Laurence Kotlikoff Speaks at Claremont Colleges

Laurence Kotlikoff Speaks at Claremont Colleges

October 28, 2019 0 By Stanley Isaacs


– Good afternoon, and welcome to the first 5Cs Presidential Forum. We are very happy here today at Scripps College that we have the honor to actually be the physical location. This event is sponsored by the Lowe Institute at CMC, and I’m happy to see so many people here. We have two of the only people who you can actually vote for for president of the United States legally. There’s only five presidential candidates and five vice presidential candidates, so you are about to see one of the only five people in the world right now that could be elected president of the United States of America. And I will now turn it over to Ed Leamer, his vice presidential running mate, to give a fuller introduction of the team and why they are running for president. (audience applauds) – So it’s great to be out here at Claremont and make the case as to why we need more sensible discourse with regard to where the economy is going. I began this journey in June when I got a call from my dear friend, long time friend, Larry Kotlikoff, and he said, “Ed, I’m running for the presidency.” I said, “I already know that,” because I’ve been a fan of his purple plans. He’s got elaborate plans that are purple, not red or blue, but some sensible combination of the two viewpoints. And go to his website, Kotlikoff2016.com You’re gonna find all those plans. I was quite familiar with that and enthusiastic about what he’s done on all the critical issues that this country faces. And he said, “Well, I’m glad that you’ve visited my website, “and I’m especially glad of that “because I want you to be my vice president.” To which I replied, “Sure.” And there are really two reasons why I said yes. One is because I have the highest regard for Larry Kotlikoff, both his personal integrity and attitudes and his intellectual accomplishments. There’s nobody in this country who understands the budgeting issues, Medicare, Social Security, better than Larry does. He’s the go to guy when it comes to Social Security, and he’s the one who computes the unfunded liabilities for Medicare to the tune of, it’s 100 trillion or 200 trillion. It’s enormous. You can hardly imagine what it is. So one reason that I was pleased to be considered along with Larry as part of this team is because I have very high regard of him. I’m proud to be part of that team. But the other is that I have this hope that we as a nation can have a more civilized, informed, sensible discussion about what the country ought to be doing with regard to these critical issues. And that would be the goal that I think is still achievable. If we find some way of getting notice, then we’ll have an impact on that conversation. And I think I could summarize both Larry’s and my opinion. By the way, we don’t always agree, but I think we agree on this, which is our campaign is about the youth of America. It’s about the future of America. I like to say youth impact statements. We’re familiar with environmental impact statements. I think every bill should come with a youth impact statement. Is it red, green, or yellow? Is it good for American youth, or is it not? That would be our promise. If we get elected, we’ll make sure that the youth are well treated, when in fact you’re just getting a bad deal right now, a really bad deal in many, many ways. We have a generation that is accurately called the locust generation. Not the greatest. It’s my generation that came after the greatest, the locust generation, and they’re leaving you impaired assets, impaired infrastructure, impaired educational assets, not here at Claremont but a lot of other places around the country, and huge liabilities, liabilities on the tax side that are absolutely enormous, and then this problem of student debt, which is, I think, an unconscionable kind of abuse of the youth of America to expect them, that they have to pay that accumulated, enormous debt to get a college degree. So let’s talk about how economists think about this. You think, oh, that must mean I’m for free tuition, like a Bernie guy, or after that would be Hillary. She’s pushing free tuition. No, that’s not green. That’s red. That’s not good for the youth of America, and the reason is, this is econ 101, if the supply is fairly inelastic, and there’s not a whole lot more slots here at this school, and the demand increases, that just raises the prices. It doesn’t make the students any better off. It just means higher salaries for faculty and administrators. That’s really what the federal loan program has done, too. It’s been a major source of revenue for colleges, as exist today, as a way of supporting much higher levels of compensation for faculty and administrators. If you wanna make the students better off, don’t work on the demand side. Work on the supply side. I have a huge hope that we’re going to have fully accredited, very high quality Internet based education particularly at the BA level but at every other level. And once we get that really going effectively, I think you’ll see some significant erosion in these high levels of tuition and all the borrowing that students are forced into accumulating to get a decent education. So that’s one of many issues that are impacting you. The biggest one you have to worry about is the sky high debt load that’s gonna occur in the future and the amount of taxes you’re gonna be paying. Taxes that should be paid today are gonna be on your balance sheet unless you wake up. So the one thing I wanna leave behind is youth impact statement. The other one is AAYP. You need to join or create the AAYP. The AARP is the Associated of Retired People. They’re way too powerful. They’re taking money out of your pockets every day. The only way the youth is gonna offset that is by having the youth represented in some serious way. And that’s my friend, Larry Kotlikoff, who will very effectively represent the youth of America. Please welcome Larry. (audience applauds) – Thank you, Ed. Thanks, Linus. Thanks to Claremont Colleges for inviting both of us to come and talk to you about our candidacy and the future of the country, why I decided to launch this campaign to run for president, how exactly we’re doing it, and why there’s still time, where we stand, Ed did a little of that, on the issues, but also, why there’s still time for things to be turned around in terms of the outcome. Now, I decided back in January that observing the political process that we were gonna end up with two candidates chosen by the extreme wings of their two parties who are not really prepared to fix the country, who do not understand the depth of our problems, and do not