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Former Obama Econ Adviser Makes A Convincing Case That Things Could Suddenly Go Bad

imageJoe Weisenthal

Think everything’s fine in the US economy?

Austan Goolsbee — Obama’s former top econ advisor — is not so sure.

In a comment to Ben White’s Morning Money at POLITICO, Goolsbee explains how easily it could all slip away.

‘Unlike in other V-shaped recoveries from recessions, we cannot go back to what we were doing before … We have to shift away from housing and consumption to exporting and investing and that’s a very slow process … And the world has not been tremendously friendly to enabling us to do that. Europeans have fumbled and fumbled their way to negative growth … And China is slowing while the price of gas is going up. There are definitely some clouds. I’m not pessimistic. I’m just guardedly optimistic. … Productivity grows 2 percent a year. So if the growth rate slows to around 2 percent then the job market will stop improving and the unemployment rate will start going back up again. …

Read more at Morning Money >

Alan Krueger A Nightmare On Pennsylvania Avenue

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by Cal Thomas

In advance of a “major speech” on the economy and jobs, President Obama has selected Princeton University professor Alan Krueger to be chairman of the Council of Economic Advisers. Krueger is no relation to the horror film character Freddy Krueger, though if his ideas are implemented, they might further “slash” the economy.

Alan Krueger is the latest in a long line of professors and academics to populate this administration. Few, if any, have held real jobs in the private sector. They are mostly theorists, whose theories are often proved wrong, but in academia, as well as in government, being wrong rarely disqualifies one from a leadership post. Intentions are all that matter.

As an economic theorist, Krueger’s record for accuracy is not a good one and doesn’t produce confidence that adding him to the Obama team will revive an economy in the doldrums.

Krueger, writing for The New York Times blog in 2009, proposed as an object of discussion, instituting a 5 percent consumption, or value added tax (VAT), on top of the income tax, which he said would “raise approximately $500 billion a year, and fill a considerable hole in the budget outlook.” He acknowledged, though, that a consumption tax would “reduce economic activity” and be a “greater burden for the poor, who spend a relatively high share of their income.”

How many of those working in the private sector think government deserves more of our money when it has done such a dreadful job of spending what we have already provided it?

In May 2011, Krueger said he wanted to raise taxes on energy producers (meaning an end to tax breaks for “big oil”), but he assured us that “because the U.S. is such a small producer (of oil), eliminating the subsidy would have very little effect in the long run and no effect in the short run on gas prices.”

America would have more oil if the administration lifted restrictions on drilling in Alaska, the Gulf of Mexico and other places in our backyard. If Krueger thinks raising the cost of energy production by eliminating tax breaks that encourage more exploration would not lead to higher prices, he’s been spending too much time in the faculty lounge.

As if all of these new taxes weren’t enough, Krueger has also said he wants to raise taxes on some employers to help fund unemployment benefits. If employers have to pay more to pay for the unemployed, won’t they be forced to lay off more workers? It becomes a vicious cycle.

Krueger favors a national cap-and-trade program, which he says would produce green jobs. He has claimed the $825 billion stimulus was growing the economy, which can’t be taken seriously given the jump in the unemployment rate from 8.2 percent when the stimulus was passed, to the current 9.1 percent. Previous economic advisers Christina Romer and Jared Bernstein predicted that, after the stimulus, unemployment wouldn’t rise above 8 percent.

As The Washington Post fact checker, Glenn Kessler, noted last week, “Unless the economy turns around in the next 18 months, Obama is on track to have the worst jobs record of any president in the modern era.”

In May 2001, when President George W. Bush had been in office just three months and unemployment was at 4.5 percent, Krueger told Jim Lehrer on PBS, it was hard to find a “silver lining” in the number since “the loss in total employment was almost a quarter of a million jobs” and that it was “quite a grim report.”

Who wouldn’t settle for numbers like that today?

The naming of Krueger is another indication that President Obama is not likely to adjust his “spread the wealth around” philosophy in light of the facts. With the words “fanatic” and “extremist” being applied by liberal Democrats to some of the Republican presidential candidates, the Obama administration continues to engage in economic extremism with its fanatical policies that don’t have a chance of producing jobs in the private sector, much less win congressional approval.

Freddy Krueger terrorized his victims in their dreams. If Alan Krueger has his way, the dreams of too many Americans will soon become nightmares.

