Phil Gramm - who called Americans a bunch of whiners about the economy - seems to be back in favor at the McCain camp.

Op-Ed Columnist - It's the Economy Stupor - Op-Ed - NYTimes.com

Meanwhile, The Times reports that, according to associates, Mr. McCain still "dials up" Phil Gramm, the former senator who resigned as co-chairman of the campaign after calling America a "nation of whiners" and dismissing the country's economic woes as nothing more than a "mental recession." And Mr. Gramm is still considered a top pick for Treasury secretary.

New research by Broda/Parker suggests the answer is "yes". The rebate checks seem to have increased consumption.

Did the 2008 US tax rebates work? | vox - Research-based policy analysis and commentary from leading economists

This spring, the US government handed out $100 billion in tax rebates. Twentieth century economic thinking - permanent income hypothesis, Ricardian equivalence, and the like - suggests that most would have been saved, as Martin Feldstein recently argued. Not so. Recent research on microdata shows that the typical family increased spending by 3.5% when the rebate arrived, boosting overall nondurable consumption by 2.4% in 2008Q2. The number should be 4.1% in 2008Q3.

[...]

Conclusion

The Economic Stimulus Act of 2008 was aimed at increasing disposable income temporarily through tax rebates in the hope this would stimulate spending and end or at least mitigate the severity of a US economic slowdown. We find that to a significant extent they succeeded. The stimulus payments are initially being spent at significant rates. These rates are slightly higher than those observed in 2001 when fiscal policy has been credited with helping end the 2001 recession.

In the wake of McCain's latest misleading ad, MSNBC echoes the Tax Policy Center's analysis:

Who'd give more to the middle class? - First Read - msnbc.com

From NBC's Domenico Montanaro McCain claims in an ad released today that "Obama voted to raise taxes on people making just $42,000. He promises more taxes on small business, seniors, your life savings, your family."

But when it comes to promises, it's worth pointing out that, according to the non-partisan Tax Policy Center's analysis of both candidates' proposed plans, Obama would cut taxes for those making in the range of $38,000 to $66,000 three to almost eight times more than McCain would.

Under Obama's plan, according to the center, by 2009, those making $37,595 would see an average increase in their income of 3.6%, or a tax cut of $892; those making an average of $66,354 would see an increase in their income of 2.4%, or a tax cut of $1,042.

On the other hand, Under McCain's plan, those making $37,595 would see an increase in their income of only about 0.5%, or $113 tax cut; those making $66,354 would see only an increase of 0.7% in their income, or a tax break of $319.

Looks like I have some night-time reading with Bush's final budget document. Here's Stan Collender:

Bush Midsession Budget: Absolute Silliness | Capital Gains and Games

There is also absolutely no indication that the White House understands in any way that this year's deficit is not just the result of things that have happened the past few months,. Nussle's statement indicates that had it not been for the need to deal with the economic slowdown, all would be well in the budget world.

That's just plain silly. The policies put in place in the first seven years of the Bush administration -- with the president's full and active support, encouragement, and insistence -- have more to do with the current fiscal situation than anything that has happened since this past January. There are many, but the most important are:

* The tax cuts enacted in 2001 and 2003
* The more than $500 billion spent on activities in Iraq and Afghanistan
* Medicare Part D
* The big increases in the national debt and corresponding increases in annual interest payments

All of these dwarf the amount that will be spent in the "bipartisan growth package."

The silliness continued...

Obama has been pushing hard on energy policy recently. His comprehensive approach combines a broad-based approach to carbon reductions (through cap-and-trade) with a variety of targeted incentives to move us to a more efficient economy fueled by renewable energy. The plan also comes with rebates to help consumers get by. Details here and bullets below.

