Republican Committee ChairMichael Steele on u. S. Founding principles, in light of actions by former president donald trump. This portion of the conference runs just under an hour and a half. [inaudible conversations] all right, everyone. If i can ask you to makeour way back to your seats. We will get started here momentarily and ill ask them to come onto the stage, yes, as we how are you . As we get ready to start our next panel in the afternoon stretch here. Our 3 20 p. M. Panel, principled economics, a formula for growth this, obviously, is an important conversation because, you know, theres not a lot of leadership right now on on principles or economics, i would say, and so, its important, i think, to have this discussion about the facts and i dont know that we could have a more esteemed or Accomplished Panel here to discuss it with us. I will introduce our moderator here, who will then introduce the rest of our panelists. But its my privilege to introduce our moderator, mr. Bob bushman. He is an original firster from the beginning. He was at some of our earliest meetings in atlanta, georgia, you know, back when we were 10 people around a chilis dinner table, in a chilis somewhere and just kind of talking about conservativism and the principles that ought to define our country and our politics. Hes the state economist of georgia now, appointed last summer by Governor Brian Kemp to handle revenue forecasting and economic matters. Previously with Georgia State university, ran the Public FinanceResearch Cluster and worked with the state and tax incentive programs and owe indicationly taught macro economics, but focused on tax policy and research. Bob, take us away. All right, good afternoon, everybody, let me introduce the panelists, maya to my immediate left for the committee for responsible federal budget, oversees projects, fix the debt, fix the u. S. , the project fix the u. S. Or fix us . Oh, okay. A project seeking to better understand the root causes of our nations growing divisions and deteriorating political also worked is a returning principles first panelist. And douge funding aaf in 2009 doug taught economics at syracuse university, served as chief economist on president bushs council. And then as director of Economic Policy for the john on the end, we have brian riddle, senior fellow at manhattan institute. Brians research is mostly area tax policy and the debt. As well as broad macroEconomic Issues like Economic Growth. Senator robportman and center for fiscal responsibility and Economic Growth and in policy positions with the mitt romney and marco rubio campaigns. Welcome to the panelists and thanks to all of you in the audience for spending your sabbathia afternoon with us for the dismal science panel. [laughter] so, most of you all probably recall from the clinton years the line, its the economy, stupid. Polls tell us that the economy is the number one topic voters want government to work on. But voters have different ideas about what Economic Issues are important now and depending on their political ings, widely divergent views on the state and direction of the economy. Accord to go a Suffolk University poll last■j month, 4 of americans think were either in a recession or a depression right now. Another 21 thinkn a period of stagnation, and only 29 think were in a period of the reality, the u. S. Economy grew inflation adjusted rate of 2 1 2 last year, ■3. 4 real growth the last three years. Unemployment last year tied for the lowest level of my lifetime, reaching 3. 4 for the First Time Since and still only were still only slightly off that level and wage and salary incomes of americans have growne of inflation, since the last quarter before the pandemic. So, does the economy stink or is it strong . And thats where well start. This will be sort of a lightning round. A few minutes each on two questions. How is the Economy Today really . And what are the top Economic Policy issues that we should be concerned about . So well start right here. Thank you. Okay. ■ . Rst i just want to say thank you. Just want to say thank its great to be here, this is truly an organization that im such a fan of and really glad to be a part of it and its like the volunteer coordinator out there, ill volunteer, sign me up, id love to help. I think its such Important Organization and howave come to this conference so happy to be a part of it. How is the economy doing . I think tty well in the immedia which isnt what interests me the most. The economy is strong, i worry about inflation probably more than a lot of people are worrying about inflation, im not sure that weve got it under control, but i think given the challenges that it took to get us here, it is a generally Strong Economy in the moment. I think ill just give three things that i worry about the most though and thats why i spend all of my time worrying about everything. The three biggest things i could also do the top 10. The three biggest, not surpring ive devoted my career to it is the Fiscal Health of the country and we can go on with a long list of the numbers. Were so in debt, closest to in debt in this country, the last time after world war ii, this payments, were spending on defense and a long, long list. Were weak not just from an Economic Perspective and vulnerable, but also the National Security perspective. Two others id add to my list, im very worried about income inequality on own, but more so because its causing people to lose trust in the Economic System. Many people think that the system is not fair, its rigged against them. That if they play by the rules they still wont get ahead and that leads to my third worry which is that im particularly worried that people