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Wonkbook: Goolsbee to head CEA, Voinovich backs small business aid; yuan(na) fight?


It's official. Austan Goolsbee -- economist, media darling, and one-time stand-up comedian (and yes, that links to video) -- will succeed Christina Romer as CEA Chair. At 41, Goolsbee, an economist from the Chicago Business School who has worked with Obama since the Senate campaign, will be the youngest CEA Chair since Arthur Okun in 1968. And don't miss this line in Jackie Calmes' story: "Because Mr. Goolsbee has been confirmed by the Senate as a member of the Council of Economic Advisers, he does not need approval to become the chairman — not a small consideration at the White House."

Speaking of Senate approval, George Voinovich says he will back the $30 billion small business lending bill when it comes before the Senate next week. Assuming no other unexpected vote changes, that gives the blegislation the 60 votes it needs to pass. Why the switch? "In an interview, Voinovich said he could no longer support Republican efforts to delay the measure in hopes of winning the right to offer additional amendments. Most of the proposed GOP amendments 'didn't have anything to do with the bill' anyway, Voinovich said, and amounted merely to partisan 'messaging.'"

I'm really sorry about today's headline. To my knowledge, there are no other puns in Wonkbook.

Top Stories

Austan Goolsbee will lead the CEA, reports Jackie Calmes: "At 41, Mr. Goolsbee would be the youngest chairman since Arthur M. Okun held the job from 1968 to 1969 under President Lyndon B. Johnson...But Mr. Goolsbee, an amateur comic as well as an economist, was a favorite within the White House, where many colleagues felt he had earned the chairmanship. He has tense relations with Mr. Summers, however, after policy disputes in the early crisis-driven debates over the rescues of the financial industry and Chrysler, among other issues. Mr. Goolsbee, who has a free-market bent, opposed bailing out Chrysler. He did not prevail, but Mr. Obama personally sought his arguments."

George Voinovich will back the small business aid bill, reports Lori Montgomery: "The package of tax breaks and other incentives includes a new loan fund that would encourage community banks to provide up to $30 billion to small businesses, improving access to credit - a problem hurting businesses owners in Ohio, Voinovich said. He cited the case of a constituent who was turned down for a loan by 42 banks. 'I happen to believe these small-business people can't get money to save their souls,' he said. Voinovich, a longtime champion of federal transportation spending, said he also plans to work with Obama to pursue a six-year reauthorization of the federal highway bill."

Confused by how an infrastructure bank, but didn't want to tell anyone? Read this and you'll be the one who makes everyone feel like it's obvious stuff they should already know.

Congress could spur a fight with China on currency evaluation in coming weeks, report Ian Talley and Michael Crittenden: "'There is no real question that China’s deliberately undervalued exchange rate is unfair ... and costs the United States jobs and economic growth,' Ways and Means Chairman Sander Levin (D., Mich.) said in a statement. The Senate Banking Committee is also scheduled to hold a hearing on the issue, and some key Senate Democrats are making a push to include currency legislation in a broader package of economic measures they hope to enact this month."

Acoustic pop interlude: Red House Painters play "San Geronimo" live.

Still to come: The administration's approach to boosting manufacturing is under fire; a US union is challenging Chinese backing of green energy industries; a federal appeals court has reversed a ruling banning spending on stem cell research; and a baby pygmy hippo.


Manufacturers object to the approach that Ron Bloom, Obama's factory czar, is taking to the industry, reports Louis Uchitelle: "He asked, in effect, that the federal government expand its support for such loans, and Mr. Bloom replied that the administration was doing just that, but with a caveat. 'It is not government’s role to direct banks to lend to particular companies or industries,' he explained. That unwillingness to interfere with the private sector is characteristic of the administration’s industrial policy. Shunning even the term, Mr. Bloom prefers to call it a 'manufacturing strategy.' Still, some of the Ohio executives pushed for more intervention."

The trade deficit fell in July:

The US wants to reduce European influence in the IMF, report Sewell Chan and David Jolly: "Last month, American officials used a procedural maneuver to block the board from being reconstituted in its current form for another two years. Under its founding charter, the I.M.F. board is supposed to have 20 members, but the number was expanded to 24 under a succession of agreements starting in 1992. 'The underlying problem is that the Europeans are overrepresented relative to the size of their economies, and the developing countries are underrepresented,' said Mark S. Copelovitch, a political scientist who studies the I.M.F. at the University of Wisconsin, Madison."