have concrete and simple solutions to fixing them. And I sat down and wrote a 157 page policy platform book. Now, that sounds like a deadly dull thing to read, and on the other hand, it turns out that I’m a New York Times bestselling author. So I’ve written a lot of books that have flopped, but I’ve also written one New York Times bestseller with some coauthors. So I actually do know something about how to write. And I tried to write this in a way that was compelling and was a page turner. So I do encourage you to go to Kotlikoff2016.com to download this free book, platform book, to also look at all the blogs that are posted, and to really inform yourself about our campaign. But anyway, I wrote this, and then in May, I decided that I would declare my candidacy as a write-in candidate for president. But I did my homework and realized that in order to have your votes counted as a write-in candidate, you have to be registered, and you have to be registered in all the states that require registration, which is most of the states in the country, in order to get enough electoral votes to potentially win the presidency. So you are looking at one of five people, five or six people, in this country who can legally be elected president on November 8th, and you’re looking over here, you look at Ed, at one of five people who could legally be elected as vice president, because Ed and I have spent the summer and the early fall engaging in this write-in registration process. The press does not seem to understand write-in candidates. They think there are thousands of write-in candidates, and I think they think that everybody’s votes are counted. And in fact, there may be a couple hundred write-in candidates, and essentially none of their votes are gonna be counted. I think that you’re looking at the only real write-in candidate in the country, and you may also be looking at the only real write-in candidate we’ve ever had in this country, because it’s not clear that anybody in the past has gone through the effort to register, so their votes have never been counted. So in short, Mickey Mouses aren’t running for president. None of the above is running for president. They won’t have their votes counted. If Mitt Romney decides today to announce that he’s gonna write in Michael Pence as the presidential candidate in Massachusetts or wherever he’s registered, maybe in Utah, I’m not sure where he’s registered to vote, that vote for Michael Pence will not be counted. On the other hand, a vote for Kotlikoff and a vote for Leamer, if it’s written in the space on that ballot in Massachusetts or in Utah, there’s spaces on the ballot to write in Laurence Kotlikoff and Edward Leamer, our votes will be counted. So part of our challenge has been to get the press to understand write-in candidacies and to understand that you can actually be a legal, registered write-in candidate and have a legal chance of becoming president without spending a huge amount of money. The entire expenditure on this campaign will end up to have been about $10,000, which is not that much money. Now, if I were Michael Bloomberg and had a billion dollars, the press would be taking my candidacy extremely seriously. If I were Herman Cain and had been a successful restaurateur, and I think he developed some form of fried chicken, my candidacy would be taken seriously, even though Herman Cain had not the slightest idea what he was talking about on any issue. And I know this firsthand. I briefed him on our long term fiscal problems. Yeah. Enough said on that. (audience laughs) The issue is really understanding where we are and where we’re going. The country has lots of deep and grave problems on the domestic side and on the foreign policy side. Let me talk to you about the youth impact statement of the postwar policy that we’ve been running in our country. What is the impact statement to describe postwar US policy, domestic policy? It’s really been one of generational appropriation. Now, let’s talk about that in specific terms. We have been running a massive Ponzi scheme, taking from successive young generations, giving to old generations, and that’s allowed older generations to live better and to consume more, but we’ve promised younger people that the money we took from them they would get back in their old age, and by the way, they’d be able to take it from their kids. And we call that money that we took from the young people taxes, and the money we promised to pay them, we call that transfer payments. When I say we here, I’m talking about Congress and the administrations from Eisenhower on down. And by using that set of words, we kept these obligations to pay these quote transfer payments off the books. So all the obligations to pay for Social Security benefits to me and to Ed and to every older person in this room, they’re off the books. The entire baby boom generation, it’s a huge cohort of people, all those obligations to those baby boomers, they’re off the books. They’re starting to collect these benefits right now. All the current retirees, there are about 33 million of them. There are something like 80 million baby boomers right now. All of that is off the books. What about the obligations to pay for defense spending in the future? Economists would say, “Well, we’re gonna have defense expenditures. “That’s an obligation. “We’re gonna have to cover that with taxes. “It should be put on the books.” What about paying for the president’s lunch? Every day, he gets to eat lunch at the taxpayer’s expense. It’s gotta be put on the books. It’s all off the books. When you put everything on the books, you find out that the value of all the future spending valued in the present, that’s what we call present value, the present value of all that projected future spending as projected by our own government by the Congressional Budget Office, far exceeds the present value of all the projected taxes. And the difference in the two numbers is what we call the fiscal gap, and economists universally support doing fiscal gap accounting. Now, the fiscal gap in the US is not the $20 trillion that Trump talked about on Sunday night when he was in the debate, and what Trump knows about our fiscal policy we could describe in about, maybe not even a full word. That would be more than he knows. And what Clinton understands about it would take about three words. She doesn’t understand too much, either. Trump, I would just say, is a deplorable person. Clinton is also dangerous in her own way because she doesn’t understand these economic issues. She’s a lawyer by training. Her solution to everything is a new government program, a new government bureaucracy. And when you don’t understand that the true debt of the country