Fox News host Martha MacCallum argued Monday with White House economic adviser Jared Bernstein over the administration’s responses to inflation and student debt.
MacCallum wondered if the country was in a recession, given that 72 economists recently predicted the economy would deteriorate through 2023. Bernstein said we are “probably not” in a recession due to strong growth in salaried employment and the historically low unemployment rate.
MacCallum then pointed to mounting pressure in the housing market and a PWC survey revealing that 50% of all respondents are preparing for layoffs and more than 40% are cutting their bonuses. The White House economic adviser said businesses and corporations are cutting vacancies, not jobs.
“Do you think that when interest rates go up and taxes go up, companies decide to hire fewer people? MacCallum asked.
“Not necessarily,” Bernstein replied.
“Come on,” MacCallum interjected. “How many people do you know that run companies that would be like ‘oh my taxes are going up, I’m going to hire more people. “”
“Yes, we actually saw very little correlation between changes, especially at the very high level of the corporate tax rate, and almost every economic variable important to middle-class families, whether taxes or wages or I mean sorry whether it’s jobs or wages,” Bernstein replied. a minimum corporate tax rate of 15% that only affects companies with over $1 billion in profits that do not pay the required corporate tax rate, which is already 21% below that the highest personal income rate.
“So these 700 companies that spoke to PWC, do they all disagree with you, or 50%, more than 50% disagree?” MacCallum asked. “Then they will withdraw.”
Bernstein argued that there have been historic gains in capital investment and jobs by raising the corporate tax rate. The host argued that many businesses, especially those with modest means, will “tighten their belts” due to an increase in taxes.
She then turned to student loan debt, an issue that has come to the fore as the president is expected to make a decision on whether to extend a pause on student loans. She quoted a tweet from Larry Summers who said student debt relief would increase demand and inflation. Bernstein declined to say whether the White House would extend that break. (RELATED: ‘I’m Just Asking You To Own It’: Martha MacCallum Confronts Biden’s Advisor Over New Inflation Numbers)
“With all due respect, the spending programs that have been launched by this administration have resulted in high inflation. You said it was untenable, or whatever word you used, didn’t you? So now you’ve flooded the market with billions of dollars in spending and now if there’s a plan to do that for student loan relief as well, it could make that problem worse,” MacCallum said.
“So wait, a few points, so first of all let’s be clear that high inflation is a global phenomenon and in fact you can go to Europe right now, including the UK, and see inflation rates that are considerably higher than ours,” Bernstein replied. “So definitely not related to US spending.”
“Well, most people can’t afford to go to Europe at this point. I don’t think they care what happens in Europe, I think they care what happens here at home,” MacCallum said.
Bernstein noted the net change where the deficit is expected to shrink, while MacCallum argued it is shrinking due to the post-pandemic recovery.
In February, the Committee for a Responsible Federal Budget, a nonpartisan agency, estimated that complete cancellation of student loan debt would raise inflation by 10 to 50 basis points.