Q: Apart from the well known facts of the economy, what is so special for us to be careful in the future? Will havens fall? Will poor become rich? Will rich become poor?Will milk and honey start flowing from our water taps?

Submitted by Amir Dewani from Miami, Florida

A: Not sure I understand the question but will publish it nonetheless.

Answered 09/21/11 11:09:22 by Kevin Hall and Tony Pugh

Q: Krugman has written that the pre-crash economy was powered by homes used as ATMs and deficit spending. Obama ridiculed the idea of giving people on social security the $250 he originally proposed, and Republicans ridicule extending unemployment, so how does anyone see the middle class getting more money to spend? The economy seems to be exactly as Krugman said, tapped out, and all the "plans" are for tax cuts or social security cuts. If Krugman is correct, and he seems to be, Obama and congress are wrong. What is good for the CEOs that write campaign checks is not good for America. Thanks for all your help, I am not sure why you care about the middle class when so few due, but I am grateful.

Submitted by Harrison Picot from Haymarket VA

A: Sorry on the delayed response, i dont think Social Security cuts are in the offing and truth be told it is the easiest of the problems to fix. the $250 to SS recipients was the same idea as the payroll tax holiday, put a little more money in peoples pockets and that money flows back into the economy and provides some forward movement. None of it is a panacea, all these efforts were to try to stimulate some activity, often just moving spending forward, to keep forward momentum in hopes that business starts getting back to normal. Isn't happening yet, however.

Answered 09/21/11 11:08:32 by Kevin Hall and Tony Pugh

Q: Small businesses are touted as the creators of job growth and it's often commented that big companies don't create net new jobs. Here's my question: is this also true when you examine trough-to-peak job growth coming out of a recession? My hypothesis is that job growth for big companies is limited "through the cycle" but might be quite significant as a source of job growth coming out of a recession. Is this right?

Submitted by Rob from Richmond, VA

A: Sorry on the delayed response, seems plausible. What gives me pause on the idea, however, is that corporations are sitting on record piles of cash. They've trimmed down and fine-tuned their businesses to be profitable in down times. It's hard to see what gets them hiring beyond growing demand for their products that threatens their profitability and requires a bigger workforce. There is no clear driver of the economy right now, housing and stocks were the big drivers over the past two decades, exports are growing as a potential driver but not a sole driver per se.

Answered 09/21/11 11:03:36 by Kevin Hall and Tony Pugh

Q: What is the average size of US small business by employees/profit and what percentage report a taxable profit each year? Are income taxes a big deal for the majority of small businesses if they have no taxable income? What about all the tax breaks passed in the last couple years? Expensing and more... Your article is excellent! Taxes are not the big issue in our business... Thanks!

Submitted by Stan Kolbe from Washington, DC

A: There is no agreed upon definition of small business. For some classifications is can be as large as 500 employees or less. Most people think of small business as an owner-operator, or a small strip mall shop. But franchise owners are often small businesses as are law firms and doctors offices. All that to say it's hard to answer your questions with any certainty. In a few years we will have a better sense on expensing, and zero capital gains for small businesses, that tax data is reported with a lag.

Answered 09/21/11 10:58:05 by Kevin Hall and Tony Pugh

Q: On 8/11/11 you answered this question Q: The US deficit is 17 trillion. We have 717 million barrels of oil in reserve. Why don't we sell 300 million barrels at $80 per to make 24 trillion and be done with it? Submitted by Jerome from Wichita, Ks A: Write your congressman... we also have gold in reserve that could be sold. Why didn't you point out that Jerome's arithmetic was off by a factor of 1000? Selling 300 million barrels at $80 nets only $24 Billion. This represents round-off error on the $17,000 Billion debt.

Submitted by William Edwards from Katy, TX

A: will publish your point here

Answered 09/21/11 10:55:38 by Kevin Hall and Tony Pugh

Q: Probably a tiny question to you, but if our economy is going to collapse, what happens in that event? Do any Social Security checks go out, is the American Dollar devalued by 50%, is the Dollar totally defunct, ...millions of us out here have no idea what would happen in Austerity, and how to survive it. Also, any time frame or clue that we need to watch for? Thank You, Gloria

Submitted by Gloria from Mammoth Spring, Ar

A: The economy is not going to collapse. Simple as that. Social Security faces no near term threat, nor does Medicare, these are all problems over a longer horizon. It also doesnt look like things are going to be notably better any time soon. We've come out of a deep financial crisis, the skeletal structure of the economy has been damaged, and you don't just bounce back quickly. I've argued for two years that we are in a Lost Decade, and it seems politicians understand that are out to make the most of a bad situation by trying to reshape policies in the way they want them, but none of the ideas out there are likely to lead to significant shifts in hiring anytime soon.

Answered 09/21/11 10:55:05 by Kevin Hall and Tony Pugh

Q: a fundamental problem discussing issues in economics is ideology, particularly the idea that ideology has some formative impact on economic realities, well it does, for a short time if not very reality based, longer if more so, kind of a cart before the horse approach. (cases of this are communism and soviet union, or aparthied with south africa, or "free" trade today etc.) why have you not educated the public, as in a bit of training, as to basic flaws in the ideology of our system, The Basic Assumptions that Must be true for the system to work as advertised but which are Not true. i could imagine your job discussing social security would get easier as an example. as would almost any other related subject.

