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David Leonhardt: Here's The Deal

Tuesday, February 12, 2013

US President Barack Obama delivers his State of the Union address before a joint session of Congress on January 24, 2012 on Capitol Hill in Washington, DC. US President Barack Obama delivering the 2012 State of the Union address. (Saul Loeb/AFP/Getty Images)

David Leonhardt, Washington bureau chief for the New York Times and author of the new e-book Here's the Deal, previews tonight's State of the Union address, and discusses his take on deficits, taxes, and growth. Plus, what the North Korean nuclear test means for Obama diplomacy.

→ Tonight: SOTU Watch and Live-Chat with Brian, plus Emily Bazelon and David Plotz of Slate's Politics Gabfest! Starts here at 9pm.

Guests:

David Leonhardt

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Comments [44]

@dboy:

"Man, you really suziparkered that one."

or

me thinks the gentleman doth protest too much

( a simple "I don't know would be sufficient )

Feb. 12 2013 01:15 PM

"Excellent research done for those lists of salaries. Have you done any similar research on the salaries and other compensation for officers, executives, and employees at non-profit, listener-sponsored WNYC?"

...and, this is relevant how??

Besides to very CLEARLY illustrate my point to the idiot who called to claim that doctors would be forced to work for "free" under a not-for-profit healthcare system.

More than one idiot, this morning...

Thanks, geTaylor!!

Feb. 12 2013 12:03 PM
Susan from Morningside Hts.

Dear Mr. Lehrer and Mr. Leonhardt,

Here is the article, with excerpts, that I was referring to when I called in during your segment. I hope you'll take up this topic again, since the discussion did not get to my question, or those raised in this article: For all the talk we have of supporting "free market forces" in this country, why aren't these manufacturers raising their wages to fill their jobs? That would be a vital source of "growth" for them and for the American middle class. It can't just be about "competing in the global economy" anymore if work is going undone, goods going unsold, and workers opting to be managers at McDonald's because owners don't want to pay higher wages. My "takeaway?" The business community appears to be intentionally suppressing wages, expressing "shock, shock" that they cannot find skilled workers, and blaming the US education system, all in one breath.

From "Skills Don't Pay the Bills:" by Adam Davidson,
http://www.nytimes.com/2012/11/25/magazine/skills-dont-pay-the-bills.html?pagewanted=all&_r=0...

EXCERPTS: "And yet, even as classes like Goldenberg’s are filled to capacity all over America, hundreds of thousands of U.S. factories are starving for skilled workers."

"Last year, [Isbister] received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.”

"The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.”

"In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren’t many places where manufacturing wages were going up and employers still couldn’t find enough workers. “Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.” The study’s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages."

Feb. 12 2013 11:43 AM

@dboy & @CaptainDrG:

Excellent research done for those lists of salaries. Have you done any similar research on the salaries and other compensation for officers, executives, and employees at non-profit, listener-sponsored WNYC?

Feb. 12 2013 11:36 AM

Deep breaths Katie. I'm merely saying that the brushing aside of STEM is problematic in a few ways. I firmly believe that education in the various disciplines have enriched our collective creativity, but we're losing ground on the science end. By the way I went to Hofstra, not Harvard. I'm in my 40's and I STILL have student loan debt.

I'm with you on the skyrocketing cost of higher education as it is a necessary tool that will help our country compete in the future, and it should not be cost prohibitive for most of us.

Feb. 12 2013 11:27 AM
Katie from Huntington, NY

Rich P.
First: In previous generation there was no such thing as student loan debt, so why has private college education become so exponentially expensive. Not everyone has to go to Harvard.
Second: If we don't have people educated in all fields, who will be the custodians of our culture? Are you so judgemental, that you will say people should not be educated in history, theoretical mathematics, human culture, music? You need people educated in those fields.
Third: It always has been that it's a societal responsiblity to provide education. State and local governments are trying to cut corners by cutting their responsibilities for education.

Feb. 12 2013 11:16 AM

Barbara385 ~

BRAVA!!

