Martin Feldstein is one of the architects who paved the way for the mess we are in now. Why on earth have this man on by himself without someone to question his failed economic ideology. Tom with all do respect I don’t think you have the expertise to do be this counter voice.
Also I get the feeling that every time On Point has program like this your more worried about your own personal portfolio than the realities of the good people of Wilmington, Ohio who are losing there jobs by the hundreds due to DHL ( a German company) shutting down all it’s American shipping operations.

I would like to ask Mr. Feldstein, what economic cure does he have for this town, which is looking more and more like a it might die altogether.

i think they should do to the banks like they did to the auto and almost any other country, make them work for the money and require them to have a monthly statement, if they can do this for a investor they can do it for the government,

also what ever happen to telling the banks they have to work and the best banks, who are helping the economy,lending and have a plan not to fail and the ones that dont, who wish to pay out massive bonus and sure up there books get nothing.

instead of the big banks holding the public ransom so the government has to give them money than go about nickle and diming there customers, and not helping the people they told the government they would after they took the money. banks should not be so massive that they can risk, risk, and risk, and reap the profits when they right, than wrong get bailed out because there to big to fail.

I agree with jeffe. President Obama should not seek the advice of Martin Feldstein, Robert Rubin, or Larry Summers. These are the same “economic experts” who strongly advocated deregulation of the banks in the late 90’s, and we all know how well that worked out.

i feel that some of the debate over current US economic policy problems has been too simplified and has been riddled with false choices. first, i would like to hear today’s guest talk about the ongoing economic situation in terms of specific problems confronting the markets for labor, capital, and goods as well as the linkages between them.

second, i think that many policy prescriptions should be revealed for the false choices they entail, and that future debate should focus on the nature of proposed policy as well as choices between policies. for example, in addressing rising unemployment in the labor market, the debate is often simplified to increased gov. spending vs. tax cuts, when it is likely that some combination of both would best serve the country. delving deeper on the gov. spending front, the debate is presented as a choice between “shovel ready” jobs benefitting blue collar workers vs. longer term infrastructure analysis, engineering, and planning that would benefit white collar workers.

similar false choices are promulgated in the case of capital markets when addressing the removal of bad assets from bank ballance sheets, or the need to improve liquidity in credit markets.

in the goods market, debate on issues like insufficient consumer spending, rising inventories, and the problems in the housing market is framed by false either or senarios.

Excellent points Patrick, I would only add that the discussion also deal with the elephant in the room which is health care. Our health care market based system, if you want to call it a system, is broken and is costing to much for to little coverage. As more and more people become unemployed this will put a huge strain on an already broken system. This area needs some drastic review and we need a complete reorganization from the ground up.

I’ve seen Mr. Feldstein on several shows like Charlie Rose over the past couple of months about his support for the stimulus. I greatly appreciate it his efforts to educate America on the need to act now and quickly. Maybe he should ask to go on Meet the Press or This Week so that more American people can understand that the Republicans’ refusal to support the stimulus package unless it has more tax cuts is irresponsible and political.

What ever happened to the concept of monopolies being illegal? It would have avoided the whole “too big to fail” problem. Is there a chance we can go back to implementing that concept?

Retiree
Cedar Falls Iowa

As a long-term proponet of free-market economics which theory has now collapsed with the market and also as the author of the Bush tax cuts, I assume that Mr. Feldstein will take some responsibility for the disastrous economy that we are now experiencing.

1. Republicans say their is to much spending with specific programs. Please make an argument for the programs that the Republicans do not support.

2. Are there expert voices around Obama who were not involved in getting us into this?

Why doesn’t government spending also put money “into circulation”?
Don’t we trust the government to pick out our “best interests” at this point more than the private sector?
Why do we allow retirement investments to go anywhere OTHER than “socially responsible” funds? Who defines “socially responsible”?
Isn’t the capitalist goal of greed, like the golden calf at the foot of Mount Sinai, ultimately suicidal, untethered to appropriate long-term social goals?
If government spending were dealt with by issuing money rather than borrowing (from China, Saudis?), we would have inflation rather than international vulnerability. Which does your guest prefer? Am I right?

The stimulus plan includes half a billion for contraception. How will that stimulate the economy and create jobs? It won’t; it’s part of the political ideology that’s being furthered by this big appropriations package. There’s other earmarks as well. I’m for real investments with long-term benefits.

Emma: Monopolies isn’t the problem; leverage is.

Clair: So your solution to the problem is to end capitalism and go to total state controlled economy. That’s worked really well for those who tried.

Mr. Feldstein’s plan for individual tax breaks for big ticket items reminds me of the old refrain of the privileged, “Let them eat cake”!

Re; tax incentives: where are consumers going to get the money to spendon incentive items like house improvement? Put it on their credit card at 25%? Why give the banks 25% of the incentive?

Re: card rates: Why are credit card rates so high with the fed rate so low?

Re: foreclosures: with fed rates so l;ow should all the adjustable mortgages be manageable now with no foreclosures?

Someone should ask Mr Feldstein about the un-equal distribution of all the benefits he attributes to Bush and Reagan — the rich got richer, the poor remained poor, and the middle class got smaller, doesn’t sound like a big success to me.

Mr. Feldstein is supporting his views with the premise that our goal is GROWTH. Considering that in the recent decades we have experienced accelerated global warming, decrease of the middle class, terrorism……etc; perhaps we need to focus on SUSTAINABILITY.

Perhaps tax credits of energy savings and sustainability projects, more assistance for education and forgiveness of student loans.

The economy grew under Reagan and Bush one and two. But the national debt also grew. When does the debt actually get some attention according to conservatives. The say when the economy is good. Well wasn’t it?

