The American Enterprise Institute’s James Pethokoukis talks with Opportunist’s Managing Editor Leslie Stone about the presidential primaries, what he considers the most significant issues facing the nation and why he enjoys injecting ideas into the public debate.
James Pethokoukis is a columnist, scholar and DeWitt Wallace Fellow at the American Enterprise Institute (AEI), a private, nonpartisan, not-for-profit organization dedicated to research and education on issues of government, politics, economics and social welfare. Headquartered in Washington, D.C., AEI’s community of scholars and supporters is committed to expanding liberty, increasing individual opportunity and strengthening free enterprise. “AEI is a think tank covering a broad spectrum of public policy issues, foreign policy and the economy,” says Pethokoukis. “I’m constantly out there trying to find and promote the best economic policy ideas and analyze, evangelize and write about them so that, hopefully, policymakers—whether they are actually members of Congress or staffers—notice and adopt them. I view what I do as promoting good ideas and knocking down bad ideas. I’m less interested in politics and what’s happening in the political races than I am in public policy.”
Pethokoukis is also editor of AEI’s blog, AEIdeas. “All the scholars are welcome to contribute and frequently do,” he adds. He also writes for a variety of publications, such as The New York Times, Financial Times and National Review and is an official CNBC contributor. He has appeared numerous times on MSNBC, the Fox News Channel, the Fox Business Network, “The McLaughlin Group,” CNN, and the “Nightly Business Report” on PBS. In 2002, he was a “Jeopardy!” champion.
Opportunist: James, how did you decide on a journalism career?
James Pethokoukis: It wasn’t my intention to become a journalist. I’ve always been interested in foreign policy. When I was in college at Northwestern University, my plan was to maybe become a criminologist, Sovietologist or C.I.A. analyst. I was a double major in Russian politics and U.S. history in the late 1980s when the Cold War was still a thing. But I’m glad I didn’t pursue that because the Soviet Union collapsed. I would’ve been a former expert on the former Soviet Union. [Laughs]
I began writing a column for an alternative newspaper on campus, which I enjoyed because it gave me an opportunity to write about a variety of topics. That’s when I really got the idea to go into journalism. Also, Northwestern had a fantastic journalism school—maybe the best in the country—and I had lots of friends going into journalism. So I wound up getting my master’s degree from Northwestern’s Medill School of Journalism and I was on my way. My first paying job was with Investor’s Business Daily in Los Angeles and from there I came to Washington, D.C., where I was briefly at USA TODAY and spent 12 years at U.S. News & World Report, followed by Thompson Reuters, and then came here to AEI.
Opportunist: What accomplishments are you most proud of?
James Pethokoukis: What I do every day is sort of what I’ve always wanted to do: talk about good ideas and inject those ideas into the public debate. If I can continue to do that and particularly get people and policymakers thinking about the big challenges facing America, such as how to shepherd the transition to a more digital economy, then that will be a fantastic accomplishment. I like to think it’s all a work in progress, though, so maybe if you ask me that in 25 years I’ll be able to say I hopefully had a tiny role in creating a flourishing, prospering America.
Opportunist: What do you consider the most significant issues facing the nation during this election year, and what would you like to hear from each of the candidates?
James Pethokoukis: To me, the No.1 economic issue is how do we get this economy growing faster and make sure that once it’s growing faster the fruits of economic growth are distributed in a way that we as a society see as fair. The U.S. economy has grown at 3 percent since World War II, but since the Great Recession there has been a permanent downshift to 2 percent economic growth. There are lots of reasons for this. One is that productivity, growth and innovation, by official measurements, are very weak. That has been almost flat since the end of the recession. It was declining since the late 1970s, jumped up in the 1990s to mid-2000s and then shifted down again. I’d like to know how each of the candidates plan to increase the rate of economic growth. The GOP talks about taxes. The Democrats talk about infrastructure. But what is their broader portfolio of ideas to boost economic growth and ensure that growth is broadly shared? The country must have that growth, and politicians need to talk beyond the narrow issues they seem most comfortable talking about.
Opportunist: Do you believe the American Dream is still attainable?
James Pethokoukis: Absolutely. I do. If you want to do great things there is no better place to do them than here in the United States. That was true 25 years ago and it’s still true, but only if we make sure government works well, schools educate our children in ways appropriate for the new economy and we make sure we have the best colleges in the world—not only in terms of education but innovation. We have to make sure people across the income spectrum have the maximum opportunity to reach their human potential whether they start at a four-year college or elsewhere. We aren’t there yet, but you can still do it better here than in other places.
Opportunist: Were you surprised by the outcome of the recent presidential primaries?
James Pethokoukis: Going into this election season, I thought the candidates who talked authentically about problems affecting the middle class and seemed to have solutions would be frontrunners. An exit poll back in 2012 asked voters if they thought it was important for the president to care about and understand their problems and, if so, who would they vote for. People said they wanted a president who showed empathy and understanding. Mitt Romney lost by about 80 points, which was a pretty big margin. Candidates and Washington policymakers should look at economic challenges broadly facing middle class America and think about the kinds of policies that would meet those challenges. Donald Trump is intuitively and superficially appealing to working class voters and he has made an emotional connection with them. He’s done it most successfully. Bernie Sanders has too. Any candidate who is making a connection with people who are struggling or having a lot of anxiety about the future seems to be having a successful campaign.
