I participated in the White House Blogger conference call today, as a stand-in for the traveling Yves. The call was run by Jason Furman, the deputy director of the National Economic Council, who provided a brief recap of President Obama’s speech earlier in the day. The stated purpose of the call was to emphasize the importance of the Administrations three economic initiatives: a R&D tax credit, a $50 billion infrastructure investment and change in the tax code to all businesses to frontload their deductions for capital investments. Mr. Furman emphasized that the Administration had been working hard from the outset to bolster the economy and that these initiatives were a stark contrast to the “failed policies” of the past administrations. His prepared remarks were less than five minutes long and then he opened the call to questions.
While I appreciate the Administration’s efforts to broaden the reach of their communication, I must confess to feeling a bit let down by the presentation. As with prior initiatives with this administration, it was preceded by various rumors of potentially bigger, more game changing proposals, which failed to materialize. In addition, both the President’s speech and the presentation on the call seemed to be more concerned with the politics of the debate, rather than the realities of the economy. Even I, a relatively passive observer of Beltway politics, was able to detect a that the economic initiatives, the President’s press conference and the Blogger Conference Call were aimed more at influencing the election in November than they were at having an impact on the economy.
In fact, prior to the questioning, Mr. Ferguson didn’t seem to make any effort (nor did the President earlier in the day) to explain why or how yet another set of Administration proposals would have any impact on unemployment, the housing market or small business creation.
Finally, after some prodding from questions by Mike Konzcal and Felix Salmon, Mr. Ferguson addressed certain current economic realities. While quoting Christine Romer’s farewell speech, and sounding a bit like CalculatedRisk, he acknowledged that the impact of the housing market on the current recession. In prior recoveries from recession, residential investment has been an important factor in generating economic growth. Now, due to significant over-supply of housing inventory and the bursting of the housing bubble, residential investment is unlikely to help lead the economy out of recession. As a result, he said, with these initiatives the Administration is trying to find ways to generate economic growth from different avenues, since residential investment is unlikely to produce much anytime soon.
I found it refreshing to hear a genuine, rational economic explanation for the Administration’s plans for a change, rather than yet another attempt at political posturing about “failed policies of Republicans”. I don’t happen to agree with their analysis that these initiatives will actually help foster other meaningful avenues of economic activity. I think that the problems with housing, banking, and the financial markets need to be resolved, rather than hidden or ignored, before any real recovery can take place. I’m also not convinced that Federal and local government agencies have demonstrated an ability to do much more than produce pork and waste from the stimulus money so far, so throwing another $50 billion at them seems like a loser economically and politically.
But wouldn’t it be nice if more of the debate about the economy and the appropriate political responses to it, occasionally resembled the fleeting reference of Mr. Ferguson to the need for new avenues of growth? Unfortunately, the allotted time for our call expired after this remark. Soon enough, the President and his staff will return to playing politics, extending and pretending and doing their best to avoid any real debate or discussion of what the government can, and cannot do, to fix the economy.
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“As a result, he said, with these initiatives the Administration is trying to find ways to generate economic growth . . .”
Not really, or, to put it another way, if the Administration thinks what it is doing is “trying to generate economic growth” it needs to hire some new help.
The R&D credit is of little consequence to the overall GDP(but of great importance to certain American companies) because the largest “American” companies have been offshoring their R&D jobs along with everything else.
The accelerated depreciation for capital investment is of no consequence to most private businesses, who already do cash accounting, and of minor consequence (and in some cases undesirable) for publicly traded companies (all of which do accrual accounting under GAAP), most of whom are not making U.S.-based capital investments. If acquistions trigger the latter “benefit,” query whether Intel will avail itself of it (or any other company paying a massive premium to acquire another company).
The additional infrastructure investment is too little, too late, and it won’t happen.
Obama and his advisors are caught within the paradigm created by the neoliberal Washington Consensus. They can’t even see the box, let alone think outside it.
The Washington – and general elite Consensus can see the box, but they do not want to see outside, go outside and look at the state of the real economy. If they did that, their whole careers would suddenly appear utterly broken, spent in the neo-classical believe system which has been proven dangerously false in this crisis. As long as nobody out of the Elite Consensus steps out and admits that he was wrong (and not just as timid as Alan G.), it will be very difficult to crack that Consensus, and change course for the economy.
Frigging A, Tao Jonesing, frigging A, you nailed it completely.
The only two items I might add: that $50 bil will most likely primarily benefit Koch Industries (now go figure, huh?).
And ain’t it funny how Obama begins to sound like a democrat just before a national election, then immediately goes back to being a rightwing Republican? (Kinda makes one nostalgic for that 2008 election, huh?)
