Economist John Lott, noted for his academic advocacy of gun rights, says that when Barack Obama was his colleague at the University of Chicago, the future president treated him as if he were “evil.”
Lott relates his interactions with Obama in his new book, co-authored with Americans for Tax Reform’s Grover Norquist, “Debacle: Obama’s War on Jobs and Growth and What We can Do Now to Regain Our Future.”
“The book relates a couple out of the dozen-and-a-half conversations that I had with him,” Lott told The Daily Caller. “But they were all very short, cut off by Obama turning his back on me and walking away.”
“He wouldn’t shake hands. It was very clear that Obama disagreed on the gun issue and acted as if he believed that people who he disagreed with were not just wrong, but evil. Unlike other liberal academics who usually enjoyed discussing opposing ideas, Obama simply showed disdain.”
Lott and Obama were colleagues at the University of Chicago Law School in the 1990s.
The book’s main focus is Obama’s economic policies, which the authors contend have exacerbated America’s economic woes.
“We wanted to put together a book that explained how the stimulus [the $787 billion American Recovery and Reinvestment Act of 2009] made the economy worse, provide evidence for that claim, and explain what could be done to increase growth,” said Lott, a Fox News contributor who has held teaching and research positions at elite universities including Yale and Stanford.
TheDC’s interview with Lott explored how he believes President Obama has mishandled the economy, what policies he believes should be implemented to spark an economic recovery, the seriousness of our looming entitlement crisis and much more.
Why did you decide to write the book?
People know that Obama’s repeated promises to grow the economy have been broken time and time again. People know that Obama promised the stimulus would keep unemployment below 8 percent, but what is missing is an explanation for why the stimulus raised unemployment and made this the worst recovery on record.
There is always some excuse. That they made these predictions before they knew how bad the economy really was (false). That the Japanese earthquake or economic problems in Europe were at fault. The economy had already slowed down long before then and it can’t explain why other countries from Germany to Canada, countries that didn’t follow Obama’s Keynesian policies have done so much better. The list of claims is quite long.
We wanted to put together a book that explained how the stimulus made the economy worse, provide evidence for that claim, and explain what could be done to increase growth.
You knew Obama somewhat when you were both professors at the University of Chicago. What was your interaction with him like?
Obama and I overlapped for four years at the University of Chicago Law School, though he was rarely around. When Obama joined the school as a part-time lecturer, it was made quite clear to everyone that he was going to use the job to run for public office. Being a part-time lecturer with no research responsibilities left him with the opportunity to spend almost all of his week to go out and campaign for office.
The book relates a couple out of the dozen-and-a-half conversations that I had with him. But they were all very short, cut off by Obama turning his back on me and walking away. He wouldn’t shake hands. It was very clear that Obama disagreed on the gun issue and acted as if he believed that people who he disagreed with were not just wrong, but evil. Unlike other liberal academics who usually enjoyed discussing opposing ideas, Obama simply showed disdain.
How do we know the stimulus package made the economic situation worse?
Compare the U.S. and Canada. Their unemployment rates increased in lock step from August 2008 until six months later, in February 2009, when the stimulus was passed in the United States. During those six months, the U.S. unemployment rate rose by 2.1 percentage points, from 6.1 percent to 8.2 percent, and the Canadian rate grew by 1.9 percentage points, from 5.1 percent to 7 percent (using the BLS [Bureau of Labor Statistics] measure to make the Canadian measure of unemployment comparable to the U.S. rate). The graph that we have showing this is actually stunning.
Canada adopted a much smaller and quite different “stimulus” program that emphasized cutting tax rates and regulations and that produced dramatically smaller deficits. On a per-capita basis, Canada’s stimulus was about a third that of America’s, costing $979 per person compared to our $2,730. The conservative Canadian government chose not to introduce any big programs.
Obama, meanwhile, adopted big-ticket Keynesian programs, believing that government spending for its own sake creates wealth. But Democratic emphasis on “green” energy, government-approved investments and technology and higher salaries for public-school teachers merely moved money away from where Americans and companies would have otherwise spent it.
