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Former U.S. Under Secretary of Commerce Robert Shapiro on the steps to boosting economic growth.
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President Obama outlining his second term agenda last night.
Proposing new taxes and spending cuts to decrease the debt.
And help our ailing economy.
-- bullies policies have any real impact we got someone who the White House tends to affect economic advice.
Former undersecretary of commerce and IMF advisor Robert Shapiro.
Okay what did you think of the speech last night's.
Robert do you feel that set the -- the president is on is gonna get his back.
On the economic front where we need to be.
-- well I.
Think it's a step in the right direction -- I was particularly.
Glad that the president made a point about the sequester and short term deficit reduction the fact is.
Yes we need to reform entitlements we need to build out the tax base both over the long term.
But in the short term we saw what happened in the fourth quarter we had pretty strong could.
Gains in consumer spending and business investment and residential construction.
But it was overwhelmed -- mainly by a sharp drop in government spending this is the same -- any number of nations in Europe have learned when they tried to impose.
Austerity while the economy was still not fully recovered and the result was they went back into -- recession.
Well I so that's that's -- for what was good about that that's a great point because.
You have a lot of people on the Republican side of the -- -- making a lot of and not not -- so but noise about cutting government spending.
And then -- okay be careful what you wish for you may get it and we got it and we were recessed about the tenth of a percent there.
Which from your perspective is that the worst thing in the world -- -- we got a little taste of what it means to cut government spending.
Well the fact is we don't have to push ourself into recession in order to address the -- issue.
We can do that the debt issue is driven primarily by.
The reduction in the tax base and the rate of increase mainly in health care spending so that's what we ought to address.
But we can address that with reforms that phase in as the economy gets stronger.
We we don't need to weaken the economy which just makes deficits larger.
So how do create jobs Robert what what policies actually work -- a lot of talk but.
Here -- you view.
Your advice is sought by the White House what would you tell them right now.
Well the truth.
Is I think we have a long term structural problem with job creation that if we look good job creation both in the bush expansion.
And in this expansion.
It's much much less that we saw under either Reagan or Clinton.
Even well we adjust for differences in overall growth.
And that tells you that what we probably need are policies.
That are targeted directly -- job creation.
Not simply policies that are targeted -- growth.
For example we could.
Did the main thing we need to do is we need to reduce the cost to business of creating new jobs.
We could do that with a cut in the employers' side of the payroll tax.
We could do that by strengthening.
The measures in Obama care.
Which will slow health care inflation because.
Health care costs are the largest.
At the fastest rising calls for business as well as for government.
Well a lot of them to do say if you wanna help me create jobs don't make it's so expensive for me to cover these workers as far as the health care is concerned.
So help -- square with that.
Well the fact is you know.
The cost to employers of health -- been going up six to 7% a year for thirty years yeah this is not a problem of Obama care.
The problem is that we haven't put in place any policies that can slow that.
We need -- Insurance companies have done a little with respect to -- -- but we could do more there -- some easy things we could do we could.
Expand prevention programs which which.
Save health care costs we could accelerate.
The introduction.
Of uniformed electronic medical records which saves costs.
We could promulgate and perhaps.
Give incentives for.
Clinics and hospitals to follow best practices that have been shown.
To produce the same results -- less cost.
There are a number of things we could do we can also.
Take the lesson from.
The change in Medicare.
Which is to move reimbursements.
For.
Services provided to results.
And apply that across the health care system.
Okay ever listen thank you very much we appreciate your coming -- to talk about that but reducing the cost of creator of jobs what what a concept thank you Robert like to see you.
Yeah -- was realistic sense Robert Shapiro it sure does.
