90.9 WBUR - Boston's NPR news station
Top Stories:
PLEDGE NOW
Can Economic Recovery Plow Ahead?

Europe wobbling. Markets down. We ask if the U.S. recovery is strong enough to plow through. Plus, Kristof/WuDunn to ’10 grads.

A trader on the floor at the New York Stock Exchange in New York, Thursday, May 27, 2010. (AP)

Talk about a tightrope. One minute this week, news of the U.S .economy is full of rosy forecasts, happy economists, manufacturing booming, and all systems go for recovery.

The next minute, the headlines are swamped with dire fear of a contagion from Europe, endless economic winter, a “double-dip” recession and the stock markets dropping like stones. 

So, which is it?  There is obviously no clear answer. But there is a big battle underway between hope and fear. 

This Hour, On Point: we look at the evidence, hear the cases, for hope and for fear on the US economy.

Guests:

Jim McTague, Washington editor for Barron’s.

Carmen M. Reinhart, director of the Center for International Economics at the University of Maryland and co-author, with Kenneth Rogoff, of “This Time is Different: Eight Centuries of Financial Folly.” She testified yesterday before President Obama’s fiscal commission.

Alan Blinder, professor of economics at Princeton University. He’s former vice chairman of the Board of Governors of the Federal Reserve System. He was a member of the Council of Economic Advisers under President Bill Clinton.

Closing Segment:

Nicholas Kristof, Sheryl WuDunn (Credit: Middlebury College)

In the seventh installment in our graduation season series, we listen to an excerpt from the Middlebury College commencement address by New York Times columnist Nicholas Kristof and author Sheryl WuDunn. In 1990, the two won a Pulitzer Prize for their coverage of China’s Tiananmen Square—the first married couple to win the Pulitzer for journalism. At Middlebury last Sunday, they spoke about what each graduate can do to help one individual at a time, and not to worry if he or she can’t immediately solve large-scale problems such as global poverty. Helping the individual, WuDunn said, is a legitimate way of changing the world, and can also change “you” for the better. You can watch the full address.

Please follow our community rules when engaging in comment discussion on this site.
  • Yeti

    When will the media report the truth about the economic recovery?

    There has never been any hope that this economic depression could be stemmed.

    The problems created by Republican policies during their twelve year’s controlling Congress, and those of Bush’s eight years, simply took far too great a toll on every part of our country’s economy.

    The ONLY ones who benefited were the very wealthy, while the rest of our country was run hopelessly into the ground.

    It was obvious from the start that Republican policies permeated every part of our economy… these policies, along with the installation of conservatives throughout government AND private institutions were imposed over a twelve year period, and it may take at least that long to weed out their detrimental influence on America.

    The main-stream media should have done a little real reporting, and pointed out from day one of the economic downturn that Republican policies had set America back for a generation, at the least. The media has failed America yet again, and we’re all going to suffer the consequences of an UNTHINKABLE conservative resurgence.

    Heaven help America!

  • Jason S

    US money supply plunges at 1930s pace as Obama eyes fresh stimulus

    The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

    http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html

  • Yeti

    The majority of the media should never have started Kowtowing to FOX viewers just because Fox was getting good ratings by drawing virtually every conservative in America as a viewer… that is how they keep failing America.

  • cory

    The very question is absurd. Plow through to what, may I ask? We have squandered the economic advantage we gained after the second world war and are now in a serious decline.

    I make less now with more education than I made 10 years ago. My grandfather retired from a can factory in the late 80′s and was making over $20 an hour with health insurance and a substantial pension.

    Please, oh god please have one of your panel discuss the reality of catastrophic American decline. No one will discuss this reality, especially politicians.

  • Alex

    There, there, Yeti. Don’t say “There has never been any hope that this economic depression could be stemmed.”

    It’s just it will take some time, as it must. I just would not put too much stock in the Republicans’ criticism who came out the next day after Obama was elected with their “unemployment is 9%. How is that hope and change working for you.” That kind of attitude is certainly not helpful.

    Perseverance, hard work and patience is what we need.

  • Jason S

    So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real….

    #1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?

    #2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?

    #3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?

    #4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?

    #5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?

    #6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that “terrible cuts” are urgently needed in order to avoid a complete financial disaster in his state?

    #7) But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?

    #8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?

    #9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?

    #10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?

    #11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?

    #12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?

    #13) The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?

    #14) The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?

    #15) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?

    #16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two “pillars” of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?

    #17) 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?

    #18) The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?

    #19) Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?

    #20) One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?

    #21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that “what is good for Wall Street is good for Main Street” actually true?

    #22) Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?

    #23) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?

    #24) In March, the price of fresh and dried vegetables in the United States soared 49.3% – the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?

    #25) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words “economic recovery”?

  • Yeti

    Bush already had the Fed interest rate at ZERO when Obama took office!

