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Boehner's Economic Take: At Odds With CBO, Biden and Guru Mark Zandi

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Rep. John Boehner, the House Republican leader and speaker-in-waiting, isn't getting much pundit love for his speech on the economy Tuesday at the City Club of Cleveland.

The headline was his suggestion that President Obama fire Treasury Secretary Tim Geithner, economic adviser Larry Summers and the rest of his economic team. Conservative blogger Ed Morrissey called that sound counsel. But economist Mark Zandi, who has advised candidates of both parties, including Obama and 2008 GOP nominee John McCain, said Wednesday that would be counter-productive.

"Certainly changing leadership doesn't engender any confidence, significant confidence. I don't think that would be prudent or that would be helpful in any way," Zandi, chief economist of Moody's Analytics, said at a Christian Science Monitor breakfast with reporters.

Zandi also said Boehner was "just wrong" to characterize the economy as "stalled" by stimulus spending. In fact he credited the $814 billion stimulus, passed early last year, with ending the recession and saving the country from an 11.5 percent unemployment rate -- two points higher than it is now.

About $200 billion in stimulus was spent in the second and third quarters of 2009, Zandi said. "That's the change that provides the economic juice and that's when the recession ended," he said. He called "exactly right" a Congressional Budget Office report this week that said the stimulus has raised GDP, reduced the unemployment rate and increased employment by 1.4 million to 3.3 million jobs.


In his speech, Boehner said uncertainty about federal policies is crippling business activity. "The prospect of higher taxes, stricter rules, and more regulations has employers sitting on their hands. And after the pummeling they've taken from Washington over the last 18 months, who can blame them?" he asked.

Zandi said some in the business community "feel like they're being beaten up on in a public way, and it's enervating. It's tiring." He said that should be addressed by the administration so everyone feels like they're working on the same team. However, he said employers are holding back primarily because of the trauma they experienced or witnessed when the economy crashed.

New financial regulations had to be passed after the collapse, and there was logic in taking up health care reform as well, in Zandi's view. That did create some uncertainty, he said, but with the two laws signed and regulations now being written, "we're past the worst of it."

There is a question of what will happen to tax rates when the Bush tax cuts expire in January. Obama campaigned on a promise to let the lower rates expire for families making more than $250,000. Boehner urged him to keep the lower rates for all income levels. Zandi supports a middle ground -- raising no one's taxes in 2011, but phasing out the cuts for high-income people over three years starting in 2012.

The highest-ranking critic of Boehner's speech was Vice President Joe Biden, who kicked off an event touting stimulus achievements Tuesday by rebutting the Republican leader's proposals -- especially his call to fire the economic team. "Very constructive advice, and we thank the leader for that," Biden said sarcastically. He said the Bush administration turned a $237 billion surplus into a $1.3 trillion deficit and added: "Mr. Boehner is nostalgic for those good old days, but the American people are not. They don't want to go back. They want to move forward. And so, folks, I'm still waiting for what it is that they are for."

One of Boehner's proposals was to cut non-defense discretionary spending to 2008 levels. Derek Thompson, a business writer for The Atlantic, noted that a Boehner spokesman mocked the same proposal when Obama made it in January. Boehner's speech also bombed with Washington Post columnist Ruth Marcus, who called it "a depressing blend of tired ideas, tired-er one-liners . . . and cheap attacks." She said it had killed for her, at least for now, the idea that divided government would work better for the country.

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2 Comments

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sysaphus71

As in the campaign for the Presidency,....it should only take a couple of sentences to determine who ACTUALLY HAS A CLUE AND WHO IS IMPRESSED BY THEIR OWN RHETORIC AND HUFF. Let Obama continue to roll the rose colored prose and empty promises thru the telepromoter and maybe just maybe ...this time enough people can discern the difference between the clued in and the clueless.

August 26 2010 at 8:13 PM Report abuse +2 rate up rate down Reply
Michael

What we need to do is borrow trillions to spend on adding headcount to the bloated and ineffective headcount on the Federal payroll. Then the money they spend on limos and entertainment will trickle down to enrich the middle class and lift the underprivileged out of poverty! Who needs industry, mining, manufacturing? That stuff is so old fashioned and boring, it's not even green! We must abandon the capitalist folly that made America the greatest economy in history in order to embrace the repeatedly failed fantasies of 19th century ideologues!

August 26 2010 at 3:08 PM Report abuse -3 rate up rate down Reply
Jim

Is this the same CBO that promised us Obama-care would not add to the budget and actually bring prices down? The one that said "THE ONE" was right and these things would come to pass? The same CBO that now says "oops,we may have screwed up by a couple of hundred billion dollars,or more and that health care costs are certain to rise? If judged by deeds and not WORDS, the CBO and this administration should NEVER be believed again. The sooner they go, the better. God Bless America.

August 25 2010 at 6:31 PM Report abuse +8 rate up rate down Reply
thirdsqurl

I saw Boehner on Meet the Press. He was asked over and over again how he was going to pay for a renewal of the Bush tax cuts, and Boehner repeatedly refused to answer the question. The truth is the Republicans have no intention of paying for their tax cuts. They want to take money and run, leaving the debt for future generations. As a fiscal conservative, I refuse to endorse a party this crooked and corrupt. Check out the Mondern Whig Party, it's time for a change.

August 25 2010 at 3:28 PM Report abuse -6 rate up rate down Reply
jspe7

John Boehner claims that business a "pummeling " in the past 18 mnths of the Obama administration. Why was it that Mr Boener had his head stuck in the sand during the 8 years of "pummeling " that our nation took under his leadership and the Bush regime let us review those "golden years"----massive tax cuts with the rih getting 95 percent of them, a huge tax INCREASE for the American consumer with gas rising to almos 5 dollars a gallon (and that "tax" going not to our Treasury but to the oil companies), a disaster called the Iraq war costing over a TRILLION dollars and the precious lives of over 4,000 of our young soldiers, a TARP bailout for the crooked Wall Street gang, worst housing and job numbers since the great Depression, and adding over 5 TRILLION dollars to our national debt, while the gap between the rich and the average American worker reached record heights Now that Mr. Boehner has taken his head out of the sand, he finds that things are not so good. I just told him who dud it

August 25 2010 at 2:46 PM Report abuse -9 rate up rate down Reply

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