This post originally appeared in The Century Foundation’s series “What’s Next? TCF Fellows Look Ahead at President Obama’s Second Term.”
With the end of the 2012 election, policymakers’ focus will pivot to the so-called “fiscal cliff” of legislated spending reductions and expiring tax cuts scheduled for 2013, which are projected to induce a recession if they materialize. So what does President Barack Obama’s re-election imply for navigating the “fiscal cliff,” both in terms of his budgetary proposals’ economic impacts and their political viability?
FULL ANALYSIS FROM EPI: Budget battles in the lame duck and beyond
The “fiscal cliff” exposes that the pace of deficit reduction must be moderated to sustain economic recovery. “Cliff,” however, is a terrible metaphor because it implies a false dichotomy; we prefer “obstacle course” as the numerous separable policies should be weighed on their merits. A recent paper I coauthored with my colleague Josh Bivens concluded that the upper-income Bush-era tax cuts and recent estate tax cuts fail any reasonable cost-benefit analysis and should expire; these policies are the least supportive of jobs of all fiscal obstacle course components. Expiration of remaining stimulus measures—notably the payroll tax cut and emergency unemployment benefits—and looming spending cuts from last summer’s debt ceiling deal actually pose the gravest economic drags.Read more
The election results signaled that the implementation of essential financial regulations can go forward, increasing the likelihood of stable and sustained economic growth. Yet despite this fresh indication of support for curbing the excesses of Wall Street (including the election of Elizabeth Warren, the most powerful consumer advocate in the country and an insightful critic of the financial industry), the lame duck Congress may, under the public radar, act in a contrary fashion. There is some momentum to move forward legislation that would severely hamper financial regulators, over objections by leading regulators at the federal and state level, and without appropriate due diligence about the bill’s effects.
Specifically, one would hope and expect the lame duck Senate to do nothing to compromise the authority of independent agencies like the SEC and the Consumer Financial Protection Bureau as they implement the Dodd-Frank reforms of Wall Street and the financial sector. Nonetheless, as New York Times editorial writer Teresa Tritch warns, the Senate Homeland Security and Government Affairs Committee might quickly take up and approve legislation to diminish the independence of these important agencies and many others, including the Consumer Product Safety Commission and the National Labor Relations Board. Read more
This piece originally appeared on the Huffington Post
Writing in The Washington Post recently, former Sens. Pete Domenici (R-N.M.) and Sam Nunn (D-Ga.) argued that enacting a bipartisan deficit reduction “grand bargain” could be instrumental in addressing the so-called “fiscal cliff” of legislated spending reductions and expiring tax cuts scheduled for the beginning of 2013. A grand bargain could theoretically mitigate the sizable pending fiscal headwinds, but a deal could also close deficits too quickly, pushing the economy into an austerity-induced recession. Nothing in their op-ed or the two grand bargains it references demonstrates how such a compromise could successfully clear the “fiscal cliff.”
FULL ANALYSIS FROM EPI: Budget battles in the lame duck and beyond
At its core the “fiscal cliff” represents the macroeconomic reality that budget deficits closing too quickly—and public debt accumulating too slowly—will push the U.S. economy back into recession. The scheduled spending cuts and tax increases comprising the legislated fiscal tightening are separable policies, all with varying budgetary costs and a wide range of economic impacts; we decomposed these à la carte in our recent paper, A fiscal obstacle course, not a cliff. “Cliff” is a terrible metaphor, as it implies a binary choice, whereas each policy should be weighed on its economic impacts and budgetary costs. Government spending cuts are more economically damaging than tax increases, particularly for upper-income households and businesses, but tax increases will drag on growth to varying degrees. Collectively, the legislated fiscal tightening would shave 3.7 percentage points from real GDP growth, and the U.S. would experience a 2.9-percent contraction in the first half of 2013, pushing unemployment back above 9 percentRead more
The New York Times has reported that the nonpartisan Congressional Research Service (CRS) has withdrawn a September report (though it can be found on the Senate Democratic Policy Committee site) that examined the relationship between top tax rates and economic outcomes. CRS made the decision in response to objections raised by Senate Minority Leader Mitch McConnell (R-Ky.) and other GOP senators about the reports “tone and … its findings.”
