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Thursday, June 12, 2008

Jason Furman, Social Security, and Wal-Mart

If you haven't heard, Barack Obama named Jason Furman as his economic policy director. Because of his centrist leanings and his identification with Rubinomics, some have questioned Furman's dedication to progressive causes, and there has been quite a bit written about this, not all of it accurate.

For example, take an article in the LA times on Furman's position on Social Security privatization. This response to the article is from the Economists for Obama web site:

Jason Furman and Social Security, Economists for Obama: As Brad Delong points out, this article in the LA Times completely misrepresents Obama Economic Policy Director Jason Furman's position on Social Security privatization. In fact, Jason is the economist who did the most to supply the intellectual ammunition to gun down Bush's proposal during the great Social Security battle of 2005. Jason, with help from Dean Baker and Brad Delong, was key to victory in that struggle. It's not hyperbole to say that without their efforts (especially Jason's), Bush might have succeeded in his efforts to gut the most important social safety net we have. See this paper for one of Jason's contributions in that battle.

Regarding the broader concerns raised in the article, I think Jared Bernstein has it right:

One economist from the left-leaning Economic Policy Institute, Jared Bernstein, offered praise for Furman, saying he understood why some critics were unhappy, though he thought their fears were misplaced.

"I understand the concerns, given positions he has taken" on some issues, Bernstein said. "But I am 110% certain that it will be Barack Obama -- not Jason Furman or Robert Rubin -- who will be setting the policies for the Obama administration." ...

Brad DeLong emailed the author of the article to ask how the inaccurate representation in the article could have happened given how well-known (and easy to find online) Jason's position on Social Security privatization is:

We Get an Email from Tom Hamburger..., by Brad DeLong: Apropos of the astonishing and false claim in this morning's LA Times that Jason Furman is some sort of a crypto-Bushie with views on Social Security matters "similar" to those Bush proposed in 2005, I write to the reporter involved, Tom Hamburger. And he writes back:

Mr. Hamburger's bottom line appears to be that his leaving a lot of readers with a false view of Jason Furman's position on Social Security is OK because that was "not the point of this story..."

So I write back:

On Wed, Jun 11, 2008 at 12:22 PM, Hamburger, Tom wrote:

Dear Mr. DeLong: Thanks for writing. I'll respond briefly and welcome the chance to chat with you further, if you wish. 1/I not only googled "Furman and social security"...

Then how did you miss the first two substantive results in your search?

The Impact of The President’s Proposal On Social Security Solvency ... by Jason Furman, http://www.cbpp.org/5-10-05socsec.htm

Contrary To Claims By Its Supporters, The Congressional Budget ... by Jason Furman ... http://www.cbpp.org/4-29-05socsec.htm...

I don't understand how anyone can write in good faith that Jason Furman's views on Social Security were "similar in some ways to that proposed at the time by President Bush," or could in good faith write that "labor activists... successfully challenged the president's initiative" without also feeling under a moral obligation to note that it was Jason Furman's quantitative analyses of the Bush plan for CBPP that provided a lot of the most effective ammunition against the Bush Social Security plan.

What you wrote simply isn't fair. It also isn't true--unless you rely want to rely very, very heavily on ... weasel words...

You've left a lot of readers with a false impression of Furman's views on Social Security. You owe them a correction. And you owe yourself a correction as well.

Instead, you say:

I wish our anemic news business had more space to include more info. In the future I plan to include some of Furman's social security views. But that was not the point of this story...

To which the rest of us can only respond that a story that says that labor activists are worried that Jason Furman is a crypto-Bushie on Social Security but they are wrong because he was actually a harsh critic of Bush Social Security proposals back in 2005 informs the LA Times's readers, while a story that says that labor activists are worried that Jason Furman is a crypto-Bushie on Social Security and his views are indeed "similar" to Bush's proposals misinforms the LA Times's readers. And there is an important distinction here somewhere. ...

Brad adds a bit from Greg Anrig:

Greg Anrig on Tom Hamburger on Jason Furman, by BradDeLong: Apropos of LA Times reporter Tom Hamburger's gross mispresentation of Jason Furman:... Greg Anrig comments:

...What was special about Jason's work was his relentlessness in turning around pointed analysis with fresh numbers every time new details came out about various plans, and all in nice user-friendly formats that the media could understand. Those kinds of skills are really huge assets for a campaign, as well as an administration. ... No sign of any climbdown on the part of the LA Times...

Why oh why can't we have a better press corps?

Paul Krugman also comes to Jason's defense:

Jason and the Obamanauts, by Paul Krugman: OK, this furor over Jason Furman’s appointment is silly, on two levels.

1. Furman is a very good guy, with a solid track record as a progressive. You can disagree with him about Walmart — and I do — but his heart is clearly with those who want more social justice and a stronger safety net.

2. He’s not, despite what the story says, Obama’s chief economic policy advisor — he’s the economic policy director, which is a process job: basically, he organizes other people to provide advice. Obviously there could be a real problem if the policy director steered the candidate away from progressive advice, but Furman is, as I said, a solid progressive, and well suited to the job of honest broker.

