Economy

Equality, Brought to You by U.S. Airways?

Flickr/Robertsharp
Poking holes in the arguments that appear on The Wall Street Journal’s editorial pages bears a close resemblance, I admit, to shooting fish in a barrel, but an op-ed in Thursday’s Journal makes points so idiotic I cannot restrain myself. Its thesis, as woozily argued by Donald Boudreaux, a George Mason University economics professor, and Mark Perry, a University of Michigan economics professor, is that the decline and stagnation of the American middle class is a myth. Careful analyses of American income distribution by economists like U.C. Berkeley’s Emmanuel Saez—who has found that 93 percent of U.S. economic growth since the trough of the recession has gone to the wealthiest 1 percent of our compatriots – are not even considered in the Boudreaux-Perry manifesto. Rather, they note that Americans’ life expectancy has increased in recent decades (though they fail to grapple with the recent report from the National Research Council and the Institute of Medicine, which found that...

Keystone XL: A Year in Review

What has happened with the pipeline in the year since the Obama administration rejected TransCanada's original permit?

Flickr/Bold Nebraska
Flickr/M.V. Jantzen I t’s been just over a year since the Obama administration rejected TransCanada’s original permit application for Keystone XL. On the surface, it might seem like nothing much has happened. The State Department has yet to release its assessment of the environmental impacts of the new, revised pipeline route, which TransCanada proposed on May 4, 2012, only four months after the initial permit rejection. None of the many attempts by Republicans in Congress to force through approval of the pipeline succeeded, and with the slow fade of Mitt Romney, one of the projects’s self-proclaimed biggest fans, the project’s best chance to pass unimpeded through U.S. bureaucracy was lost. But in this period neither TransCanada nor Keystone XL opponents have been at rest. Construction on the southern end of the pipeline began in August, and protesters, hoping to budge an administration that has turned stalling on environmental action into a specialty, have amped up both their...

Deficits: The End of an Obsession

AP Photo/Alan Diaz
The consensus around debt reduction is beginning to crumble. Some straws in the wind are more careful attention to the actual numbers, as well as public conversions by such key players as Larry Summers and Peter Orszag, two former top aides to President Obama, who only yesterday were key members of the deflate-your-way-to-recovery club. Summers wrote a piece in Wednesday’s Financial Times titled “End the Damaging Obsession with the Budget Deficit,” pointing out that the more serious deficits were in jobs, wages, and infrastructure. His former colleague Orszag wrote a piece pointing out that the rest of the budget is in decent shape—the huge outlier is federal health care costs, projected to rise from 5.5 percent of GDP now to 12 percent by 2050. President Obama, in his second inaugural address, had little to say about deficit-reduction as some kind of panacea and more about broadly-shared recovery. In the era of the Bowles Simpson Commission, the Peterson Foundation’s regular...

David Cameron's Malaise Speech

Europe is not impressed with the British P.M.'s plan to loosen the country from the E.U.'s grip.

Rex Features via AP Images
Rex Features via AP Images) Prime Minister David Cameron giving the keynote speech on Britain's future in Europe, Bloomberg head office, London, Britain. I f there is one word that defined the EU in 2012, it was “Grexit.” The prospect of Greece crashing out of the Eurozone hovered over Europe like a dark cloud, threatening a thunderstorm but never delivering. With Greece’s continued membership in the euro looking more secure than it has in a while in these early days of 2013, a new word has captured the imagination of Europe-watchers: “Brexit”, or the possibility of a British departure from the European Union. Prime Minister David Cameron gave a big speech on Britain and Europe in London on Wednesday morning. In it, he expressed his country’s dissatisfaction at the evolution of the European Union, in particular in the age of the euro crisis. Lamenting the slipping competitiveness of European economies and the mounting democratic deficit of the EU, he vowed to renegotiate the United...

Workers, Not Babysitters

There's still a long way to go to ensure domestic workers have the same protections as other workers, but progress is coming. 

Flickr/brk in bklyn
S ome very welcome news may break soon for the domestic workforce: the White House appears to be close to announcing a rule change to the Federal Labor Standards Act, finally including home health aides—those who bathe, nurse, toilet, and care for the elderly and disabled in their homes—in its protections. It may sound out of another century, and it is, but home health care workers had been excluded from federal overtime and minimum wage protections through a companionship exemption. It was designed to leave out only those who provided company, but had become so widely interpreted as to encompass a vital, booming workforce. The administration has long been sitting on the decision to change the rule, but outgoing Secretary of Labor Hilda Solis recently told The Nation , “there’ll be movement on that. We’ll shortly see progress made there.” If and when this change is announced, this workforce will be formally recognized as “workers,” not babysitters making pin money. The symbolism can’t...

