America's Place in the World Economy
The first panel discussion at The Atlantic's "Building the Economy & Jobs of the Future" Event includes Brian Deese, special assistant to the White House, Kenneth Lieberthal, a senior fellow with the Brookings Institute, and Vincent Reinhart, a resident scholar from the American Enterprise Institute. Atlantic senior editor Clive Crook moderates. We're live-blogging the event. Entries listed in reverse chronological order.
11:00 In the decade after a financial crisis, economies grow on average 1.5% slower than in the decade before, Reinhart says. Mortgages are infecting the economy up and down the food chain, and until banks and families realize and pay down their obligations we won't return to average healthy growth.
Lieberthal makes a separate point that too many US firms have the best ideas in the world but they're forced to go abroad to build their products because of lower taxes and labor costs overseas.
10:50: Does the president give a hoot about tax reform? Deese says the White House has a theory about how to constrain the size of government, but it has to be about jobs and wages. The plan to freeze non-security discretionary spending (about 20 percent of the total budget) is a "disciplining device," he says. On corporate tax reform, he says, our statutory is too high (it's the highest in the developed world except for Japan) but our effective tax rate is too low because we're helping and encouraging companies to shield money from the corporate rate.
10:40: The most fundamental shaper of US-Chinese relations is how successful China is in restructuring its domestic economy and how successful we are with restructuring our government spending and taxing, Lieberthal says. As China opens up its own capital markets, raises the RMB, and buys fewer Treasuries, we need to became less reliant on them because they won't be available to buy our government debt, Reinhart adds.
10:30: Jon Huntsman, the Chinese ambassador who resigned recently amid rumors that he would run against his boss President Obama, starts things off with an optimistic take on China's buying power. Lieberthal says that China is our fastest growing export market, and our largest overall market after Canada and Mexico. He also says that a stronger Chinese currency would have very little effect on our trade deficit. Reinhart says that bringing China online in the global trade community is an opportunity on par with rescuing Europe after WWII.