White House TED-Style: Austan Goolsbee on Tax Cuts

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Wow.
President Obama’s new Chairman of the Council of Economic Advisors Austan Goolsbee has gone “TED-ish” in his economic commentary.
Goolsbee’s talk is coherent, straightforward and doesn’t talk down to folks.
And the production style is more modern than virtually anything I have seen from the White House.
Excellent job Austan.
— Steve Clemons

Comments

40 comments on “White House TED-Style: Austan Goolsbee on Tax Cuts

  1. questions says:

    Does this help the dems in WVa?
    http://www.huffingtonpost.com/2010/10/07/massey-coal-cited-for-dan_n_754545.html
    And it looks like vetoing the make it hard to get out of foreclosure even when the banks use illegally drawn paperwork might help the dems on the margin maybe??
    A few more marginal helps in the right districts might make a difference.
    And get the I/P document DONE! Sign it in Florida! And at this point, vote for Kendrick Meek. Crist looks to be not worth it.

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  2. questions says:

    A really nicely done blog by a political scientist — worth reading for good analysis of topics typically misunderstood by the press…..
    http://plainblogaboutpolitics.blogspot.com/
    Includes this line worth noting:
    “To give you a bit of value-added beyond what John said…something to keep in mind generally about elections is that the press is apt to significantly overstate the importance of money in politics. That doesn’t mean that campaign spending is useless, by any means. But we can say two things about it: first, that other factors (such as partisan identification) are far more important than money; and, second, that money raised and spent is usually a consequence of other things (strong candidates, weak incumbents, national partisan tides), so if we understand those things, we don’t need to account for (some of) the effects of money. ”
    And another I’ve started reading…..
    http://www.theroot.com/

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  3. questions says:

    “October 1, 2010 – The National Association of Home Builders (NAHB) today recognized the more than 476,000 home renovation contractors who have successfully completed the training required under the federal Lead: Renovation, Repair and Painting Rule.
    “Six months ago, we were quite worried that home owners would not have enough certified remodelers, technicians and other contractors to do work in the nearly 79 million homes built before 1978 that are affected by this rule,” said NAHB Chairman Bob Jones, a builder in Bloomfield Hills, Mich.
    NAHB’s concerns were echoed by legislators including Sen. James Inhofe (R-Okla.), who with Sen. Susan Collins (R-Maine) sponsored an amendment to a supplemental appropriations bill that, in effect, chastised the federal Environmental Protection Agency for its failure to provide enough trainers to allow the rule to be enforced nationwide.
    The EPA responded by extending the deadline for obtaining training until Dec. 31, 2010, and by late August, NAHB’s affiliated state and local home building associations had offered more than 1,200 lead certification classes to their members and other contractors in the community.”
    http://www.nahb.org/news_details.aspx?sectionID=148&newsID=11380

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  4. questions says:

    Here is a Republican press release from this year — they seem to support the new lead rules, but wanted a delay so that small contractors would have time to get the training in:
    http://epw.senate.gov/public/index.cfm?FuseAction=Minority.PressReleases&ContentRecord_id=d1452eac-802a-23ad-42b4-fb7616854ce4&Region_id=&Issue_id=

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  5. questions says:

    Some details nadine omitted probably because her source omitted them as well.
    “EPA Requirements
    Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
    To protect against this risk, on April 22, 2008, EPA issued a rule requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning April 22, 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination.
    EPA requires that firms performing renovation, repair, and painting projects that disturb lead-based paint in pre-1978 homes, child care facilities and schools be certified by EPA and that they use certified renovators who are trained by EPA-approved training providers to follow lead-safe work practices. Individuals can become certified renovators by taking an eight-hour training course from an EPA-approved training provider. Learn how to become an EPA certified firm and where to take a training course near you.
    * Contractors must use lead-safe work practices and follow these three simple procedures:
    o Contain the work area.
    o Minimize dust.
    o Clean up thoroughly.”
    “The rule affects paid renovators who work in pre-1978 housing and child-occupied facilities, including:
    * Renovation contractors
    * Maintenance workers in multi-family housing
    * Painters and other specialty trades.
    Under the rule, child-occupied facilities are defined as residential, public or commercial buildings where children under age six are present on a regular basis. The requirements apply to renovation, repair or painting activities. The rule generally does not apply to minor maintenance or repair activities where less than six square feet of lead-based paint is disturbed in a room or where less then 20 square feet of lead-based paint is disturbed on the exterior, but this does not include window replacement, demolition, or prohibited practices.
    Previously, owner-occupants of homes built before 1978 could certify that no child six years of age or younger or pregnant woman was living in the home and “opt-out” of having their contractors follow lead-safe work practices in their homes. On April 23, 2010, to better prevent against lead paint poisoning, EPA issued a final rule to apply lead-safe work practices (PDF) (18 pp, 121K) to most pre-1978 homes, effectively closing the exemption. The rule eliminating the opt-out provision became effective July 6, 2010.”
    http://www.epa.gov/lead/pubs/renovation.htm
    DETAILS DETAILS DETAILS…..
    So, the rule was issued in April 2008, hmmm. Interesting.
    And it replaces a similar rule that allowed the certification that there were no young kids or pregnant women in the place to be lead-abated.
    And it seems to apply largely to larger firms who are just going to have to get trained. Kind of like a lot of businesses should get trained before working with toxic shit.
    This is worker protection as much as it is kid safety.
    I hope that even small contractors take this seriously and stop breathing in all the dust.
    It applies to homes, child care facilities and schools, and only the pre-1978 stuff. So older renovations will need to be done properly.
    It also only applies to larger work, not minor repairs.
    And here’s the fee schedule for the required training — the fees, I think, are designed to help cover the cost of the training and of the lead inspections that will go along with the new program:

