Berkeley Housing Symposium: Comment on Leamer and Shiller
Cutler and DeLong: Obama Can Cure Health Care's Ills

Leonid Teytelman: Obama For a Sound Economy

Leonid Teytelman asks:

Obama For a Sound Economy:Barack Obama has repeatedly said that he will lower taxes for 95% of Americans. Those making $250,000 or above will see their tax rates rolled back to the pre-Bush levels, and the 15% on capital gains will go back to the 20% that it was before Bush. These changes are what John McCain keeps referring to, threatening that Obama wants to raise taxes, take away jobs, and hurt the already suffering economy. So, we asked the individuals who would be affected by these increases, "Why are you supporting Barack Obama? Why do you think he will help the economy?"


During the past eight years the future American economy has been mortgaged by extraordinary federal borrowing that increases the national debt and decreases discretionary flexibility in the national budget. We must move the country back to a fiscally sound footing. Senator Obama's proposals and intentions are clearly aimed in this direction. He brings fresh and refreshing candor to the political dialogue and remarkable leadership skills that will serve the country domestically and, perhaps more important, internationally. His policies show a clear respect and regard for scientific and technical consultation. As a scientist and engineer, I look forward to his election. It will mark a milestone in our history an  . . .[read more] -- Vint Cerf, Vice President, Google, Reston, VA

I've already contributed to and voted for Barack Obama despite the facts that I'm a 70-year-old white male and small business owner whose taxes will increase when he is president. Obama is the first Democrat I've voted for and the first presidential candidate to whom I've sent money. We need a leader who will focus on education for all; a thoughtful and intelligent leader who can inspire this great nation of ours during the difficult times ahead. -- Bill Struve, CEO of Metal Adventures Inc., Wilmington, NC

I do not think it's class warfare [Obama's economic policies], I think it's empirical economics. The real issue is the empirical content of the supply side economics dogma. It's pretty threadbare. The "real business cycle" theory is simply inconsistent with empirical evidence. That does not prevent it from being taught as gospel to students (it's really gospel not empirical evidence). I would first and foremost talk to Ray Fair (Yale) and Mark Watson (Princeton) about the evidence for the supply side model. What is ironic is that those who preach supply side practice a crude version of Keynesian economics that ignores all of those incentive effects claimed to be so important by the supply side theorist  . . .[read more] -- James Heckman, Nobel Laureate in Economics, Professor of Economics, University of Chicago, Chicago, IL

I will pay more taxes under the Obama administration, and like Warren Buffet and Adam Smith, I think that is not unreasonable. In return I get a country that: invests more in basic science research (which will grow the economy faster), understands the need for a transformative switch to a new energy economy (which gains jobs, decreases oil usage and alleviates climate problems), and regains respect on the world stage (bettering all of us in the USA, and all of us on earth). I call that a bargain. -- Peter Norvig, Ph.D., Director of Research, Google, Palo Alto, CA

In the last few decades, the Democrats have shown that they know how to stimulate the economy and Obama is very much in that tradition. One of his key plans is to invest in science because he knows that science generates new ideas, innovation and ultimately solid economic growth. For scientists, he will provide the wherewithall for us to investigate our ideas and to find new directions for economic growth. Obama will also adjust the very unfair tax structure that was put in place by Bush, which reduced taxes on the wealthy and put more of the burden on the middle class. I must admit that by his definition, I am one of the wealthy. But like Bill Gates and Warren Buffett, I believe that I should be paying more (  . . .[read more] -- David Baltimore, Nobel Laureate in Medicine, Professor of Biology, California Institute of Technology, Pasadena, CA

My view of the future is extremely dim - whoever is elected will have ruins to deal with, with rampant inflation, banking mess, closures in the public sector. Obama definitely has the right qualities with his steady analytical approach to handle this extraordinary economical situation. Obama's competent advisers will also be critical to charting the path to recovery. On a more personal level, as an owner of small business with its main market in scientific instrumentation, I hope Obama can put an end to the shameful situation with science funding in the US. -- Dmitry Teytelman, Ph.D., President, Dimtel Inc., San Jose, CA

