April 23, 2024
Your Online Source of Global Business News
Stephen Case, the co-founder of AOL, speaks with Catherine Rampell on job creation and entrepreneurship. Mr. Case serves on the President’s Council on Jobs and Competitiveness.
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Exxon Mobil, the largest U.S. oil company, also said that its capital and exploration expenditures of $26.7 billion for the first nine months of the year represented a record, as the company attempted to take advantage of the nearly 50 percent rise in oil prices from a year ago.
Profits so far have been strong across the oil patch, but it may be difficult to sustain the improvement in the next quarter over last year. Oil prices have eased since the spring, when turmoil in Libya took 1.3 million barrels of crude off world markets.
Now that Libya’s rebels have taken power, exports from that country are beginning to flow again. Prices for oil and natural gas in the coming months will depend on the strength of the world economy, which remains uncertain.
Exxon Mobil reported that its net income rose to $10.33 billion in the three months through September, from $7.35 billion a year earlier, helped by the increase in oil prices.
“We continue pursuing new opportunities to meet growing energy demand while supporting economic growth, including job creation,” said Rex. W. Tillerson, ExxonMobil’s chairman, in a statement.
Net income at Shell, the biggest oil company in Europe, rose to $6.98 billion in the three months through September from $3.46 billion in the same period a year earlier.
“Shell did a lot better than expected, but Exxon came roughly in line,” said Fadel Gheit, senior oil analyst at Oppenheimer Co. “Shell had higher than expected production and better than expected refining and chemical results. Exxon had lower than expected production, and lower refining and chemical results.”
Shell’s chief executive, Peter Voser, said in a statement, “We are making good progress against our targets, to deliver a more competitive performance.
Mr. Voser said Shell was moving ahead with its plan to focus on its most valuable assets and invest in new projects to ensure continued production. Shell has completed $6.2 billion of assets sales so far this year, $1.8 billion of that in the third quarter, when the company sold the Stanlow refinery in Britain for $1.2 billion. Shell had planned to raise $5 billion from asset sales this year.
New project starts in Qatar and Canada helped production levels, Shell said. The projects are part of more than 20 new operations planned until 2014 as part of a $100 billion investment program.
The earnings for Shell beat forecasts of an average $6.61 billion of a group of analysts polled by Reuters.
On Tuesday, BP reported earnings that also beat analyst expectations and said it expected production to grow.
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The White House, after dismissing a similar proposal late last year, left the door open to backing the plan. “We are open to different ways of paying for the very important broadly supported measures in the American Jobs Act that would grow the economy and create jobs,” said the press secretary, Jay Carney.
The new plan, devised by the Senate majority leader, Harry Reid, Democrat of Nevada, has a twofold purpose: to draw a sharp contrast with Congressional Republicans, who have dug in against any increases in tax rates, and to quell a revolt brewing among some Democrats who objected to parts of the White House plan.
Mr. Reid said the surtax would raise $445 billion over 10 years, just about the amount needed to pay for the jobs bill, though it appears unlikely it could make it through Congress.
The proposal, he said, would “have the richest of the rich pay a little bit more” — specifically, “5 percent more to fund job creation and ensure this country’s economic success.”
Mr. Reid’s proposal was to have taken effect in 2012. The White House suggested a one-year delay. Mr. Reid agreed. On Wednesday night, his office announced a change, saying: “The millionaires’ surtax will now take effect in 2013, not 2012. The surtax rate is also changed, to 5.6 percent from 5 percent.”
Many economists predict that the economy will still face serious problems, including high unemployment, in 2012, an election year. Mr. Reid made clear that he thought his party would gain a political advantage from the proposal.
“It’s interesting to note that independents, Democrats and Republicans and even the Tea Party agree it’s time for millionaires and billionaires to pay their fair share of taxes,” Mr. Reid said Wednesday.
