My Take on Yesterday's White House Progressive Roundtable on the Economy

Yesterday, the White House invited a group of nine progressive bloggers, journalists and radio hosts to the West Wing for an on-the-record session with Jared Bernstein, chief economist to Vice President Joe Biden and a leader in the implementation of the stimulus, on the one-year anniversary of the Recovery Act.


Click image to enlarge

From left to right: Jonathan Singer of MyDD, Duncan Black of Eschaton, Oliver Willis of OliverWillis.com, Chris Hayes of The Nation, unknown administration staffer, Thom Hartmann of the Thom Hartmann Show, Matthew Yglesias of Think Progress, Erin from BlogHer, Tim Fernholz of the American Prospect, White House economist Jared Bernstein. Not pictured, John Aravosis of AmericaBlog. (Photo credit: John Aravosis)

The basic thrust of the event was to present a case for the efficacy of the Recovery Act as a part of the broader effort to convince the American people that the administration's efforts to restore the economy have been successful. To this end, Bernstein provided some stark numbers: While the economy had been contracting at an annualized rate of about 6%, last quarter saw GDP growth of nearly that amount (while conceding that this number isn't necessarily believed to be sustainable in the long term); and that while the economy was once losing 700,000 jobs per month, job losses have been nearly staved off, falling to just 20,000 per month over the past quarter.

The Recovery Act, Bernstein explained, was not only about bringing the economy away from the precipice, but was also about making meaningful investments to prepare the economy for the future. While year one was about bringing the economy off the brink, year two was about expansion (and specifically a type of expansion that ensures the middle class reaps benefits). This latter effort is focused on planting the seed money for priorities such as clean energy, a smart grid, health IT, universal broadband access and high speed rail -- just as earlier economic revolutions sparked by the development of the internet and a nation-wide rail system a century before that required government investment to leverage private capital, so too do the engines of future economic growth need private-public cooperation.

During the question-and-answer period, I asked Bernstein a question related to a series of posts I wrote here at MyDD that had gotten some traction in the Beltway press: Specifically the notion that progressive populism is beneficial on both a policy and political level. Bernstein responded first on the policy level, explaining that the administration was focused on addressing issues of income inequality -- which is now approaching levels unseen since 1928 -- ensuring that the middle class reaps any benefits from economic growth. On the political level, Bernstein was less receptive, saying that there's a difference between rhetoric and policy, while also noting that the President has expressed indignation. When I followed up by pointing to a quote from President Obama as to the effect that he "[does not] begrudge" the multi-million dollar compensation being received by some on Wall Street -- a quote I agreed that did not necessarily sum up all of the President's views, even if that's the way it was perceived by some -- Berstein sought to clarify that what the President was trying to say was that he, like other Americans, believes that people deserve to be compensated for their hard work. Pivoting again to policy rather than language, Berstein stressed the importance of restoring balance to the tax system, helping create better jobs, working to ensure that unions are able to organize fairly (though the Employee Free Choice Act), focusing on the middle class (he mentioned increased child tax credits, as well as tax credits for paying off college debts, paying for elder care, and other provisions), and, more broadly, reconnecting economic growth with the middle class.

I may write up some more thoughts on the meeting later today or tomorrow (I still have a good deal of notes from the pen-and-pad session, but I have to run to class now). But if you're itching to read more now, you can read others' accounts of the meeting from AmericaBlog, Eschaton, Tapped, Matt Yglesias, Matt Yglesias, and Oliver Willis.

Tags: Economy, Recovery Act, Jared Bernstein, white house, progressives, progressive populism (all tags)

Comments

14 Comments

I support the stimulus

But I am not impressed by the selective cherry picking of facts to make it out to be something that it is not.  Case in point: the 6% growth seen in the last quarter is not just "not sustainable", but a clear case of an inventory bounce that is always seen at around this time of the business cycle.  Pointing to that number, and claiming that to be an effect of the stimulus, even with the caveat that it cannot be sustained, is misleading at best; and downright dangerous if the person shelling out that argument believes in it himself/herself.

