What unemployment rate does the President need to do better against the Republicans?
History teaches that the level of unemployment is not as important as whether the rate’s going down. We’ve gotten some decent job market numbers these last three months. But it looked this way at the end of 2010, and then we had earthquakes and gasoline prices going way up, and we had the events in Europe, and the unemployment rate went back up. So I think it’s really the trend that’s important.
Does the capital-gains rate go higher at the end of the year? What does Obama have to do to assure people there’s some predictability?
I think the data does not support the idea that tax cuts on high incomes are the main drivers of growth. So I don’t think uncertainty over what the tax rate will be for somebody who makes a million dollars a year has that big of an impact on the economic growth rate. I think the only thing we can be guaranteed for this coming year is a whole lot of gridlock. If that adds uncertainty, I don’t know that there’s a lot we can do about it.
If the capital-gains rate goes from 15 percent to 20 percent, I think a lot of people may change their behavior.
In most of the 1990s the rate was quite low, and it went down more under [George W.] Bush. That didn’t lead to a big increase in economic growth, so I don’t know if five points would make that big of a difference either way.