Download A CONVERSATION WITH: Jason Furman, Chairman, White House

Andrew W Mellon Auditorium
1301 Constitution Avenue, NW
Washington, DC
A CONVERSATION WITH: Jason Furman, Chairman, White House Council of Economic Advisers
Thursday, 10 April 2014, 10:30am – 11:00am
Panelists:
Moderator:
Jason Furman, Chairman, White House Council of Economic Advisers
James Politi, US Economics and Trade Correspondent, The Financial Times
The US economy is enjoying positive momentum, and its fiscal policy sets the stage for continued growth,
White House Council of Economic Advisers Chairman Jason Furman told the 6th annual Bertelsmann
Foundation-Financial Times Conference.
"We had a huge fiscal head wind in 2013" with gross domestic product growth of 2.5 percent over the four
quarters, or 3.5 percent if you take out government spending and consumption, Furman said. "This year
we have a much more neutral fiscal climate… There's much more room for the private sector to drive the
overall economy."
Financial Times US Economics and Trade Correspondent James Politi, who interviewed Furman, noted
that for the first time the Obama administration does not face an international crisis that could hit the
economy. He called the president's top economist a master juggler and pointed out Furman’s other claim
to fame: He is Matt Damon’s former college roommate.
Washington should refrain from becoming involved in determining the right balance of consumption,
savings, investment, housing, manufacturing, finance and exports for the economy, Furman said. "We
should… set up a neutral tax system so people are investing in things based on what has the highest
returns and not what has the best tax advantage," he added, while noting that "net national savings has
increased in the last couple of years. Because of that the amount we borrow from the current account
deficit is the smallest as a share of GDP than it's been since the 1990s."
Politi asked Furman about his recent comment about the US’s “stupid territorial tax system”. Furman
pointed out that "[o]ur international system right now is so badly broken that we're getting all the
distortions associated with it and none of the revenue. What that suggests to me is that it's potentially a
fruitful area for reform to improve the incentives to invest in the United States," he said, noting that
lawmakers and the business community seem to be converging on a core set of ideas for corporate tax
reform. That process, however, remains in an early stage.
Furman also said that the White House is going to take any action it can to combat social income
inequality. He noted that the federal government’s minimum-wage hike to $10.10 an hour was followed by
similar moves in Maryland and Connecticut. "The president declared that this is the year of action," he
said, adding that raising the minimum wage “would benefit 28 million people… have a substantial impact
on poverty and… that's what we're going to continue to support."
The test of an economy is how much everybody shares in growth. "You haven't just seen a higher fraction
of income going to the top. You've seen growth in the middle slowing a lot, and incomes falling at the
bottom," he said. In addition to a higher minimum wage, the White House is pushing tax credits for lowincome, childless workers and measures that expand social mobility, such as access to pre-school.
The puzzle of long-term unemployment is the US's number-one cyclical challenge, Furman said. Those
unemployed more than 26 weeks account for 2.5 percent of the population, more than double the usual
one percent. "That is something that's… very troubling. It does not yet appear to be intractable, so I don't
think there's any reason to give up on it yet," he said.
Furman said there's no expectation that inflation might rise; in fact, it would be good to see real wage
growth. "As labor markets start to tighten, wage growth is one of the last things you'll see as an economy
recovers," he said.
Addressing trade liberalization and its impact on combating income inequality, Furman said some tariff
changes, such as those on items poor people buy, can actual be helpful. Rising global labor standards
can also be positive for consumers and workers.
Another positive sign in the recovery is the rebound in manufacturing, which is outpacing historical
expectations. "In the month of March… the work week in manufacturing exceeded 40 hours a week on
average. That was the longest workweek in manufacturing we have on the record [since] 1945," he said.
"Manufacturing plays a disproportionate role in innovation and exports and higher wages."
In response to a question about the US Senate’s failure to pass the Paycheck Fairness Act, which is
meant to help women earn the same wages as men, Furman said expanding opportunities for women is
an important part of President Obama's economic strategy. The labor-force participation rate of women
aged 25 to 54 was higher in the US than other developed countries in 1990 but has since stagnated while
improving in Europe and Japan.
"We're very focused on that, thinking about issues of… workplace flexibility, of child care, of paycheck
fairness…" he said. "It would be great if we heard more of that from the business community… and
others. We as a country are really missing out on some of our most important economic potential."