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Open Thread II: Treasury Boogaloo

Geithner it is.

I guess we can pretend he’s not a Clinton administration alum. And he has the right experience:

Though not an economist, Mr. Geithner has a deep understanding of monetary and fiscal policy and broad experience in international trade issues. Before the current crisis, he was involved in the bailouts of Mexico, Indonesia, Korea, Brazil and Thailand.

He also continues the tradition of being younger than most of the posters at Angry Bear.


Newsweek (blog), via TBogg:

Douglas Holtz-Eakin, the former chief economist at the Council of Economic Advisers who has been serving as top economics guru for the McCain campaign, has moved over to serve as Palin’s chief domestic-policy adviser.

A while back, a commenter who’d worked in his shop remarked on Holtz-Eakin’s great sense of humor. Looks like he’ll need it for all those questions about the best policies to bring big-box retailers to the Alaskan bush.

P.S. Good question from Don Pedro at E4O:

So which of those sitting on McCain’s economic policy adviser backbench are stepping up to man the helm? Does this mean that Phil “you’re all a bunch of whiners” Gramm is running the show? Maybe an enterprising journalist should ask.

Senator Obama chooses Jason Furman econ advisor

By: Divorced one like Bush

From this story at Common Dreams comes the news that Senator Obama has chosen Jason Furman as an economic advisor. The story notes Mr. Furman’s fame for his defending of the Walmart model. The one that states Walmart is helping the less fortunate. I don’t buy it in the big picture scheme of viewing. In fact, we at AB have had this discussion and I even posted a link to a report from the EPI which noted not everything related to ones financial well being can be bought at Walmart. Frankly, there are some very big items that are not on Walmart’s shelves that take up a large portion of ones budget.

He has held a good position at the Brookings. Note that bit about director of economic policy for the Kerry/Edwards campaign. Not to keen on the Hamilton Project though:

The offices belong to the Hamilton Project, a small think tank created by Robert E. Rubin, Bill Clinton’s Treasury secretary and key economic adviser, and former Treasury deputy secretary Roger C. Altman, who would be a front-runner for the same job in a new Clinton administration.

Is this the concession the Clinton/Blue Dog group was looking for? The DLC still keeps control of the money issues? This article suggests some recent Hamilton Project influencing.Do we really need Chicago School lite? Are we that timid that we couldn’t try another school of thought? Now that would be “change”.

Then I read this in the Common Dreams article:

One economist who has disputed some of Mr. Furman’s findings on Wal-Mart said the disagreement shouldn’t disqualify him. “That’s small potatoes. Jason’s economic agenda goes way beyond that,” Jared Bernstein of the Economic Policy Institute said. “That’s not anything close to a deal breaker.”

Well ok? If the EPI can say there is more to this young man than Walmart, I need to go looking. I found this from Mr. Furman’s article on corporate taxes:

“We should consider tax reform in the classic 1986 mode: lower tax rates and broaden the tax base by limiting special exemptions. Both halves of this classic equation have the potential for helping the economy by eliminating the perverse incentives to invest in tax-favored activities rather than in more economically productive activities. “

Alrighty, there is more to his thinking. He relates our health care problems to the tax code also:

Not only do we spend more than any other country on health care, nearly 50 percent more per capita than the second-highest-spending nation, but citizens in 28 other countries have a higher life expectancy and 33 other nations have lower infant mortality rates.

If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet: while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An importantprinciple for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current “private” health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more are Social Security, national defense, and Medicare.

Interesting perspective…yes? But, I’m not so sure he is correct with the solution, though I can now see why Senator Obama has put him at the table:

In fact, if we turned our irrational health tax subsidies right-side up–by curbing subsidies for higher-income workers and those with more generous health insurance plans–we could raise tens of billions of dollars annually, money that could go toward increasing access to health insurance. Taking it a step further, we could scrap the current deduction altogether and replace it with progressive tax credits that, together with other changes, would ensure that every American has affordable health insurance.

Not exactly a Mrs. Edward solution if I have read her correctly.

This person, Mr. Furman seems to fit well with Senator Obama’s other econ advisor, Mr. Austan Goolsbee. I think we can now start making some educated guess on what to expect for proposed solutions to the shift of income share to the top 1%. You know: It’s the economy stupid, Show me the money, declining real wages, consumer economy with little to spend, (add your’s here…). We’re going to try a new version of trickle down which has some form of tax code tightening, but no direct social policy influencing. Social influencing, like say, we use the tax code to make it more profitable for the company to pay the help as oppose to paying the very top management and shareholders.

Austan Goolsbee, Obama’s Econ Man

T-bone got me thinking in his response to my comment about Obama. Well, as a good AB’er, that meant I had to go a hunting. In this case, specifically for Obama’s econ advisor: Austan Goolsbee.

This lead me to an article by Austan Goolsbee, It’s Not About the Money. Wow, a man thinking like me. This lead me to a book: Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod which is a collection of papers presented at an October, 1997 conference in Michigan of which Mr Goolsbee was a participant.
(scroll down to mid page.) This lead me to a review of the book which I will post on later. (Yes, I’m still playing with the income data stuff.)

As a sample of Mr. Goosbee’s thinking I pulled this from his paper’s introduction:

One of the liveliest areas of debate of the last twenty years in public economics has been the argument over the behavioral effects of marginal tax rate changes.

The methodological approach in what I term the New Tax Responsiveness (NTR)literature is to control for the unobserved determinants of taxable income by using “natural experiments,”….The influence of the NTR literature such as Lindsey (1987) and Feldstein (1995a) is undeniable and, if correct, has profound implications for tax policy and revenue estimation. The backbone of the NTR approach, however, is this assumption that lower income people are a valid control group for higher income people—that the change in income of the two groups would have been identical if there were no change in taxes. If this assumption is false, existing estimates may have significant biases.

And his conclusion:

After ten years of finding large elasticities of taxable income with respect to the net of tax share by using tax changes as natural experiments, the NTR literature has had a large impact on the conventional wisdom regarding progressivity and the efficiency loss of high marginal tax rates. I argue, however, that the results from these papers are based on the faulty assumption that the very rich differ from other income groups only because they have different tax rates. Independent data on several thousand high-income executives as well as on other prominent rich people show that even the moderately rich are not a valid control group.

So what’s the up shot? Well, I’m still not sold on Obama, but then I’ve never not had him on the list. I like his econ advisor from the little I read. He likes comedy! (See Other interests)
He is dedicated to his profession. He knows how to speak:

…a prestigious New England preparatory school, Goolsbee became one of the most decorated competitive speakers in the country. In 1987, Goolsbee won the National Forensics League national title in extemporaneous speaking and finished second in original oratory with a speech on the SAT entitled “Right of Passage”

Think he may be Obama’s secret to his oratory ability?

He thinks deficits matter. He thinks companies have a morality problem:

The evidence shows that companies are particularly likely to raise prices when the government is footing the bill… It’s not your grandpa’s moral hazard anymore.

Also here he tackles the 529 savings plans problems.

He seems to be hangin’ with a crowd that thinks there is a problem with just focusing on tax rates as policy for moving an economy. Although he also seems to focus a lot on the internet and taxes. This appears to be his “thing”? In doing a quick look at some of his work, Obama’s current econ plan appears to be totally Mr. Goolsbee’s ideas. I have no problem with this. It suggests that with Obama, we would actually get people who’s qualifications actually match the job assigned. Though I feel confident with the top 3 dems we would see properly fitted personnel.