Economy

Kansas GOP: Poor Are Too Rich

(Flickr/jimmywayne)
Kansas Republicans, under the leadership of “compassionate conservative” Sam Brownback, are working hard to stick it to the poor: A Kansas House tax committee passed a bill in which anyone making less than $25,000 a year — roughly half a million of the state’s 2.9 million residents — will pay an average of $72 more in taxes, while those making more than $250,000 — about 21,000 people — will see a $1,500 cut, according to Kansas Department of Revenue estimates cited by the Kansas City Star. The hike would come from the elimination of tax credits typically benefiting the poor. I can’t help but see this as a continuation of the conservative meme that its the poor who don’t pay their “fair share.” Last fall, as the Occupy movement gained steam, it became common for conservatives to complain about the 47 percent of Americans who “don’t pay taxes.” Presidential candidates like Michele Bachmann and Rick Perry complained about it in speeches and debate performances, while conservative...

No Silver Bullet for Gas Prices

Today's Balance Sheet: No Death Star for Earth, but no low gas prices either. 

Obama has upped his campaign game on energy in the past week, while conceding there is little he can do to combat the rising gas prices before November. The president has been advocating an "all of the above" response to gas prices, including pushing more domestic oil production and stricter fuel-efficiency standards. Average gas prices reached $3.65 a gallon last week, about 12 percent higher than last year. “Four dollars per gallon has typically been the tipping point when people go from complacency to exasperation,” said pollster Geoff Garin. Republican presidential candidates have been quick to jump on the issue, especially Newt Gingrich, who has been promising $2.50 a gallon gas this week as a last-ditch effort to save his falling poll numbers. The White House was quick to pounce on its critics' claims. “There is no silver bullet. There never has been,” Obama said on the trail yesterday. “It’s the easiest thing in the world to make phony election-year promises about lower gas...

Obama's Squandered Recovery

In The Escape Artists, Noam Scheiber depicts a White House out of its depth on the financial crisis.

The Escape Artists: How Obama's Team Fumbled the Recovery . By Noam Scheiber, Simon & Schuster, 351 pages, $28.00. A guy I know told me a story. He had a friend who was working on the 55th floor of the South Tower of the World Trade Center on that terrible day. When the plane hit the North Tower, everybody in the office understandably got very worried. When the plane hit the South Tower, people were going crazy. But the authorities on the floor—calm, experienced—told them not to panic. The guy’s friend thought to himself, “Fuck this, we’re all going to die," and raced downstairs, exiting the building right before it collapsed. I thought of that story when reading Noam Scheiber’s The Escape Artists, about the economic crisis at the start of Obama’s presidency and the administration’s response. In the book, based upon hundreds of on- and off-the-record interviews with principals and other witnesses to the events described, Obama and his top economic and political staff emerge as, to...

Occupy's Return From Hibernation

The movement will next take on foreclosures.

(AP Photo/Mary Altaffer)
As winter fades, the Occupy Wall Street movement is heating up again. But don’t expect the same focus on physical encampments and rowdy protests. While the blood of the 99 percent is still boiling at the injustice of growing inequality, in organizing meetings and workgroups, cooler heads are prevailing. This is Occupy 2.0—the mainstreaming of momentum. From my conversations with Occupy organizers and supporters, my sense is that the main thrust of organizing energy and attention will go toward Occupy Our Homes — a coalition of Occupy activists joining with existing grassroots groups to support families that are facing foreclosure or have been evicted by big banks. Prioritizing Occupy Our Homes is great choice for two reasons. First, the foreclosure crisis is immense and growing. Despite the recent mortgage settlement with state attorneys general that will grant 750,000 foreclosed-upon families a whopping $2,000 each (!), 4.2 million families have already been foreclosed upon during...

Internet Privacy: It's Complicated

Today's Balance Sheet: The White House takes on Internet behemoths.

The White House plans to release guidelines for internet companies to help them protect consumers' privacy today. However, the rules are voluntary, which means the web will likely remain an information free-for-all. The Federal Trade Commission will only police companies who agree to the administration's Consumer Privacy Bill of Rights. The only real incentive for companies to agree to the rules is to boost consumer confidence. "As the Internet evolves, consumer trust is essential for the continued growth of the digital economy,” Obama said in a statement. “For businesses to succeed online, consumers must feel secure.” Although the White House did not include the "Do Not Track" button, which stops advertisers from recording user traffic, in its guidelines, a coalition of very powerful web companies have announced support for the button. Among them is Google, whose Chrome browser should have a "Do Not Track" button by the end of the year. The Latest Debt Will Swell Under Top GOP...