The announcements from the Treasury this weekend, October 11-12th, however belated are welcome. Should Paulson take the next step and guarantee interbank lending, we will be where we should have been on the eve of his ill advised decision to allow the collapse of Lehman Brothers just over four weeks ago. Something had to be done, but something much better could have been done. The Treasury proposal to buy toxic mortgage assets wasted valuable time and was the result of Paulson's refusal to consider taking equity or preferred shares plus warrants in return for direct investments in financial institutions. The purchase of toxic assets will take months to implement and would be ineffective, unless the government  . . .[read more] -- Alan L. Madian is a Director of LECG, an economic, finance and management consultancy. He served as CEO of an investment bank and as economic advisor to governor of New York and the U.S. Senate Subcommittee on Antitrust. McLean, VA

I am the founder and president of a small multinational business with headquarter in New York City. One of the most important issues for me, with respect to my company, is that of employer-sponsored health insurance. Over the last decade, I have seen significant increases of about 10 percent a year for the health care costs that I cover for each employee. Unfortunately, these increases will seem tame compared to what will happen if McCain is elected and eliminates tax breaks for employer-provided insurance. I fear McCain's proposal would be bad for my business, and bad for my employees. After carefully reviewing Obama's health insurance proposals, there is no doubt in my mind that Obama's plan would be far  . . .[read more] -- Joseph Duncan, President, Geotext Translations, New York, NY

Taxes seem to be the "third rail" in American political discourse....the T-word that cannot be said. My wife and I are very fortunate in having two good incomes and stable jobs, and hence are in the category of Americans that Obama would like to raise taxes on. While paying more taxes is never pleasant, how are we going to dig out of the present economic and political situation without some of us paying up a little bit more? The McCain/Palin administration would have us continue to believe the fantasies that go back to Ronald Reagan: that we can have more by paying less, and that our education system will improve with fewer taxes to pay for it. Personally, I am not ready to drink their kool-aid. The present fin  . . .[read more] -- Jasper Rine, Richmond, CA

I was dismayed to see that two of Princeton's economics faculty could support McCain's Bush-Reagan economic opinions. The false aura of prosperity of a very small managerial class has concealed the fact that the great majority of us, if asked whether we are really better off now than eight years ago, would say no. It is a provable fact (look at most countries in Africa or South America) that there is some level of income maldistribution at which the economy no longer works: it works best if essentially everyone has some stake in it and some hope for improvement. Most sensible economists would also agree that there are many parts of the economy which go down the drain if not supported adequately by the cent  . . .[read more] -- Philip Anderson, Nobel Laureate in Physics, Professor of Physics, Princeton University, Priceton, NJ

A comment about Obama's proposal to raise the maximum tax on dividends to 20%: Except for the 15% Bush/McCain aberration that went into effect in 2003, maximum rates of tax on dividends for the last 40 or 50 years have ranged from 28% to 70%. Thus even Obama's modest raise would leave the maximum rate of tax on dividends well below historical precedents. -- Robin Westbrook, J.D., Practitioner in Residence, Tax Clinic, American Univ. Washington College of Law, Washington, DC

The science policy over the last eight years has been a disaster. It has been extremely difficult for new scientists just setting up their laboratory to obtain support to run their laboratories. Science, research, and technology are the engines that run our economy. The only way that we are going to become independent of oil, have better, cheaper health care and embark on a greener economy is through much greater investment in research and technology development. This is not a luxury, but a necessity to ground our economy back on the work and creative productivity of our great nation. Obama will provide the leadership and resource to get this done. -- Mario Capecchi, Nobel Laureate in Medicine, Distinguished Professor of Human Genetics and Biology, University of Utah School of Medicine, Salt Lake City, UT

