June 9, 2008
Obama Campaign Taps NYU Scholar as New Economic Policy Director
Barack Obama’s campaign today announced the appointment of a new economic policy director: Jason L. Furman, a 37-year-old economist who played a similar role in John Kerry’s 2004 effort.
Furman directs The Hamilton Project, a domestic policy center at the Brookings Institution. (He will take a leave of absence from Brookings for the duration of the campaign.) He is also a visiting scholar at New York University’s Wagner School of Public Service.
In an e-mail message to The Chronicle, Furman emphasized that his appointment does not represent a demotion for Austan Goolsbee, the University of Chicago economist and Obama adviser who came under fire in March for allegedly telling Canadian officials that Obama was insincere in his public criticisms of the North American Free Trade Agreement. (Goolsbee has insisted that his remarks were misreported. Three weeks ago, the Canadian prime minister’s chief of staff resigned amid accusations that he had improperly leaked a memo about Goolsbee.)
“This is part of the campaign’s staffing up and adding people for the general election,” Furman wrote. “Austan Goolsbee and Dan Tarullo are still playing central roles as senior economic advisers.”
“Senator Obama personally asked me to help him get advice from a broad range of economic thinkers,” Furman continued, citing the fiscal hawk Paul Volcker, the labor-left economist Jared Bernstein, and Robert Reich and Christina Romer of the University of California at Berkeley.
In some respects, Furman himself is on the centrist end of the center-left spectrum. He has, for example, defended Wal-Mart as a “progressive success story.” In the Wal-Mart paper and elsewhere, Furman has advocated an expansion of the earned income tax credit, which was one of the Clinton administration’s favorite anti-poverty policies.
Furman has also left a trail of opinions about health-insurance reform, fiscal policy, and climate change.
As the Democrats licked their wounds after the 2004 election, Furman wrote in Slate that the Kerry campaign should have released more detailed policy plans and found better ways to talk about them. Stay tuned to see if Obama ’08 chooses to heed that advice.
David Glenn | Posted on Monday June 9, 2008 | PermalinkComments
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Barack must be very careful about relying too heavily on academicians’ theories, as David Halberstam demonstrated in The Best and the Brightest. Unfortunately, Harvard types have a tendancy to hang with PLU’s, isolating themselves into a mutual admiration society. Barack should remember that the housewife at the kitchen table knows a lot more about the economy than an Ivy League economist.
— original marci Jun 9, 03:25 PM #
I do not think that The Hamilkton Project’s centrist positon is what we need. We had too much of this Rubinomics in the Clinton administration. We need a second New Deal, not a fifth Eisenhower administration.
— Rich Klimmer Jun 9, 07:57 PM #
Totally Agree With Original Marci & Rich Comments # 1 & 2
Original Marci —- Love your comment about the housewives acumen.
Politically Could this be viewed as a concession to the Clinton’s by the Idealist Liberal? The Reagan/Bush patch-up also brought in key Bush figures into the Reagan campaign/cabinet.
To the above Comments, I Would like to add that the new deal of the future —- should focus on future, and not the past in terms of policies, actions, etc. —- it should encompass infrastructure and energy issues:
Apropos, we need & should consider a massive upgrade in the Rail Infrastructure (for goods & people) —- lowered energy costs/dependency, efficiencies/time savings, safety/security, etc. —- Given, the 200+ mph speeds of certain countries trains; a NYC-Chicago run would be about 5 hours (compare same with air-travel inclusive of downtown to airport commute, security check times, etc.) —- security is improved in that threats are confined to the train on tracks (which unlike a plane can’t be directed at targets of choice), and is no different in terms of airport versus train station.
The Right will probably argue this should be left to the market forces —- the govt. should not get into the Rail business —- The left will take an opposing stance, and ask for massive tax dollars —- ergo, a debate would rage, and …
In my opine, the existing debates need a perspective focal shift —- GM, Ford, etc. don’t build, own or maintain roads, nor do AA, United, etc. build, own or maintain airports —- based on the same principles, the govt. should build, own and maintain the Railroad infrastructure (tracks, stations, etc.) —- Private companies can then rent the use of the infrastructure, and run their private trains (who knows FedEx & UPS trains carrying goods, and AA and Greyhound trains carrying people —- market forces at play determining …)
The initial infrastructure costs could be funded by govt. bonds —- repaid via revenues generated by usage fees/rentals charge to the private firms …)
Additional Issues Meriting Serious Consideration In My Opine Are:
Financial reengineering —- a comprehensive redesign of the fiscal and monetary systems —- in order to restore fairness and generate the essential revenues necessary to meaningful actions. To do so involves an exhaustive analysis of the numerous facets directing the financial flows, and…
Let me present a few initials thoughts which the numerous brains out there can research analyze and comment on.