Thanks to Tom for filling in for Yves with even the “proper” amount of cynicism.
What more is there to say about dead end strategies and myopic views of growth?
I guess there IS still the question of how long this train wreck will take to hit the proverbial wall. From my vantage point the US is the train wreck and the wall is the rest of the world’s acceptance/lack thereof of Reserve Currency abuse.
Fiat currency relies on faith and that faith cannot be maintained, IMO, through the end of a gun. Quite soon, nukes are all that this banana ex-republic will have to barter with. Trying to sell humanity the rope to hang itself with will come with the message “Freedom for the rich at any cost”.
Umm, who’s Mr. Ferguson?
You are going to invest in Yesterday, in the Past. Those infrastructures were the backbone of the XX century economy model based in mass-production. Thank God we are entering in another model not based in mass-production.
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Once again we have classic Obama:
Malevolent in intent: The only policies which are “on the table”, indeed the only ones he seems congenitally capable of conceiving or entertaining, are neoliberal, corporatist, allegedly trickle-down.
Paltry and craven in execution: Even if you are a corporate liberal who believes in this kind of “policy”, you have to deplore it as woefully meager. (And if you’re one of the corporate interests slated to benefit you probably see it the same way.)
“Malevolent in intent” is right. This gang was chosen to protect the status-quo kleptocracy, the same old-guard gravediggers hired to lay the foundation for a new crypt—a whitewashed sepulcher worthy of the Pharisees.
This policy is “woefully meager” alright, but I’d go out on a limb and say it’s quite likely another Trojan horse proposal to allow Obama to reneg on expiration of the Bush tax cuts for the rich.
“Where there is no vision,the people perish…”
“Where there is no vision, the people perish.”
I thought we already had this plan before?
It was “shovel-ready,” no less.
Our real problem is that there is no alternative in the political community to the Obama lack of substance. Other than saying no, there is not real thinking.
Our government is dysfunctional along with the main street media. On Tuesday, Detroit had high winds and a spark from a illegal power entry started a fire. The city is so broke that they are not able to reapond in less than 1.5 hours and 5 houses burned to the ground.
How is that different than our national political system which is not able to respond to the financial crisis. We need to remember that the 1929 depression lasted untill 1941 when war spending and rationing set the stage for the recovery in the 50’s. Since we have not learned anything from the last depression, we are destined to repeat it. It looks like this Obama nonsense will fly untill we have a real depression
“Our real problem is that there is no alternative in the political community to the Obama lack of substance. Other than saying no, there is not real thinking.”
This.
I think Obama is doing a terrible job. The alternative, however, is the Republicans, who think the answer is:
– Repeal Healthcare reform (not improve it or replace it with something better, just eliminate it)
– Repeal Financial reform (same comment as above)
– Make the Bush tax cuts permanent
As if returning to the state of affairs that existed in 2008 and 2009 and then just doing NOTHING will improve the economy.
I’m in the ‘amen choir’ on this point.
Repeal “healthcare reform” (I believe you mean “health insurance reform”???): said “reform” will consolidate the power and control of the health insurance industry. It was originally conceived within the bowels of the Heritage Foundation, utilizing the insurance exchange concept originally conceived with the bowels of Enron, and the final legislation was written by the former VP of WellPoint.
You ever read any legislation whatsoever? (I’ve been reading this predatory legislation over the past thirty years, and its mighty nasty and NEVER equates to the name of the legislation, dood!)
And that “financial reform”? Consolidates the control and power of Wall Street, buries that so-called consumer protection agency in the stinking bowels of the Federal Reserve — you got any confidence in the Fed?
If so, you’re about the only one, other than the prez.
Beg to differ, fiscalliberal, beg to differ.
They did indeed learn. Back in 1920, Prohibition was passed (until 1933, and the same group who financed its passage was the same group which later financed its repeal).
A humongous tax cut then went into play (no longer can tax an outlawed beverage). Next, securitization really took off in the 1920s (was called by a different name then, but essentially the same buckaroo); and all those ill-gotten gains laundered through the stock exchange.
System was crashed, the super-rich rush in to purchase everything at bargain basement prices.
Samo….samo.
They understand completely, my good fellow, they understand completely….
Since I don’t know better, I’ll go with Krugman’s solution to the economy: influx of about an additional $1 billion.
Obama, of course, talks about almost no money. His ridiculous proposal doesn’t help and is politically late by about two months. It doesn’t have enough time to work as PR.