is 15 times larger than you’re talking about, when the fiscal gap is 206 trillion and the official debt that’s in the hands of the public that hasn’t been bought up by the Federal Reserve by their printing money, is only 13 1/2 trillion or so, if you don’t understand that, you don’t even understand .1 about our fiscal situation. You don’t understand that we’ve spent the postwar period indebting our children and future children. You don’t understand that our fiscal policy is 53% under financed. Our entire fiscal enterprise is 53% under financed. Now, what does that mean for you, Claremont and Scripps and Harvey Mudd and Pitzer and, another one, Pomona students? What does it mean? It means that in order for us to continue spending the path of spending that the Congressional Budget Office projects, we have to raise taxes starting today, and I mean actually this minute, by 53%. Every single federal tax rate has to go up by 53%. That’s what it means to be 53% under financed. And it has to stay 53% higher forever. So each of you young people would have to face a 53% higher tax rate on everything from FICA taxes, Social Security payroll taxes, that’s what a FICA tax is, Medicare payroll taxes, that’s also part of FICA, personal income taxes, estate and gift taxes, excise taxes, all those tax rates would have to go up by 53% starting today. If we don’t raise them by 53% starting today, we went for 23 years, or let’s say for 20 years, they have to go up by about 65% starting then. So this is generational immorality. This is generational inequity. This is generational expropriation. Now, that’s just one part of an entire panoply of policy that we’ve been running to make older people better off at the cost of younger people. Now, I know that you folks here are in a very privileged position. You could pay the 53% higher taxes and be just fine. But this country has a lot of poor and middle class people who cannot handle that burden. This will put them underwater. This will bankrupt the next generation. That path of fiscal policy, unless it’s reversed, unless we can eliminate that fiscal gap, which is part of our platform, we have a set of plans that would make that fiscal gap zero, unless we do that, we will bankrupt the next generation on the fiscal side. What are we doing on the side of education? Well, if you look at the statistics on education, we have been heading downhill for decades. Whatever we’re doing in education, it’s not working. And we have, in this platform, Ed mentioned Internet education for college. There’s a proposal in the platform for providing uniform online education from kindergarten right through high school through 12th grade for free to all the schools in the country for them to use for three or four hours a day. And there are experiments now going in New York City in schools where they put children in pods where they learn individually at their own pace. They’re tested on their achievement, and it effectively is lowering class size and allows the teacher to go around and spend time with the individual student. And if the student doesn’t learn it one way, the programs automatically change the way that the subject is taught so they get to see it from a different perspective, and then they’re tested to see if they got it that way. So we can do enormously creative things and get the best educators in front of everybody in the country. We can get what everybody has been looking for in the world of education, which is equalization. We can make sure that the kids in Watts get the same level of education as the kids in Lexington, Massachusetts, which is a very rich suburb that I used to live in, where the schools are ranked at the top in Massachusetts. So that’s an example. We’ve downgraded education compared to what my generation and prior generations received. What about immigration policy? Well, immigration policy is not a problem of illegal immigration because more illegal immigrants are leaving than coming. So when Trump puts up this huge wall if he gets elected, God forbid, he would increase the number of illegal immigrants in our country because the ones who are leaving would not have a way to get out. (audience laughs) To be clear, I am for stopping illegal immigration. That has to be stopped. We should have borders that we control, whether it’s walls or fences or more border guards, and I think we’ve accomplished a lot on that front. But the big issue here is really legal immigration. When you bring in a million people a year, 85% of whom are unskilled or low skilled, they’re putting direct competition on low skilled workers and middle skilled workers in our country, and they’re affecting the income distribution, so you have to concern yourself with that. And I’m calling for a reduction in half in immigration and a shift in the composition of the immigrants to high skilled. Let’s see how computer software engineers would feel if we brought in a million software engineers every year to compete with them, every single year, year after year. How would they feel about that? Not so good. They’d be at the Trump rallies, protesting. So immigration. Let’s think about … Let’s think about foreign policy. What’s our biggest foreign policy threat? Which didn’t event get mentioned in the last debate whatsoever. It’s not on Hillary Clinton’s national security website page. There are two words that are not mentioned. Trump, I’m not even sure he mentions it, but when he does mention it, he says he’s gonna fix it with a telephone call. The biggest problem we’re facing right now, which is very much akin to what we faced in 1962 and the Cuban Missile Crisis is North Korea’s development of not nuclear bombs, because they’ve done that already under the watchful eye of our government. We allowed them to acquire nuclear weapons. And then we allowed them to miniaturize them so they can fit on top of missiles. Now they’re testing ballistic missiles and submarine based missiles to fire them, in what direction? Claremont, or Boston, or New York City. So I’ve taken a very strong stance about North Korea’s development of nuclear weapons, their testing of nuclear weapons and their testing of missiles. I’ve said, in public, that were I elected president, in consultation with Congress, ’cause the president only has so many, is not God. He can’t do everything by himself or herself. But I’ve said I would favor the imposition of an immediate ban, military enforced, on North Korea of any further missile testing and any further nuclear weapons testing, and if they violated that, we would destroy all their facilities, their testing facilities, their submarines, and their nuclear weapons facilities the same afternoon. And that is a very strong statement, but