Obama's Tax Code Spring Cleaning

Today's Balance Sheet: The White House vacuums out the corporate tax code. 

Obama is stealing the spotlight from Mitt Romney—who plans to announce a new economic plan on Friday —by announcing his framework for simplifying the corporate tax code. The White House is asking Congress to lower the top corporate tax rate to 28 percent, while ridding the code of any loopholes and subsidies. Manufacturers will get special breaks, in accordance with Obama's push to spur domestic manufacturing jobs, and their maximum effective tax rate would be set at 25 percent. Republicans have long argued that the U.S. has one of the steepest corporate tax rates in the world. But, while the U.S. does have a high tax rate, after factoring in all the loopholes, many U.S. businesses end up paying taxes that are even lower than businesses in other rich countries., according to the Organization for Economic Cooperation and Development. The Latest Fed’s Push on Housing Crosses a Line, Critics Say The Washington Post Watchdog Targets Overdraft Charges The Wall Street Journal Euro-Area...

Bare Minimum Wage

Big business lobbyists work to prevent any rise in workers' paychecks.

(Flickr/wbeem)
The federal minimum for an hourly wage was $3.35 in 1982 and now it’s $7.25, up 120 percent. Inflation, meanwhile, has climbed during that period by 135 percent. Eight states, including New York, Connecticut, and New Jersey, are considering legislation to boost the base wage. Advocates say that such state measures are fair and make good economic sense: Putting more money in the hands of workers means more demand—good news for small businesses struggling to overcome poor sales . Then there’s politics. More than two-thirds of Americans favor raising the hourly wage to at least $10. You’d think it would be a win-win for state officials, but it’s not. While truly small businesses like restaurants and retail shops have said in the past that raising the wage will have little or no effect on labor costs , large corporations that pay minimum wage, like fast-food chains, have enormous incentive to propagandize against any increase. One of the most active in the propaganda industry has been the...

The Eurozone Marathon

Today's Balance Sheet: Greece has a new eurozone bailout, but that doesn't mean the country is out of the woods just yet.

Early today, eurozone finance ministers finally approved the €130 billion rescue package to prevent Greece from defaulting, a move that will hopefully keep the country off the precipice before its bond repayment comes due March 20. Investors who own €200 billion of Greek debt have been asked to forgive 53.5 percent of the face value of the bonds, which will cut Greece's €350 billion debt load by €107 billion. This rescue package is contingent on Greece enacting stricter austerity measures. Although the eurozone is taking big actions to prevent a financial crisis from spreading, its members are nowhere near being out of the woods. March 20 will be an important milestone, but even then the eurozone won't be out of ulcer-inducing territory for months. As Olli Rehn, European monetary affairs commissioner, said after the 14-hour meeting that hammered out the bailout plan, “I have learnt that marathon is indeed a Greek word.” The Latest Bailout News Aids U.S. Futures The Wall Street Journal...

Foxconn Tiptoes Out of The Jungle

Today's Balance Sheet: Foxconn announced a 25 percent pay raise for their factory workers on Saturday.

Foxconn Technology—responsible for assembling iPhones, Xbox 360s, and Dell computers— announced a 25 percent pay raise for its employees at Chinese factories on Saturday. News of the raise comes after weeks of increased scrutiny of the working conditions at the plants, which together employ 1.2 million workers who work as much as 14 hours a day. The pay raise comes with a limit on overtime hours. “This is the way capitalism is supposed to work,” said David Autor, a MIT economist, to The New York Times. “As nations develop, wages rise and life theoretically gets better for everyone. The reaction from consumers will test the viability of moving away from low factory wages. As Autor said, "In China, for that change to be permanent, consumers have to be willing to bear the consequences. When people read about bad Chinese factories in the paper, they might have a moment of outrage. But then they go to Amazon and are as ruthless as ever about paying the lowest prices.” The Latest Surge in...

Money Makes Good Partners

Today's Balance Sheet: The United States is a bit nervous about getting any more involved with the euro crisis.

EPI
As Europe works toward bringing Greece back from the edge of default, the United States is trying to puzzle out how good of a partner we want to be to the eurozone. Lael Brainard, the Treasury's top international diplomat, told the Senate banking committee yesterday that the International Monetary Fund doesn't need an infusion of cash from the U.S. in order to create a buffer from whatever may happen with Greece and the other European economies. “The challenge Europe faces is within the capacity of the Europeans to manage,” she said. The IMF is trying to amass $500 billion for a safety lending fund in case Europe takes a turn for the worse, and with the U.S. sitting out and only $196 billion pledged from the eurozone, the organization is turning to emerging markets to make up the difference. Even without Brainard's caution, the Obama administration would likely shy away from giving billions to Europe during an election year overshadowed by domestic economic problems. The Latest...