Submitted by robb from seattle,wa

A: Fair point, but I don't think it is the role of journalists to provide basic education, that's what the school system and the kitchen table are for. you are correct in noting that ideology is such a blinder, anytime any one of us writes a story about Social Security we get a 50/50 split of readers who accuse us of hating the president, or being his puppet. People these days seem to read an awful lot into everything.

Answered 09/21/11 10:44:05 by Kevin Hall and Tony Pugh

Q: Have you read Treasure Islands by Nicholas Shaxson yet? Why don't newspapers write more about this? Especially with the Special Committee charged with supposedly finding solutions??? Not possible without reigning in tax evaders!

Submitted by Lola Vestal from Lacey, WA

A: Have not read it, will take a look. Tax evasion is an issue, but it won't fix what's wrong with our finances, it'll help and there are a lot of things that, if addressed, will collectively help, but at the end of the day health care costs are the threat, Medicare will blow up the budget as boomers hit retirement years. This is something that has been known for quite some time, why people act as if it is sudden, unexpected thing is beyond me.

Answered 09/21/11 10:41:26 by Kevin Hall and Tony Pugh

Q: AFTER WAISTING BILLIONS AND PASSING A PROGRAM THAT WILL PUT NAIL ON THE COFFIN ..WE CAN SAY THAT ELECTION TIME IS AROUND THE CORNER AND HE THINKS HE CAN GET REELECTED (NOT) WHY NOT BUYING THE BAD ASSETS AND SELL THEM TO PRIVATE INVESTOR WITHOUT THE FOUR PER INVESTOR LIMITS AND GET A REAL JUMP ON JOBS WHEN INVESTOR REPAIR THE VACANT HOUSES AND RESELLS THEM ? WHAT DO YOU THINK??? TONY

Submitted by tony from usa

A: If you are referring to the existing inventory of homes as the bad assets, that is already taking place, and the administration more than a year ago began taking comment on the prospects of sale of distressed property in govt hands. If you are talking about the mortgage-backed securities contaminating bank balance sheets, they havent gone away, they are now classified under a different methodology so banks don't have to put a present-day value on them. there problems in housing are many, not the least of which there is no private-sector bundling of mortgages, only Fannie and Freddie doing it and with strict guidelines because the new bosses of F and F don't want even more losses on their watch.

Answered 09/21/11 10:39:40 by Kevin Hall and Tony Pugh

Q: what can be down to improve the economy in mississippi delta

Submitted by toya from hazlehurst, ms

A: Having just driven through there this summer, have to say it is a bit of a tough road ahead given the protracted downturn. I'm sure your state economic development officials wrestle with this every day. There are dwindling government funds, a stagnant economy and weak demand from consumers. that makes a new plant or development project a tough sell.

Answered 09/21/11 10:36:41 by Kevin Hall and Tony Pugh

Q: Nice to see someone looking at what actually helps and hurts business. I would like to send you a proposal to fix the corporate tax system. It was recently published in Tax Notes, a well respected journal for professional tax experts. Please send me an email address to send you this file. Thanks. Bill Parks I have both business and academic experience.

Submitted by Bill Parks from Moscow Idaho

A: 700 12th st nw suite 1000 Wash DC 20005 tx

Answered 09/09/11 18:47:59 by Kevin Hall and Tony Pugh

Q: What will happen to New York Life Insurance when is downgraded from AAA like the US government? - What will the effects be on their annuity holders?

Submitted by Tom Richardson from Germantown TN

A: For the moment, the downgrade seems to have been met with a yawn, dwarfed by bigger problems. Morgan Stanley warned though, "Because of the unprecedented nature of negative credit rating actions with respect to U.S. government obligations, the ultimate impacts on global markets and our business, financial condition and liquidity are unpredictable and may not be immediately apparent." i.e. too early to tell, but a AA plus is far from junk status and most pension funds arent required to hold just AAA bonds. NY Life didnt issue a statement, but S&P in its downgrade was generous and almost apologetic: "Our view of these companies' fundamental credit characteristics has not changed. Rather, the rating actions reflect the application of criteria and our view that the link between the ratings on these entities and the sovereign credit ratings on the U.S. could lead to a decline in the insurers' financial strength." Hope it helps...

Answered 08/11/11 15:36:00 by Kevin Hall and Tony Pugh

Q: Tony, you recently wrote that a lot of our debt problem can be attributed to tax cheats. Has there been a response to the problem outlined in your article that shows?

Submitted by Scotty Ray from Allyn, WA

A: Sorry on the delay ... here's the answer from Tony: The IRS is supposed to update the estimate on the current “tax gap” later this year or early next year. They declined to answer questions for the story. So that's what we know right now, it might be discussed more during budget/deficit negotiations later this year too

Answered 08/11/11 15:23:35 by Kevin Hall and Tony Pugh

Q: My dear Tony and Kevin, my favorite economical advisers, thank you very much for your answers regarding the timing for the next melt dow, my apologies I did not have a chance to answer YOUR questions earlier (how much can I charge you guys ?). Yes, perhaps the melt down I was talking about is starting right NOW, what do you think guys ? Should we start buying GOLD since it dropped a bit ?