    Bush left Obama literally NO TOOL WHATEVER FOR DEALING WITH THE RECESSION, short of a government stimulus.

    The Republicans destroyed America!

  • Bob

    Yeti,

    You should research the US depression of 1920 & the recession of the late 70′s to early 80′s. We need to solve the recession in the same fashion as these and not repeat the mistakes of the great depression like the Obama administration has been doing so far.

  • cory

    Let’s see… Most cities are cutting teachers and funding for public libraries. Oh definitely, recovery must surely be right around the corner.

  • Gustavo

    If these these charlatans and bond vigilantes are so concerned about the deficit–which I don’t believe they are–we all know a simple, effective and painless solution to the Social Security and Medicare problem: eliminate the payroll tax cap.

    I can always calculate almost exactly how much someone makes by noting when the week they make the universal remark (for those making over $107,000) “Wow, my paycheck went up a lot this week!” For too many of the supposedly concerned “Deficit hawks” that moment occurs in early January!

  • http://www.filipinoboston.blogspot.com AKILEZ

    How can I and you change Global Poverty if we ourselves are in poverty?

    Nice to see a couple won the Pulitzer price some extra cash for their pockets for writing something that everyone actually liked.

    I wish my blog win something for telling the world about my poetic life.

  • Gustavo

    Hey Jason S. I see you read the excellent Ritholtz blog, good for you..but notice he gave attribution to the little blog that came up with those 25 questions.

  • Nancy

    Yes… some people provide an attribution when they use another’s material.

  • Nancy

    Obviously, some don’t.

  • Jason S

    The 25 Questions are very good questions to ask and provoke thought.

    We can only wish the following is true
    “As crises continue to mount abroad and voter anger grows at home, President Obama’s dream of a new world order has died a quiet death.”

    But I fear it is not. The Obama admin is working on passing a new bill that allows the Federal government to take over buisnesses without cause and it allows the money to be randomly handed out like a broken ATM without approval or legislation.

  • Todd

    “Bush already had the Fed interest rate at ZERO when Obama took office!

    Bush left Obama literally NO TOOL WHATEVER FOR DEALING WITH THE RECESSION, short of a government stimulus.

    The Republicans destroyed America!”
    Posted by Yeti

    FYI, the privately owned and NEVER audited Federal Reserve Bank sets the Fed interest rate, NOT the POTUS.

    It is BOTH Republicans AND Democrats who’ve destroyed America, by design! There is NO difference between the two parties—they’re merely two wings of the same ugly bird.

  • Mel Craig

    ~

    We are just kicking the can down the road. There is no way to “grow” our way out of the hole we’re in because of the accelerating rate of growth of the debt + interest.

    And, as someone above noted, we have squandered our comparative advantages.

    I feel very sorry for the younger generation.

    ~

  • Ellen Dibble

    I haven’t seen what Christina Romer wrote (quoted by Tom Ashbrook, and saying more stimulus will be needed by local governments), but I haven’t heard that the foreclosures “in the pipeline” are somehow no longer in the pipeline, and that is one of the reasons we got in trouble. It sounded to me like many shady home loans are yet to implode.

  • http://politywonk.livejournal.com Elizabeth

    Which “economy” will you talk about? Economists have their math games,based on weird and meaningless theories and formulas, played in the tenured safety of banking jobs and academia.

    For the rest of us, “The economy” was a network of stable, self-replenishing relationships that nurtured our families, our neighborhoods, our culture, our planet. The game theories of “economists” don’t even fit that model. They have no numbers for the tasks by which family members care for each other, they have no negative numbers for irreversible damage like the oil spill. To them, if someone shells out a dollar, it’s a recovery — even if our kids’ inheritance is going to hell in a handbasket.

  • Jason S

    No more bailouts! Having the federal govt bails out the local governments makes as much sense as taking your money out of your billfold and putting it in your front pocket and expecting this act to make the money worth more than it was worth in the billfold.

  • JP

    I first posted this a few months after Obama took office… it still seems relevant:

    How do we try to understand the several years of prosperity before the recession hit? How, for instance, did job growth and wealth creation meet the needs of population growth during the Bush’s years? The answer is key to understanding what an attempted recovery will look like.

    Economists during this period consistently told us that economic growth of six percent per year was needed in order to meet the needs of population growth and to maintain standard of living. Well, during much of Bush’s tenure, it looked like we were meeting that goal. But how? Was the growth healthy and sustainable, or based on “false growth,” or in essence, illusion?

    THE CULPRITS

    It turns out, as we now know, that the major drivers for wealth creation and the attendant job growth during the Bush years were three main factors: sky-rocketing home values, sky-rocketing stock values, and easy credit.

    FIRST CULPRIT

    Home values doubling every few years (due almost exclusively to foreign investment), is something that will likely never happen again, and SHOULD NEVER HAPPEN AGAIN unless we want to repeat the economic fiasco that led to this recession. Home prices are still adjusting to reasonable levels, and when all has settled, trillions of dollars worth of wealth will have evaporated as easily as it was created. This wealth should never have existed in the first place.