In 1989 the state of Massachusetts received millions of dollars from Exxon for overcharges in the past. Massachusetts set up a program called “O% Heat Loan”. The government paid the interest on home energy loans (insulation, windows, new heating systems, etc.) and the consumer paid the principal only. THAT is the kind of program that can work in all areas of the country. This is where the consumers are going to get the money (from the local banks) and the interest will come from the stimulus program.

Hi Tom and Martin,

I can understand that there may be more effective ways, from a theoretical perspective, to handle the stimulus plan. What is left out is this way of looking at the is problem is the need to address the psychological change (reversing the lack of confidence in the general public) that needs to be reverse, along with the financial/industrial sector. The rhetoric and symbolism behind what we do should be taken seriously to affect change in confidence. The 15 billion may be part of that effort. It’s more direct than tax credits.

Pete

The stimulus plan includes half a billion for contraception. How will that stimulate the economy and create jobs? It won’t;

This is not completly true and is twisting of the facts; it’s a minor provision that would expand Medicaid family-planning services.

Majawill’s statement is a perfect example of Bad Faith Economics. Read Paul Krugman’s opinion piece in today’s NY Times on this very subject as it does a good job of debunking this kind of nonsense.

Was the peak in our economy Feldstein sites in 2007 (did he say?) not a complete farce? Was it not driven by the real estate market and greed and false value? I am baffled by the tax cut proposals… over and over they have not worked, trickle down does not work! How much proof is necessary?

If “the $500″ is saved for future needs (College, Retierment, etc.) it WILL add to money circulating in the economy and thus job creation since it will add to deposits that banks have available to loan out ( with their normal mutiplier effect ).
This assumes that they WILL loan it out to businesses, governments, and consumers located in the U.S. rather than elsewhere or for “acquisitions or consolidations”, of course.
Richard
Des Moines, Iowa

The government represents very little of economic activity. Consumers represent 70% and businesses 20%+.

Tax revenues grew under Reagan and Bush despite tax cuts.

Sustainability doesn’t support a growing population.

Let’s face it we ALL thought housing prices would keep going up forever. Except the U>N> whose World Economic Situation and Prospects Report (of 2007/2008) predicted the housing glut.

Mr. Feldstein just doesn’t get it. The system DOESN’T WORK. We need to steer far away from the way things have always been done. WAKE UP Mr Feldstein!

I.The MIlitary as trainer/educator? Does the Military think of itself as such an entity? How much does it cost for training people in the military? I thought they wanted to keep people they train BECAUSE IT COSTS SO MUCH TO TRAIN RECRUITS!!
II. Growth: Where did all the growth go? Certainly not to the middle class. They maintained their” standard of living” via debt, multiple jobs per household, and buying cheap stuff manufactured by poorly paid and oppressed young people who would have done better finishing high school.
The middle class’ protections- Labor Unions, quality available public education, affordable health care, affordable housing, jobs that contribute to our communities/country.

I agree with Jeffe Martin Feldstein is one of the principal architects of the economic mess the USA and the rest of the world is in. Listening to him defend his and Reagan’s approach to the economy and the follow on by every Republican politician since Reagan is repulsive. On the other hand Jeffe’s inability to recognize that human contraception will assist the economy is telling. The major reason the Earth is in such dire straights is easily recognized by intelligent humans as TOO DAMN MANY HUMANS.

He is a a skilful fellow,and there still people who are willing
to dicuss things with him ! I wouldn’t be found in the same
room with him !
Never mind the economic theories.Look at the number of
the poor in the USA as the result of “communications”
of the “Great Cummunacator”.
No ifs,buts,etc.Symply: The proof is in the pudding.
Enjoy.

i wonder if mr. feldstein realizes the true difficuties that most people are under. he seems to be more in tune with the wealthy elite who are only struggling with not being able to winter on the shore.

I disagree with Mr. Feldstein. We need to go back to the 70% rate on the highest incomes. During the 1950s and 60s, business did wonderfully well. There was no “punishing” impact from the high tax brackets. At the same time, we developed infrastructure that was the envy of the world. We had the strongest military, we built the interstate highway system, we had excellent schools and universities. Charitable giving was at the highest level ever. And, to repeat, there was NO effect on business or investment.
Mr. Feldstein has pointed out that over the last 20 years, the economy has done very well. That’s not the same as saying that the country has done really well. We’ve seen our infrastructure crumble around our ears since the Reagan years, while a small segment of the population has become extravagantly wealthy. Whoopie.

Mr. Feldstein’s should know that the “growth” we saw in the last eight years was made on the back of stolen money. We can’t afford false growth right now. We need to spend money re-inventing the US economy. We need to shed these failed ideas. We cannot afford to attempt to passify the citizenry with tax cuts. Tax cuts do nothing for the hundreds of thousands of people who have lost their jobs.

For Martin Feldstein

1. How much ofthe Reagan boost to the economy came because of crashing crude oil prices from their high in 1980 of $40/barrel to the teens and eventually to $11 and gas pump prices and home heating oilprices of $1 per gallon?

2. Excessive housing inventories are a major part of the problem. Fewer foreclosures would take place if banks would simply refinance mortgages to the current low interest fixed loans (below 5%). f the banks don’t do refinancing, the government should refinance, even upside down mortgages. People could save the difference, feel less insecure about losing their homes and might start to spend more. Fewer neighbnorhoods would be blighted by foreclosed homes. Banks would hold fewer toxic mortgages because they would be paid off. Home values would stabilize.
Bests of all, this would not take years to implement and would benefit families for 30 years, communities instead of banks.
The banks/investors would end up flush with cash that
they would feel would be apt to put to work by lending, especially if the real estate market is stable and the inventory of homes for sale would be normal.

Thnaks,
Great program.
I am surprised Martin Feldstein makes a lot of sense.