Labor, and Middle Class, Still Shrinking

AP Photo/Keith Srakocic
Can we at least agree to stop using the term “Big Labor?” Whatever else may be said of the American union movement, it’s not really big any more. Today, the Bureau of Labor Statistics (BLS) released its report on the number of Americans in unions in 2012, and it tells a tale of steady, and in some cases, dramatic shrinkage. In 2011, 11.8 percent of American workers were unionized; last year, that figure dropped to 11.3 percent. The percentage of public sector workers in unions dropped from 37.0 percent to 35.9 percent, while the share of unionized private sector workers went from 6.9 percent to 6.6 percent. For all intents and purposes, collective bargaining in the U.S. private sector has just about vanished. In 1970, there were 17.8 million union members in a nation of 203 million. Last year, 14.4 million Americans were union members (down by 400,000 from the previous year) in a nation of 315 million people. In percentage terms, the 11.3 percent national unionization rate is just...

Why Balance the Budget?

Google
I mentioned in the previous post that Republicans have pledged to craft a plan that balances the budget in ten years. As a political matter, it’s easy to see why they would do this—Americans like the idea of a balanced budget. As an economic issue, however, the question is less clear. Here’s Matthew Yglesias asking if there’s anything—anything at all—that we gain from having a balanced budget: The budget will, presumably, cut spending down to a level that conservatives think is appropriate. Say that sums up to 18 percent of GDP. Well if you’re spending 18 percent of GDP and 18 percent of GDP is the right amount to spend, then why is it better to raise 18 percent of GDP in taxes rather than raise 16 percent and borrow the rest? Is it because a 2 percent of GDP budget deficit would be inflationary? Is it because an inflation-targeting central bank faced with a 2 percent of GDP budget deficit would be forced to peg short-term interest rates at a high level? What’s the problem, exactly,...

There is No Spending Crisis

AP Photo/J. Scott Applewhite
Most GOP rhetoric centers on the notion the United States is facing a “spending crisis” that will ruin its fiscal solvency. Setting aside the fact that this is impossible —a country with fiat currency (held in reserve by most of the world) can’t “run out” of money, and can’t have a “debt crisis”—it’s also true that the government just isn’t spending as much as Republicans think. Economic stimulus aside, Obama has presided over modest growth in federal outlays. Here’s Bloomberg with more: Federal outlays over the past three years grew at their slowest pace since 1953–56, when Dwight D. Eisenhower was president. Expenditures as a share of the economy sank last year to 22.8 percent, their lowest level since 2008, according to Congressional Budget Office data. That’s down from 24.1 percent in 2011 and a 64-year high of 25.2 percent in 2009, when Obama pushed through an $831 billion stimulus package. “If you strip out the stimulus, discretionary spending over the last few years has been...

Invisible Workers, Global Struggles

Flickr/Janinsanfran
Flickr/Janansanfran L ike countless other migrant girls toiling far from home, her life was invisible—except for the chilling way it ended. Earlier this month, Rizana Nafeek, a young Sri Lankan migrant in Saudi Arabia, was executed after being convicted of killing a baby in her care. The case drew international condemnation not only because of the severe punishment and opacity of the legal proceedings—she was reportedly just 17 at the time, not 23 as her falsified passport indicated, and advocates said her confession had been coerced—but also because the girl’s brief life exposed the consequences of the invisible struggles facing domestic workers in the Middle East and beyond. Nafeek's case symbolized the severe treatment of migrants in Saudi Arabia (human-rights watchdogs report that numerous other domestic workers have faced the death penalty after unfair accusations—sometimes stemming from cases of self-defense against abusers—pushed them into a biased and abuse-ridden legal system...

The Truth about Student Debt

In 40 percent of cases where a student loan debtor sought forgiveness of their loans as part of a bankruptcy case, the judge granted at least some relief. Only 0.1 percent took the bait.

Flickr/Occupy Student Debt Campaign
There are a few ready talking points when discussing the student-loan crisis: the collective $1 trillion burden of debt, how student debt is now larger than credit card debt in this country, the fact that the 90-day delinquency rate spiked to 11 percent last year, meaning over one in ten borrowers are behind on their payments—all facts that don’t give much hope to those with loans, or those trying to resolve the financial crisis. Another widely repeated belief is that student loans are completely nondischargeable in bankruptcy, a statement that a quick fact-check proves to be rated “pants on fire” and one that is causing tens of thousands of borrowers to suffer for no reason, for years. A new empirical study of a nationwide sample of bankruptcy cases by Jason Iuliano, a Harvard Law School graduate and Princeton political science PhD student, shows that in 40 percent of cases where a student loan debtor sought forgiveness of their loans as part of a bankruptcy case, the judge granted...