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  6. questions says:

    Ya know, nadine, I just heard from a parent of a 2 year old that the kid has severe lead poisoning and is a serious risk of significant brain damage — so I don’t feel for the mfgs of THINGS who have to show there’s no lead, or for the sellers of used THINGS who shouldn’t sell stuff with lead in it.
    Lead has long been known to be highly toxic — it circulates wherever in the body calcium does as they have similar bonding properties, but they aren’t the same element, so they don’t work quite the same way. But lead really fucks with kids brains and I think neuromuscular system as well. So, yeah, get the lead out.
    We’ve fucked over generations of kids by leaving lead in gas too long (poisoning parks and soil), leaving lead in paint too long and letting kids chew on windowsills, leaving lead in food packaging, putting lead in toys….
    The future brains of these people are at risk. A little cost now is ok.
    By the way, car mfgs HATED: seat belts, mileage requirements, air bags, anti-lock brakes, and all the other stuff the gov’t dumps on them. Cars still sell. Amazing.
    Regulation is far less horrific than the kind of brain damage we hand to kids, the kind of body damage we all suffer from in car accidents.
    Corporations are not designed to produce safe products, they are designed to sell stuff with the least cost. It’s kind of one of those prisoners dilemma things, and regulation is a kind of assurance and coercion system to make sure that the public good is higher than the private good, as the harm is significant.
    By the way, whose brains are being saved by forcing people to remove lead properly? Could it be that the painters will do better?
    Clearly there are costs involved, but there were costs before the new lead regime. What’s really being traded off is who bears some of the costs.
    Better to remove the lead properly, to stop using it in stuff kids shove in their mouths, and to stop selling stuff that likely has lead in it.

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  7. nadine says:

    “But the kinds of regulations he is talking about in the piece have been in existence for many decades. ”
    No, Dan, they haven’t. A certain set of similar regulations have been in existence; plus a certain level of Federal spending (about 20% of GDP); but the Obama WH and the Pelosi Congress have turned the dial way up on both.
    All kinds of new regulations are hitting the books, doing damage that mostly goes under the radar. Just to give two examples: the 2007 Consumer Protection Act basically makes anything manufactured or sold for kids prove (at high cost) that it doesn’t have any lead in it, thus destroying the market for small toymakers, children’s ATVs (the engine has lead), and making it effectively illegal to sell a used children’s book printed before 1985.
    A new regulation that came into force this year makes all painters treat paint removal on any house built before 1974 as a hasmat site due to the assumed presence of lead paint. They have to take federal training. What do you think that does to the already struggling construction industry?
    And so on and so forth.
    Federal spending has now climbed to 23% of the GDP. With no end in sight.
    Socialists and Social Democrats (you’re right, I find the distinction hard to notice, it seems to turn on whether the government should consume 50% or 55% of GDP) seem to believe that if you can do a lot of this stuff and still have an economy, then you can keep loading on more and more indefinitely and still have an economy.
    Actually, you can’t, especially when you add the killer, a high level of uncertainty, on top of it. You kill growth dead and businesses hoard their cash rather than invest it. Exactly as we see now. What you seem to forget about consumer confidence is how much of it is a reaction to business activity — like whether consumers think they will still have a job next year.
    The next step is when businesses spend all their efforts in finding tax havens for their money, a completely unproductive activity as far as the larger economy is concerned.

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  8. erichwwk says:

    Nadine, i love business and but deplore your nonsense statements on “they supply jobs”, “regulation putting a significant damper on jobs”.
    As I stated before, “jobs” are in input, to be minimized, and a function of conceiving the world as being altered to a “better state”. What a few control is the money supply, currently tightly controlled so as to prevent ordinary people from using money to coordinate economic activity, forcing them into barter or military imperial type jobs, just as was the case in the 1930’s.
    see eg Paul Krugman:
    http://community.nytimes.com/comments/www.nytimes.com/2010/10/04/opinion/04krugman.html

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  9. erichwwk says:

    Nadine, i love business and but deplore your nonsense statements on “they supply jobs”, “regulation putting a significant damper on jobs”.
    As I stated before, “jobs” are in input, to be minimized, and a function of conceiving the world as being altered to a “better state”. What a few control is the money supply, currently tightly controlled so as to prevent ordinary people from using money to coordinate economic activity, forcing them into barter or military imperial type jobs, just as was the case in the 1930’s.
    see eg Paul Krugman:
    http://community.nytimes.com/comments/www.nytimes.com/2010/10/04/opinion/04krugman.html
    or
    Pam Martens:
    http://www.counterpunch.com/martens09272010.html
    Enough of Vodoo Economics

    Reply

  10. questions says:

    Dan,
    Nice post except that it’s not just “money in their hands” that we need — it’s assurance that the money will keep coming (psychological/consumer confidence issues), sufficient reduction of debt that the money in their hands is actually in their hands and not just sent off to to a debt collection service and re-pocketed by the wealthy, and some kind of stabilization in the loss of wealth among those who still have some.
    Underwater mortgages make people feel less wealthy even if they are still paid well and their house payments are level. These people don’t spend as much.
    Big losses in retirement accounts and other investments (college funds…) make people feel poorer as well.
    So we have a really circular circle that we’re stuck in, and as Krugman has noted, the paradox of thrift is a tough one to get out of. It’s entirely rational for us all to save on an individual level. It’s a disaster on the macro level.
    When this structure appears, collective action via the government is our best bet.

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  11. Dan Kervick says:

    Actually, Nadine, there are no statistics or studies cited in that Samuelson piece that would explain why this recession is different from others. He presents one anecdote about one small businessman’s opinion about the challenges posed to entrepreneurship by regulation. But the kinds of regulations he is talking about in the piece have been in existence for many decades. Since by Samuelson’s own account, the US has been a “phenomenal jobs machine” during that time, Samuleson has no argument that regulation is producing some inhibitory effect this time around that it didn’t produce in the past.
    Samuelson actually doesn’t dispute the main point I defended, and which he calls the “conventional analysis”: that the main cause of sluggish job growth is weak demand. He just slides past that point quickly:
    “Conventional analysis blames today’s poor performance (jobs are 7.6 million below their pre-recession peak) on weak demand. Because people aren’t buying, businesses aren’t hiring. Though true, this omits the vital role of entrepreneurship.”
    So he says that the conventional analysis is true, but there is something else that plays a “vital role” in job growth. However, he offers not a single statistic to back up any suggestion that new regulatory hurdles or burdens are playing any prominent part in sluggish job growth out of the Great Recession. He does cite some statistics that are suggestive of the importance of entrepreneurship and small business startups in growing out of a recession. But he presents no evidence to explain what might be different about small businesses this time around.
    I haven’t been able to locate the article by Morris Panner that Samuelson cites. It sounds like Panner’s main concern is over the complexity and fragmentation of regulations, not their number and existence. And certainly, if there are things the government can do to streamline the regulatory compliance process for small businesses by funneling all the regulations through some kind of clearing house, that is worth exploring.
    But all this concern about regulatory hurdles as a key to the Great Recession is missing the big picture in a big way. It’s like you are looking at motorboat that used to be driven 100 mile per week by its owner and is now driven only 50 miles per week, and you are wondering what accounts for the difference. Does the boat now have too much ballast? Is it the extra seat cushions? Is it the cup holder? Are the coolers too heavy? Does it take too long to fill out the slip rental agreement?
    Yet all the while, the problem is that the boat doesn’t have much gas in its tank because gas is so much more expensive. Economic growth is driven by increased demand for existing products and new demand for new products. If demand collapses and doesn’t come back rapidly, then growth isn’t going to happen. If there are very few customers wandering into the bazaar, then the date merchants – new ones or old ones – aren’t going to be hiring new people, even if you loosen the regulations on the kinds of nails they need to hammer their stalls together.
    Here’s what I imagine is the kind of scene that more accurately reflects the bigger challenge face by small business startups: The entrepreneur goes into the bank and says, “Hi, I have this great idea for a business to make widgets!” The banker says: “Could you please demonstrate to me that there is an unmet need for widgets? Because here are three widget factories in the region, and each operating at 70% of capacity. That looks like overcapacity and oversupply to me, not unmet demand.”
    You want to help out small businessmen? Get some money into the hands of their customers.

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  12. questions says:

    Here’s a compilation of bunches of sources on the outcome of TARP — views from the left that it was generally a bad idea, that the notion that if we didn’t do this, then the economy would collapse since not doing TARP would logically entail doing nothing at all, whereas in reality, not doing TARP might well entail actually doing something else. The opposition, then, isn’t properly TARP vs. Status Quo, it’s TARP vs. another program.
    http://www.dailykos.com/story/2010/10/4/907522/-Plunging-Into-The-Abyss:-Americas-Deepening-Moral-Crisis
    Where I wonder about the reading is the extent to which “some other program” that was less nice to rich executives would have flown for real.
    I think there might be too little appreciation of the extent to which we already are pretty thoroughly oligarchic and we can’t just stop it overnight.
    There’s a pretty broad consensus that wealth disparity is fine, though there seems to be a decent sized current of a)underestimating the size of the disparity and b)wanting less disparity than we have.
    But we can’t just move money from one class to another quite so easily. There needs to be a certain amount of preservation even as there’s change, and my guess is that TARP tried to do both at the same time.
    The banksters could quite deliberately cut back ever more on credit to push the political system in a direction they like, and so chopping the heads off of billionaires wouldn’t likely have been a solution to what ails us.
    What we really need at this point is a buy in to the system by those who are wealthy enough to have their own system.
    In Socrates’ words, we are not one, we are two. Prescription for a failed state.
    In Ezra Klein’s words, we need that infrastructure development bank to fly. We need to pull private capital back into the public stream, and we need to do it without “takings” — so let’s try “investment” with a tax boost and a decent rate of return.
    There’s a lot of unsexy stuff that we need done. Couple it with some sex, and maybe we’ll get somewhere.