Feb. 12 2013 11:01 AM

A genuine epiphany! Our present economy is doomed by "non-progressive" pricing. The "progressive" economy would arrange for (make that "require") persons who earned more than the median income pay a higher higher price for all goods and services than persons who earn below the median.
How much higher? We'll democratically elect a representative legislature to create a board of experts whose judgement is not clouded by the demands of democratic politics. The board will set prices, and tax rates, for the various levels of earnings.
I'm surprised that no one thought of it before. Although, truthfully, Mr. Lehrer always seems to be hinting at this solution. ;-)

Feb. 12 2013 10:58 AM

Did I hear David Leonhardt say that people over 40 find it easier to
pay $2000.00 per month on their housing? He must be living on a different planet from me.

Feb. 12 2013 10:57 AM
RUCB_Alum from Central New Jersey

Things I hope to hear in tonight's SOTU -

1) The fastest way to closing the deficit is full employment. Any other solution makes the suffering last longer. The Congress needs to align their rhetoric with their action and stop giving with one hand and taking with the other.

2) In the first decade of the 21st century, the President and Congress raised the national debt by $5T when Clinton/Gore had left it on a path to be $0 in a decade. A fifteen trillion dollar swing. Now, the GOP wants the poor and politically weak to pay for the spending spree. That is not the American way. That is not fair.

3)Incidents of gun violence are too frequent in our country. The NRA perceives every attempt at reigning in the carnage as an attack on a Constitutional right. It is not. No one seeks to end the right of a law abiding citizen to purchase and own a firearm. However, rational people must be able to do something other than wait their turn to get shot or at least get shot at. We invite the NRA to help construct the legislation which protects more people from the rampant abuse of the 'right to keep and bear arms'.

4. Political equality - the only thing that Jefferson could possibly have meant in our Declaration of Independence - is still the goal for each and every citizen of our country. DOMA must go. A path to legal citizenship (or safe return) should be open to our non-legal immigrant population. Our children should be certain that the degree they receive qualifies them for further education at any institution in the country or to take their place in the workplace of the country. We treasure ALL of our children but none above any other.

Feb. 12 2013 10:49 AM
Burtnor from Manhattan

Agree with comments here and on air that:
-- real issue is income inequality
-- find some tax money from corporations that pay little or none
-- social security does NOT contribute to the deficit
-- raise the payroll income tax cap
-- ALL health care should be non-profit. No one should make a profit (other than a salary) from someone else's illness.

Feb. 12 2013 10:43 AM

Katie, your argument ignores student loan debt. It's a bit naive to emphasize that college is for one's edification with less regard for utility.

Feb. 12 2013 10:42 AM

Health Insurance costs are not health care costs. Health Insurance costs except for Medicare are for profit insurance costs.
Why did this Mr. Leonhardt not mention the costs of drugs, lobbyists costs etc. that Medicare cannot negotiate and are again, profit driven. Why do we not mention how other countries have healthier populations and pay less for health care than we do in the United States.

I agree with the poster above, Mr. Leonhardt is a deciple of Pete Peterson in what he is saying. He never mentions that so many people lost their life savings and their 401 plans in the economic fail since 2010. But the Banks kept all the monies to themselves and are never brought up on criminal charges, and manipulate us, as in libor rates.

We need public campaign financing to get rid of all the elected who are bought by lobbyists. We need elected people who do the job we elected them to do, not the job paid for by lobbyists that are killing us all as we struggle to survive.

Feb. 12 2013 10:41 AM

"Non-For-Profit" Healthcare means THESE Klowns® DO NOT vacuum billions out of the American economy!!

"Executive pay at the largest shareholder-owned health insurers continued to rise in 2011. Five of seven chief executives saw their total compensation in 2011 go up compared with 2010."

http://www.ama-assn.org/amednews/2012/images/gbisf0531a.pdf

AETNA
Mark Bertolini
$937,318 $1,000,000
$1,894,848 $2,000,000
$5,827,331 $7,299,731
$0 $0
$31,890 $5,208
$117,465 $251,396
$8,808,852 $10,556,335
2010 2011
20%

CIGNA
David Cordani
$1,000,000 $1,000,000
$7,356,375 $9,323,125
$4,474,993 $5,825,025
$2,198,019 $2,647,883
$104,214 $159,040
$91,983 $130,494
$15,225,584 $19,085,567
2010 2011
25%

COVENTRY HEALTH CARE Allen Wise
$600,000 $600,000
$2,750,000 $0
$6,864,000 $9,599,998
$0 $0
$3,000,000 $2,400,000
$433,413 $388,685
$13,647,413 $12,988,683
2010 2011
-5%

