Economic Strategists, Policymakers Talk U.S. Fiscal Future In Aspen

The Aspen Economic Strategy Group presented a discussion titled “Strengthening America’s Economic Dynamism” at the Aspen Institute on Wednesday. There, the discussion emphasized the transformative changes in the American economy influenced by global tensions, rapid technological advancements, and populist resistance to traditional economic policies.

The forum was moderated by Aspen Economic Strategy Group Director Melissa S. Kearney. It featured insights from Lawrence H. Summers, president emeritus and Charles W. Eliot University professor at Harvard University, as well as Robert B. Zoellick, chair of global investment company Temasek Americas.

Together, they explored the implications of these shifts and strategic responses to emerging challenges.

Kearney initiated the discussion by noting the significant departure from free-market principles toward protectionist trade policies and government-directed industrial strategies. This pivot raises critical questions about America’s future economic dynamism, innovation, and prosperity.

Summers emphasized America’s resilience and capacity for growth. 

“This is indicative of a huge strength — that the US being incredibly open, with a resilient society with an extraordinary capacity for self-denying prophecy,” he said, eliciting laughter from the audience.

He highlighted the impressive global GDP share and technological advancements of American companies. 

“Our companies in the US are second to none,” he said.

He critiqued Trump’s economic agenda, describing it as a path to substantial inflation due to its focus on weakening the dollar, undermining Federal Reserve independence, imposing massive tariffs, and extending tax cuts without fiscal balance. 

Summers humorously noted the poor export strategy of derogatory rhetoric towards other nations.

“If you want to export to a lot of companies overseas, but you keep calling them (sh**hole) countries, and being quoted that way, that is not a good export strategy,” he said. 

Zoellick acknowledged the current economic momentum and declining inflation but warned of ongoing external uncertainties, citing global conflicts and security issues. He remarked on the unprecedented energy transition since the Industrial Revolution and the demographic challenges impacting US growth. 

He questioned the future impact of artificial intelligence, asking, “Is AI going to be the general purpose technology, or is it going to be a large sinkhole?” 

Regarding Trump’s policies, Zoellick predicted inflationary pressures and market disruptions from tariffs, deportation over immigration, and attacks on the dollar. He noted that presumptive presidential nominee Kamala Harris’ policies remain largely unknown but flagged potential regulatory concerns from the Securities and Exchange Commission and the Federal Trade Commission. 

He also highlighted the urgent need to address the national deficit and debt.

“Our deficit compared to the GDP is at 7%, and our overall debt is at an all-time high since WWII,” he said.

In discussing national security and trade, Summers underscored the importance of technological advancements driving global integration. He described the current security threat as the most dangerous since the 1990s. 

“Our national defense spending, relative to our GDP, is on track to fall by 20% over the next decade,” he said.

Zoellick stressed the necessity of addressing AI’s risks and opportunities, advocating for collaboration with the private sector and international partners to mitigate threats and leverage benefits.

The forum and speakers underscored the complexities and strategic considerations essential for navigating the evolving economic landscape, highlighting the need for thoughtful policy responses to ensure sustained growth and stability.

By: Westley Crouch I The Aspen Times I July 31, 2024