Section: News

CSAD kicks off

CSAD kicks off

By Eric Geller

“Kenyon College, welcome to nerd prom.”

And so the Center for the Study of American Democracy (CSAD) Director and Assistant Professor of Political Science Thomas Karako welcomed the audience to this week’s CSAD conference on economic inequality last night in Rosse Hall.

President Sean Decatur then took the stage to introduce Former Congressional Budget Office (CBO) Director Douglas Holtz-Eakin, and responded, to significant laughter, that nerd prom was “the only kind of prom that I’ve been invited to.”

The substance of Holtz-Eakin’s talk, however, did not produce similar laughs. Inspiring a lively discussion about the minimum wage, corporate profits and generational mobility, Holtz-Eakin presented graphs showing the evolution of the income distribution in the United States and stressed the importance of choosing the right measurements in assessing historical income trends. For example, when the trend lines were based on after-tax income — which included the value of government benefits that people received –– income inequality looked less substantial.

While he acknowledged the existence of worrisome economic inequality, Holtz-Eakin, who served as an adviser to Senator John McCain’s 2008 presidential campaign, argued the solution to this problem was to close what he described as a skills gap, rather than to expand most government welfare programs. “It is about work,” Holtz-Eakin said of American economic inequality. “It’s about jobs.” He suggested improving job training for laid-off workers and expanding early childhood education, which he called a fundamental determinant of a person’s future success.

“We ought to be entitling our kids,” he said, referring to what he saw as misdirected federal entitlement programs. “We entitle people in old age … I want to entitle them and give them the cash at birth.”

One of Holtz-Eakin’s most contentious arguments during the talk was that raising the federal minimum wage from $7.25 to $10.10 per hour, as President Barack Obama has proposed, would do serious damage to the economy. Holtz-Eakin cited a Feb. 18 report by the CBO finding such a raise would cost the U.S. economy 500,000 jobs. He did not mention that the report also found a raise to $10.10 would simultaneously lift 900,000 Americans out of poverty.

Associate Professor of Religious Studies Ennis Edmonds pointed out that fact in the question-and-answer portion of the talk, but Holtz-Eakin did not respond to it. Instead, he argued that the design of the minimum wage was unsuited to address poverty in the U.S. As an example, he said raising the wage for fast-food workers would lead to an increase in food prices at fast-food restaurants, which are disproportionately frequented by low-income Americans. However, Holtz-Eakin praised the Earned Income Tax Credit (EITC), calling it “the best anti-poverty program we have.” The EITC offers tax credits for working Americans based on their income and the number of children they have.

Another theme in Holtz-Eakin’s talk was the political debate surrounding the wealthiest Americans. “All that’s happened in the United States is we have more rich people,” he said. “Which raises the question, how many rich people should we have?” He then approached the question another way — does the simple fact that we have more rich people do active harm to society?

While he acknowledged the possibility that rich Americans would attempt to unduly influence the political process, he claimed this was not happening at the moment. The rich, he said, are not uniform in their values. “I’m less convinced than most that money automatically translates into the results [big donors] want,” he said.

Holtz-Eakin emphasized the need for “core reforms that change the structure of the government and allow us to build an equity between the present and the future,” saying inequality between generations was a more pressing problem than inequality between income groups at any given time.

Referring to Medicare, Medicaid and other programs he described as propelling the federal debt, Holtz-Eakin said, “We are letting these large programs of the past crush our economic future.”

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