May 2012
10 posts
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Did Income Inequality Cause the Financial Crisis?
Policymakers and academics have identified income inequality as a proximate cause for a number of society’s ills, from deteriorating social cohesion and unhappiness to high mortality rates. But could America’s widening income gap also be responsible for the 2008 financial crisis?
That’s the controversial conclusion reached by economists Michael Kunhof and Romain Rancière,...
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Graph of the Day: Going Over the “Fiscal Cliff”...
Yesterday, the nonpartisan Congressional Budget Office released their analysis of the upcoming “fiscal cliff” (“taxmageddon,” for those more eschatologically inclined), and the results aren’t encouraging. Unless Congress finds a way to delay the $607 billion worth of tax increases and spending cuts that are scheduled to kick in automatically at the end of this year,...
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Political Dysfunction and the Filibuster
Republican brinkmanship over the raising of the debt ceiling nearly drove the United States to default last year, creating panic in financial markets and resulting in the first ever downgrade of the nation’s AAA credit rating. After failing to resolve the crisis, Congress was forced to accept a stopgap measure that was equally odious to both parties: the debt ceiling would be temporarily...
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“[A supermajority Congress]’s real operation is to embarrass the...”
– Alexander Hamilton in Federalist 22, making the case against a supermajority Congress (and, by extension, the filibuster).
Today, according to Senate Majority Leader Harry Reid, “60 votes are required for just about everything.” Ezra Klein has more on the history of the filibuster at the Washington...
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The One Percent's Jobless Recovery
Something strange has happened in the U.S. economy. Nearly three years after the Great Recession officially ended in June 2009, unemployment remains stubbornly high at 8.1 percent and real wage growth is nonexistent, but corporate profits and GDP have never been higher. Six million workers have dropped out of the labor force in the last two years—twice the number of people who have found new...
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WatchNobel Prize-winning economist Paul Krugman, fighting the good fight on Morning Joe this morning, in support of his new book, End This Depression Now!
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Graph of the Day: Public Sector Layoffs are...
April was another lackluster month for job growth, according to today’s official report. Only 115,000 new jobs were created last month—a not-unexpected but still disappointing slowdown from December to February, when job growth was averaging 252,000 a month. The unemployment rate fell a tenth of a point to 8.1 percent, primarily because discouraged workers continue to drop out of the labor...
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The Right Wing Radicalism of Paul Ryan
Representative Paul Ryan (R-Wis.), current chairman of the House Budget Committee and the eponymous author of the Republican’s 2013 budget proposal, wants to lower taxes on the rich, eliminate assistance for the poor, uninsure millions of Americans and increase military spending. His plan would cost $4.6 trillion in lost tax revenue over the next decade (not including the $5.4 trillion loss...
April 2012
9 posts
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Graph of the Day: "The Great Divergence"
Yesterday morning, The Century Foundation hosted New Republic senior editor Timothy Noah for the first public discussion of his new book, The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It, which examines the economic and political policies that have widened the income gap between the richest and poorest citizens in our society over the last thirty years....
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Video: Timothy Noah on America’s Growing...
This morning I had the pleasure of helping host New Republic senior editor Timothy Noah for the first discussion of his newly released book, “The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It,” at The Century Foundation in New York City.
Joining Tim were four excellent panelists (from left to right in the photo above): Greg Anrig, vice...
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"A Strict and Arbitrary Document"
Ronald Dworkin, “Why the Mandate Is Constitutional: The Real Argument,” New York Review of Books:
If the Court does declare the act unconstitutional, it would have ruled that Congress lacks the power to adopt what it thought the most effective, efficient, fair, and politically workable remedy—not because that national remedy would violate anyone’s rights, or limit anyone’s liberty in...
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Graph of the Day: Has the U.S. Fallen Behind in...
Despite having the unfortunate distinction of being the first and only industrialized nation to amass over $1 trillion in outstanding student loan debt, the United States no longer leads the world in college graduates. According to the latest data from the OECD, sixteen countries now have a higher percentage of college graduates than the US, which had arguably the most educated workforce in the...
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Balancing the Budget on the Backs of the Poor
In recent weeks, Rep. Paul Ryan (R-Wis.) has suggested severe cuts to safety net programs like food stamps and housing assistance, in the spirit of the 1996 welfare reform that moved millions of struggling families off the dole and into poverty. Comparing the safety net to “a hammock that lulls able-bodied people to lives of dependency and complacency,” Ryan has proposed ”welfare...
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Student Debt and the Middle Class (Part 3)
Part Three of a three-part series on student debt and the middle class. Click here to read Part One and click here to read Part Two.
