Economists for Obama

The Agony of Analyzing Romney's Economic Proposals

noreply@blogger.com (Don Pedro) — Sat, 15 Sep 2012 19:17:00 +0000

We had a good run with this blog in 2008 and enjoyed the feeling that our small efforts to consider the substance of economic policy may have played some non-negigible role in helping to elect Barack Obama.

We've sat out this round for a mix of reasons--mostly the tug of our real world jobs and families, but also because actual evidence-based policy discussion has been non-existent in this campaign on the Republican side, making it hard for us to critically engage Romney's proposals.

For example, in 2008, McCain and Palin at least provided enough detail on their tax proposals that the Tax Policy Center could study those proposals, and then we were able to produce our own extensive discussion based on the TPC's numbers. This time around the TPC had to make heroic assumptions to say anything about Romney's vague proposals, and in his most recent statements, Romney has rejected one of the key assumptions, yielding a mathematically impossible tax plan. Jonathan Chait nails it:

The basic problem for Republicans is that their highest policy priority is to cut the effective tax rate paid by the richest 1 percent of Americans, but the vast majority of the voters don’t share that goal. Handling that problem is the single biggest challenge the Republican party faces. Normally, when a party has an extremely unpopular position, it just jettisons it. But Republicans care so much about this goal that they won’t give it up.... [T]he only way they can get elected is to obscure the real trade-offs and make up a bunch of fake numbers.

Several of us behind Economists for Obama in 2008 had advised political candidates in various capacities before, and we know from experience that campaigns often stretch to present their economic proposals in the most favorable light. But this is a far cry from what Romney has done--which is to refuse to present coherent proposals.

How can people with a genuine interest in understanding and critiquing Romney's ideas respond to this situation? I haven't figured that out--other than just pointing out that 2+2≠5. In any case, although we won't be in full force like in 2008, we may jump in here and there with our reflections between now and November 6.

Spectacular jump in probability of Obama victory

noreply@blogger.com (Don Pedro) — Sat, 15 Sep 2012 11:16:00 +0000

Intrade now shows a 67% probability of Obama re-election, up from 58% just 5 days ago. If present trends continue, his odds will reach 160% on Election Day.

Yuck.

noreply@blogger.com (Unknown) — Mon, 01 Aug 2011 23:51:00 +0000

That's what I have to say about President Obama's capitulation to the hostage-taking ways of congressional Republicans.

I suppose I might change my mind, but after watching the President give in to the Boehner-McConnell blackmail axis, I don't imagine I'll be spending much of my time advocating his re-election. Assuming he's the Democratic nominee, which I do, I'll vote for Obama, because the alternative will still--somehow--be worse. But I really can't see how, in good conscience, I could defend the economic policies of a guy who has signed on to fiscal contraction in the midst of a major downturn. And that's leaving aside the President's apparent lack of understanding of the importance of bargaining from strength. So much for all that poker expertise he's supposed to have.

What a shame.

What to Read on the Banking Crisis

noreply@blogger.com (Don Pedro) — Thu, 26 Feb 2009 16:54:00 +0000

Readers will have noticed that with our main mission accomplished, we've largely retired from the econ4obama blogging to focus on our professional and family lives. We're still following Obama economic policy obsessively, however. With the stimulus package passed, by far the most important issue is how the administration deals with the banking crisis. On that topic, I read principally Paul Krugman, Yves Smith, and Simon Johnson. Mark Thoma's site is my favorite all-around economics site.

Worth Watching on the Crisis

noreply@blogger.com (Don Pedro) — Sat, 21 Feb 2009 17:44:00 +0000

Simon Johnson makes a very compelling case in his analysis of the crisis during his appearance on the Bill Moyers Journal. The world has turned upside down when the former chief economist of the IMF sounds like Noam Chomsky. I suggest watching the video, not just reading the transcript.

I haven't had a chance to watch it yet, but last week's Frontline episode on how the crisis happened also looks very good.

Obama's Speech Today on the Stimulus

noreply@blogger.com (Don Pedro) — Fri, 06 Feb 2009 05:39:00 +0000

The video is well worth watching. Great to see that he's finally going full throttle on this. There's no time to waste.

Moving

noreply@blogger.com (Unknown) — Fri, 30 Jan 2009 21:27:00 +0000

Just a quick announcement: taking advantage of falling prices, I've opened a new shop, over at http://jonahgelbach.blogspot.com/. Not sure how often I'll post; I guess the subtitle is a good guide.

Thanks to all those who've read this blog, and my posts on it. Thanks especially also to Don Pedro for his indulgence in inviting me to contribute.