I think it’s the appropriate statement. And guess what’s going on when you have the two leading candidates not mentioning this? What they’re doing is they’re leaving the risk of this problem on your shoulders, in your laps. This is part of generational expropriation. It’s not just leaving big bills for you folks to pay. It’s also passing risk to your generation. It’s forcing your generation to bear the burden of the risk of having unstable leaders. Now, I’m also proposing to the North Koreans that we immediately settle our differences, that we recognize North Korea, they recognize us, in addition to making a peace treaty with South Korea, and that we normalize relations and full trade relations, we help them rebuild their economy, that we become friends with North Korea, we don’t have the inherent fight with North Korea. But they have to, as part of that, eliminate their nuclear weapons and eliminate their nuclear weapons production facilities. And then we would have a peace agreement, and that conflict will be settled, and they will have a sovereign country. And if they decide at some point to merge with South Korea, to reunite, even better. We have to be very firm with North Korea. I’m old enough to remember watching President Kennedy tell us about the Cuban Missile Crisis on a black and white screen when I was 11 years old, and he did not … I’m not President Kennedy by any stretch of the imagination, and there are many, many more qualified people to run for president than I am, but you happen to have, but they haven’t actually done what we’ve done in registering, so we’re stuck with five or so people who can become president in a few weeks. Now, the issue of how to fix, so there’s North Korea, and North Korea’s threat also turns into a bigger threat from Iran, because Iran can satisfy all the provisions of its Iranian treaty with us, agreement, nuclear agreement, weapons agreement, but they can just simply turn around and buy a nuclear bomb or two or 20 from North Korea and put it on top of the missiles that they are now testing, the long range missiles. Those missiles can now reach any major city in the Middle East, including Tel Aviv, Jerusalem, Riyadh. They’re fully capable of hitting anywhere in the Middle East. They can go 2,000 kilometers. In a few years, they’ll be able to go 8,000 kilometers and hit New York City. So all it takes is for the Iranians, who are in tight contact with the North Koreans, to buy nuclear warheads and then just install them on their missiles or buy missiles from North Korea, as well. Now, that will be in violation of our agreement with them, but if they wanna be a nuclear country, and they certainly seem to be intent on doing that, they’ve made a lot of effort in that direction, this is the easiest way to do that. So I’m also calling for a ban that would be militarily enforced on missile testing of long range missiles by Iran. So that’s very different from what Trump and Clinton are saying about your future. And what I’m talking about when it comes to fixing the fiscal problems that affect your future is to take each of our fiscal institutions, Social Security, the tax system, the healthcare system, and reform them fundamentally. Not modify them a little bit at the margin. Not modify the brackets on the federal income tax, for example. Trump wants to cut the brackets and Clinton wants to raise the brackets for people at the high end. That’s not gonna fix the system, because the system has got big problems. It’s not just generating too little revenue, but it’s also inducing companies to operate outside the country. And so Trump, every so often, by accident he says something that actually connects to a real problem. And the issue of investment in our country is a real problem. The infrastructure is crumbling. We don’t have enough investment. We’re investing in a four percent rate in terms of domestic investment as a share of national income. In 1950, it was 15%. Our national saving rate was 15% back then. It’s now under four percent right now. So we have a saving and investment problem. It’s very much connected to incentives for companies to operate here. We have the highest marginal tax, marginal effective tax, on corporate investment of any developed country. We also are not collecting much revenue from the corporate tax because of all the loopholes. So our tax plan calls for eliminating the corporate tax entirely, eliminating the federal income tax, the personal income tax, eliminating the estate and gift tax. Now, that’s all gonna sound extremely right wing, right? But just wait, because I’m not extremely right wing, and I’m also not extremely left wing. But I do understand that we need to have a progressive fiscal system here. So what I’m proposing is an inheritance tax instead of an estate and gift tax which nobody is paying and is generating very little revenue. The rich are getting around it very easily. So let’s tax inheritance. If you’re super wealthy and you hand everybody a dollar, why should you be taxed from doing that? But if you give it all to one child and he becomes the next Donald Trump, that produces real inequality. So let’s tax inheritance, not bequests. Let’s tax consumption. I’m calling for a value added tax, 20% value added tax. That’s similar to what Ted Cruz called for, by the way. Almost every single developed country except ours has a value added tax. I’m proposing one, as well. I’m proposing a progressive consumption tax which hits just high, just hits the rich, people that are consuming more than $100,000 a year. So somebody like Donald Trump under my tax system would pay a lot of taxes, because he’d not only pay taxes on all the money that comes in that he doesn’t actually then invest, all that lifestyle that he’s so proud of, he’d be taxed on it, but he’d also be taxed on all the consumption he’s doing through owning things like yachts and mansions and Rolls Royces, whatever he has. All those durables imply, consumption services, all that would be included in the tax base. He’d be hit with very high taxes on his lifestyle. If he didn’t spend money, like Warren Buffet, he left his wealth for other people to use as capital, then he wouldn’t be taxed. So we’d have a system that actually encourages saving and discourages consumption. And by eliminating the corporate income tax, we’re gonna have a massive inflow of investment from abroad and also from US companies expanding their investment and not moving it out of the country. So I’ve spent a lot of my career working on large scale computer simulation models with other economists that can be used actually to understand the impact on the economy, on real wages, on economic growth, of these kinds of policies, of switching