Economy

Mad Money

With right-wing fears rising over the Federal Reserve’s monetary policy, Republican state legislators want to 
create their own currencies.

(Eric Palma)
Eric Palma I n January 2011, the advocacy group Utah Sound Money released a 30-second ad designed to stir up support for a new bill in the state legislature. “The almighty dollar’s not looking so almighty these days,” the announcer intones as storm clouds fill the screen. “The feds have us tap-dancing at the edge of financial ruin.” A small map of the U.S. totters along a rising red graph of debt. Suddenly, blue skies open as a giant gold coin floats down, using the Constitution as a parachute. “Restoring an inflation-proof, sound-money option offers a time-tested option,” the announcer concludes over the laughter of children at play. Viewers are then urged to support the Utah Sound Money Act. Sponsored by Representative Brad Galvez, a Republican, the bill would make gold and silver coins from the U.S. Mint legal tender in the state. Although no businesses or individuals are compelled to use them, Galvez’s bill requires the state to accept the coins for tax payments or any government...

Top Ten Tax Facts

Think you know a lot about government revenue? Think again.

(Flickr/401K)
This piece is the fifth in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos. 1. The government has collected less in taxes as a proportion of the economy in the past three years than it has in any three-year period since World War II, and tax rates are at historic lows . 2. One out of three multi-millionaires pays a lower percentage of their income in taxes than the vast majority of people making $60,000 a year. 3. Chairman Paul Ryan’s budget proposal, which has been praised by Governor Romney, would deliver benefits to people with incomes over $1 million that are 10 times greater than the benefits to those earning $40,000 or less. 4. Corporate income taxes for the past three years have hovered at just over 1 percent of GDP , lower than for any three-year period since World War II. The average for OECD countries is 3.5 percent. 5. The Bush tax cuts added $1.7 trillion to the nation’s debt between 2001 and 2008, which is more...

Talking about Labor Law Reform with Richard Kahlenberg

A conversation with the Century Foundation’s Richard Kahlenberg

(AP Photo.Rutland Herald, Cassandra Hotaling Hahn)
For a company trying to ward off unionization, firing a union activist is a great investment. While the National Labor Relations Act bans such retaliation, its process is slow and its penalties are minimal. Every time Democrats have controlled the presidency and Congress, unions have pushed reforms to the law—and every time they’ve come up short. In their new book, Why Labor Organizing Should Be a Civil Right , the Century Foundation’s Richard Kahlenberg and labor lawyer Moshe Marvit propose a new approach to labor law reform: add protection against anti-union discrimination to the Civil Rights Act. The Prospect talked to Kahlenberg about why he expects his proposal to succeed where others failed, the relationship between law and culture, and whether Ann Coulter has a point. Why is this better than the Employee Free Choice Act? I’m in favor of EFCA and traditional labor law reform, but we’ve been at the issue now for close to 50 years, and traditional labor law reform has not passed...

With Corporate Taxes, Less Is More

The federal government can lower rates for companies while increasing revenue.

(Flickr/rexboggs5)
This piece is the fifth in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos. There is no shortage of alarmism when it comes to corporate taxes. Earlier this year, Mitt Romney said that the U.S. tax code “looks like it was devised by our worst enemy to tie us in knots.” A more recent memo drafted by the Senate Republican Caucus claimed that the “corporate income tax harms workers, consumers, job creation, investment, and innovation” (you have to wonder what else exactly is left). These statements are enough to scare anyone into thinking that the entire U.S. economy will crumble if corporate tax rates aren’t slashed tomorrow. But, as Republicans often claim, are U.S. corporate tax rates really among the highest in the world? And are workers really so dependent on protecting corporate profits? More important, is there any reason the U.S. shouldn’t raise more revenues from corporations during this time of great fiscal need?...

Can Occupy Our Homes Move Congress?

A conversation with Representative Keith Ellison.

(AP Photo/Alex Brandon)
With Occupy Our Homes—the growing movement to fight foreclosures and evictions—community organizations and Occupy activists have teamed up in cities throughout the country to defend at-risk homeowners, pressure banks to renegotiate mortgages, and keep families in their homes. This effort has resulted in some impressive local victories. At the same time, the scope of the foreclosure crisis calls out for federal remedies. Rep. Keith Ellison (D-Minnesota) has proposed one such remedy. In late February, Ellison released a statement with fellow Congressional Progressive Caucus co-chair Raúl Grijalva (D-Arizona) calling on Freddie Mac and Fannie Mae to write down mortgage principal amounts for homeowners at risk of foreclosure. The Prospect spoke with Ellison about debt forgiveness for struggling families and about how grassroots housing activism is affecting discussion in Congress. Could you elaborate on your proposal for principal reduction? Underwater mortgages are holding people in...