See ya when I see ya.

A Must See: President Obama's Final Words at the Campaign Staff Ball

noreply@blogger.com (Don Pedro) — Fri, 23 Jan 2009 03:10:00 +0000

This was from Wednesday night at the DC Armory, during the final official inaugural event:

A couple clarifications: 1) Neither I nor any of the other econ4obama bloggers was on the campaign staff. 2) Despite the open bar, I wasn't drunk when I shot this video! It's jittery because I was holding my little camera high above my head amidst a very excited crowd.

This land...

noreply@blogger.com (lerxst) — Tue, 20 Jan 2009 16:09:00 +0000

The Need for Stimulus

noreply@blogger.com (Don Pedro) — Mon, 12 Jan 2009 15:35:00 +0000

From this morning, here's a good discussion on the stimulus in a radio interview which includes James Galbraith. In many ways I think of this as Jamie's moment: he's always been a relentless scholar and advocate for Keynes, and we're all very much Keynesians now.

Paul Krugman and Mark Thoma are also good source for discussion of the stimulus.

Feminist Bean Counters to the Rescue

noreply@blogger.com (Anonymous) — Thu, 18 Dec 2008 02:20:00 +0000

Two aspects of Obama's economics and other early appointments and pronouncements have troubled me for some time but this afternoon's advance announcement that Ray LaHood, a mediocre white male Republican from Illinois, will be appointed Secretary of Transportation in the morning has finally pushed me over the edge and compels me to post an item.

Two warning signs in Obama's early appointments that women would not be treated well in the senior most positions and that women's needs would not be seriously assessed in policy discussions were the appointments of Larry Summers and Rahm Emmanuel. Neither is known for their commitment to enhancing equal opportunity for women. Having Emmanuel as the ultimate gate keeper in the White House was a bad sign for all future appointments, and having Summers as the inside-the-White-House-czar of economic policy was a bad sign for the content of economic policy, at least as far as meeting women's needs goes.

So what has happened since these major bad signs in the immediate post November 4 period? Of 15 department secretaries, 14 have been announced: 12 are men and 2 are women, for a ratio of 14 percent--lower than women's share of Congress (which itself puts the US at the bottom of countries of similar economic standing). The Department of Labor position is still open. Let us hope that it is filled with a better choice with regard to expertise and commitment to equal opportunity.

In the context of the economic disaster that is upon us, these last two jobs, transportation and labor, are very important to the success of the economic recovery program, to make sure grants and contracts are efficiently and fairly let and appropriately monitored. And to make sure women and women -owned businesses get their fair share of the new work created. Sure, you don't need to be a woman to be a feminist and you don't need to be a feminist to make sure women are treated fairly, but all the research evidence suggests it helps. And the construction industry is not known for equal opportunity for women. Moreover, our last great publicly-funded economic recovery program was also not known for equal opportunity for women--in the great depression of the 1930s women were dismissed from jobs and they got very, very few of the new public works jobs made available.

Feminist economists and other academics have been buzzing about the need for a fair economic recovery program for more than a month. Somehow, discussion of creating jobs in education, child care and health care seemed to morph overnight in Obama's language to almost exclusive focus on jobs in transportation infrastructure and retrofitting buildings to be more energy efficient. Jobs in health care have become jobs to computerize records. Unless health care, education, and early care and development SERVICES are expanded, or jobs are created in other areas in which a substantial number of women have trained for and work in, women will not get a share of jobs commensurate to their share of unemployment (which was 42% in the third quarter of 2008). Economist Randy Albelda had an op ed in the Boston Globe in November on these points. Petitions making the same arguments have recently been circulated among historians and economists as well as networks of academics and activists working on caregiving issues (see The Take Care Net and Institute for Women's Policy Research websites, takecarenet.org and iwpr.org). These experts believe the economic recovery will not be successful unless women have access to a fair share of the employment and business opportunities, in areas both traditional and nontraditional for women. Moreover the petitions and their signers stress the need for good-quality jobs, jobs that include not only decent wages and health insurance but also family friendly benefits like paid sick time. With women 46 percent of the labor force, it would be folly to ignore job creation for them or to fail to create the kinds of jobs that can truly move our country forward.

One good sign is that on Friday the Obama Transition Team is slated to meet with leaders of women's organizations to discuss the economic stimulus package and proposals for economic recovery. I wonder if senior members of the economic team will be at the meeting and if, in view of appointments like Ray LaHood, which seemingly came out of nowhere with no discussion, everything isn't already a done deal. Several pundits have commented that so far neither Obama's appointments overall nor his recovery proposals give Americans anything to get positively excited about--there's no big vision in the recovery plan (nothing to capture the imagination). And there's not even basic competence in the appointment of Ray LaHood.

