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May 17, 2006 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for May 17, 2006. Wealthiest Americans will receive most of the benefits from the planned tax cuts Congress is debating taxes on wealth this spring, specifically whether to cut taxes on capital gains, dividends, and estates. Recently published Federal Reserve data on the distribution of wealth make it clear that most of the benefits from such tax cuts will go to a very narrow slice of the population, the wealthiest of America’s wealthy.1 America’s 112 million families had combined wealth of $50.3 trillion in 2004. When those families are ranked by the size of their wealth, however, the top 1%2 alone held $16.8 trillion in wealth, more than a third of the United States’ total wealth and more than the $15.3 trillion held by 90% of U.S.
March 15, 2006 | By Lee Price | Analysis and OpinionPoliticians of both parties often exaggerate the role that taxes play in economic decisions. As a result, they tend to believe that small tax cuts can have huge positive effects on the economy and that tax increases run the risk of dire negative effects.
March 8, 2006 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for March 8, 2006. Soaring federal government payments to foreign lenders A few decades ago, economic textbooks downplayed the modest growth of federal government debt as something that “we owe to ourselves.” At that time, virtually all interest payments by the federal government went to Americans. In recent years, however, the federal debt has become increasingly financed by foreign lenders, both governments and private investors. As a result, a rapidly rising share of our federal budget goes to interest payments to foreign lenders.
February 16, 2006 | By Lee Price | Policy MemoBush’s Tax and Budget Policies Fail to Promote Economic Growth by John Irons and Lee Price This policy memo is available in PDF format.
January 26, 2006 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for January 26, 2006. Sluggish private job growth indicates failure of tax cuts Changes in tax law since 2001 reduced federal government revenue by $870 billion through September 2005. Supporters of these tax cuts have touted them as great contributors to growth in jobs and pay.
January 26, 2006 | By Lee Price | Issue BriefWhy people are so dissatisfied with today’s economy by Lee Price In recent weeks, incumbent politicians have bragged about growth in gross domestic product, jobs, and pay and touted declines in unemployment.
October 26, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for October 26, 2005. Economy pays price for Bush’s tax cuts Since 2001, changes in tax law have cost the federal government $929 billion, including $860 billion in direct cost and $69 billion in interest.1 Proponents of these tax cuts promised stronger economic gains than were typical of the past, but that did not occur.2 Unfortunately for most Americans, almost every broad measure of economic activity—GDP, jobs, personal income, and business investment, among others—has fared worse over the last four years than in past business cycles. As the chart above indicates, there has been one bright spot in the economy—residential investment. But that sector has had a reduction in tax incentives because lower income tax rates reduce the value of deductions for mortgage interest and real estate taxes. For a person with a mortgage with $10,000 in interest, taxes are reduced by $3,500 with a 35% tax rate and by $3,000 with a 30% rate.
October 25, 2005 | By Lee Price | Briefing PaperThe boom that wasn’t The economy has little to show for $860 billion in tax cuts by Lee Price Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment.
October 25, 2005 | By Lee Price | Briefing PaperSince 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment.
August 3, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for August 3, 2005. Without defense-related spending, private sector would still be in a jobs hole The private sector has 1.2 million fewer non-defense-related jobs today than it had four years ago.
July 21, 2005 | By Lee Price | Issue BriefShifting risk Workers today near retirement more vulnerable and with lower pensions by Lee Price Print-friendly PDF format Twenty years ago, most employees approaching retirement could look forward to a traditional pension.
July 20, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for July 20, 2005. Last twelve months of job growth trail similar periods of previous expansions In June 2005 there were 1.6 % more payroll jobs in the economy than there were in June 2004. This rate of job growth was faster than the 0.5% annual rate of job growth from the end of the last recession (November 2001) through June 2004. But compared to the same time period in previous expansions, the last 12 months have had the lowest record of job growth of any of the five post-World War II recoveries that have lasted as long as the current expansion (43 months).
July 6, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for July 6, 2005. The DeMint plan to raid the Social Security trust fund Led by South Carolina Senator Jim DeMint, a number of senators and representatives have coalesced around a plan to create private accounts to the extent of the Social Security surplus. The program would start next year when the surplus is projected to be about $85 billion and continue for the projected eleven years of surpluses. Proponents tout this plan as a way to “stop the raid” on Social Security, but, like other privatization proposals, it diverts money from the trust fund1 and relies on infusions of general revenues2 to avoid worsening the trust fund balance.
June 22, 2005 | By Lee Price | Commentary[ THIS TESTIMONY WAS PRESENTED BEFORE THE U.S. HOUSE OF REPRESENTATIVES’ SUBCOMMITTEE ON SOCIAL SECURITY, COMMITTEE ON WAYS AND MEANS ON JUNE 21, 2005.] Economic conditions affecting Social Security and the merits of pre-funding By Lee Price Read the testimony Economic Conditions Affecting Social Security and the Merits of Pre-funding [PDF]
May 11, 2005 | By Lee Price | CommentaryOpinion pieces and speeches by EPI staff and associates. [ THIS PRESENTATION WAS GIVEN AT THE SOCIAL SECURITY PRESS BRIEFING ON CAPITOL HILL ON MAY 6, 2005.
