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Guest Essay

By Jay ClaytonGary D. CohnBetsey Stevenson and Justin Wolfers

Mr. Clayton was chairman of the Securities and Exchange Commission and Mr. Cohn was a director of the National Economic Council in the Trump administration. Ms. Stevenson and Mr. Wolfers are economics professors at the University of Michigan.

Much of the 2024 election has been extraordinary. One thing has not, and that’s the quality of the debate about America’s economic future. Beyond the vibes — both the angry ones and the joyful ones — there’s been little to help Americans decide who better can steward the $29 trillion economy.

Here at Times Opinion, we thought we would try to fill the void. What follows is a back-and-forth between two top experts on the center left and two on the center right, discussing topics including housing, taxes, debt and, at one point, washing machines. Representing the left are the University of Michigan economics professors Betsey Stevenson and Justin Wolfers. And on the right, Jay Clayton, the head of the Securities and Exchange Commission under Donald Trump, and Gary Cohn, former president of Goldman Sachs and head of the National Economic Council in the Trump White House. This conversation has been edited.

Times Opinion: If you were advising the next president, what should be his or her top priorities?

Betsey Stevenson and Justin Wolfers, center-left economists: People are angry about the economy. Whether they blame educated elites, billionaires or immigrants, their anger comes from the same place: The system feels rigged.

Football without refs is just a rumble, and so is an economy without rules. Capitalism works partly because it turbocharges greed, but it also fails because it turbocharges greed. The profit motive gave us the iPhone, artificial intelligence and electric vehicles, but it’s also given us online hucksters, corporations that prefer to merge rather than compete and online subscriptions that take a moment to click and hours to cancel. Smart regulation creates more of the former and less of the latter.

Our tax code is a Rube Goldberg machine built by an army of lobbyists. The next president should eliminate loopholes that stack the deck in favor of the have-plenty. (Hint: Start with the “carried interest” loophole.) Fund an Internal Revenue Service that ensures everyone plays by the rules. Congress largely ignores the nearly $2 trillion given away every year through breaks, loopholes and inefficiencies in the tax code. That’s where the unfairness and bloat live. Get rid of those and you can make progress on the deficit.

Public anger reflects the challenges that people face paying for essentials such as food, gas, health care, housing and child care. Politicians talk a lot about food and gas. The others are bigger challenges, and the federal government can fix them. Health care prices make no sense. NIMBY politics make it hard to build new houses. Kids don’t vote, so it’s no surprise that child care is underfunded, even though research shows that investment pays off in spades.

Our plea to the next president is to tune in to the public’s anger. Understand and empathize, and you’ll come to see it not as a political constraint, but as the fuel that can power a once-in-a-generation presidency.

Jay Clayton and Gary Cohn, from the center-right: Betsey and Justin, we’re with you on the anger, but not on the prescriptions.

The great middle of the country is, and should be, angry about the economy. Inflation has eroded their purchasing power. Housing, higher education and health care are at or near their lows in affordability. To the next president: You won because Americans believe you know how to improve their lives. This belief is powerful. It should ground your policies and can drive progress.

Start Day 1 with America’s strengths: energy, technology, capital and talent. There is no faster way to deliver benefits across the board than lower energy prices. The forced scarcity of the Green New Deal, one of the great policy blunders in modern history, should be replaced with an “all of the above” approach to domestic energy supply. The benefits will be felt at the pump, in heating bills, at the grocery checkout and in every small business.

Technological advancement has similar broad effects — driving down costs and increasing choices for consumers. Think about the shelves of Walmart and Costco. Consumers have lower prices and more choice than we dreamed possible. Smartphones have shifted power to consumers. Continuing to win the global technology race will benefit every American in ways we know and ones we cannot imagine. Falling behind — as Europe has — will disproportionately harm our middle class.

Our wins in energy production and technology can be traced to our commitment to capital investment and human talent. Do not adopt tax policies that will reduce investment. Increasing taxation on capital gains or pursuing taxation on unrealized gains — a form of wealth tax — will stifle it. You should change our visa policy for those who earn advanced degrees in science and engineering from American universities. Sending these people packing after we spend millions educating them is absurd, particularly when millions without visas have been welcomed. Do not let this powerful change get bogged down in the disaster of our immigration policy.

On the runaway costs of housing, higher education and health care, level with the American people. Poor government — in both policy and practice — is the problem. We subsidize housing demand at the federal level but restrict supply at the local level through zoning, permitting and a host of other restrictions. We do the same in higher education, particularly at our elite universities. In health care, like higher education, there is no transparency and no market discipline. The American people are smart. They understand the high costs of poor policy choices. Show you’re going to fight for them in these areas critical to opportunity.

Times Opinion: Gary, Jay, you said the housing crisis stemmed from poor policy. Tell us about your preferred solution.

Clayton and Cohn: It starts with recognizing that housing prices have been driven out of reach by conflicting government policies. Home prices increased by over 35 percent from January 2021 through July 2024. We stimulate housing demand at the federal level​ through many channels — our ​tax code (mortgage interest deductions),​ financial market intervention (through Fannie Mae and Freddie Mac), and countless programs designed to help buyers (including from the Departments of Housing and Urban Development and Veterans Affairs). At the same time, we constrain supply at the federal, state and local level through restrictions that go beyond safety​ and density considerat​ions, often by empowering interest groups with a wide range of non-housing or even anti-housing objectives.​

Not only do these factors​ drive up the prices of existing homes, they create opportunities for meddling​. The time and cost to build new homes vary greatly among areas, even after​ taking into account the cost of labor and services. One reason is that governments and private interests use high demand for housing to push other agendas, such as environmental groups that use expansive definitions of wetlands to block development. These actions, be they selfish or laudable, keep prices elevated​, and the cycle repeats.

As an immediate step, we propose any new federal subsidies be available only in municipalities that have agreed to increase the supply of single- and multifamily homes by more than 10 percent over 10 years. Municipalities that meet those goals would receive a ​meaningful federal grant. As a complement, federal regulators would speed the resolution of environmental and other regulatory hurdles. Next, the heads of key federal agencies would present recommendations for addressing restrictions on housing supply. Our suggestion on energy generation and distribution also would increase the affordability of housing, through lower costs of materials and construction.

Times Opinion: Betsey, Justin: I’m guessing there’s some room for agreement here.

Stevenson and Wolfers: We all appear to agree the housing market has two core problems. Unfortunately they are pretty broad: housing demand and housing supply.

The supply problem can be broken down into two parts: a temporary problem related to the pandemic and a longer-term problem related to regulation. Some short-term affordability issues will dissipate as the Federal Reserve brings down interest rates, and it would be foolish to design too much policy around temporary problems. (That said, we would encourage policymakers to help people understand how they can effectively sell their low-interest-rate mortgage along with their........

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