Photo by Joe Sterbenc / Becker Friedman Institute
By Andrew Hyman, Class of 2019
On April 2nd, Senator Mark Warner mused on the current economic boom, the (lack of) fiscal responsibility in Washington, and the biggest threats to the United States from economic and national security perspectives. The wide-ranging conversation hosted by the Becker Friedman Institute (BFI) at Ida Noyes Hall touched on some of the most critical issues facing our country today, and was moderated by Michael Greenstone, the Director of the BFI.
First up was the financial crisis of 2008, which was in full force when Sen. Warner was first elected. He had been in Tech VC prior to politics, having invested in Nextel[i], and was put on the Senate Banking committee where he had a first-hand view of the response: “History will recognize the response under [Bush and Obama] as, by no means perfect, but as doing the right thing,” while also crediting Ben Bernanke and Timothy Geithner, the Fed chief and Treasury Secretary respectively, for their efforts during the panic.
The Senator then moved to fiscal responsibility, where he gave himself a “D-“ so far and warned “we are living on borrowed time” because of the mounting debt pile. “If interest rates go up 100 basis points, that adds $106B in debt service before you get to spend on anything else,” he cautioned, also noting the conflict between the sustainability of our current spending path and the current allocation of resources. When he was born, there were fifteen workers to every Social Security beneficiary, now there are only three. But we currently only spend six cents of every dollar on education, infrastructure, and basic research; the tension between entitlement spending and discretionary spending is clear, yet Congress has chosen to punt on the decision yet again with their recent spending bill.
Senator Warner also discussed the gig economy. The current safety net was set up for W-2 workers and fails to address the growing number of 1099 contractors that work for Uber, Lyft, and other on-demand services. “This section of the workforce doesn’t have a social safety net… We are one of the few countries where your benefits are tied to your workplace status as a long-term W-2 employee.” He called for a portable benefits system - potentially facilitated by FinTech or other private sector actors - as a way to reduce the volatility of income and insecurity felt by a large portion of the population. He also noted that this trend, and the disaffection that comes with it, may have caused so many people to support candidates like President Trump and Senator Sanders in the 2016 campaign.
The Senator spoke in passing on the Russia investigation (election meddling is concerning but didn’t affect vote totals), a carbon tax (potentially smart solution), and a Universal Basic Income (potentially destructive). Overall, he provided the audience with a thought-provoking discussion that was long on humility and short on sound-bites. For more information and details on future events, check out the Becker Friedman Institute online at www.bfi.uchicago.edu, and for commentary on this event, head to the Opinion section online at www.chibus.com.