the number of executives he sees making the trip.
“We need to make sure that markets and outcomes are fair,” he said, “and that if someone gets rich, it’s because they had a great idea for a business, and not because they were politically connected.”
Improving economic mobility – the ability for children born into poverty to move into the middle class, or those born middle class to achieve great wealth – will be the hardest challenge, he said. “It takes so long.” He said policymakers must tally up “a full list” of the barriers keeping people from climbing the ladder, including a sharp focus on education and skills.
He stressed the ability of parents to send their kids to alternatives to public school, such as delivering more money to states in the form of block grants tagged for low-income children whose parents would have flexibility about where to send them. In addition, he's interested in new ways of helping displaced workers train for new jobs, such as personal re-employment accounts that workers could tap when they are thrown out of work for an extended period.
Hubbard says he worries the Federal Reserve has gone too far in its extraordinary measures to stimulate the economic recovery. He also worries that the economy may not grow as fast in the future as once expected – that it is suffering from a decline in its potential growth.
He does not worry about economic inequality. He pointed out, near the end of the interview, that he had never mentioned the word. “I’m not as vexed about inequality,” he said, “as I am about opportunity.”