February 25, 2004

Missing Follow-Up Question

It was funny over the past week and a half to watch Treasury Secretary John Snow, Commerce Secretary Don Evans, Press Secretary Scott McClellan, and George W. Bush decline to endorse their own macroeconomic forecast--they ran from it as if it were a highly poisonous reptile, in a spectacle that the National Journal's Stan Collender described as an "extremely rapid (indeed, almost unprecedented) backing off from an important projection in an official report... only the latest in what has become a steady series of embarrassing gaffes from the White House's budget and economic team."

But one thing disappointed me. No reporter asked the natural follow-up question:

Mr. Secretary, the macroeconomic forecast you have just declined to endorse underlies all of Treasury's and OMB's budget estimates. Are you also saying that you decline to endorse the numbers in the administration's budget, and that those numbers are now inoperative as well? If not, then how can you endorse the budget number without endorsing the forecast it is built on?

Posted by DeLong at February 25, 2004 07:51 AM | TrackBack | | Other weblogs commenting on this post
Comments

Waiting for American reporters to ask pertinent follow-up questions is an excellent perscription for enraged burn-out.

I stopped having expecations--any of them--for those traitors. They couldn't print the truth to save their lives. I'm not kidding.

Yeah so I read the Daily Howler every day and sat through too many Game 5's for the A's. It's still true.

Posted by: paradox on February 25, 2004 08:06 AM

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"The President Supports an amendment to ban gay marriage. This should introduce significant cost savings which are not reflected in current data, but which we are confident will materialize."

Posted by: Stirling Newberry on February 25, 2004 08:16 AM

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The obvious conclusion:

"They are flying blind."

Then again, it does not matter. Regardless of the numbers, the administration policy would be the same.

Posted by: bakho on February 25, 2004 08:46 AM

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How about tax cuts for gays who don't get married? Tax cuts are the answer to everything!

Interesting Dem presentation on the budget deficit:

http://www.house.gov/budget_democrats/pres_budgets/fy2005/presbud_packet.pdf

Posted by: Kosh on February 25, 2004 08:59 AM

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http://www.nytimes.com/aponline/business/AP-Greenspan-Budget.html?hp

Greenspan Urges Cuts to Social Security to Rein In Deficit

WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan urged Congress on Wednesday to deal with the country's escalating budget deficit by cutting benefits for future Social Security retirees rather than raising taxes.

In testimony before the House Budget Committee, Greenspan said the current deficit situation, with a projected record red ink of $521 billion this year, will worsen dramatically once the baby boom generation starts becoming eligible for Social Security benefits in just four years.

He said the prospect of the retirement of 77 million baby boomers will radically change the mix of people working and paying into the Social Security retirement fund and those drawing benefits from the fund.

``This dramatic demographic change is certain to place enormous demands on our nation's resources -- demands we will almost surely be unable to meet unless action is taken,'' Greenspan said. ``For a variety of reasons, that action is better taken as soon as possible.''

Posted by: anne on February 25, 2004 09:12 AM

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Just so I understand, Alan Greenspan was a short while ago wanring us against a budget surplus that was large enough to devour Kansas. There had to be tax cuts cuts cuts to finish off the dread surplus. Now, the problem is a deficit that will devour Kansas and there must be cuts cuts cuts in social benefits promises that have lasted from the days of Franklin Roosevelt.

Why am I not surprised?

Posted by: anne on February 25, 2004 09:26 AM

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Well, we know where some of the low productivity jobs the forecast was saying would happen - all the old people who are going to have to go back to work, and all of the people who will have to take second jobs to pay for their retirement.

Wage slavery as fixing the jobs problem. Now why didn't FDR think of that?

Probably because Adolf Hilter did.

Posted by: Stirling Newberry on February 25, 2004 10:03 AM

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The new supply-side economics - we can cut tax rates and have more revenues even if economic activity does not increase. Wait, that's the old supply-side economics.

Posted by: Harold McClure on February 25, 2004 10:04 AM

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SN - Please remember the rule about breaking the argument chain.

Posted by: jd on February 25, 2004 10:07 AM

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Was merely giving a very snarky elaboration to Anne's point that there is something deeply perverse about the current economic policy team. As for "low wage, low unemployment" expansions based on artificial expansion of the money supply being the policy of 1930's Nazi Germany I refer you to the work of Peter Temin on the relative fiscal and monetary policies of the America and Germany.

Posted by: Stirling Newberry on February 25, 2004 10:22 AM

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Anne: Why am I not surprised?

Me: because you know enough about Ayn Rand? :-)

Can you imagine the horror of living in a country that has accumulated enough assets to offer some social security and other services without having to tax anyone? Yek! That would be like having a state that's run like a Foundation for National Welfare. Arghhhhh! Not that the US was even getting anywhere close to that horror anyway... We has just begun backpeddaling away from a paradise where everyone is paying taxes to cover the interest payments to the proud owners of the US federal debt...

Posted by: Jean-Philippe Stijns on February 25, 2004 10:43 AM

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The rich own the world, the rest of us should be happy to pay them rent so that they can create jobs where we only have to borrow a little bit every month to pay the rent...

Posted by: Stirling Newberry on February 25, 2004 10:49 AM

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Jean-Philippe and Sterling

Snarky and clever have a place. These are curious times.

Posted by: anne on February 25, 2004 12:26 PM

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NY Times Quotes DeLong on Mankiw Forecast Endorsements

http://www.nytimes.com/2004/02/26/business/26mankiw.html

J. Bradford DeLong, a professor of economics at the University of California at Berkeley, called the forecast "ludicrously optimistic." But Mr. Mankiw, he added, does not bear all the blame. The Treasury Department and the Office of Management and Budget signed off on the forecast - until they disavowed it.

=====================================
Economics Adviser Learns the Principles of Politics
By EDMUND L. ANDREWS

Published: February 26, 2004
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"The administration's problem is that it hasn't decided how to handle the political attacks that the opposition is making," Mr. Hassett said. "They are all panicked. They are terrified of saying anything."

Mr. Mankiw "said what economists tend to say," said Allen Sinai, economist at Decision Economics, but "he missed the highly political nature of speech, and he is stuck in the middle of the political season."

Even economists sympathetic to Mr. Mankiw on trade issues have been critical of his prediction that the nation will add 2.6 million jobs in 2004 - in effect, about 320,000 jobs a month.

The actual rate of job creation has been less than 100,000 jobs a month since last fall, and the consensus view among forecasters surveyed by the Federal Reserve Bank of Philadelphia is that the rate will be only 91,000 jobs a month for 2004.

J. Bradford DeLong, a professor of economics at the University of California at Berkeley, called the forecast "ludicrously optimistic." But Mr. Mankiw, he added, does not bear all the blame. The Treasury Department and the Office of Management and Budget signed off on the forecast - until they disavowed it.

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