Bush adviser Glenn Hubbard on how to make entitlement reform fair

As we enter a new earnings season, many market watchers are cautiously optimistic about the state of the U.S. economy and its recovery.Yet some, including former Obama White House economic adviser Larry Summers, worry that the recovery is not happening fast enough.

“When the economy goes down there is less capital investment, some people who lose their jobs and never come back to working, some young people never get on the track that they hope to,” Summers told Marketplace. “So the temporary blemish of a downturn leaves a permanent scar.”

Glenn Hubbard, who was Chair of the White House Economic Council of Advisers under President George W. Bush, joined Marketplace Morning Report host Jeremy Hobson to discuss the economy and where its headed from his point of view.

On why stocks are booming despite a tepid job and housing market:

Hubbard: “It’s a complicated picture in the economy. I expect first quarter GDP growth to actually be relatively healthy. The economy has some underlying momentum in it, particularly coming from the housing sector and durable goods. But there is a lot of uncertainty in the economy, principally from public policy, and that really holds back the job market and long-term investments.”

On his advice for Washington lawmakers:

Hubbard: “The first thing would be to reduce uncertainty by agreeing on gradual deficit reductions. Unfortunately the debate in Washinton and in Europe tends to be about austerity today — that’s not really the issue. The issue is gradual spending restraint, principally in entitlement programs. It needs to be fair — let’s do the entitlement adjustments progressively, slow down Social Security growth and/or Medical subsidy growth for more affluent people.

To hear more from Glenn Hubbard on tax increases, entitlement reform and the deficit, click on the audio player above.

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Bush adviser Glenn Hubbard on how to make entitlement reform fair

Sequester will seriously damage job growth: Obama economic adviser

The Bureau of Labor Statistics reports that the economy added 236,000 jobs last month, beating analyst expectations. The unemployment rate fell from 7.9 percent to 7.7 percent, its lowest point in four years.

Alan Krueger, chairman of  the White House Council of Economic Advisers, joined Marketplace Morning Report host Jeremy Hobson to break down the report and discuss the sequestration.

On the U.S. job market:

Krueger: We still have too many Americans unemployed, we still have a middle class that has been under stress for some time. Improving the recovery, making sure that the recovery continues, making sure that the economy continues to make good middle class jobs, remains the president’s North star.

On the sequestration:

Krueger: As the president has said repeatedly, the sequester which took effect early in March is bad policy. I think people across the political spectrum will look at it and think it is bad policy. It imposes a set of indiscriminate cuts which don’t solve our long term deficit problem. The Congressional Budget Office forecasts [it] will shave economic growth by 0.6 percent and reduce job growth by around 750,000 jobs by the end of the year. The president has proposed a balance approach to put us on a sustainable fiscal path, which includes closing tax loopholes, includes reforming our entitlements, and a smarter set of spending cuts.

On whether the sequestration will be undone:

Krueger: The president has been reaching out to Congress. He made phone calls to many members of Congress this past week, he had a dinner with Senators from both sides, he met with ranking members of the House. So we are working to try to put us on a better fiscal path. It is going to take some time. We would like to see the Congress move back to regular order in terms of passing a budget.

 

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Sequester will seriously damage job growth: Obama economic adviser