Tags: Hubbard | Obama | economic | policy

Glenn Hubbard: Why Obama's Economic Policy Errs and How to Fix It

By    |   Monday, 02 March 2015 08:31 AM


Glenn Hubbard, dean of Columbia University's Business School and former chairman of the Council of Economic Advisers under President George W. Bush, sees problems with President Obama's economic policy.

The goal should be to "advance growth, work, and economic opportunity," he writes in The Financial Times.

"To do this we must go beyond the current triangle of trade-offs among jobs, income security, and near-term budget outcomes. This triangle is really a tri-lemma—in trying to achieve two elements, we miss the third."

That leads to inadequate policy, Hubbard says. "For example, a focus on employment and short-term cash savings led to temporary stimulus following the 2008 financial crisis, instead of the larger jolt to expectations that the troubled economy needed (and needs) for a real recovery."

In addition, Obamacare emphasizes "income security and near-term budget outcomes . . . at the expense of employment by taxing work and imposing job creation penalties on businesses," Hubbard says.

The solution? "We need a different triangle emphasizing growth and opportunity, making work pay, and long-term budget goals," he writes. That can include wage subsidies or an expansion of the Earned Income Tax Credit.

Meanwhile, Peter Schiff, CEO of Euro Pacific Capital, offered a pessimistic view of the economy in an interview with Newsmax TV.

"The problem is the economy can't stay strong because it's not strong," he said on the network's "MidPoint" program. GDP grew 2.4 percent last year. "It's a bubble, and the Fed is inflating the bubble, which is why it's lying about shrinking its balance sheet," Schiff said.

That balance sheet now totals $4.6 trillion. And it's "never" going to shrink, he said. "The balance sheet is going to get bigger and bigger when the fed launches QE4 [quantitative easing]." The Fed finished its third round of quantitative easing last October.

"They cannot shrink this balance sheet, and they cannot raise interest rates without pricking the bubble. That's what they should do, but unfortunately, that's not what they're going to do," Schiff said.

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Glenn Hubbard, dean of Columbia University's Business School and former chairman of the Council of Economic Advisers under President George W Bush, sees problems with President Obama's economic policy.
Hubbard, Obama, economic, policy
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2015-31-02
Monday, 02 March 2015 08:31 AM
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