Federal Reserve Board governor Daniel Tarullo last week suggested placing limits on the size of the nation’s biggest banks, making him one of the highest-ranking American economic policy officials to endorse such a step. But the Romney campaign will not be jumping on board with the idea any time soon, according to Glenn Hubbard, one of its chief economics advisers:

“I understand Dan Tarullo gave those remarks. I disagree with them. First of all I’m not quite sure what a cap would be and how I would figure it out,” Hubbard said in response to a question at a National Association for Business Economics conference.

“The reason we’re concerned about big banks is that they’re too big to fail,” he added. “If the market forces say these banks are too big and too complex, they will be wittled down to size. And I think that’s a much better (solution) than arbitrary limits on bank sizes.”

Hubbard seems to have forgotten that the market did not whittle banks down before the financial crisis of 2008, which then showed that the banks were absolutely be too-big-to-fail. As David Min explained when other conservatives made similar comments, “While this line of thinking is intrinsically appealing in its simplicity, it reflects a dangerous ignorance of what happened in the financial crisis of 2008 and of what it means to be ‘too big to fail.’”

President Obama, of course, has not endorsed breaking up the nation’s biggest banks or capping their size, but the Dodd-Frank financial reform law, which he signed, includes a provision aimed at preventing banks from engaging in risky trading with federally backed dollars. Romney has pledged to repeal Dodd-Frank, while laying out no plan for what he would put in its place.

A slew of former Wall Street bankers — including those who were instrumental in the creation of too-big-to-fail — have recently said that the biggest banks should be broken up. The six biggest banks are back to making pre-recession profits, even as they complain about new regulations.

Oklahoma Sen. Tom Coburn (R) is out with the latest edition of an online chronicle of wasteful government spending, and he is taking aim at several of America’s professional sports leagues. Coburn objects to the fact that the leagues are classified as tax-exempt non-profit organizations, even as they rake in millions of dollars in profits.

The National Football League, National Hockey League, and Professional Golfers’ Association, according to Coburn’s report, could be costing taxpayers at least $91 million a year because of their tax-exempt status, even though they generate billions in revenue, millions in profits, and pay their top executives multi-million dollar salaries:

The National Football League (NFL), the National Hockey League (NHL), and the Professional Golfers’ Association (PGA) classify themselves as non-profit organizations to exempt themselves from federal income taxes on earnings. Smaller sports leagues, such as the National Lacrosse League, are also using the tax status. Taxpayers may be losing at least $91 million subsidizing these tax loopholes for professional sports leagues that generate billions of dollars annually in profits. Taxpayers should not be asked to subsidize sports organizations already benefiting widely from willing fans and turning a profit, while claiming to be non-profit organizations.

The NFL raked in $9 billion in revenue last year and has more than $1 billion in assets, and according to Coburn’s report, it paid eight executives a total of $51.5 million in 2010, including $11.6 million to commissioner Roger Goodell. PGA commissioner Tim Finchem made $5.2 million in 2010; NHL commissioner Gary Bettman made $4.3 million and will reportedly earn nearly $8 million this year.

The leagues, in their non-profit filings, claim to be promotion vehicles for their sports (the NHL’s mission, for instance, is “to perpetuate professional hockey in the US and Canada.”). These statements have little justification, Coburn wrote, as “major professional sports leagues are hardly in the business of simply promoting the hockey, football, or golf industry. They are in fact businesses — designed to make money.”

Though they were unmentioned in Coburn’s report, other sports organizations that file as nonprofits have also faced scrutiny. Many of college football’s biggest bowl games, including the Bowl Championship Series, are classified as non-profit charities. After generating $261 million in revenue in 2009, bowl games gave just $4 million to charity. And in 2007, the New Orleans-based Sugar Bowl made $11.6 million in tax-free profits thanks to its non-profit status.

Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.

PolitiFact published a misguided report yesterday giving a “mostly false” rating to the Obama campaign’s claim that the work of two Republican economists, Martin Feldstein and Harvey Rosen, undermines Mitt Romney’s claims about his tax plan. Oddly, last month PolitiFact gave a “mostly false” rating to Romney’s claim that the same studies back up his tax plan. PolitiFact got it right the first time and badly botched this one.

As the nonpartisan Tax Policy Center has found, Romney’s tax plan cannot add up without large tax increases on middle-class households. Feldstein, a Romney advisor, and Rosen, a former George W. Bush advisor, have each recently outlined an analysis purporting to show otherwise. But even though Feldstein and Rosen dispute that Romney’s tax plan would hit the middle-class, the math behind their own analyses simply provides further proof.

The Obama campaign asserted: “Even the studies that Romney has cited to claim his plan adds up still show he would need to raise middle-class taxes…[Feldstein and Rosen] both concede that paying for Romney’s tax cuts would require large tax increases on families making between $100,000 and $200,000.” (Romney says “middle-income” is $200,000-$250,000 and less.)

Politfact writes, “We read both economists’ writings and didn’t see any such claims.” But that simply shows that PolitiFact didn’t read their writings very carefully.

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Citigroup CEO Vikram Pandit abruptly resigned today, leaving the helm of the bank that he guided through the financial crisis of 2008. For his five years of leading Citi, Pandit will receive compensation in the neighborhood of $260 million:

If no alterations are made to Pandit’s compensation package, Citigroup will have paid him about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.