the tax system from this to that. By the way, in the tax reform proposal, there’s two other major features. One is a carbon tax, an $80 per metric ton of CO2 emissions carbon tax. I’m not afraid of using the two words carbon tax. Hillary Clinton is afraid. So this is the other big area where we are expropriating your generation. We are leaving you with a climate that can, it’s very dangerous. We’ve had 10 of the hottest years on record since 2000. This year, 2016, may be the 11th of the hottest years on record. August was the hottest month ever in an August, the hottest August ever recorded. So we have the potential, if we don’t get our hands around this problem right away, of tipping the climate in the environment in four or five different critical ways. For example, West Antarctic ice shelf melting, the Greenland ice shelf melting, the Amazon rainforest disappearing, the Gulf Stream reversing course, the permafrost, especially in Siberia, could melt, and that could release enormous amounts of methane gas and we could end up frying the entire planet, making it uninhabitable. Right now, we’re facing a situation where at the end of the century, if we don’t do something, there’s a good chance, there’s a decent chance, that sea levels will rise by six feet. That will put Miami, New York City, Boston, Los Angeles, underwater, many other cities, as well. Charleston, South Carolina. A good fraction of the population of our country will not be able to live where it now lives. A good fraction of the world’s population, probably about a third of the world’s population, will have to move. And these are big dangers that we are foisting on your generation, and I say we, the US has the largest responsibility for having produced this problem, because we’ve been the largest historic emitter of CO2. China has now passed us on an annual basis, but most of what’s up there is due to us. So that’s why I’m saying we need an $80 tax imposed today, not, according to the Paris Accord, in 20 years or 15 years. Because what does that tell somebody? This is where having an economist as president can matter, because an economist can think about incentives, whereas a lawyer, which is what Hillary Clinton is, or a businessman, are not trained in economics. They don’t necessarily think through the feedback effects, what we call the general equilibrium effects, of one policy versus another. So in the case of the Paris Accords, what we have here is a pledge by 195 countries to do things in the future. Now, suppose that you own a big pot of oil. You’re Saudi Arabia, and your country consists of soil on top of a big pot of oil. You can put a pipe into the ground, drive it into the ground, and out will come oil. And you’re being told by 195 countries that in 15, 20 years, you’re not gonna be allowed to sell this stuff. And you’re being told by ISIS that you’re the enemy and that they’re gonna come and kill you and take away your oil, as well. What do you do? You pump it like crazy right now, because it’s use it or lose it. You want to get it out of the ground, sell it, and then buy expensive real estate in London or New York, not live there because you’re only one person, but you buy. That’s why you have large parts of, you know, Kensington in London is large part empty, or the Plaza Hotel in New York City. You can move in there and you’d be the only person in your hall probably. That’s what’s going on. So the reason that oil and energy prices are so low right now is because people who are dirty energy owners and producers recognize the economics here. They understand that accelerating the development of clean technologies means their days are numbered, so they’re gonna use it or lose it, and that means that they’re gonna produce a fast burn rather than a slow burn. They’re producing a fast burn, and the fast burn means we get closer to the tipping point, the tipping points that I just went through. So what we need is an incentive for these folks to delay their use of their fossil fuels, to have a slow burn, and the way you do that is with a high tax starting now and the tax rate declines through time, not a low tax rate that rises through time. It’s basic economics. There’s a famous economist, Howard Hotelling, who told us all about this back in 1932 in a famous paper. Had he lived in the time of the Nobel Prize, he would’ve received the Nobel Prize in Economics for that work. So economics matters, and having an economist at the top can change the course of our country, and economists are also trained to deal with threats because we learn about game theory. And we’re playing some strategic games with our adversaries, with Russia now, with China in the South China Sea. We have to deal with these countries, and we have to deal with it from somebody who’s actually been outside of the country. I’ve lived in Germany, at 16, I lived in Germany for a year in high school as an exchange student. I speak German, not perfect, but I can get by in German. And this may be why the two top German newspapers wrote extensive articles about my candidacy. I also speak New Jersey, since I’m from New Jersay. (audience laughs) And this may be why the people in Australia, the top Australian newspaper, has written about my candidacy, The Australian. And the top Danish newspaper wrote. These are long articles. But the LA Times cannot figure out how to get over here from their offices in downtown LA to cover this event even though we’ve asked them to come. They can’t figure out that there’s only five people that can actually legally be elected and that the entire country is dying for an alternative to Trump and Clinton, and they can’t write about it. We don’t rise to the level of the Los Angeles Times. I would say the Los Angeles Times reporters are lazy, and they’re not doing their job, and they’re not doing their job by your generation. Same thing for The New York Times reporters. The same thing for The Washington Post reporters. They’re not doing their job. They’re not doing their homework. That means that we as a group have to inform each other about this candidacy. And again, I’m not coming at this and Ed is not coming at this from a position of ego. We don’t look at ourselves in the mirror in the morning and say how brilliant we are. That’s Donald Trump’s angle. And we don’t just talk to ourselves and figure out what should be fixed. When I thought about how to fix the Social Security system, I spent time with Jeff Sachs, who’s one of the top economists in the world and very much concerned about social issues, and we figured out a plan back in the ’90s, and our plan is in the platform. The healthcare reform, I got a terrific plan idea from a libertarian economist named John Goodman. That’s