Politics and the Economy
http://thedianerehmshow.org/shows/2010-12-06/politics-and-economy
President Barack Obama's Debt Commission co-chairmen, Erskine Bowles right, and former Wyoming Sen. Alan Simpson, take part in a news conference on Capitol Hill in Washington Tuesday, Nov. 30, 2010.
AP Photo/Alex Brandon
Diane and her guests discuss what congressional votes on extending Bush tax cuts may signal about battles ahead over government spending, deficits and efforts to reduce the nation's unemployment rate. How politics is affecting the sluggish economy.
Guests
Alice Rivlin
senior fellow, Brookings Institution,
vice chair, Board of Governors, Federal Reserve System (1996-99);
director, White House Office of Management and Budget (1994-96); and founding director, Congressional Budget Office (1975-83).
David Walker
founder and CEO of the Comeback America Initiative and former U.S. Comptroller General
Major Garrett
congressional correspondent, National Journal
Dan Mitchell
senior fellow at the Cato Institute
Dan Mitchell
senior fellow at the Cato Institute
Comments
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For Alice - having an inside perspective of the Federal Reserve, I'm interested in your thoughts here. The Fed has announced a second round of QE to fight the unemployment rate. We've discussed the what and the why of that a great deal, but I feel the how is frequently left out of the discussion
Based on my understanding of economics, more money in the system may in fact increase employment, but only at the cost of wages. When new money enters the economy, prices rise, but wages are typically 'sticky' and are among the last things to adjust. As such, adding new money to the system effectively reduces the real value of wages and the cost of labor, making it easier for businesses to hire.
Is that understanding accurate? And if so, why doesn't this aspect of QE get more face-time in the public discourse? If we as a nation are taking inflation pay-cuts to aid our neighbors in finding work, that is one thing, but I would at least think we would deserve to know about it.
"How politics is affecting the sluggish economy?"
No. How politics are destroying our economic prospects. Deliberately.
I think this sudden focus on the deficit is just a Republican ploy to prevent Democrats from getting anything done. Can any guest explain why we are trying to fix the deficit right now, in a downturn, when we happily let it balloon when Bush was in charge?
I wish once in a while we could learn from our mistakes instead of repeating over and over
Reagan cut tax rate on wealthiest Americans proclaiming this would rocket economy to new levels of production and prosperity. It did the opposite, producing at the time, the deepest recession since Great Depression. The ultimate result of Reagan supply side tax cuts was to funnel more of nation’s wealth to already wealthy. W put this process on steroids.
As far as jobs, in each of Clinton years, on average 2.5 times more jobs were created than each of Reagan, Bush SR, or W!
These facts SHOULD demonstrate which policies are most beneficial.
The working, and middle classes, spend virtually everything they earn.
This is Economics 101. It is consumption (spending) that generates 67% of GDP
As long as lunacy continues to drive tax policy, the government will keep expanding deficits and jobs will continue to be lost
The richest couple percent of Americans and corporations presently have UNPRECEDENTED cash reserves. So if we extend tax cuts to the wealthy it
will suddenly prompt hiring??? Right.
Flooding the elections with undisclosed money and distorting the truth clearly works. Corporations, hedge fund managers, and some wealthy individuals simply do what they do best in parameters of the system they are allowed to work with. This is American way.
It had been American way to have laws in place that helped to protect the American consumer and somewhat restrict the influence of powerful interests, but most of these regulations have been effectively stripped
away.
As long as Americans continue to vote against their own best interests and support the notion that if we just make sure the wealthy continue to earn the equivelant of 20, 100, 400x average American wage, America is headed for a cliff.
Disinformation is winning the day.
Do you think that Americas economy will ever rebound as long as we are involved in the middle east?
The Tea Party movement is not a grass roots movement but one created and fostered by the mega wealth of David and Charles Koch, similar to their creation of the CATO Institute. (Remember their father who founded the John Birch Society!) The Tea Party began with a goal of disrupting Democratic Town Halls on the the president's health care program.
In response to what Bort wrote, once again the media has not responded to the question as asked. When Bush was in office the deficit was a non issue. The tea party has somehow convinced people that the mess we're in is the responsibility of the Obama administration even though it was obviously produced by the Bush admin. Relating to that, the tax cut is part of what made the huge deficit. Why are they trying to extend it? The tax cut for the wealthy is a joke. It hasn't helped create new jobs in the last 10 years, why would it work now?
In the Great Depression of the 30's at least there were a few options at self-sustenance thru agriculture, and "the poor house" and sanitaria for TB patients.
Now the govt is busily destroying small scale agriculture, regulating out of existence anything that doesn't conform to its belief of "safe" food being sterile (disregarding nourishing), so those safety nets are gone.
Why are the trillions of dollars we are pouring into military excursions not being taken into account when it comes to balancing the budget. Why are social security and medicare prime targets? Are they just the most visible?