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  13. questions says:

    And this one via HuffPo on using pricey life insurance (20 thousand dollar annual premiums) as a tax shelter:
    http://online.wsj.com/article/SB10001424052748703435104575421411449555240.html?mod=WSJ_hpp_MIDDLETopStories
    Money chases after money, money grants connections and finds ways to avoid doing good for others. That avoidance of any kind of tax burden ends up making the lives of the next few generations more difficult as we young’uns have to shoulder larger public burdens in order to protect the possibility of inheriting a slice of a multi-million dollar life insurance policy.
    So what do we pay in terms of: supporting our parents, pathetic public schools, horrible public health and transit, climate disaster, lack of public parks and amenities, lack of student aid, an ill-educated general populace…. all for that slice of an inheritance?
    I might guess that some people on the lower end of the inheritance front probably pay the same amount of the inheritance or more in higher costs for housing, transit, entertainment, education, and the like…..
    A tax bite might actually be a bargain?
    It should be calculated by someone who calculates things. What’s the typical cash payout in inheritance at the lower end (not talking Carnegies, Mellons, Rockefellers, Gateses, Zuckerbergs, Kochs, Waltons, and the like) — what’s the typical payout as against the typical cost in lifestyle changes over time?
    That is, you inherit a million bucks, but what did it cost you over time to be in a such a nice tax position? How much extra in housing…..

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  14. questions says:

    nadine,
    http://www.dailykos.com/storyonly/2010/10/3/907121/-No-country-for-Zuckerbergs
    “I wonder what sort of businessmen operate like this. Mr. Zuckerberg, for example, in 2004 was staring at a top marginal tax rate of 35 percent, the Bush rate. It seems to me he considered paying that rate of tax would be worth the cost of earning himself almost $7 billion. Does anyone really believe he would not have founded Facebook if the tax rate was 39.6 percent, the Clinton rate? Is that extra 4.6 percent such a huge obstacle to success, that Mr. Zuckerberg would have decided Facebook and its prospects weren’t worth the effort? How about Bill Gates of Microsoft staring at a top rate of 70 percent in 1979? Or perhaps Gordon Moore of Intel starting out with a top rate of 75 percent in 1968? Why did Bill Hewlett and Dave Packard start HP in a garage in 1939 with a top rate of 79 percent and then take the company public in 1957, during which time the top rate rose to 91 percent? 91 percent!
    The fact is the idea that tax rates have anything to do with business creation is a myth. Nobody who has a great idea and good prospects is going to not go for it because of tax rates. Even if the tax rate was 100 percent over annual income of $1 billion, it isn’t going to stop someone who has some moxie for going for that $1 billion a year. Lets face it, a billion dollars is a good living. Furthermore, it has almost nothing to do with job creation. American Express surveyed small business this year and found only 18 percent cared about high taxes. Only 8 percent were worried about the federal deficit. When asked “Which of the following would most incent you to hire,” 67 percent of small businesses said more consumer demand or better economic outlook. Only 11 percent said tax credit.
    The only people who think that tax rates are keeping them from success are, quite frankly, losers and cowards. Joe the Plumber comes to mind as an example. Joe told then-candidate Barack Obama a couple of years ago that he was going to buy a company that made about $280,000 a year but he was afraid of being taxed more. He constructed, only in his own mind, a scenario in which he would buy a truck and get taxed more and more:”
    and:
    http://www.nytimes.com/2010/10/04/business/04borrow.html?hp
    “Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.
    The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up

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  15. nadine says:

    Dan, the severity of the recession does not explain why we have lost 7.5 million jobs and are not creating new ones. Robert Samuelson has a new column that does explain it:
    The Real Jobs Machine
    By Robert Samuelson
    WASHINGTON — If you’re interested in job creation — and who isn’t these days? — you should talk to someone like Morris Panner. In 1999, Panner and a few others started a small Boston software company called OpenAir. By 2008, they sold it for $31 million. The firm had then grown to about 50 workers. It turns out that entrepreneurship (essentially: the founding of new companies) is crucial to job creation. But as Panner’s experience suggests, success is often a slog.
    What’s frustrating and perplexing about the present unemployment is that the U.S. economy has long been a phenomenal jobs machine. Here’s the record: 83 million jobs added from 1960 to 2007 with only six years of declines (1961, 1975, 1982, 1991, 2002 and 2003). Conventional analysis blames today’s poor performance (jobs are 7.6 million below their pre-recession peak) on weak demand. Because people aren’t buying, businesses aren’t hiring. Though true, this omits the vital role of entrepreneurship.
    In any given year, employment may reflect the ups and downs of the business cycle. But over longer periods, almost all job growth comes from new businesses. The reason: high death rates among existing firms. Even successful firms succumb to threats: new competition, products or technologies; mature markets; the death of founders and family feuds; shifting consumer tastes; poor management and unprofitability. A company founded today has an 80 percent chance of disappearing over the next quarter-century, reports a study by Dane Stangler and Paul Kedrosky of the Kauffman Foundation.
    True, some blue-chip firms — the Exxons and Procter & Gambles — endure. Fourth-fifths of the “Fortune 500” were founded before 1970, note Stangler and Kedrosky. But they are exceptions, and many brand names have died: Pan Am (once the premier international airline), Digital Equipment (once the second-largest computer maker) and Circuit City (once a leading consumer electronics chain).
    The debate over whether small or big firms create more jobs is misleading. The real distinction is between new and old.
    American workers are roughly split between firms with less or more than 500 employees. In healthy times, older companies of all sizes do create lots of jobs. But they also lose jobs, as some businesses shrink or vanish. On balance, job creation and destruction cancel each other. All the net job increases occur among startups, finds a study of the 1992-2005 period by economists John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau. Because most startups are necessarily small, this gives a statistical edge to tinier firms in job creation. But, the study says, the effect entirely reflects the impact of new businesses.
    To be sure, entrepreneurship has a downside: booms and busts. Remember the dot-com “bubble.” But more damaging, says Panner, are widespread popular misconceptions about what entrepreneurship is and isn’t.
    Start with the Blockbuster Myth: Success involves creating huge enterprises a la Google that transform how we live. In reality, “most ventures don’t change the world,” says Panner. They’re unknown companies providing highly specialized goods and services, plus restaurants, auto repair shops and many everyday businesses. There are more than 500,000 startups annually, report Haltiwanger, Jarmin and Miranda. The number must be large to make an impact on the 155-million-person labor force.
    Second is the Inspiration Myth: Most startups spring from some epiphany suggesting a new product or technology. Wrong. Gee-wiz moments are few. Companies continually change plans. OpenAir ditched its original idea, which drew scant customers. “You can’t do anything until you meet someone’s needs,” says Panner. Discovering what works is exhausting, frustrating and chancy. Failure rates are high; half of new firms die in five years.
    And, finally, the Incentive Myth: It’s necessary to keep tax rates low, so entrepreneurs can reap huge rewards for their time, sweat and money. Well, this may be true, but it misses a parallel truth: government disincentives to entrepreneurship. Panner, a registered Democrat, criticizes complex accounting, employment, and health care regulations imposed by federal and state agencies that consume scarce investment funds and time. The fragmented system of business oversight imposes a bureaucratic bias, perhaps unintended, on startups. Any one rule or tax may seem justifiable; but the collective effect can be crushing.
    It’s all about risk-taking. The good news is that the entrepreneurial instinct seems deeply ingrained in the nation’s economic culture. Americans like to create; they’re ambitious; many want to be “their own bosses”; many crave fame and fortune. (Panner is already involved with a new startup, TownFlier. It has five employees.) The bad news is that venture capital for startups is scarce and political leaders seem largely oblivious to burdensome government policies. This needs to be addressed. Entrepreneurship won’t instantly cure America’s jobs’ deficit, but without it, there will be no strong recovery.
    http://www.realclearpolitics.com/articles/2010/10/04/the_real_jobs_machine_107410.html

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  16. Dan Kervick says:

    Nadine, the recession destroyed the value of homes and evaporated retirement savings. That

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  17. Cee says:

    Interesting time for the terror alerts
    Noise Against the Bankers in Europe
    http://www.youtube.com/watch?v=cPHvqs4qW1w&feature=player_embedded

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  18. nadine says:

    Dan, the severity of the losses caused by the bursting of the housing bubble explains the downturn’s severity, but does not explain its failure to begin a recovery as quickly as during previous sharp downturns. The severity is an absolute number, but the recovery need only be a direction of positive growth. Granted, we have a positive GDP growth but just barely, not enough for a recovery.
    I would argue that the extent of government interference, bailouts, and propping up unsustainable budgets, on the whole made things worse not better. The government didn’t allow losers to go bankrupt or the dust to settle, and as a result there is no firm foundation to build on. And nobody knows the rules because they are subject to change without notice from this government!
    Worse, the government interference was not done on a basis of stimulating the economy, but merely rewarding their political friends (e.g. UAW, NEA) and punishing their political enemies (e.g. Chrysler bondholders). So they spent a trillion dollars of “stimulus” with very little stimulative effect — but lots more debt overhang.
    We’ll probably see better growth once there is a Republican Congress. At least businesses will know that they are unlikely to be subject to any MORE job-destroying legislation.
    Ironically, of course, a recovering economy will help Obama’s chances in 2012, just as the restrained spending of the Republican Congress helped Clinton in 1996.