the fix for healthcare. Everybody gets a basic plan. We have hyper competition to provide that by the private sector, so it’s multiple providers, single payer, mainly the government, but it’s paid for in full by the government. Everybody gets the same basic plan. It’s highly progressive because the poor will get the same things covered. Their liver will be covered just like somebody who’s rich to the same degree in terms of trying to make it stay healthy, but the poor have bigger health problems than the rich, so they’re gonna disproportionately benefit from this proposal. So if you look at the set of proposals that I’m pushing out there, they are progressive, but they’re also economically efficient. Let me tell you one important thing about the tax system and the transfer system that we have, and it relates to poor people. It’s based on work that I’ve been doing with Alan Auerbach, who’s a economist at Berkeley. So what we did that nobody else has ever done so far is to put together all the fiscal programs that we have in this country, and there’s about 20 major different fiscal programs, and some of them are things that are embedded, a number are just embedded in the federal income tax. We have not just one tax system inside the federal income tax, but multiple tax systems. There’s the tax on Social Security benefits. There’s the earned income tax credit, the alternative minimum tax. There’s child tax credits. There’s the progressive rates. There’s the phase out of the child tax credit and other deductions and exemptions. There’s Medicare high income premium taxes. There’s new Medicare asset and labor income taxes for high income people. So there’s a host of fiscal policies right there in the federal income tax. Then you go to the food stamps program. You get food stamps, but if you start earning money, you lose them at 23 cents on the dollar. If you look at the Medicaid system, you earn a dollar too much, you could lose Medicaid benefits for your entire family, healthcare benefits. So if you add all this stuff up together, you see that we have probably half of the poor people in this country in enormously high marginal tax brackets to the point where we are locking them into poverty. We are saying, “You earn an extra $10,000 “and you could actually lose more than you earn,” or, “You could lose 60% of what you earn.” So they’re just saying, “Why should I bother? “I know the welfare system. “I know I’m gonna lose “23 cents on the dollar in food stamps, “15 cents on the dollar from FICA taxes, “five cents on the dollar from the state income tax, “five cents on the dollar from the sales tax. “I’m gonna lose 22 cents on the dollar “from the earned income tax credit. “And then I’m gonna lose all my Medicaid.” Or if they’re under Obamacare, they’ll lose Obamacare subsidies. These programs have been put together by bureaucrats, most of whom are lawyers. I don’t think we have many, any economists in the Congress, without anybody looking at the overall impact. So we’ve locked the poor into poverty, and it’s not just now. It’s been for decades. So you wonder why we have poor people here. Well, part of it is they’re being told not to work. And you wonder why we have older people who are not working in very large numbers. Well, they face even bigger marginal taxes because if they earn money while they’re getting Social Security benefits, they’ll lose 50 cents on the dollar in their Social Security benefits. That’s called the Social Security earnings tax. So when you’ve spent four decades studying all these fiscal institutions, you understand as an economist what’s screwed up, and you understand that you can’t fix this by tinkering with it or something. It’s like you’ve got a patient on a table here. He’s dying. He’s the American economy. And he needs a heart transplant. He needs radical surgery. But that’s the smart move, because otherwise the patient will die. Not operating, not doing the radical surgery, is radically stupid. And doing the radical surgery, even if it’s risky, is the only way to save the patient. We have to have radical reform of taxes. We have to radically change our healthcare system. We have to eliminate Obamacare, Medicare, Medicaid, and employer-based healthcare, institute this new purple health plan which I don’t have the time to tell you the details about but I think you’ll find it exactly what we should do. And it’s very similar in many ways to what Germany is doing and what the French are doing and the Swiss and the Japanese and the Israelis. When I devised this plan, I wrote a book called The Healthcare Fix. A German economist who was involved in healthcare reform in Germany flew over and said, “You know what? “You just reinvented the German healthcare system.” I said, “I did? “I didn’t know that much about it. “Tell me.” That’s apparently pretty similar to what they have. Now, they’re providing better health outcomes for about 60% of the cost of what we’re spending on healthcare in our country. So if we’re clever about how we fix things, if we’re knowledgeable about how to do it, we can get that fiscal gap down to zero and give you folks a much better economic future. And I’m not talking just about you folks here at this particular set of colleges, because you’re gonna do fine because of all your connections and your educational abilities and also all the education you’re receiving, the excellent education. Your future is really set. I’m talking about our kids in general. We have to recognize that everybody is our kids. If we’re white and older, we have to understand that blacks and Hispanic children are our children. They’re not somebody else’s children, they’re our children, and we have to act as a cohesive society. Part of what’s going on in this country, part of the ripoff of younger people that’s been going on for six decades, is due to racism. It’s due to people realizing that this is a big mixed up country with a lot of different, not mixed up, but mixed country in terms of its demographics, and why should I, if I’m from this culture and this background, support somebody from that other culture and background who’s a kid who I don’t even know? You don’t see that in Sweden because it’s homogeneous society. They recognize a common whatever, a common culture and heritage and whatever, and they support their children. We need to get our adults around in their brains to the idea that everybody’s children are their children. So let me stop here, and we have 10 minutes, I believe, we can spend on questions. And actually, we’re able to remain and answer questions of those who don’t have to go off to class or to teach or to take a course. So please, if you have a question, shout out. Right over here. – [Moderator] Sarah, thank