Your guest made comparisons to Hong Kong and France. Our own experience I feel is a better measure. During the 90's when taxes on those above 250k net were about 5 % points higher, the economy created about 22 million new jobs. During this century, with the lower taxes, job creation is stagnate. Currently, taxes in the US are the lowest in 60 yrs, yet the unemployment rate remains high. During the 50's, an era many consider the golden age of the US,(not me) marginal tax rates were 90%, but millions of jobs were created. The same people who want to extend the the Bush tax cuts for the wealthiest want to end the Obama "Making Work Pay" tax cut of $400 to every working person in this country.
The man from the Cato Institute ties every argument to growth prospects - yet what really matters is growth that is spread around the population, not concentrated at the top. As Jim Hightower says, moneyn is like manure - when its spread around it does a lot of good, when collected in huge piles it's just a big stinking mess....
Seems the worry in removing the tax cuts for the wealthy, is the effect on small business and jobs. Instead of giving the tax breaks carte blanche to the wealthy, why not restructure the tax so that small business earning more than 250,000 get the tax cut based on the new jobs they create?
It kills me to see wealthy people who have not been affected by the economic problems, get the tax cuts when we need to start paying down the deficit.
I wish that the government would run it's budget similar to the way we "families" run our households. Sometimes we need to tighten our belts. That's something that we have all done over the past year. I don't think that it is unreasonable to ask us to tighten our belts again. Repeal the tax incentives just for 2011. Then reinstate them in 2012. Let's bail ourselves out of all this debt. ASK the American people to step up!
I wish that the government would run it's budget similar to the way we "families" run our households. Sometimes we need to tighten our belts. That's something that we have all done over the past year. I don't think that it is unreasonable to ask us to tighten our belts again. Repeal the tax incentives just for 2011. Then reinstate them in 2012. Let's bail ourselves out of all this debt. ASK the American people to step up!
When you talk about unemployment, talk about National Hiring Day, set for Jan 17, 2011.
This is the first worker initiated response to the jobless problem. The media needs to cover both the workers response as well as the corporate response to job problems.
The media so far refuses to even mention the worker initiated jobs day.
Diane don't join the bad media on this one. Show support for all sides of the issue.
How about an hour with Sen Bernie Sanders to discuss the progressive alternative plan?
From Jane Smith:
An interesting program. I hope our Congressional members are listening.
I am hoping everyone voting on the tax cut proposals figures out how the country will pay for them other than by borrowing money to do so. When they do, they can vote yes. If not, the vote should be no.
While we are spending so much money on wars, we have not been asked to sacrifice anything to pay for them. Where are the victory gardens, the war bonds, the giving up things so we can help the war effort? While I don't support the wars, I think the American people need to realize they are costly. Perhaps an end to the tax cuts would do that.
Let's be sure to look at the taxing structure that underlies Social Security.
We pay two kinds of personal income tax in this country:
A) the flat-rate, from-dollar-one, Social Security tax --7.5% employee/same from employer, or if you're self-employed like me, all 15% of it-- that we've all been contributing to since our first job in high school;
B) graduated income tax, with all kinds of personal deductions, mortgage deductions, etc. Many at the lower end pay none of this kind of tax, or even get an earned-income tax credit. But the rate goes up the more you make, and rich folks pay more.
So guess which tax got the Bush tax cuts, and which tax fund they borrowed from to pay for the tax cuts, two wars, and an unfunded drug benefit?
Now some have the gall to come and say we can't afford the entitlements (SS, Medicare, etc.--all that stuff supported by payroll taxes). Well, this is the main reason to kill off the Bush tax cuts for the wealthy, and get funding for SS guaranteed solid. The rich used those tax breaks to "invest" in money chasing money, not building a strong economy, and drove us over a cliff.
It's OUR money -- the wages and salaries of working people -- that funds Social Security, and provides a secure floor under us in our old age. And it WORKS!
(Getting more people back to work will improve SS payroll tax revenues!)
And as Krugman noted just this morning:
America, however, cannot afford to make those cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. [emphasis mine]
The “compromise” being talked about in congress is that we keep all the tax cuts and all the benefits that both parties want, borrow all the money and hope that future generations can pay the bill. Politics will trump responsibility and common sense!!
Here are some ideas on taxes
A simple tax code where all income (wages, inheritance, dividends, capital gains) are taxed at the same rate with ZERO deductions. Three or four rates with the top rate only for those incomes above a million.Those taxes should EQUAL our expenses.
Replace both employee and employee FICA with a combination national sales tax and energy tax. A back of the envelope calculation looks to be 7 to 8 per cent. This should finance Social Security and Medicare.
Thanks to Alice Rivlin and David Walker for being part of the deficit solutio.
I am an admirer of economists Paul Krugman and Robert Reich. But is anyone in congress or even the Whitehouse listening ?
I see this tax crisis as an opportunity to educate the public about the Republican agenda or to call their bluff. How can Republicans, with a straight face, say that they want to continue tax breaks for the wealthiest Americans and cut the Federal debt by letting unemployment benefits run out?
Who would the public be angriest with if President Obama stood firmly against the Republican agenda ? There are times for the president to fight and this is clearly one of them . Let the public wake up finally, and for once, Pres Obama, articulate the hypocrisy in Republicans words. And is it asking too much of the media to start shedding more light and less heat on the issues?
Signed
An Incensed Voter
why haven't we heard more talk about creating actual tax incentives for companies that create and maintain jobs in the US?