Opportunist: Speaking of Mitt Romney, the former Republican presidential nominee has said that Donald Trump’s domestic policy will lead to recession. What are your thoughts on that?
James Pethokoukis: A major trade conflict would add a huge level of uncertainty in the global economy. If Trump follows through, it would involve huge conflicts with Mexico, Canada, China and maybe a few other countries. I don’t know where that ends. That’s an experiment I would not like to try. His tax cut plan would sharply reduce government revenue, with a loss of about $11 trillion over a decade. With suddenly increasing federal budget deficits over a $1 trillion a year, people would start to question U.S. bonds and U.S. currency. I’m not sure to what degree these policies are negotiation markers.
Opportunist: Former presidential candidate Carly Fiorina endorsed Sen. Ted Cruz last week, calling him a ‘leader’ and a ‘reformer.’ Do you believe her endorsement will help him win the GOP nomination, especially since he’s only trailing Trump by about 90 delegates right now.
James Pethokoukis: I think there are very few endorsements that are going to make any difference. Rubio got a big endorsement from South Carolina Gov. Nikki Haley but that didn’t seem to help him very much there. When you’re competing in a state, you certainly don’t want the governor of that state coming out against you but I’m not sure their words will sway voters. What really matters is that people sort of trust you and identify with you and think you care about their lives and want to make their lives better. That is the key here rather than an endorsement from Carly Fiorina or anybody else. Sen. Cruz seems to have some momentum. Although Rubio won the Minnesota caucus and the Puerto Rico primary, Sen. Cruz has won more states. [Editor’s note: since this interview, Sen. Marco Rubio won the Washington, D.C., Republican caucus on Sat., March 13]. Cruz won his home state of Texas—by a lot—and that’s a pretty good state to win. I think the race is narrowing down and will continue to narrow further after the next primaries.
Opportunist: Sen. Bernie Sanders says he will invest $1 trillion to rebuild the country’s crumbling infrastructure, put 13 million Americans to work in good jobs and invest $5.5 billion to employ a million young Americans and provide job training to hundreds of thousands of others. Is this possible and, if so, how do you believe it would play out?
James Pethokoukis: There are a lot of economists who have raised huge questions about whether his idea will create economic growth and jobs. His advisors say it will. It seems that not much thought was given as to how it will affect incentives. What I would like to see is jobs created through a more dynamic private sector economy—jobs with value that consumers and producers think are meaningful—rather than assuming the catalyst needs to be more government spending. You have to be discerning about how you do it and how to redistribute the fruits of economic growth. I see very little in his plan about innovation.
Opportunist: Hillary Clinton’s economic plan focuses primarily on the middle class and small business, both of which she says will receive more tax cuts. Some of her other plans include raising minimum wage to $15 per hour, encouraging businesses to share profits with employees and strengthening the Affordable Care Act. She also proposes raising short-term capital gains taxes for those earning $400,000 or more annually. How will her ideas potentially help or hurt the economy overall?
James Pethokoukis: As I said earlier, the middle class struggle and which public policies can alleviate those struggles are exactly where the candidates should be focusing right now. The question is whether Hillary Clinton’s policies would do that. Raising minimum wage is a poorly targeted plan because it will likely have negative effects on employment. I like the idea of expanded wage subsidies and earned income tax credits to help low-income workers. Raising taxes sharply on investments through capital gains won’t get us a more dynamic economy. It’s somewhat like Bernie Sanders’ plan. I don’t think she’s paying a lot of attention to how the higher taxes will hurt incentives. I wouldn’t necessarily be in favor of deep tax cuts given the U.S. debt situation, but I would think of reducing some tax breaks for the wealthy. We need to think very hard about every policy and how it will affect the innovation and productivity capacity of the U.S. economy and how that will translate into rising incomes for middle class and lower-income Americans.
Opportunist: We’ve heard that only about 300 of every 100,000 people vying for a chance to be on ‘Jeopardy!’ actually make it. How did you get to be a contestant on the show and can you share some highlights from the experience?
James Pethokoukis: My wife is the big ‘Jeopardy!’ fan. She submitted my name online and they picked me to come try out in a huge ballroom filled with people. We lived in Chicago at the time. They gave us a practice test on a giant video screen. I think out of maybe 300 or 400 people who tried out only 20 people passed the test. It was a very small percentage. Then they had us do a sample show so they could see how we would do on camera. Some people got stage fright, but I did not. Soon after that I was invited out to Los Angeles to film the show. I had very little time to prepare when I went out to California but I was pretty happy with the outcome.
Opportunist: Would you do ‘Jeopardy!’ again?
James Pethokoukis: Yes. I would do it again. I think I’m much smarter now and know more, so I would do better. [Laughs] I would also do ‘Survivor’—one of my favorite shows.
Opportunist: Is there a book in your future?
James Pethokoukis: I hope so. I have lots of ideas and I did a lot of research on one. It keeps evolving and at some point here soon I will pick an angle. My first book would be about some of the things we’ve talked about, such as what’s next for the U.S. economy and what we need to do so the next generation and the 21st century will be as prosperous as the 20th century was.
Leslie Stone is an award-winning writer, editor and journalist with more than two decades of experience covering business, finance, real estate and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides between Florida and Michigan. Follow Leslie on Twitter: @lescstone.
Follow James Pethokoukis on Twitter: @JimPethokoukis.