Of the 14 secretary appointments so far, 5 are minority men. There is not a single woman of color appointed to head a major department. Whoa. Why did I title this entry "feminist bean counters to the rescue"? I'm hoping another positive development will occur: that the person appointed to head the Labor Department will actually be a champion for workers of both genders and all races and ethnicities. I'm even hoping the ridiculously inept nomination of Ray LaHood can be stopped. There are many Republican policy makers who could make a substantive contribution at Transportation: Ray LaHood is not among them. And there are many women with expertise in transportation who could make a significant contribution to the economic recovery. If he gets that far, Ray LaHood is likely to serve as the joke of Obama's cabinet.

Moxie Momma

Geithner, Grace Under Pressure

noreply@blogger.com (lerxst) — Sat, 22 Nov 2008 16:49:00 +0000

While I was somewhat disappointed that Summers won't be tapped to run Treasury, I'm very relieved that it will be Geithner.

Jeff Frankel, who was in Geithner's presence yesterday --presumably when he got the call from Obama-- describes him as a cool customer and as a strong choice.

I enjoyed reading this piece by Noam Schreiber that paints a pretty nice picture of Geithner (h/t Steve Benen, more here). I can't begin to imagine his smarts if Rubin and Summers relied on this guy despite his relatively minimal training or background in finance and economics.

Fourteen Black Paintings

noreply@blogger.com (lerxst) — Mon, 17 Nov 2008 19:13:00 +0000

Since Jonah posted about Will.i.am's new song, I thought I'd share as well.

I put on Peter Gabriel's "Us" (link is to rhapsody) the other day and thought about Obama while listening to "Fourteen black paintings":

From the pain come the dream
From the dream come the vision
From the vision come the people
From the people come the power
From this power come the change

Right now, we need Summers

noreply@blogger.com (lerxst) — Sat, 15 Nov 2008 22:39:00 +0000

Jeff Frankel bets Obama will pick Summers for Treasury. I know there are many in the progressive blogosphere with strong negative feelings about Summers but I have to say that I think it would be a wise choice by Obama --assuming Obama feels he can personally get along with him.

The bottom line for me is that right now, the Treasury Secretary will likely be the second most powerful position in the administration. During this period of financial crisis we need someone who has a deep intellect and a sophisticated understanding of the interplay between macroeconomics and financial markets. Right now, we simply cannot afford to have anything less than the best person for the job. If we just focused on this criteria and put aside Summers' history of making offensive comments I think there's a compelling case for Summers.

Summers is by all accounts one of a small group of leading intellectual thinkers about macroeconomic policy. For those who are Krugman fans, Summers is one of a few who are at Krugman's level of intellect. (Krugman, in my view is simply not at all temperamentally well suited to be a Treasury Secretary). In addition to his intellect, Summers brings tremendous real world experience having already served at Treasury during the peso crisis and during the Asian financial crisis. Although he bears some responsibility for being involved in some of the missteps of the 1990s e.g. the financial deregulation that helped lay the foundation for the current financial crisis, I think that he probably has a deeper understanding of these mistakes than most of his critics and is not ideologically driven to defend them or repeat them.

I was somewhat reluctant to write this post not only because of Summer's controversial comments but also because I doubt it will make all that much difference to the currently severe economic conditions we are facing. Summers will certainly not be a savior. I see Summers as more of an insurance policy, as a way of minimizing the downside risks rather than dramatically changing the current situation. Two years from now we do not want to be engaged in second-guessing whether or not Obama picked the most capable person for the job.

Until recently, my feeling has been that if there was a fresh young talented person who say resembles a Larry Summers of 20 years ago who could serve as a strong Deputy under a Volcker or Tyson, that this might be a satisfactory alternative. Maybe such a person exists but I certainly don't know who it is. As for Geithner --he wouldn't be bad but I think we're well served with him remaining at the Fed.

Obama Campaign Photos

noreply@blogger.com (Don Pedro) — Wed, 12 Nov 2008 00:49:00 +0000

There are many great sites out there celebrating President-elect Obama's victory. Here's one of my favorites: professional photographer Scout Tufankjian's photos from two years of following the campaign.

