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Home , Austan Goolsbee, Jude Wanniski, Michael Boskin, Michael Froman, Phil Gramm, Roger Altman

THE MAGAZINE OF INTERNATIONAL ECONOMIC POLICY 888 16th Street, N.W. Suite 740 Washington, D.C. 20006 Phone: 202-861-0791 Fax: 202-861-0790 Advising the Candidates www.international-economy.com Who advises the 2008 presidential candidates on economic policy?

B Y R OBERT D. NOVAK

his lineup pretty well freezes the current outlook adviser Jude Wanniski brought to the for both Republicans and Democrats without a supply-side table). Nevertheless, the nature of the advis- Tsign now of a daring new outlook for any can- ers introduces nuances in the economic platforms of didate (such as in 1980, when and his the candidates. Here’s the lay of the land:

Democrats Republicans

Hillary Clinton: An all-star team Mitt Romney: Assembled well- of her husband’s economic known team, mainly supply- counselors during his presi- siders who include architects of dency, augmented by a couple George W. Bush’s tax cuts and of former Congressional leaders a former Congressional lieu- favoring higher taxes and pro- tenant of Jack Kemp. tectionism.

Rudy Giuliani: Conservative, supply-side economists maneu- : Academic vered the former Republican economists, not familiar names heretic back into the acceptable on the national scene, who are GOP fold. left of center but are more origi- nal and not as conventionally liberal as Clinton’s advisers.

John McCain: A father of the supply-side tax movement and a close George W. Bush ally have helped change his former anti-tax cut stance.

John Edwards: A multi-million- aire former cable executive gives populist advice to the multi-millionaire trial lawyer Fred Thompson: Brought on the who follows the populist line. chief economic adviser in Bush’s 2000 campaign who was booted from his adminis- tration for dispensing too much truth.

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SENATOR HILLARY nomic plan. It featured a soak-the-rich tax increase that RODHAM passed the Senate and House by one vote in each cham- CLINTON OF ber, followed by Republican victories in the next three (D) Congressional elections. Sperling is prescribing the same medicine for 2009, and the other Clinton advisers n 1992 at age 34, a for- agree—as does the Senator herself. “You raise taxes on mer aide to New York the wealthiest Americans IGovernor Mario to create tax relief for the Cuomo named less wealthy,” she said climbed above better-known economic savants around this year. presidential candidate to draft his cam- There is similar paign economic plan. He rose to agreement among the Cabinet-level post of Clinton and all her advis- National Economic Director in ers to oppose any basic the Clinton Administration and reform in Social Security. now is the key economic adviser The Senator has called to Senator Clinton’s campaign. President Bush’s proposal Richard Gephardt Tom Daschle He is currently a senior fellow for personal accounts a at the left-wing Center for “risky scheme” that American Progress (while also “would undermine the promise of Social Security.” serving on the Council for Just where Clinton is going on international trade Foreign Relations staff). Gene Sperling is less clear. Sperling and Rubin helped craft her hus- Also providing economic band’s record in the . But they advice is financier Roger C. may be overridden by Altman, a charter member FOB Gephardt’s aggressively (“Friend of Bill”), who served protectionist stance, dat- as President Clinton’s Deputy Sperling and ing back to his first run Secretary of the Treasury. He Rubin may be for president in 1988. advised Senator in Clinton’s voting record in his 2004 campaign and might overridden by the Senate has been have been Treasury Secretary in Gephardt’s mainly protectionist, as is a Kerry Administration. Altman, her rhetoric calling for chairman and co-CEO of aggressively “trade agreements with Evercore Partners investment Roger Altman enforceable labor and bankers, serves on the board protectionist environmental stan- (with ) of the stance. dards.” Most indicative is ’s her call for “a little time- Hamilton Project, which pours out” before new trade out health care and tax propos- agreements are signed—a als. Former Treasury Secretary clear protectionist signal. While she voted to give China Rubin, chairman of ’s most-favored-nation status, she later supported pun- executive committee, also ishment of Beijing for “currency manipulation.” advises Mrs. Clinton. Rounding Clinton voted for Sarbanes-Oxley financial regu- out her economic advisory team lation in 2002 and since then has uttered no criticism of are two big-name alumni of its impact. Altman, presumably her lead adviser on this Congress: former House Robert Rubin issue, has declared he does not trace the “greater sen- Majority Leader Dick Gephardt sitivity” by corporate management to Sarbanes-Oxley. and former Senate Majority Clinton takes the full liberal line on energy issues: Leader Tom Daschle. Against oil and natural gas drilling in Alaska and the Sperling emerged from obscurity during the 1992 outer continental shelf, for the Kyoto Protocol on global campaign as principal architect of Bill Clinton’s eco- warming, and for higher taxes on oil companies.