We’ll leave arguments about tone aside for a moment and focus on the research quality of the report and whether or not the GOP objections have any basis. Spoiler alert: they don’t. The report mostly just confirms what a rich economic literature already has shown: Raising marginal tax rates on the highest incomes just doesn’t have much impact at all on aggregate economic indicators, though it does have considerable impact on inequality.
This is shown in the report through a wide range of descriptive data and scatter plots that show very little obvious relationship between top tax rates and aggregate economic indicators, but which show striking relationships between falling top tax rates in recent decades and the share of overall income accruing to the top 1 percent of households. It then tests to see if these simple two-way relationships hold in a multivariate regression. They do.
So what are the allegedly substantive objections raised by GOP senators to this report? Read more
The Center for Immigration Studies issued an alarming-sounding report yesterday that, at first glance, seemed to indicate that immigrants have gotten most of the jobs during the recovery from the Great Recession. In fact, the great majority of jobs gained back since the recession have gone to natives, but clever cherry-picking of the comparison dates by CIS could trick a reader into believing otherwise.
The following figure from the CIS report tells the story:
Employment declined from 2009, when President Obama took office, to early 2010, continuing the employment shrinkage that began in 2007 and escalated in 2008. Natives, who make up 84 percent of the workforce, took the brunt of the recession’s job losses. Read more
Here’s some of the interesting content that EPI’s research team browsed through today:
- “Nonpartisan Tax Report Withdrawn After GOP Protest” (New York Times)
- “With paychecks, size matters” (Los Angeles Times)
- “Mexico is now a top producer of engineers, but where are jobs?” (Washington Post)
- “Wary of Future, Professionals Leave China in Record Numbers” (New York Times)
Suzy Khimm wrote an excellent post (during a hurricane, no less) earlier this week on the incoherence of those screaming about the alleged dangers of mounting public debt while also fretting about the “fiscal cliff.” To reiterate her point and be very clear (again) on this: The danger of going over the “fiscal cliff” (bad metaphor, by the way) is that budget deficits will fall, not rise, too quickly. This is very confusing to far too many economic commentators and policymakers because they have been trained to a near-Pavlovian degree to think the federal budget deficit is always too high and rising too quickly.
FULL ANALYSIS FROM EPI: Budget battles in the lame duck and beyond
This failure to realize that there should be much more to consider when making fiscal policy than “deficit BAD” has been a big problem in dealing with the Great Recession and its aftermath (see this blog post for an extended take on this).
So, I applaud Khimm’s campaign to spread the word that if you’re worrying about the “fiscal cliff,” then you’re a Keynesian, period. Read more
President Obama and Secretary of Education Arne Duncan claim that the poor achievement of African-American students is the “civil rights issue of our time.” Yet there is little chance that the achievement gap between white and black students will be narrowed significantly, as long as large numbers of disadvantaged children are concentrated in racially segregated and economically bereft urban neighborhoods. In these (to use William Julius Wilson’s term) “truly disadvantaged” neighborhoods, teachers are overwhelmed by the impediments to learning that children bring to school, and that reinforce each other in racially and economically isolated classrooms. None of this can change substantially until metropolitan areas are residentially desegregated.
An investigation by Nikole Hannah-Jones for ProPublica, “Living Apart: How the Government Betrayed a Landmark Civil Rights Law,” published this week, demonstrates that the Obama administration and its predecessors have done little to promote residential integration.
Specifically, Hannah-Jones exposes the contempt with which the federal government, for 45 years, has ignored its obligation under the 1968 Fair Housing Act to “affirmatively further” the goal of racial desegregation. Read more
A recent blog post by the Heritage Foundation’s Derek Scissors claims that my estimates of the number of jobs lost due to growing trade deficits with China “are demonstrably wrong.” Scissors then fails to demonstrate how they’re wrong.
That’s because he can’t. The economic models used in our report (Scott 2012, 9, Appendix and note 15) are the gold standard for research on the employment effects of trade, and “all but identical models” have been used in similar studies by the Federal Reserve Bank of New York, by Martin Bailey and Robert Lawrence of the Brookings Institution, and in a U.S. Commerce Department study that represents the work of more than 20 government economists including the chief economists from that agency and the Office of the U.S. Trade Representative.