How many times did Tom Ashbook prove he was incapable of understanding the basic concepts Martin Feldstein explained this morning? How many times did he ask the same question — in the apparent hope that if he kept asking, he might get a different answer?

I lost count after a half dozen.

To take just one example of Ashbrook’s obtuseness, the excerpt he played from Obama’s inaugural that the free market is unmatched in creating opportunity and prosperity but that oversight and regulation are required to keep things from going off the rail IS EXACTLY THE POINT Feldstein made. Yet Ashbrook, who apparently thinks free markets are bad, continued to pursue his preconceived notion that Feldstein and Obama are at economic dagger points.

This goes beyond Ashbrook’s (and NPR’s) liberal bias. With respect, it gets at whether someone dropped Ashbrook on his head when he was a kid.

It was both terribly frustrating and amazing how MR. Feldstein continually avoided addressing the incredible greed of the CEO’s and others who rec’d outrageous salaries and bonuses. Yes, housing pricing and the lack of oversight was a “slice of the pie” in this economic collapse. However, the increasing GREED in the small % of our people was the catalyst and the eventual downfall of our country’s stability and moral decline… those “in charge” have not taken responsibility for their actions!

How well is the economy doing now that oil crashed from $147 to under $40 at one time?

I’m all for refinancing mortgages and I think that’s coming. It has been complicated by the fact that in many cases the bank doesn’t own the mortgage anymore. Your pension fund does. So it’s not the bank that gets screwed by lowering the principal or interest its your retirement. You’re right, stability of the real estate market is key. It sounds to me that we have to convince those with cash to spend; those with incomes to borrow and those with debt to pay it off.

We’ve created an economy that grew because of leverage and now it’s too big.

We need to use tax incentives to convince people to buy foreclosed properties

professor Feldstein made an important contribution to the discussion of fixing the economy. His solution of increasing demand is right-on. If incentives for homeowners and businesses to add value to their assets by tax breaks instead of hoarding it would give spark. However, there are other facts such as the war, and off-shore accounts, and non-taxing of unearned income. The majority of working people are not getting the breaks that corportations are getting. The loop holes and the lack of regulation have hurt the majority at the benefit of the minority. This is contrary to market forces theology.

I listened to a good portion of your conversation with Martin Feldstein this morning. As I listened I angrier and angrier. The architect of ‘Reganomics’ is certainly sticking to his guns as wrong as those guns may be. I would like very much for you to have Paul Krugman on to answer the absurdities that Feldstein is promoting. He may be right that the bailout is not well enough targeted but he is dead wrong that the tax policies of the last 25 years are good for America… unless you are in the upper one percent (financially) of the population.

Thanks, Tom, for having Dr. Feldstein on the program this morning. Clear thinking, grounded in an understanding of markets and a belief in empowering individuals, is seldom heard in this rush to borrow and spend billions and billions more.

President Obama advocates a fact-based approach to decision making. In this regard, history shows the high cost and widespread inefficiency of much of what’s in his current proposal. Is there _any_ Federal program that demonstrates that the Federal government can be trusted with billions more?

Despite many of the appealing things on his very long list, none of these is free. And our current economic straits should make us more skeptical not less of the need to borrow and saddle future generations with still more debt.

Let us also remember that it’s rare that Federal programs ever end, and that new initiatives, however modest in scope initially, grow to take on a life of their own, complete with a political constituency lobbying to ensure that funding and staffing grow. This makes the true cost of the proposal much higher–a perpetuity, of sorts–where the amount stated today is only the beginning.

Finally, let us take a page from what we’ve just been through over the last several years in other areas of foreign and domestic policy and ensure that fear does not trample knowledge and experience in the setting of policy that will be with us for a long, long time.

Since Mr. Feldstein chose to mention the national debt, perhaps we should look at its history:

1980, Regan elected, national debt 1 trillion.

1984, Regan re-elected, national debt 2 trillion.

2000, George Bush elected, national debt, 6 trillion.

2009, Bark Obama takes office, national debt, 10 trillion.

Over half of every tax dollar goes to funding interest on the national debt, most of which was accumulated during “conservative” Republican administrations.

One other figure worth considering:

Distribution of the nation’s wealth, 1980 — 20 percent for the top 1 percent, 80 percent for the rest of us.

Distribution of the nations wealth now — over 40 percent for the top 1 percent, less than 60 percent for the rest of us.

This was the price we paid for administrations that increased spending while reducing taxes. I find it highly ironic that Mr. Feldstein says, “Nobody wants to go back to a top tax rate of 70 percent”.

Perhaps he should have said, “Nobody in the top

Despite Mr Feldstein’s comments about the problem with financial markets being regulated by competing bureaucracies, how does he not see placing people who have made public statements about how the business world does not need regulation is, in and of itself, going to cause problems? One would chose neither Timothy Leary or Keith Stroup to be put in charge of the DEA nor would one consider placing Larry Flynt in charge of the FCC: regulatory agencies are law enforcement agencies, and placing people with anti-enforcement philosophies in charge of them. Certainly, Greenspan has been shown saying that there was inadequate enforcement of existing regulations under his watch.

If Mr Feldstein thinks that people of middle and lower income are doing better now than they were before Reagan, I suggest that he’s showing some degree of disconnect from reality. The “Reagan Revolution” has made it all but impossible for children of middle class parent to go to college without incurring crushing debt burdens. People in my pre-Reagan generation had considerably greater levels of federal financial aid.

We also didn’t have insult added to injury by having to pay federal income tax on unemployment compensation.

1 percent wants to go back to a top tax rate of 70 percent”.

The top 1 percent were the people Regan and subsequent conservative administrations entrusted our economy to because “government shouldn’t tell businessmen how to run their businesses.”

It was the Tax Reform Act of 1986 that called for the tax on unemployment benefits. Who sponsored this legislation? Who controlled Congress at the time it was passed?