    SECOND CULPRIT

    The artificial creation of all that wealth fed the stock market bubble, as did investor stupidity. The stock of healthy companies should trade at maybe 10-20 times earnings, TOPS. Instead, companies were trading at absurd multiples, many at hundreds of times earnings. This was the “irrational exuberance” alluded to by Greenspan. Again, as stocks adjusted to reasonable levels, trillions of dollars of wealth evaporated. Also again, this was wealth that should never have existed in the first place.

    THIRD CULPRIT

    Foreign investment and banks flush with bubble cash made for easy credit. This allowed Americans to spend far beyond their means, even as they were making a killing off illusionary wealth that would soon disappear into the ether from which it came. This level of freak spending, bolstered by artificial wealth creation and easy credit, is what allowed job growth in America to keep up with population growth. Since almost all of America’s wealth creation was on paper and not based on real productivity, almost all of the jobs created were service sector jobs fed by the irrational spending of illusionary wealth. Service sector jobs are, of course, the first to go when spending slows.

    THE BOTTOM LINE FOR RECOVERY

    The tens of trillions of dollars lost in housing and stock market will likely never be seen again. More importantly, unless we want to have an economy again based on illusion, those tens of trillions SHOULD never be seen again.

    This means that we had a decade of population growth for which little new real wealth was created. This lack of new real wealth means no new spending to create new jobs… FOR TEN YEARS WORTH OF POPULATION GROWTH!!!!!

    In other words, the wealth simply doesn’t exist anymore that sustained the last decade’s worth of people that were added to our country. It evaporated! It’s gone, likely never to return… or at least no time soon.

    Add to the above one more exacerbating circumstance: those who would historically have been leaving the workforce to free up jobs for newcomers are now being forced to work past the traditional age of retirement. This will naturally translate into even fewer jobs for those trying to enter the workforce. Had this recent economic fiasco been averted with a little foresight, regulatory enforcement, and the intelligence to heed the Cassandras who warned those in power, then this compounding problem of fewer retirees wouldn’t exist either.

    Now, with real wealth reduced by tens of trillions of dollars, there’s not enough money in the financial system to both give the ten year’s worth of added population jobs, and have everyone maintain standard of living.

    This fact means that a trade off will have to occur:

    either

    1) we find a way to give everyone a job, but median individual real wealth is reduced

    or

    2) median individual real wealth remains level, but unemployment numbers remain high.

    Either way, we face a major paradigm shift in America. In fact, we are already seeing that the length of the average work week is decreasing in America, to around thirty hours… this makes the first option look like the direction in which the country is moving.

    This is the true legacy that Bush and the Republican Revolution left our country and our new President. The Bush administration was content that all of our growth be illusionary, that none of it be based on real increases in productivity… that it NOT BE SUSTAINABLE.

    This is not to say that some Dems, especially Clinton, were completely blameless, but the real opportunity to avert the crisis was on Bush’s watch… at the moment when enough credible voices were beginning to alert those in power to what was happening. Of course, Republicans were solidly in power at this time and had overseen the creation of K-Street; never before had the Federal government been so closely and openly aligned with Wall Street and huge corporate interests. This did not make for an environment where regulatory enforcement was probable, or where malignant economic forces were likely to be reigned in.

    Unfortunately, all the above leaves little hope that enough jobs can be created to bring our unemployment down to the low levels to which we’ve been accustomed. Also unfortunately, Americans will never place the blame squarely where it belongs, and we’ll end up thwarting the recovery efforts of one of the most honorable and intelligent Presidents we’ve ever elected.

    Here’s a line-up of the last 5 presidents:

    Carter (D) – started debt/GDP 35.8% ended debt/GDP 32.6%

    Reagan (R) – started debt/GDP 32.6% ended debt/GDP 53.1%

    Bush I (R) – started debt/GDP 53.1% ended debt/GDP 66.2%

    Clinton (D) – started debt/GDP 66.2% ended debt/GDP 57.4%

    Bush II (R) – started debt/GDP 57.4% ended debt/GDP 75.5% !!!!

    This makes clear that

    DEMOCRATIC PRESIDENTS ARE FAR MORE FISCALLY RESPONSBLE THAN REPUBLICAN PRESIDENTS!!!!!!

    Obama may change the trend, but only because he was handed by Bush the worst economy and job market that perhaps any U.S. President has ever inherited.

    Obama is just one more Dem brought in to make the best of a huge mess left by a Republican predecessor.

    http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms

    In addition, Bush presided over one of the most prosperous periods in American history, which unfortunately was all based on the volatile “bubble” wealth which propped up irrational levels of spending. Even during this period of unparalleled government revenue, the Bush administraion utterly neglected vast vital infrastructure decay… all massive, but necessary expense burdens that Federal, State, and local governments must now bear during recession.

