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What the 2008 Election Means for Women: A Conversation with Diana Furchtgott-RothDiana Furchtgott-Roth | 2009.02.25 | Conservative Women's Network
Q: Is Obama a socialist? Today, just 3 days after his historic victory as President, the Labor Dept announced the economy had lost 340,000 jobs, and the unemployment rate has risen to 6.5%. The economy is weak, getting weaker, probably contracting now at a quarterly rate of about 3%. Third quarter GDP is probably going to be revised down to about 1%. So there’s all this adulation of President-elect Obama, but he’s not going to be able to implement his campaign promises. Or if he goes ahead with them, it will send the economy further into a ditch. His campaign promises include a combination of welfare payments for Americans and tax increases for the most productive at the top, a so-called “pay equity” for women, health care, more education spending, and more spending on energy alternatives. Even the left-leaning Tax Policy Center run by the Brookings Institution and the Urban Institute has said that Senator Obama’s entire package – including his tax increases on capital gains and on small businesses who he calls “the rich” – would lose $2.9 trillion from our economy over 10 years. Yet the Tax Policy Center’s estimates don’t include the effects of this current financial crisis and the stock market decline, which has reduced Americans’ taxable income. A lot of the tax reporting from capital gains this year is going to be capital gains losses, so government isn’t going to get the revenue from capital gains taxes that it got previously. The new president is going to have trouble paying for his expensive new projects, so he proposes to force private sector employers to bear the cost. For example, he plans to ‘pay’ for investments in alternative energy and electric vehicles by compelling employers to purchase ‘permits’ to emit carbon, called a “cap and trade” program, that supposedly will raise about 56 billion [dollars] annually – that’s the estimate, and it’s a huge new tax on businesses already struggling to survive in a sick economy. Nationalized health care is another Obama promise. He proposes a new public health plan like the federal health benefit program – an expensive program – that any American can sign up for. It sounds fine, but again, he plans to force American employers to pay for his promise. How? He’s going to have a National Health Exchange that will regulate all private insurance plans to ensure they conform to the same provisions of his new nationalized federal plan. If they don’t, the private insurance plans will be disallowed. So what’s going to happen? Private insurance plans are going to be driven out of business, and employers will have no choice but to join – and pay the high price for – his new nationalized health care plan. This, too, is a huge new government tax on employers. Both of these proposals will reduce private sector hiring, and it will stop economic growth in the nation.
Q: What proposals are likely to affect women most? In most of the European countries today where these policies are in place, unemployment rates for women are higher than unemployment rates for men. Why is this? Because if you have two equally qualified job candidates, a male and a female – and the woman gets a lot more paid leave than the man – you’re going to hire the man because his productivity is likely to be greater than the woman’s. Furthermore, if tax rates increase to fund new government programs, the secondary earners in a family, which are primarily women, are going to drop out of the labor force because the tax bite primarily falls on them. This isn’t the kind of thing our economy needs right now. Obama’s plans are socially dangerous, too. Look, for example, at his tax increases. If you have 2 people earning about $110,000 each, they’re in the 25% tax bracket. Under his plan, if they get married, they would be in the 36% tax bracket (he’s going to raise the 33% tax bracket to 36%). So there are a lot more people who would just say, why bother getting married if I’m going to have to give another 12 percentage points of my income to Uncle Sam. It’s going to cost me. That’s called the marriage penalty, and it would worsen if top tax rates are increased. Pay equity is another thing he promised to ‘give’ American women. That means he’s going to look at certain jobs in the workplace that are primarily female, certain jobs that are primarily male, and say, well, these have to be paid equal amounts. So unpleasant jobs such as, maybe, logging or oil drilling or driving a truck or working in construction where you’re out in zero-degree weather … will have the same worth, he would say, as more comfortable jobs such as medical assistant or nurse or technician, and he would try and equalize those salaries. But if employers are compelled to pay artificially higher wages for certain ‘female’ jobs, they will have to cut back the number of people they employ in those jobs. So while some women may get higher wages, other women will lose their jobs or never get hired in the first place.
Q: Will we see the effects of Obama’s policies by 2010? Will the American people be able to see the economic repercussions of them? There are some things that President-elect Obama can do right away. One of those is defunding the part of the Department of Labor that makes each union’s annual LM2 Expenditures report available electronically on the Internet. The Obama Administration can take that off the Internet right away, so that union members can’t see how their money is spent and how much of it goes into political campaigns. That’s very dangerous. Union members and Americans deserve to know the extent of unions’ involvement in politics.
