McCaskill, Akin and Dine on jobs and the economy

Wednesday, October 31, 2012 | 6:37 p.m. CDT

Jobs and the Economy

Jonathan Dine

Dine thinks a free and competitive market is the best solution to economic issues. Dine wants to eliminate the Federal Reserve, which he blames for inflationary policies decreasing Americans’ purchasing power, and he wants to return to a system where the value of money is tied to a commodity such as gold. 

Todd Akin

Akin believes bureaucratic offices of the federal government have created a regulatory environment that punishes success. In particular, he said the Dodd-Frank Wall Street Reform and Consumer Protection Act restricts community banks from making loans to small businesses. 

Akin supports legislation that would require congressional approval of all major, new regulations issued by federal government agencies. He wants to provide tax cuts for small businesses, increase gas and oil exploration and production and halt policies of the Federal Reserve. Akin thinks keeping interest rates low, which the Federal Reserve has done, hurts pension funds and retirees relying on interest income from retirement accounts.

Claire McCaskill

McCaskill says she also is pro-business. She supports government involvement in business to contract services and curb increasing health and fuels costs facing business owners. She wants to lower the corporate tax rate, strengthen federal job training programs, ease regulations on small businesses and allow local governments to borrow from the federal government for infrastructure projects.

What experts said

Dean Crader, research analyst with the MU Economic and Policy Analysis Research Center, said that lowering corporate tax rates would help businesses but that corporate tax collections are dwarfed by individual federal income taxes.

As for reversing Federal Reserve policies meant to curb inflation and stimulate growth, Crader said he thinks Chairman Ben Bernanke is more apt and able to understand the economy than Todd Akin. 

“Reversing the Federal Reserve’s policies is not a good idea,” Crader said. “The Federal Reserve has lowered interest rates to promote lending, make credit markets liquid and keep activity in the business center. Raising interest rates will slow lending.”

As for Dine's proposal to return to something like the gold standard, Crader said doing so isn't really  feasible.

“In the current economic climate, much of the power in debt instruments is overseas, and our debt instruments tend to give us leverage in international economic transactions,” he said. “Tying the value of money to a commodity would be very unstable in the international economy.”

Deanna Sharpe, MU professor of personal financial planning, said there is merit to Akin’s argument that low interest rates could hurt retirees depending on interest from retirement savings for income but those retirees are typically of middle income and above.

“Lower-wage workers are living day to day and are not in a position to save large amounts of money in retirement accounts,” she said. “His concern about pension funds is fair, but the fulfillment of the promises returns made through investment depends on how well individual managers of those accounts conduct benefit planning.”

MU economics professor Peter Mueser said very few economists think eliminating the Federal Reserve and moving to a commodity is a good idea, as it would remove our ability to deal with a variety of economic crises and make things worse over the long run. 

“Although lower interest rates are not good for retirees who depend on interest from savings for their income, raising interest rates would be problematic for the economy, and those retirees could also be hurt if the economy suffered,” Mueser said.

As for Dodd-Frank, Mueser said the act is complex legislation that tries to impose some regulation on the financial services industry.

“Those who dislike it say it’s too complicated,” he said. “On the other hand, those who support it say you need regulations that are subtle and complex in order to limit problems but allow growth. Whether it’s effective or not is a partisan issue, and it’s even an area where economists split.”

Mueser said most economists think lowering the corporate tax rate is a good idea but that various tax loopholes also must be closed.

“A large amount of corporations don’t end up paying that tax because of exemptions,” he said. “... The United States is among the highest corporate tax rates among developed countries. It won’t make all the difference in the world, but it is a policy most economists agree on.”

Supervising editor is Scott Swafford.

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