The President on 60 Minutes

[Maggie]

Did anyone watch this interview? I didn’t. If the quotes in this article are accurate – some of what the President is saying is down right odd (and that is probably not the best description). Here are the quotes (I have issues with several of his statements):

10. “…one of the things that I think is important for people to remember is that, you know, this country doesn't just agree with The New York Times editorial page.”

9. "We have a long tradition in this country of a desire for limited government, the suspicion of the federal government, of a concern that government spends too much money. You know? I mean, that's as American as apple pie. And although, you know, there's a new label to this, I mean those sentiments are ones that a lot of people support and give voice to. Including a lot of Democrats.”

8. “I think the Republicans were able to paint my governing philosophy as a classic, traditional, big government liberal. And that's not something that the American people want….I think the Republicans were successful in creating a picture of the Obama Administration as one that was contrary to those commonsense, Main Street values about the size of government. And so, it I think it is fair to say that, you know, the American people don't want to see some massive expansion of government.”

7. “I do get discouraged, I mean, there are times where you think, "Dog-gone-it you know, the job numbers aren't movin' as fast as I want." And you know, I thought that the economy would have gotten better by now. You know, one of the things I think you understand -- as president you're held responsible for everything. But you don't always have control of everything. Right? And especially an economy this big, there are limited tools to encourage the kind of job growth that we need.”

6. “I think a lot of businesses still don't know what the economy is doing. They don't know, are consumers gonna start buyin' again? You know, are we gonna start getting the virtuous cycle, where because businesses start hiring, the people who get hired start shoppin', which means other businesses are hirin', and everybody starts feelin' better about the economy. There's still a lotta uncertain data out there. And we're still workin' through some big problems of the economy.”

5. “One of the things that we got in trouble with -- and this is an example of, 'are there some things you'd do differently' -- we made an estimation that unemployment would peak at eight percent when we were still at the beginning of the crisis… Well, it wasn't because The Recovery Act didn't work; it's because the modeling, in terms of what to expect where unemployment would go to, turned out to be wrong. So, you know, I don't wanna pretend like I've got a crystal ball.”

4. “I don't think I was naïve. I just think that these things are hard to do. You know, this is a big country.”

3. “…there are more efficient ways to recirculate dollars out there and get people to spend. I mean unemployment insurance, most economists will tell you, is probably the single most important thing we can do to improve the economy.”

2. “We still we've got a couple of trillion dollars worth of infrastructure improvements that need to be made around the country.”

1.“…when you're campaigning, I think you're liberated to say things without thinking about, "Okay, how am I gonna actually practically implement this."

Top 10 Statements from Pres. Obama's '60 Minutes' Interview

[Ixiah]

He sounds like a person that will say anything (without regard to the consequences) to get elected.

[RoyalShock]

:blink:

[wu_shizzle]

So how is he going to square #7 and #8 with the political philosophy that he has embraced his entire adult life?

He says he knows the American people don't want big government but his passion for governing is Secular Progressivism.

I guess we'll find out what he wants to do by who he surrounds himself with. If Cass Sunstein is still around, look for him to continue to "nudge" this country into European style Socialism. If he brings in Clinton-era, pro-business types, maybe he'll work on governing rather than trying to force a partisan agenda.

[Maggie]

So how is he going to square #7 and #8 with the political philosophy that he has embraced his entire adult life?

He says he knows the American people don't want big government but his passion for governing is Secular Progressivism.

I guess we'll find out what he wants to do by who he surrounds himself with. If Cass Sunstein is still around, look for him to continue to "nudge" this country into European style Socialism. If he brings in Clinton-era, pro-business types, maybe he'll work on governing rather than trying to force a partisan agenda.

I don’t think that it matters who he brings in – the President is running the show and the more I read about his alleged interactions with others he clearly regards himself as the brightest bulb in the room. He is not likely to listen to, let alone, heed any sort of advice that might push him toward the center when it matters. To do so would be a tacit admission that he was wrong – how often do you think that happens?

Take quote number 3 for example: The President obviously believes that extending unemployment insurance ad infinitum is not only the moral thing to do (even though it creates a disincentive to work), but is very beneficial for the economy. This guy is an unqualified Keynesian, demand-side zealot. Never mind that you're taking money from other people who won't have it to save, spend or invest to give it to others. Just increase consumption and all will be well. That never has worked, but liberal theory says it does, as well as liberal revisionist history, so it does.