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  19. Dan Kervick says:

    “Are you “not buying much” because you can’t afford to, or because you are afraid to take on additional debt when there is still the chance that you or your spouse will lose their job?”
    Both paul. But certainly we would be willing to take on somewhat more debt if we felt confident that our incomes were going to rise in any significant way the coming year. Our credit rating is very good, and there are no end of people who are willing to lend us money. But debt amounts and price tags that seemed ordinary and comfortable in the pre-crash era now throw a scare into us.
    And it is hard for me, and people like me, to feel confident about the prospect of rising incomes, when I go to work every day and run reports showing dismal private and public sector sales numbers, and our companies are still on self-imposed austerity programs as they wait for sales to pick up.
    Add to this that nobody has any leverage whatsoever to demand a raise in this market, since we all go to work everyday in a buyer’s market for labor surrounded by an ocean of unemployed people who will happily take our jobs if we are unsatisfied, and where we likely just kiss our boss’s feet every day for not firing us during the depths of the devastation.
    For some reason, Washington has been committed to a business-side approach to this problem rather than a consumer-side approach. They want to make cheap money available to businesses, and expect these businesses to just start hiring unnecessary people in a leap of faith as they look forward to the sunny days that *might* be ahead. Then they expect those new hires to translate into more consumer spending.
    But it seems to me businesses avoid hiring more people until their production and sales needs dictate they need them. Why not prime the pumps more directly by shifting money to people who will spend more of it? If the customers show up, businesses will start hiring people to service them.
    The stimulus certainly helped, as the CBO report made clear, but it was not enough. And the problem is that the long-term bill for the stimulus was sent to the same middle class who needed it most, rather than to the rich. Or at least it wasn’t made clear exactly who was getting the bill. So the stimulatory effect and confidence-building were partially offset by added fears about long-term deficit and tax burdens.
    They should have canceled the Bush high-end tax cuts right away, and pumped the revenue directly into middle and lower-class bank accounts, and small business bank accounts, in such a way that 90% of Americans would understand that they were clear economic winners in the transaction. They also should have understood that the very necessary Keynesian deficit spending was going to be paid for by taxing the rich more.
    Notice how Bill Gates and a lot of the rest of the moneybags rushed out to form new high-profile charities surrounded by gushing media portrayals. That was a blatant move to buy fawning press and ward off left-populist moves to re-distribute incomes.
    Democrats in this country need to rediscover the economic wisdom of re-distribution, something they were never that afraid to talk about during the prosperous postwar American heyday. Right now, they are a beaten-down phony-left party terrified of endorsing any traditional left ideas. They remind me of Patty Duke in The Miracle Worker, flailing their hands confusedly and wildly without a word on their lips to describe what they should be doing.

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  20. Sand says:

    Sigh!
    –Monty Python- Four yorkshiremen with Rowan Atkinson
    http://www.youtube.com/watch?v=cYtYBI6eZ3E&feature=related

    Reply

  21. Dan Kervick says:

    “How come consumer uncertainty didn’t keep those previous recessions from much recovering so much more quickly?”
    Because median household wealth in the United States decreased by 19% from 2007 to 2009, the largest amount for any recessionary episode since WWII, and those households are still far short of recovering what they lost. Unlike other recessions and burst bubbles, which tend to affect a single key business sector primarily, and ripple indirectly into everything else, this one ripped straight and violently through the landscape of American middle class households, destroying the value of their homes and retirement accounts. This happened at a historic peak in home ownership rates, adding to the devastation.
    The astonishing runaway housing bubble, and the wild speculation in homes and mortgages as get-rich investment instruments, engineered by the Bush adminsitration and the lunatic Ayn Randian Alan Greenspan, drove the wealth of ordinary Americans off a cliff in an unprecedented way.
    If you’re serious about restoring business income sooner rather than later then you should be thinking about ways of rapidly shifting wealth from those who didn’t lose as much of it on a percentage basis, who have abundant disposable levels of it, and who are saving more of it than our economy needs to save right now, into the bank accounts of the devastated American middle class.

    Reply

  22. DonS says:

    Couldn’t be better timed for the issues in this post and the tangential quality-of-life issues raised tangentially in the post below. For all the kool-aid drinking Hannity bots, you’ll wanted to skip it. You don’t understand the language much less the concepts.
    http://firedoglake.com/2010/10/03/work-or-suffer-versus-work-and-live/

    Reply

  23. nadine says:

    “Why aren’t we and other companies hiring more? Because nobody can be sure when the US consumer is going to show up again to buy the new product”
    Yes, Dan, it’s called a feedback loop, a vicious cycle. There is a debt overhang, nobody denies it. But it’s not enough to explain why this is the longest downturn since the Great Depression, with no end in sight. How come consumer uncertainty didn’t keep those previous recessions from much recovering so much more quickly?
    CEOs say that regulatory, healthcare, and tax uncertainty (note: it’s not just the level, it’s the uncertainty) is putting a significant damper on any expansion plans they might otherwise have. That’s whom the Chamber represents – businesses. Yes, we know you hate businesses. But they supply the jobs. No jobs, no consumer confidence.

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  24. paul_lukasiak says:

    Dan —
    Please clarify. Are you “not buying much” because you can’t afford to, or because you are afraid to take on additional debt when there is still the chance that you or your spouse will lose their job? I.E., if you were more confident about your economic future, would you be willing to go into more debt?

