Economic Adviser Goolsbee On Tax Cuts
MELISSA BLOCK, host:
This is ALL THINGS CONSIDERED from NPR News. Im Melissa Block.
DAVID GREENE, host:
And Im David Greene.
Now to a view from the White House on the economy and the contentious issue of tax cuts. The House of Representatives will be focused on that issue next week when it votes on a package of tax breaks and loan incentives for small businesses. Yesterday, the Senate overcame Republican objections and approved the bill.
Still looming is the debate over those Bush-era tax cuts that expire at the end of the year; namely, whether to extend cuts that benefit the highest income levels.
BLOCK: We're going to talk about taxes and the economy now with Austan Goolsbee. He was recently named chairman of the White House Council of Economic Advisers.
Austan, welcome back to the program.
Dr. AUSTAN GOOLSBEE (Chairman, White House Council of Economic Advisers): Thank you for having me, Melissa.
BLOCK: Part of what is fueling the debate over taxes is the concern that letting that tax break expire on income above $250,000 is going to hurt some small businesses. How do you address that concern?
Dr. GOOLSBEE: First of all, the president's totally committed to helping small business, has been pressing for months to get the Small Business Bill passed, that would give them credit and cut taxes for small business eight different ways. So it's clear that the president has a commitment there.
On these rates, let's remember two things. First, most of the income that would see the rates go up on that income, has nothing to do with small business. They're just generic rate cuts for very high-income people.
BLOCK: But some of it does apply to some small-business owners who file in a certain way. So what about those people? Why shouldnt they be afraid of this?
Dr. GOOLSBEE: Well, as I say, more than 97 percent of small businesses, that would have no impact on them. All small businesses in the country can benefit from the eight different tax cuts that the president has in the Small Business Assistance Bill, as well as giving them credit.
And it's clear that if you take as a package the president's plan of extend the middle-class tax cuts, pass the business tax incentives he called for in his small-business bill, it's far more pro-business than is passing significant tax cuts for people that make very substantial amounts of money, which all objective analysts have said are the least effective way to get the economy going.
BLOCK: Let's talk about the broader economy here: the 9.6 percent unemployment rate that we're looking at right now, GDP just 1.6 percent in the second quarter. When you look at those numbers, where do you say we are right now, and what do you say to people who think we are headed for a double-dip recession?
Dr. GOOLSBEE: Well, I dont think we're headed for a double-dip recession. But what I would say to most people - you dont need to be an economic expert to know that we have been in a very tough spot, and it will continue to be a difficult road.
Now, there are certainly bright spots. We've had eight straight months of private-sector job growth. I think we just have to keep working away at it because when you're that far down, it's going to take time to get out. But we are on the right path, and I think we just got to do everything we can to accelerate the growth rate and accelerate the hiring.
BLOCK: Would a realistic view right now be: Look, we're stuck where we are right now for a good stretch of time; we'd better get used to it. Things might get a little bit better, but we're not going to be seeing great growth; we're not going to be seeing a great change in unemployment.
Dr. GOOLSBEE: Well, I certainly dont think we should adopt a kind of a fatalist view that, you know, we were down in a deep hole; it's going to take us a while to get out so we should just give up. I mean, I dont think it makes logical sense, and I dont think it makes practical sense here, either.
There is no question that as you come out of major financial crises, it's always hard. No matter what country you look at where theyve had that, it's always hard to get out. But we're on a path to recover. And we've got to keep working down that path, and we've got to do everything we can to accelerate the growth.
I certainly dont think we should give up. That would be a terrible idea.
BLOCK: We did have $787 billion in stimulus spending. Why do you think it hasnt had more of a stimulative effect, in what was supposed to be recovery summer?
Dr. GOOLSBEE: Well, I'd say two things about that. Much has been made about the recovery summer. But it is the case that the vice president was talking about recovery summer in reference to the Recovery Act and the projects that would be coming online over this summer.
What the Recovery Act did is stop the freefall. The private sector had completely frozen and the Recovery Act, along with what happened from the Fed, prevented that from turning into a depression. And it did create - according not just to the government, but also according to private-sector forecasters and the nonpartisan CBO - it did create millions more jobs than would have existed if it weren't there.
BLOCK: One last question. Austan Goolsbee, given the political climate that we're in right now, would you say that stimulus has become a dirty word, verboten in the White House?
(Soundbite of laughter)
Dr. GOOLSBEE: Look, I dont know. Im not an English professor. Im just an economist, and I tend to think in numbers. So I dont have too much of...
BLOCK: We dont hear that word used very much these days.
Dr. GOOLSBEE: ...a semantic view of it. I know we need to get the growth rate up, and we need to do everything we can to get people back to work. And, you know, whatever you want to call that, thats what everybody is thinking about doing.
BLOCK: Okay. Austan Goolsbee, thanks very much.
Dr. GOOLSBEE: Okay, nice talking to, Melissa.
BLOCK: Austan Goolsbee is the chairman of the White House Council of Economic Advisers.