    Thanks Bush and you ‘licans, for completely destroying our country and bringing down the economies of the globe after a mere twelve years in political stranglehold. If you’ll just loosen your grip on our neck a little, we’ll try and take America back to the fairly stable prosperity that we enjoyed for the fifty years before the Republican power grab.

  • Raj

    After Japan, US now Europe what is chance that China will be next on the chopping block. China enjoyed tremendous long term growth and how long can it keep a bullish economy? Is China’s economy transparent or are we just seeing it green — the way we want to .

    What will happen to US and/or rest of the world if something happens to China?

  • Jason S

    This video shows how the current administration treated the BP oil spill.

    http://www.youtube.com/watch?v=WcU4t6zRAKg

  • Ellen Dibble

    The stimulus seemed to buck up established institutions, car companies, banks. By far most new jobs come from upstarts (who established companies by definition view as threats), and the question is whether the new jobs come from establishment institutions feeling safer, or from the more real new growth of a non-oil, sustainable economy. We went from 7.6 to 7.3 unemployment in a month where I live. Probably people saw the financial reforms being passed in Congress, and the financial sector with their mammoth weight in the economy is feeling more stable, and small businesses can hire, if they’ve been thinking of it. Banks would be allowing some growth post Christopher Dodd et al and their bill.

  • Jason S

    TOM,
    Debt/GDP=90% is not in the future…. it is NOW. We are going to have a debt to GDP = to Greece in 2 years according to the Obama Administration!

  • Danielleoh

    The unreported story here is how the European situation reveals the lie in the “Teabaggers” ideal of an American federation of loosely-connected states. As with Greece; once a group of individual states (nations) share a common currency, the fate of one is the fate of the many. Sorry, Texas; we’re all in this together.

  • JP

    We get it Joe (“Jason S”):

    You don’t like Obama.

    We’ve always gotten it, Joe.

    I liked it when you decided to post under your own name for a while. What happened?

  • informed American

    What economic recovery?

  • Ellen Dibble

    A country that is coddling its rich is also coddling its underclass, with all sorts of subsidized health insurance, affordable housing, etc. These socialized goods manage to benefit the rich (insurance companies, developers), and yet they are a feature of a nation that is NOT using its people to best advantage.
    So far, Obama et al have not mobilized the populace into a new sense of growth, sustainable growth that can allow reduction of debt, a reasonable role (nonempirical) in the world, etc.

  • JP

    Obama will leave the yearly deficit at a LOWER LEVEL after his eight years than he inherited from Bush… I guarantee it!

  • jeffe

    AKILEZ are you serious? Nicholas Kristof and Sheryl WuDunn earned that Pulitzer and Kristof keeps writing and reporting on people who otherwise have no voice.

    Have you done any investigative reporting that has been published? This does not include your blog.

  • Ellen Dibble

    That was “nonimperial,” skip the empirical — scientific. But think about that too.

  • Benjamin Klein

    Is there any truth to the observation that part of this economic situation is simply a result of the shift from the old industries to the new? – as established companies fail to change with the times, while the new start ups “get it”

  • Jason S

    JP,

    It doesn’t really matter if the annual budget deficit is reduced to Bush levels if the Total debt is 10x what it was during the bush years. Not to mention the fact that Obama will not have 8 years in office unless he starts governing from the center. Good luck with that.

  • jeffe

    This is a jobless recovery and a lot of people will be permanently unemployed or underemployed. The majority of them will be 45 through 60 and predominantly male.

  • Gustavo

    Okay I trashed Blinder for WSJ article on your FB page, but I have to give him credit for noting that we are borrowing at 3.2%–lower than the long term-inflation rate—otherwise known as free.

  • Danielleoh

    Ben, I provide technical services to high-tech firms in the Northeast, and I can assure you that I have witnessed stimulus funding assisting startups and small companies that are rapidly becoming large companies, innovating within the alternative/green energy markets. (Have also worked with a few companies using stimulus funds to enhance defense preparedness). There’s a plan here, and it is not about us sitting around worshipping the old ways that are failing around us, in the gulf, in West Virginian mines, etc.

  • JP

    How’s that math workin’ for ya?

    We’d need a yearly deficit of eight trillion/year for Obama to leave it at 10x where Bush left it.

    … and it does matter because Bush set the pace for our nation’s indebtedness.

    You conservatives just can’t win an argument without resorting to outright lies and/or hyber-exaggeration..

  • JP

    … hyper-

  • Tom from Boston

    The U.S. stock market has become a joke. A handful of investors have the clout to push the markets down (as we saw with the “flash crash” of a few weeks ago) and profit from it. I took all of my money out of the market right after that crash. The market is a poor investment vehicle. When it is controlled like this by such a small handful, I refuse to give them my money to play with.

