Patterico's Pontifications

11/9/2008

Mankiw’s Economic Advice for Obama

Filed under: Economics — DRJ @ 1:23 am



[Guest post by DRJ]

Harvard Economics Professor Greg Mankiw has four suggestions for Barack Obama:

Listen to your economists.

“Pay close attention to what they have to say. They will often give you advice quite different from what you will hear from congressional leaders Nancy Pelosi and Harry Reid.”

Embrace some Republican ideas.

“Your best chance of delivering what they want requires that you abandon some of your past positions and pursue a more moderate, bipartisan course [as Bill Clinton did].”

Mankiw also recommends that Obama embrace McCain’s refundable health insurance tax credit. Mankiw describes this as the Furman-McCain plan because it was advanced by Jason Furman, a former student of Mankiw’s and Obama’s director of economic policy, before McCain ever proposed it.

Pay attention to the government’s budget constraint.

“[D]uring the campaign, you promised that you would cut taxes for 95 percent of Americans, that you would vastly expand health insurance coverage, and that you would never cut Social Security benefits or raise the retirement age. You will almost surely have to renege on some of these promises.”

Recognize your past mistakes.

“Your economists can explain to you why these [isolationaist] positions [you voted for] were wrong-headed. Economic isolationism is not in the national interest.”

Good advice that I suspect will fall on deaf ears.

— DRJ

39 Responses to “Mankiw’s Economic Advice for Obama”

  1. Suggestion #5 – In the best interests of America, you should have voted for McCain.

    Perfect Sense (9d1b08)

  2. “Pay close attention to what they have to say. They will often give you advice quite different from what you will hear from congressional leaders Nancy Pelosi and Harry Reid.”

    Because Mankiw thinks Barack Obama is easily led by the people around him.

    I think Mankiw is right about this.

    Daryl Herbert (4ecd4c)

  3. The prohlem with BO listening to his economists is that it is likely that all of BO’s economists are Marxists, like him. BO seems to have a grasp on socialist theory, and little clue of economic reality.

    BO is left with the daunting task of trying to convince investors to put money back into the market while he continues with plans to take any profits they may garner way. BO does not understand the effect of socialism on free markets.

    BO is not smart and he surrounds himself with fellow socialist. Trying to smuggle a clue into Camp BO will prove to be difficult.

    DavidL (02e14f)

  4. Barry knows where all money already comes from.

    It magically appears from the Govt.

    TC (0b9ca4)

  5. I just hope that Obama’s mistakes will be enough to deny him a second term, yet not so severe as to cause permanent damage to the American economy or way of life. If he follows a Carter path or Clinton path, that can be fixed later. If he follows his voting record, listens to voices from his past, or panders to the far left, we’re all in serious troble.

    Mark Turner (c6b144)

  6. DRJ:

    I thought we weren’t permitted to talk about Obama’s ears.

    [Heh. Good point. — DRJ]

    arch (18fdbe)

  7. Actually, it will fall on ears in the 99th percentile. I imagine though, that the last person to speak with Obama will be the one whose policy Obama advocates.

    Jack (d9cbc5)

  8. Embrace some Republican ideas.
    …McCain’s refundable health insurance tax credit. …the Furman-McCain plan …advanced by Jason Furman, …Obama’s
    (now) director of economic policy….”

    Not likely after the incessant attacks during the campaign on this reasonable, and long overdue, proposed change to the way we deal with health insurance in the workplace.
    If he did embrace this policy, watch for a preliminary cozying-up to John Kerry, because they will need an inordinate amount of Heinz Catsup to slather-on to disguise the taste for the Kook-Aid drinkers.

    Another Drew (c881b0)

  9. #5
    I think what is more likely to occur is the GOP picks up a lot of house seats in 2010 as the economic recovery will only be in the early stages. Combined with Blue Dog Dems the house ability to go too far left may be hampered.
    By 2012 the economy should be going pretty well and Obama will be tough to beat.
    The only caveat is if something on the terrorism front or some kind of war occurs all bets are off on 2012.
    I sure don’t want to see the economy go bad just to see Obama struggle. However, all the indicators are that we are going for a very hard recession that will only begin to end in 2010. If McCain had won instead he would have inherited the same thing.
    Interestingly enough that would have opened the door for the return of Hillary in 2012 and a probable upset win due to McCains age and 12 years of the same party in power.

    voiceofreason2 (a2141a)

  10. I keep reading these little pieces, essentially saying, “congratulations on the win, Obama, now govern like a republican.” Why would he?

    I see people citing the current approval rating of the democrat congress. Yeah, they’re so bad the people punished them with 20 more seats in the house and half a dozen in the senate. If I’m a republican I’m praying for approval ratings this low.

