A fantastic visualization of the Twitter buzz surrounding Obama’s inauguration. The number of tweets steadily increases starting Monday morning, and then Tuesday at noon, the map explodes with activity.
Paul Krugman, who has turned Obama into his weekly pinata, takes another whack today:
Thus, in his speech Mr. Obama attributed the economic crisis in part to “our collective failure to make hard choices and prepare the nation for a new age” — but I have no idea what he meant.
If someone makes $40,000 a year, he shouldn’t take a loan for an $800,000 house. When the savings rate plunges to near zero and dips into the red temporarily, there is a collective failure. Obama means, after an era of living beyond its means, the public must make the hard choice of sacrifice.
The government shied away from difficult decisions as well, repeatedly kicking the can down the road on Social Security, Medicare, pensions, etc. Consequently, the budget spiraled deeper into deficit, hampering current options with which to confront the financial crisis.
Obama plans to save or create three to four million jobs over the next two years. The records of his predecessors:
Ezra Klein analyzes Cass Sunstein’s appointment as head of the Office of Information and Regulatory Affairs:
The point of all this is that OIRA is quiet, but important. It’s the chokepoint of the entire federal regulatory apparatus. If used wisely, it facilitates the flow, provides welcome analysis and judgment, and aids in implementation…
It’s worth remembering that Sunstein has recently achieved great fame for Nudge, a book which basically argues that we need to apply the insights of behavioral economics to the construction of regulation. And Director of the Office of Information and Regulatory Affairs is the ultimate staging ground for those ideas.
This is a huge pick.
In Nudge, Sunstein discusses the standard behavioral economics example: 401(k) plans. Companies generally have opt-in policies, where workers are forced to fill out paperwork to enroll in the plan. One of behavioral economics’ axioms is that people tend to stick with the default; therefore, the majority of people never take advantage of their 401(k)s.
Say you make a minor tweak. Switch the 401(k) from opt-in to opt-out, meaning employees are automatically enrolled in the program. A CBO study shows that this nearly doubles participation rates (going from ~45% to ~85%). For employees making under $30,000, participation nearly quadruples.
As head of OIRA, Sunstein could implement this nudge as well as a passel of other ones outlined in his book. They’re subtle adjustments in “choice architecture” that deliver outsized benefits.
Obama has taken some flak from the left for including $300 billion worth of tax cuts in the stimulus package. Tax cuts have traditionally not stimulated an economy during recession, as people shovel the money under their mattresses instead and aggregate demand stays flat.
In this crisis, however, people need money to pay for essentials like their mortgage payments. The tax cuts target that socioeconomic bracket; the incoming Obama administration thinks that no one from this group can afford to save the money.
It’s also important to note that there’s a surprisingly low ceiling to infrastructure investment. Doubling the current federal infrastructure budget would compose only eight percent of a $75o billion package. The rest of the stimulus needs to go somewhere, and tax cuts are not only politically beneficial but ease the recession’s impact on the less well-off.
This Wednesday, Obama introduced Nancy Killefer as chief performance officer, “who will work with federal agencies to set performance standards and hold agency managers accountable for progress.” Often in government bureaucracies, standards aren’t as high as they would be in a corporation, and managers can skate by with lackluster records.
With this appointment, Obama tries to change that tradition, carrying over a critical concept from the election. In a post-election interview with Portfolio, campaign manager David Plouffe said, “We were an organization about accountability. Down to the entry-level staffer, we measured their job performance based on metrics.” That business-like attention to data played a major role in the ground game’s success. Implementing a similar philosophy in government should pay dividends as well.