Lawrence Lindsey served as an economic adviser to presidents Ronald Reagan and George W. Bush.
In his address at the fourth annual Orrin Hatch Economic Forum, Lindsey identified the cause of the current economic troubles as the “twin bubbles.” The first occurred during the late 1990s and is known as the “dot-com” bubble. When it burst, the Bush administration acted aggressively by cutting interest rates, which was a text-book response.
With the benefit of hindsight, Lindsey acknowledges these actions as the cause of the second housing bubble.
“We got too clever. We printed money. We felt richer. We thought that money was there forever. We borrowed against it. We took our debt burden way way up. We realized the wealth wasn’t there to pay it off and so we’re now paying the price,” he said.
Despite accepting some of the blame for bursting the second bubble, Lindsey explained how President Obama’s economic initiatives have failed to bring about a real recovery. Current policy has increased gross domestic product by only 1 percent, but there are 4 percent fewer jobs than December 2007 and the government is more in debt than before.
Lindsey segued the discussion of the current economic situation into a discussion on tax reform. If Obama were to eliminate all the Bush tax cuts for the rich as he has proposed, the government would only receive 9 cents on the dollar, hardly making a dent in the trillion dollar debt.
During a panel discussion following Lindsey’s presentation, Sen. Orrin Hatch, R-Utah, and Lindsey discussed the possibility of a flat tax rate and the sustainability of programs such as Social Security and Medicare.
Lindsey threw his support behind a flatter tax rate, but not a completely flat tax. He suggested a 20 percent rate for most people and a 30 percent rate for the wealthy.
On the topic of Social Security, Hatch said, “Social Security right now is not paying for itself.” He said that Republicans don’t want to get rid of this and other programs, but redesign them in order to insure their survival for younger generations.
Hatch stressed the importance of young people making the difference and implored the students to get involved in campaigns. “Learn about campaigning, learn about politics, learn about government the practical way,” he said.
Chris Whitehead, a UVU junior from Cedar Hills studying political science attended the conference and found the discussion to be an “eye-opener.”
Whitehead agreed with Hatch’s plea to the students. “Now is the time to decide the direction we’re going to head with the elections coming up,” he said.
The conference painted a bleak picture of the economic situation in the U.S. and globally. Lindsey advised now is the time to act. He said Americans can’t afford to “kick-the-can” each year to the next, “the hole is deep and we’re digging as fast as we can.”