The plan, pushed by Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, comes after Mr. Obama earlier proposed a “Buffett Rule” that would force wealthy Americans to pay more in taxes. It also comes against a backdrop of protests against Wall Street, giving Democrats hope they can tap into some of that sentiment in next year’s elections.
Indeed, the Democratic proposal seems more about politics than policy. Even if wavering Democrats could be rounded up to support the president’s plan, Senate Republicans could block the proposal by denying Democrats the votes needed to overcome a near-certain filibuster.
Republicans, who control the House, scorned the new proposal.
In an interview with Bloomberg Television, the House majority leader, Representative Eric Cantor, Republican of Virginia, said: “Here we go again, continued insistence in Washington — raise taxes on job creators right now. That’s not what we need. Most people in America think it’s counterintuitive to raise taxes if you want economic growth.”
Details of the surtax proposal are still being worked out.
Congressional aides said it would probably work this way: The government would collect an additional tax equal to 5.6 percent of the amount of income exceeding $1 million. So for a person with income of $1.1 million, the extra tax would be $5,600, which is 5.6 percent of $100,000. Estimates from the Congressional Joint Committee on Taxation indicate that 330,000 households have more than $1 million of income, broadly defined.
The proposed surtax would apply to wages and salaries, capitals gains, interest, dividends and some other types of income, Congressional aides said.
Public opinion polls suggest some support for the Democrats’ approach.
In a recent CBS News poll, 64 percent of people said taxes should be increased on households earning $1 million a year or more and 30 percent said the government should address the budget deficit without increasing taxes on those households. Only a quarter said this tax increase would help job creation, 18 percent said it would hurt job creation and about half said it would not make a difference.
Jennifer Steinhauer contributed reporting.
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Nothing distinguishes them from the other workers at the Jefferson North plant, except their paychecks.
The newest Chrysler workers earn about $14 an hour, compared with double that amount for longtime employees on the same shift. With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries.
For many, the opportunity for steady employment is welcome, even at a lower wage.
“Everybody is appreciative of a job and glad to be working,” said Derrick Chatman, who makes $14.65 an hour putting tires on Jeeps after being laid off at Home Depot, working odd construction jobs and collecting unemployment.
What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here, and it froze the list after receiving 10,000 applications.
The companies say the two-tier wages are paying off. Despite the disparity, there is no appreciable difference in the Grand Cherokees produced on the shift dominated since last fall by the lower-paid workers, the plant manager says. At General Motors, the savings from its two-tier workers are crucial to production that began last month of an inexpensive, subcompact car, the Chevrolet Sonic, in suburban Detroit.
Two-tier wage systems have been tried in the airline industry and others with spotty success. Usually the lower wages disappear rather quickly when the economy picks up. But the arrival of vastly different wage rates in auto factories is a seminal event in an industry long influenced by a powerful union devoted to equal pay regardless of seniority.
The new jobs, which are seen as long term, are being watched closely by economists, executives in other industries and Washington policy makers eager to increase employment in manufacturing and other areas.
“This is not going away,” said Kristin Dziczek, a labor analyst at the Center for Automotive Research in Ann Arbor, Mich., a research organization. “It has allowed the Big Three to reduce labor costs without cutting the pay of incumbent workers. Is it good for the health and competitiveness of the companies? Yes. And is that good for job security? Yes.”
Four years ago, the United Automobile Workers agreed to allow Chrysler, G.M. and Ford to pay lower wages to new hires to help close the cost gap with foreign carmakers. Now the two-tier arrangement is at the forefront of labor talks between the U.A.W. and the Detroit companies.
The union’s president, Bob King, has made an increase in entry-level wages a top priority in negotiations for a new national contract to replace the current agreement, which expires on Wednesday.
So far, about 12 percent of Chrysler’s 23,000 union workers earn the lower wage, and over all, 4,000 or so of the 112,000 U.A.W. members are second-tier hires. Those numbers are expected to grow — and in fact can increase significantly even under the current contract. The jobs are central to the contract talks now because they are viewed as a critical element of the industry’s continued recovery.