McCain's approach is all about drilling and nuclear. It's pretty thin by way of actual policy. What do I mean thin on policy? His documents say he "supports Flex-Fuel vehicles" but there is no policy, he simply "calls on automakers" to make a faster switch. He says cellulosic ethanol shows "great potential" but does not offer solutions to speed the development. He says modernizing the electric grid would save energy, but only says he will "reduce red tape" to allow for more investment. The only real substance is a $2 billion support of the coal industry and his cap-and-trade policy (though the later is flawed in how it allocates permits). More drilling and a gas tax holiday are purely gimmicks that will have little or no impact on consumers.

New Energy for America

Obama's comprehensive New Energy for America plan will:

• Provide short-term relief to American families facing pain at the pump
• Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
• Within 10 years save more oil than we currently import from the Middle East and Venezuela combined
• Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America
• Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025
• Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050

My EPI colleagues have analyzed the Tax Policy Center's analysis of the Obama and McCain's health are plans. Main points below...

Obama health plan outperforms McCain plan in coverage and efficiency

• Efficiency. Over the 10-year period analyzed by the TPC, Senator Obama's plan provides far greater "bang-for-the-buck," spending far less per capita for its coverage of the uninsured population (see Figure A below).
• Cost. The costs of the plans over the 10-year period are in the same ballpark: the Obama plan costs roughly $1.6 trillion, while the McCain plan costs $1.3 trillion (the Obama plan spends roughly 20% more than McCain's) (see Figure B).
• Coverage. The Obama plan makes a much bigger dent in covering the uninsured population. On average over the 10-year period, the Obama plan covers over 47% of the forecasted uninsured population, while the McCain plan covers less than 5% (see Figure C).

GDP posts a modest gain - but still not strong enough to tighten the labor market. Also look at the revision in Q4 from last year.

GDP Picture, July 31, 2008

Even with boost from stimulus, economy just limps along

by EPI economist L. Josh Bivens

U.S. gross domestic product (GDP) grew at a 1.9% annual rate in the second quarter of 2008, following growth of 0.9% in the first quarter of the year, according to a Commerce Department report released today.

While positive growth obviously is better than negative, the underlying trends in the working-age population and productivity mean that GDP growth of less than 2.5% is a recipe for job-loss, rising unemployment, and falling wages. For example, the 0.9% growth rate of the first quarter of this year was accompanied by the loss of 247,000 jobs, and the second quarter's 1.9% growth was accompanied by a loss of another 191,000. Furthermore, wage growth for non-supervisory workers (80% of the private sector workforce) has lagged inflation in five of the first six months of this year.

Today's report also included revisions to GDP going back three years, based on more complete source data. These revisions show that GDP actually shrank in the last quarter of 2007 (falling at a 0.2% annual rate). If anybody was taking comfort in the fact that quarterly GDP reports had yet to show negative growth, that solace is now gone.

Following on the heals of my previous post:

The Candidates' Tax Plans: Fuzzy Math - TIME

Here is Douglas Holtz-Eakin, McCain's chief economic policy adviser. "I used to say that Barack Obama raises taxes and John McCain cuts them, and I was convinced," he told me in a phone interview this week. "I stand corrected."

[...]

But don't expect McCain to change his rhetoric on the stump.

More fallout from the McCain tax policy bait and switch...

Wonk Room » Holtz-Eakin On $2.8 Trillion Gap: Just Because McCain 'Said Things In Town Halls...Doesn't Mean It's Official'

McCain adviser Douglas Holtz-Eakin responded yesterday to a recent report by the Tax Policy Center, which found a $2.8 trillion gap between McCain's public economic proposals and what his advisers had been telling tax experts in private.

Slate reports:

Douglas Holtz-Eakin, McCain's chief economic adviser, says the numbers he provided to the TPC aren't secret--they're the same ones he provides to anyone who asks. He also disputes the way the study takes suggestions McCain has made on the stump out of context. "This is parsing words out of campaign appearances to an unreasonable degree," Holtz-Eakin said. "He has certainly I'm sure said things in town halls" that don't jibe perfectly with his written plan. But that doesn't mean it's official.

