Economy

Will Lobby for Food

The farm bill is set to expire, which is bad news for anyone who eats.

Flickr/cordery
Something happened today that, chances are, you know little about yet care about very deeply. It helps pay for the lovely farmers market you frequent every weekend. It’s behind all those corn-syrupy soft drinks you’ve been taught to avoid. It’s the reason you started hiking to that one artisanal shop for grass-fed beef after you read The Omnivore’s Dilemma . It helps feed America’s hungry, because it authorizes the federal food-stamp program, which feeds 46 million people. It’s the farm bill, usually the concern of only the corn, wheat, cotton, peanut, and soy-bean lobby, but it really should be called the food bill, and it has to be reauthorized every five years. The House Agriculture Committee debated and passed the reauthorization of the law this morning—and it includes $16 billion in cuts to food stamps and an amendment that will kill a program designed to help small chicken farmers. Now, the bill will likely die. Most observers don’t expect House Majority Leader John Boehner to...

The Myth of Rags to Riches

In the latest version of SimCity, a computer game that let's you pretend to be an urban planner, city residents are born into an economic class and there they remain for life. This may have been done for simplicity's sake, but the scenario makes the popular computer game disturbingly similar to the situation of most Americans. The latest report from Pew Charitable Trusts, "Purusing the American Dream," deals a stunning blow to any romantic notions of bootstrapping your way to the top. It turns out only 4 percent of those raised in the bottom 20 percent ever climb into the top 20 percent. Rather, people raised on one rung of the income ladder are likely to stay pretty close to it as adults. As the report notes, "Forty-three percent of Americans raised in the bottom quintile remain stuck in the bottom as adults and 70 percent remain below the middle class." The report, from a non-partisan group that's far from ideological, shows that while in absolute numbers, the vast majority of...

The Insidious Threat of Telecommuters

Jeremy Bentham's plan for a panopticon.
A couple of weeks ago, upon the release of a study suggesting that people who work at home spend a lot of time not working but nonetheless are more productive than their office-bound colleagues, I argued that people who work at home don't goof off less, we just goof off differently. Not only is there probably no less non-work-related Web surfing/Twitter reading/Facebooking going on in the office, but people in offices (at least every office I've ever worked in) spend a lot of time doing things like talking to each other, which we home workers don't waste a moment on. In any case, The Wall Street Journal reports that bosses are not satisfied with the fact that their telecommuting employees are perfectly productive. Gripped by the suspicion that they might be slacking off, they're upping the surveillance: These days, working from home is more like being in the office, with bosses developing new ways to make sure employees are on task. Some track projects and schedule meetings on shared...

Americans Paying Historically Low Taxes

The top marginal income tax rate, a testament to our oppression. (Flickr)
When the Tea Party movement started in 2009, some of its adherents made signs that read, "Taxed Enough Already!"—the movement defined itself in large part as a reaction against the oppressive tax policies of the federal government, sucking ordinary people dry in its endless search for cash to fund its freedom-destroying schemes. This was always an insane inversion of actual reality—the truth is that as part of the stimulus bill, President Barack Obama actually cut taxes for almost everyone, and the only tax increase he imposed in his first term was a hike in cigarette taxes. It's true that the Affordable Care Act contains a number of different tax increases (on things like "Cadillac" health plans), but those have not taken effect yet. But to many conservatives, it just feels like they're paying more taxes, because ... well, because there's a Democrat in the White House. Today, the Congressional Budget Office released a report on the taxes we have actually been paying, and guess what:...

Investment without Job Creation

A well-known job creator. (Flickr/Vaguely Artistic)
Some time within the last few years, conservatives decided that people who have lots of money shouldn't be called "the rich" or "the wealthy" but "job creators." Give them credit—they know how to use language to turn a problem into an opportunity. After all, defending low tax rates for the rich is hard, but defending low tax rates for job creators is easy. Every now and then you might get an apostate like this venture capitalist coming out and saying that the real job creators are middle class people who buy things and not rich people, but on the whole the "job creator" framing allows conservatives to make their tax arguments without any discomfort. That gentleman's argument is completely valid: if you have enough middle class people buying Acme Widgets to require 100 people working in the widget factory to meet the demand, it doesn't really matter whether C. Montgomery Acme gets his income taxed at 35 percent (the current, Bush-established, free enterprise-supporting level) or 39.6...

What’s the European Central Bank?

The Prospect takes a look at one of the key players in Europe's financial crisis.