The benefits for the lower-tier workers are scaled back as well. They get a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.
The gap in wages between regular and entry-level workers has created some dissent in the U.A.W.’s ranks. Some long-term employees have demonstrated against the two-tier system and called for it to be abolished. Mr. King, however, has focused on getting meaningful pay raises for the lower tier rather than eliminating it.
At the big Labor Day parade in Detroit, union activists chanted “equal pay for equal work,” and some full-paid workers said they were willing to forgo a wage increase in the new contract to help the lower-tier employees.
Nick Bunkley contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=f321e8559bbe962eabf896bd60e31359
A group of at least 57 prominent business executives and former government officials have signed a petition in support of a greater deficit reduction, which they are to release at a news conference on Monday. Among them are former treasury secretaries, budget directors and economic advisers to eight presidents from Richard M. Nixon to Mr. Obama; former Congressional leaders; and executives of top companies.
Their letter reflects a broad sense of urgency in both parties, and among economists and businesses, that the nation must put in place long-range measures to shrink future deficits. At current spending levels, those deficits are expected to balloon over the next decade as the population ages and as health care costs rise.
The letter does not call for short-term job-creation measures like the tax cuts and infrastructure spending Mr. Obama proposed last week, which would add to deficits initially. Even so, many of the signers, liberals and conservatives, have called for such steps.
The petition does include what has fast become a catchphrase for those who believe Congress is thinking too small. “We urge you to ‘go big,’ ” they wrote, “and develop a large-scale debt-reduction package sufficient to stabilize the debt as a share of the economy.”
Generally that level is estimated at $4 trillion in deficit reductions over the decade, savings that would build in later years. Because Congress and Mr. Obama already agreed last month to nearly $1 trillion in reductions in so-called discretionary spending for social and military programs, the special committee would have to find more than $3 trillion more to meet that goal — double its mandate for $1.2 trillion to $1.5 trillion, written into the August deficit-reduction deal.
Mr. Obama has called for a goal of at least $2 trillion, though the extra savings would mostly offset the up-front costs of his new $447 billion stimulus plan.
A higher deficit-reduction goal would increase pressure on both parties to address the two main drivers of projected high debt: the rapid growth of spending for the Medicare and Medicaid programs and an inefficient tax system unable to keep pace. That would test Republicans’ opposition to raising any tax revenues from high-income individuals and corporations, and would challenge Congressional Democrats to agree to more savings from entitlement programs than they would like.
Yet it is the parties’ differences on taxes and government health care benefits that have many in the White House, Congress and outside groups skeptical that the 12-member panel, which is split evenly between Republicans and Democrats and House and Senate members, can reach agreement even on the lesser goal.
Several signers of the letter said they had no illusions that their appeal alone would persuade many lawmakers, especially Republicans, to compromise. And while Congressional Democratic leaders have indicated that they would follow Mr. Obama in backing a compromise, many Democrats fear that doing so would undercut their ability to attack Republicans in 2012 for their proposals to remake and shrink Medicare and Medicaid.
The threshold of $4 trillion was first suggested in December by a majority of the fiscal panel that Mr. Obama established in 2010, led by Alan K. Simpson, a former Senate Republican leader, and Erskine B. Bowles, a former chief of staff to President Bill Clinton. Both men signed the letter.
“That is not a number that people just made up because the No. 4 bus just drove by,” Mr. Bowles said in an interview. “It’s the minimum amount we need to do in order to stabilize the debt and put it on a downward path as a percent of G.D.P.”
The public debt amounted to 62 percent of the nation’s gross domestic product last year and is projected to reach 77 percent of economic output by 2021.
Other signers include George P. Schultz, a former secretary of labor, treasury and state; Martin Feldstein and Murray L. Weidenbaum, top economic advisers to President Ronald Reagan; and the first chairman of Mr. Obama’s Council of Economic Advisers, Christina D. Romer.
