Policy Shop

Policy as if people mattered

Your Credit Score Could Be A Fake

Say you want to buy a house or a car and you need a loan to do it. You do what every personal finance site recommends and obtain a free copy of your credit report from annualcreditreport.com . Then, urged on by the ads from TransUnion, Equifax, or Experian—the “big three” credit reporting firms that compile the reports—you opt for not only the free report but also shell out for what the companies promise is your actual three-digit credit score . A number! Now, you may think, I know what the auto lenders and banks making mortgages really think of me. I have a sense of what rates I qualify for and what type of car or home I can afford. There’s just one problem: the score you paid for is likely not the same one potential lenders will use to assess you . In fact, it could be way off. What many consumers don’t realize is that they have no single “credit score”— FICO alone has more than 49 different scoring models . And new research from the Consumer Financial Protection Bureau (CFPB) finds...

Jerry Perenchio: California's Sheldon Adelson

(AP Photo)
While Sheldon Adelson and the Koch brothers have become emblematic of outside spending at the national level, it is local outside spending that could have the greatest impact on policy. Jerry Perenchio is California's homegrown Sheldon Adelson, and he's using his fortune to decide the future of the nation's most populous state. California's income inequality is among the worst in the country. And as the ongoing fight over Proposition 30 shows, that often translates into political inequality. Proposition 30, which Californians will vote on this year, is Governor Jerry Brown’s attempt to solve the state’s budget deficit while maintaining funding of California schools by raising taxes on individuals making over $250,000 dollars a year. The initiative is badly needed. Without Prop. 30, California's budget deficit would slash education funding by $6 billion . Perenchio recently made a $200,000 donation against Prop. 30. As it is, California lags behind the rest of the country when it comes...

An Antidote to Voter Suppression

Yesterday, hundreds of non-partisan organizations came together for National Voter Registration Day to ensure that hundreds of thousands of Americans will be able to exercise their freedom to vote and make their voices heard this upcoming November. While a 21st century upgrade of our elections system is desperately needed to make a National Voter Registration Day unnecessary , we take this moment to recognize several states around the country that make every single day a “state voter registration day” by ensuring that voter registration services are provided at public agencies under the National Voter Registration Act ( NVRA ), commonly known as “the Motor Voter Law.” Many of us have experienced the Motor Voter Law when we have visited a motor vehicles department and have registered to vote or updated our voter registration information. Less well known is that public assistance agencies also are required to offer voter registration services. Unfortunately, over the first ten years...

Against a TSA Democracy

For the first time ever, people around the country who love American democracy have decided to come together to observe a National Voter Registration Day on September 25, 2012—a day to pull out all the stops in making sure that every eligible voter is registered and able to vote in this critical election year. Hundreds of non-partisan organizations have agreed to reach out to help hundreds of thousands of people get registered to vote so that they can fulfill their civic duty as citizens and make their voices heard in November. This is an inspiring project that all of us should support. But it also provides an important occasion for asking deeper questions about our voting system: Why exactly are there so many Americans who are not registered to vote, and how can we improve our electoral system to get rid of red tape around the registration process and ensure that every eligible person is able to exercise the freedom to vote? American democracy should be a model for the world. A...

History Lesson: Tax Cuts Are No Magic Bullet

No idea is more central to conservative economic thinking than the belief that cutting taxes leads to higher economic growth. One can certainly understand the appeal of this belief: It would be great if government could collect the same amount of revenue, but with much lower tax rates, because those rates fostered strong growth. Alas, the historical record doesn't offer much validation of this sunny supply-side vision -- as I have noted here repeatedly. David Leonhardt discussed the record yesterday in the New York Times. One interesting point he noted was that cutting taxes may make a difference when taxes are extremely high, but the rate changes of recent years are relatively small and thus it's no surprise that the effects would be modest. Listening to today's tax debate, you'd think our political leaders were debating capitalism vs. socialism. In fact, though, going back to the Clinton-era tax rates would mean raising the top income tax bracket by less than 5 percent. That's not...

Wall Street Built That

(Flickr/Ed Gaillard)
As we celebrate Occupy Wall Street’s first birthday, the movement's pivoted from financial regulation to focus on crushing consumer debt . While reforming debt is crucial (particularly student debt), finance remains an imminent threat to the American economy. We shouldn't forget it. There's little evidence that Wall Street's changed since 2008. The drumbeat of flagrant financial crimes has continued unabated in the year since Occupy Wall Street’s inception. As Senior Fellow Wallace Turbeville aptly illustrates, the culture of the "alpha" remains . In addition, coming on the heels of a report by Better Markets last week that apprised the cost of the financial crisis at $12.8 trillion dollars in lost wealth and human capital, a new report from the Americans for Financial Reform estimates the financial crisis’ additional costs. Some glaring figures the AFR highlight: 8.8 million Americans (1 in 20 full-time workers) lost their jobs between 2007 to 2009. The unemployment rate doubled from...