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  25. Dan Kervick says:

    “That has created an environment of “uncertainty,” which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.”
    This strikes me as unadulterated balderdash from a highly politicized organization of liars. For most businesses in the US, the challenges posed by potential new regulations pale in comparison to larger macroeconomic challenges.
    At my company, available capital has been used over the past few years to invest in a few innovative and potentially profitable new projects. New hires have gone into those ventures. In the meantime, everyone is incredibly overworked and doing the jobs of two and three people. Why aren’t we and other companies hiring more? Because nobody can be sure when the US consumer is going to show up again to buy the new products. Many of those consumers are still struggling with the underwater mortgages, oppressive debt burdens, loss of income, loss of personal wealth, rising health and fuel costs and other dislocations that hit them like a ton of bricks two years ago. The idea that this employment stagnation is mainly due to fear of regulation, when almost every company in America can point to dramatically falling sales at the consumer end as the main cause of their woes, is ridiculous.
    In my household, I can’t even count the number of things my wife and I would like to buy, but which we have had to defer during this period of contraction and retrenchment. And we’re the lucky ones. We have both held onto our jobs so far during the Great Recession. We have an ancient washer and dryer that have been on their last legs for three years. My car has a dent in the door panel that I haven’t repaired because we can’t justify shelling out the money it will cost to fix what is basically just a cosmetic problem. We would like new furniture; new televisions; new yard tools; other new gadgets. It’s all on hold. We also have to worry about aged parents and other family members in various straits of distress. That’s happening all across America.
    So we’re not buying much. If we could buy more, then all of the people who sell washers, door panels, body work services, furniture, televisions, paint, tile, wallpaper, chain saws and the rest could hire more people.
    Regulation fears? Please! That’s a drop in the bucket.

    Reply

  26. questions says:

    I concede points when there are points to concede, and as for muddying (!!) alls I really did, honest, is to quote more from the same article you linked to!
    If you have an actual response, some proof, say, that regulatory anxiety is a major cause of the lack of business expansion, then please cite it.
    The article you did cite, and the CoC piece come to think of it, don’t really do what you want them to do. When you cite evidence, the evidence should say what you’re saying it says, and it should be actual evidence.
    There’s no mud here at all.
    The point is that regulatory anxiety MIGHT be something of a factor is some industries, but isn’t a major factor across the economy.
    The Little Shop of Horrors isn’t refusing to hire because it’s afraid of the Big Bad Congress, it’s refusing to hire because its owners are unsure if the recession is really over.
    Unemployment improvement lags in every recession because no one is dumb enough to try to expand when the consumer market is iffy moving forward.
    The consumer market won’t move forward without more jobs and a lower unemployment rate.
    This kind of circle needs to be busted open, and the gov’t is a good source of circle busting.
    So, like, where’s the mud?
    (By the way, the standard metaphor around here is “fog” not “mud” — just to get that straight!)

    Reply

  27. questions says:

    4:21 pm post should say trust not tryst — vaguely amusing at some level?

    Reply

  28. questions says:

    nadine,
    I think you’re just too one-sided on this “regulation uncertainty” read of the market.
    There are many many factors that go into business planning including how many widgets they think they can sell, whether or not they can get a loan to tide them over, whether or not they can continue to pay their undocumented workers nice low wages without, say, worrying about mass arrests and deportations, weather, the existence of new and interesting products, consumer confidence…..
    It’s not all “regulation”, and it’s not not at all regulation. Give regulatory uncertainty some place in some industries where it’s real, understand that regulatory capture fixes a bunch of that, relations with individual MCs fixes another chunk of it, and you’ll see that the uncertainty is probably on the smaller side for many industries.
    If you want to extend “uncertainty” as a cause, then please cite industries that are in the process of being regulated and show the fall off in expansion and date it to the possibility of regulation.
    The capital markets aren’t frozen because of possible regulation, they are frozen because they caused the damned recession in the first place and they are suffering from significant indigestion. They are sitting on cash because there is still a lot of MARKET uncertainty, a whole lot of unemployment, and not a lot of consumer confidence.
    We’re actually in one of those self-feeding loop/vicious circle dynamics and the way out is most likely through the establishment of tryst and certainty/assurance and communication through governmental agency.
    But if you want to blame the gov alone, please at least cite a few massive industries that can’t do anything at all ONLY because Congress or an agency LOOMS.
    Thanks!

    Reply

  29. nadine says:

    I don’t envy any economist whose job it is to explain why you should hike taxes in the middle of a prolonged recession. But Goolsbee asked for the job.
    And cheer up, now that Congress has left town without voting, everybody’s taxes will go up!
    Unless they return to vote on it in November. Gee, ain’t business planning fun under Obama? If you’re lucky, you can see a whole six weeks ahead.
    paul_lukasiak, you are confusing demand with supply. Demand is what employed people with disposable income create for goods and services. Supply of goods and services is what employers create by expanding their businesses and hiring people. Both are necessary.
    It’s possible for the government to screw up conditions sufficiently to depress supply even when there might be demand to meet it — for instance, by creating so much chaos and uncertainty in the marketplace through new regulations and uncertain tax rates that even profitable businesses sit on a pile of cash rather than reinvest it to expand their business. And that exactly describes the current situation.

    Reply

  30. erichwwk says:

    Wigwag:
    Ok…. i guess. at least i can rule out senility, at least in this one case.
    Bart:
    “They” don’t produce jobs. Unless you think the world is perfect, the work it takes to get there implies the jobs you are talking about “creating”. “They” have nothing to do about that work. It is the nature of a less than perfect world. In the perfect world of course, there are no jobs. The irony is that it takes work to eliminate work.
    But elitists folks DO CONTROL is the money spigot.
    That spigot is turned off and on mostly in secret, by a few well placed elitists. The work they would like to see involves mostly yachts, mansions, fine art, real estate, drugs, weapons, human trafficking, etc.
    So what folks are mostly complaining about when they talk of “jobs creation” is the reluctance to turn on the spigot and allow money to be used to facilitate the specialization of labor so that OUR goods (education, public health, parks, community centers, transportation, communication) get produced.
    Read up on the thirties and understand the efforts to control what and for whom labor works is what recessions are essentially about.