Maybe I’m wrong, but my sense is that Jason Furman has become a proxy target for some Obama supporters who, now that the Great Satanness has been defeated, are suddenly starting to have the queasy feeling that their hero might be a bit of a …. centrist. I’m tempted to say I told you so; in fact, I guess I just did. But that’s all in the past now.

Anyway, lay off Jason Furman, a good guy who will do his best to defeat a candidate who gets his economic advice from Phil Gramm.

As noted, Jason Furman's view on Wal-Mart have also been questioned.

For those who want to go beyond the very stylized characterizations of his position in the media, here's some material from a debate held by the Center for American Progress in November, 2005 on how Wal-Mart impacts wages, prices, etc., and the net effect on the welfare of low income households:

Video: [links don't work]
Full transcript

Writings from panelists:
Wal-Mart's Giant Sucking Sound, by Leo J. Hindery Jr.
Wal-Mart and Job Quality – What Do We Know, and Should We Care?, Arindrajit Dube, PhD and Steve Wertheim
Wal-Mart: A Progressive Success Story, by Jason Furman

At the risk of oversimplifying his views myself, here's a brief passage from the full transcript above:

JASON FURMAN: Thank you... There’s only a handful of decent studies that would pass anything resembling academic muster about Wal-Mart, and the author of one of those studies [Arin Dube] is sitting to my left and will talk to you next. I tried to take a look at a lot of the evidence and sort through it, and some of these are factual differences that I have, in terms of whether we really think that Wal-Mart pays more or less, but a lot of them are profound ones or interpretive differences, and I’ll talk about both of those. ...

The lower prices at Wal-Mart are staggering. They are eight to 40 percent lower than what people would pay elsewhere. The total annual savings in one recent study, and I’ll talk more about it in a moment, for consumers are $263 billion. That’s $2,300 for every household in America. They’re very few public policies that I’ve advocated in my life that would make as big a difference as that.

Compare that to estimates of wage suppression by Wal-Mart, and I’m going to talk about these estimates also in a little bit more detail in a moment. Arin’s written a previous paper finding that that was $5 billion a year in lower wages due to Wal-Mart. $5 billion, $263 billion – it’s just an enormous differential. Because of that I called my paper, and also to be a little bit provocative maybe, "Wal-Mart: A Progressive Success Story," and part of it is the progressive benefits that Wal-Mart has delivered. ...

Wal-Mart, even if we didn’t do anything, would be a force where the good vastly outweighs the bad. But the good isn’t good enough and we need to do a lot more, and Wal-Mart should act in what it claims it’s interested in doing on behalf of its stakeholders and work with all of us to do things like expand Medicaid, food stamps, EITC, raise the minimum wage, which Wal-Mart has finally come around to supporting. ...

Here's a bit more from his paper:

There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector. Plausible estimates of the magnitude of the savings from Wal-Mart are enormous – a total of $263 billion in 2004, or $2,329 per household. Even if you grant that Wal-Mart hurts workers in the retail sector – and the evidence for this is far from clear – the magnitude of any potential harm is small in comparison. ... But Wal-Mart, like other retailers and employers of less-skilled workers, does not pay enough for a family to live the dignified life Americans have come to expect and demand.

That is where a ... progressive success story comes in: the transformation of our social safety net from a support for the indigent to a system to that makes work pay. In the 1990s, President Clinton fought for expansions in support for low-income workers, including a more generous Earned Income Tax Credit (EITC) and efforts to ensure that children did not lose their Medicaid if their parents took a low-paid job. The bulk of the benefits of these expansions go to the workers that receive them, not to the corporations that employ them. Attempts to limit the spread of Wal-Mart and similar “big box” stores do not just limit the benefits of lower prices to moderate-income consumers, they also limit the job opportunities that Wal-Mart and other retailers provide. More puzzling is that some progressives have described Medicaid, food stamps, the EITC, and public housing assistance as “corporate welfare.” The right response to Wal-Mart is not to scale back these programs but to expand them in order to fulfill the goal of making work pay.

If Wal-Mart were committed to the welfare of its more than 1.3 million “associates,” as it calls its workers, then it would push to expand these public programs. Instead, Wal-Mart and the Walton family have generally worked against the progressive issues that would benefit its employees, including funding campaigns advocating the repeal of the estate tax. Recently, Wal-Mart has come around to endorsing a higher minimum wage, but this limited step is outweighed by its consistent funding for attempts to roll back progressive priorities that would benefit its workers. ...

Thus, how you see Jason's views depends, in part, on how you view changes in the Clinton era such as welfare reform and expansion of the EITC. He sees Wal-Mart, in conjunction with these programs, as providing entry level jobs and a way to lift workers out of poverty and off the welfare roles, and he would like to see Wal-Mart recognize its role in this area and provide more support for programs that aid the typical Wal-Mart worker. But others see the jobs and associated low wages (with few benefits) at Wal-Mart from different perspectives, e.g. as the outcome of an unfair labor negotiation rather than an opportunity for workers to enter the labor force.

[Also: Link to Arin Dube's latest paper on this topic.]

    Posted by on Thursday, June 12, 2008 at 12:15 AM in Economics, Politics, Social Security | Permalink  TrackBack (0)  Comments (129)


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