 

A clear case can be made that the stimulus was needed, and had a beneficial effect.  But an equally clear case can be made (and was made at the time) that the WH badly underestimated the size of the required stimulus (with the ARRA chart projections vs actual numbers, for instance) and the resultant effect on the economy has been substantially less than what it had forecast.

 

 

by Ravi Verma 2010-02-18 02:07PM | 1 recs
RE: I support the stimulus

One thing I gleaned from reading all the other blogs, esp Americablog, this was more of a the WH pressuring the liberal blogs to step up the fight against misinformation. The principle problem here is the noise. While the Republicans and tea-party, backed by people with deep pockets, were out in full force denouncing the stimulus from its inception the WH, DNC were conspicuously absent. I did not receive anything from the OFA barring the usual two sentence emails ending with a call for a donation. Maybe much of the fight was being held back because of the bipartisan schtick. There were no ads mocking the Republicans requesting the money or even pointing out their Hooverism, or for that matter the tax cuts in the bill that they voted against. Again there was no offensive when it came to health care. So the administration did drop the ball on the political narrative. Now was that because they were asleep at the wheels or because it was all a part of the grand scheme of changing the tone of political discourse in Washington is anyone's guess.

In the end as you (and economists like Krugman, Roubini, Stiglitz) point out the stimulus was just enough to be a band-aid, leading us to this jobs bill (a second stimulus one might add). Why they did not have a more expansive stimulus is again baffling because they are getting vilified for going small anyway. But I don't quite understand the logic of having a $15 billion jobs bill now in a multi-trillion dollar economy in deep recession. As far as the 6% growth number goes, I am sure if the WH really believed in those numbers they would have made a much more forceful case, instead of getting the message out through liberal blogs. But when the stimulus and health care fights were going on the liberal blogosphere did its job of espousing the virtues of both bills multiple times.

by tarheel74 2010-02-18 03:27PM | 1 recs
RE: I support the stimulus

This and the post above are typical of what has become the "Sports talk" or "Coffee shop coach" left. Oh, to be in the cheap seats, where nobody's lost a game--on either side of the gym.

by spirowasright 2010-02-18 05:01PM | 0 recs
RE: I support the stimulus

An inventory bounce means we've hit bottom. That's what good about it.

by vecky 2010-02-18 09:00PM | 0 recs
Oh really ?

You should publish that in a peer reviewed publication and collect your Nobel!

by Ravi Verma 2010-02-18 10:17PM | 0 recs
RE: Oh really ?

Do you know what an inventory bounce is?:

Inventory bounce is a term used in economics to describe an economy's bounce back to normal GDP levels after a recession.

The Recession is ending. How strong the recovery will be is a matter for discussion. Given the systemic challenges facing the US economy and the way it has affeln behind this last decade i'm not optimistic it will be strong.

by vecky 2010-02-18 11:02PM | 0 recs
Nice to see that you can read headlines

I was puzzled by your claims of what an inventory bounce is, because it is without any links.  So I did a search, and it turns out you are quoting the first line a <a href=http://en.wikipedia.org/wiki/Inventory_bounce&gt; wikipedia page on the inventory bounce </a> that does not meet wikipedia's quality standards (and also happens to be an orphan).

 

In any case, the line you quoted isnt accurate; and (more substantially) also happens to be incomplete.  As per the last line of the same wiki page:

We care about it because if GDP recovers is only an inventory bounce, the recovery of GDP might not be sustained, which means that economy might not have truly recovered from the recession.

An inventory bounce (as described more accurately <a href=http://www.calculatedriskblog.com/2010/02/inventory-cycle-and-gdp.html&gt; here </a> and whose significance is discussed <a href=http://www.nytimes.com/2010/01/04/opinion/04krugman.html&gt; here </a>) happens when companies are rebuilding inventories that have dwindled because of a phase lag between dwindling sales and the companies initial response.

An inventory bounce does not have to (and almost never does) coincide with a bottoming out of the sales itself.  Recovery happens when sales have bottomed out.

by Ravi Verma 2010-02-19 12:09AM | 0 recs
RE: Nice to see that you can read headlines

I could have posted a longer discussion on what an Inventory Bounce is but it seemed quite simple and as happened, you found more detailed links yourself.