With the price of a college education rising three times faster than median family income and total student loan debt exceeding $1 trillion, Congress must act quickly to reign in costs if our high-skill labor market is to remain globally competitive. Already, the...
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Student Debt and the Middle Class (Part 2)
Part Two of a three-part series on student debt and the middle class. Click here to read Part One.
A trillion dollars of student loans may not be the next subprime crisis, but it is delaying traditional middle-class aspirations like home ownership. Around one million students will graduate college in debt this spring, with an average $23,000 to be paid off over a period of ten to twenty years;...
March 2012
14 posts
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Student Debt, the Trillion Dollar Threat to the...
Part One of a three-part series on student debt and the middle class. Click here to read Part Two and click here to read Part Three.
Although the American love affair with easy credit hit a rough patch during the recession as families delayed the purchase of new cars and ever-larger flat-screen TVs to collectively pay down nearly a trillion dollars in outstanding household debt, one sector of the...
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Why Drilling Won’t Lower Gas Prices
With the unemployment rate dropping and the economic recovery picking up steam, Republican presidential candidates Mitt Romney, Rick Santorum and Newt Gingrich have redirected their invective at rising gas prices—and President Obama’s inability to lower them. But as has been widely reported, neither the president nor Congress have much control over what Americans pay at the pump....
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Greenwald: Ironies in American Justice and... →
Glenn Greenwald, Salon: After Bradley Manning was arrested on charges that he leaked documents to WikiLeaks, he was held in intense solitary confinement for ten months until political pressure finally forced his transfer to more humane conditions in Fort Leavenworth; the top U.N. torture official last week concluded that Manning’s treatment during those 10 months was “cruel and inhumane.” By stark...
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Graph of the Day: President Obama, Fiscal...
A graph that purports to establish Bill Clinton and Barack Obama as the two most fiscally conservative presidents in modern history has been making its way through the blogosphere, after first originating on Century Foundation Fellow Mark Thoma’sEconomist’s View blog. Thoma’s submitter explains:
Seeing the Krugman commentary comparing real government spending under Obama and...
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Graph of the Day: Infrastructure Austerity Hurts...
It has been nearly seven years since Congress last passed a major transportation bill. Since then, funding for surface transportation infrastructure has been extended eight times by temporary stopgap measures without any agreement on long-term legislation to maintain—let alone improve—America’s crumbling infrastructure. Congressional staffers now report that the House will not take up the $109...
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Graph of the Day: Few Americans Prepared for...
Few Americans are prepared for retirement, according to a national survey that finds nearly half of all workers with less than $10,000 in savings. Sixty percent of respondents to the 2012 Retirement Confidence Survey reported less than $25,000 in savings and investment (excluding their home and defined benefit plans) and 30% were living paycheck to paycheck with less than $1,000 in the bank.
...
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Report: Success of RomneyCare Shows Promise of ACA
Towards the end of this month, the Supreme Court is scheduled to hear six hours of oral argument on the Affordable Care Act, the longest such session since the Voting Rights Act was challenged in 1965. At stake is the constitutionality of the individual mandate—a key component of the ACA that requires individuals to purchase health insurance or pay a fine. Opponents of the law allege that power...
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What Slowing Productivity Growth Means for...
The U.S. economy went on something of a crash diet during the Great Recession, cutting millions of Americans from the workforce and squeezing dramatic productivity gains from those who remained. Unit labor costs dropped and output per hour rose as busiensses became leaner and meaner. But slimming down can only increase efficiency to a point, and as the economy has recovered, the pendulum has...
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A Recovery for the One Percent
The top 1% captured 93% of the income gains in the first year of recovery.
That is the shocking new statistic from income inequality expert Emmanuel Saez, whose latest data for the World Top Incomes Database shows that America’s richest 1 percent survived the Great Recession just fine. Back in 2011, some commentators,Megan McArdle among them, suggested that the financial crisis might...
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Reblogged: "Why an MRI costs $1,080 in America and...
Ezra Klein:
There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.
That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978....
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Graph of the Day: Mitt's Reverse Robin Hood Tax...
Hoping to revive a struggling campaign and shore up his Republican bona fides, Mitt Romney last week released a new version of his tax plan that would dramatically lower taxes for America’s wealthy while raising rates on the poor. The Tax Policy Center got to work examining the details, and the results aren’t pretty: Romney’s proposal would save the top 1 percent of earners nearly $150,000 per...
February 2012
11 posts
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Graph of the Day: Putting the Squeeze on Labor,...