The Truth about Student Debt

Flickr/Occupy Student Debt Campaign
There are a few ready talking points when discussing the student-loan crisis: the collective $1 trillion burden of debt, how student debt is now larger than credit card debt in this country, the fact that the 90-day delinquency rate spiked to 11 percent last year, meaning over one in ten borrowers are behind on their payments—all facts that don’t give much hope to those with loans, or those trying to resolve the financial crisis. Another widely repeated belief is that student loans are completely nondischargeable in bankruptcy, a statement that a quick fact-check proves to be rated “pants on fire” and one that is causing tens of thousands of borrowers to suffer for no reason, for years. A new empirical study of a nationwide sample of bankruptcy cases by Jason Iuliano, a Harvard Law School graduate and Princeton political science PhD student, shows that in 40 percent of cases where a student loan debtor sought forgiveness of their loans as part of a bankruptcy case, the judge granted...

Bobby Jindal to Poor Louisianans: Drop Dead

Gage Skidmore / Flickr
Last week, I wrote on how Louisiana Governor Bobby Jindal was transforming his state’s tax system, from a mixed collection of corporate, income and sales taxes, to one where corporate and income taxes have been eliminated, and sales taxes are hiked to make up for lost revenue. In other words, Jindal wants to turn Louisiana’s marginally progressive tax structure into a fully regressive one, which places its largest tax burden on its most vulnerable citizens. If Jindal were also proposing a large expansion of state services, this would make sense. Overall, the progressivity of the tax burden is less important than the level of redistribution. A state with regressive taxes but robust public benefits is better for lower-income people than one with progressive taxes but few benefits. Unfortunately, that doesn’t describe Jindal’s Louisiana. To wit, he has authorized elimination of the state’s hospice program for Medicaid recipients. According to a local New Orleans news station, Louisiana...

Movin' on Up

Google
Every Thursday, the federal government releases data on new jobless claims, and for the last several months, they’ve hovered between 350,000 and 400,000. For the sake of context, a number below the latter is evidence of an improving jobs landscape, and a number below the former is a sign that jobs are growing at a fast pace. Today, the Department of Labor announced there were only 335,000 new jobless claims for the previous week: New applications for U.S. unemployment benefits fell by 37,000 to a seasonally adjusted 335,000 in the week ended Jan. 12, the Labor Department said Thursday. Claims fell to the lowest level since January 2008, but the big drop likely stems from a seasonal-adjustment quirk whose effects could quickly fade and push the numbers back up in the next few weeks. Economists surveyed by MarketWatch expected claims to drop to 368,000 from last week’s slightly revised 372,000. When combined with increased housing activity , and firmer consumer spending , this is a sure...

How’s That Medicine Taste, Germany?

Oliver Lang/dapd
Germany, the powerhouse of Europe, experienced negative growth in the last three months of 2012, down from a positive growth rate of 3 percent in 2011. Chancellor Angela Merkel, who more than any other leader inflicted austerity on the rest of Europe, is finding that what goes around, comes around. All of the small nations that have bowed to Germany’s austerity demands—Greece, Ireland, Spain, Portugal—are stuck in an even deeper downward spiral. They cut spending, but their deficits increased. Why? Because the hit to employment, consumption, and then to government revenues leaves their economies in deeper distress. This is a path to permanent depression. It is economic madness, a fact recognized by no less than the chief economist of the International Monetary Fund (IMF), the organization that has been Germany’s partner in enforcing austerity. The IMF’s Olivier Blanchard, in a paper released January 1, warned that the negative effects of austerity far outweighed the positive ones. It...

Bobby Jindal's New Tax Plan Would Be a Huge Blow to Louisiana's Poorest Residents

Derek Bridges / Flickr
Derek Bridges / Flickr Louisiana Governor Bobby Jindal. Last week, I mentioned Louisiana Governor Bobby Jindal’s proposal to end all corporate and income taxes, in order to drive economic “investment.” There aren’t many details on the plan, but it’s safe to assume that Louisiana would make up that revenue with higher state and local sales taxes. To wit, here’s the Tax Policy Center , which found that if Louisiana wanted to maintain its current revenues without income and corporate taxes, it would have to double its sales taxes: Last year Louisiana collected $2.9 billion through the individual and corporate income taxes and another $2.6 billion through the general sales tax. Maintaining current revenues with Jindal’s plan would require that sales tax revenues more than double, which means that, absent a significant broadening of the tax base, the tax rate would also have to rise substantially. For households that don’t pay income taxes and save little or no income, this amounts to...

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