As I was listening to today’s show, I kept thinking back to a recent On Point featuring some other big guns, but the best suggestion for the economy came from a caller.

He was an economist from Boston region, and was all to quickly passed over. But his idea was intriguing:

Let the Federal Govt. pick up all state sales taxes for a specific period, allowing the states to suspend them, and purchases to be tax free during that period Cars, electronics, even houses, I guess.

Because
1. People hate to pay taxes.
2. Making the tax holiday for a limited time would us them to purchase now, or loose the savings from the purchase..

I can imagine it having a real benefit for the auto industry, to mention just one.

I hope you find out who this was and invite him on the program. He deserves better.

Re our “Economic Fix,” I wonder about the following. It seems that our economic growth has been largely based on consumer spending. Constantly increasing consumer spending seems unsustainable to me, given our coming environmental and population limitations. How much “junk” can we continue to consume or import, then throw away when a better model of that “junk” is created? I feel that an era of limits is coming, if not already here and an economy based on acquiring goods will ultimately fail. Maybe now is the time for a re-adjustment. Giving folks more money to spend, by cutting taxes, is perhaps an idea whose time it is to modify or abandon.

Professor Feldstein’s philosophy regarding tax cuts and military spending together with the mysterious notion of “trickle down economics” has been soundly rejected by the results of implementing his philosophy by Presidents Reagan and G.W. Bush. Why? The tax cuts went to the wrong people (the high income brackets) who do not spend but invest or save, with no or little “trickle down” effect. Military spending, although necessary for a common defense of the country, is economically a “black hole” since it consumes capital but does not create any. In a capitalistic system, using capital must create new capital (from profits) to keep the ball rolling – military spending stops the ball since it does not create capital. The combination of the two: tax cuts for the wrong people and excessive military spending created huge deficits under Reagan and Bush II, and were aptly termed “Voodoo economics” by H.W. Bush when he ran against Reagan in the republican primary. After becoming president, Bush I reversed the Reagan policy and increases taxes (anyone remembers this?) – result: end of the recession.

So the big dog comes on the air sputtering and stammering with the same “don’t look at me” look as do the politicians, the think tank dummies and the Fox media ignorami. The problem is that Feldstein is some kind of “Uber-professor. . .dare we say “Overman?” Now where in the world did that characterization come from? I know where it comes from, and it ain’t pretty. The question is, does everyone else?

Okay, let’s get it right this time. It’s not the economy, STUPID, it’s the STUPIDITIY, STUPID! These so called professors are teaching. . .or should I say “proselytizing”. . .the next generations of business heads and CEOs while standing there in the buff I guess. . .the emperor without so much as a g-string. GET A SUIT, PROFESSOR. We’re tired of looking at it and we’ve seen enough. Has the good doctor no shame? Has he no pride? Or is it a case of no shame AND no pride?

The nub the argument–his FAILED argument–is just this. If the FED is to blame by cutting interest rates too far and over too long a period, then let’s ask WHY they cut interest rates too far and for too long. Why?. . .okay? Answer–TO MAKE MONEY! Not that the FED cares about making money, but for their LOBBYIST friends of course and all the clients of their lobbyist friends. Isn’t this the American Way? Didn’t GW Bush sell the hot idea to Fox News and others that “Every American can and should be a homeowner?” Where was that, Tom? EVERY AMERICAN CAN AND SHOULD BECOME A HOMEOWNER. Feldstein NOW calls lowering interest rates “irresponsible.” Oh, sure. Now the big business Reaganomics machine doesn’t work because people saw ways of making money “irresponsibly.”

I seem to remember Alan Greenspan saying roughly the same thing, but more like being “shocked” to think that business men would act in ways that were contrary to their best self interest. GO HOME DOCTOR FELDSTEIN. RETIRE AND WRITE MEMOIRS. It shouldn’t take too many years for everything you’ve ever preached to end up and forgotten in the garbage dump of broken human promises.

What I find so incredible is that Mr. Feldstein like Milton Friedman and the “guru” Alan Greenspan would never admit and still don’t that one of the failings of the free market is it is espoused by individuals that will not admit that it is not the end all be all for economic growth and prosperity. Mr. Feldstein continued to say that there was no responsible oversite. But the free market capitalists beleive that the “market” will always take care of itself. They scream at any kind of significant regulations or appoint people to positions in government who look the other way. Those that do sound alarms (if they are brave) are demoted or fired. Mr. Feldstein kept repeating that the economy in the Bush years was growing. It was not growing for the middle class as they worked two jobs to keep up. It was not growing for families trying to send their kids to college and it was not growing for people who could not afford to pay for healthcare. I am sorry, if we have not learned by now that “free market” proponents and “trickle down” theorists have been discredited then shame on us.

Why isn’t more emphasis being placed on the lack of oversite for Fannie Mae and Freddie Mac? The lowering of the bar for credit began by these institutions in concert with the Clinton administration is what began this fall. It wasn’t healthy. Where would we be now if those credit limits hadn’t been droped? Other lending institutions wouldn’t have taken the signal and dropped theirs and developed the other hedges. Think about it.