(Flickr / Davide "Dodo" Oliva)
Weird terms like “yield spreads,” “troika,” and “Merkel” have been popping up in the news, often surrounded by acronyms like IMF, ESM, EFSF, and FROB. Our politicians aren't talking about it much, but you can bet your retirement they will once Wall Street underwriters start freaking out about it. Today, the Prospect fills you in on one of the most important acronym in the euro crisis: the ECB, or the European Central Bank. The European whatsit? In a nutshell, the ECB is the central bank of the Eurozone—the countries of the European Union that use the euro. Though it only technically became a crucial apparatus of the European Union in 2009, it has a large role in the history of European integration. For now, we'll just leave it at this: The ECB controls the monetary policy of Eurozone countries. It's also one of the newer venues in which France and Germany play chicken over who's the boss of Europe. More on that later. Monetary policy? So it’s like the Fed? Sort of. There are definite...

The American Jobs Act Still Exists

Mitt Romney is back to accusing President Obama of having no plan for economic growth: The president’s policies have not gotten America working again. And the president is going to have to stand up and take responsibility for it. I know he’s been planning on going across the country and celebrating what he calls ‘forward.’ Well, forward doesn’t look a lot like forward to the millions and millions of families that are struggling today in this great country. It doesn’t have to be this way. The President doesn’t have a plan, hasn’t proposed any new ideas to get the economy going—just the same old ideas of the past that have failed . [Emphasis added] The political world has all but forgotten the American Jobs Act , but it remains on the table as Obama’s plan for juicing the economy. If passed in full, the Jobs Act would cut payroll taxes for businesses, double the size of the payroll tax cut for individuals, give aid to states to prevent public sector layoffs, and increase infrastructure...

Terribly Lackluster

(wools/Flickr)
For the third month in a row, job growth has been lackluster. In June , the number of new net jobs came in at 80,000—slightly below the 90,000 to 100,000 expected. Likewise, revisions for previous months were a wash—April’s numbers were revised from 77,000 to 68,000, and May's were revised from 69,000 to 77,000. There simply isn’t much news in this jobs report, which is another way of saying that our sluggish economic growth is grinding to a halt. Millions of American workers are stuck in continued stagnation, and the odds for relief are low. Republicans in Congress have no interest in providing additional fiscal stimulus, and the Federal Reserve is unmoved by widespread economic misery—if anything, it sees high unemployment as the necessary cost of low inflation. Politically, this obviously isn’t good for President Barack Obama’s re-election chances, and it's a godsend for Mitt Romney, who has been struggling against a headwind generated by the Supreme Court’s ruling on the...

Romneyland on the Mediterranean

What does having a Bain-style CEO do to a country? Israel has run the experiment, and the results are ugly.

(Flickr/TheeErin)
If Mitt Romney visits Israel this summer, it's a safe guess that his tour will avoid demonstrations against the government's economic policies. When Mitt and Bibi dine together, the Israeli prime minister probably won't show clips of riot cops dragging away Daphni Leef, the woman who ignited the economic protests, as she tries to re-establish a tent encampment in downtown Tel Aviv. Meeting the media, Romney may mention his old friendship with Benjamin Netanyahu, which dates back to the time when the two of them, fresh from business school, worked at the Boston Consulting Group. Journalists will dutifully ask him and Netanyahu about Iran, ignoring the fact that Israel has an economy and that running it is Netanyahu's passion. This is a shame, because Israel can be seen as a laboratory where tests have been conducted in managing a country as if Bain Capital had bought it — and the lab results aren't pretty. To be fair, the Israeli government has followed free-market orthodoxy since the...

Where Work Disappears and Dreams Die

In Gary, Indiana—the former “Magic City” of industrial might—jobs have left, and so has almost everything else.

(Flickr/slworking)
N ot all teenagers are as lucky as J’Len Glass. He trusts his parents. He knows they will always tell it to him straight. Yet the 15-year-old, who wants to be a doctor, can’t help being skeptical of his elders’ veracity—or at least of their memories—when they tell him that his shrinking, economically depressed hometown of Gary, Indiana—Steel City—was, once upon a time, a wonderful place to raise a family. That it had good public schools and well-maintained city parks and streets. That there were department stores, restaurants, movie theaters, nightclubs, and crowded office buildings up and down Broadway, its main thoroughfare. That a young guy could go outside, play some ball, flirt with girls, and not worry about getting killed in a drive-by shooting. That he could graduate high school, and if he didn’t want to go to college or join the military, he could just stay put and make a decent living in one of the smoke-belching steel mills that ringed the city and provided paychecks to...