Original Article

Alan Krueger Has Some Peculiar Views on Energy Policy

By Daniel Kish

Daniel Kish is the senior vice president for policy at the Institute for Energy Research.

The latest in President Obama’s revolving door of White House Economic Council Chairmen—Dr. Alan Krueger—has some peculiar views on our national energy policy, to say the least.

In his previous capacity as United States Assistant Secretary of the Treasury for Economic Policy and Chief Economist, Krueger testified before the Senate Finance Committee Subcommittee on Energy, Natural Resources and Infrastructure back in 2009 to defend the administration’s budget proposals regarding oil and gas. Krueger began by defining two central tenets to the administration’s environmental and energy policy: (1) that the United States must build a new clean energy economy and reduce greenhouse gas emissions; and (2) that finding more fossil fuels will no longer address our nation’s energy needs.

The logic of this position is elusive, especially if you take a look at the amount of fossil fuels we can recover in the United States with existing technology. According to data from the U.S. Energy Information Administration and the U.S. Geological Survey, relative to current rates of consumption, America has enough oil to power itself for 29 years, enough oil shale for 140 years, enough natural gas for 88 years, and enough coal for a whopping 465 years of use. And that’s just what we could extract today, with existing technology. History shows energy supplies grow geometrically with technological advances, the shale gas revolution being the latest proof. [See a collection of political cartoons on gas prices.]

Nonetheless, according to Krueger’s testimony, what we should really be worried about is the overproduction of oil. In attempting to make the case for why a discriminatory repeal of tax deductions for U.S. oil and gas businesses is a good thing—while leaving this particular deduction for all other U.S. manufacturing and production industries—Krueger exposed his ignorance with the following statement: “To the extent that current tax subsidies encourage the overproduction of oil and natural gas, they divert resources away from other, potentially more efficient investments and they are inconsistent with the Obama administration’s goals to reduce GHG emissions and build a new, clean energy economy.”

Reading that first part, one might think Krueger sounds like a supporter of the free market, bemoaning as he does the diversion of resources to inefficient investments. Alas, Krueger conveniently neglects to mention that in building a “new, clean energy economy,” the federal government provides massive subsidies to green energy technologies that apparently can’t get off—or more importantly, stay off—the ground without taxpayer dollars. If that’s not inefficiency, I don’t know what is, and if you don’t believe me, ask someone from Spain where green energy subsidy programs have contributed to 21 percent unemployment.  Its commitment to renewable energies subsidies has cost the government four times what it had originally budgeted and totals 11 percent of its gross domestic product, while the sovereign debt crises has led to significant doubt that government energy subsidy programs will even be honored.

Ultimately, then, cost-effectiveness isn’t the true end goal for Krueger. In his testimony to the Senate, he stressed the importance of leveling the energy playing field by taking into account nebulous “externalities,” like global climate change, foreign oil dependency, and—wait for it—the costs of traffic congestion. He makes the case for a social conscience when it comes to budget policy, but job losses and increased foreign energy dependence associated with restricting our access to domestic oil and gas resources don’t appear to count. Indeed, he never even addressed how making energy cost more for consumers and making U.S. production of energy uncompetitive with that in foreign countries will help America’s economy or produce jobs. [Read the U.S. News debate: Should offshore drilling be expanded?]

What this all adds up to is a troubling scenario for a president looking to address our nation’s economic and energy troubles. As Chairman of the White House Economic Council, Krueger—renowned for his expertise in labor issues—will ostensibly be expected to advise President Obama on how to get our unemployment situation back on track and bring down gas prices. Proposals like building the Keystone XL pipeline, lifting the Gulf of Mexico “permitorium,” beginning to tap Alaska’s vast energy resources, and opening up a bit more than 4 percent of government lands for energy exploration stand out as ways to create jobs, attract investment and bring prices down almost immediately.

It’s doubtful that Krueger will be suggesting these ideas to the president, though. Not only did he lead the charge to repeal the aforementioned tax deductions—a proposal that the administration has recently revived in budget talks—but Krueger also advocated for a new excise tax on offshore oil and gas and the national cap-and-trade program, which was nothing more than a new tax on energy use. Affordable energy is like fertilizer for an economy, but taxing it to make it more expensive is like sowing salt in a field. [Read: How Much Oil is There?]

Had these proposals become law in 2009, the impacts would have been disastrous for U.S. energy security and the economy. Let’s hope the President conditioned Krueger’s appointment on him reversing his previous policies.

Original Article

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