An E-Book a Day Keeps Amazon at Bay

Today's Balance Sheet

The Economist
The Department of Justice is going after Apple and five publishing companies, suing them for colluding to raise e-book prices. Amazon, the current leader in e-book sales thanks to the Kindle and the company's early domination of the market, takes a loss on their $9.99 books in order to pull in customers. Apple took a different route with its e-book store, allowing publishers to set the price and then taking a commission, also known as agency pricing . These publishers became unwilling to offer Amazon wholesale priced e-books, and prices rose from $9.99 to $12.99 and $14.99. Three publishers have already settled with the Justice Department, and have allowed Amazon and other retailers to return to what they call the "wretched $9.99 price point." A group of 16 states filed its own suit against publishers, and came to a settlement of $51 million with two publishers is set to provide restitution to consumers who bought the higher-priced e-books. Apple and the two other publishers are set...

The Weakness of the Buffett Rule

Pete Souza/The White House
Now that America's burning hunger for Mitt Romney has overflowed, and he really is the Republican nominee-to-be, the Obama campaign must settle on its anti-Romney strategy. Or more properly, they will reveal to us the anti-Romney strategy they settled on many months ago. One central component will be an argument about taxes, contrasting Obama's approach with the Republican one, and the cornerstone of that argument looks to be the "Buffett Rule." Which is kind of unfortunate. The Buffett Rule is, I'm quite sure, good politics. Believe you me, the Obama campaign wouldn't be going whole-hog on it if they hadn't already polled and focus-grouped it within an inch of its life. What it isn't is particularly good policy. The fairness principle at play—that rich people shouldn't pay lower tax rates on their income than the rest of us—is perfectly sound. The problem is the way they've decided to implement that principle. I use the term "implement" loosely, because the chances that the Buffett...

Taxing Wall Street Speculation

There's another, better way to go after the 1 percent than the Obama administration's proposed "Buffett rule."

(Flickr/401K)
This piece is the third in a six-part series on taxation, and a joint project by The American Prospect and its publishing partner, Demos. As the White House mounts a major campaign to sell the “Buffett Tax” this week, there is another, better tax on the 1 percent that Washington should be considering: A financial-transaction tax—better known as a financial speculation tax (FST). A financial-speculation tax has been discussed, from time to time intensely, ever since the financial crisis of 2008 riveted attention on the markets that drove the economy to the edge of a Great Depression-quality abyss. One motivation was to make the perpetrators pay, as the public focused on bonuses at levels befitting Croesus and callous disregard for the responsibility borne by the banks for the great recession. But the financial-transaction tax is also good policy. Under the concept, financial transactions—purchases and sales of equity shares and bonds and the execution of derivatives—are taxed based, at...

Reintroducing the Buffet Rule

(michael_reuter/Flickr)
Later this afternoon, in Florida, President Obama will make his push for the Buffet rule, a policy which would ensure a minimum 30 percent tax rate for individuals making more than $1 million per year. There’s no chance that it will pass either chamber of Congress, but that’s not the point; the proposal is meant to place Democrats on the side of tax fairness and present the GOP as tied to the interests of the wealthy Americans. The Republican response is that this is an attempt to draw attention away from the economy and its sluggish performance over the last three years. In a great post, Greg Sargent notes the extent to which the Obama campaign is hoping to tie its argument about the direction of the economy to an argument on economic fairness: The GOP hopes to neutralize the tax fairness issue by separating it from the economy’s performance. But Obama’s case is that there is no separating the fairness issue from the economy’s performance or from people’s economic suffering. He is...

Write Down the 11 Million

Underwater homeowners aren’t backing down—they’re standing up and fighting back. And we need to stand with them.

(AP Photo / DAVID J. PHILLIP)
We’re entering the 99 percent spring, with escalating actions starting across the country next Tuesday targeting America’s biggest tax dodgers. On April 24, shareholder actions will begin at General Electric, Wells Fargo, Bank of America, and dozens of other corporations. Americans are renewing the fight to fix our economy and to hold the big banks accountable for the misdeeds that have left millions out of work and out of homes. Last month in The Nation , I wrote about three issues that allow us to thread different strands of activity through a common analysis of how Wall Street, big banks, and corporations have profited by tanking and then reorganizing the economy: housing, student debt, and the devaluing of work. Of those three issues, the bravest activists—and the highest stakes—may be found in the housing crisis. Right now in America there are nearly 11 million homeowners who are threatened by foreclosure or are underwater— 11 million— who collectively hold nearly $800 billion in...