Two problems: the numbers Holtz-Eakin gave to the Tax Policy Center in their initial analysis weren't available to "anyone who asks," and pointing out the gaping distinctions between what McCain says on the stump and what his advisers say in private, is far from parsing.

For months, the McCain campaign had not offered specific numbers on his profligate budget proposals. In June, Robert Bixby of the Concord Coalition, a prominent advocacy group for balanced budgets, told Bloomberg news: "I haven't received anything, and if some of the other groups have then I'll be really ticked off...If he's got some more complete budget proposal he can send I'd love to get it."

The Tax Policy Center has released an updated analysis of the two campaign's tax plans.

The outcomes are similar to the first iteration (see below) - with Obama's tax plan reducing taxes for middle-income (quintile) taxpayers by about $1,000, which is 3 times as large as McCain's reductions for that group. McCain's plan would reduce taxes on those in the top 1% by approximately $50,000, whereas those at the top would see an increase under Obama's plan.

Update: Looks like this version also examines the impact of the policies as stated by the candidates, and not just what their advisers told the TPC. For McCain, the 10-year impact is $2.8 trillion worse than his advisers described to the TPC analysts. By contrast, Obama comes out $370 billion over 10 years to the up-side (most of which comes from a payroll tax surcharge for those making more than $250,000).

An Updated Analysis of the 2008 Presidential Candidates' Tax Plans

The two candidates' tax plans would have sharply different distributional effects. Senator McCain's tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those tax cuts would be small as a share of after-tax income. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise significantly.

Neat-o. (Though a couple months old.)

From the NYTimes, an interactive graphic: "Each shape below represents how much the average American spends in different categories. Larger shapes make up a larger part of spending." Click on the image for full functionality.

CBO director Peter Orszag weighs in on the allocation of carbon permits under a cap-and-trade regime. Orszag argues the standard economics of the program --- that only with an auction can the revenue be recycled, through lower taxes or rebates. Without the auction, polluters would be able to raise prices, and be given $100 billion+ in a new tradable commodity.

While both Sens McCain and Obama support a cap-and-trade program, only Obama supports a full immediate auction.

Peter R. Orszag - Climate Change Economics - washingtonpost.com

A second way to reduce costs under a cap-and-trade program involves the method for initially distributing emissions allowances. The key questions here are whether some or all of the allowances will be sold by the government or given away -- and, if they are sold, how the revenue will be used.

Cap-and-trade programs create a new commodity: the right to emit carbon. With a constraint on total emissions, allowances would suddenly be highly valuable -- likely to be worth more than $100 billion per year. Selling them would provide revenue to offset some of the costs of the program. For example, revenue could be used to lower existing taxes that dampen economic activity. Following this path, the cost to the U.S. economy of a 15 percent cut in emissions might be half as large as it would be if the allowances were given away.

Another possible use of revenue from auctioning allowances is to offset the effects that higher energy prices would have on low- and moderate-income households. Although such price increases encourage greater efficiency in reducing emissions, and are thus essential to the success of a cap-and-trade program, they would impose a disproportionate burden on low- and moderate-income households. The Congressional Budget Office has found that if the allowances were sold and the revenue used to provide equal rebates to every household, lower-income households could be financially better off because the rebate would be larger than the average increase in their spending on energy-intensive goods. Alternatively, the distributional consequences could be offset by increasing the earned-income tax credit or boosting food stamp benefits.

By contrast, granting allowances free to emitters would not be well suited to reducing either the macroeconomic costs or the distributional effects of a cap-and-trade program. Businesses would raise energy prices for their customers regardless of whether the allowances were auctioned or given away. Indeed, providing free permits to energy producers and energy-intensive firms would be equivalent to auctioning the permits and simply giving the proceeds to the firms. The result would be a lost opportunity to use the money to offset the costs of emissions reductions as well as the potential creation of regressive "windfall profits" for the relatively high-income shareholders of those companies.

Avi-Yonah sums up the problems with McCain's expensing proposal...