Republicans' Deceptive Payroll Tax Compromise

(Flickr/Gage Skidmore)
Republicans finally came to their senses yesterday and realized they were waging a losing battle with their opposition to a payroll tax extension. The two-month extension Congress passed in December was set to expire by the end of this month, and Republicans were adamant that any further extension be paired with equal spending cuts. Democrats balked, instead suggesting a surtax on millionaires that the Republicans would never accept, and another last minute legislative showdown appeared inevitable. Then out of nowhere yesterday afternoon Congressional Republicans announced that they would drop their resistance: “Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue regarding offsets, unemployment insurance, and the ‘doc fix,’” said GOP...

Happy Valentine's Day ... And Don't Forget to Tip Your Waitress

(Flickr/Adikos)
As is true for roughly, oh, 72,000 working parents a day, I'm home today with a sick child. Okay, I made up that "statistic." But here's a real one: 70 percent of all U.S. children are growing up in households with all adults employed. And one-third of those working adults have no paid sick days—almost all of them working for the lowest of wages, who cannot afford to miss even a day of washing dishes or waiting tables. Fortunately, my job is relatively flexible. I can stay home, and I won't be penalized if this isn't my most brilliant Prospect post of the year. But if a waitress's child gets sick, either that child will go to school anyway, or some family member or friend will be drafted hastily to take him in, or the waitress will stay home and lose wages that family really can't afford to do without. Last year, Heather Boushey and Joan Williams wrote a report that should have gotten much more attention than it did, called The Three Faces of Work-Family Conflict: The Poor, the...

Greece's Baby Steps to Recovery

Today's Balance Sheet: Will Greece finally get the eurozone bailout it desperately needs?

The Greek Parliament passed austerity measures that were a crucial step to getting a €130 billion eurozone bailout yesterday. However, the country isn't out of the woods yet. Eurozone financial leaders will meet Wednesday to discuss the logistics of the bailout, which won't get approved—if it gets approved—until March. The austerity package, which includes wage and pension cuts and reduces the government payrolls by 150,000, passed by a 199-74 vote, but was accompanied by mass protests leaving forty buildings in Athens aflame. The rest of the eurozone applauded the move, seeing as the fate of the rest of the global economy rests in part on Greece's shoulders. Angela Merkel's spokesperson said the vote "shows the will and the readiness of the Greeks to undertake major efforts of their own, including tough cuts to put their country on a good path." Although the bill is only a first step, Greece “will be saved in one way or another,” said German Finance Minister Wolfgang Schaeuble...

Greece Bets Once Again on Austerity

The country's parliament approves deep cuts to social services as rioters overrun central Athens.

(AP Photo/Thanassis Stavrakis)
(AP Photo/Kostas Tsironis) Protesters pass by a burning cinema in Athens, Sunday, Feb. 12, 2012. Riots engulfed central Athens and at least 10 buildings went up in flames in mass protests late Sunday as lawmakers prepared for a historic parliamentary vote on harsh austerity measures demanded to keep the country solvent and within the eurozone. ATHENS, GREECE —After a night of high drama, both inside and outside parliament, the Greek government passed the slew of new austerity measures demanded by its official lenders in return for a second bailout package worth 130 billion euros. The deal slashes the minimum wage by 22 percent, reduces pensions, and will result in public-worker rolls shrinking by 150,000 employees, among other measures. The final count for the controversial package, which was announced after 1 a.m. Monday morning, was 199 in favor and 74 against. Politicians accused each other of national betrayal, and tensions erupted into angry exchanges about a deeply divided...

Hidden Gems in the Mortgage Deal

AP Photo/Paul Sakuma
In the end, as at the start, Thursday’s deal between five big banks, the Department of Justice, and the attorneys general of 49 states came down to New York, the center of mortgage securitization and securities misrepresentation, and California, the center of mortgage mis-origination. Those states’ attorneys general—New York’s Eric Schneiderman and California’s Kamala Harris, both progressive Democrats elected in 2010—weren’t about the give the banks a pass. Which is why it wasn’t until two a.m. Thursday that the deal was finalized. Schneiderman’s chief concern was to preserve and enhance his and other law enforcement agencies’ ability to investigate the banks. Harris’s foremost interest was to secure the best deal for the hundreds of thousands of California homeowners who were struggling to make the payments on their devalued homes. Together, they compelled the banks and the Obama administration to come up with a better deal than the one that the banks and the Justice Department had...

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