Fox News host Martha MacCallum sparred with White House economic adviser Jared Bernstein on Monday over the administration’s responses to inflation and student loan debt.
MacCallum questioned whether the nation is in a recessionary period, given that 72 economists recently predicted the economy will worsen throughout 2023. Bernstein said we are “probably not” in a recession due to the strong payroll employment growth and the historically low unemployment rate.
MacCallum then pointed to the increasing pressure in the housing market and a PWC survey finding that 50% of all respondents are preparing for layoffs and over 40% are cutting their bonus payments. The White House economic adviser said businesses and corporations are reducing vacancies, not job employment.
“Do you think that when interest rates go up and taxes for corporations go up, that they decide to hire fewer people?” MacCallum asked.
“Not necessarily,” Bernstein responded.
“Come on,” MacCallum interjected. “How many people do you know that run businesses who would say like ‘oh my taxes are going up, I’m going to hire more people.'”
“Yeah, we’ve actually seen very little correlation between changes, particularly at the very high end of the corporate tax rate and almost any economic variable that’s of importance to middle class families, whether it’s taxes or wages or I mean sorry, whether it’s jobs or wages,” Bernstein responded. “The tax hike that you’re talking about, one of them that you’re referring to, is a 15% minimum corporate tax rate that only hits corporations over $1 billion of profit who aren’t paying the requisite corporate tax rate which is already 21% below that of the top personal income rate.”
“So these 700 companies that talked to PWC, they all disagree with you, or 50%, more than 50% disagree?” MacCallum asked. “So they’re gonna pull back.”
Bernstein argued there have been historical gains in capital investments and jobs by raising the corporate tax rate. The host argued that many corporations, particularly those making modest means, will “tighten their belts” due to a raise in taxes.
She then turned to student loan debt, an issue which has come to the forefront as the president is expected to make a decision on whether to extend a pause on student loans. She cited a tweet by Larry Summers which stated that student loan debt relief will increase demand and inflation. Bernstein declined to comment on whether the White House is going to extend this pause. (RELATED: ‘I’m Just Asking You To Own It’: Martha MacCallum Confront Biden Adviser On New Inflation Numbers)
“With all due respect, the spending programs that have been launched by this administration have led to high inflation. You said it’s untenable, or whatever word you used, right? So now you’ve been flooding the market with billions of dollars in spending and now if there’s a plan to do that also for student loan relief, that could add to that problem,” MacCallum said.
“So hold on, a couple of points, so first of all let’s be clear that elevated inflation is a global phenomena and in fact you can go over to Europe right now, including the United Kingdom, and see inflation rates that are considerably higher than ours,” Bernstein replied. “So certainly not related to American spending.”
“Well most people can’t afford to go to Europe at this point. I don’t think they care about what’s happening in Europe, I think they care about what’s happening right here at home,” MacCallum said.
Bernstein noted the net change where the deficit is expected to decrease, whereas MacCallum argued that it is dropping because of recovery from the pandemic.
In February, the Committee for Responsible Federal Budget, a non-partisan agency, estimated that cancelling student loan debt entirely would increase inflation by anywhere from 10 to 50 basis points.