Wonk Room » McCain's Expensing Idea Revisited: Still A Massive Tax Shelter

McCain's Expensing Idea Revisited: Still A Massive Tax Shelter»

Our guest blogger is Reuven S. Avi-Yonah, the Irwin I. Cohn Professor of Law at University of Michigan Law School.

For a while, Senator John McCain has been advocating letting corporations expense (currently deduct) the cost of purchasing business equipment. This is touted as a way of helping the economy, despite the lack of any evidence that it would do so.

Sen. McCain's original proposal involved open ended expensing with no limitations. As I pointed out in an earlier paper, this proposal would not only "bust the budget" because of its direct cost, but it would also open the door to an immense increase in tax sheltering.

That is because corporations could borrow funds and use these funds to buy business equipment. The whole amount of the investment would be immediately deductible, as would the interest on the loan. The deductions would be larger than the size of the investment, generating extra deductions that could shield other income from taxes. Tax lawyers call this a "negative tax rate" and it is similar to the shelters that proliferated before the 1986 Tax Reform Act.

Sen. McCain has recently revised his proposal in the face of such criticism. He now proposes to limit expensing to equipment purchased between 2009 and 2013 and to limit the deduction of interest on loans incurred to purchase such equipment.

[...]

More importantly, the revised proposal is still open to massive tax sheltering. Limitations on interest deductibility have proven unworkable because money is fungible. If interest on loans incurred to finance business equipment purchases cannot be deducted, corporations would borrow to fund other expenditures and use the money freed up that way to buy the equipment.

[...]

Sen. McCain's revised proposal will not work either. There is no evidence it will help the economy, the budgetary cost would still be significant, and the anti-tax shelters provision would just add complexity without deterring the shelters. This whole proposal is wrong-headed and should simply be scrapped.

With Obama out of the country, there's not been much econ discussion recently. But here is McCain blaming Obama for higher gas prices.

Seems like a wee-bit of a stretch to me. Obama's campaign response points out that McCain has been the one in Washington for over 25 years and has opposed investments in renewable energy and opposed increases in fuel efficiency standards.

McCain's "solutions" - an increases in drilling and a temporary reduction in the gas tax would have little or no impact on prices, and would do nothing to wean the US off of carbon-based fuels.

Congress is looking to put together a second economic stimulus package (see below). This one may include funding for national infrastructure including roads, bridges and schools.

An often-heard criticism of this approach is that spending on infrastructure can come too slowly to have an impact.

One counter example to this point is the bridge collapse in Minneapolis from last August: the concrete for the replacement bridge began flowing last winter, and the bridge is now halfway done. They expect to be finished entirely by December.

There are many other projects, especially repair work, that can and should be done now--they need to be done anyway so why not accelerate the spending to stimulate the economy in the short-run? On schools, for example, "...the Portland Public Schools estimate an $800 million deferred maintenance backlog and the Los Angeles Unified School District estimates a $5 billion backlog in their existing facilities".

The sooner we start, the sooner we can get our highways unclogged, our schools more energy efficient, and our bridges safer--all while stimulating jobs creation for our weak economy.

Democrats See a Need for Further Economic Stimulus - NYTimes.com

On Tuesday, Nancy Pelosi of California, the speaker of the House, and other House Democrats met with economists to draft another stimulus package, saying it was likely to include spending for roads, bridges, schools and other public facilities, as well as aid for states confronting smaller tax revenues in the face of the housing downturn.

"This is a serious situation," said Lawrence H. Summers, a former Treasury secretary in the Clinton administration who attended the meeting, according to Bloomberg News. "We are in much more danger of responding inefficiently than in responding excessively."

"One is a glass half full kind of guy and the other is an expert on the economy."

Without comment:

McCain's chief economic advisor: "the Main Street guys are hanging in there. The Wall Street guys are in a world of hurt."

Candidates starkly divided on economy - Jeanne Cummings and Eamon Javers - Politico.com

In the Obama camp, the worry is that middle-class families, who were already falling behind when the economy was growing, will slip farther behind in the months ahead.

