GSB professors spar over policy choices

By Tim Michaels

The George J. Stigler Center for the Study of the Economy and the State presented a debate Monday, November 1, on the economic policies of President Bush and Senator Kerry at the new Hyde Park Center for the Graduate School of Business. The debate featured two renowned professors of economics at the GSB—Randall S. Kroszner and Austan D. Goolsbee—who have both participated in previous debates concerning the presidential candidates’ contrasting economic policies. For this debate, Goolsbee defended Kerry while Krosner supported Bush’s policies.

Each speaker gave an opening statement, answered questions from moderator Saul Levmore, dean of the Law School, and finally fielded audience questions. Levmore asked that each audience member say what state he or she was from when asking a question, in hopes of having some impact on undecided voters from swing states in the audience.

While many past debates between the speakers have been humorous and light-hearted, this debate was serious and specific in nature. “This debate had less give-and-take than previous debates,” Kroszner said.

Goolsbee’s energetic opening statements criticized Bush’s handling of the national deficit and fiscal spending for the war in Iraq. “What does it take for a president to be voted out of office?” Goolsbee asked.

Kroszner was less animated than Goolsbee in his opening, arguing that steady economic growth since 2001 proved that the president was taking the correct economic approach, and that Kerry had provided little description of his economic plan. Kroszner also praised Bush’s tax cut, while Goolsbee blamed the tax cuts for contributing to the deficit and “putting the burden on future generations.”

While the debate covered mostly economic topics—the stock market, healthcare, and medical liability reform—the panelists also addressed the international impact of the candidate’s policies. Goolsbee stated that most foreign powers disagreed with the president’s policies, and would look forward to a change of leadership. Kroszner painted a more optimistic picture of international business, claiming that Kerry’s attack on outsourcing would hurt rather than help international relations. While discussing policies, each candidate frequently referred to an October 31 article in the Chicago Tribune, which featured Goolsbee, Kroszner, and the dean of the GSB, Edward Snyder, grading both candidates’ policies.

When an Illinois voter asked about the significance of the mounting debt, both debaters took a drastically different stance on deficit and economic growth. While admitting that the deficit was larger under President Ronald Reagan, Goolsbee said that the real harm lay in the approaching retirement of the baby boom generation, and the burden placed on future generations to pay off a deficit that will continue to grow for a decade. Kroszner responded that the deficit was having no impact on interest rates, and that overall there was long-term economical growth, although he did not address Goolsbee’s concern about future harms of the deficit.

Audience members from a variety of swing states, such as Florida and Wisconsin, asked questions concerning Kerry’s changes to the tax cuts, social security, and how each candidate would affect the distribution of wealth. At one point in the debate, moderator Levmore challenged Kroszner to explain why he defended Bush’s tax cuts, despite most economists’ contempt for the policy. Kroszner explained that the tax cuts actually increase the burden on the high end of income earners, contradicting claims by the Kerry campaign that tax cuts only benefited the wealthiest Americans.

The final question posed whether or not either candidate would be able to affect the economy. While Kroszner admitted that politicians could only go so far in impacting economic growth, Goolsbee felt that Kerry’s ability to directly affect health care costs would have a genuine ability to positively affect the economy.

Many audience members were engrossed in the debate. “I felt that their analysis on the effects of the deficit was particularly fascinating,” said GSB student Vivek Garg.

The audience had a large impact on the overall mood of the event. “The serious nature of the debate was due in part to the specific and insightful questions of the audience members,” Goolsbee said.

Overall, the debate’s organizers felt the purpose of informing voters, especially in swing states, was achieved.

“Judging by the mood in the room, I thought that a few swing voters would tilt toward the incumbent, and perhaps this is so because deficits seem like a problem for the far future,” Levmore said. “The net effect was to be less sure, on both sides, that the election would make an enormous difference.”