  • JP

    Value-added tax is a recessive tax on the less wealthy in our country

    … not necessarily an awful idea, but how about the wealthy start paying their share first, since they’re the ones who have benefited most from the Republican policies that have cost the rest of us so dearly.

  • Jason S

    Tom,

    your female guest is missing the point. The US needs to stop being the Welfare State that we have become and return to our routs of freedom and personal responsibility.

    Only this can cut government spending by enough to pull us out of this situation.

    You cant spend your way out of Bankruptcy!

  • Jason S

    JP

    It isn’t recessive, it is regressive… LOL

  • Loay

    We have to accept that the interests of the investor class and the rest of the country are no longer the same. The way out of debt is inflation. We borrow in our own currency. Owners of capital will lose. Tough!

  • JP

    Correction:

    Value-added tax is a regressive tax on the less wealthy in our country

    … not necessarily an awful idea, but how about the wealthy start paying their share first, since they’re the ones who have benefited most from the Republican policies that have cost the rest of us so dearly.

    Thanks Joe!

  • Gustavo

    You know who doesn’t think Japan has had a “Lost Decade”? The Japanese people. They are living very rich, enjoyable and productive lives. Yeah, the numbers are not great for investors or economists, but for the average Japanese, the last 1 years have been pretty darned good. No inflation and 1.25% interest rates aren’t too bad to live with I guess.

  • Steve

    1) We have recently had a 10% decline in the stock market. While eye catching in that it came in a short term time period, a correction of this magnitude is not material over the longer period of time. It would be a very difficult task to find a year when the high and low of the market is not more than 10% apart. For the year to date, large cap stocks are down a little, and small cap stocks are up a little. While provocative after a fast 10% decline, the question “Is this a great buying opportunity” seems ridiculous on its face.

  • John

    Cut spending of the gov’t. There is no need for people to retire at any age. Retirement while still physically able to work is a modern concept, and it is one factor putting us in a hole. Additionally, we should face the fact that Social Security is not a forced retirement plan, but it is rather the sole means for some desperate people. Therefore, a financial means test should be in place to obtain Social Security payments.

  • Jason S

    President Barack Obama has repeatedly claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious. The Washington Post has a great graphic which helps put President Obama’s budget deficits in context of President Bush’s.

    What’s driving Obama’s unprecedented massive deficits? Spending. Riedl details:

    President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion.
    President Bush began a string of expensive finan cial bailouts. President Obama is accelerating that course.
    President Bush created a Medicare drug entitle ment that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new govern ment health care fund.
    President Bush increased federal education spending 58 percent faster than inflation. Presi dent Obama would double it.
    President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already in creased this spending by 20 percent.
    President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend.

    President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
    UPDATE: Many Obama defenders in the comments are claiming that the numbers above do not include spending on Iraq and Afghanistan during the Bush years. They most certainly do. While Bush did fund the wars through emergency supplementals (not the regular budget process), that spending did not simply vanish. It is included in the numbers above. Also, some Obama defenders are claiming the graphic above represents biased Heritage Foundation numbers. While we stand behind the numbers we put out 100%, the numbers, and the graphic itself, above are from the Washington Post. We originally left out the link to WaPo. It has now been added.

  • JP

    Yes John… we all know that businesses are falling over themselves to hire the elderly.

    I look froward to seeing you living under a bridge in your old age.

  • Jason S
  • Jason S

    The discussion today was “Off Point” like usual….

  • JP

    Here’s a line-up of the last 5 presidents:

    Carter (D) – started debt/GDP 35.8% ended debt/GDP 32.6%

    Reagan (R) – started debt/GDP 32.6% ended debt/GDP 53.1%

    Bush I (R) – started debt/GDP 53.1% ended debt/GDP 66.2%

    Clinton (D) – started debt/GDP 66.2% ended debt/GDP 57.4%

    Bush II (R) – started debt/GDP 57.4% ended debt/GDP 75.5% !!!!

    This makes clear that

    DEMOCRATIC PRESIDENTS ARE FAR MORE FISCALLY RESPONSBLE THAN REPUBLICAN PRESIDENTS!!!!!!

    http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms

    Obama may change the trend, but only because he was handed by Bush the worst economy and job market that perhaps any U.S. President has ever inherited.

    Obama is just one more Dem brought in to make the best of a huge mess left by a Republican predecessor.

  • Ellen Dibble

    The way out of national debt is inflation, is borrowing in our own currency, and those with capital/investments will see their reserves shrink — do I understand you, Loay?
    I think you cause inflation from the Fed??
    I think I heard on the program that the hazard of deflation is hoarding, and that we now have 1% deflation. And I can’t see how that happens; if money is becoming worth less, I wouldn’t be saving it in my mattress. But because the Fed has a 0% interest rate, I heard, we can’t go any lower. However that works.
    My brain isn’t working, but I am expecting inflation — gas prices incorporating a realistic tax and sequelae, just for starters.
    Sincerely, your brain-scrambled listener.

