Thursday, September 23, 2010

Will Austan Goolsbee help reduce government spending by 10-20%?

If he is an economist who can do basic math, I think he has to:
President Barack Obama’s chief economist said Wall Street has largely recovered from the 2008 crisis and will be strengthened by the White House-backed regulatory overhaul that Congress passed this year.

“In the long run, the financial sector will be significantly stronger because we did this,” Austan Goolsbee, chairman of the Council of Economic Advisers, said yesterday.

While Wall Street may not return to “the go-go days” when it earned “20, 40 percent of all the profits in the entire nation,” the financial industry will benefit from the new regulations because “setting clear rules of the road is going to allow the credit channels to keep flowing to the wider economy,” Goolsbee said.

So if Wall Street earnings are cut by, let's say 46%, then the entire nation needs to tighten its belt because Wall Street can no longer pay the taxes it used to, either.

As I noted this past Tuesday, Wall Street jobs are being destroyed, not created. That's a loss of top income tax bracket revenue, on top of the reduced taxes coming from Wall Street firms.

Perhaps Goolsbee can take a page from here or here.

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