April 4, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for March 16, 2005. Implications of the Bush budget for people over 55 I have a message for every American who is 55 or older: Do not let anyone mislead you; for you, the Social Security system will not change in any way.
January 12, 2005 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for January 12, 2005. Proposal by the president’s Social Security commission whittles away at income support The White House has signaled that it supports the key proposal by President Bush’s 2001 commission on Social Security to freeze future growth in Social Security benefits by fixing them to current living standards.1 This is a change from the current law, which increases benefits to reflect the life time earnings of future workers. Because American workers’ pay will most likely grow faster than inflation in the future, this change would steadily lower the share of income that Social Security would replace for retirees, the disabled, and survivors. This proposal would cut the replacement rate in half in 70 years, a major blow to low- and middle-income workers.
December 22, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for December 22, 2004. Private accounts: The ‘spicy sauce’ to sell deep benefit cuts Like a cafeteria selling a cheap cut of meat by serving it in spicy sauce, proponents of deep cuts in Social Security benefits are masking their sour taste with the artificial sweetener of private accounts.
December 8, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for December 8, 2004. President’s policies won’t deliver promised deficit cuts Last February, the Bush Administration set a goal of reducing the federal budget deficit to 1.6% of the gross domestic product (GDP) in five years, by fiscal year 2009. This would be a significant reduction from the 2004 level of 3.6%, or $413 billion.
November 3, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for November 3, 2004. Consumption grows at the expense of saving The U.S. economy has depended very heavily on consumption growth to drive the economy in the last several years, but cannot do so indefinitely. Americans spent a record 88.8% of their pre-tax income last quarter. Between 1960 and 2000, consumption accounted for an average of 81.0% of pre-tax income. Just four years ago, that ratio was still 83.1%. Consumption has risen by 5.7 percentage points of pre-tax income in just four years only because of deep cuts in both saving and income taxes.
October 29, 2004 | By Lee Price | Economic IndicatorsOctober 29, 2004 GDP growth fueled by consumer debt, defense spending The nation’s output (gross domestic product, or GDP) grew at a less-than-expected rate of 3.7% in the third quarter as surges in both auto sales and defense spending were somewhat offset by disappointing investment and trade numbers in the report issued today by the Bureau of Economic Analysis. Consumers cut their saving to a record low 0.4% of after-tax income to increase their auto spending at a 27% annual rate. Economy-wide demand rose at a hefty 4.6% rate, but output growth was pulled down by a higher trade deficit and slower inventory growth. After rearing up to the 3% range in the first half of 2004, inflation fell back below a 2% rate for the third quarter.
October 25, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for October 25, 2004. The ‘sad story’ of the current employment picture 4.2 million jobs below normal The unprecedented loss of payroll jobs 42 months after the start of the last recession is well known. However, it has been argued that the two surveys of employment conditions (the payroll survey and the household survey) tell conflicting stories.1 Some have claimed that the household survey paints a much more favorable employment picture. Last spring, however, two economists at the Cleveland Federal Reserve issued a study entitled “Employment Surveys Are Telling the Same (Sad) Story.”2 This Snapshot adds six more months of data to their central figure and finds that the household survey continues to tell “the same sad story” as the payroll survey.
September 29, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for September 29, 2004. Decline in corporate borrowing helps keep interest rates low The dramatic withdrawal of corporations from the capital markets over the last four years helps to explain why interest rates have remained low. In normal times, corporations have greater capital expenditures than their internal cash flow can cover. This creates a so-called “financing gap” that they fill by borrowing money and issuing stock. Corporations had an unusually large financing gap of $309 billion in 2000 that swung around to a rare negative gap in 2003, and a negligible $2 billion gap in the first half of this year.
September 22, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for September 22, 2004. Annual unemployment insurance exhaustion rate at highest level in 60 years Last year, 43.4% of people who began receiving state unemployment benefits ended up exhausting all the benefits to which they were entitled without finding a job.1 This exhaustion rate is the highest rate since 1941, and it exceeds the 38.5% rate for 1982 when the unemployment rate was over 10%.
June 16, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for June 16, 2004. The lesson of the 1981 “supply-side” tax cuts When President Reagan took office in 1981, he quickly succeeded in passing substantial “supply-side” cuts in both individual and corporate income taxes. He predicted that the 1981 tax cuts would “pay for themselves” through higher investment and faster growth in productivity and incomes. Once enacted, the 1981 tax cuts opened up wide budget deficits (6% of gross domestic product, the largest peacetime deficit in history), leading Congress and the president to agree to substantially increase taxes on corporations in 1982 and on payrolls in 1983. Although those measures helped to narrow the budget deficit, large deficits persisted and further major tax hikes were adopted in 1990 and 1993. By the time that the tax increases of 1993 took effect, any supply-side effects of the 1981 tax cuts had been largely eliminated.
May 26, 2004 | By Lee Price | Economic SnapshotSee Snapshots Archive. Snapshot for May 26, 2004. Rising inflation due to profit margins and energy, not labor costs Consumer prices have risen by 2.3% in the last 12 months and at a 3.9% rate in the last three months according to the Consumer Price Index (CPI).