"If families lost ground in an economic expansion, what will happen to them in an economic recession?" Furman asked rhetorically.

In McCain's world, Holtz-Eakin said it seems "the Main Street guys are hanging in there. The Wall Street guys are in a world of hurt."

"The concern is how to keep the travails in the financial sector from spilling over and hurting Main Street," he concluded.

Difference of opinion on a second stimulus: Obama has suggested additional infrastructure investments (in roads, bridges, etc) could make rebuild our aging structures while providing stimulus. McCain disagrees.

I agree with Zandi below that combining stimulus with infrastructure can meet both long-term challenges while stimulating the economy in the short run.

Democrats See a Need for Further Economic Stimulus - NYTimes.com

Mr. McCain's economic adviser also rejected another idea that has become a centerpiece of Mr. Obama's stimulus thinking -- financing large infrastructure projects.

"That's not timely and quick," Mr. Holtz-Eakin said. He offered as a better course lowering corporate taxes and making President Bush's larger tax cuts permanent.

Indeed, the policy prescriptions of Mr. McCain's chief economic adviser were challenged by another economist on the McCain campaign, Mark Zandi, chief economist at Moody's Economy.com.

A paper Mr. Zandi prepared this year concluded that, within the first year of enactment, increased infrastructure spending and aid to states generate roughly four times as much economic growth as making the president's tax cuts permanent, cutting corporate taxes or allowing businesses to write off new investments more quickly.

"Everyone agrees that we need jobs, and everyone also agrees that infrastructure is one of our most pressing needs," Mr. Zandi said in an interview last week. "If we can combine stimulus with infrastructure, I think that's great."

Above all, Mr. Zandi said, it was now imperative the government deliver some sort of new stimulus.

"The problems plaguing the economy seem entrenched," he said. "The economy could spiral even further down if you don't try to stem that."

Stan Collender on McCain's balanced budget pledge:

Please Don't Promise To Balance The Budget | Capital Gains and Games

The candidate's pledge to balance the budget by 2013 repeats the Snow mistake by again refusing to acknowledge that budget policy should fit the economy. Reducing or eliminating the deficit should never be promised in a vacuum. In 2013, the U.S. economic situation might well require an increased deficit, a substantial surplus or something in between. In July 2008, neither the candidate nor anyone else has a clue as to what the correct fiscal policy will be four and a half years from now. That makes the pledge to produce a balanced budget political pandering rather than good economics.

...

But as Hoover discovered, and as counterintuitive as it sounds, promising to balance the federal budget, no matter the situation, is actually the fiscally irresponsible position.

In a recent AARP event, McCain Advisor Douglas Holtz-Eakin says a balanced budget is about saying "no" and good governance; not about "economic reality."

Well, if it's not about "economic reality" why not say "yes" to investments in, for example, energy independence, national infrastructure, and education?

Campaign 2008 and the Federal Deficit 206378-1 : C-SPAN Video Library (The segment on the deficit starts at 00:56:25.)

"Aiming to balance the budget gives you a way to say 'no'... as an economist, $0 vs $20 billion dollars, we know that there is no economic reality there. But as a matter of governance [a balanced budget goal] gives you a way to make decisions"

First, a McCain adviser calls us whiners about a "mental recession," now this...

Bush: Troubled financial system is basically sound

WASHINGTON --

[Bush also called on the Democratic-run Congress to follow his example and lift a ban on offshore drilling to help increase domestic oil production.

"I readily concede it won't produce a barrel of oil tomorrow, but it will reverse the psychology," Bush told a White House news conference _ his first since late April.

From Forbes magazine, this distributional chart shows the impact of the candidates tax plans (using data from the Tax Policy Center's analysis.)

As I was saying, the McCain plan is not so much a plan as a rhetorical fog. I can understand setting a deficit reduction goal, but a "plan" should articulate how you get there under reasonable assumptions. Here's the Post editorial.