I think its a waste of time deriding sound economic thought and practice while ignoring the cause of the problem. “Free Market” is not free from regulation because it would stop being a free market by its nature. The recovery proposal should have more imphasis on stimulus rather than just plain spending. Why is that wrong?

u do know fanny and freddie was created after ww2 because the government realized that people who had a afforable home would be a benifit to society after the auto ford stikes,and both where used with great success to give peoples homes at a affordable cost, and in turn helped the economy as before it was something like 30 percent of people who did,

Back to the crisis, fanny and freddie control only 13percent of the market during its boom and was only control of a large part of the market when the banks started unloading the mortages on them, and that in 2000 bush declared that everyone should have a home did he deregulate the mortage market along with the bubble bursting from the internet boom investor wanna somewhere to go. and so private company loaned and sold sliced and diced up mortages, where as broker and created mortage back security, aaa to be extract with the help from moodys and other rating agency than used complex math to create dev on top of that, while bank levage with this overflated value by 20 to 30 to 1.

hench money flowed and people tryed to sell as many and lower even more standards to sell them and pass them along, where investor where scared about the risk created credit swaps, (or insurance) but not regulated and so this went and when the bubble was bursting they unloaded what they could to freddy and fannie,

these practices where intentionally private and unregualted, and when the bubble could not hold we found that those inflated prices on the books by the banks were just that inflated. and so we have our crisis

According to the CBO, only $26B of the $355B new spending would be spent in the curren fiscal year; and just $110B by the end of 2010. At least tax cuts take effect immediately.

On the other hand Jeffe’s inability to recognize that human contraception will assist the economy is telling. The major reason the Earth is in such dire straights is easily recognized by intelligent humans as TOO DAMN MANY HUMANS.
Posted by Ken Hall,

Ken I was quoting Majawill, I’m all for family planing and giving out contraceptives to like candy. I think you misunderstood my point. No harm I should have sited him.

On the other hand Jeffe’s inability to recognize that human contraception will assist the economy is telling. The major reason the Earth is in such dire straights is easily recognized by intelligent humans as TOO DAMN MANY HUMANS.
Posted by Ken Hall,

Ken I was quoting Majawill, I’m all for family planing and giving out contraceptives to all, like candy. I think you misunderstood my point. No harm I should have sited him.

[...] read more | digg story [...]

Infinite growth is a fantasy of economists who have little or no grounding in hard science. We live on a finite planet and so our growth must also be finite. Instead of frantically trying to spur growth, we should take advantage of the slowdown as a first step to a steady state economy. It will require considerable re-engineering of our economy, but if we don’t do it nature will do it for us.

Feldstein sounds like a well educated fool taking no responsibility for his actions his plan to use the military seems silly

this is an interesting read.

http://www.commondreams.org/view/2009/01/26-0

There seems to be no interest in the demand side here.
no surprise. The split of wages to productivity goes back to 1978. But we seem to only have a sense of trading water while believing the mantra of ‘free markets’ it seems. You can reduce costs to produce( labor) but reducing those costs leave you w/ a few less consumers. Either this man ( and those who think like him) are really short sighted enough to believe what they espouse -or- he has an agenda he isnt saying. Does growth equate to a rising tide – not since 1978.
Growth has beeb 3% he says. But job growth the last 6 yaers isnt keeping up w/ population.
WE would have been in dire starits years ago( not 2007 sir) w/o all the cheap money to be had. ( greenspan – another man who stopped thinking decades ago)
His comment about the ‘raising out of poverty ‘ almost tipped my guiness. Why hasnt his tax cuts helped the 80% who have been sliding into debt and job anxiety?

When does his magic start to happen? There are 2 americas. His is not mine – but the investor class.
There is a war on – and they are winning.

Tom

Hvae a counter point to all of your guests when discussing divisive issues. At the very least Jack Beatty. ( we from the west bow to the Beatty oracle of the east. )

This man got off too easy by far.

I was there, at a huge Investment Bank from the 97 until this past year.

This problem may have been aggrevated by government (Bush) policy on home ownership, but this policy was not root cause.

Root causes:
1 Absurdly low interest rates – free money
2 Lack of transparency (dark market) – very difficult for investors to understand securitized Mortgage debt risks.
3 Over leverage everywhere in economy, but in particular within the Investment Banking/Brokerage business that drove artificial investment demand.

Feldstein is a mess. His positing that this financial nightmare has nothing to do with Reagan/Bush free-market policies and instead is the fault of low-level bureaucrat is similar to Rumsfeld’s pushing the atrocities of Abu Gharaib on a “few bad apples.”

Wow! What an idiot this guy is. He does not get the fact that the rich a-holes have robbed the working stiffs of their money and we are pissed! If he wants to keep giving money to the bankers and brokers he will be in for a rude awakening when the common people start a revolution, and go after the crooks like him first!

I listened Mr. Feldstein and became very disgusted by the same rhetoric that was spouted by the GOP for the last 25 years. I don’t doubt he is an intelligent person, but he seems to be using is intelligence as a catapult for her ego; an ego that is too large to accept the fact that he was wrong. He is spending way too much time convincing himself that he was always in the right. Too many excuses a little to late to convince me. As to using the Economic Stimulus money for the military/defense, I for one do not want to see any more money used to pad the pockets of the rich who have gotten richer off the war in Iraq. Get us out of the war and then rebuild the military. Don’t waste anymore money on a lost cause. The only good thing he had to say was the idea of using the funds for education. We need to develop our young people to take on the technical jobs for the future of our country. Maybe then Mr. Gates will be willing to hire US citizens at Microsoft, or maybe he won’t have anymore excuses to hire low wage foreigners.

I am so weary of hearing Republican apologists explain how well the economy has done under Reagan and the Bushies. The social policy got so skewed that only the rich benefited from economic growth, and the lack of an adequate social safety net because of Darwinian “free-market” policies contributes to people’s anxieties and makes them far less ready to spend money now, aggravating the decline. Sorry, Marty, the most generous incentives in the world do not get a businessman to invest when he sees his customers prostrate, unable to buy anything he’s going to make; so that idea is a non-starter. If European growth was slightly slower than that here, the people’s standard of living has risen more, and they feel less alienated from their government. Now can we talk about environmental, social and foreign-policy failures, and the ascendency of anti-intellectual superstition? Obama is taking us away from these antediluvian, anti-social policies. Give him a break.