The Fair Model and the Crisis

noreply@blogger.com (Don Pedro) — Mon, 10 Nov 2008 03:25:00 +0000

I've been trying to figure out a way to argue the case for more short-term stimulus in a way that might appeal to those worried about deficits over the longer term. It is likely that a stimulus that reduces the duration and intensity of the recession will result in a lower national debt over the medium-term horizon (say, 5-10 years). This is because the longer and deeper the recession is, the more government revenue will suffer.

I thought to run Ray Fair's macro model to quantify what government debt might look several years in the future, with and without a stimulus package now. Empirical forecasting models like this one suffer from the Lucas critique, but they're the best we have.

My intents were stymied, however, by the fact that the most baseline run of the model doesn't forecast a severe recession. Here's what the model's forecast memo of October 30 says:

Real GDP Growth and the Unemployment Rate: The model is predicting no growth in the next two quarters, 1.7 percent in 2009:2, and 2.3 percent in 2009:3. The unemployment rate rises to 6.9 percent in 2009:3.
....
The negative wealth effect from the fall in stock prices ... is one of the reasons the model is predicting no growth for the next two quarters. There is, however, nothing in the initial conditions and likely paths of the exogenous variables that suggests there is going to be a deep and prolonged recession. It may be, of course, because of the current financial crisis that consumers and investors are concerned enough or restricted enough in their ability to borrow that they decrease their spending by huge amounts. These potential "animal spirits" and "credit crunch" effects are not the type that the model can capture. If, for example, people have been spooked by the dire warnings of policy makers and significantly cut back their spending, the economy could be much worse in the next few quarters than the model is predicting.

Real housing prices are exogenous in the model, and the baseline scenario has prices continuing to drop slowly and stabilizing at about 5% below current values. I tried running the model with a bigger decline in housing prices (which creates a larger wealth effect in the model), but it didn't make much difference for the trajectory of the economy beyond a couple quarters down the line.

The model's forecast does make me wonder just for a moment if the dangers of a deep recession have been overstated. But I am fairly confident that the main reason the model doesn't forecast a more severe recession is that, reflecting the weaknesses of macro modeling, the model doesn't have a way of incorporating the "credit crunch" effect.

(Note that I'm not actually a macroeconomist, and this was first stab at tinkering with the Fair model, so take all my conclusions with a grain of salt.)

Still Celebrating

noreply@blogger.com (Don Pedro) — Mon, 10 Nov 2008 02:31:00 +0000

I keep thinking I should come up with something original to say about what to expect from Obamanomics going forward, but I've too busy savoring our victory. I was at the DC for Obama rooftop karaoke party last night, and everyone was just so joyous. And the inauguration is still to come! Here's one of many great videos from last Tuesday:

Keynes Lives in Beijing: U.S. vs. Chinese Stimulus Numbers

noreply@blogger.com (Don Pedro) — Sun, 09 Nov 2008 21:54:00 +0000

Like Yves Smith says, the Chinese stimulus package puts into context America's puny stimulus efforts thus far. Yves, however, confuses the numbers a bit by converting everything into dollars at PPP exchange rate. Much better to stick to thinking about this in terms of national currencies:

The Chinese have announced plans to spend 4 trillion yuan for "transportation networks, ecology, technical innovation and post-disaster reconstruction" to stimulate their economy. That amounts to 16.2% of GDP (which was 24.67 trillion yuan in 2007).
In contrast, the U.S. $150 billion package passed earlier to this year is equivalent to just 1.1% of GDP (which was $13.84 trillion in 2007).

Put in other terms, a U.S. stimulus of the same size as the Chinese package (proportional to GDP) would amount to $2.2 trillion.

That's the kind of rocket-powered stimulus we need! I would say that we could learn from the Chinese Keynesians, but Obama's team is already ready to roll with similar plans. It's great to see that all signs are that Obama is ignoring the New Hoovers and planning a "big bang" investment package. Job 1 right now is preventing what will be a severe recession from turning into a 2nd Great Depression, and it is absolutely not the time to be worried about short-run deficits.

It's a New Day

noreply@blogger.com (Unknown) — Sun, 09 Nov 2008 21:45:00 +0000

Just now I was writing up a technical appendix concerning the asymptotic covariance matrix of an estimator. I was listening to will.i.am's new song, "It's a New Day", for probably the fifth time today. When he got to the part where he sings,

'Cause we weren't fighting for nothing
And the soldiers weren't fighting
For nothing
No, Martin wasn't dreaming for nothing
And Lincoln didn't change it for nothing
And children weren't crying for nothing

I just started crying.

This is unusual for me.

As I wrote on election night, I supported Obama because I thought he was the best candidate, not because he's black. But just now, it really hit me, just how big a deal this is for America.

