Former economic adviser for President Clinton Alan Blinder says that Congress, the Obama administration and the Federal Reserve have helped the economy enormously, but it is still in bad shape. He says although GDP is growing, the amount of jobs is still likely to “shrink.” (0:37)
The lack of productivity that accompanies the onset of diseases and other health conditions may deprive the U.S. economy of $1.4 trillion annually, a new report sponsored by the Advanced Medical Technology Association concludes.
“It’s obvious that disease and productivity are intrinsically linked,” report contributor Bryan Luce of the United BioSource Corporation (UBC) said during a presentation Monday marking the reports’ release. “[Disease is] obviously important to GDP if it’s important to productivity.”
The report estimates that cancer is responsible for the loss of $306 billion in productivity with substance abuse detracting an additional $225 billion. The study also highlighted billions in losses from hypertension, heart disease, and mental problems.
The report’s contributors explained that the data shows the need for further investment in preventative treatment, arguing that an aggressive prevention program is needed.
“There is a rationale for a national program on the order of putting a man on the moon,” report contributor Greg de Lissovoy of UBC said. “Certainly health care reform and better access to care…will make a great contribution to this.”
In the wake of highest GDP contraction in seven years, several economic experts offered their take on the recent crisis and weighed in on the costs and benefits of a fiscal stimulus package during a Joint Economic Committee hearing in the Dirksen Senate Office Building.
“This is likely to be the most severe recession the United States has experienced in a number of decades,” said Nouriel Roubini, professor of economics at New York University’s Stern School of Business.
“This is going to be much longer, more severe, more protracted than the average U.S. recession.”
Roubini recommended an aggressive fiscal stimulus package priced anywhere between $300 billion and $400 billion, and warned that it should be passed soon.
“We cannot wait until the next congress in February because three months from now, the collapse of spending, consumption, and investments is going to be so sharp that the economic contractions could become even more severe.”
Roubini said that the next package should focus on direct government spending for goods and services since the private sector has decreased its overall consumption.
Richard Vedder, Professor of Economics at Ohio University and visiting scholar at the American Enterprise Institute, said he was “dubious” of a fiscal stimulus package. Vedder said that fiscal stimulus does little to aid the economy, and pointed out the last stimulus package was followed by a decrease in GDP and a rise in unemployment rates. However, if fiscal stimulus is unavoidable, Vedder stated that it should take a different form. “If you’re going to have a stimulus package, certainly a tax cut is preferable to a spending increase…a tax cut would have some more positive long run incentive effects.”
When asked if the Troubled Asset Relief Program, or the bailout bill, was a good idea, Roubini answered it was the right step as long as it was used to inject banks with public capitol. This was a notion agreed upon by Simon Johnson, Ronald Kurtz Professor
of Entrepreneurship at MIT.
“The original design of TARP to buy distressed assets was a bad idea and remains a bad idea. Using those funds to recapitalize the bank system and the insurance industry, and other financial institutions that may need recapitalization as we head into serious recession is a very good, if not essential idea,” said Johnson.
Vedder said that he reluctantly supported the original proposal, but was neutral regarding the revisions.
For weeks, the administration has been lowering expectations about the economy, saying the third quarter report on gross domestic product would be rough.
It was. It fell 0.3% between July and September, the weakest figure in seven years. And the White House outlook? Things are probably going to get worse.
“There’s no question the economy has weakened significantly,” admitted Eddie Lazear, chairman of the president’s council of economic advisors. “We’ve got a few tough months ahead of us,”
Lazear said parts of the U.S. are undoubtedly in a recession, but declined to say if the entire country is. By definition, a recession occurs when the economy shrinks for two quarters in a row.
But Lazear said the administration’s recent actions, notably the massive $700 billion Troubled Asset Relief Program, or TARP will help move the economy in the right direction.
Dividends
Meantime, White House press secretary Dana Perino was subjected to a barrage of questions about why banks dipping into the TARP trough for much needed capital continue to pay dividends to shareholders.
“You know, some people think only rich people get dividends. That’s not true, she said.” Perino pointed out that “mutual funds, schoolteachers” and others get dividends through investments they hold.
Where’s Bush?
The silence is thunderous. President Bush is, perhaps not by choice, staying off the campaign trail and keeping quiet about the race to succeed him – a race now down to its final hundred hours. He’ll spend the weekend at Camp David with the First Lady, but will return to the White House to watch returns on election night.
When will the president hold a news conference to comment on the election?
“I don’t know,” says Perino. “You’ll probably hear from me first though, on Tuesday night.”
The President did find a receptive audience today, though, attending graduation at the FBI academy, then visiting Marine Squadron One – home of Marine One, the presidential helicopter.
Mrs. Bush, for her part, visited New Orleans today, her 20th visit to the Gulf region since Hurricane Katrina. She visited an elementary school and announced a grant to help rebuild school libraries in the region. Perino said it would probably be Mrs. Bush’s final visit to the region as first lady.
Petra Todorovich, director of the America 2050 National Infrastructure Plan, spoke about “Smart Growth: Planning for America’s Future Infrastructure, Economic Development, and Environmental Challenges” in a speech in a series of talks at the National Building Museum. (more…)
Briefer: Tony Fratto
President’s Schedule
At 10.15 am President Bush makes remarks on the 57th National Day of Prayer in the East Room of the White House. This afternoon, at 2:50 pm he will also make remarks at the celebration of Asian Pacific American Heritage Month.
Deputy White House Press Secretary Tony Fratto will brief the press at 12.30 pm today.
By Ellen Ratner
Twenty-four hour campaigning, 7,000 person rallies, political ads filling every TV and radio spot, political pundits spewing their latest guesstimates … overall, there is a lot of noise and promises, but no one is dealing with two of the biggest issues facing America – debt and health care crises. (more…)
William Beach, Director of the Heritage Foundation’s Center for Data Analysis, stated that recent economic indicators demonstrate slow growth rather than recession in his testimony before the Joint Economic Committee (JEC). (0:44)