What would be the impact on the economy and the government if we had a tax free period of 6 months or even a year?

The free market did not fail us. The oversight and regulation of the free market failed us.

When Adam Smith talked about “rational self interest” and competitive markets he envisioned many consumers interested in buying goods and services from many producers. This “free market” system would best serve the private and public good. He was not talking about producers, companies, being too big to fail.

This is a major problem in today’s economy. We lost our way in regards to allowing competitive markets becoming oligopolistic markets. The financial institutions that are here to serve our needs have gotten so big, and have such a huge impact on our markets, that the public sector is forced to step in and save them because of the irreparable harm that would be caused by having them no longer in the market.

Everyone is talking about reforming the “system”. A major part of that reform is to break up the size of our financial institutions Make each of them small enough, relative to the size of our economy, that we yawn as one of them cease to exist. This will result in them no longer counting on the taxpayer to bail them out and will provide the added benefit of keeping the compensation of the scoundrels running these companies from being ludicrous. Small is Good!!

Dear Tom Ashbrook, It was delightfully wonderful for you to ask real follow-up questions to Martin Feldstein. Please continue to do this, and possibly encourage other journalist to follow your lead. I am more than ready to hear someone call the pundits on their spin, I am not an economist, but I am keenly aware that some of Mr. Feldstein’s comments did not pass the test of common since. I was proud to have you ask the questions that I myself would have asked if I was there myself.

Tom/listeners:

I wish I had not been out of the house today…

Go read my blog .

a) we’re in a depression now.
b) won’t be proven for 24 months.
c) ha ha to feldstein thinking unemployment will be 9% in one year. try 9% in TWO months!
d) the Great war (later called WW1) was so named AFTER the 2nd one occurred.

Thus: We’re now in the SECOND depression.
today (alone) 24,000 people lost their jobs.
I say: Yea Mr Feldstein for saying stimulus.
I say: Boo Mr. Feldstein for thinking it’ll get better next year.

I said (two years ago) that:
we’d have a depression
we’d have a need for a huge FDR-type new deal program COMPLETE with JOBs (WPA), as well as PROJECTS…

I still stay we need to fix:
class/gender inequity caused by:
class;education;gender problems:

this could be done ALMOST like Mr. Feldstein said:

Instead of the ARMY Training the mass hordes,

We need a new (USA only) version of the PEACE CORP- I call it the USA-Service Corp.
And it comes with a new plan for our teenagers to provide SERVICE to our country to help it grow.

And it is a MANDATORY plan. 4 options.
a) going to post HS study? You will serve with your college/trade school during school breaks in YOUR trade as a work-study/internship program IN YOUR field.

b) NOT going Post HS? about 100 similar people from your area will be grouped together, and moved to a different part of the country to help train you in your desired field, and perform serivce to the country.

c and d) refer to other specifics, see HERE:
http://sos-newdeal.blogspot.com/2008/09/topic-of-week-mandatory-draft.html

In a nutshell, if you are from the city, you will work in the country, building, learning a trade, etc.
if you are from the suburbs, you will learn how the other half lives, and teach, and mentor others.

Oh Tom…..
You (and your “callers”) keep trying to get your conservative guest(s) to blame Bush, Reagan, and the Republicans on ALL the country’s woes. This is STRIKE two for you buddy !!! I about ran off the road from laughing so hard at your exasperation and failure (3 times !!! plus the failure of your Bush bashing caller “MR. BUSH REGIME”) to get Mr. Feldstein to agree with your SLANTED view(s). It seems like you and your kind (Libs) don’t play follow YOUR leader and are not willing to listen to all views that are put on the table.
Mr. Feldstein was right in saying it was a culmination of things that has put the country in the financial mess that it is in. Fortunately, I have worked and saved my money the good old fashioned way. Unlike all the grasshopper’s who played and tried to make it rich quick. If I had my choice, I’d let all that are going through rough times continue with their lot…..People in this country have been living high on the hog and beyond their means for tooo long…..now it’s time to pay the piper and suffer. Maybe the children and grandchildren will learn from our mistakes.

Brian Martin
Southern Pines, NC

Mr. Ashbrook, I’d like to thank you for delivering to us one of the best interviews that I have heard on the radio. I won’t elaborate further, as your other listeners have already voiced my opinions, but suffice it to say that your respectful yet dogged persistence in responding to Mr. Feldstein’s views on the economy and the source of our current woes does you and this program much credit. Thanks for that.

You people are sadly funny. Who knows what the truth is anymore. The facts are there who started this ball rolling. The facts are there what caused all this problem. The blame game will go on forever. The guilty dog always barks first. In 1994, a book was written by a wise man entitled “The Coming Economic Earthquake.” In this book it describes exactly what has now taken place today, yet! 15 years ago. I am glad I paid attention. I am now 57 years old. We have lived in two new houses and was totally out of debt at age 41. We have put two kids through college and did this with no more than a combined income of 75,000.00 a year. The principle behind all this is being content with what you have. Greed to keep up with the Jone’s will lead you into trouble, just as it has with our problem today. The problem is “WE The People”. We wanted everything and we got nothing. Our lust to have,fed the crooks the will to deliver. Now we want the government to bail us out. Until Americans can live within our means and be content with what we do have, the problem will continue. There are three kinds of people in America, the has, the has not, and the has not because they have not paid for what they has. Help the needy and punish the greedy.

[...] about as far a possible without entering batshit crazy territory. You can listen to the interview online. It’s good and they go over a lot of the points that we debate back and forth in this forum. Good [...]

Tom, you’re in real top form in this show. Thanks for the persistent follow-up questions here–it’s clear that you know your stuff and are doing your best to ensure that your listeners will as well.

