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Economic data over any indication of the health of the economy -- were in need of some pretty strong medicine is there anything that Washington can do now.
To jumpstart the economy.
Austan Goolsbee is the former White House chief economic advisor is now professor at University of Chicago Booth school of business.
It's always a pleasure to welcome him to our show -- good to see yet.
A lot of bad economic news preceded this market fall today -- we had unemployment numbers not very encouraging manufacturing -- the Philly Fed's figures were.
Housing growth was not encouraging Goldman Sachs shorting the -- eight.
This isn't all Europe is it.
I think a lot of it's coming from Europe but I think that the particularly on the jobs side.
The thing to remember is it's always a race between how fast as the economy growing vs how fast as productivity growing from the existing workers.
So -- the growth rate is less than 2%.
You don't really need to hire anybody.
To grow that fast and that's basically what's happened to us the stuff in Europe slowed us down a tick.
So that we're growing modestly.
And the job market is not going to look good until we get the growth rate back up.
Boston you know we just had -- -- -- of US trust in the last hour -- just got off the plane from Finland -- says that Europe is still very much in.
In disarray but he also said that he personally is looking toward the so called fiscal cliff and he's very worried about the issues.
That are facing us now.
You've been in Washington you've been inside that beltway it's become -- hotter and more difficult place to strike any kind of deal will we see any kind of compromises before the election in November.
That will save us from at least falling over in hanging on with our -- now.
You know I -- I he's sincerely doubt anything what happened before the election and so I think the markets are gonna get a little.
Antsy as we runup to November and you say will walk which way we do whatever we do -- the Romney way -- the Obama way or or.
Or are they going to fight to the very last minute and not be able to do it.
I think we should not under estimate.
How big this fiscal cliff is.
Regardless of what you think of the stimulus its biggest year was about plus 275 billion and this thing is gonna be about minus 700 billion.
In the first year so if we if we cannot step back from this partisan battle.
I think we're all gonna be paying the price for that the beginning of next year.
But this fiscal cliff scares a -- -- arson I think -- not just speaking to Republicans I have to tell -- guys speak to some business people some of whom.
Voted for President Obama the first time.
Right now they say we have never seen a president as anti business as this when it comes to new rules and regulations that affect them people like same tank -- to give you a name.
Who owns more Applebee's in New York than any particular order he voted for President Obama the first time.
He's not this time because he says there is an anti business bias.
On the part of this administration that doesn't understand what business people have to face -- day what do you tell those people.
Well I don't I don't think it's true I I.
That's not help save us -- and it mustn't forget all but that's not enough for the people they need you know let me finish my sentence -- if you want to know what I would say.
I hate to hear from some business people this is the same thing.
I think as a factual matter it's not true that there that that the excessively.
Piling on regulations.
I think that business.
Opinion of the president if you look over the last three years is -- -- correlated with how the overall economy is doing.
And you saw that at the end of the Bush Administration to business people souring on their view of the administration because the aggregate economy wasn't doing well -- We've got to get the growth rate higher I think that's for sure true.
And of I think there's a lot of bipartisan stuff that they could agree on such a thing that's weird is that in the media.
If you take say that jobs act that they passed or two years ago when they pass the tax deal there have been things that -- bipartisan.
That -- to help the economy and help business.
It's just that when they pass those the media doesn't really want to emphasize that in the two parties.
Are so geared up into this.
Cut her hand to hand combat mode that nobody wants that.
-- each other on the back and say well at least we did something right they just want to look for the thing where they can disagree.
I think we've got to get past that.
Hopefully we can in November we'll.
We we trumpeted the jobs act does as a real positive when both sides were able to come together on it but that's rearview mirror stuff.
What now what can be done.
Well I think they've got to address the fiscal -- -- hopefully.
In a way that will.
Ensure a longer run fiscal consolidation.
But not in a way that's gonna do 700 billion dollars of damage all in the first year.
I think if we get back away from the mentality that says -- that you because we also have to raise the debt ceiling in the middle -- there.
That -- let's go back to the hostage taking.
And say we're gonna threaten default if we don't get our way I think that would that would be a mistake time they could agree on a grand bargain.
Now they probably cannot agree on a grand bargain but like Bowles Simpson before the election but post election.
I think it would do a great service to the business community to investors and to Washington.
If they -- sort out of balance plan.
Yup if it were up to me I'd pattern and on the Bowles Simpson book pattern of whatever you want yeah looks -- a balanced approach and and let's do that.
I think a lot of -- like doubled since all right so we've we've agreed up all -- -- but I gotta disagree with some Muir wrote you a pretty good piece of the Wall Street Journal the other day about the Euro zone.
And a crisis but -- it you said eurozone hardliners have called for.
Putting in eight discipline that unified fiscal arrangement similar to the one that we have in the US -- I know that we emphasize the bad news a lot but.
Do you really think that ours is a discipline -- unified fiscal arrangement.
Don't know I said they do it in some sense the opposite the data show that in the US.
One major reason our fiscal union has worked and nobody's talking about whether the state of Minnesota is gonna abandon it.
Is that there are significant.
Subsidies embodied in our fiscal union on a persistent basis that the rich countries pay in more than they get out.
And states like Mississippi and West Virginia get about 10% of GDP per year in subsidy back from the federal government.
In Europe they aren't talking about a fiscal union like that you can understand why the Germans don't wanna sign up for subsidy but without -- That I think they're gonna have a well very sorry to there's segregation was not separate states I think that's a big difference -- and they don't speak the same language that's a problem.
But sometimes we don't either but today we did Austin good to see a thank you for coming in -- -- the University of Chicago professor and a.