Tag Archives: Council of Economic Advisers

Unnoticed In The Mix

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On Friday Issues & Insights posted an article about an executive order signed by President Biden that was pretty much overlooked, but will have enormous impact.

The article reports:

In the flurry of President Joe Biden’s executive orders was one that was almost entirely overlooked but could easily end up having the biggest impact.

The order also seems harmless enough, going by the seemingly innocent title “Modernizing Regulatory Review.” Except this order isn’t about modernizing regulations. It’s about unleashing the regulatory state with a ferocity never before seen in this country.

Biden’s order – which didn’t get released to the press until late in the evening of his first day – aims to effectively toss the cost-benefit analysis that for many decades has served as at least a modest brake on the ambitions of regulators. In the past, regulations where the cost of compliance far exceeded the benefits could be stymied by the White House Office of Information and Regulatory Affairs.

Essentially this means that there will be no cost controls on the new regulations President Biden is unleashing on the country.

The article contrasts this to what the Trump administration accomplished in the area of regulation:

One of Trump’s biggest – unsung – achievements in the White House was his effort to rein in the regulatory state. A lifelong businessman, Trump understood – in a way lifelong politicians cannot – the avalanche of regulations that fall on a business and the enormous costs they impose. One of his very first actions was the two-for-one order.

CEI’s Crews says that Trump actually exceeded that goal, with agencies getting rid of 4.3 rules for every new one.

The Trump administration’s Council of Economic Advisers calculated that the deregulatory measures taken over the past four years saved households an average of $3,100 a year. And while there’s some debate over the extent of the benefits from Trump’s efforts, the undeniable fact is that he slowed the regulatory current.

Even so, the regulatory state today imposes $1.9 trillion in costs, according to CEI. That is an enormous hidden tax on families. In fact, if our regulatory state were a country, it would be bigger than Canada’s entire economy. The idea that we are getting more than $1.9 trillion in health and safety benefits from these rules is laughable.

Unfortunately, with this one executive order, Biden shows that he’s intent on giving regulators carte blanche to impose massive new rules on businesses and households, on virtually anything and everything they do, regardless of costs. There’s little else Biden has done so far that will have as wide-ranging an impact.

This is definitely a time to hold on to your wallet.

It Really Is A Shame That The Media Has Chosen To Ignore President Trump’s Economic Success

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On Saturday, The Western Journal reported the following:

The Trump economy is giving the greatest benefits to those who have been at the bottom, according to new data from the Council of Economic Advisers.

Data released by the CEA shows that over 11 quarters from the end of 2016 through the first half of 2019, the net wealth of the top 1 percent of American households rose 13 percent. However, that rise is dwarfed by the 47 percent increase seen by the bottom 50 percent of America’s households over that same period.

…The report said that on average, workers’ pay has been rising faster than that of managers, and wage gains for Americans without a bachelor’s degree are rising faster than those for Americans with a bachelor’s degree or higher.

And, in keeping with Trump’s campaign promise to lift up black Americans, “average wage growth for African Americans now outpaces wage growth for white Americans,” according to the White House report.

America’s labor force is growing because Americans who were not formerly even looking for jobs are now employed, the report said.

The article concludes:

The Labor Department’s December jobs numbers, meanwhile, showed that women now are the majority in the American workforce.

“Why is today a milestone? It’s a milestone because it’s really heralding the future and not just telling us where we are today,” Betsey Stevenson, a professor of public policy and economics at the University of Michigan, told The Washington Post.

Larry Kudlow, director of the National Economic Council, said the jobs report has political ramifications.

“This stuff will translate in the election, I’m surprised the Democrats are so pessimistic painting a picture of a deep recession,” Kudlow told The Post. “The key point here is 3.5 percent unemployment continues, and that is a very low number historically and shows you still have a healthy economy and healthy job market.”

There is another aspect of President Trump’s policies that is impacting the wages of working Americans. President Trump’s policy of ending illegal immigration also eliminates some downward pressure on the lower end of the wage scale. Illegal immigrants are willing to work for less than American workers and don’t demand the same benefits. If they are working ‘under the table’, their employee is not paying Social Security taxes on them. Ending the flow of illegal immigrants into America is a positive thing for everyone.

Good News–Temporary Good News, But Good News

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Breitbart is reporting today that a White House study released on Friday found that President Donald Trump’s Obamacare reforms will save Americans roughly $450 billion over the next ten years.

That is wonderful news, but it is only temporary wonderful news.