A rich American business person has little reason to re-invest in the USA nowadays with the cost of labor being so low overseas.
republican Trickle down economics was and always has been a deception
self serving Greed promoted by tax breaks and incentives
for the affluent
Only create jobs in third world countries
What the scoundrels do is fatten their profit margins
by going off shore
And kicking American workers in the face
Mr. Mitchell and his ilk form the Cato Institute and the Heritage Foundation are propagandists, not credible experts, and their use of distorting phrases like "death tax" reveal them for what they are - mendacious partisan hacks, who push their discredited ideology without remorse and without regard for the long term well being of our country or our planet.
Diane, I have been listening to you for nearly 10 years. This collection of right wing pundits you have on today's show offers zero depth of discussion and understanding. These people all want tax cuts for the wealthy and cuts in spending for the poor. They support the Tea Party and the Republican Party. And their comments are peppered with pre-rehearsed sound bites. Listen back to the (often critical) questions from your listeners and how these guests block and parry every major point. Only Alice Rivlin has addressed the problems without something like a Ad-man's sales pitch for the right. Garrett Major!, Cato Institute!, Please, Please, Please--this grouping, Diane, is completely beneath you.
ps. The deficit argument is a great right wing strategy as Republican administrations always run up the deficit (see Reagan and G.W. Bush). When the Democrats take over the preidency, the Republican congress screams: "Cut Deficits! Cut Deficits!" (see Clinton and Obama). This clever equation gives Republican administrations carte-blanche to cut taxes and engage in wars (running up the deficit), and hand-cuffs the Democrats from getting through their programs.
pps. And the Tea-Party is another great corporate right-wing money grab, and is a hand-in-hand relation to the Republican Party. The TP makes the Republican party look moderate by comparison, and all the while--follow the money--they are both drawing water from the same well. Unfortunately, because of the corporate lock on campaigning, the Democrats are not far behind. The FDR Democrats are now in the green party.
John Doe has said what I was thinking. In fact, the program was peppered with such right-wing propaganda, I had to turn it off. It was not a thoughtful discussion. Even Alice Rivlin had the same starting point that Social Security and Medicare are the problem. They are not problems; they are solutions to the inherent unfairness of capitalism.
It was unfunded wars, reckless tax cuts, and lack of effective regulation that created this economic mess. All three stemmed from Republican presidencies: Reagan - tax cuts, de-regulation, and war with Granada (a mouse); Bush I - Gulf War; Bush II - tax cuts, two wars, and dereliction of duty on regulation of business. In all that time, value has been sucked out of the country by corporations, and the middle class has stagnated or lost ground.
Tax cuts, wars, and lack of regulation got us here. It will take ending the wars, restoring tax fairness, and re-regulation to get us out. No one mentioned these factors on your show.
p..s. There is a simple, effective cure for our rising cost of health care: single payer. It works everywhere else.
Yes, Tom, that would be a balanced perspective.
Yes, Bernie Sanders and add an hour with Elizabeth Warren! Then, how about an hour with Jacob Hacker and Paul Pierson, authors of Winner Take All Politics. Lets get some NEW perspectives in place of the old, worn-out talking points.
If you are from the Cato Institute, the answer to everything is tax breaks for the super-rich (none of whom are small business owners) and destruction of all social programs. They give the same responses in good times and bad. You can count on it.
If I want to listen to Republican talking points (as if I couldn't repeat them all myself at this point), I will turn on Beck or Hannity.
A national sales tax is regressive. It will hit the poor and the middle class the hardest. If you want a national sales tax, put it on luxury items like yachts over 100 feet long, private planes, wines over $100 a bottle, jewelry over $10,000 per item, art work over $10,000 per item.... you get the idea.
Socialism: There seem to be many that believe all social programs are evil- Infrastructure (roads, water, sewer, etc.), education, health care, environmental protection, social security are all unnecessary.
It seems what they are advocating is that we all need hoard guns and return to the life of the caveman.
I think today's compromise on taxes suggest that, just like for the previous two years, Obama's biggest obstacle to governing is negotiating within his own party. Before November's election, Republicans didn't matter so he could go left and had to negotiate with the middle members of his party. Come January, Republicans matter and he'll have to contend with the malcontents on the left of his party if he wants to accomplish anything.
I am a small business owner with my family for four generations. We operate a hotel, restaurant, and real estate office and over the years have had many ventures, successes, and failures. I personally operate the restaurant and I do not understand how over this recession with all of this unemployment extensions I have trouble hiring american. Mainly in the lower positions like bus buys and dishwashers and in the hotel bell hops and house cleaning. The only people coming through the doors to work are immigrants and most likely illegal. They have documentation most likely fake from the looks of it but we need the help. It bothers me to give them money and watch half go back to mexico. I feel the unemployment extensions need to be given out less freely. The one good point I do see with the mexicans is a neighboring small city that has had a small awakening from the mexicans taking residence in the center. Opening businesses, renting and spending there wages. Locals refer to it as little mexico. It is like we need to balance the good with the bad. Shut the border down and give proper documentation to the ones that are here. Not legal status but work visas so they can be taxed properly.