HEALTH NET
Jay Gellert
$1,204,615 $1,200,000
$1,215,000 $1,539,000
$863,588 $2,765,610
$2,497,575 $1,976,778
$1,793,883 $2,758,296
$90,292 $88,795
$7,664,953 $10,328,479
2010 2011
35%

HUMANA
Mike McCallister
$1,026,182 $1,056,875
$2,052,364 $2,113,750
$0 $1,276,907
$2,500,097 $2,312,843
$0 $546,486
$569,274 $0
$6,147,917 $7,306,861
2010 2011
19%

UNITEDHEALTH GROUP
Stephen Hemsley
$1,300,000 $1,300,000
$3,400,000 $4,940,000
$4,500,045 $7,000,028
$1,500,007 $0
$0 $0
$110,079 $154,804
$10,810,131 $13,394,832
2010 2011
24%

WELLPOINT
Angela Braly
$1,144,000 $1,144,000
$2,714,503 $1,858,528
$5,404,433 $8,000,009
$3,595,564 $2,000,513
$10,605 $38,813
$591,340 $216,279

DOCTORS STILL GET PAID!!

Feb. 12 2013 10:41 AM
Katie from Huntington, NY

The purpose of College and University is for expanding and educating the mind, not just to get a good paying job. I think the discussion about cutting off funding to those who take art history or journalism as opposed to fraking engineering, etc., is disgraceful.

Feb. 12 2013 10:38 AM
kikakiki from wall street

I just want to know when enough profit is enough so that business can begin to think about the worker. When the profit margin is getting higher and higher and the wages are getting lower and lower the free market system is out of control

Feb. 12 2013 10:34 AM

30 years of tax breaks, union busting, etc. & salaries are still at 70s levels. Tax receipts are at a lower level than under Ike even though our population has almost doubled = NO GROWTH.

The GOP Soviet supply side system hasn't worked. Why doesn't Mr. Leonhardt accept that hard fact????? Trouble with simple math???

He keeps offering short-term non-solutions to long-term solutions.

Mr. Leonhardt current & past returns on investments & college degrees do not predict future earnings, jobs, etc.

The current situation was created by Reagan, Gramm et al. with help from Clinton. His short term facts become history once they are published. Has he forgotten that? Past data does not necessarily predict future facts.

Brian, the NYTimes has wasted a valuable segment of your show.

Feb. 12 2013 10:34 AM
Amy from Manhattan

He's not a CNBC reporter, but he'll play one on the radio!

What about the fact that a market controlled by a monopoly or oligopoly (like computer or energy co's.) is no more free than a market regulated by a government? Right-wing Republicans never acknowledge this.

Feb. 12 2013 10:34 AM
michele from westchester

Apropos your caller who asked why doctors, among the entire market economy, should even possibly be asked to offer services for free or less than they're worth:

Can your guest address the reasons that the medical sector alone among all our industries is plagued with a middle man, the insurance industry, that profiteers off of this sector's provider-client relationship?

How is it that in a capitalist free market system, the major factor everyone returns to is the "rising cost" of this sector, to the point of saying the resolution is how to get people to use or pay LESS to that sector's providers?

Would plumbers or their clients, for example, accept such a state of affairs? It speaks to the dearth of true "values" in our society that we mindlessly sustain this state of affairs in regard to our health, the basis for life. Isn't "life" the first thing our founding documents take a stand to support? In the 21st century it's more clear than it was then, that life depends on optimal health, so that we are able to pursue liberty, etc.

Feb. 12 2013 10:33 AM
Burtnor from Manhattan

Ridiculous that Brian is buying into Leonhardt's false antagonism between spending on the young and spending on the old. Why perpetuate that obfuscating non-issue?

We need support for good schools AND support for older people to live with dignity -- but could rebalance the budget by challenging other priorities: the absurd level of military spending on obsolete weapons systems, subsidies for energy companies and agribusiness, tax breaks for corporations and wealthy individuals, waste and mismanagement.

Feb. 12 2013 10:33 AM

EVERY single issue:

Our Dickensian friend can hardly contain his problem with the President's complexion.

Pathetic and totally predictable.