As an aside, Mr. President there are quite a lot of economists that don’t think extending unemployment benefits aids economic improvement – he always attempts to frame arguments as if there is no legitimate opposition to his world view. It is a bad, bad habit. Reeks of arrogance and a lack of intellectual curiosity, you see, President Obama has it all figured out.

Quote number 2 and 1 really bother me, though. Talk about brazenly cynical.

[BOBB]

So how is he going to square #7 and #8 with the political philosophy that he has embraced his entire adult life?

He says he knows the American people don't want big government but his passion for governing is Secular Progressivism.

I guess we'll find out what he wants to do by who he surrounds himself with. If Cass Sunstein is still around, look for him to continue to "nudge" this country into European style Socialism. If he brings in Clinton-era, pro-business types, maybe he'll work on governing rather than trying to force a partisan agenda.

I don’t think that it matters who he brings in – the President is running the show and the more I read about his alleged interactions with others he clearly regards himself as the brightest bulb in the room. He is not likely to listen to, let alone, heed any sort of advice that might push him toward the center when it matters. To do so would be a tacit admission that he was wrong – how often do you think that happens?

Take quote number 3 for example: The President obviously believes that extending unemployment insurance ad infinitum is not only the moral thing to do (even though it creates a disincentive to work), but is very beneficial for the economy. This guy is an unqualified Keynesian, demand-side zealot. Never mind that you're taking money from other people who won't have it to save, spend or invest to give it to others. Just increase consumption and all will be well. That never has worked, but liberal theory says it does, as well as liberal revisionist history, so it does.

As an aside, Mr. President there are quite a lot of economists that don’t think extending unemployment benefits aids economic improvement – he always attempts to frame arguments as if there is no legitimate opposition to his world view. It is a bad, bad habit. Reeks of arrogance and a lack of intellectual curiosity, you see, President Obama has it all figured out.

Quote number 2 and 1 really bother me, though. Talk about brazenly cynical.

Given that the unemployment rate only includes those actively seeking work, I don't think the disincentive model holds up well. It is also accepted that direct government payment to the system has a greater economic impact than other incentives. Only when government spending " crowds out" private investment does government spending have a negative impact on the economy. You can argue philosophically against unemployment benefits and that is a legitimate argument, but to argue economically against them is counter to economic evidence. I challenge you to find one Phd economist who is arguing for elimination of unemployment benefits during a recession.

[Maggie]

So how is he going to square #7 and #8 with the political philosophy that he has embraced his entire adult life?

He says he knows the American people don't want big government but his passion for governing is Secular Progressivism.

I guess we'll find out what he wants to do by who he surrounds himself with. If Cass Sunstein is still around, look for him to continue to "nudge" this country into European style Socialism. If he brings in Clinton-era, pro-business types, maybe he'll work on governing rather than trying to force a partisan agenda.

I don’t think that it matters who he brings in – the President is running the show and the more I read about his alleged interactions with others he clearly regards himself as the brightest bulb in the room. He is not likely to listen to, let alone, heed any sort of advice that might push him toward the center when it matters. To do so would be a tacit admission that he was wrong – how often do you think that happens?

Take quote number 3 for example: The President obviously believes that extending unemployment insurance ad infinitum is not only the moral thing to do (even though it creates a disincentive to work), but is very beneficial for the economy. This guy is an unqualified Keynesian, demand-side zealot. Never mind that you're taking money from other people who won't have it to save, spend or invest to give it to others. Just increase consumption and all will be well. That never has worked, but liberal theory says it does, as well as liberal revisionist history, so it does.

As an aside, Mr. President there are quite a lot of economists that don’t think extending unemployment benefits aids economic improvement – he always attempts to frame arguments as if there is no legitimate opposition to his world view. It is a bad, bad habit. Reeks of arrogance and a lack of intellectual curiosity, you see, President Obama has it all figured out.

Quote number 2 and 1 really bother me, though. Talk about brazenly cynical.

Given that the unemployment rate only includes those actively seeking work, I don't think the disincentive model holds up well. It is also accepted that direct government payment to the system has a greater economic impact than other incentives. Only when government spending " crowds out" private investment does government spending have a negative impact on the economy. You can argue philosophically against unemployment benefits and that is a legitimate argument, but to argue economically against them is counter to economic evidence. I challenge you to find one Phd economist who is arguing for elimination of unemployment benefits during a recession.