Yesterday I commented on what Mark Thoma and Karl Smith both identified as one of the most significant graphs in the White House’s Economic Report of the President. That graph showed how the historical post-war relationship between wages and prices—or more fundamentally, between labor and capital—has broken down over the last thirty years. You can probably guess who has gotten the short...
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Graph of the Day: Putting the Squeeze on Labor
The White House’s new Economic Report of the President—broadly, an annual overview of how the president and his Council of Economic Advisors (CEA) view the state of the economy—is generally optimistic for 2012, noting better-than-expected job growth and economic expansion for ten straight quarters. It also underscores just how severe the financial crisis was that the president faced,...
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Simple Solutions to Complex Problems
Via Sarah Kliff, the OECD’s Obesity Update 2012 provides an important example of a complex problem (soaring health care costs) that could be addressed, in part, by a relatively simple solution (healthier diet and exercise).
President Obama has caught plently of flak in the past for similarly modest proposals, like painting roofs white to reduce air conditioning and electricity costs, or...
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Mitt's "Entitlement Society" is a Myth
As I wrote earlier this week, the idea that the United States has become an “Entitlement Society,” as Mitt Romney recently put it, is a myth unsupported by the most basic facts. Although the former Massachusetts governor has written that government benefits engender “passivity and sloth,” the truth is that over 90 percent of benefit dollars are spent on the elderly,...
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Who Benefits From Our "Entitlement Society"?
“Even Critics of Safety Net Increasingly Depend on it,” read a recent New York Times headline, capturing in a sentence the uncertain and contradictory sentiment of millions of middle class Americans who say they want the government out of their lives, but admit they count on Social Security, Medicare, and other benefits to stay afloat. Chisago, Minnesota—the archetypal heartland county in...
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Graph of the Day: The Growing Education Gap...
New research on the state of U.S. education shows that income inequality has surpassed racial inequality as the single most significant predictor of education outcomes. According to the Russell Sage Foundation, the achievement gap between rich and poor students is now larger than the gap between white and black students—perhaps a watershed moment in the changing discourse on inequality.
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Graph of the Day: For High-Scoring Students,...
My colleague Greg Anrig continues live-blogging his critique of Charles Murray’s Coming Apart: The State of White America 1960-2010, with a deconstruction of Murray’s claim that top-tier universities perpetuate a genetically superior elite, whose privilege further isolates them from working-class Americans. As Anrig points out, class privilege in higher education is a problem The...
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"Slow-Motion Violence"
What is it about the “the slow-motion violence of mass incarceration that enables it to elude our moral immune system”? Adam Gopnik reflects on his recent piece on the moral failure of America’s prison system for the New Yorker, which has drawn both praise and criticism. His closing words widen the scope:
The moral failings of advanced liberal societies, not least this one, ...
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Fiscal Drag Still Threatens the Recovery
Last week brought good news for the U.S. economy: according to the Labor Department, the headline unemployment rate fell to 8.3 percent as payrolls added 243,000 new jobs in January. That number climbs to 304,000 if you include the revised numbers for November and December, which underestimated employment by a full 60,000. And job growth was well distributed throughout the private sector,...
January 2012
13 posts
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“The scale and the brutality of our prisons are the moral scandal of American...”
– Adam Gopnik, The Caging of America
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Union Membership Grew in 2011, But Remains at...
Despite ongoing government cutbacks and a series of threats from states seeking to limit collective bargaining rights, the latest data shows that gains in the private sector helped overall union membership to increase slightly last year to 14.8 million. While that number is “essentially unchanged” from 2010, according to the Bureau of Labor Statistics, it indicates that declining...
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Graph of the Day: Why Does the U.S. Have...
The folks at the Center for Economic and Policy Research have a new report out this week that provides an interesting perspective on the now hot-button issue of income inequality. According to John Schmitt, the report’s author, nearly a quarter of American workers were in low-wage jobs in 2009, a higher percentage than in any other rich, developed country. What’s more, the number...
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Graph of the Day: Busting the Myths About Food...
Last week I commented on a terrific graph published by the Center on Budget and Policy Priorities, which refuted presidential candidate Mitt Romney’s false claim that the majority of federal funding for poverty prevention programs like Medicaid and food stamps (now called the Supplemental Nutrition Assistance Program, or SNAP) is wasted on “massive overhead,” leaving few...
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Inside Obama’s World: The President talks to TIME... →
The Tea-evangelical base has been lulled into a false sense of security by the absurd notion that Obama is somehow useless without his teleprompter. He is not. If you’ve forgotten just how intelligent, measured and eloquent this president is, I suggest you read his new TIME interview with Fareed Zakaria. Neither Romney nor Gingrich are prepared to debate foreign policy at this level.