At its core, our model is based on a straightforward application of Keynesian economics and national income accounting, which show that exports stimulate the domestic economy while imports reduce demand for domestic products. Scissors (and many others before him, such as Dan Griswold at Cato and the U.S. China Business Council) claims that imports are good for the economy, in part because they are correlated with growth. But this assertion ignores two fundamental questionsRead more
Robert Samuelson on government jobs: They exist, but people who recognize them are like flat-earthers
It’s entirely clear that the whole discussion over “government creating jobs” sparked by President Obama’s closing statement in the second presidential debate is really about the role of public-sector hiring or cutbacks as something that either cushions or exacerbates the current problem of chronically high unemployment rates.
This debate just can’t be about anything else, because it would just be too silly. And it surely can’t really be about what Samuelson spends most of his column doing: wondering whether or not government jobs are really jobs.
Government jobs are jobs, period. Nothing about the fact that they require “money to support [them]” or that public hiring can lead to “substituting public-sector workers for private-sector workers” changes this. As Baker notes, private-sector jobs “require money” to support them, and, there are plenty of times when rising private employment in one sector drives declining private employment in another. This all just seems too obvious to need pointing out.
No, the issue is whether or not cutbacks to public-sector employment when the economy has lots of productive slack lead to net economy-wide job loss, and just how much. The answers to this are “they do,” and, “a lot.” Around 2.3 million is our estimate, cited by the New York Times.
Samuelson notes that government spending during times of economic slumps can boost net job creation, but then notes that the idea of fiscal stimulus is “fiercely debated” and says he doesn’t “intend to settle this debate either.”
But then again, I didn’t think that it was so hard to recognize what a “job” is, either.
The impact of each presidential election on the makeup of the Supreme Court receives plenty of media attention and is analyzed extensively by experts and court watchers—and deservedly so. During the vice presidential debate, Vice President Biden predicted that the next president is likely to appoint “one or two” justices to the nation’s highest court. Although this prediction may have spooked a few of the Supreme Court justices, given that they would either have to die or retire to open a seat on the court, the election’s impact on the judiciary is a crucial consideration. Lifetime appointments for Supreme Court nominees mean they are sometimes the most enduring legacy of a president’s administration. Given that the Supreme Court is currently comprised of five conservative and four moderately progressive justices, the next administration could realistically tip the ideological balance of the court.
Some of the Supreme Court’s decisions in the past few terms, on Citizens United, the Affordable Care Act, and Arizona’s SB1070 immigration law, for example, were monumental decisions that will impact the everyday lives of citizens, and even the framework of American democracy. But the mainstream media, for the most part, have paid little attention to the potential impact of the election on federal regulationsRead more
Here’s some reading material for you from items EPI’s research team skimmed through today:
- “More People Eschew Jobless Benefits Than Scam System” (Wall Street Journal)
- “Protecting the Child Tax Credit at the Fiscal Cliff” (TaxVox)
- “Starting salaries: How can women catch up with the guys?” (Washington Post)
- “The Dark Side of Bipartisanship” (New York Times)
Here’s a sampling of links that EPI’s research team found insightful today:
- “The Ten Biggest Differences between the Romney and Obama Tax Plans” (TaxVox)
- “The Economic Consequences of Mr. Osborne” (Paul Krugman)
- “Labor unions, liberal groups fear lame-duck betrayal by Obama” (The Hill)
- “Americans don’t want ‘grand bargain’” (Politico)
- “Report Details Massive Chemical Investments in Lobbying and Campaigns” (ENews Park Forest)
My colleague Josh Bivens and I recently published a briefing paper analyzing the near-term macroeconomic impacts of the Obama and Romney budget proposals based on prevailing actionable evidence. (Short summary of findings here.) Our verdict was that Obama’s budget plans would lead to increased employment of 1.1 million jobs in 2013, relative to current policy, whereas Romney’s proposals would lead to small job gains of 87,000 in 2013 if all his proposed tax cuts were deficit-financed, but lead to job losses of 608,000 in 2013 if only some of his tax cuts were deficit-financed.