The businesspeople include David M. Cote, the chairman of Honeywell International and a Republican on the Bowles-Simpson commission, and Marne Obernauer Jr., chairman of the Beverage Distributors Company and an owner of the Colorado Rockies baseball team.
The letter writers did not recommend how to reduce deficits, acknowledging that they had “differences of opinion.” But their letter, which was organized by the Committee for a Responsible Federal Budget at the New America Foundation, a centrist research group, makes clear that the solution should include spending and tax changes.
“We believe that a go-big approach that goes well beyond the $1.5 trillion deficit reduction goal” should include “major reforms of entitlement programs and the tax code,” they wrote.
Republican leaders have not joined Mr. Obama in seeking a higher goal. After a Rose Garden event on Monday, Mr. Obama will send Congress his jobs bill and long-term deficit cuts to offset its cost; next week he will propose another $1.5 trillion in deficit reductions to the committee.
“We’re certainly open to hearing the president’s ideas,” said Michael Steel, a spokesman for Speaker John A. Boehner.
The Senate Republican leader, Mitch McConnell of Kentucky, said last week: “I’m not going to prejudge what the joint committee might do. It has a broad array of options. But its goal, obviously, is to do something significant about deficit reduction with a floor of between $1.2 trillion and $1.5 trillion over 10 years.”
He added, “We’ll see whether they can even go beyond that.”
The committee is to report by Nov. 23, and Congress must hold an up-or-down vote by Dec. 23.
“Is it 50-50 that they’ll do something big and bold? No,” Mr. Bowles said. “But I think there’s a real chance. There are a lot of people on that committee, Republicans and Democrats, that I’ve talked to personally that want to do something big.”
Article source: http://feeds.nytimes.com/click.phdo?i=c3321c0f178d4ae2c49fdf1b691c857f
The economy is in bad shape. Technically, the recession ended in June 2009, and since then the economy has been recovering. But it doesn’t feel that way to many Americans. Things have stopped getting worse, but they have not gotten much better. The recovery has been so meager that unemployment lingers at historically high levels.
The disappointing news about job creation is closely linked to lackluster growth in G.D.P. Economists call the relationship between growth and unemployment “Okun’s Law,” after Arthur Okun, who studied it in the 1960s. In essence, Okun’s Law says that to reduce the unemployment rate, we need for gross domestic product to grow by more than its long-run average rate of about 3 percent. So far in 2011, the growth rate has been less than 1 percent.
The most volatile component of G.D.P. over the business cycle is spending on investment goods. This spending category includes equipment, software, inventory accumulation, and residential and nonresidential construction. And the recent economic downturn offers this case in point about the problem: From the economy’s peak in the fourth quarter of 2007 to the recession’s official end, G.D.P. fell by only 5.1 percent, while investment spending fell by a whopping 34 percent.
The subpar recovery has coincided with a historically weak investment recovery. Compare our recent experience with that of the early 1980s, when the nation last experienced a deep economic downturn in which unemployment topped 10 percent. That recession ended in the fourth quarter of 1982. In the subsequent two years, investment spending grew by a total of 54 percent. By contrast, in the first two years of this recovery, it grew by half that amount.
While the sluggish housing market can explain the slow pace of residential investment, it is not the whole story. Business investment has also been weak. Over the last two years, nonresidential fixed investment has grown by only 12 percent, whereas during the two years after the 1982 recession, it grew by 27 percent. Similarly, the narrow category of spending on business equipment and software fell more than twice as much in this recession as it did in the 1982 recession, and it has been slower to recover.
So much for what we know for sure. Now comes the hard part: what to make of these facts.
Advocates of traditional fiscal stimulus often view low levels of investment as a symptom, rather than a cause, of the weak recovery. Businesses are reluctant to invest, they argue, because they lack customers eager to spend. If the government can goose demand by handing out dollars to households short on cash, or by buying goods and services directly, businesses will respond by expanding their own spending as well.