Feldstein kept repeating the hollow statistic about how much growth occurred the last 8 years under Bush and Tom, you never busted him – along with this ‘growth’ actual, real income for most workers fell – people worked harder for less, a situation with many components, one of them the rise in ‘private contractors’ plus people who worked for a salary instead of by the hour -working longer hours because they want to keep their job – this is false growth – another part of that wonderful 8 years is more very rich, more very poor, less middle class – these elements show us the real picture of ‘growth’ – Feldstein needs to retire, Raegan and Bush screwed this country and he is still around, defending the criminality

I am disappointed that at a time when the policies of deficit spending and war industries have put us into this trillion dollar financial bind that you would give the microphone to one of the chief architects of republican financial thinking. Mr. Feldstein, having overseen policy during the three biggest eras of deficit spending in our history, would seem a poor choice to design, critique, or even comment publicly about US economic policy. In claiming to be influential on economic policy for Reagan, Bush senior, and Bush junior he has claimed responsibility for the failed ideas which have us in this bind. I appreciate that you attempted to challenge him on his points, Tom, but a savvy foil from the Obama advisors could have done more to counter Mr Feldstein’s hubris at even attempting the tired free-market policies that have proven so disasterous to the common good, both in America, and around the world.

[...] economist, Martin Feldstein made the same point this week on the public radio program, On Point. Question is, will Obama go for it, especially when you listen to pledges from him and Hillary [...]

One more thing, Tom. I LOVE your show and your interview style, even when I might seem critical. Thanks for the in depth information. Mr Feldstein would never say he had ANY responsibility for the current bind and I find that reprehensible.

I was in the car to hear part of the kid glove treatment posing as a hard hitting, on point interview.

If you couldn’t tell, I’m dumbfounded. At a minimum it would seem that the interviewer might have questioned how more military spending is going to help a country that spends more on military than the next ten largest spenders combined. Instead Mr. Feldstein’s assertion that this is what the country needs is taken at face value.

Then instead of asking Mr. Feldstein why more tax cuts would help, the interviewer just lets him say that he would do it differently than President Obama is doing it. Didn’t we just go through eight years of non-regulation, lowered taxes and free money? Maybe I’m just not in the right income bracket, but I don’t feel like I’m living in the utopia that was going to be delivered by these policies. Unless living in the largest banana republic is all I should have expected.

Not only have these policies blown a hole in our budget, it removed any semblance of cushion and severly limited our options. Couple this with an effective fed rate of 0% and the policy prescriptions become even more constrained.

I’m not a professional economist, but I do find that common sense sayings seem to actually work a lot better than the theories espoused by many of the “experts.”

One that would seem to apply here: When you find yourself in a hole, quit digging.

Perhaps Mr. Feldstein should consider this since the policies he advocates look to be very similar to the ones that are pretty discredited at this point. Or maybe, what he’s really saying is: Who am I going to believe? Him or my own eyes?

Why don’t you save the soft touch for the entertainers or people like that? The right wing punditry will never extend you the same courtesy, so take the gloves off.

I can tell you as a business owner first hand that the biggest threat to the middle class is obsolescence. I buy tooling from a small manufacturer outside of Chicago who produces the highest quality tooling in the world, right up there with the German stuff if not better, and his prices are lower than the Chinese junk.

What used to require very well paid machinists has been replaced by automated machinery that doesn’t even require that the lights be on. You don’t even need to pay a kid to sort the parts; a robot with vision does it for you. What used to require a sales force is now done by a website that costs pennies a day to run, a little blogging on the right forums, and an Ebay account. You don’t even need to print a catalog. No machinists and no sales force means no middle managers are required, just menial labor to box up orders and ship them out.

Of course, this also means that the owners of this firm take in income that, just 10 years ago, would’ve been shared amongst many more well-paid employees.

The Luddites had it right. The biggest threat to the American worker is not cheap foreign labor, it’s automation, and the pace of this technology is scary.

If the US would invest in renewable energy and efficiency, it would create a lot of American jobs, because people abroad can simply not install solar hot water capacity, insulation, photovoltaics etc. on American homes and businesses. In addition, since renewable energy and efficiency is decentralized it does create jobs everywhere in the country.
And not only that, it does also reduce Americans dependence on foreign resources.

Interesting little fact:
Worldwide solar hot water capacity added 2006:
China: 75.3%
USA: 0.4%
http://www.ren21.ne/pdf/RE2007_Global_Status_Report.pdf
(Either there is no sun in the US or the US doesn’t promote jobs for roofers, plumbers and electricians.)

And American roofers, plumbers and electricians cannot be replaced by robots either…

Sad to say robots can’t, but the imported workers from south of the border has replaced all the American roofers, plumbers and electricians in my area.

“And American roofers, plumbers and electricians cannot be replaced by robots either…”

No, but you’re missing the point. A large swath of the economy can and will be. Modern farm tractors no longer require drivers, as they are simply put on autopilot. A satellite image tells you exactly what acres need harvesting and a GPS tells you exactly where you are in the field. High rises don’t require window washers, because there’s a robot to do that as well. Look at video of a modern auto factory: robots do all of the welding and the painting. While such technology used to require deep pockets, this is no longer the case.

The upshot is more workers chasing fewer jobs, which drives down labor rates, which is the REAL problem. We’ve reached a tipping point in our industrial economy where economic growth doesn’t depend on population growth. In other words, productivity can increase while the labor force remains stagnant and even decreases.

And the problem economically with the “green revolution” is that it simply replaces an existing industry instead of creating a new one. We already have an energy economy, albeit based on fossil fuels. As we transition to renewables, there’s no evidence that all of the labor currently used to extract fossil fuels, build and run power plants couldn’t simply transition to building and running wind farms. There will likely be a short-term employment increase as we all climb on our roofs to install solar cells, but long-term, it’s a creative destruction like when the horse and buggy builders transitioned to making cars. Now in the latter case, the build out of the road system created a massive net growth in the car industry per capita well beyond the size of the horse industry, but will that be the case for energy? Energy usage per capita is likely to decline going forward as our economy becomes more energy efficient.

