On Friday morning’s CNN Newsroom, co-host Poppy Harlow clashed with former Trump economic advisor Tomas Phillipson on seemingly basic economics. Despite Phillipson being an actual economist and stating that people are not going back to work due to them receiving more from unemployment insurance than their paychecks, Harlow asked; “I wonder what data you're pointing to other than maybe your own hypothesis that people aren't going to want to go to work if they're making more at home?”
As part of CNN’s ongoing attempt to undermine the new job report, Harlow began by downplaying the positive job numbers:
Your -- your reaction to the jobs numbers this morning, yes, 1.8 million new jobs added in the month of July. Good to see some addition here. But a huge slowdown from the 4.8 million added the month before and unemployment now still higher than at the peak of -- of the great recession.
Incredibly, Phillipson had to teach Harlow about work disincentives:
PHILLIPSON: I think it’s remarkable that we are actually seeing these gains despite these large, you know, enormous disincentives to actually see them.
HARLOW: What disincentives to see the gains?
PHILLIPSON: That we're actually paying people who work not to work that work. That's the UI problem. And that’s, I mean, it's been noted by a lot of people. But people don't realize, you know, how much of a disincentive that is.
Harlow, an esteemed economist in her own mind, accused Phillipson of using his “own hypothesis” instead of data:
I wonder what data you're pointing to other than maybe your own hypothesis that people aren't going to want to go to work if they're making more at home, which is just not something that I see in the American people.
She also claimed that “most Americans” don’t go to work in order to get paid:
Well, I -- I think it's assuming that people only go to work for a paycheck which is just not the case for most Americans because many people go to work because it gives them a sense of purpose.
Maybe that’s true of rich liberal elites like Harlow who have dream jobs such as being an anchor at an international news network, but it’s common sense that most Americans would rather be elsewhere than their nine to five.
Phillipson started to patiently explain to Harlow that “Part of the reason they go to work is the paycheck certainly,” but she interrupted him to spare herself further embarrassment.
Harlow advocated for extending unemployment insurance, to which Phillip responded with a series of statistics that negated the need for the benefit:
HARLOW: All right, so if you were still in the White House, you were in the oval a lot, you advised the President a lot. If you were there today, Tomas, would you tell them to agree to an extension now of what is expired, which is the extra $600 in cash assistance to unemployed per week? Should they do that?
PHILLIPSON: No, absolutely not. So here's -- here’s a -- an important number, which I don't understand why people haven't jumped more on it. The Friday report of GDP last week had a very interesting number which people are not talking enough about. It showed that 40 -- disposable income went up by 45%. Not because it took a huge dip in Q1. It was actually 3% growth, which is normal growth in Q1. But it went up by 45%. That is telling you that the fiscal overreaction has been quite stark. And I don't honestly understand when the Democrats say we want to go big. I mean, do they want to double income in a pandemic as opposed to 40 -- 45% gain?
Because she was being schooled on basic economic principles, Harlow resorted to woke talking points:
Well, what would you do? You've got, you know, 14.6% unemployment for black Americans and a new report out of the Aspen Institute this morning Tomas that says 40 million Americans, 80% of them black and Latino, could be evicted by the end of this year if things don't change.
Harlow, like all other rich liberal elites, seems to want to keep throwing other people’s money at problems.
This complete lack of economic common sense was paid for by IHOP and Consumer Cellular. Let them know here what you think about them sponsoring this content.
Read the full August 7th transcript here:
CNN Newsroom
08/07/20
9:26:32 AM
POPPY HARLOW: For more on the state of the U.S. Economy, we’re joined now by Tomas Philipson, former acting chairman of the Economic Council of Advisers and good to have you, Tomas. For people who don't know, you were -- you were in the mix. You were in the middle of this just a few weeks ago. You just left the Trump administration. So your -- your perspective is invaluable. Your -- your reaction to the jobs numbers this morning, yes, 1.8 million new jobs added in the month of July. Good to see some addition here. But a huge slowdown from the 4.8 million added the month before and unemployment now still higher than at the peak of -- of the great recession.
TOMAS PHILLIPSON (FORMER ACTING CHAIRMAN OF THE ECONOMIC COUNCIL OF ADVISORS): Yeah, I think -- I mean, there was a obviously higher expectations and you saw the markets react to that. We're about 40% back from the big losses in March and April right now. But if you think of it, I mean there's obviously two forces here that are operating as the COVID that generates preventions through lack of economic activity. But the second force is I think fiscal policy where it's putting -- it’s kind of remarkable we’re getting these job gains with the brakes we’re putting on the economy. Imagine if you went into work and the IRS took 100% of your paycheck and also made you pay to get into the building. That's essentially what two-thirds of the labor force is facing right now with earning less at work than they earn --HARLOW: Yeah.