Here's the video:

Thank you Don Pedro

noreply@blogger.com (Anonymous) — Fri, 07 Nov 2008 04:14:00 +0000

As a late addition to blogging here I just want to say how useful I have found the information on the site. I so much appreciate all the great facts and analysis and the initiative you all took to set it up. (I even ordered some Economists for Obama items from the listed vendor--a tip they still have items that are sold out elsewhere.) I hope the founders will keep the site going for the next couple of months as the transition unfolds. Doubtless there will be some economic policy initiatives that can be usefully commented upon. I too share in the optimism that this new administration will be able to get our country back on the right track. As one whose daily work is super affected by who's in power, it will be very hard to wait for January 20th!

Today's Newspaper Front Pages from Around the World

noreply@blogger.com (Don Pedro) — Thu, 06 Nov 2008 00:56:00 +0000

A marvelous sight. See it here.
(I switched the link from the archive to just the permanent today's page, since the archive link turned out to not be stable.)

Congratulations, America!

noreply@blogger.com (Unknown) — Wed, 05 Nov 2008 07:57:00 +0000

What an amazing day for our country. I had some colleagues and friends over to watch the returns come in, and it was a moving experience.

I am very proud, very optimistic, and very hopeful. I know the road ahead will be difficult, but finally, it is a road that plausibly leads somewhere better than where we find ourselves now.

I thought McCain's concession speech was appropriate to the moment, and I hope he will be willing to work with President-elect Obama.

I also hope and trust that President-elect Obama will move to implement the policies on which he campaigned. Some details will need adjusting, but the tapestry he proposed is what he should hang on the wall.

I want to say one other thing. I came to support Barack Obama for President of the United States of America because he convinced me he is a true progressive, one with the right policy and political instincts. I didn't support him because he is black, or because it is time for a black President. Indeed, President-elect Obama is black, and it is long past time for a black person's run for the presidency to be considered serious regardless of his or her race. But President-elect Obama's race was always beside the point for me. A wonderful bonus, and now, a wonderful statement about Progress In America.

But I gravitated to Barack Obama because he was the best candidate. Period.

Congratulations, America: finally, you picked the right candidate.

Reflections on Election Day

noreply@blogger.com (Don Pedro) — Wed, 05 Nov 2008 07:16:00 +0000

I used to walk in front of the White House on the way to work. I stopped doing so after the revelations that the United States had tortured prisoners in Iraq and Afghanistan and at Guantanamo Bay. I felt so ashamed of my country and so angry at the occupant of the White House that I couldn't bear to walk by the building.

Tonight, I joined a crowd of many, many thousands in front of the White House, crying with joy, chanting "Yes We Did" and "U. S. A.", and singing the Star Spangled Banner and God Bless America. I've never felt so proud of my country. And I'm proud that our little blog played a tiny role in electing President Barack Obama. I want to thank Lerxst, Jonah, David, Pike, Susan, Progedi, and Moxiemomma for their dedication and contributions over the last many months. We helped make history happen.

As Lerxst noted, the original idea for the blog came from the model of the Economists for Dean blog, which he headed up while I was economic adviser for Howard Dean during his presidential campaign. In many ways, Barack Obama's election is the ultimate vindication of Dean's campaign, his political vision, and his policy views. I could not be more please to see Barack Obama carry forward this legacy to the White House.

A new era

noreply@blogger.com (David I. Levine) — Wed, 05 Nov 2008 06:48:00 +0000

A new era has arisen in American politics. Much ink has and will be spilled about the race of our new president-elect and his age and his politics. The new era is much deeper.

In 1994 a Republican Congress arrived in power with no respect for the laws of arithmetic. Following the lead of Ronald Reagan, they prescribed fiscal policies that had only the vaguest pretense of adding up. The goal was clearly to enrich the prosperous, disregarding the burden on future generations. The Bush Administration expanded this model, moving from disregarding reality in fiscal policy to disregarding it in a host of areas ranging from climate change to Saddam's relationship to 9/11.

The incoming adminstraiton faces two wars, an unsustainable fiscal policy, and a financial crisis. The next two years will be bleak for the living standards of much of the world. In short, it is an unimaginably challenging time for a new administration to take power. At the same time, it is an unimaginably great feeling to be proud that our government is once again in the hands of people who believe in reality and who will respect the laws of arithmetic as they try to improve the world.

Celebrating with Thousands at the White House

noreply@blogger.com (Don Pedro) — Wed, 05 Nov 2008 06:17:00 +0000