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SENATOR BARACK OBAMA Tarullo may be responsible for not going the full OF (D) protectionist route. “We shouldn’t kid ourselves into believing that voting against trade agreements will stop s the non-Washington candidate globalization,” Obama has said, while then voting running out of Washington, he against them. He has not matched Clinton’s labor- Arelies on young academics courting call for a pause in trade agreements but joined beyond the Beltway. They are left-of-cen- her in voting against Chinese “currency manipulation.” ter but markedly less predictably and dog- Obama is opposed to feasible expansion of energy matically liberal than Clinton’s advisers. sources and supports carbon caps and higher CAFE Heading the team is Austan D. Goolsbee, 37, standards, saying: “I’ll put in place a low-carbon fuel a University of professor (and New standard that will take fifty million cars worth of pol- York Times monthly columnist) specializing in describ- lution off the road.” An Obama proposal, devised by ing the “new economy.” Obama’s other key academic Kornbluh, would help automakers advisers are both on the Harvard faculty: Jeffrey with their burden of health care Liebman, 39, and David Cutler, 41. They are backed by for retired workers in return Karen Kornbluh, the policy chief in Obama’s Senate for fuel-efficient cars. office, and two Clinton Administration alumni: Georgetown Professor Daniel Tarullo and Michael FORMER SENATOR Froman of Citigroup. JOHN EDWARDS Despite OF NORTH Goolsbee’s reputa- CAROLINA (D) tion as an innovative tax expert with cen- is chief economic adviser is Leo trist views, Obama’s Hindery, who headed TCI cable before it was position on an upper- Habsorbed by AT&T. Naming a corporate exec- bracket tax increase utive to head the economic team is unusual for any is indistinguishable presidential team but extraordinary for the self-pro- from Clinton’s. fessed populist candidate. Cutler is responsible Edwards not only joins for the candidate’s Clinton and Obama in wanting market-oriented pro- to roll back the Bush tax cuts but posals on health care. also would raise the current 15 Liebman, a pen- percent capital gains rate to 28 sions expert, is percent (compared to the 20 per- author of a Social cent pre-Bush level). However, Security reform plan he has put forward as his own that includes individ- proposal the Hamilton Project’s David Cutler Karen Kornbluh ual retirement tax simplification scheme to accounts. But Obama excuse some 50 million Leo Hindery himself does not Americans from filing tax sound at all different returns (a plan devised by from the other Obama adviser Goolsbee). Democrats in oppos- Whether or not Hindery is influential, Edwards ing Bush’s personal takes the left-wing position on all issues. Edwards is accounts: “Relying most severe on energy, opposing nuclear power as well on the magic of the as oil and gas drilling and advocating severe reductions marketplace is a in greenhouse emissions. But he has moderated his tempting idea, ele- rhetoric on trade, asserting that labor and environmen- gant in its simplicity. tal standards should not be used “as a ruse to create a Dan Tarullo But it won’t work.” protectionist barrier.”

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FORMER needed to make Romney GOVERNOR MITT an all-out enemy of pro- ROMNEY (R) tectionism. Mankiw takes the counterintuitive posi- tion that the ormer Represen - benefits economically tative Vin Weber, from a lower rather than Fwho twenty-five a higher Chinese yuan, years ago was Kemp’s close and Romney has taken ally (and now a Washington lob- the position that China is John Cogan Brian Reardon byist), as head of Romney’s domestic policy board an economic opportunity coordinates policy recommendations to the candidate. rather than a danger. The campaign’s actual economic advisers have a strong flavor of George W. Bush’s administration. Cesar Conda, a longtime Congressional staffer who as Vice President ’s domestic policy chief FORMER was instrumental in devising the MAYOR Bush tax cuts, has for the past RUDOLPH GIULIANI (R) two years promoted Romney’s supply-side agenda. He has been is senior adviser is joined by R. Glenn Hubbard and , a N. Gregory Mankiw, Bush’s first HHoover Institution fel- two chairmen of the Council of low who headed the Council of Economic Advisers, as well as Economic Advisers during Bush advisers John Cogan (of President George H.W. Bush’s Stanford’s ) entire tenure. Boskin is basically a Vin Weber and Brian Reardon. supply-sider who was considered one This gives Romney the of the more conservative White House most authentic supply-side brain aides during the first Bush presidency. Giuliani also is trust of any Republican candi- supported and advised by two other prominent date (though Mankiw is suspect supply-siders: David Malpass (chief economist among purists for past criticism of Bear Stearns) and former presidential candi- of Reagan tax cuts and his advi- date . sory role in the 2000 McCain While Giuliani supports the Bush tax cuts campaign). Romney proposes and free trade, he has declined to sign the ATR making interest and capital gains tax pledge. Boskin has described Giuliani as tax-free for lower income brack- advocating “substantial reform of the tax code” ets, advocates abolition of the but opposed to a national sales tax. Glenn Hubbard estate tax, and has signed the Giuliani is less explicit on Social Security Americans for Tax Reform reform, asserting that “people should have some Michael Boskin (ATR) pledge not to raise taxes. choice” about how their money is invested. Conda has endorsed “pro- Boskin’s proposed Social gressive indexing” for Social Security reform contains Security, reducing payments for only a small component wealthy beneficiaries. Romney devoted to personal has not embraced that and has accounts. As a New been cautious about venturing Yorker, Giuliani is clearer into this minefield, short of gen- than most candidates in erally endorsing personal expressing concern about accounts with bipartisan support. the impact of Sarbanes- Gregory Mankiw Mankiw is an ardent free Oxley, contending that trader, but that advice is not “they overdid it.” David Malpass Steve Forbes