I never wrote you should eliminate unemployment benefits in a recession and I don’t believe anyone is making that argument. The point is do they act as an economic stimulus as the President suggests. I don’t think they do. Unemployment benefits that are more generous (either in amount or duration) can foster unemployment, by increasing the relative attractiveness of remaining unemployed and drawing benefits. In a normal economic environment there have been many studies that have demonstrated when unemployment benefits are about to be exhausted -suddenly - that person finds a job. The question is how strong this effect is, and how much its strength changes in recession. I don't know the answer to that question.

Frankly, I am inclined to favor further extension of unemployment benefits while the job market remains so weak. You extend the benefits to help people get by not because it will necessarily impact growth. Those benefits should be curtailed when the economy and the job market improves.

Let me ask you couple of things – just curious: If direct government infusion of cash into the economic system is so effective why didn’t the multiple stimulus packages have a quantifiable positive impact? Do you think the government can simply spend money and thereby increase demand?

[BOBB]

I would argue that the stimuli were watered down and not as strong medicine as we needed. That being said, we won't know the true effect of the stimulus for many years. The economy has stabilized, albeit at suboptimal output. In other words, it's difficult to prove a negative.

As long as there is idled capacity in the system then I do believe that government spending can generate demand. Without a doubt, this spending comes from the current or future tax receipts of the government. As such the ability of government to do this is not infinite. Also, spending on infrastructure would be more effective than increased transfer payments. Coupled with tax and regulatory certainty, I am confident that spending would increase demand.

[Maggie]

So various stimulus packages were too small? Both you and Paul Krugman can attempt to rehabilitate the notion (and Krugman has tried valiantly) that government can spend its way to job growth and prosperity – and that is fine, I guess. ;-)

But I just don’t by that theory and here is why, without getting into the weeds: Just because a government spends money doesn’t result in increased demand because Congress does not have a vault of money to distribute in the economy. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. You’re not creating new demand, you’re just transferring it from one group of people to another. If Washington borrows the money from domestic lenders, then investment spending falls, dollar for dollar. If they borrow the money from foreigners, say from China, then net exports drop dollar for dollar, because the balance of payments must adjust. Therefore, again, there is no net increase in aggregate demand. It just means that one group of people, in the case of the last stimulus package, has $800 billion less to spend, and the government has $800 billion more to spend.

As an aside, increased unemployment and social spending (which has increased substantially) is supposed to be among the most stimulative according to Keynesian economic theories, yet unemployment has not even responded minimally. This spending’s complete failure to create jobs should provide one more nail in the Keynesian coffin.

By the way – I appreciate your thoughtful posts. It is obvious you have given this some thought. :good:

[ABC]

There are economists that believe extending unemployment benefits does prolong unemployment.

"The Folly of Subsidizing Unemployment

My calculations suggest the jobless rate could be as low as 6.8%, instead of 9.5%, if jobless benefits hadn't been extended to 99 weeks."

http://online.wsj.com/article/SB10001424052748703959704575454431457720188.html

Many economists believe the government spending multiplier is negative, so it is hard to argue that the stimulus didn't work b/c it was too small.

[SB Shock]

The economy has stabilized, albeit at suboptimal output. In other words, it's difficult to prove a negative.

The economy has not stabilized. All you have to look at what is happening to the aircraft companies in this town (and the continual layoffs) to see that.

Banks are failing weekly. 143 bank failures so far with some projecting a total near 200 by years end.

The fed is printing money to buy back debt. The list can go on and on. There is no signs that economy is stabilizing.

[BOBB]

Thanks, Maggie you as well.

Maggie and ABC, I read the Laffer piece: it took me about 30 seconds to find an answer on my own challenge (inconceivable!). I don't disagree with much of what he is saying, assuming that the capital used to fund spending would be in play otherwise. The reality is that banks both commercial and investment are sitting on tons of cash. Because they are unsure of the stability of the system, because of the dearth of real risk adjusted returns, because of the belief in deflation, or some combination thereof.

The American consumer wants to consume, provided they are comfortable they have a next paycheck coming. The American investor wants to invest provided a reasonable return for the risk of the investment. When this breaks down there is a role for the government to play through spending.

SB - the aircraft industry is a late comer to the spiral, I'm guessing because of the the long production and sales cycle. These 200 banks have been dead for two years. The FDIC is closing these banks on a rolling basis based on manpower and to allow the system to absorb them. These are the so-called "zombie banks." Most have been operating under C&D letters for some time and are in essence, vassals of the Fed.

[SB Shock]

SB - the aircraft industry is a late comer to the spiral, I'm guessing because of the the long production and sales cycle.

