We’re here at a private briefing in the White House about the economy.Basically, we’re hearing a dry run of how the White House and Democrats will likely frame the economy during the election.
The Chairman of the President’s Council of Economic Advisors, Alan Krueger, is speaking first.
Most of what Krueger’s saying is fair.
That said, he has been speaking for 10 minutes and the deficit hasn’t come up once. Neither have gas prices.
Here’s some of what he’s saying (paraphrased):
I’m here to talk about the “progress of the recovery.”Before I do that, though, a few words on what caused the crisis.
1) Stagnation of middle class incomes
2) Easy credit, lax lending standards, lax regulation
Years and years of problems won’t be solved in a few years, but we’ve made a great deal of progress.
The recession ended middle 2009. Economy has been recovering since. We’ve had 10 consecutive quarters of growth.
Growth has been at a moderate pace.
GDP has grown 2.4% last 10 quarters.
As the President said yesterday, the “Economy recovering but hasn’t recovered.”
Self-inflicted wounds as well (Congress debate over debt ceiling)
And some specific factors on why growth hasn’t been faster…
3 segments of the economy are lagging:
State and local governments have been scaling back. Recovery Act offset that. As the money phased out, though, Congress did not follow through…
Residential construction. We built too many houses during boom years. Now, we have roughly worked off the excess. Still parts with overhang. Nationwide, looks to me like we’re pretty close. Housing construction normally cyclical… We’ve been recovering without this engine.
Discretionary consumption. Durable goods pretty strong, but discretionary services—dry cleaning, car repairs. A lot of jobs in discretionary services.
If you take out government and look at private GDP:
Growth has been an annualized rate of 3.4%.
If do same thing from previous recovery, in early 2000s [Bush years], it was 2.9%.
So the private sector healing at faster clip.
This is inconsistent with the Republican claim that companies are overburdened by regulation, uncertainty, taxes, etc. Lots of other points supporting this.
And a point on jobs…
Since early 2009, state and local governments lost 590,000 jobs.
If take out residential construction and government, then it’s 3.5% growth.
Prior rate was 2.5% (last recession)
Also faster than early 1990s recovery.
Not to deny we need more recovery…
The President’s policies helped. Well-targeted. Payroll tax cut. Funds to help schools retain teachers.
24 months of job growth. Private sector job growth best 6 months in years. Unemployment falling.
Private sector job growth last 24 months… 3X faster than prior recovery in 2002, on pace with 1990s recovery
Important we stay on this path.
And now it’s on to Gene Sperling…
GENE SPERLING, Director of National Economic Council
He’s blasting Congress for not working with White House.
The President’s Jobs Act could have saved a lot of the jobs lost in February. Had Congress signed the Act, we’d have seen Teacher jobs added.
In Clinton years, you could count on teamwork on infrastructure.
This is PERFECT time to spend more on infrastructure.
If we had just passed the accelerated infrastructure initiative and the teacher program, we’d be under 8% unemployment.
Those are completely under our control and supported by the public and would have made a real difference.
We are starting in a deep hole [dug for us by the Republicans]
But we are making progress.
We have a long way to go, but unquestionable progress. Job creation. Unemployment.
Americans hold $17.9 trillion in retirement accounts. Highest ever. Up from peak in 2007. Was down 25%.
Account balances had fallen 26%. Now up 3.3%. Above where they were at start of financial crisis.
President gave awesome speech yesterday…
Republican budget wants to cut Medicaid by 30%!
Already 30 million people will be uncovered by repealing healthcare. Then want to cut $800 billion from Medicaid. 30%!
If you cut all the poor kids from Medicaid, that’s only 20%.
The Medicaid cuts the Republicans want hammer people in nursing homes, middle class families, etc.
Barrons’ Jim McTague asks smart question: What per cent of those impressive retirement account numbers you cited are from appreciation versus new contribution?
Sperling: I don’t know. [Kinda busted]
Sperling: Our first priority was preventing depression. Then, avoiding another one.
Yahoo’s Dan Gross asks about the 3.5% GDP point hit from all the spending cuts and tax hikes on January 1st…
Sperling (paraphrase): Not going to challenge your premise [ie, challenging it]. Our goal is to fight for middle class. In budget deal, we all agreed on what we wanted to. The enforcement mechanism was supposed to be equally odious for both sides. Designed to have everyone want to work together on real budget deal. No one wants to see those cuts go into effect. Goal is to force compromise. That’s the right way to think about end of year. These could be action-forcing events.
JASON FURMAN, Principal Deputy Director of the National Economic Council
Here’s the logic behind the Buffett Rule:
Average tax rate on high-income families was cut in half over last 50 years.
Average family… tax rate went up.
So goal is to make millionaires stop paying lower rate than middle class.
Senate will be voting on this when they return.
We get to our budget targets without the Buffett Rule. It’s a basic principle of tax fairness.
The $47 billion this raises is real money. And in conjunction with other tax hikes, will be big money.
HEATHER ZICHAL, Deputy Assistant to the President For Energy and Climate Change
No magic bullet.
No way to bring gas prices down to $2 overnight
We’re doing the “all of the above” plan.
1) Oil. Quadrupled rigs, approved dozens of pipelines. Oil and gas production up every year since Obama in office.
2) Clean energy.
3) Alternatives to oil.
4) Energy efficiency. Focused a lot on homes. 1 million houses weatherized. Most aggressive efficiency standards for cars and trucks (saving families money). 40% of GM’s cars get 30mpg, vs. 16% in 2009.
The notion that this is all happening on private lands is a crock. We’re doing both public and private.
DAN PFEIFFER, Director of Communications
And… In walks President Obama…
Nice little spiel about importance of web sites in combating propaganda during “silly season” [election]
If state and local hiring had been normal, unemployment would be 1 point lower.
Strategic petroleum reserve…
No silver bullets for gas prices. Our production levels higher than for 8 years. Using less foreign oil each year. Less than 50% imports now. The big factors now are a million barrels a day taken off market in dribs and drabs. Sudan, 100,000. Yemen, 100,000. None of these things atypical, but cumulatively, a larger amount that’s been taken off line. And then the risk premium, possible conflict in Middle East. Because Europe’s economy is weak, we could grow without driving up prices. But because of the others, can’t.
“I don’t engage in SPR release lightly.”
Have to factor in many things… we’re looking at it closely. I will not be making any news today.
I signed biggest spending cut in long time.
Need to deal with both sides. Want to get revenue levels back to those in the 20th Century… Then there’s healthcare.
We spend $50 billion a year on healthcare for our troops.
Idea behind the Healthcare Act was to aim for savings.
The key to use to drive further improvements.
I have already indicated my willingness to engage in reforms… as long as take care of people.
My hope is that post-election, there will be a serious conversation in Congress about both sides… Revenue and spending.
We have not seen a balanced approach from the other side. We cannot just cut our way out of the problem.
Out of touch with personal finances of normal Americans?
Went to law school and college on scholarships. So did my wife. We were still paying off student loans 9 years after graduated. Bought first car for $900. Had big hole that allowed you to see the road, so I knew my wife wasn’t marrying me for my money. We had credit-card debt we hadn’t paid off. We had to start college fund.
Our personal finances… not having to worry about bills or gas prices… weren’t stable until fairly recently. Middle class upbringing and experience. In contrast to some of the Republican candidates…
How’s that for a diplomatic answer?
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