McCain Math - washingtonpost.com

SEN. JOHN McCain says that President McCain would balance the federal budget by 2013. The plan is not credible.

The Congressional Budget Office projects a deficit of $443 billion in 2013 if President Bush's tax cuts are extended, as Mr. McCain wants, and the alternative minimum tax is merely patched to make certain it does not hit growing numbers of taxpayers. But Mr. McCain is proposing far more tax cuts. The only way he avoids having them add hundreds of billions more to the deficit in 2013 is by phasing them in and adding other caveats.
...
The McCain campaign says it will fill the hole with spending cuts. It would "reclaim billions" by rooting out existing earmarks and prohibiting new ones; impose a one-year freeze on discretionary spending other than for defense and veterans; and "reserve all savings from victory in the Iraq and Afghanistan operations" to use toward deficit reduction. These claimed savings are illusory.
...
In any event, Mr. McCain has called for billions more in new spending: increasing the size of the military, launching a new energy independence project, fully funding the No Child Left Behind law. Where's the savings?
...
Mr. McCain's campaign says that he would rein in the growth of entitlement spending, saving another $160 billion, but it does not explain how. His campaign cites "excessive agricultural and ethanol subsidies," but eliminating all farm subsidies would trim less than $15 billion in 2013.

Mr. McCain sells American voters short -- and he does himself a disservice -- with his implausible claim.

Two big housing-related stories out of the Fed today.

• The Fed is opening it's lending to Freddy Mac and Fannie Mae. Ordinarily this would calm fears of a failure, but since everyone assumed the federal government would step in anyway, it is simply confirming expectations.

• The Fed has put forward new rules for mortgage lenders, in both the prime and sub-prime markets. They seem like reasonable, common sense improvements--I particularly like the partial ban on pre-payment penalties--but they come too late to impact the current market downturn, and they would not take effect before October of 2009. (See more for full summary from the Fed.)
  

Here's the link to the economists statement opposing the Gas Tax Holiday. Bottom line is that it wouldn't lower prices.

Opposing the Gas Tax Holiday

OPEN LETTER FROM ECONOMISTS OPPOSING THE GAS TAX HOLIDAY 321 SIGNERS AND COUNTING

An Open Statement Opposing Proposals for a Gas Tax Holiday

In recent weeks, there have been proposals in Congress and by some presidential candidates to suspend the gas tax for the summer. As economists who study issues of energy policy, taxation, public finance, and budgeting, we write to indicate our opposition to this policy.

Put simply, suspending the federal tax on gasoline this summer is a bad idea and we oppose it.

There are several reasons for this opposition:

First, research shows that waiving the gas tax would generate major profits for oil companies rather than significantly lowering prices for consumers.

Second, it would encourage people to keep buying costly imported oil and do nothing to encourage conservation.

Third, a tax holiday would provide very little relief to families feeling squeezed.

Fourth, the gas tax suspension would threaten to increase the already record deficit in the coming year and reduce the amount of money going into the highway trust fund that maintains our infrastructure.

Signers of this letter are Democrats, Republicans and Independents. This is not a partisan issue. It is a matter of good public policy.

For those that know me, no surprise here:

I support Obamanomics

Feel free to use the image above...

(Note: the McCain ads you may see at the top of the page are being dropped in automatically by Google.)

Obama and McCain have recently laid out their economic plans; and, I suspect, they will be revisiting the issues of jobs, energy, etc., throughout the election season. There is a stark contrast between the two candidates' approaches across the board.

I would urge people to read through each of the plans (see below) and not rely exclusively on media reports.

I will have more to say about the policies of the two sides in coming weeks, but I first wanted to flag an important issue in evaluating the two sides....

It would be nice if we could take stated policy positions at face value (as posted on the website, for example): and assume that these are the policies that the candidates would try to implement if elected. However, from what we have seen so far, it will be very difficult to take seriously much of the rhetoric coming from the McCain side.