    I’m someone who has very serious doubts about the success of an Obama administration, but still can’t understand why anyone would expect him to govern other than how he has until now.

    sears poncho (319646)

  11. Comment by sears poncho — 11/9/2008 @ 6:15 am

    Re-election efforts

    voiceofreason2 (a2141a)

  12. I thought we weren’t permitted to talk about Obama’s ears.

    Only if we say they are the ears of a good man.

    Old Coot (8a493c)

  13. #11 vor2:

    Re-election efforts

    I tend to agree with sears poncho~I really don’t expect this leopard to change its spots, even if it tries to make it appear so.

    EW1(SG) (7b8592)

  14. “…why anyone would expect him to govern other than how he has until now…”

    Can anyone explain to me how Obama has governed anything “until now”?
    The man is an empty slate and all I hear are fingernails.
    If the economy is on the road to recovery prior to the 2012 election, BHO will be the luckiest man in the world. If he follows the usual advice from Congress, it will take much longer than that.

    Another Drew (c881b0)

  15. The Ministry of Propaganda (aka, the MSM) today reports that our Dear Leader – B. Hussein “Praise Be Upon Him” Obama, is busy at work trying to “fix” the economy that the evil Bush destroyed.

    In other news…..compulsory pre-school will begin soon to socialize children in the “proper” Marxist dialectic, along with the compulsory, susidized school lunch program which will be expanded to include subsudized school breakfast program (consisting of breakfast burritos for the children of our “guest workers”, soon to be citizens). Also today, Oprah The Baptist will be awarded the Medal of Freedom, as her tireless work to prepare the way for The One.

    The Ministry also reports that compulsory increases in federal income taxes will begin so our Dear Leader “Praise Be Upon Him” Barack can best determine which of His favorite constituencies are most deserving of His Largess.

    You may go back to your Sunday day off, for tomorrow, you “non-Hispanic Whites” are expected back at work to generate tax revenue for the Dear Leader to redistribute with His infinite wisdom. That is all.

    Nessus (f6cafd)

  16. How long before parody segues into reality?

    Another Drew (c881b0)

  17. #16. Another Drew:

    How long before parody segues into reality?

    Sorry, but you missed it.

    Ironic to think that the social engineering programs instituted by the Soviet Union to bring about capitalism’s (and specifically, the US) downfall have come to fruition…but that there isn’t anybody for us to surrender to anymore.

    EW1(SG) (7b8592)

  18. Great advice. Problem is, we’re now dealing with a Messiah who already thinks he can “change the world.” Ten bucks say His Majesty will tolerantly allow economists like Mankiw their “15 minutes”: he’ll nod thoughtfully, ask a few questions, thank them for their time…and then shove off in a completely different direction.

    MarkJ (7fa185)

  19. Another Drew,

    Point taken. Allow me to re-phrase; Given warmed over liberal (read socialist) prescriptions that the PRESIDENT-ELECT has learned to say without any thought, why would anyone think he’s going to change. Also, I happen to believe you are correct. If the economy is improving, Obama gets re-elected. If not, someone else gets a shot.

    voiceofreason2,

    See my second point. This congress has been woeful for going on 2 years now and more members of the ruling party have been elected. Seems that, for all the polls, the people must like what they see. How many of congress got the bum’s rush this election. Yes, I know that Dems keep pinning this all on Bush with a sympathetic press. Problem is, I don’t see that changing anytime soon.

    Thanks all for the replies.

    sears poncho (319646)

  20. I think we are screwed. Can’t see the fresh prince of bill ayers going against his puppet masters soros and daley. Let’s face it, McCain would have reached across the aisle with his Senate RINO congeniality and taken the heat as POTUS for all the doom about to beset us. Yes, McCain would be better facing off against radical islamofascism.

    How is it possible that Obama could possibly dig us out of our present financial mess that is a house of cards? Our infrastructure is crumbling. I support the wars in Iraq and Afghanistan but we have almost unlimited financial exposure to rebuilding efforts there that encompass gross malfeasance and theft. Look back at Japan’s financial struggles. You’ll recall when they were buying up American real estate in California and New York City. Did not work out too well. So Japan wrote off enormous losses, but the Japanese don’t owe their asses to rest of world like we do. How much US debt does China hold? What is the US savings rate? Japanese have great savings at least.
    Ok, Obama raises taxes and confiscates wealth, like mandating feds take over 401k’s. How much money will go as handouts to people who pay no income taxes now, but will get welfare checks in the future? Unions mean that American auto companies are unable to compete with Toyota and Honda? So that means more bailouts, instead of letting Ford and GM go bankrupt? How do we not gear up the printing presses to pay for all these mistakes? I don’t see how an inflationary depression will help Americans and the world in general. Some of you recall the Jimmy Carter ear 20% interest rates.