Feb. 12 2013 10:32 AM
RUCB_Alum from Central New Jersey

@Martin Chuzzlewit from Manhattan

"LOL .... and we're stuck with an anti-growth socialist in the White House for 1437 more days.

Good luck."

The only possible good thing about the end of the President's term will be that you will STFU with your crypto-racist hatespeak.

Hope your writers are already working on Hilary putdowns. You will need them.

Feb. 12 2013 10:31 AM
Amy from Manhattan

The idea that you make more money the older you get isn't holding anymore in this economy.

And economic growth may be able to go on "forever," but there'll be ups & sometimes severe downs in that overall upward slope, & when growth is going at a high rate, that rate can't be sustained over the long term.

Feb. 12 2013 10:28 AM
Martin Chuzzlewit from Manhattan

LOL .... and we're stuck with an anti-growth socialist in the White House for 1437 more days.

Good luck.

Feb. 12 2013 10:28 AM
antonio from baySide

Thanks CaptDrG!!!
I presume that's the fine senator from Vermont!

Feb. 12 2013 10:27 AM
Aiken from Hastings

RE: the caller who was offended by the comment that health care should not be a for profit industry. He's primarily worried about doctor's incomes. I have in-laws and friends in France and England who are doctors who live better than doctors here, better quality of life, less stress (better system for dealing with malpractice), good incomes, less school debt to begin with. Most of the profit in health care goes to the drug, device makers, and insurance companies. Doctors are just as screwed by this system as patients.

Feb. 12 2013 10:26 AM

Brian and team, please post the link (or the names of the colleagues) mentioned by David Leonhardt regarding some in depth spending data.

Feb. 12 2013 10:26 AM
Bobby G from East Village

Here is how our tax system works:

1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.

2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.

3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.

4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.

5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.

6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.

8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.

9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.

10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
Reply · 14 · · 7 hours ago

Feb. 12 2013 10:25 AM
mejimenez from manhattan

Although he sounds more reasonable than the deficit scolds, advocates of Modern Monetary Theory (MMT) would say that he is confused about the so-called debt and the role of taxes. A government that is the sovereign issuer of its own fiat currency can never run out of money. Quoting from http://neweconomicperspectives.org/2013/01/mmt-and-social-norms.html: "there are very REAL constraints on what the federal government can spend, but those constraints are not on the FINANCIAL side (whether or not the government has "enough money" to spend) but, instead, are on the RESOURCE side - whether the labor, materials and manufacturing capacity are actually there to be put to work by the proposed sovereign spending." Only if the government is throwing more money at the problem than the resource side can absorb do we run into the danger of inflation.

MMT'ers are very clear that inflation can be managed through taxation. Quoting from the Wikipedia page on MMT/Chartalism: " Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities per se."

Feb. 12 2013 10:24 AM
Nancy

Did I hear Mr. Leonhardt say that Social Security would still have problems even if we didn't do any military spending?! Please, Brian, ask him to explain!

Feb. 12 2013 10:24 AM
Katherine Jackson from LES

I have no idea what David Leonhardt recommends as a way of insuring "balance" between future-oriented spending and taking care of today's elderly. But isn't there a danger that the cuts to Medicare might be such that a portion of costs for the care of older family members fall on the shoulders of younger family members? Won't everybody pay more for an inadequate safety net?

Feb. 12 2013 10:24 AM

To the "I'm not a doctor" caller:

"Non-For-Profit" DOES NOT MEAN DOCTORS DON"T GET PAID!!

geezus. It's a good thing you're NOT!!

Feb. 12 2013 10:21 AM
sp from nyc

Solving the debt crisis really is not hard. What is needed is the following:
1. Eliminate ALL deductions (that means mortgage, charity, child, state and local tax, business loopholes, etc.) If Congress really thinks something is worth supporting, they will have to appropriate funds for it openly and defend the decision. After all, every deduction someone gets means everyone else pays more, since government must still be funded.
2. Institute a single, progressive income tax that covers ALL income--there is no reason to tax income one does not work for (i.e., capital gains) at a lower rate than income one puts in time and effort to earn. Set these rates to actually cover our obligations. Now that the Supreme Court has recognized corporations as persons with equal free speech rights, tax them at the same rates as persons.
3. Disallow any political contributions from non-constituents--representative government can only function if those in office actually represent those who elected them rather than those with deep pockets. Set representative pay and privileges at the mean for their constituents.

