Economy

Look to the Revisions!

(wools/Flickr)

As far as April is concerned, the jobs report is disappointing; 115,000 new jobs, just enough to keep pace with population growth. Unemployment dropped to 8.1 percent, but labor force participation also declined, which means that joblessness is lower because fewer people are searching for jobs.

What’s interesting is that this runs counter to a host of other economic indicators, all of which point to a brighter picture. According to Gallup, for example, economic confidence is a four-year high, consumer spending has edged up, and small-business optimism has risen to its highest levels since the summer of 2008.

A Post-Buffett Rule Corporate Tax Reform Push? Not Likely.

Today's Balance Sheet

Although tax reform has been in the national spotlight lately—between the Obama team's April Buffett Rule push and the Republican primary candidates' proposals (remember 9-9-9?)—don't expect corporate tax reform to be a legislative priority in the near future. “From the beginning, we acknowledged that this would be a heavy lift and take time,” an official from the Treasury Department said.

The Case for Just Giving Money to People, Part Infinity

(401K/Flickr)

In a few weeks, tens of thousands of students will graduate from college or university, and attempt to make their way in the economy. During better times, these former students would find jobs, rent apartments, and almost immediately begin to pump money into the economy. But—three years after the nadir of the economic crisis—the job market for young people is still terrible, and many have opted to live with their parents in order to save money. This, you can probably imagine, has only made the economy worse. Here’s The Washington Post:

Austerity in the US!

(401K/Flickr)

The defining feature of Republican economic policy for the short-term is immediate austerity—big spending cuts to social programs, coupled with tax increases on lower-income people, and a reduction in the size of the federal workforce. Conservatives claim that this will lead to immediate job growth and a more robust recovery.

Voting Out Austerity in Europe

The elections in France and Greece this week may lead to a reexamination of how the euro zone approaches the debt crisis.

(Sipa via AP Images)

Could this week produce a turning point in Europe’s long, Sisyphean battle against the debt-and-banking crisis that has been ravaging it for the last two-and-a-half years? This coming Sunday, France will likely vote for Francois Hollande, a pro-Keynesian Socialist, as its new president. In Greece, on the same day, parliamentary elections will produce a hammer blow to the existing two-party system and will significantly increase the strength of the anti-Europeans on the far left and the extreme right.

The Death and Life of Detroit

Neighborhood groups are bringing the blighted city back, one block at a time. Will City Hall stand in their way?

(Flickr/Sascha Frank)

A shivering knot of college students stands outside Motor City Java House as John George unlocks the front door. It’s 15 degrees in Detroit on a February morning, and fresh snow covers the Old Redford business district. Cold weather doesn’t stanch the flow of volunteers coming to the city’s northwest corner: They show up every Saturday, arriving in shifts, ready to swing sledgehammers and twist crowbars. George’s wife, Alicia Marion, has learned to expect this traffic since she opened the coffeehouse in 2010. She puts on an apron and starts brewing.

Consumer Screwgie of the Day

The scene of the crime.

There are a lot of things companies do to fool consumers, some more meaningful than others. They pack items in large boxes to make them look bigger, they offer questionable claims about their products' effectiveness, they weave absurd tales about how your life will be changed if you buy their thing. Navigating your way through that thicket of baloney is part of being a smart consumer, and to a degree we accept it as part of the price of having free commercial speech. Short of outright fraud or practices that do substantial harm to consumers, we understand that people who are selling things can say almost anything they want, and we accept that being a consumer means that manufacturers and retailers are going to try to fool you. In the immortal words of Morty Seinfeld, "Cheap fabric and dim lighting. That's how you move merchandise."

But there are some kinds of deception that are beyond the pale. It's one thing to sell you something that might not be up to your expectations; perhaps your expectations were just too high. It's something else to fool you into buying one thing, when you actually wanted to buy something else. I give you the modern American gas pump...

We Won't Destroy Society If We Raise Taxes on the Rich

(401K/Flickr)

Over at the Center on Budget and Policy Priorities, Chye-Ching Huang has written a massive review of the evidence and literature on the relationship between taxes on high-income earners and their effects on economic growth. Her key findings are surprisingly straightforward, and important for how we approach current debates over tax reform and economic policy:

iPhones Bring in the Cashmoney

Today's Balance Sheet

While the global economy is still on shaky terrain, Apple is having a good 2012. In the first quarter, the tech behemoth sold 35 million iPhones—an 88 percent increase from last year, representing 59.7 percent of Apple's overall sales—and 11.8 million iPads. These sales nearly doubled Apple's profits, and sent Apple's stocks up 7 percent, up $40.55 to $600.83 yesterday.

Social Security and Medicare Don't Look So Hot

Today's Balance Sheet

Social Security will run out of funds in 2033—sooner than forecast last year—according to a new government report. Medicare's hospital insurance fund will be gone by 2024. Together, the programs account for 35 percent of all federal spending, and if the trust funds—which are made up of the difference between the payroll taxes paid toward the programs and the benefits doled out—were depleted, benefits would be automatically cut by 25 percent. Social Security's disability insurance faces the soonest expiration—it is now scheduled to run out of money  in 2016, two years earlier than projected last year.

The Joys of Recession

(Flickr/jima)

The Social Security Trustees have just projected that the date by which the system will no longer be able to meet all of its payouts has been moved up three years from 2036 to 2033. This has prompted the usual clucking about the need for drastic benefit cuts of partial privatization right now. 

What nobody seems to have noticed is that the primary reason for the pessimistic forecast is the lousy economy, particularly the high unemployment and depressed wages. Social Security is of course financed by payroll taxes. There’s no better way to put the system into the red than to have a recession and to have 93 percent of the gains to go to the top one percent (whose payroll taxes are capped).

The Case of the Vanishing Middle Class

Timothy Noah's The Great Divergence deftly explores the roots and resurgence of American inequality.

Did Timothy Noah catch a wave or anticipate one? In 2010, Noah, a longtime public-policy reporter now at The New Republic, wrote a ten-part series in Slate about American economic inequality. This was at a time when the most discussed issue in U.S. politics was how much government Tea Partiers aimed to slash and how quickly we must balance the budget—even in the face of the worst downturn in eight decades. Then, about a year after the Slate series, Occupy Wall Street and its proxies around the country seemingly awakened the nation to the vast disparity of wealth between the top 1 percent and the rest of us.

France Reacts Against Austerity

François Hollande and Nicolas Sarkozy will face off in a May 6 runoff election after the Socialist challenger won 28.6 percent of the vote in the first round of the French presidential elections yesterday.

The Man the Banks Fear Most

Wall Street's gone largely unpunished for its role in 
wrecking the economy—until New York Attorney General 
Eric Schneiderman came along.

Steven Moors
Steve Moors

A New Kind of Gold Standard?

(Flickr/tao_zhyn)

In the latest issue of the magazine, I have a piece examining a strange and growing trend in some conservative circles—pushing states to adopt alternative currencies to the federal dollar. The basic concern is one you've probably heard from Ron Paul: The Federal Reserve can't be trusted, the national debt is out of control, so the U.S. dollar, backed only by faith in the government, may become worthless. (The story outlines some of the more obvious economic problems with this theory.)

To deal with the concern, problem-solving state lawmakers have started introducing bills to create a second currency, one of gold and silver. Sounds like a fringe concept right? 

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