I am a business owner, asset manager and financial advisor based in New York City, and a strong supporter of Senator Barack Obama for President. Senator Obama promises to raise my taxes and I will be happy to pay the proposed higher rates. Let me tell you why: I believe that paying taxes for worthy programs that help to strengthen America such as early childhood education, improvement in school programs, providing loans to students for college and supporting better pay for teachers, police, fire services and providing social services to the needy are part of my civic duty as a responsible and patriotic citizen. I do not mind paying taxes, but I do care that my taxes are not wasted on an unnecessary war and subs  . . .[read more] -- Ian D. Quan-Soon, MBA, CFP, President, IQ Financial Services, Inc., New York, NY

We need to work to make the economy fundamentally sound again. That involves fixing the mess on Wall Street and making investments in the areas of our economy that have been neglected too long: health care, energy, and education. Sensible investments in those areas will promote US economic growth now and for the next several decades. -- David Cutler, Research Associate, National Bureau of Economic Research, Professor of Economics, Harvard Univeristy, Cambridge, MA

My support for Barack Obama is based upon multiple factors including science policy. I have no question that our country needs his leadership, and I am optimistic about our country's future. The real work begins in January, and we should all get behind our new President. -- Peter Agre, M.D., Nobel Laureate in Chemistry, Director of the Johns Hopkins Malaria Research Institute, Baltimore, MD

We have built up a business that grosses over six million dollars. Some years we are lucky enough to have enough profit that slides us into a higher income bracket. It's easy enough to distribute the profit among the people who work for the bookstore and avoid higher taxes, but I have always believed that paying taxes is patriotic. We are supporting our nation in collaboration with other Americans investing in the future, allowing all Americans to acheive a better life. Under President Obama I hope our taxes can be used to support improvements in education, health, and alternative energy. -- Carla Cohen, Co-Owner of Politics and Prose Bookstore, Washington, D.C.

My husband and I both support Barack Obama because we believe in his sound analytical approach to the current economic crisis that jeopardizes the future of our society as we know it. It is unfortunate that McCain-Palin label Obama's efforts as "socialist" when McCain has supported the bailout of banks - very hypocritical and divisive at a time when we need everyone to come together and be part of the solution - Obama's very consistent message. -- Sylvia McKean, M.D., Boston, MA

Paying taxes is a privilege for living in this country. We can no longer continue with the myth that we can have all the benefits this country provides without paying for it. Obama shares that view and offers a plan for a more equitable society.I share his commitment to provide proper health care for those who have been doing without for so long.I consider myself fortunate in being able and willing to have my taxes raised in order to provide assistance for those working families still in need. -- Paul Berg, Nobel Laureate in Chemistry, Professor of Biochemistry, Stanford University School of Medicine, Stanford, CA

I am as concerned about the future of United States as anyone, even though I don't have any kids whose future the Republican Party is so clearly putting in jeopardy. We all can see that Bush has messed up essentially every major decision he had to make as president, and McCain seems on course to continue the unbroken record. Look where that kind of person has taken us. Yes, the government now IS the problem, and Bush has made it so. Even now when Bush or McCain go on TV to say how concerned all people must be about the current financial mess and how it is a cricis, neither can bring themselves to give even the slightest indication that he has any responsibility for having dug us into this hole. In light of the  . . .[read more] -- Thomas Cline, Ph.D., Professor of Genetics, Genomics, and Development, University of California, Berkeley, CA

And Edward Prescott, Nobel Memorial Laureate in Economics, Arizona State University:

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 12:00 PM Dear Professor Prescott: Two of my friends and myself have started a web site, We would absolutely love to have a statement of support for Obama from you. The inspiration for the site are the many conversations that we’ve had with supporters of McCain. Many people we know hesitate to vote for Obama because they are afraid that increasing taxes on the wealthy would derail the economy; some are concerned about their own income or capital gains taxes going up. The goal of the site is to dispel the illusion that Obama’s economic policies are a form of class warfare or redistribution by displaying the reasons why affluent supporters and experts believe Obama would be better for the US economy.

