Wonkbook: Romer wants more stimulus; five reasons for economic optimism; illegal immigration down
In her final speech as chair of the Council of Economic Advisors, Christina Romer issued the clearest call any member of the administration has made for substantial new stimulus. "The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less," she said. As is her trademark, Romer delivered her "scary descriptions and warnings" with a "perma-smile and singsong delivery."
If you're looking for actual optimism, however, we've got some of that, too: Neil Irwin sees at least five reasons to be upbeat about the economy. Many will be glad to hear that illegal immigration has fallen by two-thirds since 2005. And Republican House chairmen will be happy to know that John Boehner plans to make them more powerful if he becomes speaker.
Can we have some real talk? I almost cried during Top Chef last night. Anyway, welcome to Wonkbook.
Christina Romer left her post as CEA chair by issuing one final call for more stimulus: "The thing I do regret is that there is still so much unfinished business. I would give anything if unemployment really were down to 8 percent or lower. The American people are suffering terribly. Policymakers need to find the will to take the steps needed to finish the job and return the American economy to full health, and no one should be blocking essential actions for partisan reasons."
"While we would all love to find the inexpensive magic bullet to our economic troubles, the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts."
Download the whole speech: http://bit.ly/a7Z5BP
Illegal immigration has fallen by two-thirds since 2005, reports Tara Bahrampour: "In the first half of the decade, an average of 850,000 people a year entered the United States without authorization, according to the report, released Wednesday. As the economy plunged into recession between 2007 and 2009, that number fell to 300,000. The drop has contributed to an 8 percent decrease in the estimated number of illegal immigrants living in the United States, from a peak of 12 million in 2007 to 11.1 million in 2009, the report said."
Neil Irwin presents fives causes for economic optimism: http://bit.ly/9oF83X
Lehman CEO Dick Fuld faulted the Fed and Treasury for not orchestrating a bailout of his company, reports Ariana Eunjung Cha: "'Lehman was forced into bankruptcy not because it neglected to act responsibly or seek solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors and other nonfinancial firms in the ensuing days,' Fuld said. Fuld - a central figure in the crisis, criticized for taking too much risk - argued that the sudden collapse of Lehman and the resulting shock to markets could have been avoided as late as the weekend before, had the government taken action."
Read Fuld's full remarks: http://bit.ly/a4fUQA
House Republicans want to strengthen committee chairs if they win back the body, reports Richard Cohen: "They make clear that they plan not only to change the top-down management style of Speaker Nancy Pelosi but also to pare back the excesses and power plays that occurred during the 12 years of Republican control under Newt Gingrich, Dennis Hastert and Tom DeLay...Such proposals for internal changes inevitably generate controversy among members, as well as from lobbyists who work with them on legislation. That helps explain why GOP leaders have offered limited details and why they would plan to move quickly on a reform package after the election. Possible proposals to change the jurisdiction of some committees or to sunset others could be especially controversial."
Springsteen cover interlude: Vampire Weekend play "I'm Going Down".
Still to come: The IMF thinks the United States could borrow another $7 trillion without hitting even odds of a default; foreign carbon trading programs are running into problems; David Loenhardt looks at teacher accountability; seven states opposing health care reform's implementation are nonetheless using its funds; and a montage of Iron Chef secret ingredient announcements.
The IMF estimates the US is at moderate risk of default, reports Howard Schneider: "The IMF estimated a series of probabilities regarding the amount of increased debt a country might be able to sustain without hitting its projected point of no return. In the case of the U.S., the fund said the odds were roughly three out of four that the country could increase its total debt to some degree without being penalized by investors -- logical considering that the debt is steadily increasing and interest rates remain low and steady. However that probability falls to an even 50-50 if the amount of new borrowing were to exceed fifty percent of GDP - or about $7 trillion given the current, $14 trillion size of the U.S. economy."
Manufacturing grew surprisingly fast in August: http://bit.ly/9qtAWL
Bernie Sanders argues for lifting the payroll tax cap: "Under the law today, the Social Security payroll tax is levied only on earnings up to $106,800 a year. That means millionaires and billionaires get off scot free on all of their income above that amount. In other words, an individual who earns $106,800 pays the same Social Security tax as a multimillionaire. That’s wrong. Applying the Social Security payroll tax on those with the most income, say over $250,000 a year, would correct this inequity. According to CBO, applying the tax to all income would provide all the revenue that Social Security needs for the foreseeable future -- for our kids and grandchildren and great grandchildren."
