McMahon Has A Plan, But UConn Economist Would Like More Details
(Updated 11:30 a.m. Friday) U.S. Senate candidate Linda McMahon’s jobs plan calls for a balanced budget amendment but the director of the Connecticut Center for Economic Analysis says that the details he’s seen of the plan seems to be a recipe to balloon the federal deficit at a “phenomenal rate.”
Although McMahon has said that economists at John Dunham and Associates say the numbers in her plan check out, Fred Carstensen, director of UConn’s economic analysis center, said the plan could spell trouble for the deficit.
Carstensen said McMahon’s plan contains some good ideas like proposals aimed at encouraging job training. One provision in McMahon’s plan encourages private-public partnerships to match employers with workers looking for immediate jobs training.
But Carstensen said the positive aspects of the plan were out of sync with each other and her proposal to drastically cut taxes.
McMahon, the Republican nominee for the Senate seat being vacated by Sen. Joseph Lieberman, calls for lowering middle class taxes and keeping the capital gains and dividend tax rate at 15 percent. Her plan also calls for reducing the federal corporate income tax rate from 35 percent to 25 percent.
Carstensen argued that cutting taxes, in and of itself, does not encourage economic growth, which is what he said Connecticut needs.
“You’re talking about just savaging federal revenue and I don’t know how the hell she would pay for it,” Carstensen said. “If tax cuts are your first priority than clearly there will be no money for your other proposals unless you plan massive deficit spending.”
On the contrary, McMahon’s plan calls for closing the federal deficit by reducing spending by one percent each year. As she was touring a Berlin business Thursday McMahon said those cuts would not be across the board cutbacks, rather priority-based, targeted cuts that amount to about $38 billion a year. But McMahon has said during the course of the campaign that she would not cut defense spending or Medicare.
McMahon said she plans to find and eliminate duplicative programs, as they’re laid out by the Government Accountability Office, and end loopholes and subsidies to some businesses.
“We can really find $38 billion in overlap,” she said. “... There are places to find this $38 billion, I think, without really impacting our services.”
Carstensen said that might be tough to do. There is likely fat to trim in the federal government, but it’s difficult to do without impacting someone, he said.
“There’s probably some reasonable ways you can get more efficiency out of government but that means there’s going to be less money in someone’s pocket,” he said.
Many of the programs frequently identified as overlapping may not be as duplicative as people think, Carstensen said.
“The may appear similar but they may serve different populations,” he said.
At the end of the day it’s tough to reduce spending without the absence of that money having a ripple effect on the economy, Carstensen said. For instance, if you reduce spending on food stamps it would likely create all sorts of health problems for the families that currently receive them, he said.
Carstensen said he would like to see McMahon clarify parts of her plan with more specifics like the models her economists used to asses the plan’s budgetary impact.
Todd Abrajano, McMahon’s spokesman, questioned how closely Carstensen had looked at the plan, given that he came to such a drastically different conclusion than the campaign’s economists. He said the plan will incentivize investment in the American economy while putting more money in the pockets of middle class families.
“Without any sort of detailed analysis I find it difficult to believe his conclusions are correct,” Abrajano said.
On Thursday McMahon defended the numbers in her plan as sound and ready to be implemented.
“I’ve had an economist model my plan to make sure the numbers work and they do. So I’m really going to try very hard to pass that plan,” she said.
The McMahon campaign has pointed to her jobs plan frequently as it has hammered her Democratic rival, U.S. Rep. Chris Murphy, for characterizing his own plan to create jobs as a “work in progress.”
Murphy says his plan is adaptable in that he is able to include ideas he hears from constituents.
“What I said when I unveiled my jobs plan was I’m going to listen to people. And if people come up with better ideas, I’m going to put them in my jobs plan,” Murphy said earlier this month.
“I’m going to never stop listening to people. You know what? That’s okay. There’s not enough listening that happens in government today,” he added.
However McMahon said Murphy’s had plenty of time to formulate his plan. Her campaign has been emailing reporters almost daily with updates on how many days it’s been since Murphy was elected to office and not formulated a jobs plan. On Wednesday they said it was 4,977 days.
“To say he’s got a work in progress, I think that’s what the people of Connecticut are tired of hearing. They want to see what a plan of action is and that’s what I’ve put out,” McMahon said.
Though she has continued to tour small businesses around the state, hearing from business owners about what impacts them, McMahon said what she hears does not influence her plan, which is completed.
“I have already spent almost 30 years in business myself, I’ve been touring the state talking to many small business, not just this time but before. So basically my jobs plan is a result of my experience and touring the state,” she said.
McMahon unsuccessfully ran for the U.S. Senate against Richard Blumenthal in 2010.
Editor’s note: Days after this article appeared John Dunham and Associates responded to the observations made by Mr. Carstensen in this letter.