Economy: Jockeying Over Taxes, Agriculture In Jobs Bill
• "As the Senate this week considers a 'jobs bill' to reduce unemployment, lawmakers will have to decide whether to continue an unprecedented change in how the country treats people who are out of work, which was quietly approved last year," the Washington Post reports.
• "Senate leaders are working on an estate tax deal to make it easier to move a bipartisan jobs bill," The Hill reports.
• "Senate Agriculture Chairwoman Blanche Lincoln," D-Ark., "is pressing to add more than $2 billion for farm disaster aid to an emerging $80 billion-plus package of tax incentives for job creation and safety-net spending for the unemployed," CongressDailyAM (subscription) reports.
Economy expert and Syracuse University professor Len Burman proposed in the Washington Post last week an alternative to the modest savings from President Obama's spending freeze -- a freeze in some "tax expenditures," those exemptions in the tax code for different groups that work effectively like spending programs for special interests. You can read Len's proposal here. The article raised a few questions for me, which I forwarded to Len, and he responded with some very full answers, which you can read at NationalJournal.com's Insider Interviews blog. What do you think of the idea, and Len's defense of it?
-- John Maggs, NationalJournal.com
8 responses: Len Burman, Grover Norquist, Charles Calomiris, Donald Marron, Isabel Sawhill, Jeffrey Frankel, John Maggs, Ryan Ellis
In wondering what kind of recovery it will be, Robert Shiller returns to the mystery of the productivity slowdown in the 1970s and 1980s and asks what role public pessimism might play in causing a sustained economic malaise. Was psychology that important in the 1930s? What role might the proposed Volcker Rule on bank risk-taking, for example, play in a longer-term shift in investor and consumer confidence?
-- John Maggs, NationalJournal.com
One unanswered question behind the debate over public debt and long term deficits: At what level does the size of America's public debt become a significant drag on economic growth? It clearly varies from country to country, and from era to era, but when would that occur for the United States? Carmen Reinhart and Ken Rogoff suggest that the trigger may generally be about 90 percent of gross domestic product, a level that the United States could breach as soon as 2020, according to some analyses. Is this good news?
-- John Maggs, NationalJournal.com
7 responses: Len Burman, James K. Galbraith, Robert Greenstein, John S. Irons, Grover Norquist, Len Burman, Alice Rivlin
Updated at 9:06 a.m. on Jan. 19.
Expert Blog contributor Desmond Lachman has been making the argument -- for example, in this letter and here -- that the unfolding economic crises in Greece, Ireland, Spain and Portugal constitute a major threat to the global economic recovery. He observes that the unusually large public deficits and external imbalances in these countries are already raising questions in the markets as to the long-term viability of the Euro in its present form. What do you think?
-- John Maggs, NationalJournal.com
4 responses: Grover Norquist, James K. Galbraith, Charles Calomiris, Nicolas Véron
Last week's weak jobs numbers, along with a large drop in consumer credit and signs of a renewed weakness in housing, are leading some to again ponder the possibility of a double-dip recession. If such a dip becomes likely, are there means for significant fiscal and monetary stimulus? In particular, with the federal funds rate effectively at zero and the Fed's balance sheet at well over $2 trillion, can the Fed still stimulate without serious risks to the dollar and the credit-worthiness of the United States?
-- John Maggs, NationalJournal.com
Federal Reserve Chairman Ben Bernanke argued in his speech to the American Economic Association that there is little evidence linking the Fed's low interest rate policy in the 2000s to the developing of the housing bubble. Do you agree?
-- John Maggs, NationalJournal.com
4 responses: Charles Calomiris, Gene Steuerle, Edward Leamer, Len Burman
Business investment remains extraordinarily weak, surely a combination of the depth of the recession and the continuing difficulty business has in obtaining credit. Greg Mankiw (here) and Bruce Bartlett (toward the bottom of his column, here) argue for a policy shift toward encouraging business investment. What do you think?
-- John Maggs, NationalJournal.com
5 responses: Rob Atkinson, John Maggs, Jeffrey Frankel, Charles Calomiris, Alan J. Auerbach
A report on the federal debt burden due out today from the Peterson-Pew Commission on Budget Reform calls for delaying serious deficit and debt reduction until 2012, so as not to endanger a recovery; President Obama says he will start that debt-cutting with the upcoming budget, but he is also proposing what amounts to a continuation of many of this year's stimulus measures to create jobs. If an apparent recovery gathers pace in the coming months, should the government wait a year or two to confront the alarming budget projections?
-- John Maggs, NationalJournal.com
The surprisingly small job losses in November, along with revisions for the previous two months, are encouraging some commentators (such as the New York Times' Floyd Norris) to speculate that a return to employment growth may be at hand. What do you think? The consensus view of a very slow recovery in employment is based, in part, on the expectation that this recovery would resemble those after the 1990-1991 and 2001 recessions. Is there a good case for this? What are the factors that could contribute to significant worsening of unemployment in the coming months?
-- John Maggs, NationalJournal.com
President Obama and his team said recently that the fiscal 2011 budget will represent a credible effort to reduce budget deficits and put the federal government on a path toward "sustainable" deficits of not more than 3 percent of GDP by 2016. How would you alter taxes and spending to achieve (or at least pursue) that goal? Would you allow the Bush tax cuts for the middle class to expire? Cut discretionary spending across the board, perhaps through a Gramm-Rudman-Hollings-like approach? Can spending be cut enough, or taxes increased enough, to meet the 3 percent goal in 2016?
-- John Maggs, NationalJournal.com
7 responses: James K. Galbraith, Jeffrey Frankel, Donald Marron, Isabel Sawhill, Charles Calomiris, Desmond Lachman, Gene Steuerle