The article reports:

A White House Council of Economic Advisers (CEA) study released on Friday found that Americans will save $450 billion through Trump’s Obamacare reforms. The CEA suggested that Trump’s repeal of the Obamacare individual mandate and the expansion of short-term insurance plans and Association Health Plans (AHPs) will save Americans billions over the next ten years.

The White House also suggested that the benefits of Trump’s deregulatory actions saved Americans billions, increased access to more health insurance options, and did not amount to a “sabotage” of the Affordable Care Act (ACA).

Unfortunately these savings are a result of Executive Orders, not legislative action. That means that the changes can theoretically be reversed by a future President. It would have been wonderful if Congress had stepped up to the plate and made the necessary changes.

The article concludes:

Many Americans have contended that because 80 percent of those who paid the Obamacare mandate made less than $50,000 a year, the individual mandate repeal serves as a significant middle-class tax break.

The CEA said about 87 percent of Obamacare exchange enrollees receive ACA subsidies and “only pay a fraction of their health insurance costs.”

Many Obamacare proponents suggested that the repeal of the individual mandate, as well as the expansion of short-term plans and AHPs, would lead to higher premiums on the Obamacare exchanges.

In contrast, the CEA contended that because more people will use AHPs and short-term plans and fewer people will use the ACA exchanges, the government will save $185 billion over the next ten years.

The CEA said that instead of sabotaging the ACA, the Trump administration offered millions of Americans more affordable health insurance options.

“The oft-expressed view that deregulation ‘sabotages the ACA’ by giving consumers more insurance-coverage options is misguided,” the CEA said.

The free market is always the best answer.

What Some Economists Are Saying About President Trump’s Proposed Tax Plan

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The Washington Free Beacon posted an article today about President Trump‘s proposed tax plan. The article reports on a new study from Boston University economists.

The article reports:

“We find that, depending on the year considered, the new Republican tax plan raises GDP by between 3 and 5 percent and real wages by between 4 and 7 percent,” the economists explain. “This translates into roughly $3,500 annually more annual real take-home pay for the average American household.”

Economists believe this growth can happen due to the plan’s aim to reduce the marginal effective corporate tax rate from 34.6 percent to 18.6 percent, which they believe will grow the capital stock by 12 to 20 percent.

The article concludes:

The study also says every American can benefit from this tax reform framework.

“The [Unified Framework] tax reform delivers small increases in lifetime welfare to current retirees and moderate ones to workers and future generations,” the study states. “All generations benefit from the policy. The old benefit slightly from higher rates of return on their investment, and the young from higher wages.”

The Boston University study is similar to the findings from the Council of Economic Advisers study put out earlier this week, which said that the average household income could increase by $4,000 annually if the corporate tax rate was cut from 35 percent to 20 percent.

“The truth is that a tax cut like this very conservatively will increase the median wage by about $4,000 a year over a relatively short time,” said Kevin Hassett, the chairman of the Council of Economic Advisers. “If you look at some of the more optimistic estimates of the literature and then run the thing over time you could be looking at $10,000, even $20,000 higher wages relative to baseline, and that’s the message of this tax reform.”

The economy is growing right now at a much faster rate than it did under President Obama. There are a number of reasons for that. President Trump has been quietly removing the government regulations that were a drag on the economy. President Trump has also allowed the coal industry to resume operations and allowed other businesses to work toward American energy independence. As a result of this, gasoline and other energy prices are relatively low right now, making America a desirable place to do business. Also, the lower gasoline prices result in more money in all Americans’ pockets. Low gasoline prices impact everyone who drives–they are the equivalent of a tax cut for everyone. When people have more money in their pockets, they do things like go out to dinner, go shopping, or go to a movie. This puts money in the pockets of the people who work in those industries. Everybody wins.

Recovery???

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Yesterday the Washington Times posted an editorial about President Obama’s request to extend unemployment benefits for another three months. The original extension of unemployment benefits to 99 weeks occurred in 2008, at the height of the recession. According to the Obama Administration, the recession ended in the summer of 2009. So why do people still need two years of unemployment benefits?

The editorial reminds us:

Since the Great Recession began in 2008, Congress has supplemented the 26 weeks of jobless benefits traditionally provided by the states, extending them to 99 weeks.

Ordinarily, this wouldn’t be an issue because such extensions have been temporary, but Mr. Obama’s economy has spawned a jobless “recovery,” and more workers continue to join the unemployment line.

Democrats see this not as an opportunity to reconsider the failure of Obamanomics, but as an excuse to spend another $25 billion. The Senate will vote this week on a three-month extension with a $6.5 billion price tag.