Kenneth Rogoff argues crisis-related unemployment is not fixable with stimulus alone, and it's time for the Fed to begin goosing inflation: http://bit.ly/cfFBtR
Karl Case makes the post-crisis case for home ownership: "For people with a more realistic version of the American dream, buying a house now can make a lot of sense...it provides what is called 'net imputed rent from owner-occupied housing.' You live in the house and so it provides you with a real flow of valuable services. This part of the yield is counted as part of national income by the Commerce Department. It is the equivalent of about a 6 percent return on your investment after maintenance and repair, and it is constant over time in real terms. Consider it this way: when Enron went belly up, shareholders ended up with nothing, but when the housing market drops, homeowners still have a house."
Culinary television interlude: A montage of Iron Chef secret ingredient announcements.
A major renewable energy provider is promising additional investment if Congress passes a renewable energy standard, reports Andrew Restuccia: "Lew Hay, the head of NextEra, the country’s largest renewable energy developer, promised to invest $2.5 billion a year in wind and solar energy if a renewable energy standard passes. And he suggested that investment would create as many as 40,000 new jobs in the five years after the investment is made. An RES would require that a certain percentage of the country’s electricity come from renewable energy sources like wind and solar."
Oil prices are rising: http://bit.ly/csdrRz
Efficiency improvements could reduce US energy use dramatically, reports Erica Gies: "Mr. Goldstein argues that the United States could reduce its projected energy consumption 88 percent by 2050, and that a 30 percent reduction is possible by 2020. Other estimates are somewhat lower. The National Academy of Sciences study, on which he was a consultant, found that projected U.S. consumption could be cut 17 percent to 20 percent by 2020. McKinsey & Co., using prerecession consumption projections, put the potential reduction at 23 percent by 2020."
BP spent almost $100 million on advertising following the oil spill: http://bit.ly/a5EZaL
Foreign carbon exchange markets have been running into problems, reports Sonia Kolesnikov-Jessop: "In July 2007, the Australian Climate Exchange, known as the A.C.X., introduced the first electronic trading system for greenhouse gas emissions in Australia....But this January, the A.C.X. discreetly halted business, and what had started like a lion went out like a lamb. 'We had to close the business down because we’d run out of funds to continue,' said Tim Hanlin, the former managing director of the exchange."
Dave Roberts describes the outlook of climate legislation after November: http://bit.ly/aif1PA
Math is magic interlude: An iPad app that can solve algebra equations.
Seven states backing a legal challenge to health care reform are taking money from it nonetheless, reports Ricardo Alonso-Zaldivar: "About 2,000 employers have been approved for the extra help to cover early retirees, mainly private businesses. But the list also includes seven states suing to overturn the health care overhaul as an unconstitutional power grab by the federal government. The seven are Arizona, Idaho, Indiana, Louisiana, Michigan, Nebraska and Nevada."
The FCC is still weighing its net neutrality plan: http://bit.ly/bSoI24
Food safety advocates are planning a new push for Senate action, reports Meredith Shiner: "A top Democratic aide said he was 'hopeful' the Senate could move the bill to the floor, citing a manager's amendment released last month as progress. He added that proponents of the legislation are putting together a time agreement. 'Hopefully, we can get this done, but Republicans aren't inclined to give us much of anything right now,' the aide said...Republicans Mike Enzi of Wyoming, Richard Burr of North Carolina and Judd Gregg of New Hampshire were all sponsors of the recently approved update to the bill that moved out of the Health, Education, Labor and Pensions Committee."
School lunch programs exacerbate obesity - but school breakfast programs don't: http://bit.ly/9mu3rC
Nicholas Kristof argues the salmonella outbreak makes the case for cage-free eggs: http://nyti.ms/ahyFyW
David Leonhardt considers the limits of teacher accountability measures: "Value-added data is not gospel. Among the limitations, scores can bounce around from year to year for any one teacher, notes Ross Wiener of the Aspen Institute, who is generally a fan of the value-added approach. So a single year of scores -- which some states may use for evaluation -- can be misleading. In addition, students are not randomly assigned to teachers; indeed, principals may deliberately assign slow learners to certain teachers, unfairly lowering their scores. As for the tests themselves, most do not even try to measure the social skills that are crucial to early learning."
Long-form interlude: Bank robbers!
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