A Glimpse at the "Opportunity Society"

(Muffet/Flickr)
Whenever Paul Ryan speaks on the need to reform the welfare state, he declares that what the United States needs is a social safety net , and not a hammock. The idea is easy to understand: A net is meant as a last resort, to keep you from serious danger; a hammock, by contrast, is designed to keep you comfortable or—in Ryan’s words—“lull able-bodied people to lives of dependency and complacency.” Each of the Republican presidential candidates have made similar declarations, and to that end, each has promised to cut social programs until we are left only with what’s necessary. As Mitt Romney put it in his speech last Wednesday, “I want to restore the values of economic freedom, opportunity, and small government that have made this nation the leader it is.” The striking thing about this rhetoric is that it drastically overstates the extent to which we have a social safety net at all. Writing for the New York Times , Jason DeParle describes the shape of the welfare state for many...

Washington, We Have a Revenue Problem

Why taxes have to go up—by a lot

(Flickr/401K)
This piece is the first in a six-part series on taxation and a joint project by The American Prospect and its publishing partner, Demos. The United States has a revenue problem. Taxes at all levels of government are too low to balance budgets and, more important, to ensure America’s future prosperity and cope with an aging population. While many political and policy leaders argue that future revenues should reflect “historic norms,” this is a flawed assumption on which to base long-term fiscal planning. Tax revenues have accounted for around 18 percent of GDP since World War II, and 18.3 percent over the past 30 years. The budget released by Paul Ryan and the House Budget Committee proposes average revenue levels at this same level—18.3 over the next decade. (Although an analysis by the Tax Policy Center found that the average would in fact be 15.4 percent.) The Simpson-Bowles plan, released in late 2010, proposed average revenues of 19.3 percent through 2020. Meanwhile, the Obama...

Mission Accomplished for Top Corporations

Today's Balance Sheet

The New York Times
Although the economy is still improving at a glacial pace, as evidenced by this month's slowing job growth, companies and CEOs have returned to their pre-recession heights, with a stock market at a four-year high to match. In 2007, S&P 500 companies created an average of $378,000 in revenue for every employee. Last year, that number was $420,000 . Top executives are doing okay too—the median income of the top 100 CEOs is $14.4 million . Leading the pack is Apple's Timothy Cook, who makes an astounding $12 per second. The average annual American salary is $45,230. These company riches haven't translated into substantial job growth yet, partly because companies are still "very, very cautious" about hiring as we emerge from the recession, and partly because when they do hire, it is not always domestically. Until companies have the confidence to spend on hiring, job numbers aren't likely to rival corporate profits in the near future. The Latest ‘Super PAC,’ Eyeing General Election,...

+120,000 Jobs for March

Today's Balance Sheet

Moneybox
The economy added 120,000 nonfarm jobs in March—far less impressive growth than February's 240,000 jobs, which were revised upward from last months estimate of 227,000. The unemployment rate dropped 0.1 percent to 8.2 percent, according to today's Bureau of Labor Statistics report. Economists had predicted that 205,000 jobs would be added in March. The numbers released today are far lower than expectations, and the +150,000 threshold needed to keep job growth at pace with population growth. The numbers could be a sign that job growth is slowing—the Federal Reserve has noted that expectations this year should be tempered given weak demand, the still precarious situation in Europe, and gas prices—or that much of the growth of the past few months was seasonal. Manufacturing employment went up by 37,000, boosted by growth in the auto industry; health care, financial services, and professional and business services also posted considerable growth. March also marks the 24th month of...

March's Disappointing Jobs Report

(Chrstopher/Flickr)
For the March jobs report, economists were expecting another month where the economy grew by more than 200,000 jobs. Instead, what we received—according to the Bureau of Labor Statistics—was a disappointing backslide into the anemic months of last fall. The economy created 120,000 jobs in March, a huge drop compared to previous months. At the same time, however, the unemployment rate dropped to 8.2 percent. This looks good, but it isn’t; the employment to population ratio dropped a tenth to 58.5 percent, and if labor force participation had remained steady from February, then the unemployment rate would have grown to 8.4 percent. On the bright side, the composition of the unemployed has begun to change. Fewer are people who lost their jobs, and more are people who chose to leave them . In other words, a growing number of people feel confident enough about the job market that they will choose a brief period of unemployment to find a better deal. This is in line with the latest measure...

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