But then, how did you get this ridiculous statement:

" An inventory bounce does not have to (and almost never does) coincide with a bottoming out of the sales itself.  Recovery happens when sales have bottomed out. "

Please re-read what an inventory bounce is. Companies would not be ramping up production to stock up their new inventory levels if they thought sales were still plummeting. Krugmans widget example is apt. Demand has stablized to it's new level so companies are ramping up production to stock up inventories for that new level.

by vecky 2010-02-19 12:47AM | 0 recs
I think you need to think deeper

and beyond the headlines.  Krugman specifically states

Such blips are often, in part, statistical illusions. But even more important, they’re usually caused by an “inventory bounce.” When the economy slumps, companies typically find themselves with large stocks of unsold goods. To work off their excess inventories, they slash production; once the excess has been disposed of, they raise production again, which shows up as a burst of growth in G.D.P. Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up.

I do not know how to explain this to you.  Perhaps you are hugely motivated to not understand this.

An inventory bounce happens when inventories have been slashed to very low levels.  Recovery happens when sales have bottomed out.  The two are not the same events.  There can be several inventory bounces before sales bottom out.  As an example, sales can go down to 99% of previous value, and cause an inventory bounce.  It can go down a further 1%, and cause another inventory bounce.  Given a slow enough rate of sales decline, and a slow enough rate at which information trickles up from the retailers to the producers, you will see several inventory bounces.  The rate at which they occur is governed by the rate at which information flows, and the rate at which humans make decisions.

And like I said, if you can prove that an inventory bounce = recovery, then you should go collect your Nobel !!

 

by Ravi Verma 2010-02-19 08:58AM | 0 recs
RE: I think you need to think deeper

Now where did I claim "inventory bounce = recovery", if that is what your trying to claim I said then it's not me who deserves a noble as much as you a Pulitzer! The whole point of an inventory bounce is that it is NOT a recovery. I remember the I-B because back at the end of the 2001 recession the Bush team went around trumpteing a GDP inventory bounce as a recovery, when it clearly was not.

All I stated was that an inventory bounce marks the end/bottoming out of a recession. There is no need for a noble, and since the end of every single recession in the last 40 years has seen an inventory bounce I imagine somebody else would have already claimed such a noble.

But I will note you still don't seem to grasp what an I-B is:

"An inventory bounce happens when inventories have been slashed to very low levels."

K. So here is a question, what has caused inventories to be slashed to very low levels. Hint:

Production > Demand/sales : Inventories grow

Production < Demand/sales : Inventories shrink

Work from there.

Another point, what is this : "Recovery happens when sales have bottomed out."

Umm, NO! Recovery happens when demand/sales INCREASE.

by vecky 2010-02-21 03:29PM | 0 recs
Hint

Production > Demand/sales : Inventories grow

Production < Demand/sales : Inventories shrink

 

Now factor in the rate of information flow, resulting in an overreaction by the producer... slashing the production more than the decrease in sales... and you have shrinking inventories.  Inventories can shrink even when demand is decreasing!!

 

Think about it for a day (or a week, in your case), and you will get it (I hope).  And if you dont, then I cant help you anymore...sorry!!

by Ravi Verma 2010-02-21 04:05PM | 0 recs
RE: Hint

Yes, inventories can shrink as long as demand is decreasing, as long as production is lower than demand. I'm not sure where this is leading you... keep at it though!

by vecky 2010-02-21 04:29PM | 0 recs
Thank you for participating

It is so seasy for the liberal blogosphere to (continue to) degenerate into a sports call in show, where armchair criticism is doled out by Monday Morning quarterbacks with the ease of 20/20 hindsight. Your questions were excellent.

by NoFortunateSon 2010-02-18 02:33PM | 1 recs
RE: My Take on Yesterday's White House Progressive Roundtable on the Economy

You certainly have he sports call in show ananolgy right re the current attitude of the liberal blogogsphere.

Good to see the two sides engaged in some dialouge.

by spirowasright 2010-02-18 02:46PM | 0 recs

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