…There’s a negative consideration to extending unemployment subsidies time after time. A 2008 Princeton University study comes to the obvious conclusion that workers are much more aggressive in their job searches as their benefits near the end, “increasing sharply in the weeks prior to benefit exhaustion.”

Alan B. Krueger, a former chairman of Mr. Obama’s Council of Economic Advisers, was a co-author of the report. A Swedish study, finished in 2008 as well, concluded that more generous unemployment benefits increased unemployment rates. The linkage, it said, is “fairly robust.”

The year before, Sweden reformed its unemployment compensation system, such that recipients could receive up to 60 weeks of benefits, but with a catch. The longer someone is unemployed, under the new program, the less he receives in assistance.

The diminishing benefits have been a powerful inducement to look for work.

Unfortunately, extending unemployment benefits has become a political issue, which means that no one is considering whether or not it will actually help or hurt the country or the economy. Until Congress includes enough patriots who want to do what is right for the country, we can expect to have more political gamesmanship on this and other issues.

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It’s Only A Surprise Because Most Of The Mainstream Media Didn’t Cover It

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Yesterday, Byron York posted a story at the Washington Examiner about the shock many people are experiencing when their health insurance policies are cancelled. Byron York posted the transcript of a conversation between Christina Romer, then chair of the Council of Economic Advisers, and Representative Tom Price, who is also a doctor, at a House Education and Labor Committee hearing of June 23, 2009.

This is part of the transcript:

REP. PRICE: I’m asking about if an individual likes their current plan and maybe they don’t get it through their employer and maybe in fact their plan doesn’t comply with every parameter of the current draft bill, how are they going to be able to keep that?

MS. ROMER: So the president is fundamentally talking about maintaining what’s good about the system that we have. And —

REP. PRICE: That’s not my question.

MS. ROMER: One of the things that he has been saying is, for example, you may like your plan and one of the things we may do is slow the growth rate of the cost of your plan, right? So that’s something that is not only —

REP. PRICE: The question is whether or not patients are going to be able to keep their plan if they like it. What if, for example, there’s an employer out there — and you’ve said that if the employers that already provide health insurance, health coverage for their employees, that they’ll be just fine, right? What if the policy that those employees and that employer like and provide for their employees doesn’t comply with the specifics of the bill? Will they be able to keep that one?

MS. ROMER: So certainly my understanding — and I won’t pretend to be an expert in the bill — but certainly I think what’s being planned is, for example, for plans in the exchange to have a minimum level of benefits.

REP. PRICE: So if I were to tell you that in the bill it says that if a plan doesn’t comply with the specifics that are outlined in the bill that that employer’s going to have to move to the — to a different plan within five years — would you — would that be unusual, or would that seem outrageous to you?

MS. ROMER: I think the crucial thing is, what kind of changes are we talking about? The president was saying he wanted the American people to know that fundamentally if you like what you have it will still be there.

REP. PRICE: What if you like what you have, Dr. Romer, though, and it doesn’t fit with the definition in the bill? My reading of the bill is that you can’t keep that.

MS. ROMER: I think the crucial thing — the bill is talking about setting a minimum standard of what can count —

REP. PRICE: So it’s possible that you may like what you have, but you may not be able to keep it? Right?

MS. ROMER: We’d have — I’d have to look at the specifics.

That testimony took place more than four years ago. The mainstream media ignored the testimony, and the American voters were in the dark about what ObamaCare would mean to them. Because of the way the law has been written, Congress can keep their healthcare coverage, the President will keep his healthcare coverage, and most Congressional staffers will keep their healthcare coverage. When did we reach a point in America where there was one set of standards for the average American and another set of standards for the people who write our laws? Keep in mind that one reason a health insurance plan could be cancelled under ObamaCare would be that it did not provide pediatric dental coverage for a single man of twenty-five or a married couple in their sixties. I need someone to explain to me why a plan for those people without that coverage would be considered inadequate.

 

 

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An Interesting Perspective On Immigration Reform

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Yesterday John Hinderaker at Power Line posted an article about the economic impact the current proposals regarding immigration reform will have on the incomes of Americans.

This week in his weekly address, President Obama stated the following:

The Senate’s plan would also provide a big boost to our recovery. And on Wednesday, we released a report detailing exactly how big a boost that would be.

The report is based on the findings of independent, nonpartisan economists and experts who concluded that, if the Senate’s plan becomes law, our economy will be 5% larger in two decades compared to the status quo. That’s $1.4 trillion added to our economy just by fixing our immigration system.

