Holtz-Eakin expressed concern that the administration’s tariffs and other actions to pull out of or scrap free trade agreements could damage the economy over the long term.
“In 2001-2002, I failed to convince President Bush that tariffs were a bad idea,” he said. “The World Trade Organization came back and said that tariffs were non-compliant and had to be dropped. It feels like we’re watching the same movie, and it’s hard for me to think that this is a step in the right direction.”
The renegotiation of NAFTA is also a dangerous path, said Holtz-Eakin. The free-trade pact with the U.S.’s North American neighbors was never meant to create an economic boost at home, but to solidify Mexico as a democratic ally to the south.
Currently, policymakers are working to reform and modernize the agreement before the end of 2018.
“Time is really short. If you look at the timetable required to get a vote in the U.S. Congress before the end of 2018, they have to finish this thing by the end of next week,” he said. “I’m worried about the future of NAFTA.”
Immigration Reform
Immigration is a policy area where Holtz-Eakin believes the Trump administration is moving in the wrong direction.
Economic growth usually depends on two different factors: increases in productivity and demographic growth. Restricting immigration throttles down the potential for economic growth, said Holtz-Eakin.
“The native-born population of the U.S. has sub-replacement fertility. In other words, we don’t have enough babies,” he said. “In the absence of immigration, we’re Japan. We shrink in size, we get old and we become less influential. Everything about our future depends on our choices on immigration.”
Rather than impinge on the ability of peoples to enter the U.S., policymakers should find ways to make immigration and citizenship easier to achieve, he said.