The proponents of tax cuts such as Mr Feldstein that say tax cuts promote jobs should document their case. Survey employers and ask how many employees they added as a direct restult of the last Bush tax cut, and how many they will add if they were to get a tax cut now as part of the stimulus. I bet they cannot give any numbers in either case. The so-called good economy from Reaganomics was the result of the deficit spending, not the tax cuts. Obama should eliminate all tax cuts from the package because they will negate the other actions of the stimulus package. We’ve got to have people learn from mistakes of the past and not repeat them

David and twenty niner.

I guess you haven’t had a response to this little fact:
Worldwide solar hot water capacity added 2006:
China: 75.3%
USA: 0.4%
http://www.ren21.ne/pdf/RE2007_Global_Status_Report.pdf
Maybe there’s no sun in the US or you are not getting enough roofers, plumbers and electricians from the south of your border…

And automation in large photovoltaic factories do create many jobs for engineers and technicians.

And when one compares the infrastructure and building quality and efficiency in the US with the infrastructure and building quality and efficiency in central Europe, the US requires a lot of workers if it wants to reach a similar level.

The US might probably not have enough people to do all this work, if it wants to take the reduction from foreign resources seriously.

On the subject of how to get people to spend since the banks were holding onto the bailout $$.
I want to get this idea off my chest. Let the Federal government subsidize sales taxes as a stimulus. The usual accounting for paying tax to states and localities could generate a voucher to Washington. This way the needed local programs could continue to be funded, spending would be encouraged, and families get a tax break every day.
If Mr. Feldstein or anyone else thinks this is a bad idea, I can live with that. But I’d like to know why it is a bad idea. I already know one reason: my daughter in New Hampshire asks “what about me?” OK.

I’d like to add my voice to those who are asking for a voice that reflects Tom’s concern that the ethos of deregulation had a lot to do with the bubble economy that has now burst. I don’t think Martin Feldstein did a very good job of countering Tom’s assertion that the gains seen up to ~2007 weren’t real anyway.

Perhaps Professor Stephen Marglin from Harvard who has written on the blindness that the rational man model inculcates to community would be a good source to flesh out Tom’s intuition that ethos is important to analyzing the bubble economy and it’s collapse.

Thanks Tom for giving it a shot. Now you should do a show on it.

TW

Did I hear him right when he said – I’d rather have a system that glorifies growth over equality as an end in itself? You want to talk about freaking un-American!! It that isn’t the most egregious statement of corporatism I don’t know what is.

I agree with the first comment that Tom Ashbrook had his hands full trying to pin down Martin Feldstein on why we are in the current financial mess. Try as he might, Mr. Ashbrook was unable to get Mr. Feldstein to admit that he bears some responsibility for the suffering of millions. To Feldstein, the problem is a technical one, in which government bureaucrats forgot or neglected to exercise proper oversight of the banking and investment industry. But the truth is much more damaging and has to do with blind faith in a completely unrestrained form of capitalism. He is not able to admit this, apparently because his faith in the benevolence of the so-called “free” market remains unwavering, despite evidence to the contrary. We can say the same for Alan Greenspan, who ought to be called to account for the major role he played in the economic meltdown. When challenged to explain why he opposed regulation of the derivatives market (for mortgage-based securities) and why he didn’t forsee the current crisis, Greenspan claimed he didn’t realize that bankers would be dishonest.

Such comments show that conservatives are too willing to lecture the rest of us on taking personal responsibility while they themselves find ways to avoid being held accountable for their own blatant misdeeds.

I would like to ask Mr. Feldstein how fair it is that the people who caused this crisis are the ones now being bailed out, while the rest of us are the ones being made to pay for it? How fair is it that the CEO’s who presided over this disaster are virtually insulated from accountability, that they still pull down astronomical salaries?

If Tom Ashbrook ever invites another conservative spokesman like Feldstein on the program (e.g., Greenspan or Phil Gramm), he should also invite principled critics like economists Joseph Stiglitz and Dean Baker, journalist and author Naomi Klein, or Sen. Bernie Sanders on as well. The ensuing debate would no doubt be lively and, I would expect, most instructive – that is, if the spokesman would even agree to such a debate.

New bipartisanship in Washington!
While the House approved the stimulus bill, a mixture of Democrats and Republicans voted against it.

u do know that the republican need something to act like they somehow got there values back, so they had no attentions to vote for it in the first place, it was a political ruse to try and gain favor for later elections,
example they first was against it because of not enough taxes cuts and infrastructure spending was a waste, than they said it was because they was not enough on infrastructure spending, and wanting absurd tax cuts in the like the corporate taxs from 35 to 12.50 or suspending fica, and taxes in general, if this happen states would lose even more revenue and have to cut programs, rise taxes, lay off workers, to try and cope with the lose in revenues, than companies could always outsource more work/labor and make a killing.

please dont act like this is some awaking for the republican when its a ploy to gain power no matter what the cost

[...] debate President Obama’s economic stimulus package. During an interview on the NPR program On Point, host Tom Ashbrook repeatedly referred to Feldstein as [...]

The “derivatives” are more than just bad mortgages. They are sliced and diced mortgages packaged together, AND they are bets that those packages of sliced and diced mortgages will be good(or NOT), AND they are bets on the bets that those mortgages will go bad or not. It is my understanding that if you total up all the derivatives world-wide, the total is LARGER THAN THE ALL THE GDP’S OF THE ENTIRE WORLD COMBINED. How can we possibly honor these bets under these circumstances.