Submitted by Norberto from Sydney, NSW

A: You tell me since you seem to be the Answer Man, did you buy gold ahead of the spike?

Answered 08/11/11 13:22:48 by Kevin Hall and Tony Pugh

Q: What is the difference between interest and usury?Don't you think one of these two is the cause of all the economic failures of our times?

Submitted by Amir Dewani from Florida-USA

A: Interesting question. In the case of the housing meltdown, banks were charging wild interest rates, 10 or 12 percent, but sucking people in with low teaser rates. Investors snapped these up with the intent of flipping the home before the new interest rate kicked in ... and when the house of cards tumbled, things looked quite different.. you know the rest of the story. The new Consumer Financial Protection Bureau is trying to draw a line of distinction between the two, focusing first on lending near military bases, where some of the worst abuse occurs.

Answered 08/11/11 13:20:32 by Kevin Hall and Tony Pugh

Q: I have recently added www.bea.gov to the information sources on which I base my investment decisions. The site explains why and how GDP figures and other data were revised, some of which makes some sense and some of which remains nebulous in spite of my attempts to understand their explanation. However, the skeptic in me wonders whether the Commerce Department would ever exert pressure on the BEA to intentionally skew data in an attempt to influence consumer attitudes, investor attitudes, and congressional actions. For better or worse, I have a fair amount of confidence in the integrity of CBO figures. I think they really strive for accuracy. Do you think the BEA is worthy of that same level of confidence? Are the recent dramatic downward revisions of growth regarding this year's first two quarters and of revision of previous years simply due to legitimate improvements in calculation methods and due to newly incorporated data sources as the BEA claims or is it smoke and mirrors? I'm thinking that October 27, 2011 (earliest estimated 3rd quarter GDP) could be a critical point on the markets' pricing curve.

Submitted by Charles Johnson from Blaine, MN

A: I think the BEA has a pretty good reputation for impartiality, so while it is always healthy to be skeptical, the BEA director Steve Landefeld is an honorable guy. His challenge is trying to improve statistics with new bodies and technology, and the budget cuts and wrangling make it difficult for him to make improvements in data collection. One area he is trying to improve is data flow from small business, on fears that this segment of hte economy may not be adequately represented in the GDP data. The GDP and other data offer first blush estimates that are then revised as quarterly and annual surveys come in, tax information also arrives lagged for obvious reasons, so it is not so much smoke and mirrors as data that comes in after the first estimates.

Answered 08/11/11 13:18:13 by Kevin Hall and Tony Pugh

Q: I am graduating next October with a BA in History. I use PEll grants to pay. Will I have Pell in 2012 and will monies be available for graduate school in 2013?

Submitted by Vernita Weller from Burlington, Vermont

A: I think the recent agreement ensures Pell is around for 2012... for 2013 who knows as big cuts are still being debated. The Obama administration has made Pell and similar education efforts part of its core untouchables since it relates so directly to the wealth and knowledgebase of our economy. But Congress is an unpredictable animal.

Answered 08/11/11 13:15:03 by Kevin Hall and Tony Pugh

Q: I imagine you have responded to this line of questioning in the past...if so, I beg your indulgence...but why isn't a single flat tax rate for everyone a reasonable solution to generating sufficient revenues for the government to operate? And what about a national sales tax? I dislike taxes as much as the next guy...but If everyone were to pay an equal percentage of their income to the gov't and do likewise at the counter for the goods they purchase, what could be the 'unfairness' in that approach? Also, what would that hypothetical income tax percentage need to be in order to achieve the revenues that our current system managed to haul in for - say- FY2010? And - finally - what might those 'one-size-fits-all' percentages need to be in order to dig ourselves out of debt as a nation over the next 10 years...or 20 years...etc.???

Submitted by Fielder from Atlanta, GA

A: I share many of your views, but i think the argument against the flat tax that has carried the day is the lack of progressivity... we have a tax code that tries to flatten out the differences between rich and poor and it has been a hallmark of our tax system, for better or worse. the flat tax will no doubt be discussed again both in this committee that must recommend deficit reduction, and in what is expected to be some revamp of the tax code in the next several years.

Answered 08/11/11 13:13:39 by Kevin Hall and Tony Pugh

Q: The US deficit is 17 trillion. We have 717 million barrels of oil in reserve. Why don't we sell 300 million barrels at $80 per to make 24 trillion and be done with it?

Submitted by Jerome from Wichita, Ks

A: Write your congressman... we also have gold in reserve that could be sold.

Answered 08/11/11 13:11:35 by Kevin Hall and Tony Pugh

Q: What do you reckon about a strong correlation I found during my MBA between price of oil and depression cycles in the US ?

Submitted by Norberto from sydney

A: Educate us.

Answered 07/29/11 16:41:48 by Kevin Hall and Tony Pugh