Can European Leaders Go Big?

With Spain, Italy, and Cyprus reeling, the stakes are high for the Brussels summit—but Germany stands in the way of broad reform.

(AP Photo/Philippos Christou)
(AP Photo/Philippos Christou) A woman passes by a branch of Bank of Cyprus in central Nicosia, Cyprus, Thursday, June 28, 2012. Cyprus became the fifth eurozone country this week to ask for a bailout from its partners in the currency union in order to prop up its Greece-exposed banks and flagging economy. Officials from the European Commission, the European Central Bank and the International Monetary Fund will begin assessing next week how much bailout money Cyprus will need. The European Summit today and tomorrow in Brussels is the latest in a series of make-or-break moments for the European project. On many occasions since May 2010, when Greece was first cut off from market access, European leaders have been called upon to make a bold leap forward in the policy integration of the Eurozone—the only way to convince investors of the iron irrevocability of the common currency. Under constant pressure from the ongoing crisis, they have often seemed to be making the big decisions to...

Tax Reform Silliness

Flickr/401K 2012
Barack Obama did a bunch of big things in his first term—passed health care reform and ended the war in Iraq, most notably. If he wants to do something big domestically in his second term (especially since he seems to have lost any inclination to do anything about climate change), one natural area to try would be tax reform. It might actually be possible to arrive at something both Democrats and Republicans could live with, if we put aside Republicans' desire to make sure he never accomplishes anything, ever (which will continue into his second term). Republicans already have their own tax plan, which lays out some goodies they'll give people (especially wealthy people, you'll be shocked to learn) while conveniently avoiding any specificity on how the goodies will be paid for. Some analyses have been done on the Republicans' plan, and they don't look too good : The tax reform plan that House Republicans have advanced would sharply cut taxes for the wealthiest Americans and could leave...

Welfare for the Wealthy

When conservatives rail against redistribution, it’s important to understand what they mean by the term. It’s not that they are opposed to removing resources from one sector of the economy and moving them to another, but that they’re opposed to taxing funds from rich people, and directing them toward the poor. If you go from the other direction, taxing money from ordinary Americans and giving it to the rich, then there isn’t a problem. To wit, the budget of GOP wunderkind Paul Ryan—which calls for big tax cuts, small deductions, and severe spending cuts—would raise middle-class taxes, and give a huge break to the wealthiest Americans. The Washington Post reports : The tax reform plan that House Republicans have advanced would sharply cut taxes for the wealthiest Americans and could leave middle-class households facing much larger tax bills, according to a new analysis set to be released Wednesday. […] The net result: Married couples in that income range would pay an additional $2,700...

A Paralyzed G-20

(AP Photo/Andres Leighton) France's President François Hollande smiles at the end of a news conference at the G-20 summit in Los Cabos, Mexico, Tuesday, June 19, 2012. All the bland platitudes coming out of the Group of 20 Meeting in Mexico can’t disguise the absence of progress on the European crisis. German Chancellor Angela Merkel is totally dug in on the proposition that Greece, Portugal, and Spain need to stick to the austerity medicine that will only deepen the collapse and embolden more speculative attacks on government bonds. President Obama has just about no leverage in this situation. On Monday, the European Commission President, Jose Barroso, a conservative former Portuguese prime minister, and close Merkel ally, broke his diplomatic cool and declared that he was in no mood to be lectured by Americans on what Europe needed to do to restore growth. This crisis was not originated in Europe," Barroso said. "This crisis was originated in North America. Many in our financial...

School for Success

Capital Idea, an innovative long-term job-training program in Austin, helps lift the working poor out of poverty.

(Patrick Michels) Maria Mora discusses class and work options with a student preparing for summer term. S tudents trail into the Austin Community College classroom in ones and twos, taking seats in pale plastic chairs behind long narrow tables. Some wear scrubs, fresh from shifts at the hospital, while others are in street clothes. A few are middle-aged, but most are in their late twenties or early thirties. The only man in the room wears shoes so battered the soles have almost separated. It’s just days before spring exams begin, and a few of the students discuss an upcoming test. “What kind of math is it?” “It’s easy conversions. How many ounces in a cup and stuff like that.” “They don’t let you use calculators. The first time I didn’t pass for three points, because I didn’t have time to finish.” “If you study your stuff, you’ll get it.” It sounds like any pre-exam college conversation. But not long ago, many of these students could not do high school–level work. Now these working-...

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