The WaPo's train-wreck of an economy Q & A

Blog ››› ››› JAMISON FOSER

On Thursday, Washington Post reporter Frank Ahrens held an online Q&A about president Obama's jobs summit. Ahrens has been widely mocked for his inane response to a reader who correctly pointed out that he was wrong to suggest that U.S. corporations pay unusually high taxes:

Frank Ahrens: But did you know our corporate tax rate is among the highest in the world? That makes a real difference if you're a business and you're thinking about locating in the U.S. or, say, India.

...

But did you know our corporate tax rate is among the highest in the world?: Dead wrong. Our nominal tax rate of 35% is among the highest, but because of loopholes our real tax rate of 18% is among the lowest real corporate tax rates.

Frank Ahrens: Back atcha.

That was Ahrens entire response: "Back atcha." What was that even supposed to mean? As Matthew Yglesias put it, it was an "embarrassing exchange between The Washington Post's readers and a badly overmatched Washington Post financial reporter, who doesn't seem to know anything about tax policy, or how to admit you're wrong, or how to just confess ignorance of an issue."

But what hasn't gotten much attention is that the rest of the Q&A was a train-wreck, too.

In response to the second question he was asked, Ahrens implied that president Obama's response to the recession should be to stop spending and slash the federal budget deficit, which would be news to the legions of economists who think that's the last thing the government should do during tough economic times.

A little later, Ahrens wrote that the jobs summit was "A nice photo opp, with the president standing side-by-side with America's business leaders" and added "Today, big CEOs have the president's ear for several hours, and they can give real rubber-meets-the-road examples of what tax cuts and other business stimuli can provide."

Let's set aside Ahrens odd faith in "big CEOs" having ideas that will help the economy rather than, well, big CEOs. And his suggestion that tax cuts are the answer.

Instead, let's skip to a question a little later, in which a reader from Brunswick, Maine asserted that the jobs summit consisted only of "Unions, Liberal Think Tanks, SEIU, Teacher's Union, EPA, Democrats" and excluded "Independent Businesses." Ahrens' reply? "This is a good point and one which was addressed in our story today on the summit. The White House's response: We've already talked to these other groups and will continue to do so."

Wait, what? Just a few minutes earlier, Ahrens had said Obama would stand "side-by-side with America's business leaders" at the summit, during which "big CEOs" would "have the president's ear for several hours." Now Ahrens says a claim that the summit excludes business interests is a "good point"? Well, which is it?

(That questioner from Brunswick also denounced "this dictatorship from our government body" and said Obama "has taken the most divisive path of any president in history" -- and Ahrens only response was to praise the questioner for making a "good point.")

Then there's Ahrens' claims about the drawbacks of government stimulus spending:

The drawback here is that there is not enough government money to sustain an economy the size of the U.S.'s. It's like trying to run a big furnace with one coal. And, it ends up being a zero-sum game -- nothing is created, just recycled.

Some have advocated creating a new FDR-like WPA, or Works Progress Administration, creating millions of new make-work jobs. If your goal is only lowering unemployment, that'll work. But if your goal is restoring a vibrant, growing economy, it won't for the reasons listed above.

The "trying to run a big furnace with one coal" analogy doesn't really work. A better one might be "using kindling to start a bonfire." And Ahrens didn't actually explain how putting people to work won't help to restore a "vibrant, growing economy." Unless he thinks his furnace analogy is the explanation.

A little later:

During President George W. Bush's two terms, unemployment started in January 2001 at 4.2 percent. In his last month in office, January 2009, it was up to 7.6 percent.

Prior to last year's recession surge, however, unemployment during the eight years of Bush's terms never got higher than 6.3 percent. ... for the bulk of his two terms, unemployment was not a problem.

Granted, "not a problem" is somewhat subjective, but many people probably thought a 50 percent increase in the unemployment rate in a little more than two years was at least a little bit of a problem.

Then, in a response to a question citing Amity Shlaes' book, The Forgotten Man: A New History of the Great Depression to claim that the New Deal didn't work, Ahrens replied:

[Y]es, there's some excellent recent scholarship on the efficacy -- or not -- of of FDR's alphabet-soup agencies. The chief villain appears to have been the NIRA -- the National Industrial Recovery Act -- which (shockingly) actually allowed businesses to create cartels and monopolies to fix prices. (An example, by the way, of demand-side economics.)

Shlaes' anti-New Deal argument has been widely criticized, and economists like Paul Krugman have noted that the New Deal was working until FDR was persuaded to cut government spending in order to balance the budget. Which, remember, is what Ahrens thinks should happen now.

Like I said: train-wreck.

Posted In
Economy
Network/Outlet
The Washington Post
Person
Frank Ahrens
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