A key example (thought not the only one) is on THE core issue for McCain:

McCain claims he will balance the budget by 2013 while passing an additional $200 to $300+ billion/year in tax cuts (with a good chunk for corporations) over and above Bush, and on top of a projected $443 billion deficit. McCain promises to make up the gap by unspecified earmarks cuts, unspecified cuts to Social Security, Medicare, and unspecified cuts to domestic spending.

Until the campaign gets specific on what these cuts will be (about $650 to $750 billion worth per year), there is simply no "there" there: this policy is simply not internally consistent or credible.

To get a sense of the magnitude of the necessary cuts consider that, even according to the Heritage Foundation, cutting all earmarks would save just $9 billion. Eliminating Medicare entirely would still leave a $200 billion hole.

Until there are details on fiscal policy, McCain's approach is simply fantasy. And this then throws into question his stated plan to throw $2 billion to subsidize coal plants, or to implement any energy policies, etc.

This is not the usual budget trickery, but a huge, huge gap between campaign policy and economic reality.

Here are the links to the plans.

• McCain's

• Obama's
  

The phrase "out-of-touch" comes to mind...

Washington Times - McCain adviser talks of 'mental recession'

"You've heard of mental depression; this is a mental recession," he [Phil Gramm] said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

The McCain website is claiming that over 300 economists have endorsed his economic plan. Politico tracked down many of those supposed endorsers and find that this is not true (see excerpt below.) Apparently the letter was circulating months before McCain released his actual plan - so many, if not all, of the signers did not know their names would be used as an endorsement in this way.

Jonah Gelbach has more on the specifics of the letter.

In theory, economists support McCain - Alexander Burns and Avi Zenilman - Politico.com

The endorsement could hardly have been stronger. On Monday, John McCain's campaign released a statement signed by 300 economists who "enthusiastically support" his "Jobs for America" economic plan, providing a heavyweight testimonial to the presumptive Republican nominee's "broad and powerful economic agenda."

There's just one problem. Upon closer inspection, it seems a good many of those economists don't actually support the whole of McCain's economic agenda. And at least one doesn't even support McCain for president.

In interviews with more than a dozen of the signatories, Politico found that, far from embracing McCain's economic plan, many were unfamiliar with -- or downright opposed to -- key details. While most of those contacted by Politico had warm feelings about McCain, many did not want to associate themselves too closely with his campaign and its policy prescriptions.

Lost 62k jobs last month. Manufacturing continues the drop despite the weak dollar... manufacturing has lost 353,000 jobs since this time last year.

Employment Situation Summary

Nonfarm payroll employment continued to trend down in June (-62,000), while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and employment services, while health care and mining added jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

From The New Republic...

TRB: The Illusionist

McCain is promising to cut taxes by $300 billion per year on top of the Bush tax cuts, which he would make permanent. In addition to this, he promises to balance the budget in his first term. When asked how he could possibly pull this off, McCain has asserted that he could eliminate all earmark spending, saving $100 billion per year.

I don't find this explanation persuasive. The first point I'd make is that $100 billion is, in fact, less than $300 billion. The second point I'd make is that McCain won't even cut $100 billion, or anywhere close. By conventional measures, earmarks only account for $18 billion per year. McCain gets his number by employing an unusually broad definition of what constitutes an earmark. McCain's definition includes things like aid to Israel and housing for members of the military that are not "pork" as the term is understood. When asked if he would eliminate those programs, he replied, "Of course not."

So we're left with a pot of money closer to $18 billion. And McCain surely won't eliminate even that. He has frequently found himself campaigning at places funded by federal earmarks and beloved by the local citizenry, and he keeps inadvertently showing how impossible it is to fulfill his promises. Last month, McCain visited a hospital in Pennsylvania and met an ovarian cancer patient who's being treated with a clinical trial program funded by an earmark. Asked if he would eliminate that program, he replied, "It's the process I object to. ... When you earmark in the middle of the night, you have no budgetary constraints."