From: Edward Prescott Date: Sat, Oct 11, 2008 at 12:22 PM: Why is Western Europe by one-third depressed relative to the U.S. ? Answer is that they are following the policies that Obama is proposing. This is an established scientific finding. All respectable students of public finance agree the taxing of capital income is bad policy. It distorts the inter temporal trade off between consumption today and consumption in the future. The corrupt rich lawyers and Wall Street bankers support Obama. Obama caters to the special in interests. That is why the CEO’s of the big companies support him and the people oppose him

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 12:35 PM Dear Professor, Thank you so much for the response. It is quite a forceful statement. Given my former Soviet Union residence, I have a very strong revulsion when it comes to socialist or communist ideas. However, I do not see Obama’s proposals as anything near the socialist economics. It seems to me that investment in infrastructure is sorely lacking in the US, and I think that is the main reason why Bloomberg and “Economist” laude Obama’s infrastructure proposals. The overhead on our healthcare is an enormous drag on the US economy, and Obama’s healthcare proposal seems to be on the right track to reducing it. As for populist messages and protectionism, I see these as a sad reality of American politics. I think that Obama spews nonsense and panders to the base when talking about many economic issues (protectionism, biofuels, etc.). I view that as a sad political reality that both McCain and Obama face. McCain is locked into the lower-tax-cut theme (or the ridiculous gas tax holiday) just because of his party, even though he opposed the tax cuts before. One other critical factor for me is John McCain’s early support for the rush to Iraq. I have no respect left for politicians (including Biden), who supported this war. Best, Leonid

From: Edward Prescott Date: Sat, Oct 11, 2008 at 1:54 PM: Infrastructure investments are best made at the local and state level. The Army Core of Engineers and the levies in New Orleans were Bama in action. Our health systemn was great until the federal government got involved. Mc Cain has made a serious proposal to improve the system. Obama’s proposal is to make a bad system worse. Edward C. Prescott P.S. With people like you I understand why Ruyssians can not governed themselves.

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 2:31 PM Dear Professor: It is pretty obvious that we will never see eye-to-eye on these issues. There is a good reason why so many well-informed and educated people disagree on whether McCain or Obama would be better for this country. What I love about the United States is that such disagreements are welcome in public, and that in the upcoming presidential elections, there is a sort of a referendum on who has the better ideas. While the elections are still far away and anything can happen, I do have to note that at this point, Obama is leading McCain by quite a margin in the polls. Particularly when it comes to the economy, overwhelming majority of the public thinks that Obama would do a better job of leading the country. I am not sure how that reconciles with your statement that “CEO’s of the big companies support him [Obama] and the people oppose him.” Lastly, I must say that I am perplexed by your comment that it is because of people like me that the Russians cannot govern themselves. To be sure, the Russian government and political system is a mess, thanks to the communism and the botched transition out of it. There are a million causes of the Russian problems, but people like me being one of them? I am a socially-liberal and fiscally-conservative voter. I am not registered with either party (find both of them pretty disappointing). I tend to form my opinions based on much reading and thinking. My opinions may differ from yours, but isn’t that the point of democracy and debate? Isn’t that how the correct decisions are ultimately made? How am I the problem?

From: Edward Prescott Date: Sat, Oct 11, 2008 at 4:11 PM: Show some honesty. Facts are facts and you choose to ignore. Scientist collusions follow from their assumptions. It is not a matter of religious belief. Are you Russians goiung to getogether with the Germans again and split up Poland again? You invade Georgia.

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 4:22 PM Dear Professor: I am a scientist. Facts and the scientific method are what I go by; but as always is the case in science, same facts can lead to different and competing models. I think this is exactly what is happening in our exchange - we observe the same facts, but our interpretations differ. By the way, I am a United States citizen and came to this wonderful country in 1990 as a refugee from the former Soviet Union. I don’t think I bear much responsibility for the invasion of Georgia. Leonid Teytelman

From: Edward Prescott Date: Sun, Oct 12, 2008 at 6:45 AM: In economics there is almost always one theory or no theory. You and your think a likes destroyed Russia and now are destroying the United States. Society needs religion to get around the time inconsistency problem. Your religion of Statism is a not a good religion. It is detrimental to the welfare of the people. A basic tenet of my religion is free to choose and to enter into mutually beneficial contracts.