Reinstating of President Kennedy’s Executive Order Number 11110 —- This action could save hundreds of billions in interest payments on the National Debt (Google 11110 —- read/analyze JFK’s actions, which were reversed by Johnson, and then ignored by all Democrats and Republicans alike).
Scrapping the existing tax code —- and introducing a new simplified and fair one.
The new tax code should in my opine encompass the following metrics/concepts:
(a) All income no matter how derived should be treated as the same for tax purposes —- the notion of capital gains is simply put oxymoronic for it ignores inflation —- If I bought a house in 1980 for $50K and sold it in 2008 for $250K —- I do not feel that I have gained capital —- I may have even lost capital —- for the value of the Dollar in terms of its purchasing power is not the same —- ergo based on inflation for that time period, $50K may be worth $300K, so I actually lost money ($50K) or it may be worth $200K, in which case I had a income of $50K.
Additionally, the distortion of income in the form of the existing capital gains tax —- heavily favors hedge fund managers, and those lucky enough to be compensated in stocks —- this distortion will be eliminated if all income is treated the same, with inflation adjustment (stocks income will be based on the differences of value of stock given in relation to the actual selling price of the stock —- adjusted for inflation, and thus subject to taxation as ordinary income).
(b) Individual taxes should be graduated, with no deductions period —- but there also should be no taxation for those at the low-end which could be tied to factors like poverty levels or other meaningful indices —- so for instance arbitrarily speaking the zero tax bracket for individuals may be $35K, head of households $42K, (with an addition of $5K per dependent after the first), for married couples $46K (with an addition of $5K per child/dependent). —-
Brackets can be set so as provide essential revenues related to actual present revenues, or a Tax Revenue/GDP ratio.
© Social security taxes should be reduced —- lost revenue should be made up by encompassing all income, and removing the upper limit (i.e. tax all income no cap at $200K or so as Obama proposes)
(d) Businesses should be subjected to flat tax on sales revenues (the issue of gross or net sales merits consideration) with deductions limited to compensations paid to U.S. citizens/residents up to a maximum of say 5 times the median wage —- the issue of how a entity runs its business should be left to the business (it chooses to fly people first class or coach has no tax consequences, nor is the individual taxpayer compensating the former via deductions of costs allowed, the same runs the entire gambit —- rent space or own, spend lavishly or frugally on entertainment, advertising, etc. —- none of it is business decision based on taxation consequences (since no deductions are allowed). The aforesaid certainly has no bearing on Health, Safety, Environmental, Or Consumer Protection Laws (which remain applicable).
Additionally taxing of sales rather than profits —- eliminates the shell game of transfer pricing whereby the firm has a profit in say Ireland with a tax holiday, and a loss in the U.S. (Example Widget A is bought in China at $1 by Irish Subsidiary which packages it for $0.10, and sell it to the U.S. subsidiary for $2.10, the U.S. subsidiary then sells packaged Widget A for $1.50 and declares a loss $0.60, for U.S. taxes, and the Irish subsidiary makes a profit of $1.00 while paying no taxes based on agreement with Irish govt.).
(e) The requirements and the rules governing Non-Profit entities also need a complete overhaul (I will however leave that alone for now though —- suffice it to say, this whole area is murky —- with Non-Profit entities owning For-Profit entities; Non-Profit entities in certain instances charging those who could least afford, dubious/inflated fees for services, etc.).
(f) We should consider some form on a sales tax on the purchase and sale of stocks —- stock brokers charge a fee for transacting a sale, a nominal sales tax on each stock sale, would provide much needed revenue, and may restrain bubbles to boot.
(g) An environmental tax is essential —- the tax should be levied at the source (dispersion at the consumer level will not only burden the consumer, it will also eliminate competitive pressures on the business, and have minimal positive impact on the environment per se —- maybe, we will see smaller/sensible packages, if the package carries an associative environmental tax).