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SENATOR JOHN MCCAIN him in a direction different from the other candidates no OF ARIZONA (R) matter what advisers say. He does not favor total repeal of the estate tax, opposes ANWR drilling, and supports caps on carbon emissions and higher CAFE standards. Also, is principal economic he is the rare Senator who says he made a mistake voting policy chairman is for Sarbanes-Oxley. HDouglas J. Holtz- Eakin, former head of the Congressional Budget Office. His informal economic advisers FORMER SENATOR include former Senator Phil Gramm of FRED , investment banker THOMPSON Gerald Parsky, and economist Arthur OF TENNESSEE (R) Laffer, a founder of the supply-side movement. ith his late-starting Laffer’s advice Laffer’s advice may have been campaign, neither most influential in contributing to a Whis economic team nor may have been remarkable shift in McCain from his his economic agenda are complete at opposition to across-the-board tax cuts this writing. Lawrence Lindsey, the most influential during his 2000 campaign for president former Federal Reserve governor in contributing and his votes against the Bush 2001 and and national economic adviser for 2003 tax cuts. He now wants to make President George W. Bush, has to a remarkable the Bush tax cuts permanent, conced- been named chief economic shift in McCain. ing: “I may have changed some of my adviser and is said to be working views.” on a plan to reform the corporate He is a 100 percent free trader, and and individual tax systems. takes advice on this issue from Prof. Lindsey can be described as a pru- Teresa Beckham Gramm of Rhodes dent and cautious supply-sider. An College in Memphis. early backer of Bush for president, Larry Lindsey However, McCain he was shown the door when he marches to his own publically admitted that the drummer and that sets war would cost much more than predicted. Thompson voted for the 2001 Bush tax cut and has expressed sympathy with the idea of a national sales tax “as a good place to start” on reform. His Senate voting record was mostly free trade and he has asserted: “On globalization, we’re not afraid of it. It works to our ben- efit.” While Thompson is not on record on the Chinese Doug Holtz-Eakin Phil Gramm currency question, Lindsey has proposed a “On globalization, compromise under which China would we’re not afraid agree to moderately appreciate its currency. of it. It works to our benefit.”

Arthur Laffer Teresa Beckham Gerald Parsky Gramm

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2008 Policy Scorecard

INCOME TAXES TRADE Giuliani—Opposed. Clinton—Return tax rates to Clinton—Mostly protectionist McCain—Favors. 2001 level. with “a little timeout” for Thompson—Opposed. Obama—Return to 2001 level. trade agreements. Edwards—Return to 2001 but Obama—Votes against free SARBANES-OXLEY raise capital gains rate trade but speaks in favor of Clinton—Voted yes. No further higher. it. position. Romney—Make Bush cuts Edwards—Mostly protectionist. Obama—No position. permanent and further Romney—Free trade. Edwards—Voted yes. No reform capital gains rate. Giuliani—Free trade. further position. Signed ATR pledge. McCain—Free trade. Romney—Supports changes. Giuliani—Make Bush cuts Thompson—Mostly free trade. Giuliani—Supports changes. permanent, but won’t take McCain—Voted yes, but says ATR tax pledge. CHINESE CURRENCY was mistaken. Supports Clinton—Force lower yuan. changes. OPPOSES NATIONAL SALES TAX Obama—Force lower yuan. Thompson—Voted yes. No McCain—Supports Bush tax Edwards—Force lower further position. cuts, but against full estate yuan. tax repeal. Romney—No public Thompson—Make Bush tax stance. cuts permanent. Consider Giuliani—No public national sales tax. stance. McCain—Voted SOCIAL SECURITY REFORM against forcing Clinton—No personal accounts. lower yuan. Obama—No personal accounts. Thompson—No Favors government- public stance. subsidized “Universal 401(k).” ANWR DRILLING Edwards—No personal Clinton—Opposed. accounts. Favors matching Obama—Opposed. accounts to workers on top Edwards—Opposed. of Social Security. Romney—Favors. Which way the yuan? Romney—Favors personal Giuliani—Favors. Surprisingly, the Republicans accounts without details. McCain—Opposed. largely offer no position. Giuliani—“People should have Thompson—Favors. some choice.” McCain—Supports some form CAPS ON CARBON EMISSIONS of personal accounts. Clinton—Favors. Thompson—Supports personal Obama—Favors. accounts. Backed reduced Edwards—Favors. inflationary adjustments. Romney—Opposed.

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