    Aren’t new Presidents usually granted a honeymoon? Of course our media has already been in bed with the One and will provide cover, but what about businesses laying off people and not expanding, etc. because they fear the higher tax rates?

    madmax333 (0c6cfc)

  21. Obama will give at least two or three speeches at the UN and abroad that will earn the (further) disdain of middle America, but will receive gushing reviews from all the blue zones that surround our academic institutions.
    Our enemies will smell weakness and will attack, particulary if Obama listens to the left and dismantles some of the spying programs and allows lawsuits against the telecoms.

    If Obama doesn’t listen to his moderate advisors, there will be a larger rise in unemployment due to small and medium sized businesses cutting back due to tax burden.
    These businesses will try to pass the tax increase on to the consumer, or if the market forces them to absorb the increase, the business will likely fail.
    Consumers will see costs for services rise as businesses raise prices to account for new taxes and forced healthcare.
    Consumers should see consumer goods prices fall in the near term and if they have a job still, and cash to spend, they can get good prices as buyers will be scarce and cash is king.
    However, high labor costs, healthcare and taxes will ensure Mexico’s border factories will get the rest of all the consumer goods assembly jobs because it will be too costly to assemble anything in the US.
    Obama will try to put a prohibitive tax on these items that are assembled outside our borders to try to force those jobs back into the US which will be passed onto the consumer of course.
    Obama’s plan will drive the lower middle class to either welfare or into some sort of government job program (which will no doubt be unionized by the SEIU or its ilk) This type of program will bankrupt the future of non government worker engaged in productivity as they will have to carry the burden of wages, administration, healthcare, and retirement benefits of the massive non producing public sector.
    Taxes should very quickly have to rise for nearly everyone making more than $40,000 because the rich will find ways to not be taxable; or they simply will no longer be able to earn as much in a crippled economy. The temptation will be to look at the huge middle class and think that the IRS can just grab another 4-6% out of all those potential payers.

    Obama’s plan is “tail (government) swings dog” not “ground up”.
    The only thing ground up in Obama’s plan is productive small business, and I mean “ground” like in ground chuck

    SteveG (71dc6f)

  22. BREAKING NEWS – OBAMA REPEALS TANSTAAFL RULE AFTER CONSULTING ECONOMIC ADVISERS!!!!11!1!

    daleyrocks (5d22c0)

  23. Oops. This is the passage I intended to quote:

    To make sure you hear the views of your economists, put them in offices close to yours. Tell your chief of staff to invite them to all the relevant meetings.

    If Obama surrounds himself with economists, he would do whatever they say, and be our best president ever. Because he’s susceptible to the people around him.

    I fear he has fallen in with a bad crowd, though.

    Daryl Herbert (4ecd4c)

  24. DRJ,

    Why Mankiw? He’s a Pigovian – a half-step away from any lefty economist with a “theory on how things should be done”. Press him and he’ll cough up a tax policy on fuel that reiterates every asinine assumption made by the northeast liberal elites concerning the “need to control CO2 emissions”.

    Courtiers offering advice to the new Prince for a chance at table scraps aren’t a new thing under the sun and this particular offering of rehashed hash isn’t particularly appetizing. Offering advice to the liar on how to renege gracefully on his empty promise to reduce taxes for 95% of the population is an act without honor.

    That’s really unsurprising for a Pigovian (steeped in Straussian obscurantism as they are) but this one is clumsier than most.

    How about if President-elect Obama is called upon to demonstrate his honor for the first time by maintaining his word concerning a tax cut for 95%? We all know he’s a liar (and a poor one at that) but the people who voted for him apparently don’t. Why not spend some effort in encouraging a man without character to develop one?

    Rick Ballard (e3e91f)

  25. Everyone seems to be forgetting about his new chief of staff, Rahm. He’s already had quite enough familiarity with Clinton getting steamrollered by the far lefties in his own party, then watching the country give Congressional majorities to the GOP less than two years later, in an massive electoral change. I don’t believe he’ll let Obama drift too far leftward, and that’s one the reasons why he was selected – unlike in Carter’s case, Emmanuel will most likely tell his President when he’s full of it. He seems like a fairly nasty guy to deal with, but he’s also one of the few who can keep the crazies from their own parties at bay.

    At least that’s my best – case scenario here; if I’m wrong, yikes.

    Dmac (e30284)

  26. #16. Another Drew:

    How long before parody segues into reality?