The OECD is suggesting members engage in more economic stimulus:

A tax cut extension could pass in Congress' lame duck session, reports Manu Raju: "Democrats are increasingly likely to punt the huge tax vote until a lame-duck session after the November elections. President Barack Obama is sending mixed messages about his demands, calling for a rollback of the top income tax cuts while stopping short of threatening to veto a compromise bill that would temporarily extend all tax cuts...Some say Obama’s equivocation about whether he’d veto a bill that temporarily extends the tax cuts has only muddied the debate."

Wall Street is unclear on how to read the administration's slow approach to appointing a consumer protection czar:

Paul Krugman believes things could get worse before they get better: "More broadly, if Republicans regain power, they will surely do what they did during the Bush years: they won’t seriously try to address the economy’s troubles; they’ll just use those troubles as an excuse to push the usual agenda, including Social Security privatization. They’ll also surely try to repeal health reform, which would be another twofer, reducing economic security even as it increases long-term deficits. So I find myself almost envying the Japanese. Yes, their performance has been disappointing. But things could have been worse. And the case Democrats now need to make -- the case the president finally began to make in Cleveland this week -- is that if Republicans regain power, things will indeed be worse."

Barry Eichengreen thinks we could be on the verge of a productivity boom:

Allan Sloan argues for aid to those making payments on underwater mortgages: "Enter Keith Gumbinger, a leading mortgage expert, with an interesting proposal for how the government can help you, help the housing market and even help whoever owns your mortgage. Gumbinger, a vice president at the HSH Associates mortgage consulting firm, wants the federal government to issue what he calls 'value gap coverage.' It would reduce your interest payments, reduce your incentive to walk away from your mortgage and show that behaving well doesn't make you a sucker."

Adorable animals being adorable interlude: A newborn pygmy hippopotamus.

Domestic Policy

A federal appeals court has restored funding for stem cell research, report Rob Stein and Spencer S. Hsu: "While the move was praised by advocates for the research, the appeals court made it clear it was not making a final decision about the case, which means the reprieve could be short-lived and the fate of the funding could continue to be whiplashed by seesawing court rulings. 'The purpose of this administrative stay is to give the court sufficient opportunity to consider the merits of the emergency motion for stay and should not be construed in any way as a ruling on the merits of that motion,' the appeals court wrote in its decision."

A new study suggests that health care reform won't reduce health costs over the next decade, reports Janet Adamy: "In February, the federal Centers for Medicare and Medicaid Services projected that overall national health spending would increase an average of 6.1% a year over the next decade. The center's economists recalculated the numbers in light of the health bill and now project that the increase will average 6.3% a year, according to a report in the journal Health Affairs. Total U.S. health spending will reach $4.6 trillion by 2019, accounting for nearly one of every five U.S. dollars spent, the report says."

Food inspectors noticed problems with eggs being recalled now but were ignored:

Some are arguing college is a poor investment, reports Sarah Kaufman: "Hundreds of billions of dollars of national student-loan debt has now overtaken American credit-card debt, the Wall Street Journal recently reported, using numbers compiled by, a Web site for college financial aid information...Few families have that kind of money lying around. But if you can give your child $10,000 or so to start his own business, Altucher says, your child will reap practical lessons never taught in a classroom. Later, when he's more mature and focused, college might be more meaningful."

David Brooks believes America's elites are developing some decline-of-Rome habits: America’s brightest minds have been abandoning industry and technical enterprise in favor of more prestigious but less productive fields like law, finance, consulting and nonprofit activism. It would be embarrassing or at least countercultural for an Ivy League grad to go to Akron and work for a small manufacturing company. By contrast, in 2007, 58 percent of male Harvard graduates and 43 percent of female graduates went into finance and consulting."

A judge's ban on a misleading election flier has been overruled:

Grandparents are taking on a greater role as caregivers due to the recession, reports Carol Morello: "Advocates for intergenerational families say the recession has dealt multiple blows to grandparents. Some are caring for grandchildren while their own children have gone away to look for another job or get career retraining. Meanwhile, many financially strapped states and counties have cut programs that provided financial and emotional support to so-called kinship families, including respite care and support groups. The families often are dealing with added emotional issues that stem from job loss."