you for being first. – [Sarah] Hi, Professor. Thank you so much for coming. – Thank you. – [Sarah] So I’m wondering if in fact you don’t win the election, what is your plan to influence policy in some other way? – Okay. Well, Sarah, that’s a great question. And I thought in my career that I could influence policy by doing things like testify to Congress. I’ve testified 19 times. I’ve written a book on healthcare reform. I’ve written a book about how to fix the banking system, a very simple solution endorsed by a number of Nobel laureates, the head of the Bank of England. I wrote a book about Social Security that became a bestseller. In the end of the book, I talk about how to fix the Social Security system very simply. I wrote a book about taxes and have written about tax reform. I’ve written hundreds if not thousands of op eds. I’ve written lots of professional articles. So I’ve spent my time trying to influence policy in that manner and it hasn’t worked because the politicians aren’t interested in the right answer. They’re not interested in the next generation. They’re interested in the next election. What my goal here is is actually to win, and I’m gonna tell you in the next minute how we can still win at this point even though we’re not showing up in the polls right now. You have Donald Trump’s presidency imploding. You have the Republicans needing to have somebody that they can tell their rank and file to go vote for for president, because otherwise their rank and file will stay home and not vote for them as senators or congressmen. So we just need to have some major Republican, some major news outlet, say we’re writing in or we’re endorsing Kotlikoff and Leamer and that could flip the entire election just over night. And there’s still time for that to happen. So we’re doing our best in our campaign to make that happen. But let me tell you how you folks can help if you feel like you would like to help. If you feel we’re a better option for your future and for your children’s future than Clinton or Trump, here’s how to do it. There’s about 50 or 60 of you in this room. If you each sent tonight an email to 30 people and it was a chain email that said, “Please, whatever you do, go to Kotlikoff2016.com and “send the same email to another 30 people, “this is a chain email, keep the chain going.” Double check that the people you’ve chained to have actually done this. If not, find another 30 people. If you think about 30 to some power, like five or six or 10, if you think about 30 to the 10th power, if you pull out your hand calculator, you’ll find out that you will reach, just by youth votes alone doing this, starting this out tonight or this afternoon we’ll reach the entire electorate. We don’t need the LA Times which doesn’t wanna do its job to do its job. We can do its job for it. We don’t need The New York Times to decide early on that they’re a Democratic newspaper and they’re only gonna support Clinton and they’re not gonna recognize anybody else who could threaten her presidency. We don’t need The Washington Post to decide that our candidacy doesn’t rise to the level of The Washington Post, which I was told in an email by one of their political reporters. Our candidacy does not rise to the level of The Washington Post. I wrote back to the guy that his behavior doesn’t rise to the level of The Washington Post. The situation is that we may not get the endorsements. We may not get the press attention. But if we can spread the word through the social media, we can turn around the election. Just say, “This is one of five people “that can be legally elected because he’s registered. “All you have to do is write four words “in the ballot in the space provided “and you’ll be voting for these two people, “and that’s all that’s required.” Compose it in your own words. “This guy and his running mate can make a big difference. “They’re the people we’re looking for, “we’ve been all looking for, we’ve been praying for, “They’re not necessarily the best people in the country “to do this job, but they’re available. “They’ve done their homework to get to this point, “and they’re all we have left at this point.” I’m the only person in the country, in the world, who’s standing between the American public and Donald Trump and Hillary Clinton. And I want you to take that very seriously, and I want you to do your homework today on that website and decide where you’re gonna stand. Are you gonna stand for somebody who’s not gonna really fix our problems, who’s gonna leave our kids a threat, who’s not gonna address climate change, who can’t say the words carbon tax, who’s gonna leave the banking system to fail yet again because the banking system has been rebuilt, I wrote a whole book about banking reform, as I mentioned, who’s gonna leave that risk again to our children, of having, in their lifetime, as they’re middle aged people they’re gonna face another great recession? Because I think the banking system today is in a riskier shape than it was in 2008 the way they quote fixed it. Or are we gonna really put out and work for getting two economists to help lead the country? So that’s my answer. I tried the old fashioned, standard way. I’m now trying it this way. Yes. (moderator speaking off mic) – [Woman In Audience] No problem. So I think pushing back on that same point, though. As you mentioned, we don’t have many, if any, economists working in Congress, and how would that level of policy influence be another viable option to you if you don’t obtain the presidency? – If I did not or if I did? – [Woman In Audience] If you did not. – If I did not, I don’t see policy changing. I see the downward economic drift of our country continuing. I see nobody addressing North Korea. They will end up with nuclear missiles that can hit anywhere in the country. I see climate change not really being addressed in a serious way. I see that as perhaps the super threat, the biggest elephant in the room. And banking, we could have another banking crisis. I see nothing getting fixed. So even if there were economists, they’re having to kowtow to their political parties, but political parties are the problem in this country. They’re not the answer. And if we’re elected, it will be the end of the political parties, trust me, because everyone will see that you can become elected president without money and without the two political parties. And then everybody will be free to run as a write-in candidate and be elected based on the content of their character and the quality of their answers. – [Woman In Audience] Hi. Thank you for your talk, and I wanted to, I guess, follow up again a third time on what these students are saying in that you have a lot of great