Obama’s stimulus also raised the effective marginal tax rates that some individuals face, discouraging work; Canada, by contrast, cut some marginal rates. Obama kept the corporate tax rate stuck at 35 percent, while Canadians cut their corresponding rate from 21 percent in 2007 to 16.5 percent this year — with a further cut to 15 percent planned for next year. By last year, Canada had the lowest overall tax rate on business investment of any major industrialized country.
Canada also didn’t run the huge stimulative deficits that we ran here in the U.S. They didn’t saddle their kids with a huge debt that they were going to have to pay off.
But if Obama’s program — including a massive 21 percent hike in spending from 2008 to 2011 and corresponding massive deficits — worked so well, why has our unemployment rate risen more since those policies were adopted than have the rates of the European Union, South America, Japan, Australia or New Zealand?
How serious is our looming entitlement crisis?
The publicly held U.S. federal debt was $3.4 trillion by the end of 2000, shortly before George W. Bush became president, and by the end of his tenure after eight years, it rose to $5.8 trillion in 2008. Publicly held debt excludes the money that the government owes to itself. Now the publicly held debt has reached about $11 trillion. Obama has almost succeeded in doubling it during just three years. For the average family, that means their share of the federal debt went from $87,000 to $140,000. If Obama remains the president for a second term, assuming no new pet projects or other changes, Obama’s projections from this year’s budget predict that each family’s share of the debt would balloon, reaching a whopping $186,000 by October 2016.
But what lies ahead is even scarier. Some economists estimate that at their current value our obligations are about $200 trillion. The longer we put off dealing with this problem the worse things will get.
Interest rates right now are at historical lows. Each one percentage point increase in interest rates adds over $110 billion to the deficit. What is a huge deficit right now can quickly spiral out of control. Interest rates could rise either when the economy finally gets back on track or if lenders begin to get more concerned about our ability to pay off our debts. The problem is that once interest rates rise, they make lending to the government riskier, which will raise interest rates further and we are off to the races. Americans need only look at what has happened in Greece or Portugal to see how quickly things can get out of control.
If you could change three economic policies immediately in order to get the economy on track, what would they be?
- Cutting corporate income taxes would be number one. The U.S. has the highest corporate tax rate in the world. There are hundreds of trillions of dollars in international capital markets that will flow to where investors can get the highest rate of return. The U.S. rate is about 40 percent. If you invest in Canada, you get to keep 14 cents more of every dollar that you earn. If you invest in Ireland, you keep 28 cents more. Where are you going to invest?
Increased investment makes workers more productive and raises their wages. As companies expand, it increases the demand for workers
- Cutting government spending. When Obama ran for president during 2008 he promised over and over again that he was going to cut net government spending. If you don’t remember it, look up the second and third presidential debates. During the third debate he reminded voters that he had made that promise “throughout this campaign.” But he was right. Government was too big then. Now it is much, much bigger. Americans have to ask themselves whether the $100,000 worth of debt per family that Obama promises to pile up during his two terms in office is worth the increase in the size of government that he has created.
If Obama was right in 2008, cutting government spending back to where it was in 2007 would practically eliminate the deficit.
- Cutting the deficit. Getting spending down to where it should be will solve this problem. Cutting corporate taxes will also generate more revenue. With the highest tax rate in the world, we have taxed us out of the competition.
What do you think of Paul Ryan’s Path to Prosperity? Some think it is too timid in addressing America’s fiscal crisis.
Paul Ryan’s plan is a good start. He cuts taxes and he cuts spending. By contrast, according to the Congressional Budget Office, Obama’s budget for next year would increase the already huge projected deficits by over $3.5 trillion over the next 10 years.
How do you respond to those who say that Reagan also built up huge deficits and sometimes deficit spending is necessary in order to jump start the economy?
Reagan’s deficits as a percent of GDP were nothing like Obama’s. The highest they were under Reagan was less than half the percentage reached during Obama’s first year.
What mattered was Reagan’s cuts in marginal income tax rates. Giving people a greater percentage of the money they earned gave them an incentive to work hard and make the pie bigger.