Comments on: The Obama administration’s biggest macroeconomic mistake A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: ikitov Sat, 15 Oct 2011 14:35:17 +0000 1. If to dig deeper into BEA’s publiations one can find an unofficial estimate of the uncertainty in the GDP growth rate of 1% per year or annualized 4% per quarter. Thusall revision you have mentioned are within the limits and 8.9 not worse, actually, than 6.3%. Both values inside 4%.
2. Okun’s law is very relibale for the US( 0/some-corrections-to-david-altigs-job.h tml) but BEA statistics makes a big difference when used as it is – d beware-of-bea.html
3. real proble is that there is no comparability of GDP estimates over time – eware-of-bea.html

By: DaveRoberts Sat, 15 Oct 2011 00:39:57 +0000 Smart cramdown would still make a lot of sense. So would getting a HFHA director who was interested in the long term stability of Fannie and Freddie and the overall housing market. Obama’s team really did whiff on housing. Still are, and they don’t have to be. Making the banks own their piece of the housing mess via bankruptcy and cramdown goes hand in hand with the jobs push as a middle class strengthening effort.

By: JohnBChilton Fri, 14 Oct 2011 18:37:53 +0000 We’re turning Japanese.

Yes, I really think so. pA

By: dellbell Fri, 14 Oct 2011 18:27:14 +0000 So, we got a series of measures (of varying effectiveness) designed to be counter-cyclical to/cure a V-shaped, business-cycle recession, when the real problem was a L-shaped, balance-sheet recession. And those measures weren’t even aimed at, nor particularly effective at resolving that, the real problem. Lovely.

We not going to get inflation going to cure the problem. The banks, if forced to mark all their assets to market, are still insolvent. The politics of debt relief stink. Feldstein’s idea, presented in FT, may be the start of a way out of this trap.

By: TFF Fri, 14 Oct 2011 13:15:04 +0000 Go ahead and multiply by four… It is a simpler computation, and the difference between that and the actual computation is far less than the uncertainty in the inputs.

By: FelixSalmon Fri, 14 Oct 2011 03:12:19 +0000 Actually, Jeff Holmes, they do raise to the fourth power. Look at step two of how to compute an annualized rate: 122

By: TFF Thu, 13 Oct 2011 23:47:43 +0000 “oddly enough the vast majority of the stimulus was tax cuts.”

…which do little or nothing to stimulate demand, partly because the benefits flow primarily to people who already have enough to meet their needs. (Those who are struggling pay very little tax.)

By: TFF Thu, 13 Oct 2011 23:45:13 +0000 “pushing people into early retirement the minute they become eligible for Social Security at 62″

Aren’t Social Security benefits calculated so that the value of the payout is roughly the same at 62, 67, and 70? More years but less money…

Comparing direct employment at the minimum wage to unemployment benefits is trickier. I suspect unemployment benefits for many are *above* the minimum wage? In which case paying them less would definitely save money. For the rest, it wouldn’t save money — it would simply get something done that hopefully benefits society.

Of course the unemployed aren’t all sitting on their bum in front of the TV. Many of them are working odd jobs under the table. Many of them are performing household work (esp. child care) that would otherwise be farmed out. So making them actually work for their handout would leave them substantially less well-off.

“The goverment could take an even more controvercial step and shift all FICA taxes to workers.”

Ironically, their present policy is the exact opposite. Obama’s FICA tax rebate is on the *worker* share, not the *employer* share. Moreover, there has been a big crackdown on 1090-MISC payments, forcing many situations to be converted to W2 employee status (and thus forcing the employer to pay half the FICA liability).

By: y2kurtus Thu, 13 Oct 2011 22:20:55 +0000 What could Obama or the administration or the Fed possibly do to increase employment?

Well #1 they could employ people directly via a minimum wage jobs program. That would be, controvercial, hard to manage, and wasteful… but no more so than paying people not to work via extended unemployment benifits, or pushing people into early retirement the minute they become eligible for Social Security at 62. The cost would be about 100B/year assuming minimum wage and zero benifits.

#2 The goverment could take an even more controvercial step and shift all FICA taxes to workers. This would pull money out of the paychecks of workers instantly. It would be massively regressive as it only hits people making below the social security wage base… and it would make US workers cheaper to employ and would immediatly boost employment. It would hurt everyone with a job and help everyone without one.

By: politicalcalcs Thu, 13 Oct 2011 20:18:45 +0000 Ultimately, it’s not about the projections of how the economy was performing and whether the economy performed worse than expected. It’s about the Obama administration’s lack of response to the evidence that the stimulus was failing to achieve its objectives of stemming the increase in unemployment.

A competent leader would have adapted their original plans to fit the developing situation. If they weren’t getting the results they anticipated, they could accelerate other aspects of the plan within the scope of the stimulus, to compensate for things turning out worse than they had originally expected.

And it’s not like they were having to wait to get that feedback. While three months might have been a bit short, shouldn’t there have been some action taken by the President’s administration after six months? How about nine months? Or a year later?

Instead, the Obama administration just let the stimulus play itself out, without any useful intervention on their part, over the two years it ran.

And here we are three years after the stimulus was launched. It’s sad that one of the big knocks against the President today is the claim that he’s basically already quit as President, stopping doing the job without bothering to resign, choosing instead to campaign for whatever without end.

The lack of any effective response to the jobs situation while the stimulus was running suggests that really happened sometime during his first year in office.