Here in America, we’ve always been a nation of immigrants. That’s what’s kept our workforce dynamic, our businesses on the cutting edge, and our economy the strongest in the world. But under the current system, too many smart, hardworking immigrants are prevented from contributing to that success.

John Hinderaker points out:

And who might those supposedly “independent, nonpartisan economists and experts” be? When you check out the actual report, here is who they are:

President’s National Economic Council, Domestic Policy Council, Office of Management and Budget, and the Council of Economic Advisers.

In other words, extensions of the office of the president. His appointees–high level flacks.

That’s the first problem with that statement. The second problem is explained by a Power Line reader with amazing math skills who sent a note to Power Line which definitely disputed that claim.

The reader reports:

The claim is that aggregate GDP will be 5% higher in 20 years than otherwise, equal to $1.4 trillion in constant dollars. By simple algebra that means they are assuming a status quo future GDP of $28 trillion and therefore an immigration-enhanced GDP of $29.4 trillion. But wait! What about GDP per capita, the only meaningful measure of economic growth for the populace? Well…population will increase from today’s 315 million to about 378 million under the current immigration and population levels, and to about 410 million with the new immigration regime, conservatively estimated. [Ed.: That is a VERY conservative estimate.] Simple arithmetic demonstrates that future GDP per capita without the new immigration levels is $74,000, whereas with increased immigration it is $71,700.

…Their plan is simply to import scores of millions of unskilled 3rd world immigrants, covered by a fig leaf of a few hundred thousand high skilled STEM workers, 90% of whom we can easily do without, in order to create “economic growth” — in the aggregate — by a massive population expansion from the outside–but not growth that will benefit existing native born Americans at all. And that is not counting the inevitable economic drawbacks of this grotesque giantism — overcrowding, land use issues, infrastructure deterioration, and environmental degradation, to name a few.

The ability of some of our elected leaders to lie in order to further whatever agenda they have is amazing to me. I would love to see our immigration policies reformed–they are awful. However, the current changes proposed by the Senate are not the answer. The incremental proposals coming from the House of Representatives might better solve our current problems.

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Politicizing The Internal Revenue Service

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Politicizing the Internal Revenue Service (IRS) is not a new or original idea. I am sure it has been done in the past in varying degrees, but the Obama Administration seems to have turned it into an art form. They have a slightly less obvious approach–not so much audits, but collecting information on political opponents.

John Hinderaker at Power Line posted an article yesterday on some past abuses of the IRS by the Obama Administration.

The article at Power Line reports:

In August 2010, Austin Goolsbee, who directed Obama’s Economic Recovery Advisory Board and later chaired his Council of Economic Advisers, gave a press briefing in which he discussed corporate income taxes. In that briefing, he suggested that he had access to confidential IRS data, and falsely accused the administration’s beta noire, Koch Industries, of not paying corporate income taxes.

The article goes on to give the exact quote. The obvious question asked in the Power Line article is, “How did an Obama Administration official obtain confidential IRS tax records?” It should also be noted here that the charges were false. The fact that the charges were false probably doesn’t matter–I am willing to bet that more people heard the false charges than heard that the charges were false.

The article at Power Line concludes:

UPDATE: Also, let’s not forget Obama’s joke, during the first days of his presidency, in a speech at Arizona State University:

I really thought this was much ado about nothing, but I do think we all learned an important lesson. I learned never again to pick another team over the Sun Devils in my NCAA brackets. . . . President [Michael] Crowe and the Board of Regents will soon learn all about being audited by the IRS.

At the time, most people thought he was kidding. But as Glenn Reynolds pointed out at the time, jokes about presidential abuse of power are not funny when they come from the president. With hindsight, more attention should have been paid.

Mary Katharine Ham posted an article at Hot Air yesterday showing exactly what questions organizations containing the words ‘tea party’ or ‘patriot’ were asked. The questions are quite revealing. The American Center for Law & Justice has handled lawsuits by a number of these organizations protesting their treatment, and the article at Hot Air lists specific questions their clients were asked:

IRS1

IRS2

IRS3

Please follow the link above to the Hot Air article to read further questions and compliance instructions. The blame for this has been put on some low-level IRS employees in Cincinnati. As someone who used to work for the government many years ago, I find it hard to believe that low-level employees would take this kind of initiative on their own. At any rate, I wondered why the questions asked didn’t include the political affiliation of the household pets of the boards of directors of the various organizations. It seems as if every other question was asked.

 

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