Tag: economic recovery

Trust me and trust Congress

Trust me and trust Congress

Posted on by Jack

Mitt Romney has a plan to fix the economy. It is just that he won’t tell us exactly or even approximately what it is. He will cut taxes for everyone while reducing the deficit and the economy will boom.

Unfortunately he will not tell us how he will manage to cut tax rates while reducing the deficit except to say that he will eliminate nonspecified loopholes and deductions. Paul Ryan seems to have a similar plan with unspecified details. Should they be called the “Trust Me Team”?

It seems they will work with Congress to specify some of those loopholes and deductions. So our role is to trust them and trust Congress. Congress certainly hasn’t done much lately to earn our trust.

So trust them and trust Congress. Does anyone else see a flaw in this plan ?

Ryan’s fantasy

Ryan’s fantasy

Posted on by Jack

I usually disagree with David Brooks of the New York Times but do find his columns well-worth reading as he often makes good points. In a recent column Ryan’s Biggest Mistake he makes the point that in voting against the Simpson-Bowles proposal and so denying a vote for the proposal which offered both deficit reduction and tax reform, Paul Ryan helped shoot down a good proposal which he viewed as less than perfect.

They do say the perfect is the enemy of the good or something like that and this seems to be a good example. While I don’t think Paul Ryans’s ideas are perfect, I’m sure he has a high opinion of them. But as David Brooks points out, Paul Ryan was giving up real progress for a fantasy. Read the column. It is interesting (good but not perfect).

Jon Huntsman and Too-Big-To-Fail Wall Street banks

Jon Huntsman and Too-Big-To-Fail Wall Street banks

Posted on by Jack

Jon Huntsman has shown he is a candidate with a real shot at the nomination with his strong showing in the New Hampshire primary. Maybe now he will get the attention he deserves.

Mr. Huntsman has again addressed the issue of Too-Big-To-Fail Wall Street banks. He seems to be one of the very few politicians who is willing to take on Wall Street banks which threaten our country’s economy. I had written about this last month (see my post – Jon Huntsman and Too Big to Fail.

It would seem that many in the Republican and business communities are opposed to the regulation of financial institutions passed by Congress (Dodd-Frank) But if the government is responsible for the debts of the big banks, does it not make sense to regulate? Certainly, it can be argued whether Dodd-Frank got it right. But if there are no too big to fail institutions, a lighter regulatory hand is appropriate.

Jon Huntsman and Too Big to Fail

Jon Huntsman and Too Big to Fail

Posted on by Jack

I was very pleased to read Jon Huntsman’s plan on financial reform . Two aspects of it especially struck me.

First, it never made any sense to me to have financial institutions so large that they would be considered too big to fail. That is they are so large that if they were to fail the entire US economy would be in danger. Indeed, I had writen about this over 2 years ago.. Jon Huntsman presents a plan to eliminate this risk by the simplest means possible: not have too big to fail institutions.

Second, he proposes the repeal of Dodd-Frank. This was our government’s regulatory response to the 2008 crisis. I read quite a few newspapers (including both the NY Times and the Wall Street Journal) and I know this regulatory reform is opposed by many in the business community but it seems to me if the goverment is ultimately reponsible for the debts of the big banks, there is a need for extensive regulation. It is an arguable point whether Dodd-Frank got it right. But if there are no too big to fail institutions, a lighter regulatory hand is appropriate.

There are several other aspects to Jon Huntsman’s plan but I just wanted to highlight these. Although Jon Huntsman is way back in the pack seeking the GOP nomination for President, he may be the most qualified and thoughtful in the group.

Stimulus worked, more jobs needed

Stimulus worked, more jobs needed

Posted on by Jack

The graph below shows the month to month change in private employment during the 45 months from January 2008 to September 2011. Thus months 1-12 are 2008 during the Bush admininstration. Months 14 -45 are the Obama administration. And month 13 is January 2009 which was split between the 2 administrations. The numbers on the right indicate thousands of jobs gained or lost each month.

All numbers are from the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor. The month to month change was calculated and graphed with Excel.

Jobs Chart BLS numbers

The graph clearly shows accelerating job loss in 2008 hitting over 800, 0000 jobs lost in January 2009, staying in that area for several months, followed by a decreasing job loss, and emerging into positive job growth in April 2010. The job growth is too small bring down our stubbornly high unemployment rate but it is moving in the right direction. We need to create more jobs to keep up with the constantly growing labor force. We have had 17 straight months of job gains in the private sector. (The August figures are often reported as zero but that was because the number of jobs in the public sector shrank.)