Edward Schumacher-Matos argues the economic cost of domestic policy is overstated:

Questionable moments in advertising strategy interlude: Extreme baby carrots.


The Steelworkers' union is fighting Chinese attempts to subsidize green energy, reports Howard Schneider: "In a filing with the office of the U.S. trade representative, the union claims that China is steadily seizing world market share in the production of such things as solar panels and wind turbines through an array of subsidies, tax credits, cut-rate loans and other policies that favor local producers. Those policies violate World Trade Organization rules, the union says, and it is asking the Obama administration to open talks with the Chinese and then pursue the matter with the WTO if those negotiations fail."

Irrigation could be masking the effects of global warming:

Government agencies are attempting to reduce their carbon footprint, reports Lisa Rein: "The plans, released by the White House on Thursday, target the nation's single-largest energy consumer. The federal government, with 500,000 buildings and 600,000 vehicles, had a $24 billion bill last year for utilities and fuel -- 1.5 percent of the country's total energy spending. 'These actions [by agencies] will have an economic return for the American taxpayer,' said Michelle Moore, the federal environmental executive, who is helping lead the greening of government for the White House Council on Environmental Quality."

The US is fighting European efforts to charge consumers for airline emissions:

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard.

By Ezra Klein  |  September 10, 2010; 7:01 AM ET
Categories:  Wonkbook  
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Next: Seven things to know about Austan Goolsbee


I'd like to see some items discussing the koch brothers as well as how the AG's of various states such as Texas and Alabama are planning to sue California over it's carbon emission laws. It's really quite amazing how ultra wealthy right-wing corporatists and energy companies are thwarting Democracy in the USA. Then add to that the right-wing judges who are systematically converting this land into a libertarian free-for-all (e.g. see Ezra's item above how right-wing candidates can print anything they want in their attempts to deceive Democratic voters) you gotta wonder just how soon the while friggin machine simply grinds to a sudden halt.

Posted by: Lomillialor | September 10, 2010 7:44 AM | Report abuse

I liked the pun! Also, I think we need to find some use for "blegislation".

We also need to find out how to breed those pygmy hippos so they stay that small. In fact, let's make micro versions of all the animals of Africa. I really want a tiny giraffe as a pet.

Posted by: MosBen | September 10, 2010 7:56 AM | Report abuse

also in that health report is the fact that the biggest savings on cost in PPACA comes in 2018 with the implementation of the excise tax. Sad that the threat of a tax is the best thing we can do to reduce costs. And again it won't reduce costs, just reduce benefits to sit below the cost levels.

Posted by: visionbrkr | September 10, 2010 10:34 AM | Report abuse

That Eichengreen article is insulting. His evidence for the potential "productivity boom"?

"There are hints of firms responding similarly now. General Motors, faced with an existential crisis, has sought to transform its business model. US airlines have used the lull in demand for their services to reorganize both their equipment and personnel, much like the railways in the 1930’s. Firms in both manufacturing and services are adopting new information technologies – today’s analog to small electric motors – to optimize supply chains and quality-management systems."

What? You've got to be kidding me. Productivity comes from innovation in technology and/or strategy; while I don't doubt that there are efficiencies to be wrung out of these businesses (mostly by laying off workers), to suggest that there are industries that haven't been fully touched by the IT revolution of the last fifteen years is just silly.

Someone tell me I'm wrong here about this Eichengreen article. As far as I'm concerned, it's a piece of crap.

Posted by: Klug | September 10, 2010 1:43 PM | Report abuse

Let's say we set up an infrastructure bank in the US similar to the European Investment Bank. It starts with some seed money but primarily raises money by selling bonds. That money is used, according to it's charter, to fund infrastructure projects. Sounds to me like this would give the Federal Reserve the ability to engage in fiscal stimulus, independent of the political process, by purchasing bonds from the infrastructure bank. Am I right about this? And if so, how come nobody else is talking about it?

Posted by: wayward_va | September 10, 2010 4:52 PM | Report abuse

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