Q: Do you have any idea where the 6.5 million extra votes came from? Was it youth vote? It was a mistake – the Republicans’ stand against the comprehensive immigration bill. We’ve always been a country of immigrants. We need to welcome immigrants. A lot of them came here when we were not enforcing immigration laws. All of a sudden we started to enforce those laws and throw people out, and I don’t think this went down very well. It’s as though we suddenly started enforcing the 55 mile per hour speed limit that we’d basically let go to 65. We need to work with the Hispanic community and make them feel welcome. There are people who want to do us harm that we don’t want in this country, but people who want to come and work should be welcome. One of my ideas for easing the housing situation is for the I&N Service to offer visas to immigrants who want to come to the U.S. and buy a $300,000 house. If we had 100,000 of those visas, that would be $30 billion dollars into the housing market, 200,000 of these visas would mean $60 billion into the housing market, and so on. We should welcome people who want to contribute to our economy.
Q: How do you see immigration issues as affecting women? American skills are in a bell-shaped curve. There aren’t many Americans without a high school diploma, and there aren’t many Americans who have Ph.D.s in math and science. Distribution of immigrants is in a U-shaped curve. There are many adults without high school diplomas who want to do jobs that are important in the economy, and there are adults with PhDs in math and science. So immigrants benefit the economy and the economic growth, and they especially benefit women who want to go out into the workplace.
Q: Is anyone in the government taking charge of going after Barney Frank, Chris Dodd, Lehman Brothers [for the housing mortgage crisis] – all these people who said a couple months ago that everything was great? Is anyone holding them accountable? I think it’s amazing that Senator Stevens should be indicted and found guilty for accepting gifts from construction workers whereas Senator Dodd was not indicted for accepting a favorable mortgage from Countrywide. The standards are just mind-boggling. If you look at the top political contribution recipients of Fannie Mae, it’s Senator Schumer, Senator Obama, Senator Dodd, and Representative Frank –all Democrats. And some of these funds have been channeled into the Democratic Senatorial Committee for campaign funds. If anything should be investigated, that should be. But no one is looking at this. Just people in private research.
Q: I’m a business owner. One of my grave concerns about Obama’s alternative energy policies is that it will increase the cost of electricity to such a degree that the old, the poor will all be subject to incredible prices. If we want to achieve more energy independence there are better ways of doing this. One of the ideas I’ve proposed is leasing rights to oil and gas companies to explore some of our energy here in the United States, and then using those funds to recapitalize banks, for example. When energy is scarce, when gas prices went up over the summer, Americans drove less and American driving went down. People can react to prices by themselves. They don’t need this extra tax. We also need to be building nuclear power plants in order to lower the price of electricity and energy in the United States. So you’re absolutely right. There’s a paper on the Heritage website by Bill Beach, which looks at the effect of the Warner-Lieberman Cap & Trade proposal which I can assure you is going to come back in February, probably under another name. We need to be fighting against that. We don’t need energy prices going up any more than they are already, especially during a recession. Q: People hired to carry out the work of the new administration: can you give us a hint of their policies? DF-R: There are a lot of names floating around. What we need to do is look to see how a President Obama is going to change his programs given that we are in a substantial recession and how are these new appointees going to deal with the economic reality. Are they really going to raise taxes on our most productive businesses as we go into a sharp recession? What kind of a stimulus package are they going to propose? They talk about stimulus as spending billions of government dollars on infrastructure, a lot of which isn’t going to take effect until maybe after the recession is over. A real stimulus package should be cutting tax rates and giving people more of their own money to spend. Or maybe saying we’re going to have the capital gains rate at zero for the next five years to encourage monetary capital to flow into the United States. So we need to be exploring alternative stimulus packages rather than the old Keynesian idea of just taking government money and throwing it around.
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Diana Furchtgott-Roth is Director of Employment Policy at the Hudson Institute. She served as chief economist of the U.S. Department of Labor and chief of staff at the President’s Council of Economic Advisors. On Nov. 7, 2008, she discussed the incoming Administration’s economic proposals with women at a Luce Institute CWN event.