Call it “partisan coloring.”
The view of the U.S. economy is split right down party lines, and that could mean bad news for future policies.
That’s according to Federal Reserve Chairman Ben Bernanke, who told the New York Times he was struck by how Republicans right now see the economy in great shape, while Democrats see the opposite.
Bernanke, in an interview conducted last week and published Monday, said the election result “completely reversed” what each party’s members thought of the economy. His view was backed up by a recent University of Michigan consumer sentiment survey, which showed the two parties split over their expectations for the future.
‘Republicans who thought that we were in a dystopia now think things look great, and Democrats, the opposite. And it shows that it isn’t all based on an objective assessment of the economy.’
When the economy becomes colored by politics, as well as the underlying stats, it can create policies that don’t work, he said.
Ahead of anticipated details on Trump’s long-awaited tax-reform plans, expected Wednesday, Bernanke weighed in on some of Trump’s ideas, such as corporate tax cuts. The president has reportedly told his administration that he wants to slash that rate to 15%.
Bernanke said he doesn’t think “major reform is very likely,” though there might be lower tax rates, along with the closure of some tax loopholes. “I don’t think it’s going create a productivity miracle or anything like that, but it would be more efficient. It would probably improve investment a little bit,” he said.
And Trump’s border-tax ambition, which favors U.S. exports over imports, probably won’t happen either, even if it’s a “really interesting idea,” Bernanke said. The big stumbling block is that the dollar must rise 25% for it work.
The former Fed chief even addressed the changing workforce, one that includes robots. Bernanke is among those who believe, yes, artificial intelligence is a threat to jobs, as time is showing that human imagination, creativity and even social interaction are replaceable.
“We are coming closer to the point where not only cashiers, but surgeons might be at least partially replaced by A.I.,” he said.
Read the full interview in the New York Times here.