Discussion of budget issues is thin gruel, indeed, symptomatic of the president's daybreak and the fact that not much is happening in a Congress where not much is expected to happen. Always looming, of course, is the ongoing financial crisis, and a writer was interested to see whether and how reporters would treat this.
In any case, The Christian Science Monitor breakfast, hosted by Dave Cook, is a high-quality event, and it is a genuine service on the part of C-SPAN to make this event available to the public.
The breakfast on Feb. 19 featured Douglas Elmendorf, head of the Congressional Budget Office (CBO) since 2009 who has an undergraduate degree from Princeton, as well as master's and doctoral degrees from Harvard. He later taught at Harvard and served on the staffs of the Council of Economic Advisers and the Federal Reserve Board and as deputy assistant secretary of the Treasury for Economic Policy. Elmendorf came to CBO directly from the Brookings Institution.
The headline was that the CBO had released a report stating that increasing the minimum wage would benefit about 16.5 million workers, but cost about 500,000 others their jobs. Elmendorf led his presentation with a discussion of conditions in the labor market, which he called "among the most puzzling aspects of the economic recovery."
The CBO attributes the slow recovery of the labor market to slow growth in demand for goods and services and, to a lesser extent, from various structural factors, so that considerable slack remains in the labor market, 6 million jobs short of what by some measures would be considered normal. The CBO predicts that the unemployment rate will decline toward 5.8 percent by 2017 and 5.5 percent by 2024.
A reporter asked Elmendorf whether there is any interaction between the finding on the minimum wage and on an earlier report that employers would reduce the supply of labor by 2.5 million as a result of the Affordable Care Act (ACA). Elmendorf responded that the two issues are independent of each other and that federal policy is one of many factors influencing labor markets.
Reference was made to a charge by House Minority Leader Nancy Pelosi, D-Calif., that the CBO findings on the effect of raising the minimum wage "contradict the consensus among hundreds of America's top economists," and Elmendorf declined to respond directly to Pelosi's remarks, but rather he reiterated that CBO's analysis is "quite consistent with the latest thinking by economists." He stressed that the CBO consulted with a wide range of economists in formulating its estimate.
In response to a question by Alexis Simendinger of RealClearPolitics, Elmendorf stated the CBO still does not know what the ultimate effects of ACA will be on healthcare costs. He cited studies showing a slower rate of growth of healthcare costs. There have been some direct reductions in federal spending, but there are indirect effects for which the CBO has no analysis.
In conclusion, the reaction by Pelosi seems a bit excessive, particularly since proponents of increasing the minimum wage are unlikely to change their position, and Elmendorf was certainly not intimidated by the words of the leader of congressional Democrats. This is in the tradition of another Brookings liberal, Alice Rivlin, who established the principle of bipartisanship that has marked the 40-year history of the CBO under directors from both parties.
(Archived video can be found here
© 2014 Moneynews. All rights reserved.