But while Pandit made off like a bandit, shareholders were not so lucky. Via Matt Yglesias, here’s Citigroup’s stock performance since Pandit took over:

Overall, Citi lost 88 percent of its value under Pandit. Earlier this year, the Wall Street Journal dinged Pandit for having the pay package that was most detached from his company’s performance, as a three-year decline of 27 percent coincided with his making $43 million. The Dodd-Frank financial reform law gave shareholders the right to hold a non-binding vote on executive compensation, and Pandit was the first bank CEO to get tagged with a vote of disapproval.

Both Republican candidate Mitt Romney and his running-mate Paul Ryan claim that their campaign’s jobs plan is essentially its tax plan. In an ad, Romney states that “my tax reform plan to lower rates for the middle class and for small business creates seven million [jobs]” out of the twelve million total he says his policies will produce. “Our entire premise of these tax reform plans is to grow the economy and create jobs,” Ryan said at the vice-presidential debate. “It’s a plan that’s estimated to create seven million jobs.”

The basic conceptual framework of Romney’s tax plan is to cut marginal tax rates for every income bracket, then cut deductions in the tax code in order to avoid losing revenue. (Though the specific numbers Romney has laid out cannot go together mathematically.) In defense of this framework, the campaign often cites the 1986 tax reform deal hammered out by President Ronald Reagan and then Speaker Tip O’Neill, which also cut the top marginal rate to 28 percent and closed loopholes to keep revenue.

But the history of the 1986 deal shows it doesn’t double as a jobs plan, as Bruce Bartlett, a senior economic policy advisor in the Reagan and George H.W. Bush administrations, pointed out in The New York Times today:

Real gross domestic product growth was about the same after the 1986 act took effect in 1987 as it was before, and tax reform obviously did nothing to forestall the 1990-91 recession. Unemployment fell, but it had been trending downward before tax reform, and the 1986 act probably had nothing to do with it. Within a couple of years it was trending upward again.

By the mid-1990s, it was the consensus view of economists that the Tax Reform Act of 1986 had little, if any, impact on growth. [...] Compositional changes in income are not unimportant and may be worth the effort of doing tax reform, even if there is no growth effect whatsoever. For example, it may improve fairness, simplicity and tax administration. But it appears that even in a best-case scenario in which the top rate comes down a lot – the 1986 act lowered the top rate 22 percentage points from 50 percent – the real economic effects are at best very modest.

Bartlett cites multiple studies that came to this conclusion, but his chart of economic growth after the reform is sufficient to drive the point home:

Romney’s claim of seven million new jobs from his tax plan, and 12 million new jobs from his policies in total, is also less impressive than it sounds. Both Moody’s Analytics and Macroeconomic Advisors have predicted the economy will create roughly that amount by 2016 no matter who is president.

Even more embarrassingly, the study that Romney cited to show his tax plan will create seven million new jobs predicts those gains over a ten-year window, not a four-year one.

The problem with Romney’s solution to the jobs crisis is that it’s a giant non sequitur. Cleaning up the tax code and making it more efficient is certainly a worthwhile goal. But it has nothing to do with the country’s current problem, which is a short-term economic collapse that has driven up unemployment.

During both the first presidential debate and last week’s vice presidential debate, moderators said that they wanted to focus on “the economy,” an admirable sentiment considering the still slow recovery that is underway. However, “the economy” has, for the most part, meant discussing taxes and the budget deficit. Those are important issues, but they by no means account for all of the economic challenges that the nation faces.

For starters, neither candidate has been pushed on how they plan to bring unemployment down below its current 7.8 percent. Romney merely promises to create the number of jobs that economists say will come along regardless of who is president, while Obama hasn’t had to address record high long-term unemployment. Here are eight other significant issues that the candidates should be asked about during tonight’s debate:

1) Housing: While the housing market is slowly recovering, it still remains a drag on the economic recovery. President Obama should be asked to explain why his administration was so slow to change foreclosure prevention programs that were clearly not meeting their goals, and why he has not named a new director for the Federal Housing Finance Agency (since the current acting director is blocking policies that would help troubled homeowners). Romney, meanwhile, should be asked to flesh out a housing plan that has absolutely no details.

2) Poverty: More than 46 million Americans — 15 percent of our population — now live at or below the federal poverty level, and the United States has one of the highest child poverty rates in the developed world. So why does Romney support a budget that takes 62 percent of its spending cuts from programs that help the poor? How would Obama protect the poor from spending cuts in any “grand bargain” deficit deal he might sign?

3) Breaking up the big banks: The nation’s biggest banks are back to making pre-recession profits. In the last several months, high ranking economic officials, as well as several former Wall Street titans, have called for breaking up or capping the size of those banks. Do either of the candidates support such a step? Why or why not?

4) Mass transit: More Americans are using mass transit and driving less and less. But the U.S. mass transit system trails those of its peer nations, and fails to connect workers who need it most to their jobs. How would Romney square this increasing demand with his desire to cut funding for Amtrak? Does President Obama have any plans to push transit development beyond the infrastructure investments included in his never-passed American Jobs Act?

5) Income inequality: The level of inequality in the United States now rivals countries like Pakistan and the Ivory Coast. This inequality crushes economic mobility for America’s shrinking middle class and its growing number of working poor. Romney said that a focus on income inequality was “about envy” and said it should only be talked about in a quiet room. Does he view income inequality as a serious issue threatening the future of America’s economy, and if so, how do his policies address it? How would Obama bolster the lower- and middle classes and reduce the growth of inequality aside from increasing some tax rates on the richest Americans?

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