Yet fluctuations in investment spending, rather than being only a passive response, are also one of the driving forces of the booms and busts of the business cycle. The great economist John Maynard Keynes suggested that investment spending is in part determined by the “animal spirits” of investors, which he described as “a spontaneous urge to action rather than inaction.” Recessions occur when optimism turns to pessimism, and businesses are reluctant to place bets on a prosperous future. Recovery occurs when investor confidence returns.
To be sure, both points of view may well be true. The relationship between investment and the overall economy is what an engineer would call a positive feedback loop. Greater business investment would increase hiring, both by those who produce the investment goods and those who buy them. Greater employment would mean more workers taking home paychecks, which in turn would increase the overall demand for goods and services. When businesses saw more customers coming through their doors, they would then increase investment spending yet again.
WHAT can policy makers do to stoke animal spirits and encourage businesses to invest?
One obvious step would be a cut in the taxation of income from corporate capital. According to a 2008 study by the Organization for Economic Cooperation and Development, “Corporate taxes are found to be most harmful for growth.” Tax reform that reduced the burden on capital income and shifted it toward consumption would improve prospects for long-run growth and, in so doing, encourage greater investment today.
Yet it would be overly optimistic to think that any single public policy, by itself, could lead to the kind of robust investment spending seen in previous recoveries. Myriad government actions influence the expected future profitability of capital. These include not only policies concerning taxation but also those concerning trade and regulation.
For example, passing the free trade agreement with South Korea, which has languished in Congress more than four years after first being negotiated, would be a step in the right direction. So would reining in the National Labor Relations Board; its decision to block Boeing from opening a nonunion plant in South Carolina may have been hailed by organized labor, but it surely did not hearten investors.
Economists often rely on the convenient shortcut of separating long-run and short-run issues. Recessions are then viewed as short-run problems that require short-run solutions. That approach, however, may be simplistic. Lack of investment spending is a large part of the economy’s current difficulties, but capital investments are always made with an eye toward the future.
The best fix for our short-run problems may be to focus on policies that will foster long-run growth as well.
N. Gregory Mankiw is a professor of economics at Harvard. He is advising Mitt Romney, the former governor of Massachusetts, in the campaign for the Republican presidential nomination.
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WASHINGTON — The Obama administration is seeking to broaden access to a two-year-old refinancing program that has helped far fewer homeowners take advantage of low interest rates than initially expected.
President Obama announced the effort Thursday night as part of his package of measures to spur job creation, saying it would help “responsible homeowners” by reducing their monthly mortgage payments, and bolster the economy as they spent the money on other things instead.
“I know you guys must be for this,” Mr. Obama told a joint session of Congress, “because that’s a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.”
The Home Affordable Refinance Program was set up to help homeowners who cannot qualify for loans from private companies. The government-owned companies Fannie Mae and Freddie Mac agreed to offer loans at lower rates to borrowers with mortgage debts up to 125 percent of the value of their homes.
The administration had predicted that millions of homeowners would benefit, but through the end of June, the companies refinanced only 838,000 mortgages. Falling home values reduced the numbers of eligible borrowers. So did strict income requirements that excluded people even if they had never missed a mortgage payment. And large fees exceeded the potential available savings in some cases.
Administration officials said Friday that they were examining a range of issues and hoped to complete new guidelines in the next few weeks.
Economists, including the Federal Reserve chairman, Ben S. Bernanke, see the poor housing market as a crucial reason the economy is not growing faster. Business interests and consumer advocates have pressed the White House for grand plans, arguing that the economy will not fully recover as long as the housing market is depressed.
But some of the president’s key advisers worry that efforts to aid struggling homeowners will infuriate people who do not need help, and the memory remains fresh in Washington that the Tea Party movement began as an angry response to a mortgage aid program.