Make that the white house blogger conference call with liberal bloggers that support our fearless leader Obamy
LOL you are out of touch with “liberals” and the white house. Remember the White House staff refers to “liberals” as “f$$king retards”, of course than they had to apologize to the individuals with downs syndrome. LOL
This social/ecomomic mess is brought to us by what I call the “Credit Card Conservative Movement”, wrapped in Jesus, good old american pie and money, you know, the ones who go around labeling all desenting voices as “liberal” and attempting to marginalize anyone who does not agree with them. Little things like de-regulating the banking system, duhhhhhh, did we really expect anything else than this to happen? Shipping our core manufacturing over seas? I’m shocked, we now have a huge current account deficit! What do you mean you can’t lower the deficit, increase the personel savings rate and buy all this stuff from overseas?? Most american voters don’t understand, and can’t read the writing on the wall (punn intended) because they didn’t get the education or maybe they are just to stupid and lazy to learn and they deserve what they get.
Get rid of the goverment laws and enforcement, it’s not robbery if there are no laws against it. It’s like stealing candy from a baby…..
As the song goes, “Becareful what you say or they’ll be calling you a liberal…”
These briefings were “cute” initially but don’t serve much of a purpose. This WH does not interact well with the Press, traditional or blog. How many press conf’s have we had?
Were it not for the fact that the main-stream-media chooses to ignore the polls, there would be a lot more negative press regarding this Administration. (And alternately, if Fox didn’t let itself get pushed further right by Beck and O’Reilly its protestations regarding media bias would resonant beyond its rabid viewer base.)
The realities are that Obama promised “change,” walked into the Oval Office and became more liberal than Senator Kerry; who I only mention because America rejected this brand of liberalism in the previous election. Its remarkable really. The “old bull” dems of the House and Senate had to wait through the Clinton and Bush years to get a President who would let them do whatever they wanted. It is this Congressional hubris that will lose the Dems their majorities.
Sadly, this all is playing out during a time when the country can ill-afford stupidity from its federal government, which is why we’ve gotten legislation like Obama care, fin reg and the stimulus. What a colossal waste of billions of dollars.
What is most surprising to me is these Dems continue to tout their legislative agenda as if its anything but self-serving. (Remember those checks that were sent out by Uncle Sam when the crisis first hit? How ridiculous that looks now.)
Obama and the Dems should be careful though. With all this talk about education. If our schools actually do teach our children about life and government they will look back on this era and rightly apply the “Hoover” label to Obama, Pelosi and Reid. Lest readers here think I am a shill for the Republicans, fear not as I have yet to see much from the other side of the aisle. Their turn will come soon.
The projects in my area of Michigan are much needed. One of them is puzzling because the road was not damaged, but merely an inconvenience at times, for traffic. But there were other areas of roads labeled ARRA that were horrendous and I am glad they fixed them. Again tho, all they did was fix them. There was no, I will say, reform, of the traffic routes. The previous road, what was left of it, was tore up to the ground and then repaved nearly exactly as it was before. The interstate i referred to at the beginning was the same deal. They tore up the old section and just rebuilt it with larger areas to pull over on the side. Tho what was needed was the addition of another lane (from 2 lane to 3 lane).
To sum, it was nice to get some roads fixed ahead of schedule.
But yes, the stimulus was crap.
I add. What Obama is doing is continuing to add to the surplus cash reserves that companies (large fortune 500 ones) are holding. This is to buffer them when and if another economic shock occurs. Some would argue this is a good idea. Companies can dip into this instead of further layoffs. But this is not what happens. During the “expansion” of the first part of the decade, companies were laying off workers during growth. So in another downturn, they will either lay more off to maintain that cash or use the funds to buy up and shut down competitors.
This is nothing more than another back door taxpayer bailout of corporations. Most mom and pop “grocery stores” won’t be able to utilize this type of credit. In this downturn, they are doing everything to scrape by. The only way they “invest in R&D” is when their store is flooded with customers. And they probably have suffered book tax losses for several years (see the article on the decline of retail) and additional write-off does not help them.
What we have is a drug making company who constantly uses R&D getting to write most of that off at the expense of the treasury. They get to pass that along to shareholders.
You understand perfectly, ep3.
But allow me to add: they have been dismantling the economy over the past 35 years or so.
Government spending (a la Keynes) is supposed to tweak the economy, not carry it.
As there is no true existing economic system any longer, but plenty of debt-financed billionaires as a result, said stimulus mainly goes overseas via FDI (foreign direct investment for any newbies out there).
And the jobs offshoring continues unabated, as does rising unemployment and the destruction of the tax base.
‘Nuff said forever, Doom out forever.