Furthermore, product specific recycling with associative taxation would be meaningful. —- recycling plastics diffuses the issue —- if Coke were responsible for recycling Coke products i.e. the plastic bottles (with associative taxation), and Motorola responsible for the plastics used in its packaging of cell phones (with associative taxation), and … I am sure that the outcomes would be more desirable environmentally, given the individual competitive cost pressures, and …
Enough said —- The main issue remains —- seeking past gurus, with their inherent biases, tends to undermine a future whose underpinnings are predicated on radical changes.
And, Now —- Let the academics, economic gurus, and other sages debate (or ignore) the aforesaid —- as for the housewife at the kitchen table, and getting her perspective, it … (maybe someone will design a survey for the housewife —- ensuring question phraseology and order generate the desired outcome)
— zahid Jun 10, 11:15 AM #
Wow! Zahid – some of your ideas are fascinating. But like so many leftist economists (or leftist economic theories), the assumption is always that a successful businessperson is “big business.” One of the biggest flaws in left-wing economics is the absolute refusal to understand anything about entrepreneurship, which is the lynchpin of American economic success. All big businesses started small. That they could start at all, and grow, and make millionaires out of their founders and original investors (and others) is what has enabled the country to expand as it has. And there is no inherent limit to our capacity to continue to do this, as market factors (including inflation, pollution, global warming and other problems) simply provide additional sources of economic opportunity for entrepreneurs. Most entrepreneurs are passionate about solving problems – not making money, contrary to what those who don’t know anything about entrepreneurship think. If you want to make money, it’s a helluva lot easier to make it working for someone else than to start your own business. But the rewards for solving the right problem the right way are tremendous for those who succeed. And that is as it should be.
Taxing all income over $200,000 (for example) is a prescription for failure, and an incentive-killer. Amongst other things. If there are no scholars in entrepreneurship in Obama’s coterie, this ill betides the economics of the country if he is elected.
— Ergum Soloff Jun 10, 07:20 PM #
For Ergum Soloff:
I do concur with you in general on the issues/concerns raised —- and in particular with regards to the entrepreneurs/entrepreneurship aspects put forth by you —- especially given the fact that I have personally had numerous years first-hand experience in this arena —- for besides being involved in start-ups, dealing with small businesses, etc. —- I also worked for several years for a Non-Profit organization (ironically funded by govt. and Fortune 100 corps.), whose primary charter was business development in multiple states, by primarily assisting start-ups and small businesses —- additionally, I also been directly involved in a few start-ups —- and, I have worked for almost 2 decades in both a small and a large corp. (fortune 25 company). —- I do not have an economic background (my academic qualifications are in engineering, business, and law —- ergo, I am not indoctrinated in any particular manner).
Apropos, your comments clearly have merit, and my comments, do warrant some clarification.
1. On business, I believe my position is not just to the right, but to the extreme right, arguably as far as you could possibly go —- given that I am advocating that income taxes be abolished in toto, and sales (net or gross)* be taxed —- it frees up all business (small & large), to make solely business focused decisions devoid of any taxation considerations —- since there are no tax consequences associated with; buying vs. renting or first class vs. coach, or in-house vs. out-sourcing, etc. —- for it is the sales which are taxed. Clearly, this has no bearing on applicable Health, Safety, Environmental, Or Consumer Protection Laws, for none of us want to see chemical dumping, contaminated food, unsafe toys, etc.
*Net vs. Gross sales or something in-between is a nature of business consideration/classification.
The only deduction (or it could be a credit) that I feel a business should be allowed is that for the compensation paid to the employees who are U.S. Citizens/Residents up to a maximum of 5 times the median wages —- there is no restriction on what a company wants to pay, if the company based on business feels its CEO is worth $100 million, then pay him/her —- just don’t pass that cost as a deduction —- which is tab for all taxpayers —- additionally, the reason that I would like the deduction/credit restricted to U.S. Citizens/Residents is simple —- deductions for compensations paid overseas are an indirect form of taxation on the U.S. Citizens —- the govt. still has to provide services domestically, and tend other needs of its citizenry (defence, health, education, etc.), and it does so vide tax revenues —- whilst a business deducts foreign nationals wages (and benefits), the foreign nationals pay no U.S. income taxes on these wages (vs. U.S. citizens who do), nor does the foreign compensation reduce in any way the U.S. govt.’s obligations/costs d vis-à-vis its citizenry’s requirements/expectations.
