Martin Feldstein: I Worry About What the Fed is Doing

Former Reagan Council of Economic Advisors chairman Martin Feldstein gave his take on the state of the U.S. economy, Federal Reserve policy and the potential impact of the presidential candidates’ economic plans on the FOX Business Network Monday.

“I think the economy is in good shape. I think that with an unemployment rate of 5%, with inflation around 2% and rising, I think the economy’s in good shape. I worry about what the Fed is doing, you and I have talked about it before with the Fed keeping interest rates super low – I think we’re building risks into the economy,” Feldstein told Maria Bartiromo.

But Feldstein says tax reform could help improve the economy even further.

“If we want to get stronger growth going forward, I think serious tax reform, particularly in the business and corporate area, would be a good thing. Whether we can get that through Congress remains to be seen.”

On Trump’s plans for the economy if he is elected, Feldstein said, “I don’t think he knows what his plan is – I sure don’t know what his plan is. What he says is ‘I’d like to do A, but it won’t pass,’ so what are we supposed to think?”

But Feldstein doesn’t see Trump winning the 2016 presidential race.

“I think that he [Donald Trump] knows how to put out good one liners. I think the key question is, what will get through the House of Representatives? Frankly I don’t think Donald Trump is going to be our next president. So I think the key question is going to be if Hillary is our next president, does she want to negotiate with Paul Ryan to get things through the House, or does she want to blame Republicans for her failure to get things done?”

But despite Clinton’s potential presidential win, Feldstein had concerns about her tax plan as well.

“She [Hillary Clinton] doesn’t have a very articulate tax plan,” but in response to Bartiromo pointing out Clinton’s proposal to raise $1.1 trillion in new taxes, Feldstein responded, “How is she going to do it? Ultimately the House of Representatives is going to be the block that is going to stop things that you and I don’t want to see happen.”

Feldstein sees the deficit as the biggest economic concern facing the U.S.

“The big problem from a fiscal point of view is the long-term deficit; Our debt is growing very rapidly. We have to slow the growth of entitlements and we haven’t heard that, at least I haven’t heard that from Trump, but maybe I’m not listening carefully enough. We haven’t heard it from Hillary either.”

On the inability of the Republican Party to unify behind Trump’s campaign, Feldstein said, “This doesn’t sound like a Republican president.” He continued, “There is too much uncertainty surrounding Trump’s policies, in foreign policy, in trade.”