The modest proposal this week to expand the refinancing program emerged from months of deliberations. Just two sentences about it were included in the speech after an internal debate, and Mr. Obama was careful to say that the plan was aimed at “responsible homeowners.”
He also proposed investing $15 billion to rehabilitate vacant and foreclosed properties, creating construction jobs and helping to refresh blighted neighborhoods.
While most of Mr. Obama’s stimulus plan requires the consent of Congressional Republicans, expanding the refinancing program must instead be negotiated with the Federal Housing Finance Agency, the independent guardian of Fannie and Freddie.
The agency is charged with limiting losses at the two companies, which fall to taxpayers, and it has resisted some ideas that could increase those losses.
But Edward J. DeMarco, the agency’s acting director, said Friday in a statement that he shared the administration’s desire to expand the program because broadening eligibility might benefit both homeowners and the companies, by limiting defaults.
“The final outcome of this review remains uncertain, but F.H.F.A. believes this undertaking is worthwhile and consistent without our conservator responsibilities,” Mr. DeMarco said.
The financial implications depend on the particulars. In a recent paper, however, the Congressional Budget Office said Fannie and Freddie could refinance an additional 2.9 million loans without significantly increasing taxpayers’ liability.
The office calculated that such a program would save homeowners about $7.4 billion in the first year and help about 111,000 of those homeowners avoid default. It said the cost to the government would be about $600 million, because the loss of revenues from future interest payments on the refinanced loans would exceed the savings from reducing defaults.
Louise Story contributed reporting.
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Republicans and business groups say yes, arguing that environmental protection is simply too expensive for a battered economy. They were quick to claim victory Friday after the Obama administration abandoned stricter ozone pollution standards.
Many economists agree that regulation comes with undeniable costs that can affect workers. Factories may close because of the high cost of cleanup, or owners may relocate to countries with weaker regulations.
But many experts say that the effects should be assessed through a nuanced tally of costs and benefits that takes into account both economic and societal factors. Some argue that the costs can be offset as companies develop cheaper ways to clean up pollutants, and others say that regulation is often blamed for job losses that occur for different reasons, like a stagnant economy. As companies develop new technologies to cope with regulatory requirements, some new jobs are created.
What’s more, some economists say, previous regulations, like the various amendments to the Clean Air Act, have resulted in far lower costs and job losses than industrial executives initially feared.
For example, when the Environmental Protection Agency first proposed amendments to the Clean Air Act aimed at reducing acid rain caused by power plant emissions, the electric utility industry warned that they would cost $7.5 billion and tens of thousands of jobs. But the cost of the program has been closer to $1 billion, said Dallas Burtraw, an economist at Resources for the Future, a nonprofit research group on the environment. And the E.P.A., in a paper published this year, cited studies showing that the law had been a modest net creator of jobs through industry spending on technology to comply with it.
The question of just how much environmental regulation hurts jobs is a particularly delicate one as leaders in Washington debate the best ways to address the nation’s stubbornly high unemployment rate. As President Obama prepares for an important speech on Thursday focusing on job creation, Republicans are pushing for a rollback in environmental regulations that they say saddle companies with onerous costs that curtail jobs without leading to significant improvement in environmental or public health.
Part of the problem in evaluating the costs of regulation is that there have been few systematic studies of such costs after regulations are imposed.
“Regulations are put on the books and largely stay there unexamined,” said Michael Greenstone, an economist at the Massachusetts Institute of Technology. “This is part of the reason that these debates about regulations have a Groundhog’s Day quality to them.”
Mr. Greenstone has conducted one of the few studies that actually measure job losses related to environmental rules. In researching the amendments to the Clean Air Act that affected polluting plants from 1972 and 1987, he found that those companies lost almost 600,000 jobs compared with what would have happened without the regulations.
But Mr. Greenstone has also conducted research showing that clean air regulations have reduced infant mortality and increased housing prices, and indeed many economists argue that job losses should not be considered in isolation. They say the costs of regulations are dwarfed by the gains in lengthened lives, reduced hospitalizations and other health benefits, and by economic gains like the improvement to the real estate market.
