In this day of gloom and doom predictions, I thought it would be nice to see what the White House plans to do in the upcoming months to try and steer this gigantic ship (economy) back in the right direction. The Freakonomics section of the New York Times solicited questions from their readers for White House economists Austan Goolsbee…. In order to keep this blog short, I summarized the answers and questions, but I will leave the link if you wish to see the article in its entirety.
Question: The Obama Administration has tightened its control of the domestic financial industry, the domestic automobile industry, the tobacco industry, and is gearing up to do the same with the healthcare industry. Why do you and the president believe a centralized control of the economy will be productive?
Answer: The administration firmly believes in the importance of a well functioning private sector, but we’re dealing with historic messes. We’re not “tighten in our control” in order to convert them to a centralize socialism; impose mind-control or any other such thing. The loss of public trust in the financial institutions undermined a market system and created the biggest crisis in 75 years.
Question: Do you think raising taxes on the wealthiest persons can stifle economic growth?
Answer: In the abstract If tax rates are too high, yes. Tax rates on the wealthiest Americans in the country are not the primary thing driving growth. The Obama budget will go back to where they were in 1990s (growth was quite respectable).
Question: What do you think will drive our economy in the next 15 to 20 years?
Answer: The skills and education of our people and technological innovation.
Question: If you’re trying to get credit markets up and running and the government might decide on a whim to take money away from secured creditors to which they are entitled to, won’t that discourage lending?
Answer: Secured creditors in bankruptcy, will get at least what they would have gotten in event of liquidation. And in this case, 29¢ on the dollar was better than what they would have gotten.
Question: What kind of progression in marginal tax rates do you think is ideal?
Answer: There is no ideal tax rate in isolation. It depends what the government is doing with the money.
Question: How likely is hyperinflation in the next couple of years?
Answer: The concern in the near term is preventing deflation where we do not have very good tools to work with… We have several tools to use should we see inflation rise.
Question: What is the real rate of unemployment?
Answer: There a lot of people out of the labor force. There also more people now counted as employed who are involuntary part time workers are “under employed workers, so we need to be careful making apples to apples in comparison across decades. It’s like comparing batting averages now to the 1960s ,when the pitcher’s mound was higher. You have to be aware of the differences.
The Q & A, I left out was about Mr. Goolsby favorite economist, type of car he drove, and where he had his money invested.
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July 8, 2009 at 11:18 a.m.I'll ask again, who will decide whether something is a "key investment" or "wasteful spending"? I hope you don't think politicians like Barney Frank will be doing that.
Legion357
No offense taken ,but I believe the questions were little bit bland requiring typical responses.
I like the fact that you took the time to point out your reasons there were typical bureaucratic responses.
In order to be fair to Mr. Goolsby, I have included his full response.
There is no ideal tax rate in isolation. Among other things, it depends so what the government does what the money. Whether we are making key investments vs. spending on wasteful programs that don’t work makes a big difference in what you think that tax rate should be.
The full question fleet and get the proper context:
Question: what kind of progression in marginal tax rates do you think is ideal? There was a big hubbub over the UK getting 50% of their top are eight; and could we be heading there too, and would it be harmful?
I see what you mean, my mistake.
BigJ
July 8, 2009 at 10:06 a.m.You’re quite welcome.
I really don't see real answers here, just the typical Washington elite political machine dodge comments with no real substance.
July 7, 2009 at 9:44 p.m.No offense intended, but Mr. Goolsby answers seem like typical bureaucratic responses.
Question: What kind of progression in marginal tax rates do you think is ideal?
Answer: There is no ideal tax rate in isolation. It depends what the government is doing with the money.
As the above answer demonstrates.
Did the person asking the question ask about a isolated marginal tax rate?
I take it the marginal progressive tax rate ( the more you make, the more you pay), is a isolated event or not, depending on what the government spends the tax it receives from the isolated progressive tax margin on?
July 7, 2009 at 6:28 p.m.