FacebookTwitterGoogle+RedditEmail

What Will Lew Do?

by DEAN BAKER

It has been more than five years since the onset of the financial crisis.

It will be at least several more years before the economy recovers fully. And the too-big-to-fail banks are bigger than ever. President Obama’s nominee for Treasury Secretary, Jack Lew, needs to address these two problems.

On the first, would he be open to increasing the deficit to stimulate the economy? If not, why not? What sort of person would he recommend to chair the Federal Reserve? Would he want a continuation or even expansion of Ben Bernanke’s policy of quantitative easing – having the Fed buy government securities to increase the monetary supply? Or would he prefer a retrenchment in monetary policy?

Does he favor trying to break up the huge banks, whose protection by the government gives them an implicit subsidy? If so, what measures would he propose? If not, how does he justify this taxpayer subsidy for many of the country’s richest people.

Also, the European Union is moving ahead with a financial transactions tax. Such a tax would make the financial sector more efficient by eliminating a huge amount of wasteful transactions. It could also raise a large amount of revenue. Congress’ Joint Tax Committee estimated that the Harkin-DeFazio bill’s modest transaction tax, with a 0.03 percent rate, could raise $40 billion a year. Other proposals could raise more. If Lew doesn’t support this efficiency enhancing tax, why not?

Finally, we just saw Standard & Poor’s sued by the government on accusations that it mis-rated securities in the run-up of the housing bubble. A provision of the Dodd-Frank bill would end the conflict of interest inherent when, as is now the case, bond issuers pay raters, by having the Securities and Exchange Commission select the rating agency. This provision sits in some bizarre regulatory limbo even after an SEC study determined that it is feasible. Will Lew push to have this provision put into law? If not, why not?

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This article originally appeared in Room for Debate.

 

More articles by:

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

Weekend Edition
February 16, 2018
Friday - Sunday
Jeffrey St. Clair
American Carnage
Paul Street
Michael Wolff, Class Rule, and the Madness of King Don
Andrew Levine
Had Hillary Won: What Now?
David Rosen
Donald Trump’s Pathetic Sex Life
Susan Roberts
Are Modern Cities Sustainable?
Joyce Nelson
Canada vs. Venezuela: Have the Koch Brothers Captured Canada’s Left?
Geoff Dutton
America Loves Islamic Terrorists (Abroad): ISIS as Proxy US Mercenaries
Mike Whitney
The Obnoxious Pence Shows Why Korea Must End US Occupation
Joseph Natoli
In the Post-Truth Classroom
John Eskow
One More Slaughter, One More Piece of Evidence: Racism is a Terminal Mental Disease
John W. Whitehead
War Spending Will Bankrupt America
Dave Lindorff
Trump’s Latest Insulting Proposal: Converting SNAP into a Canned Goods Distribution Program
Robert Fantina
Guns, Violence and the United States
Robert Hunziker
Global Warming Zaps Oxygen
John Laforge
$1.74 Trillion for H-bomb Profiteers and “Fake” Cleanups
CJ Hopkins
The War on Dissent: the Specter of Divisiveness
Peter A. Coclanis
Chipotle Bell
Anders Sandström – Joona-Hermanni Mäkinen
Ways Forward for the Left
Wilfred Burchett
Vietnam Will Win: Winning Hearts and Minds
Tommy Raskin
Syrian Quicksand
Martha Rosenberg
Big Pharma Still Tries to Push Dangerous Drug Class
Jill Richardson
The Attorney General Thinks Aspirin Helps Severe Pain – He’s Wrong
Mike Miller
Herb March: a Legend Deserved
Ann Garrison
If the Democrats Were Decent
Renee Parsons
The Times, They are a-Changing
Howard Gregory
The Democrats Must Campaign to End Trickle-Down Economics
Sean Keller
Agriculture and Autonomy in the Middle East
Ron Jacobs
Re-Visiting Gonzo
Eileen Appelbaum
Rapid Job Growth, More Education Fail to Translate into Higher Wages for Health Care Workers
Ralph Nader
Shernoff, Bidart, and Echeverria—Wide-Ranging Lawyers for the People
Chris Zinda
The Meaning of Virginia Park
Robert Koehler
War and Poverty: A Compromise with Hell
Mike Bader – Mike Garrity
Senator Tester Must Stop Playing Politics With Public Lands
Kenneth Culton
No Time for Olympic Inspired Nationalism
Graham Peebles
Ethiopia: Final Days of the Regime
Irene Tung – Teófilo Reyes
Tips are for Servers Not CEOs
Randy Shields
Yahoomans in Paradise – This is L.A. to Me
Thomas Knapp
No Huawei! US Spy Chiefs Reverse Course on Phone Spying
Mel Gurtov
Was There Really a Breakthrough in US-North Korea Relations?
David Swanson
Witness Out of Palestine
Binoy Kampmark
George Brandis, the Rule of Law and Populism
Dean Baker
The Washington Post’s Long-Running Attack on Unions
Andrew Stewart
Providence Public School Teachers Fight Back at City Hall
Stephen Cooper
Majestic Meditations with Jesse Royal: the Interview
David Yearsley
Olympic Music
FacebookTwitterGoogle+RedditEmail