  • AKILEZ

    We can Add Value Added Tax in American and get rid off Sales and Income Tax. A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

    The Philippines passed that Value Added Tax 1 and 2 for the past 20 years since Cory Aquino’s Administration.

    It really helped the Infrastructure of the Philippines except for Power enegry the Electricity. Roads,bridges and fly over were built with the scarifice of the energy sector

    VAT for America

  • jeffe

    Gustavo have you ever been to Japan?
    The homelessness problem is awful. Mostly men who lost jobs and could not find new ones.

    The cost for most things is absurd a cantaloupe is about $20!

    They have a high standard of living and they also have national health care which is a factor in the quality of life in a downturn.

  • JP

    This is no economic recovery, this is Republican policies of the past coming to full fruition.

  • Todd

    C’mon Tom! Alan Blinder has been in the thick of helping to create America’s economic decline: he was vice-chair of the Federal Reserve Board of Governors! Do you really expect to hear the truth from the mouth of the wolf? The Fed IS the problem!

    Asking Alan Blinder to offer his opinion on U.S. economic solutions is kind of like asking Joseph Goebbels to offer his opinion on Hitler’s Final solution. The man has no credible opinion to offer!

  • Steve

    Jason, so Bush, backed by a Republican Congress was able to take a surplus and in a strong economy with low social spending requirements and a strong environment for tax collections and turn it into a significant deficit. Obama steps in with an economy falling apart, formulaic spending requirements rising rapidly, and tax collections sharply falling and the deficit shoots up. What a surprise. In such an environment most main stream economists advocate classic Keynesian solutions (more federal spending, accelerate money growth etc.. That being said, the Democratic controlled Congress has yet to find a thing they don’t want to spend money on, and the Administration (as with Bush) has used neither the veto nor the bully pulpit to try to slow it down.

  • ThresherK

    In the future, stop tagging stories like this with “the economy” as if it were one ship on the ocean in which we would all sink or float.

    Also, JP: The term you are looking for by which every Republican is Fiscally Responsbile, no matter how many budgets they unbalance more than a Democratic predecessor, is called Birthrighteousness.

    It also applies to Family Values, and Keeping Us Safe.

    Oh, and let’s have more links to the Heritage folks. Yep. I can really believe their crap.

  • JP

    Steve,

    That difference you point out, between what Bush had to work with and what Obama was left by Bush, is ALL that should be on Americans’ minds this November.

    That Bush and the Republicans could have done that to America considering the incredible advantages they had with which to work… how can anyone think of putting those same idiots back in power?!!!

  • Ellen Dibble

    I keep reading that the younger generations are very worried about the Baby Boom retiring. They won’t be able to supply the labor to replace them; they are not a post-World-War II “boom” duplicate, just the next cohort. They don’t have the manpower to replace us, and they sure don’t want us collecting Social Security off their backs while they work two or three jobs.
    Well, right now the jobs haven’t been handed off to them. And right now the boomers aren’t looking at nicely padded retirement accounts. If inflation makes those retirement accounts look pathetic, and capital gains taxes makes them look even more pathetic, those boomers — the basic midle-class sorts — will be working, regardless of policy. Those self-employed will. Those in corporate jobs, a different picture.

  • JP

    ” Birthrighteousness!”

    That’s teriffic!

    I hope to see that in the OED next year.

  • Todd

    “This is no economic recovery, this is Republican policies of the past coming to full fruition.”
    Posted by JP

    Agreed, but that’s only half the story JP. The other half of the blame rests with the Democrats. Because any apparent difference between the two parties is superficial, a mere political illusion. Over and over again, the Dems. set us up like bowling pins, so the Reps. can knock us down. It’s tag-team politics, plain and simple.

  • John

    The Democrats are incompetent and spineless and the Republicans are evil.

  • Kevin

    All I can say is that I’m glad I’m retired and living on a pension with no debt. I feel bad for you worker-types because a tax bill is coming that will have you working for the government for more than half-a-year and then for your healthcare for 4 months and you’ll be lucky if you’ve got two months of wages for yourself. It’s going to cost you more to do anything and your quality of life will pretty much stink.

  • John

    What are pensions?

  • JP

    It’s hard to defend any politician or political party these days, I agree.

    Still, never has a new party come into power in any country on Earth and not been ultimately corrupted… that is quite simply what power does to humans, and power over the nation’s purse strings has every body and his dog coming to beg for a piece. That will eventually get to anyone’s head… it always has.
    Don’t forget, “Meet the new boss… same as the old boss.”

    All we can go on, then, is an honest analysis of who has done better for the American people historically.

    Dems controlled Congress for fifty years before the Rpublican “Devolution…” from the end of WWII until 1994.

    Economically, those were the best years America has ever seen in terms of real productivity… those years represent the most substantial narowing of the wealth gap America has ever seen.