PHILLIPSON: -- at home. And I think it's kind of remarkable --
HARLOW: Well --
PHILLIPSON: -- I think it’s remarkable that we are actually seeing these gains despite these large, you know, enormous disincentives to actually see them.
HARLOW: What disincentives to see the gains?
PHILLIPSON: That we're actually paying people who work not to work that work. That's the UI problem. And that’s, I mean, it's been noted by a lot of people. But people don't realize, you know, how much of a disincentive that is.
HARLOW: Yeah except I wonder what -- I -- just to jump in there, Tomas, I wonder what data you're pointing to other than maybe your own hypothesis that people aren't going to want to go to work if they're making more at home, which is just not something that I see in the American people because I think you're referring to the University of Chicago study, right, that says 68% of people have been taking home more than at work with that additional $600 a week. But I spoke to the -- the author of the study last night. And he told me you cannot extract that. They do not surmise that. They do not say that that is therefore a disincentive for people to go to work. The Yale study says the same and five others.
PHILLIPSON: No I mean, people look at the long term presumably. But it's on the margin. It’s certainly must be a disincentive to take everyone’s -- I mean a 100% tax rate on work is a disincentive. You can't get around that. But people are potentially looking beyond this and saying if I don't go to work now, I might not have a job after this. And that might potentially --
HARLOW: Yeah.
PHILLIPSON: -- be depriving people.
HARLOW: Well, I -- I think it's assuming that people only go to work for a paycheck which is just not the case for most Americans because many people go to work --
PHILLIPSON: I’m not -- I’m not seeing that.
HARLOW: -- because it gives them a sense of purpose.
PHILLIPSON: Part of the reason -- yeah, part of the reason they go to work is the paycheck certainly. If we didn't pay them, very few people --
HARLOW: All right, so if you were still in the White House, you were in the oval a lot, you advised the President a lot. If you were there today, Tomas, would you tell them to agree to an extension now of what is expired, which is the extra $600 in cash assistance to unemployed per week? Should they do that?
PHILLIPSON: No, absolutely not. So here's -- here’s a -- an important number, which I don't understand why people haven't jumped more on it. The Friday report of GDP last week had a very interesting number which people are not talking enough about. It showed that 40 -- disposable income went up by 45%. Not because it took a huge dip in Q1. It was actually 3% growth, which is normal growth in Q1. But it went up by 45%. That is telling you that the fiscal overreaction has been quite stark. And I don't honestly understand when the Democrats say we want to go big. I mean, do they want to double income in a pandemic as opposed to 40 -- 45% gain? I think that's been missed and therefore continuing that including the unemployment insurance benefits which again, should not -- I mean- if you want to help people --
HARLOW: All right.
PHILLIPSON: you can help them. You don't have to tie it to not working.
HARLOW: Well, what would you do? You've got, you know, 14.6% unemployment for black Americans and a new report out of the Aspen Institute this morning Tomas that says 40 million Americans, 80% of them black and Latino, could be evicted by the end of this year if things don't change.
PHILLIPSON: You can help people financially. You just don't have to tie it with bad incentives of -- of having the cash payments is one thing if you want to target those certain people that’s fine. But don't pay them not to work. That's what unemployment insurance is implicitly doing --
HARLOW: But what are you -- okay.
PHILLIPSON: -- and you certainly don't need to overpay them not to work as opposed to hardly replacing their work income --
HARLOW: Listen to this --
PHILLIPSON: -- which is what unemployment insurance would do.
HARLOW: Listen to this from an -- another guy who had your job a few years before you, Austan Goolsbee. Here’s what he told me on the show yesterday. He said, look, if the United States can't get control of this virus until we can we need to spend, quote, unlimited trillions of dollars. I know you don't like the sound of that. Here's his argument.
(Cuts to clip)
AUSTAN GOOLSBEE (FORMER OBAMA ADMINISTRATION ECONOMIC ADVISOR): There is one difference between now and the last crisis, which is this isn't really stimulus. We're not even yet to the spot where stimulus can work in the sense of government spending to try to get the economy moving again.
(Cuts to live)
HARLOW: Is he wrong?
PHILLIPSON: No. I mean, everyone -- everyone agrees that the government was basically reducing economic activity as a prevention for new -- we -- we de-stimulated the economy to de- stimulate the infection. Everyone agrees on that. Everyone also agrees that we needed liquidity during that period. That doesn't mean you want to hurt work incentives and that doesn't mean that you think you can stimulate aggregate consumption or aggregate demand in general which I think D.C. is kind of addicted to that kind of view even though I think many economists don't believe it.
