AP Photo/Jacquelyn Martin

The Federal Reserve, in a remarkable acknowledgement of how soft the economy is, has disclosed a vote of its open market committee to keep short term interest rates close to zero for at least three more years—until late 2014. This means that the Fed will keep pumping money into the economy by purchasing bonds at whatever level is required.

The Fairness Doctrine

Today's Balance Sheet: Obama laid out his economic message for the election in last night's State of the Union address.

President Barack Obama delineated his campaign message in last night's State of the Union address. Positioning himself as a populist alternative to Mitt Romney and the 1 percent, Obama spent the beginning of his speech laying out his economic plan for the year: "We need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes," he said. He recommended that the Buffett Rule—which would make it so millionaires can't pay less than 30 percent in taxes—be put in place.

Eurozone Overexposed

EU leaders scuttle a Greek bond deal for fear of greater losses.

AP Photo/Thanassis Stavrakis

Greece is once again the focal point of efforts to stem the bleeding of investor confidence and save the eurozone. Intense negotiations continue on the precise terms of the restructuring of privately held debt in the struggling Mediterranean country. Agreement is a necessary condition for the approval of a second bailout package from Greece’s eurozone partners and the International Monetary Fund (IMF), which, at 130 billion euros or more, will exceed the first one.

The Scarlet Tax Return

AP Photo

Mitt Romney’s newly released tax returns, showing that he paid taxes in 2010 at a rate of just 13.9 percent on income of $21.6 million, should provide ammunition for President Barack Obama’s newly rediscovered populism. Obama is on record supporting a “Buffett Rule,” that the boss should pay at least the same tax rate as the help.

In the watered down economic dialogue of 2012, a flat tax rate rather pitifully passes for the progressive position. Not so long ago, progressives were of the view that the more money you made, the higher your rate should be. The tax schedule should be, well, progressive. The original presidential sponsor of this concept was that Bolshevik, Theodore Roosevelt.

How the Other Half Banks

Today's Balance Sheet: Mitt Romney makes beaucoup bucks.

Mitt Romney released his tax returns today, revealing that he made a combined $42.6 million in 2010 and 2011, mostly through capital gains. Because the bulk of his wealth was made through investment, Romney only paid $6.2 million in taxes, which translates into a 13.9 percent tax rate in 2010 and an estimated 15.4 percent rate in 2011. Those rates place him in the same tax bracket as a couple making $70,000 a year.

Occupy the Alps

Today's Balance Sheet: The conference in Davos is no laughing matter, but apparently Federal Open Market Committee meetings were.

Thousands of the world’s business and political leaders are all heading to Davos, Switzerland—the home of Thomas Mann's fictional sanatorium—for this year’s five-day World Economic Forum.  The euro crisis will be a dominant theme of the conference and Angela Merkel will serve as the keynote speaker. The conference comes as public confidence in world leaders' ability to fix the economic crisis hits a new low.


Today's Balance Sheet: The FBI shuts down Megaupload in what the Justice Department is calling its biggest copyright case ever.

AP Photo/Greg Bowker

Yesterday, on the same day that major websites like Wikipedia, Wordpress, Reddit, and Wired went dark to protest the Stop Online Piracy Act (SOPA), the Justice Department shut down Megaupload, one of the largest file-sharing sites on the Internet. The site’s seven founders were arrested in New Zealand and are accused of making $175 million in profits while costing copyright holders an estimated $500 million in revenue. They face up to 20 years in prison for violating international copyright laws.

The Internet Strikes Back

Today's Balance Sheet: A war is brewing between the Internet and the entertainment industry, and it looks like things might get brutal this week.

The coming week is shaping up to feature a hostile fight between tech companies and content producers as the Stop Online Piracy Act (SOPA) and PROTECT-IP bills are debated in Congress. Reddit and Wikipedia have announced their intention to go dark for 12 hours on Wednesday to protest the bills, and rumors that Google, Facebook, and Twitter might join in have circulated.

Handicapping 2012

Today's Balance Sheet: Starting off the 2012 race between a tortoise and our economic recovery

In the past few weeks, the good economic news pouring in has kept newspaper business sections buoyant, but the celebrations may be premature. One of the biggest problems barring a quick comeback for the economy is inadequate aggregate demand—without demand, we can't produce more goods and can't hire more people. The Treasury estimates that the gap between actual and potential output is over 7 percent—that's equal to $1 trillion worth of goods and services. The U.S. has a considerable 12.1 million jobs gap as well, which won't close until 2024 if we keep adding 200,000 new jobs per month, the pace set in December 2011.

Lonely at the Top

The debate among the Republican candidates over Mitt Romney’s time at Bain Capital has raised again questions about whether Romney’s tenure in the “1 percent” will damage his campaign. The Obama team certainly welcomes this debate. After all, they have been attacking Romney along precisely these lines:

The day after Mr. Romney squeezed out a razor-thin victory in the Iowa caucuses, Mr. Obama’s political brain-trust trained most of its fire on him, painting him as both a Wall Street 1 percent type and an unprincipled flip-flopper.

Scarcity Came to Town

Two leading minds on our lean times

Jeff Madrick, the author most recently of Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present (Knopf), exchanges questions and ideas with Thomas Byrne Edsall, whose book The Age of Austerity: How Scarcity Will Remake American Politics (Doubleday) is out this week.

Madrick: Your book places the current extreme partisanship in its critical economic context. There are cultural and religious conflicts in America, but it is economic scarcity that underlies much of our political paralysis. Is that so—scarcity lately more than culture? And scarcity has tended to favor conservatives?

The Class War Turns

Yesterday, the Pew Research Center released a report showing that the American public now perceives the conflict between the rich and poor as more prevalent and intense than conflicts between black and whites or conflicts between immigrants and the native-born. The number seeing those class conflicts has jumped 19 points since 2009, and amazingly, even 55 percent of Republicans think there are strong conflicts between rich and poor. For the GOP, about to nominate a guy who earned a couple of hundred million dollars as what one of his opponents calls a "vulture capitalist," this is disconcerting news. First, a graph:


Today's Balance Sheet: Obama tries to bring manufacturing jobs back home. 

As part of an effort to push "insourcing," President Obama is proposing tax incentives for companies that move manufacturing jobs back to the United States. “I don’t want America to be a nation that’s primarily known for financial speculation, and racking up debt and buying stuff from other nations,” Obama said during an announcement yesterday.

An Ax to Grind

AP Photo/Mike Carlson

Cable-news pundits rejoiced a week ago when Rick Santorum drew Mitt Romney into an essential tie for first place in the Iowa caucuses. For all the ups and downs throughout the fall, this election has been inherently boring. Until Iowa, Romney had inched along unremarkably to the general election while a rotating group of talking heads ran nominal presidential campaigns in order to boost their fees on the lecture circuit.

The Tough Sell

AP Photo/Charles Dharapak

Nashua, New Hampshire—Mitt Romney is the sort-of acceptable man in this year’s Republican field. His strong victory here yesterday was rooted in his support from all quadrants of the Republican Party. He carried 40 percent of the voters who told exit pollsters that they supported the Tea Party movement, a far higher percentage than anyone else in the field. (Ron Paul finished second with 22 percent of Tea Partiers.) Romney also led the field among voters who said they were neutral toward the Tea Party. Only among voters who said they opposed the Tea Party—and that was just 17 percent of yesterday’s Republican electorate—did he come in second, to Jon Huntsman.