The current system breeds distrust and contempt, as our purported representatives ignore their constituents in favor of their corporate paymasters, obscuring their bought-and-paid-for favors with endless, incomprehensible layers of taxes and deductions. If the Democrats and Republicans can't (or won't) act in our interest, we will vote for a third party, one with a moral compass.

Feb. 12 2013 10:21 AM
John A

Right, break the cycle of selfishness, either at the top or at the bottom. Teach people to be selfless.

Feb. 12 2013 10:19 AM
RUCB_Alum from Central New Jersey

Clearly, payroll tax cap which now end at about $113K in salary ought to be raised. I suggest the amount subject to taxation increase to where the top tax rate begins. Approx. $400K. The folks who would be creamed by this are the self-employed. They should get some relief from having to pay both sides of the FICA bite below most other earners.

The rates - which we have been paying double on SINCE the Greenspan commission of the 80's - ought to go down.

Feb. 12 2013 10:19 AM

Does his calculation take into account the people who contribute but do not live to enjoy the benefits in his bottom line ?

Feb. 12 2013 10:19 AM

Speaking of takers: We can save more than the entire present tax revenues by not giving welfare to super rich bankers.
The Federal Reserve gave $16.1 Trillion since 2007 to:

Citigroup: $2.5 trillion ($2,500,000,000,000)

Morgan Stanley: $2.04 trillion ($2,040,000,000,000)

Merrill Lynch: $1.949 trillion ($1,949,000,000,000)

Bank of America: $1.344 trillion ($1,344,000,000,000)

Barclays PLC (United Kingdom): $868 billion* ($868,000,000,000)

Bear Sterns: $853 billion ($853,000,000,000)

Goldman Sachs: $814 billion ($814,000,000,000)

Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)

JP Morgan Chase: $391 billion ($391,000,000,000)

Deutsche Bank (Germany): $354 billion ($354,000,000,000)

UBS (Switzerland): $287 billion ($287,000,000,000)

Credit Suisse (Switzerland): $262 billion ($262,000,000,000)

Lehman Brothers: $183 billion ($183,000,000,000)

Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)

BNP Paribas (France): $175 billion ($175,000,000,000)

Federal Reserve's nearly 100 year history was posted on Senator Sander's webpage.
http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

Feb. 12 2013 10:18 AM

I LOVE the speculative media HYPE!!

This is a speech that hasn't even been DELIVERED YET!!

Can't we at least WAIT until the speech is delivered?!!?

Feb. 12 2013 10:18 AM
antonio from baySide

BUT S.S DOES NOT CONTRIBUTE TO THE DEFICIT!

Feb. 12 2013 10:15 AM
fuva from harlemworld

This is noise. The SIGNAL is the structural problem of income inequality, which drives deficits, not to mention a kind of feudalism.

Feb. 12 2013 10:14 AM

We have an unemployment problem that has not been addressed sufficiently since the last 2 years of the GWB administration. The unemployment problem was increased when the GOP blocked aid to cities & states to maintain 1st responders, et al.

Mr. Leonhardt loses his credibility as he joins the Pete Peterson fear propaganda machine.

Social Security cure: remove wage/salary cap on FICA tax. Make "carried interest," interest & dividends regular income & limit capital gains to assets held more than 10 years.

Feb. 12 2013 10:14 AM
amalgam from NYC by day, NJ by night

By the way and as per usual, David Leonhardt wrote an excellent piece (with a bad title) for the Times regarding the economics of "green growth" being trumped by the environmental challenges and vagaries of climate change.

http://www.nytimes.com/2013/02/10/sunday-review/its-not-easy-being-green.html?pagewanted=all&_r=0

Feb. 12 2013 09:45 AM
amalgam from NYC by day, NJ by night

Glad to see Chuzzle out early purveying his feverish, unhinged, and unsubstantiated views.

Bully for you!

Feb. 12 2013 09:41 AM
Martin Chuzzlewit from Manhattan

If This Manchurian mole makes his anticipated (and leaked) pitch for unilateral American nuclear disarmament on the day after North Korea’s 3rd (and now successful) nuclear weapons test, while continuing to oppose ballistic missile defense ... then he should be impeached.

Are you people insane?

Feb. 12 2013 09:33 AM

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