This latter estimate assumed Romney’s proposed 20 percent reduction in individual income tax rates and alternative minimum tax (AMT) elimination would be revenue-neutral, whereas his earlier proposals—notably cutting the corporate tax rate and eliminating the corporate AMT, taxes on foreign profits, the estate tax, and Affordable Care Act taxes—would be deficit-financed. While regressive tax cuts are really inefficient at boosting growth, enough money plowed into inefficient tax cuts will modestly boost demand and, short of “base-broadening,” (none of which has been concretely specified) Romney is proposing a lot of costly tax cuts. Read more
Paul Krugman and others have recently claimed that Chinese currency manipulation is “an issue whose time has passed.” There are two fundamental problems with these arguments. First, China’s global trade surplus appears to be perhaps three to four times larger than has previously been reported. Second, productivity in China is growing much faster than in the United States and other developed countries and therefore, China’s exchange rate likely needs to appreciate at least 3 to 5 percent per year just to keep its trade surplus from growing. On the first issue—what the size of the Chinese current account surplus and its recent movement tell us about the need for currency realignment—it’s worth noting that most of the decline in China’s global trade surplus since 2008 is explained by the great recession and the sluggish recovery, especially in Europe. However, the U.S. bilateral deficit with China has increased by a third since it bottomed-out in 2009, which has slowed the U.S. recovery.
Further, China’s trade data likely understates its global trade surplus by a significant amount, a problem that has been ignored by officials in the United States, the International Monetary Fund and other international agencies. The IMF relies on self-reported data from each member country. Analysis of trade data from the United Nations shows that China is massively under-reporting its exports. Read more
A number of commenters declare that currency management by our trading partners is an issue “whose time has passed.” At the risk of violating Brad DeLong’s wise rules (Paraphrased: “Mistakes are avoided if you follow two rules: (1) Remember that Paul Krugman is right, and (2) If your analysis leads you to conclude that Paul Krugman is wrong, refer to rule No. 1”), I’m not convinced by claims—even Krugman’s—that this is a dead issue.
Look at one key piece of evidence Krugman presents: the real (inflation-adjusted) appreciation of the yuan in the last year. But, as Krugman himself has said in previous writings on this:
“Notice that I didn’t mention the value of the renminbi at all in this account [ed: of China’s currency management]. … You want to keep your eye on the ball: it’s the artificial capital exports that are the driving force here.
We know that the renminbi is grossly undervalued … on a PPE (proof of the pudding is in the eating) basis: the current value of the renminbi is consistent with massive artificial capital export, and that’s that.” [Edited for clarity; I’m pretty sure I haven’t done any (much?) damage to his argument].
So, have the artificial capital exports from China continued? Read more
Every once in a while, someone will write a column so densely packed with deception and misinformation that it truly astonishes me. Last week, U.S. News and World Report published such a column about government regulation of business by John Allison of the Cato Institute. I feel compelled to respond.
Let’s start with Allison’s use of a thoroughly discredited study that estimated the annual cost of regulation to be $1.75 trillion in 2008. This report, by Nicole and Mark Crain of Lafayette College, has been shown to be based on flimsy data, a flawed methodology based on a misuse of polling data, and an equally discredited estimate of the costs of OSHA regulation whose original data are untraceable. The Small Business Administration funded the research, but the Chairman of the Council of Economic Advisers has condemned it:
“The Council of Economic Advisers has looked at those claims and the $1.75 trillion figure is utterly erroneous. In fact, their [Crain and Crain’s] own data (which come from the World Bank) show that countries with smarter regulations have higher standards of living, and the United States has one of the best regulatory systems in the world.” Read more
Sen. Chuck Schumer (D-NY) recently made headlines in declaring that marginal income tax rate reductions are a terrible starting point for tax reform—they shouldn’t be a priority, period—and that the dual objectives of the Tax Reform Act of 1986 are completely inappropriate today. The 1986 reform, the last comprehensive “cleaning” of the tax code, is often touted as the model for tax reform, which Schumer attributes more to coalescing political bipartisanship than policy specifics. The ’86 framework of base-broadening, rate reductions, and distributional neutrality was recently adopted by two prominent tax proposals Schumer is now urging Democrats to reject—reforms proposed by Fiscal Commission Co-Chairs Alan Simpson and Erskine Bowles, as well as the Gang of Six (although both of these proposals would raise revenue, unlike the ’86 reforms). And Schumer is absolutely right about both the premise and conclusion of his argument. Here’s his take in a recent interview with Ezra Klein:
Klein: “The core of your argument is that tax reform in 2012 is proceeding atop a mistaken analogy to tax reform in 1986. So why isn’t 2012 like 1986?”