    It took Republicans a mere twelve years to turn that around into one of the worst wealth gaps America has ever seen.

    America can’t forget how much better Dems have been for America than Republicans economically… especially when the economy is all anyone is really worried about.

    Agreed, both parties can suck in their own ways, but I’ll take historical precedent over lies and hyperbole any day of the week.

  • Alex

    At a minimum it can be said with certainty that electing Republicans versus Democrats does not give clear advantages economically or fiscally. The record is just not there. We have heard a lot in the past decade and a half about how mature they are and how they are careful with money and all that. But facts are pretty stubborn. Republicans were generally pretty bad. It is enough to remember that the Great Depression, the Savings and Loan debacle and the Great Credit Crunch all occurred on their watch.

  • Jim in Omaha

    The absolute first step to resolving a number of issues such as debt, income/asset inequality, market manipulation, to name a few, is to immediately tax the highest levels of income at least as much as a $10/hour worker: 15.3% (the Social Security and Medicare taxes, aka “payroll tax”) of ALL income, regardless of whether it’s wages, dividends, capital gains, plus the income tax due on such income. An uncontroverted fact is that Warren Buffet pays a lower rate of taxes than his secretary. Until our “leaders” have the guts to at least do this, no progress will be made in addressing our fiscal problems.

  • Rachel

    The more automated our society becomes the less people we need to do jobs. We have more people than jobs and the only way I can see any recovery would be to restructure our society. Creating more jobs doesn’t really seem to be the answer when it isn’t necessary. Maybe cutting the number or hours each person works and dividing jobs in two…I’m not sure if this is the answer, but with a still growing population and computers and machines doing more of our work, we need to figure some other way for our world to function.

  • Alex

    “Maybe cutting the number or hours each person works and dividing jobs in two…”

    That’s what they did in Europe. Restricted the number of hours per person, like in France I think 35 hrs is the max per worker. I’d be glad if my law firm did that, but they want me to work 70 hrs a week.

  • Janet

    President Bush spent too much money on government programs and obama is doing the same thing. It is not going to build a sound economy and it would be better to cut back across the board.

  • Bush’s fault

    JP’s favorite slice of history is from the end of WWII until 1994.

    “Economically, those were the best years America has ever seen in terms of real productivity… those years represent the most substantial narrowing of the wealth gap America has ever seen.”

    Clearly JP’s thought is jumbled. Productivity gains? not so much…production? certainly (a no brainer)..and the wealth gap narrowed (for all you collectivists) because of swelling population which needed goods and services and the the willingness of management to agree to labor unions’ demands, despite no gains in productivity.

    Our economy from the end of WWII until 1994 was an historical anomaly unique to history – largely driven by exploiting third world countries. The oil embargo of the early 70′s was a harbinger of our present condition telling us the world was changing.

    The result would have been the same whether the presidency or Congress had been different.

    It took Republicans a mere twelve years to turn that around into one of the worst wealth gaps America has ever seen.

  • david

    “Bush II (R) – started debt/GDP 57.4% ended debt/GDP 75.5% !!!!”
    Obama (D)- started debt/GDP 75.5% ended debt/GDP may well be over 100%!!!
    As of May 26th 2010, the Total Public Debt Outstanding was 88.9% of GDP
    Doing the math, in 8 years: beginning of a recession, 911, 2 war fronts, Katrina, Bush increased the debt/GDP by 18.1%.
    Let me see, Obama inherits 75.5%, in 18 months it is now at 88.9%. That means that Obama has increased the debt/GDP by 13.4%!!!!!
    Dog!!!! in just 18 months,Obama has almost increased the debt/GDP as much as Bush did in 8 years !!!!!
    Whether they are Dems or Repubs. they are ALL spending our nation into bankruptcy

  • Julie

    @Ellen — I think you are confusing deflation (where prices are dropping) with devaluation (where the value of currency is dropping). Hoarding happens during deflation because the longer you wait, the lower the price, so the more you can buy with a set amount. It is the inverse of inflation, where rising prices decrease the amount you can buy with a set amount of money.

    When currency is devalued, more currency is required to buy a particular good or service because as time passes the set amount of currency is worth less and less.

    Hoarding is different from saving. When you save, it is generally with the expectation that the money being saved is also invested so that it increases with time. And that increase is generated by the money being circulated in the form of loans or credit. With hoarding, the money is just taken out of circulation until it is spent (thus, the proverbial mattress).
    Disclaimer: I am not an economist, nor do I play one on TV. Just an ordinary person trying to follow all this craziness.

  • Janet

    Wealth gap? A foolish socialist term to create a class envy war. The poor in this country enjoy more taxpayer funded welfare program than any time in our history.

  • JP

    David,

    I hope you’re not just another conservative incapable of doing simple math.

    Bush left the annual defict at 1.2 trillion per year.

