Mark Thoma@@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=staff&d=person&b=name&s=Mark+Thoma@@ is a professor of economics at the University and the author of Economist’s View, a well-known blog on fiscal policy. Through the popularity of his blog, Thoma has become a guest columnist for roughly a dozen publications, including the New York Times, Washington Post and the Wall Street Journal. His lectures, published to YouTube, have received over 60,000 unique views in multiple iterations.
ODE: What initially inspired you to create your blog?
Thoma: I was very dissatisfied, during the approach toward the Bush re-election, with the way economic issues were represented in the media. I thought young voters were being misled. My goal was to become a nonpartisan voice that people could trust. My economics drives my politics — not the other way around.
ODE: Looking at today’s GOP primary candidates, how is the economy being manipulated as a campaign issue?
Thoma: A lot of candidates are saying that the Democrats are anti-free market. Just because you believe that the state should intervene into markets doesn’t mean you are anti-market. The Democrats aren’t saying that the state should be a socialistic enterprise that runs people’s lives. We’ve got one side that has an ideological problem with big government. They’ve flooded the airwaves and the think tanks with the idea of expansionary austerity.
ODE: What are the likely benefits, if any, of the Payroll Tax Cut Extension?
Thoma: Employees and employers are paying less into Social Security, and the federal government is back-filling the difference. This isn’t the best way to stimulate the economy, because you don’t know if people will spend their money or just save it. But the worry was that if we raise taxes in the middle of recession, it could cause a contraction.
ODE: Critics have slammed Obama over high levels in the national debt-to-income ratio. Why?
Thoma: They’re acting like the government is a private-sector individual and measuring its ability to pay bills based on its income. The reason it made news is because it hit 100 percent and economists believe that it should stay below 90 percent. This has happened before, and it doesn’t necessarily spell disaster.
ODE: What is the significance of the debt-ceiling debate?
Thoma: It’s a stupid exercise. Congress passes a budget and says “we’re going to spend this much money this year,” and then they turn around and refuse to authorize the debt levels that are needed to sustain the spending that they’ve already authorized. It’s a threat from the Republicans to Obama to damage the economy and then blame him.
ODE: How do you perceive the idea of money being considered equal to speech in terms of campaign financing?
Thoma: This is called regulatory capture. The problem is that this money makes politicians beholden to the people who are putting it up. You end up passing laws to satisfy the people who promoted your campaigns, thereby distorting the agency and representation of Congress to its constituents.
ODE: What is your response to comedian-pundit Stephen Colbert’s satirical creation of a Super PAC and the use of its funds to finance the South Carolina Republican primary, change its name and add a referendum to the ticket?
Thoma: I think, as a statement, it’s a microcosm of what can happen when you have widening wealth inequality and increasing wealth concentration. This illustrates that one person with enough money can have more influence than perhaps the average citizen would be comfortable with.
ODE: President Obama recently pledged to “slim down” the nation’s military and thus its defense spending. What is the Military-Industrial Complex’s role in the current deficit?
Thoma: The cronyism within the military that relies on privatization and outsourcing in government contracts is certainly something that needs to be confronted. Public-private partnerships work with many infrastructure needs, but there is evidence that the current system in the military fails to control costs. They need to look closely into their contracting procedures to better promote competition.
ODE: Do you feel that the International Monetary Fund (IMF) and World Bank, largely U.S.-driven entities, are making a positive contribution to developing and indebted nations?
Thoma: The IMF is changing the way it issues aid. It’s much less dictatorial in its terms than in the past, when the conditionality was too strict. Under (Economic Counselor Olivier) Blanchard, they are operating very differently than they once did. I have no problem with a new regime saying ‘we’re not going to honor the old regime’s tyranny,’ but that can affect the level of trust for future investment, so you have to look at it on a case-by-case basis.
ODE: What does America’s path to economic recovery look like to you?
Thoma: The deficit problem is going to have to be answered with a combination of increases in taxes and cuts in services. We’re not going to get out of that.