Schumer: “It’s not like 1986 for two reasons. Read more
As a follow-up to my earlier post, another issue likely to be raised in tonight’s debate is the issue of federal budget deficits that force us to “borrow from China.” Is this a real problem, and will it hurt if China suddenly decides to stop lending us money?
No and no.
First, rising budget deficits since the Great Recession began have actually been more than financed by rising domestic savings of U.S. households and businesses. In fact, the huge spike in private savings that began in 2007 (see the chart below) is the reason for the Great Recession: households and businesses stopped spending in 2008 and the economy cratered thereafter, cushioned a bit by the rise in government deficits. So, we have not relied on rising borrowing from China to finance the increased budget deficits in recent years, instead the rise in domestic savings has been more than sufficient to cover these.
But what happens if China turns off the spigot and stops trying to buy U.S. Treasuries and other dollar-denominated assets?
This would have two effects. First, the decline in available savings that can be borrowed by American households, businesses, and governments would decline. In normal times, this could bid-up interest rates. Think of interest rates as the price of loanable funds—as the supply of loanable funds falls, the price should be expected (all else equal) to rise. But we’re not in normal times. Instead, the American economy remains characterized by a huge excess of savings over demand for new loans, meaning that there’s no upward pressure on interest rates. Absent this upward pressure on interest rates, no damage would be done if China stopped plowing money into buying dollar-denominated assets.
Second, if China did stop buying U.S. assets, the value of its currency would increase vis-à-vis the dollar, and this would spur U.S. exports, both to China as well as to third-country markets.
So, in regards to China buying the U.S. government’s debt, it’s not only nothing to worry about, it would be better for the U.S. economy if they stopped.
Notes for tonight’s debate: Faster growth without growing budget deficits requires a more competitive U.S. dollar
Tonight’s presidential debate will mostly focus on issues out of my wheelhouse, but there are a couple of international economic issues that will come up that people should be prepared for. This post tackles one (currency management by our trading partners, particularly China) and a subsequent post will tackle the other (alleged reliance of the U.S. on China to buy our public debt).
The primary reason why the United States ran large (and generally-growing) trade deficits over the past 15 years was that the value of the U.S. dollar was too expensive. This expensive dollar prices our exports out of too many global markets. The source of this too-expensive dollar has actually varied over that time, but over the past decade it has been clearly driven by the policy of foreign governments buying hundreds of billions of dollars of dollar-denominated assets, hence increasing the demand for dollars, which pushes up the price of dollars on world markets.
In the late 1990s and early 2000s, it was largely private investors demanding dollars to buy into the U.S. stock market, and to find a safe haven for their investments in the fallout Read more
One year ago, on Oct. 11, 2011, the Senate passed Sherrod Brown’s Currency Exchange Rate Oversight Reform Act of 2011. This legislation aimed to put an end to the exchange rate intervention practiced by China and other countries, which kills jobs in the United States by artificially lowering the cost of the intervening countries’ exports while making goods produced in the U.S. artificially expensive. The Senate passed the bill 63-35, on a rare bipartisan vote.
The next day, the bill was sent to the Republican-controlled House of Representatives, where it has been blocked ever since. This gridlock is especially unfortunate because a year earlier, in Sept. 2010, the House passed a somewhat tougher bill, the Currency Reform for Fair Trade Act, by an overwhelming vote of 348–79, with a majority of Republicans joining their Democratic colleagues in support.
China continues to peg its currency to the dollar at an artificially low rate, and good-paying manufacturing jobs in the U.S. continue to be lost as a result. At an event hosted by EPI, two economists who have long favored free trade, Fred Bergsten and Paul Krugman, agreed that ending China’s “staggering and unprecedented” currency intervention could create up to a million jobs in the U.S., a result that would also improve the U.S. budget deficit and add as much as $200 billion to U.S. GDP.