Business groups also tend to cite regulation even if other factors are involved, critics say. The cement industry is currently warning that as many as 18 of the 100 cement plants currently operating in the United States could close down because of proposed stricter standards for sulfur dioxide and nitrogen oxide emissions, resulting in the direct loss of 13,000 jobs.
An E.P.A. analysis of the proposed rules projects a much smaller effect, ranging from as few as 600 jobs lost to 1,300 jobs actually added in companies that make cleaner equipment.
Some cement plants could be at risk simply because of the economy. With the housing market on its knees, demand for cement is down by about 40 percent from its prerecession peak. According to Andy O’Hare, vice president for regulatory affairs at the Portland Cement Association, a trade group, about a third of the cement plants in the country are being shut off every other month.
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Among the stimulus policies Mr. Obama is considering is a temporary tax credit for employers adding to their work force, an idea that Mr. Krueger championed in his earlier stint in the administration. Mr. Krueger was an assistant secretary and chief economist at the Treasury Department for 17 months, before he returned to teaching at Princeton in 2010.
A more modest version of the hiring credit became law, but Congressional Republicans blocked its extension last year.
Mr. Krueger, if confirmed by the Senate, will find Republicans a force to be reckoned with against the sorts of ideas he is associated with, including a higher minimum wage. Republicans have taken control of the House since he left Washington, and party leaders say they will oppose further stimulus measures. Their focus is on spending cuts, despite widespread calls from economists, including the chairman of Federal Reserve, Ben S. Bernanke, for a more expansive fiscal policy in a period of weak economic growth and stubbornly high unemployment.
Mr. Obama, in a speech planned for next week, will call for both temporary tax cuts and spending measures to spur hiring in the short term, and also long-term steps to reduce spending and raise revenue once the economy fully recovers. But in nominating Mr. Krueger, with his expertise in policies that affect job creation, Mr. Obama passed over some economists better known for deficit reduction policies, including Alan J. Auerbach of the University of California, Berkeley.
The choice of Mr. Krueger more broadly reflects Mr. Obama’s desire to strike a balance between job creation and deficit reduction after months in which Congressional Republicans successfully forced action only on spending cuts. Mr. Krueger, who first joined the administration amid the recession, helped design other early stimulus proposals, including the “cash for clunkers” rebate for new-car purchasers, the Build America Bonds program to finance infrastructure projects and a credit fund for small businesses.
“As one of this country’s leading economists, Alan has been a key voice on a vast array of economic issues for more than two decades,” Mr. Obama said. “Alan understands the difficult challenges our country faces, and I have confidence that he will help us meet those challenges as one of the leaders on my economic team.”
The ability to win confirmation in the Senate was a consideration; Mr. Krueger was confirmed for his prior post with the Treasury. But the chairmanship of the Council of Economic Advisers is a higher position, and Republicans have become more aggressive about blocking nominees to demonstrate their opposition to White House policies generally. Mr. Obama’s pick for the commerce secretary, John E. Bryson, remains in limbo three months after his nomination.
If confirmed, Mr. Krueger, who turns 51 next month, would replace a longtime Obama adviser, Austan Goolsbee, who returned to the University of Chicago for the academic year. Mr. Krueger “is going to be able to hit the ground running immediately,” Mr. Goolsbee said. “And B, he’s a world-class, respected researcher on job market policies, job creation and things of that nature. So in that sense he’s a perfect match to the moment,” Mr. Goolsbee said.
Mr. Krueger would be the second former adviser to the Treasury secretary, Timothy F. Geithner, to take one of the four positions at the core of Mr. Obama’s economic circle; the other is Gene B. Sperling, a former Treasury counselor who replaced Lawrence H. Summers as director of the National Economic Council at the White House. That Mr. Geithner has two former underlings on Mr. Obama’s economic team is further evidence of his influence as the sole remaining member of the president’s original economic team.