    Actually, the future is already here. Baracky is going to educate everyone, including infants!!! The Zero to Five Plan: Education for Infants on up

    Patricia (ee5c9d)

  27. Racists. I hereby denounce all o’y’all.

    Xrlq (509000)

  28. Comment by Patricia — 11/9/2008 @ 8:39 am

    Patricia, the link makes me sick. Essentially the premise is parents can’t do what needs to be done for their own children, so let’s get them young and get them for life. Unfortunately, there are too many irresponsible people procreating who would be more than willing to abdicate the privilege and responsibility of rearing their own children and will gladly hand them over to the state. Those who are unwilling, however…..

    Unlike other early childhood education plans, the Obama-Biden plan places key emphasis at early care and education for infants, which is essential for children to be ready to enter kindergarten.

    Because this thinking is so diametrically opposed to homeschooling philosophies, its very hard to see them co-existing under Obama’s presidency and considering how enormous the homeschooling movement is, I see trouble ahead.

    Dana (79a78b)

  29. no, no, no….. don’t do any of these things Juggy!

    even though you’re not my president, i urge you to do everything you promised, just the way you said you would. your supporters deserve exactly what you promised them, and they deserve to get it good and hard.

    and don’t worry about us bitter clingy types when you do this, because we *always* survive.

    redc1c4 (27fd3e)

  30. I’d like to point out the cadre of “economic” advisers in attendance at the 1st presser….
    Governor Granholm? Volcker? and the rest of the retreads from Clinton years. I hope he doesn’t listen to THEM!

    Keep the change (ee01f7)

  31. “Good advice that I suspect will fall on deaf ears.”

    Mankiw was a Dubya economic adviser. How well were those 4 precepts followed in the last few years? Like: “Pay attention to the government’s budget constraint.”

    imdw (825964)

  32. Sadly, imdw, little and none. But in Mankiw’s defense, I think he left in 2005.

    DRJ (cb68f2)

  33. I don’t get it. Why would Obama do any of this stuff? Hasn’t he made his economic philosophy clear? Didn’t he just win an election? Don’t you get it?

    He does not believe in the free market. He does not believe in capitalism. He wants government control. He will move to impose it on day 1. He is about as likely to take this advice as he is to resign his office.

    The economy is shot. The military is shot. The social issues are shot. It’s over. Obamas fight is now against the moderates in his own party.

    We need to concentrate on preserving our only reentry route – the free press and free elections, which includes fair representation (the Obama census). And we don’t have many cards to play there either. Otherwise welcome to one party rule.

    Amphipolis (fdbc48)

  34. We were walking into another Great Depression and this Ideologue missed it entirely. Again; Krugman nailed it, Mankiw totally missed the angst on Main Street for the last decade.

    sadly, the Chinese seem to be smarter than us. Their half a Trillion stimulus package shows their economists are very learned and that they’ve studied the failures of both conservatives’ Hoover and FDR. and Krugman gets another thing correct…FDR was too Conservative which is why the better things of the New Deal only made a little progress….like CCCs and WPAs. Lowering taxes and cutting funds for everyone…will just decrease consumer demand until it becomes a “World Made By Hand” by James Howard Kunstler.

    a fun read btw….and unfortunately…in 20 years could be true. (character development is only slightly better than karma-imbued Micheal Crighton’s flat personalities..)

    datadave (7100c4)

  35. Wouldn’t you actually have to have experience running something in order to have some past mistakes to learn from?

    Wouldn’tcha?

    Oh yeah! Annenberg.

    How much money did he waste there?

    Learn, oh Chosen One, learn.

    Icy Truth (aedb2f)

  36. Comment by datadave — 11/10/2008 @ 7:41 am

    “…both conservatives’ Hoover and FDR…”

    You need to read some non-Marxist history about The Great Depression.
    I would suggest a new, best-seller, The Forgotten Man, by Amity Shlaes.
    Neither Hoover, nor Roosevelt are conservatives.
    Hoover, in fact, was a big-government guy in the mold of GWB, and the complete antithesis of the Conservative Calvin Coolidge.

    Another Drew (d51d84)

  37. oh yeah Amity Shleas that one! defending Phil Gramm?

    sorry, Main Street’s been in a recession since last year…but govt stats didn’t show it as the extreme skewing of wealth by the upper one percent hides what’s really happening on the ground level. Phill Gramm with his posh job at USB certainly doesn’t know what’s going on.

    datadave (a7b605)

  38. datadave – doesn’t know what’s going on

    How would you know what another person knows and does not know? Have you talked to him? And your knowledge of the ground level is based on what, beyond anecdotal evidence that could drive you to truly ignorant conclusions?

    Gramm disagrees with you, so he must be an out-of-touch rich dude. You turn a disagreement about what constitutes a recession into class-baiting poor snobbery.

    Amphipolis (fdbc48)

  39. Sorry, but the “mainstream liberalism = Marxism” thing isn’t working any more. You all need to find a new talking point.

    Tom Moore (da9e85)


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