are starting to walk away from the system of capitalism and markets being used for the allocation of capital because they are have losing trust in our Economic System and that were thereby going to end up with things really bad for the economy, slownn growth dramatically and stop considering growth as much as we should in our policy decisions. Smaller economic pie is going to lead to even more Political Tension than we already have. So, im both worried about the problems with capitalism, but im worried that people are about to reject it rather than making some tweaks to improve it and that would be very dangerous. Well, the voters are always right, and well, first of all, thank you, this is my first time. Its a fantastic organization. I question only how your you spend your saturday afternoons. Onto something and in the near term where i would say there remains an elevated chance of recession in the quarter of this year. Inflation is not yet back that genie is not back yet in the bottle. Those two terms are real and legitimate, but the larger concern is that in the 21st century, we grew quite rapidly, gdp per capita, crude measure of■ume, the standard of living, 2. 4 for years, no one needs to remember that. In one working career, 29 years eiving would double. In the 21st century were going 1. 4 and the standard of living doubles every 56 years so its true, they feel like they ahead to access the American Dream is disappearing over the horizon. Had we grew at the 20th century, everybody would have another 19,000 in real gdp. I want my 19 and you should wantour 19, too. Thats the problem. We have an Enormous Growth problem. Part of that problem feeds the deficit, if gdp was as high as it sul another 1. 2 trillion a year in revenue, given the debts that we face, 12 trillion would begandy years deficit and the structure of the federal budget is the biggest head wind in Economic Growth. If we can take on the deficit, we can take on the problem. Thank you, and thank you for coming out on a saturday. You know, about the economy is the Unemployment Rate is low. The bad news about it is really the Unemployment Rate is low, just as a result of a typical inflationary overheating weve had over the past couple of years. The inflation rate has come down, but prices havent. Prices are stillp 18 since President Biden took office. You see it when you get gas. You see it when you go to the grocery store. Wages have generally not kept up. Growing a little bit more, but depending how you calculate wages, compensation, whether you effect. A lot of real wages are still down and ultimately real wages is what matters the most. Economic growth, real are you getting ahead . But its not even just the numbers on growth. The cost of buying a h doubled since in the last three years if you take into account the rise in Interest Rates, at the same time of a rise in ic on a median priced home is double what it was three years ago. Moving forward, i think, my is that really weve been powered by a series of bubbles. In the late 90s, we were powered by a stock market bubble. Burst. Then we had a housing bubble power us for the next eight years. That burst painfully. And now, im worried we have a debt bubble thats been powering us every since and im worried that thats going to be the worst burst of all we can t about the deficit numbers because we just had the deficit double to its highest level in American History outside of war and recession. It went from one trillion to two trillion in one year and depending on what you think about the tax cuts, and Interest Rates, we could be headed for deficits of three to four trillion by the end of the and my concern is just like the other two bubbles didnt end well, if we dont get a hold on our budget, this bubble will not end well either. Okay. Thank you for all of this. There were some issues i had i but were going to start and thats an excellent segue to where i wanted to start with a ep debt. My i recently watched your policy director mark goldwine and if youre not familiar with the committees website, there is so much content there that is very informative and their video presentations like this one that im talking ■about. It was called riches to rags. So i was thinking we could start with the question that he tries to answer with regard to our Massive National debt, which is basically how did we get here, what policy choices my over the last couplef biggest d of deficits and debt . Yeah, so, this is a study that we undertook because anytime wed go and testify for issue of deficits and debt, it just starts into this painful finger pointing game between the two Political Parties. Its your fault. No, it is your fault. And it is its like, just right there, im always afraid that while im doing a suddenly going to lose my temper and start yelling, like you guys are breaking the country. None of you care about is youre acting like children on im embarrassed for my children to watch you. So i should stop testifying until i learn to meditate or something. But theres an incredible blame game going around and the biggest part of it whether on the democratic side, could have been the other side, a chart that showed if we had not cut taxes under the bush era, the trump era, our budget would be fine we■ and you know, i bet thats probably true and bet thats not the whole part of the story. I looked at this, whether you look at spending or revenues, theyve all on their own contributed so much that weve kind of deteriorated the situation from wurpluses to deficits, many times over. So, whats really interesting, weve found there are two ways to look at this. The legislation that you put in place and what we found there is that the