So why hasn’t Congress acted? What happened to change the outcome in the House from one year to the next? Most obviously, control switched from the Democrats to the Republicans in the 2010 elections, and the new Speaker of the House, John Boehner, and the new majority leader, Eric Cantor, both opposed the bill in 2010.
Penalizing imports from China that have benefited from illegal currency intervention is very popular, with public support more than 70 percent in most polls. But the U.S. Chamber of Commerce and other business groups representing the multinational corporations that benefit from China trade are dead-set against the currency bill. From their point of view, policies like China’s currency intervention that put pressure on U.S. workers to accept pay cuts and other concessions to save their jobs are just fine. Corporate lobbying and campaign contributions almost guarantee that Congress will remain deadlocked on this issue.
Republican presidential candidate Mitt Romney has been adamant that his tax plan won’t cut taxes for the rich. In the debate earlier this week, he said:
“The top 5 percent of taxpayers will continue to pay 60 percent of the income tax the nation collects… I will not reduce the share paid by high-income individuals.”
So would his plan cut taxes for high-income households? Most likely. Note that he specifies the share of federal income taxes. Why is this important? If his plan was revenue-neutral, there would be no distinction: the same share of the same total revenue equals the same amount of taxes paid.
But it’s clear that his plan can’t be revenue neutral: According to the Tax Policy Center, the 20 percent cut would give households with income of more than $200,000 a $251 billion tax cut, but they only get $165 billion in tax breaks (excluding the tax breaks for savings, which Romney has proposed to retain). A more recent TPC analysis shows that the $25,000 cap on itemized deductions he floated in the debate would only raise $1.3 trillion, offsetting only a quarter of the $5 trillion cost of his across-the-board rate cut.
So it seems that Romney’s plan would lose revenue, and if high-income households are paying the same share of a lesser amount of overall tax revenue, that means their tax bill will fall. This conclusion is reinforced by Romney’s own choice of words. If his plan really did ensure that the top households didn’t get a tax cut, why would he often insist on describing his plan using the clunky “I will not reduce the share of taxes paid” explanation? It’s a roundabout explanation that suggests that even Romney knows that his plan will result in high-income households paying less in taxes.
Politicians love to complain about “waste, fraud and abuse,” and to promise to root it out. But few of them ever actually take the opportunity to attack actual waste or abuse (as opposed to making fun of scientific research they don’t understand or bike path construction projects they disagree with). But soon, in the lame duck session of Congress that will begin after the election, members of Congress will have a chance to vote against actual waste and abuse, or—if they’re so inclined—to allow it to continue, at great cost to the taxpaying public. Thanks to an amendment to the Department of Defense authorization bill introduced by Sen. Joe Manchin of West Virginia, Congress has an opportunity to put an end to an egregious practice of self-dealing and self-aggrandizement by federal defense contractors that costs the government billions of dollars a year.
Top federal contract employees are treated very differently (and much better) than equivalent employees on the federal civil service payroll. Current law permits federal contractors to charge the government up to $763,029 a year for their employees, while even federal cabinet secretaries are paid no more than $200,000 a year, and the president is paid only $400,000 a year. Read more
Today is the 40th anniversary of the Clean Water Act, federal legislation that has improved quality of life for millions of Americans, increasing recreational opportunities, improving public health, adding to our aesthetic enjoyment of nature and our environment, and providing business opportunities to manufacturers of boats and fishing equipment, rafting outfitters, and retailers of outdoor equipment. The Act is proof of the power and benefits of federal regulation; it transformed our world in so many visible ways and did more to protect our precious water resources than any other action, public or private, in the nation’s history.