There are quite a few things that could influence the economy in this time. The slow-down in job decline in early 2009 seems to suggest that stimulus plan seems to have worked but is now slowing down. The TARP program passed in late 2008 may have helped this recovery. And one could argue that things would be better or worse if we had followed a different plan.

The present jobs bill being promoted by President Obama should also stimulate job creation the same way. And there is a focus on fixing infrastructure, things we need to do anyway. One could argue certain aspects of the plan could be improved but many critics think this plan is a waste of time and money since the first stimulus didn’t work. It looks to me like it probably worked but may not have been enough so it is well worth trying something similar.

The stimulus was working but is now slower

The stimulus was working but is now slower

Posted on by Jack

The economic stimulus plan of 2009 is widely criticized as not working but it seems that it did work but is now slowing down. They say it didn’t create jobs but that is not right.

They say the government can only create government jobs. While it is true that government creates government jobs directly, it also plays a large role in creating private-sector jobs, say by contacting with a construction company to build a road or repair a school. Also those government workers and private-sector workers paid to do the work that the government funds, spend their money and that will further stimulate the private sector.

Why do I say this? Let’s look at the data. To make my point I’ll just look at private employment. Government employment is useless according to the critics. I disagree but I’ll leave that point alone right now. But it complicates the picture and gets into an argument that just distracts from my point. So private-sector only.

Monthly job numbers from the Bureau of Labor Statistics of the U.S. Department of Labor from January 2008 to as close to present as we can get are plotted here.

Jobs Chart BLS numbers

I downloaded the numbers from BLS and ran the numbers myself and produced a similar graph. My graph did not look nearly as nice as this one so I went ahead and used the one already published on the internet.

There are quite a few things the would influence the ecomomy beside that change in Presdential administrations. And one could argue that things would be better or worse if we had followed a different plan. Or one could argue that the TARP program passed in late 2008 was a part of this recovery. But the slow-down in job decline in early 2009 seem to suggest that stimulus plan seems to have worked but is now slowing down. Jobs are being added but at a slow pace.

The present jobs bill being promoted by President Obama should also stimulate job creation the same way. And there is a focus on fixing infrastrucure, things we need to do anyway. Some critics think this plan is a waste of time and money since the first stimulus didn’t work. It look to me like it probably worked but may not have been enough so it is well worth trying something similar.

Huntsman Beats Obama

Huntsman Beats Obama

Posted on by Jack

Jon Huntsman beats Barack Obama in making public a jobs plan. President Obama’s plan should be out in a few days. Gov. Huntsman’s plan has already been available for several days. It covers many aspects of the economy as would be expected as jobs are not an isolated issue and they are but a part of the larger economy. Here is the whole plan as a PDF as well as a blog entry on the candidate’s website that summarizes.

Let us hope more of the candidates come out with plans like this so we can have a debate on some ideas. I was a bit disappointed that parts of Huntsman’s plan were vague but I’m sure these points will be more fully explained in the near future.

Stimulus efforts: Shovel ready or not. Please fix our infrastructure.

Stimulus efforts: Shovel ready or not. Please fix our infrastructure.

Posted on by Jack

The stimulus efforts have seemed to slow down for a variey of reasons but often cited is that there are very few truly shovel-ready projects. The infrastructure needs to be fixed. Our roads are certainly in need of improvement and not so long ago a bridge collaped with loss of life and many of our bridges were inspected and found to be sorely lacking. The power grid could use updating too. Remember the black-outs. It would be a long list if I tried to list all the needs and even then I’d surely miss some. Lots of infrastructure improvements are needed in this country.

A project does not need to be shovel-ready to be a stimulus to the economy. The planning stage requires much work (jobs!) and is followed by construction jobs. So we need to fix our infrastucture and stimulate our economy at the same time.

Bush tax hike delayed

Bush tax hike delayed

Posted on by Jack

The delayed Bush tax hike (aka the Bush tax cuts) has been delayed by a compromise. I call them the delayed Bush tax hike because President George W. Bush gave us a temporary tax cut which would have expired this year giving us a tax hike. This was discussed in this blog a few days back as the Bush tax increase.

There have been numerous new articles and endless commentary on this on this so I won’t add much more for now, just point to 2 of the more interesting comments I have seen.

MAD from Forbes

Obama: President; McConnell: Sucker

Too big to fail

Too big to fail

Posted on by Jack

One of the more curious thing about and the US economic recovery efforts in general is that certain institutions have been bailed-out with taxpayer money because they were too big to fail. That is, they were so large that their failure would bring down the US economy. So the solution that makes no sense is to merge them with another big corporation so that if they fail again it could be even more catastrophic.

Am I missing something? Wouldn’t it be better to rescue them (if need be) and then force a break-up into smaller entities that could fail without bringing down the entire economy?