deterioration was one third from tax cuts, one third from spending increases and one third from a recovery from the crises, the Great Recession and covid. Of that way, close to 80 of it, bipartisan. This is not a republican or a democrat situation, both parties love to borrow and then the other way to think about it, to look at the issue, where are we with spending and revenues at gdp compared to■■ae surpluses and basically, if you look at it that way, one third of the problem is revenue, and twothirds of the problems a re there, because soap so much of our spending is automatic. You dont vote for it and legislation doesnt change it, but Social Security and medicare go up dramatically. Get over the blame game and ou voted for these things and enough on spending, if we hadnt done any spending increases basically the debt could be close to paid off. Our deficit would be m much, much lower than it is, all of it has contributed. Everybody has a part of it and one tiny study that we recently did, and i was frustrated with the no new taxes pledge and curious how many of the members who promised not to raise taxes have raised spending and in my mind, no new spending, no new borrowing, but turns out that 90 of the folks who have taken the pledge not to raise taxes have increased spending, so, its such a hypocrisy, a hypocrisy and t an the people promising not to touch Social Security. There are very few clean hands when it comes to how here and if we dont stop and start looking forward to the tough choices, that were going to have to fix social securi t and have to cut all sorts of spending and well be caught in this growing physical ive you all some quick numbers, last year, the federal budget deficit was 1. 7 trillion dollars, and federal debt held by the public today is 98 of gdp. Now, just a few years ago there were socalled economists promoting theories for why deficits and debt wont keep pr spending money as much as we want so long as were printing u. S. Dollars, its never going to matter. Why is it important . Well start with doug and brian. Why is it important that we address the deficits and the debt . Its very important. I just want to touch a little on what maya went through. I was at the white house in th three years after that, on the Mccain Campaign and think tank that testified more than any other in that period. What happened, doug . You were there, you did th. [laughter] pretty much my fault. Yeah, thanks, doug. But ive thought a lot about it. The old saying that budget is policy and at the budgets of my old boss, george w. Bush, those budgets said were going to win the war on terror at all costs and the obama budget, as long as the rich pay their fair share, its all good. We can do the aca, and President Trump said not one they think about deficits in office. Not one word. Nothing. And this crowd promises build back better, whatever you want, more and more and more. The most important Economic Indicators in the country for the 21st century told the American People, there is no problem. So they dont think theres a problem. So if you vote to raise taxes and cut spending and fix the problem youre going to lose your job and thats where we are. Its not complicated. The American People have to be told theres a problem. And i about to say why its a problem and youre going to fall asleep, and we do have a problem and they need to be told and then t willing to vote for people who will fix the problem and vote against people who wont. And the problem is really twofold. Number one, you know, we have these enormous deficits, two trillion a year the next 10 years and probably bigger than the projections and thats cash that has to be raised by the federal government and when they go into the Financial Markets to get the cash, theyre taking it at the expense of private firms and households and americans who want it invested in education and technology and businesses that raise their wes theyre competing for that and crowding it out and it comes with a cost. Thats, i think, most recogniz which it affects things. Theres a really important channel i dont think na people understand. Our government is simply spending too much and when it spends money, it doesnt invest, it subsidizes consumption, and an economy can only grow if people save and invest in the future. What we do with our federal budget, we take that private Sector Investment dollars and use it to subsidize consumption against future Economic Growth. Thats why were growing in this century than last century, were not taking care of eating the quality leaving behind for the next generation, leaving them with a poor standard of living and a financial bill and thats a big problem and that has to be recognized and corrected. Im going to take a lot of the same points as doug and just put my own emphasis im a numbers person so bear with me. Interest consists two years ago in the federal government budget 350 billion. Last year, they were 663 billion. Next year, interest cost is going to pass dense, medicare. A decade from now, depending on if we extend the tax cuts and everything out, interest costs alone could approach 2 trillion a year. At that point 30 of your federal taxes will be paying interest on the debt. So you will work and pay taxes for three months out of the year just to pay interest. Its not going to finance Social Security check, a veteran or a highway. Just interest. Then it keeps going, over 30 years were on pace between 119 and 150 trillion dollars depending on current policy assumptions. By the end of that, you could be paying half or more of your money to the government just for interest. Its such a waste of money. And fun fact, every point Interest Rate rise adds 30 tril