Bush's claim that his tax cuts for high-income individuals are good for small business again fails to hold up under scrutiny. (For more on small businesses and taxes, see "Reforming the Tax Code to Assist Small Businesses" (pdf))

Bush: 43M families hurt if tax cuts expire - Jun. 2, 2008

"It turns out that 75% of taxpayers who benefited from the reduction of the top bracket were small business owners," Bush said, noting that small businesses pay taxes at individual income tax rates. "So when you hear 'tax the rich' you're really talking about taxing Mom and Pop businesses."

Williams said that it's true that the majority of taxpayers in the top income tax bracket (currently 35%) report business income, but those taxpayers don't represent the majority of small business owners.

According to a Tax Policy Center analysis, over 90% of small business owners report income that puts in them in the 26% tax bracket or below.

Many of the top-bracket taxpayers who report self-employment income get most of their income from salaries, investments and stock options, Williams said. Of those taxpayers, only 50% make more than half of their total income from their business, and 25% get less than a tenth of their income from their small business, he said.

I was on a panel yesterday talking climate change, specifically my cap-and-lease proposal. My segment begins at 1:23:50

Click to watch

C-SPAN | Capitol Hill, The White House and National Politics - C-SPAN

Center for American Progress Discussion on the New Progressive Agenda With the inauguration of a new president in 2009 comes an opportunity for new progressive policies. The Center for American Progress hosts a discussion to explore ideas put forth in "Democracy: A Journal of Ideas," and debate the contours of the new progressive agenda. Washington, DC : 2 hr. 30 min.

The New York Review of Books looks to try and pigeonhole Obama as a "behavioralist".. That's too simple. Behavioral economics has many useful insights, but it's still too early and too incomplete to be a cohesive theory of everything economics.

Economics: Which Way for Obama? - The New York Review of Books

Should Obama win the nomination, political considerations may well force upon him a more interventionist position, but his first inclination is to seek a path between big government and laissez-faire, a trait that reflects his age--he was born in 1961--and the intellectual milieu he emerged from. Before entering the Illinois state Senate, he spent ten years teaching constitutional law at the University of Chicago, where respect for the free market is a cherished tradition. His senior economic adviser, Austan Goolsbee, is a former colleague of his at Chicago and an expert on the economics of high-tech industries. Goolsbee is not a member of the "Chicago School" of Milton Friedman and Gary Becker, but he is not well known as a critic of American capitalism either. As recently as March 2007, he published an article in The New York Times pointing out the virtues of subprime mortgages. "The three decades from 1970 to 2000 witnessed an incredible flowering of new types of home loans," Goolsbee wrote. "These innovations mainly served to give people power to make their own decisions about housing, and they ended up being quite sensible with their newfound access to capital."

[...]

If Obama isn't an old-school Keynesian, what is he? One answer is that he is a behavioralist--the term economists use to describe those who subscribe to the tenets of behavioral economics, an increasingly popular discipline that seeks to marry the insights of psychology to the rigor of economics. Although its intellectual roots go back more than thirty years, to the pioneering work of two Israeli psychologists, Amos Tversky and Daniel Kahneman, behavioral economics took off only about ten years ago, and many of its leading lights, among them David Laibson and Andrei Shleifer, of Harvard; Matt Rabin, of Berkeley; and Colin Camerer, of Caltech, are still in their thirties or forties. One of the reasons this approach has proved so popular is that it appears to provide a center ground between the Friedmanites and the Keynesians, whose intellectual jousting dominated economics for most of the twentieth century.

Via Wonkette...

Gas Tax Holiday: Hillary Places Economists Beneath Large Transportation Unit

From this morning's ABC "town hall" with Hillary Clinton, about the gas tax holiday:

STEPHANOPOULOS: "But can you name an economist who thinks this makes sense?"
CLINTON: "Well, I'll tell you what, I'm not going to put my lot in with economists."

Silly George, the Clintons don't listen to economists for economic advice. Spanky the Money Octopus tells them all they need to know.