Late coming - nope. The aircraft industry was one first industry hit and they continue to get hit with layoffs each quarter as things continue to get worse and no demand. Right now the expectation is for next year to be even worse than 2010.

These 200 banks have been dead for two years. The FDIC is closing these banks on a rolling basis based on manpower and to allow the system to absorb them. These are the so-called "zombie banks." Most have been operating under C&D letters for some time and are in essence, vassals of the Fed.

I'm sure there is some of that, but what I have been reading is now the commercial property bubble breaking which is causing the increase in failures. What will be the next bubble?

There has to be 230,000 job created a month to just break even. Anything less is means people coming into the job force unemployed. Here are private sector job increases. If you include government jobs added (mainly census jobs) only 2 months exceed the 230,000 figure.



I just got done looking at the Atlanta Fed 53 charts of economic indicators. Everything seems flat. They are predicting that unemployment for 2011 will be ~9.5%. Hourly earning are still on a downward trend. Credit is still tight.

Federal Reserve Bank of Chicago has some economic indicator charts - their trends show below average growth with a negative trend for the last 4 months.

[SubGod22]

I think a big reason banks, businesses and consumers are unsure of things is because gov't keeps trying to do things it's not meant to do and creating more crap to have to worry about. If gov't would have stayed out of it to begine with, I think things would be better off now than they are. Businesses will correct themselves or pay the price. Same with banks. And we'd all be better off for it in the long run.

[Maggie]

Maggie and ABC, I read the Laffer piece: it took me about 30 seconds to find an answer on my own challenge (inconceivable!). I don't disagree with much of what he is saying, assuming that the capital used to fund spending would be in play otherwise. The reality is that banks both commercial and investment are sitting on tons of cash. Because they are unsure of the stability of the system, because of the dearth of real risk adjusted returns, because of the belief in deflation, or some combination thereof.

The American consumer wants to consume, provided they are comfortable they have a next paycheck coming. The American investor wants to invest provided a reasonable return for the risk of the investment. When this breaks down there is a role for the government to play through spending.

What Laffer piece?

I think I understand where you are coming from and I will say this: I do think that many conservatives, at times, oversell the influence of “uncertainty” (which I think is basically what you are saying) in businesses’ decision-making at this moment. That mountain of cash starting building up a long time ago, and, given the state of sales, it is more than plausible that very weak demand and a lack of attractive alternative investments are the reasons why cash is king. (Just because the Keynesians’ case about weak demand has some merit, which seems to me pretty obvious, doesn’t mean I am conceding that the policy they propose, i.e., another super sized dose of stimulus spending – is a good idea).

But there is a lot of uncertainty out there, nonetheless. Uncertainty about future taxes, future employment, future returns to individual investments, and the future of entitlement benefits almost certainly is having an effect on Americans’ spending and saving decisions comparable to the effect of actual lost income. Americans are saving at a relatively high rate; presumably, it is the employed, not the unemployed, who are saving.

I think a good place to start dealing with this issue would be paying down the debt – taking the debt seriously. The fact is our debt is serious threat, not just to our economy, but the world economic system. We are still the largest national economy in the world, and we are about three times bigger, in fact, than No. 2 – which is China. However, a fiscal crisis in China will be a crisis for the United States, and vice versa. Our government’s books are a wreck, and their banks are the stuff of nightmares. Nobody knows how high a debt-to-GDP ratio the United States can withstand before somebody starts calling in the chips. In short: The radical expansion of the U.S. national debt under the Obama administration is creating enormous risks for the entire world, and those risks are not well understood, because there is little or no precedent for this situation. Weighed against those facts, the case for additional borrowing to finance stimulus spending is, in my judgment, pretty weak.

We need more capital available for productive investments: We spent stimulus money subsidizing beekeepers, turning b.s. into fuel to power magical corn-gas distilleries, and getting monkeys high on cocaine (and, of course, public sector union jobs). As much as I would enjoy having a union platoon of coke-tweaking baboons to dispatch around town to do my bidding and collect the honey from my organic apiary, these are not exactly pressing national priorities.

But that money has to come from somewhere, and the banks, which are still being subsidized with free money from the Fed, are content to park their funds in T-bills and collect the spread - which is pretty attractive when the cost of money is zero and the risk is (allegedly!) negligible. So why take a risk on making a loan to a start-up? People who want to make stuff and provide services need capital to get going, but Uncle Sam is sucking a whole lot of capital out of circulation.