ideas, and I appreciate your platform from that perspective, but do you have any political capital? So you just brought up the fact that it is very difficult to change what’s gong on given the political system as it is. And I actually find what you’re saying here to be a little frightening, because I don’t believe that you have the political capital to do what you say you’re gonna do and you are a third party candidate that’s only gonna probably take away votes from Hillary Clinton. – Okay. Let me address that. I think that when the Democrats looked at my platform and see that I was going to dismantle Medicare or Medicaid, Obamacare, and employer-based healthcare and set up a new healthcare system that actually works and is not gonna go bankrupt and not bankrupt our children, they won’t like it because these are sacred cows. And they are very concerned about Donald Trump, and rightfully so. So what I see is this candidacy drawing votes away from, and same thing with Social Security. I’m freezing the existing Social Security system and setting up a new one. So I’m not reneging on the promises under the old system. I’m just not continuing the old system as is. I’m just gonna pay off what we owe under the old system through time, set up a new system that works for younger people. So these are sacred cows. The Democrats are not going to be leaving Clinton to vote for me. The Republicans are gonna leave Trump to vote for me. So that’s the answer to the last part of your question. But the issue of social capital is, the social capital is you folks. The social capital is your ability to be megaphones. You have a lot of contacts. You don’t realize that each one of you has enormous power to get the message out just by yourself. If you have 10 of you send a 10 person chain email and it went through 100 rounds, it would reach every single voter in this country. So the social capital is right here in this room, and the political capital is right here in this room. That’s the marvel of the Internet age. That’s the reason we had the Arab Spring, because of the Internet. It probably could not have existed, happened without the Internet. That’s why we had the Orange Revolution in the Ukraine, thanks to the Internet, thanks to texting and so forth and social media. So we can change the future. Some of the questions are coming from the younger people sound like they’re too old, sound like they’re questions from older people. I want to remind younger people that the sky is the limit. You’re looking at somebody who’s 65, but I’m actually only about 30, and if I have the energy and guts, and Ed does, Ed is 28, and he’s the best vice presidential candidate around, the best looking as well as best quality, if we’re putting ourselves out there, it’s your job to put yourself out there with us. It’s your responsibility, it’s your duty, and I’m talking right at you and to you. You gotta do your homework tonight and get to work, because you can just, you as a group, can change the future of this country. Thank you. (audience applauds) – [Moderator] Would you like to take one more question, or shall we– – Yeah, sure. – [Moderator] Don’t be shy. – I won’t bite anybody. Here’s one. Here’s a question right here. – [Man In Audience] Thank you for your speech today. With your proposal of this value added tax and to tax high consumption, what would you see would be the effect on consumption? Would that overall decrease consumption, and if so, what would that effect be on the long term of our economy? – So, our country doesn’t need to spend its way into prosperity. I’ve never seen a country spend its way into economic growth. When we grew at the fastest rate, which was in the ’50s, we had the lowest consumption rate, the highest saving and investment rate. When China has been growing in recent decades, they’ve done it with a extremely high saving rate. If you look at the Southeast Asian countries that have taken off, Malaysia and Indonesia to a certain extent, and Singapore, Hong Kong, I’ll include Hong Kong, Vietnam, they’re doing it with very high saving rates. There’s black magic economics floating around. The Republicans have their version. The Democrats have their version. They’re actually very similar forms of black magic economics. The Democrats think that if you spend more, it’s gonna stimulate the economy and the extra taxes are gonna pay for the extra spending and everybody is gonna be better off and it’s gonna like a free lunch. And the Republicans think if you cut taxes, we’re gonna stimulate the economy and we’ll get so much tax revenue to pay for the tax cuts themselves, and again, it’s gonna be great times. And that’s voodoo economics. George Bush, the first, not the second, but the first, George Herbert Walker Bush, referred to this as voodoo economics. And we have voodoo economics coming at us from both sides. And then we have mainline, mainstream, what I’ll call neoclassical economics, not Keynesian, not supply side economics, but we have good economics, good, solid economics that the vast majority of economists agree. And there’s also the data. We don’t have any evidence of these policies of spending more are paying for themselves or that taxing less is paying for itself and growing the economy. It’s not working. What we’ve been doing is not working. We have to get back to fundamentals. We have to understand. And if you look at who’s doing all the consumption, I’m not against older people. My mom is 97. I love her very dearly. I do a lot to support her. But the age consumption profile, average consumption by age used to look like this in 1960. It was hump shaped. Today, it’s a straight upward sloping line. The older people are consuming a whole lot more than the younger people. That’s the result of six decades of take as you go policy, taking from the young, giving it to the old. I call this fiscal child abuse. That’s what we’ve been running for six decades, fiscal child abuse, and it has to end. If you simulate this in standard economic models, and that’s what I’ve been doing since graduate school, simulating these kinds of policies on the computer, the computer tells you exactly what’s gonna happen. It’s that the economy is gonna go downhill. And then you watch the economy go downhill, decade after decade, and you’re running these models, you’re making them more and more precise, and the message is quite clear that we have to change course. And yes, we can grow with less consumption and higher saving and higher investment, and that’s actually the only way we can grow. Any other questions? Well, thank you so much. (audience applauds) Remember, Kotlikoff2016.com And God bless you. Thank you. – Thank you so much. Thank you, everyone, for coming. Bye-bye.