It’s hard for young people to imagine just how polluted and threatened our waters were in 1972, when the Act was passed and signed into law by President Richard Nixon. I grew up near Detroit, on the shores of Lake St. Clair, the lake that, along with the Detroit River, connects Lake Erie and Lake Huron. After heavy rains, tides of human sewage and fecal matter would flow out into the lake, and continuous discharges of mercury and other toxins from industrial plants killed all but the hardiest and least appetizing fish. I swam in that lake Read more
Here’s some of the thought-provoking content that EPI’s research team enjoyed reading today:
- “Income Inequality May Take Toll on Growth” (New York Times)
- “Economic Health? It’s Relative” (New York Times)
- “Leading by Example: Minneapolis Acts on Employment Equity” (PolicyLink)
- “How a High-Speed Rail Disaster Exposed China’s Corruption” (The New Yorker)
- And finally, in case you missed it over the weekend, here’s a great Saturday Night Live skit on Apple’s iPhone 5 and the Chinese workers toiling away in Foxconn’s factories—something EPI has covered extensively:
Republican presidential nominee Mitt Romney’s budget proposal is short by nearly $9 trillion worth of specifics—the tax increases and spending cuts needed to meet promises of revenue-neutral tax changes and capping government spending at 20 percent of GDP. In this context, the Washington Post editorial board’s recent “pox on both houses” indictment of President Obama for a lack of second-term policy specifics, particularly with regard to fiscal sustainability, was entirely off the mark. Though too often lost on the punditry, the president has produced four comprehensive, independently analyzed and scored budgets—largely consistent and all fiscally sound—offering guidance to what a second Obama administration would imply for economic recovery and fiscal sustainability.
Economy: The president’s fiscal 2013 budget request included an adaptation of the American Jobs Act (AJA), originally a $447 billion package of stimulus spending and tax cuts proposed in Sept. 2011. I recently estimated that full passage of the AJA, relative to the scaled-back payroll tax cut and Emergency Unemployment Compensation extension Congress enacted, would have boosted real GDP growth by 1.4 percentage points and employment by more than 1.6 million by the end of 2012. Read more
Here’s some of the thought-provoking content that EPI’s research team enjoyed reading today:
- “The judicial jihad against the regulatory state” (Washington Post)
- “Social Security Keeps 21 Million Americans Out of Poverty: A State-by-State Analysis” (Center on Budget and Policy Priorities)
- “Transforming Medicare into a Premium Support System: Implications for Beneficiary Premiums” (Kaiser Family Foundation)
- “The Presidential Debate Commission is Chaired by Corporate Lobbyists, Funded by Corporations” (BoldProgressives.org)
- “A Risky Lifeline for the Elderly Is Costing Some Their Homes” (New York Times)
Despite a massive and endless campaign by business lobbyists and associations to vilify government regulation, 50 percent of Americans in a recent Gallup poll think there is too little regulation or just the right amount, while a minority (46 percent) think there is too much. According to the poll, Democrats tend to think regulation is too lax (42 percent think there is too little regulation while 32 percent think the balance is about right), and more Independents think the balance is right or that there is too little regulation (50 percent) than think there is too much (46 percent).
In one sense, this is good news, showing that anti-government cynicism is substantial but still a minority position. Yet it is disturbing to know that 77 percent of Republicans are so opposed to additional regulation when
- an estimated 100,000 people a year die needlessly from preventable hospital acquired infections;
- thousands die, more than 100,000 are hospitalized, and millions are sickened by contaminated food while the rate of infections linked to foodborne salmonella has been rising and food safety rules are stalled in Washington;
- air pollution that can be controlled for less than $3 billion a year causes between 13,000 and 34,000 preventable, premature deaths, 15,000 preventable, non-fatal heart attacks, 19,000 hospital and emergency room visits and 1.8 million days of missed work or school each year. As Steven Pearlstein points out in a recent column, the projected annual compliance cost of EPA’s final cross-state air pollution rule is $2.4 billion, compared with annual health benefits ranging from $120 billion to $280 billion. But the EPA rule was recently struck down by two Republican judges.
It is perfectly clear to me that more regulation would make millions of us both safer and freer—free from the fear that a random bite of spinach or a routine surgery will kill us or a loved one. And when I look back over the past 40 years and consider how much cleaner our lakes and rivers are now, how much more dangerous our workplaces were, and how unsafe the mines, factories, pharmaceuticals, and even the bridges and railways are in less advanced and less regulated countries like China, the last feeling I have about regulation is that we have too much, rather than too little.