Big Oil's Political Blitz

News came out last week that fossil fuel interests have spent over $153 million in television ads attacking the President’s clean energy agenda, including criticizing new air pollution rules and the delay of the Keystone XL pipeline. This figure is likely to grow, as there is still two months before the election. And, this is in addition to the $13 million the fossil fuel industry gave to the Republican National Committee and associated PACs, $950,000 to the Democratic National Committee, and $70 million spent in lobbying . While the amount of money spent seems to indicate the industry is under attack and is going on the defensive, nothing could be further from the truth. Domestic oil production is at its highest level in decades, the Obama Administration has made its commitment to natural gas development well-known, as well as its commitment to and investment in “ clean coal ”, even though fracking is extremely hazardous and there seems to be little progress towards making clean coal...

Riches to Massive Riches: The Michael McCaul Story

(mccaul.house.gov)
Sick of investment advice from hacks like Warren Buffet and Donald Trump? Ask a congress member. Roll Call published their latest list of the “ 50 Richest Members of the 112th Congress ” last week. Texan House Representative Mike McCaul took first place, reporting a minimum net worth of $305.46 million for 2011. His wealth has increased exponentially over the past few years while the current median household income is the lowest it’s been since the late 1990s, according to recent data from the US Census: In 2011, real median household income was 8.1 percent lower than in 2007, the year before the most recent recession, and was 8.9 percent lower than the median household income peak that occurred in 1999. The average Texan made $38,294 in 2011. One play from the McCaul book involves influencing legislation to turn a profit. The McCaul family holds between $325,000 and $750,000 worth of stock in a parent company of Pratt & Whitney, according to Republic Report . Pratt & Whitney...

Understanding Poverty: What the Census Doesn't Tell Us

(Demos.org)
It’s time we change how we think about poverty. The newly released Census report on poverty received a lot of attention from the chattering class. But was it really deserved? There are many ways in which the rate understates poverty. The poverty line, individuals making $11,484 a year, has been used since 1964. A CBS report explores the inadequacy of the measure: This amount was originally set as the earnings line below which a family of three or more would have to spend more than a third of its income on food. Notably, the report does not consider other major expenses, such as housing, transportation, medical care and child care, in gauging the nation's poverty rate. That’s a big blind spot. In his article for the Prospect’s Poverty issue , Mark Levinson provided a thorough critique of the way that the Census measures poverty. The poverty line was roughly equal to 50 percent of median income when it was set in the 1960s. It has now declined to about 36 percent. So today’s official...

Peer Power: Facebook, Voting, and Social Influence

(Facebook)
A new study from the University of California, San Diego , shows how a Facebook get-out-the-vote campaign can have a tangible impact on voter turnout—but only when there’s a certain sort of social component to it. The researchers conducted an experiment on every American Facebook user who was 18 or older during the 2010 congressional elections—more than 61 million people. Most people in the group saw a message at the top of their News Feed that encouraged the user to vote, provided a link to find local polling places, showed a clickable button reading ‘I voted’, showed a counter indicating how many other Facebook users had previously reported voting, and displayed up to six small randomly selected ‘profile pictures’ of the user’s Facebook friends who had already clicked the I Voted button. Another group (which the researchers call the ‘information-only group’ in the paper) saw a similar message, but without pictures of their friends, and a final, control group didn’t see any message...

The Pension Pinch

(Demos.org)
For the magazine’s 20 th Anniversary, the September issue of SmartMoney has a long section recapping changes in American personal finance -- and on what they got right and wrong -- over the last two decades. Their historical review starts with the blunt question: Who’s responsible for your retirement? You are. It would be more accurate to add, however: "You're responsible and you're all alone in an industry built to make money for itself, with few protections for your savings." As SmartMoney explains: . . . .the biggest change of all may be the demise of the pension plan. With the help of new federal laws and provisions passed in the 1970s, private-sector companies have been gradually shedding the costs and risks associated with funding their employees’ retirements –- a helpful boost to their bottom lines. ... In the absence of those paycheck security blankets, more and more Americans are being asked to “own their retirement” -- that is, to fund and manage accounts that will be used...

Corporate Tax Myths

(Flickr/Contando Estrelas)
There's no corporate income tax in Bermuda. Can we really compete with that? In The Wall Street Journal today , John McKinnon and Scott Thurm revive the zombie of too-high corporate taxes causing businesses to flee offshore. Needless to say, they give too large a megaphone to international outsourcers and too little to their critics. Based on their interviews with companies that have moved their businesses to commerce-centers like Bermuda and Ireland, McKinnon and Thurm find: Companies cite various reasons for moving, including expanding their operations and their geographic reach. But tax bills remain a primary concern. A few cite worries that U.S. taxes will rise in the future, especially if Washington revamps the tax code next year to shrink the federal budget deficit. The uncertainty fairy strikes again. The authors go on to make the claim that we need to “rewrite the tax code to give companies an extra incentive to stay in the U.S.” We couldn’t possibly raise taxes or business...

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