The United States must address two main issues to get out of its
current economic funk — the federal deficit and the trade
That was the central message Robert Rubin delivered to a room
overflowing with students and campus members last night in the Law
School’s Honigman Auditorium.
Rubin, former Treasury secretary in President Bill
Clinton’s administration, discussed reasons for and solutions
to the current economic state in a lecture titled
“Globalization, Trade and Our Fiscal Morass: The Challenges
After a few laughs, Rubin began his lecture by stating what he
learned as a student in philosophy class.
“There is no provable certainty,” he said, alluding
to his upcoming book titled “Dealing with an Uncertain
This view, he added, leads to the conclusion that reality is
complex and people must accept trade-offs. Having this mindset is a
top priority and the “only way to thoughtfully come to grips
with the economic environment,” he added.
“As all times are uncertain, some are particularly
uncertain,” he said, referring to the current economic
He continued the lecture with that theme, emphasizing the
economic importance of social matters. As Treasury secretary,
fixing the economic situations in rural areas and inner cities was
central to his and the Clinton administration’s agenda, he
The 1990s were the longest period of expansion in American
history, he said. Incomes increased across the board and fiscal
discipline was restored.
But around the turn of the century, imbalances arose. Rubin
suggested tax stimuli for states, localities and lower income
people would probably have helped prevent these problems from
Though he doesn’t fully agree with the Bush
administration’s tax cuts, Rubin said he believes the
important question is whether the recovery will be sustained or
short-lived after the current stimulus measures have worked through
Economic analysts overlook the risks embodied in this question,
In his discussion of solutions, Rubin cited a lesson learned
during the Mexican and Asian financial crises that occurred during
the Clinton administration.
“If we are going to succeed,” he said, “we
must have genuine and mutual respect (for other
Recognizing the importance of exports, Rubin stressed the
benefit imports have on industries. Trade policies have highly
visible impact, making trade a tricky concern. Rubin also discussed
the role other nations’ economies play in a U.S. economic
“What would help a lot is more robust economies in Japan
and Europe,” he said, though most economists foresee only
modest gains in those economies.
Speaking on the consequences of the present economic state,
Rubin said the continuation of high trade imbalances could have a
profound effect on the U.S. dollar. The U.S. economy could be
damaged by a severe weakening of the dollar, as was experienced at
the end of the Carter administration, if these trade imbalances are
not rectified, he said.
Addressing today’s federal deficit, Rubin mentioned the
1992 elections, when a high federal deficit led the public to
believe that “we lost control of our economic destiny,”
“Deficits reduce our flexibility in responding to
(events),” he said.
Because of the surpluses the country had on Sept. 11, the tragic
event could have been faced without changes in the interest rate,
he added. Now, interest rates will remain low as long as private
capital demand remains low.
“Fixing this morass has become exceedingly
difficult,” he said.
Still, Rubin ended the lecture on somewhat of a high note.
“The economic potential of our country is enormous,”
he said. “Our country has been highly resilient in (hard
As Rubin fielded questions from the audience at the end, he
stressed that the future of the economy is uncertain, saying,
“If I sounded unwarrantedly optimistic, I certainly
didn’t mean to.”
After joining Goldman, Sachs & Company in 1966, Rubin became
general partner in 1971 and co-senior partner and co-chairman from
1990 to 1992. He joined the Clinton administration in 1993,
directing the National Economic Council. In 1995, Rubin was sworn
in as the 70th secretary of the Treasury. Rubin became director and
chairman of the executive committee for Citigroup in 1999.