Former Assistant Treasury Secretary Calls Trump's Economic Policies 'Wild'

Donald Trump's economic policies are not what the U.S. needs, according to one prominent economist in Philadelphia for the Democratic National Convention. Here's why.
By Emily Stewart ,

PHILADELPHIA (TheStreet) -- Who is better on the economy, Democrats or Republicans? 

"Just look at the performance under President Obama and President Clinton versus both President Bushes," said Alan Krueger, professor of economics and public affairs at Princeton University who served as chairman of the Council of Economic Advisers from 2011 to 2013. "Look at the wild policy pronouncements that are coming from the Republican side of the aisle, in particular from Donald Trump."

Krueger is here in Philadelphia this week for the Democratic National Convention. The former Obama adviser also served as assistant secretary for economic policy and chief economist of the Department of Treasury from 2009 to 2010 and as chief economist at the Department of Labor from 1994 to 1995.

While this election cycle may seem an anomaly to many -- especially with the rise of bombastic businessman Donald Trump -- Krueger says the economic questions at hand aren't anything new.

"They've been the same issues for the last 20 years -- how do we revitalize the middle class, how do we help those who have been left behind by technology, by trade, globalization, and also by changes in corporate practices, which have been outsourcing and contracting out the work," he said.

In the first two days of the DNC in Philadelphia, much of the party's rhetoric has been focused on issues outside of the economy. Bernie Sanders made reference to the economy and the recession -- two major planks of his presidential campaign platform -- in his speech on Monday evening, but other headliners, including Michelle Obama and President Bill Clinton, largely focused their attention elsewhere.

Meanwhile, Trump's flagship issue this election cycle has been immigration, beginning with his running announcement last June. The GOP presidential nominee insists he will build a wall and deport 11 million immigrants -- something that could do significant damage to the U.S. economy.

How do Democrats convince those buying into Trump's anti-immigrant argument that immigration reform is necessary and immigration is a good thing? Perhaps a Broadway musical.

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"If you go back to our history, it's clear that immigration has helped to build the United States. Just to back to the Revolutionary War, and you had Alexander Hamilton -- just watch the show Hamilton -- to look at the role of immigrants for the founding of our nation," said Krueger.

For those looking for a wonkier argument, there is the Congressional Budget Office report on the Senate immigration reform bill. The nonpartisan federal agency estimates it would boost economic output by 3.3% and decrease federal budget deficits by $197 billion over a 10-year period.

"What we've seen is that immigration contributes mightily to the economy," Krueger said.

He also thinks that Democrats are on the right side of the issues when it comes to financial regulation. 

"As a result of the efforts that were taken in 2008 and 2009, the financial system is much stronger, although we have to be vigilant," said Alan Krueger, professor of economics and public affairs at Princeton University who served as chairman of the Council of Economic Advisers from 2011 to 2013.

"I think it's important that we are vigilant in enforcing capital standards, liquidity cushions, doing the stress tests requiring significant financial institutions to have living wills so we can understand how we would resolve them in the event of a crisis, and that we have the Financial Stability Oversight Committee looking for new risks, because I do worry about the growth of the shadow banking sector, and I think it's important that we prevent the types of problems that led to the crisis in '08," he said.

Democratic nominee Hillary Clinton often cites the shadow banking system -- financial intermediaries like hedge funds and unlisted derivatives -- as an area she would focus on in the White House.

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