Note: This has nothing to do with Free Trade per se —- businesses can go and set-up shop anywhere based on business merits/metrics, they simply can’t pass on the cost to the U.S. citizens vide deductions.
2. Mr. Soloff On the issue of taxing income over the $200K figure —- as presented by you, I do tend to agree —- however, if you notice —- the $200k cap removal is solely associated with and limited to Social Security and Social Security taxes alone (which currently has a cap, that Obama wants to raise to $200K) —- additionally, if you look at what I was originally proposing (item c; comment #3) —- you will note it advocates a reduction in the tax rate (clearly something which benefits small businesses, mom and pop shops, entrepreneurial start-ups etc. —- for rarely are the wages paid to the employees in these establishments in excess of $200K —- so all they see is a lowered rate). —- correct me if I am wrong, wouldn’t this ipso facto tax reduction be a benefit rather than burden, in economic terms —- for it helps the entrepreneurial sector allude to by you.
Expounding briefly: The reason to tax social security without a cap is two-fold:
Firstly it addresses the projected monetary shortfalls in the system (the reason for a lowered rate is to avoid creating large surpluses —- which would invariably lead to wasteful govt. spending)
And secondly I view Social Security as primarily being an insurance (not an entitlement) —- essential in meeting basic fundamental needs of those who need it (if not civilization then humanity in my opine merits that). —- this is analogous to a personal perspective, for instance I have paid my homeowners insurance for 30 odd years without a single claim —- the premium I pay helps those who unfortunately are struck by a calamity —- and, I too could find myself in similar circumstances. Some unfortunate souls who depart early never see a dime of their Social Security contributions; others based on long lives see a lot more than they put in.
3. The issue of taxation in my opine faces resentment owing to its lack of fairness (perceived or real is immaterial) —- this could be corrected by addressing fundamentals —- The first dictum: income is income no matter how derived (salary, sale of stocks received as options, sale of property, etc.), and it should be treated as the same (adjusted for inflation of course) —- I feel that the “economist housewife” referred to by original Marci (comment #1), would agree and see income as income irrespective of source, so the same tax treatment of all income is only fair.
4. The next issue in the current taxation (again a personal opinion) is the systems complexity —- the removal of all deductions removes the same. It also is somewhat rooted in “individualistic freedom of choice,” —- in that the right exercised in individual choices are made devoid of tax consequences —- I am installing energy saving devices on merits not energy credits, education cost to meet needs, etc. —- even the subsidy provided to the homeowner versus the renter is removed (for me it is a fairness issue —- why is the taxpayer paying indirectly for my home ownership, and the taxpayer not providing any assistance to the renter?).
The complexity is also simplified when taxes are eliminated at the low-end —- start the zero bracket in relation to the poverty level (see item b; comment #3) —- For those on the left would say what do you do about incomes below the poverty-line, my answer is simple, help them, but remove the complexity (For Instance Line 1 says you are single; line 2 says income below 42K —- Statement reads your taxes are 0. Sign below to certify that your income is $42k or less. Additionally, there are assistance programs to which you may be entitled, these are handled separately so see the attached list and apply directly, etc. etc.).
On the issue of taxation levels, I am for a graduated income-based taxation level —- however, I am not opposed to a flat tax either. Irrespective of whether taxes are flat or graduated, the zero bracket should start at a reasonable level (as stated in b; comment #3), and there should be no deductions period.
The rate of taxation should be the required reasonable needs related in percentage terms first to the govt.’s budget relative to GDP (example Budget = 28% GDP —- GDP is $10 trillion, budget is $2.8 trillion) —- and, then based on fairness/practicality, the tax burden should be allocated to various sources (excise/customs, business, individuals, etc.) —- based on same say Individual taxation are supposed to provide $2 trillion —- this $2 trillion can be derived either by a flat tax or a graduated tax (level of graduation should be related to multiples of median income —- the satisfy the fairness perception).
5. I would like to make a final clarification i.e. The issue of left or right in general —- I believe that I subscribe to neither, for in my opine, on some issues it is the right which is correct and on others it is the left; furthermore, I personally feel that a comprised position (between and right), is not necessarily the correct course of action —- for it could possibly be worse course of action (especially, it accumulates the negatives of each position). —- I personally have some views which are conservative and others which are liberal —- and, I do readily admit my views may be distorted or at odds with what is “correct.” And, I do appreciate not just being corrected with logic. —- but be enlightened with something better.
— zahid Jun 11, 03:37 PM #