    That means that if Obama left the annual deficit EXACTLY WHERE HE INHERITED IT FROM BUSH… that is, at 1.2 trillion per year, then in eighteen months, the nations debt would have increased by the 13 percent to which you are referring.

    That means, by your own figures above, BUSH IS STILL RESPONSIBLE FOR ANY NATIONAL DEBT ADDED SINCE OBAMA TOOK OFFICE.

    … What’s worse is that Bush added the debt in GOOD economic times, not at a time when government revenues are greatly reduced, and when the government is doing everything it can to stimulate the economy.

  • Gustavo

    Jeffe, Comparing homelessness in Japan to U.S.

    According to the BBC there are at least 10,000 homeless in Osaka, a city of 8,800,000. In Los Angeles the population is 9,800,000 and the homeless total over 250,000 or 25X as many. As far as the price of a cantaloupe in Japan, I suggest you step into a good Asian grocery store in any major city in the U.S. and check out the prices on their “exotics” pretty steep too.

  • Rob L

    If Alan Blinder’s personal investments aren’t back to where they were before the financial crisis, why are we even listening to his predictions for the future?

    He says all we need to do to keep promising is to “promise credibly to pay it back”. What a sad Court jester he is, rationalizing the continued postponing of reality in hopes the big crash will come a year or two after he’s gone. He must have no children or family to wish the disaster that continued debt will bring to the USA.

  • Rob L

    What’s the name of the idiot guest who giggles about gold investors? Gold investors are up 400% this decade. Dow investors? Underwater. Why?

    Maybe Alan Blinder was right – it’s all about the credibility. Unfortunately the credibility of the US government is just about finished.

  • twenty-niner

    Good 70-year chart on Debt/GDP, shows a big U:

    http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg

    Debt/GDP spiked under Roosevelt: WW2 spending.

    Debt/GDP decreased under Truman-Nixon: US left as only standing industrial economy after WW2, but around 1970 we started to become a net oil imorter, and we started to face increased foreign competition. This is where the U starts to bottom.

    Debt/GDP increased under Reagan-Obama (with a slight dip under Clinton): Massive military build up in the 80s under Reagan and draw down under Clinton. Also, Clinton benefitted from the 90′s IT boom that resulted in a surging economy and stock market with huge gains in income and capital-gains-tax revenues. Bush II and Obama continue the overall trend that started around 1980.

  • curious1

    question: Will a recovery generally begin in one area of the country as opposed to another?

ONPOINT
TODAY
Aug 20, 2014
A man holds his hands up in the street after a standoff with police Monday, Aug. 18, 2014, during a protest for Michael Brown, who was killed by a police officer Aug. 9 in Ferguson, Mo. (AP)

A deep read on Ferguson, Missouri and what we’re seeing about race, class, hope and fear in America.

Aug 20, 2014
In this Oct. 21, 2013 file photo, a monarch butterfly lands on a confetti lantana plant in San Antonio. A half-century ago Monarch butterflies, tired, hungry and bursting to lay eggs, found plenty of nourishment flying across Texas. Native white-flowering balls of antelope milkweed covered grasslands, growing alongside nectar-filled wildflowers. But now, these orange-and-black winged butterflies find mostly buildings, manicured lawns and toxic, pesticide-filled plants. (AP)

This year’s monarch butterfly migration is the smallest ever recorded. We’ll ask why. It’s a big story. Plus: how climate change is creating new hybridized species.

RECENT
SHOWS
Aug 19, 2014
Lara Russo, left, Cally Guasti, center, and Reese Werkhoven sit on a couch in their apartment in New Paltz, N.Y. on Thursday, May 15, 2014.  While their roommate story of $40,800 found in a couch made the news, other, weirder stories of unusual roommates are far more common. (AP)

From college dorms and summer camps to RVs and retirement hotels, what it’s like to share a room. True stories of roommates.

 
Aug 19, 2014
Police wait to advance after tear gas was used to disperse a crowd Sunday, Aug. 17, 2014, during a protest for Michael Brown, who was killed by a police officer last Saturday in Ferguson, Mo. (AP)

“War zones” in America. Local police departments with military grade equipment – how much is too much, and what it would take to de-militarize America’s police force.

On Point Blog
On Point Blog
Your (Weird? Wonderful? Wacky?) Roommate Stories
Tuesday, Aug 19, 2014

We asked, and you delivered: some of the best roommate stories from across our many listener input channels.

More »
1 Comment
 
Our Week In The Web (August 15, 2014)
Friday, Aug 15, 2014

On Pinterest, Thomas the Tank Engine and surprising population trends from around the country. Also, words on why we respond to your words, tweets and Facebook posts.

More »
Comment
 
Nickel Creek Plays Three Songs LIVE For On Point
Wednesday, Aug 13, 2014

Nickel Creek shares three live (well, mostly) tracks from their interview with On Point Radio.

More »
Comment