It also reflects Mr. Obama wish for a collegial economic team after the fractiousness in his first two years, which were marked by tension especially between Mr. Summers and the former White House budget director, Peter R. Orszag. Then, Mr. Summers questioned the likely effectiveness and cost of the job credit proposal associated with Mr. Krueger, administration officials say.
Mr. Orszag was a student of Mr. Krueger’s at Princeton, where Mr. Krueger began teaching in 1987.
Article source: http://www.nytimes.com/2011/08/30/business/krueger-chosen-to-lead-economic-council.html?partner=rss&emc=rss
Among the stimulus policies that Mr. Obama is considering is a temporary hiring tax credit for employers who add to their work force, an idea that Mr. Krueger championed in his earlier stint in the administration. Mr. Krueger was as an assistant secretary and chief economist at the Treasury Department for 17 months, before he returned to his teaching post at Princeton in 2010.
A more modest version of the hiring credit became law but Congressional Republicans blocked its extension last year.
Mr. Krueger, if confirmed by the Senate, will find Republicans even more of a force to be reckoned with against the sorts of ideas he is associated with, including a higher minimum wage. Republicans took control of the House since he left Washington, and party leaders say they will oppose further stimulus measures. Their focus is on cutting spending, despite widespread calls from economists, including the Federal Reserve chairman, Ben S. Bernanke, for a more expansive fiscal policy in a period of weak economic growth and stubbornly high unemployment.
Mr. Obama, in a speech planned for next week, is expected to call for both temporary tax cuts and spending measures to spur hiring in the short term, and long-term steps to reduce spending and raise revenues once the economy fully recovers. But in nominating Mr. Krueger, with his expertise in policies that affect job creation, Mr. Obama passed over some economists better known for deficit reduction policies, including Alan J. Auerbach of the University of California, Berkeley.
The choice of Mr. Krueger reflects Mr. Obama’s policy preferences to strike a balance between job creation and deficit reduction after months in which Congressional Republicans successfully forced action only on spending cuts. Mr. Krueger, who first joined the administration amid the recession, helped design other early stimulus proposals, including the “cash for clunkers” rebate for new car purchasers, the Build America Bonds program to finance infrastructure projects and a credit fund for small businesses.
“As one of this country’s leading economists, Alan has been a key voice on a vast array of economic issues for more than two decades,” Mr. Obama said. “Alan understands the difficult challenges our country faces, and I have confidence that he will help us meet those challenges as one of the leaders on my economic team.”
The ability to win confirmation in the Senate was a certain consideration; Mr. Krueger was successfully confirmed for his prior Treasury post. But the chairmanship of the Council of Economic Advisers is a higher position, and Republicans have become more aggressive about blocking nominees to demonstrate their opposition to White House policies generally. Mr. Obama’s pick for Commerce secretary, John Bryson, remains in limbo three months after his nomination.
If confirmed, Mr. Krueger, who turns 51 next month, would replace the longtime Obama adviser Austan Goolsbee, who returned to the University of Chicago for the academic year. Mr. Krueger “is going to be able to hit the ground running immediately,” Mr. Goolsbee said. “And B, he’s a world-class, respected researcher on job-market policies, job creation and things of that nature. So in that sense he’s a perfect match to the moment.”
Mr. Krueger would be the second former adviser to Treasury Secretary Timothy F. Geithner to take one of the four positions at the core of Mr. Obama’s economic circle; the other is Gene Sperling, a former Treasury counselor who replaced Lawrence H. Summers as director of the White House National Economic Council. With Mr. Krueger and Mr. Sperling, Mr. Geithner has two former subordinates on the White House economic team furthering his influence as the sole remaining member of Mr. Obama’s original economic team.
Article source: http://feeds.nytimes.com/click.phdo?i=8c36f44bb9bbdac182a96f085d410f15
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