As Congress begins the daunting process of reforming a banking system that failed so many Americans and brought the country to the brink of economic collapse last fall, EPI is weighing in on the discussion with analysis and commentary. On June 10, EPI hosted Small Enough to Fail: Community Banks in the Bailout, the first in a series of forums examining the massive government bailouts. A panel representing the community of small, independent banks said that they were being hurt by bailout policies that prop up the nation’s biggest banks. A combination of stricter reserve requirements on community banks and generous funding of big banks to help them offer more competitive interest rates, the panel said, was serving to help the “too big to fail” banks get bigger, while placing more small banks on a path to insolvency. Some 37 independent banks have failed so far this year and hundreds more are on the FDIC’s watch list.
If “too big to fail” has become a common slogan justifying the repeated bailouts of some major banks and insurers such as AIG, “too complex to regulate” could be the defense used by the finance industry resisting government oversight, according to a recent discussion published on EPI.org. In Too Complex to Regulate, Robert Johnson, an EPI board member who previously served as director of Soros Fund Management, and Sony Kapoor, a former investment banker who now heads the progressive think tank Re-Define, outline how Wall Street has a tradition of using extreme complexity as a shield to pad its profits and keep regulators guessing. They stress that simplicity needs to be at the core of any reform. “If it is too complex to understand, it is too complex for stability,” notes Kapoor.
Health care needs reform but not more taxes
On June 11, EPI’s health policy research director Elise Gould published Capping the Health Insurance Tax Exclusion: The Consequences Vary Greatly across States and Regions and presented her research at a briefing on Capitol Hill. The paper, the most recent in a series analyzing the losers from a limit of the tax exclusion, examines how workers and their families would fare in different states across the country. Gould finds tremendous regional variation in the likelihood of enrollees being directly affected by a tax cap, and argues that such a cap has the potential to reduce both the quality and quantity of insurance available through the workplace. Gould also outlined some of the problems with taxing health care benefits in a June 9 debate on CNBC. The Washington Post also cited Gould’s research, outlining how capping the health insurance tax exclusion would raise taxes mainly on workers with family coverage, many of them in smaller firms with high concentrations of older, female, or unionized workers.
Diploma … but no job
It’s that time of year again, when college graduates celebrate the completion of their studies and then prepare to join the work force. But this year, large numbers of young college graduates have no job to go to. EPI’s latest Economic Snapshot, Commencing Unemployment, shows that while college graduates have been somewhat insulated from the high unemployment plaguing the nation, joblessness among young college graduates now stands at a high 5.9%, the second worst rate on record. EPI economist Heidi Shierholz appeared on The Today Show discussing the tough job market for the Class of ’09.
The New York Times op-ed, Too Poor To Make the News, meanwhile, discussed how mainstream media coverage of the recession focused largely on the white-collar workers who had lost their jobs, rather than on the country’s poorest residents, who are challenged to earn a living wage even in better economic times. The piece quoted EPI President Lawrence Mishel showing that blue-collar unemployment is rising three times faster than white-collar unemployment.
Immigration policy can be fixed, but not forgotten
As recently as the 1980s, policy makers regarded immigration as a one-time problem rather than an evolving issue, which helps explains why many immigration policies, such as the cap on green cards, have not been adjusted in close to 20 years. On June 11, a diverse group of immigration attorneys representing everyone from scientists to farm workers gathered at the American Immigration Lawyers Association in Washington, D.C. to consider ways to reform the system. Ray Marshall, who served as Secretary of Labor under Jimmy Carter and authored the new EPI book Immigration for Shared Prosperity, said the United States needed a better system of counting authorized and unauthorized immigrants. That sort of data, he said, would help officials regularly adjust immigration levels to reflect needs across different industries so that they could maintain the country’s long tradition of welcoming immigrants while also protecting the needs of U.S.-born workers.
Upcoming events
On June 19, Algernon Austin, director of EPI’s Race, Ethnicity, and the Economy program, will participate in a panel sponsored by the Center for American Progress on Weathering the Storm: Black Male Employment in the Recession. Unemployment among black men is significantly higher than the national unemployment rate and the the panel will discuss how challenges such as high rates of incarceration, limited educational attainment, and the impact of criminal records impact the job prospects for this group. This discussion runs from noon until 1:15 p.m. at Center for American Progress offices.
On June 25, the A Broader, Bolder Approach to Education campaign will hold a briefing at EPI headquarters to discuss its proposals for replacing the No Child Left Behind program with a new system that will hold teachers accountable not just for standardized test results, but a broader measure of their students’ breadth and depth of learning. The event will be moderated by EPI President Lawrence Mishel and will run from 10:00 a.m. until 11:30 a.m.