    Reply

  31. WigWag says:

    “Re Ross Perot, I miss your point Wigwag. I recollect that Ross made a great showing, compared to other recent independents. What was your point?” (Erichwwk)
    No point, Erichwwk, I was just making a joke about the fact that both Perot and Goolsbee used charts as graphics in trying to explain economic issues. If you look at the link I posted, I think Perot was a little more entertaining then Goolsbee but I meant nothing more serious than that.

    Reply

  32. Kathleen Grasso Andersen says:

    ZZZZZzzzzzzz…wake me when they get around to tax cuts from the bottom up…that I can get behind…cut the bottom % from 15 to 1 and gradually increase it up to the top under Clinton….raise the standard deduction to a livable income and index it to the cost of living…this will cut the amount of public assistance people need to make ends meet, for starters and will enable people to actually affrord to live a safe and healthy life…oh. oh, does wanting to help the people on the bottom rung make me a “socialist”? Well how about helping the people on the top making you a monarchist”?

    Reply

  33. Bart says:

    Erik, these people had eight years to produce jobs under Bush. They did poorly.

    Reply

  34. erichwwk says:

    My $0.02 worth
    While Goolsbee did a “better” job than most- hopefully his appointment signals a change in direction?- I rate it poor re to what he could have done.
    First, it was sloppy. The verbal presentation is contradicted by the graphics – eg the tax cut circle for >$1M is smaller than the tax cut for $500K. all circles for tax cuts >$250K should be identical.
    Second, the aggregate cost (actually the wealth redistribution from poor to rich) was not depicted graphically.
    Third, the issue of WHY such a redistribution RETARDS economic recovery (separate from the equity issue) was poorly handled, as evidenced by the “jobs creation” response.
    IMO, “jobs creation” should be broken down into the “income received” issue, separate from gthe “what is the purpose of an economy” or the “output” issue.
    Jobs are an input. Despite the fact that from a personal perspective, we wish to maximize out personal income, from the point of view of an economy, jobs are an input, and a factor to be minimized, not maximized for whatever level of output one is producing.
    The focus should be on REAL OUTPUT, something measure in satisfaction units, not GDP. GDP itself should be minimized, for what ever level of consumer satisfaction is achieved. Eg, while commercializing child care increases GDP, GDP overstates the shift from women working, the shift from home gardens to imports, etc.
    The focus should be on precisely WHAT IT IS THAT IS NOT BEING PRODUCED that should be central to the discussion, not jobs per se. One could always employ more by utilizing workers inefficiently, but why?
    Th reason shifting wealth up, is that the propensity to leak income (buy assets, rather than new products, but overseas, etc) is MUCH higher, as one moves up the income scale.
    Re Ross Perot, I miss your point Wigwag. I recollect that Ross made a great showing, compared to other recent independents. What was your point?
    BTW, one of the major changes in economics from when I first studied it (mid 1960’s) is in the national income accounting. Then Kennth Boulding was President of the American Economic Association, and advocating focusing on STATES (wealth, infrastructure) rather than flows (states in income)
    see eg
    http://tpmcafe.talkingpointsmemo.com/2007/04/24/how_would_you_know_if_the_econ/index.php#comment-2533325

    Reply

  35. The Pessimist says:

    paul,
    Excellent analysis. Sometimes stripping a topic down to its fundamental core is the only accurate way to explain it. And you can’t get more fundamental than a single word.
    Another singular word that can be used to describe the complexities of Wall Street activities: greed.

    Reply

  36. The Pessimist says:

    paul,
    Excellent analysis. Sometimes stripping a topic down to its fundamental core is the only accurate way to explain it. And you can’t get more fundamental than a single word.
    Another singular word that can be used to describe the complexities of Wall Street activities: greed.

    Reply

  37. Erik Price says:

    How about spending cuts? I don’t know about you, but not too many people making less then $200K a year create jobs. People who make more then $200K a year tend to be small company owners who employ between 50 and 200 people or more.
    People who make more than a million are usually doing the same. So we are saying, take from those who produce and create jobs and give it to the government who is not known for its job creating ability (unless you work for the census and get re-hired 20 or 30 times)or worse yet, to those who don’t produce any jobs and that’s good for us?

    Reply

  38. WigWag says:

    Steve you wanted Rahm out and now he’s out. You ran post after post at the Washington Note about how he was serving Obama poorly and speculating about who might replace him. Don’t you have a comment about his replacement?
    As for Goolsbee, his presentation was pretty good, but Obama’s going to lose on this one. More than anything else, Goolsbee’s performance reminded me of the television infomercials Ross Perot made during the presidential campaign of 1992.
    If you don’t believe me, check it out,
    http://www.youtube.com/watch?v=ERlGndQ_xtM

    Reply

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