In a story headlined, “France Drowning in Rules and Regulations, critics say,” WaPo writer Edward Cody presents a caricature of a country with one of the highest standards of living in the world. Based on little more than interviews with disgruntled officials in one small town, Cody variously describes France’s regulatory regime as “strangling,” “smothering,” or “burying” the economy. For example:

“France and its southern European neighbors, such as Italy and Greece, are increasingly being buried in such norms, rules and directives. In the past two decades, the number of legal do’s and don’ts has become so great that businessmen and economists1 warn that it is smothering growth just as the continent tries to dig out of its worst slump in a generation.”

But France is not Italy or Greece, and the truth is almost the opposite of Cody’s claim that, compared with the Scandinavian countries, France discourages business. In fact, the World Bank measures the nations of the world on the ease of starting a new business, and France ranks well above all four of the Scandinavian countries. France also ranks about 80 places ahead of Europe’s economic powerhouse, Germany.

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Paul Krugman has been writing (and linking to helpful pieces) about the “missing deflation” of recent years. Despite lots of hand-wringing that activist macroeconomic policy (especially the large degree of easing done by the Federal Reserve) is laying the powder for an explosion of inflation, it’s clear that this is the wrong worry and that the extraordinary degree of economic slack actually argues that disinflation is much more likely, and is actually a problem (by the way, Ken Rogoff is totally right about this one).

But Krugman notes it’s actually a puzzle that disinflation (a reduction in the rate of price-growth) has not been ongoing and has not pushed over into outright deflation (falling prices) like in Japan. And even in Japan, prolonged economic weakness has not led to accelerating deflation, instead their deflation has been slow and steady. So what’s happening?

Krugman and others have usefully pointed to downward nominal wage rigidity as the key reason—for whatever reasons, workers seem to really not like, and employers seem to indulge their preference for, outright nominal wage cuts. Wages holding steady while inflation reduces their purchasing power? That happens—and it’s happening a lot these days. But outright nominal wage reductions are rare, and this rarity could well be providing a (useful) floor to disinflation.

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Are we spending too much on seniors and too little on kids? Many will recognize this as a classic either-or fallacy (what about tax breaks for the wealthy…?) But with Ron Brownstein, Ezra Klein and Charlie Cook all repeating the Urban Institute statistic that federal spending on seniors is nearly seven times that on children, the idea that seniors are crowding out children’s programs is catching on in Washington. Meanwhile, Urban’s estimate that state and local governments spend nine times more on kids than on seniors hasn’t gotten the same attention. Overall, it appears that government spending on seniors is roughly double (or less) that on children, though this measure includes Social Security, which is almost entirely funded through worker contributions.

Few progressives would dispute the need to spend more on children, especially low-income children. This should be the take-away from the Urban Institute’s “Kids’ Share” reports, the latest of which was published last July but is still frequently cited. Unfortunately, its findings are used mainly to justify cuts to Social Security and Medicare rather than expanding worthy kids’ programs.

Reporters love the generational warfare angle, which Urban isn’t above exploiting. The report is rife with selective comparisons to federal spending on elderly and disabled adults, as if there were only three groups of recipients of government spending and the size of the government pie was, by necessity, fixed or shrinking.

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Three quick notes on the debate over the Reinhart and Rogoff kerfuffle.

First, in their response, they move far from what has been interpreted (often with their encouragement) as the key claim of their paper—that there exists a clear, well-defined threshold for a nation’s public debt (90 percent of total gross domestic product) above which debt exerts a “secular drag on growth.” In commenting on the Herndon, Ash and Pollin (HAP) paper which demonstrates that a few improvements to the paper’s methodology (including correcting a coding error) makes this well-defined threshold disappear, Reinhart and Rogoff (R&R, hereafter) point to the HAP finding that as debt ratios rise in their sample, growth rates are slightly (and not statistically significant) lower. R&R try to cast this as somehow supportive of their own original finding. But it’s really not. Nobody has denied that there could be a statistical association between high levels of debt and slow growth—the key argument was that the causality could easily run from slow growth to higher debt ratios. What R&R claimed, and more importantly what became crucially important in fiscal policy debates, was that 90 percent was a bright line of debt that policymakers dare not flirt with. In some arenas they have been more judicious than that, but in others they wrote things like:

“…we find that very high debt levels of 90% of GDP are a long-term secular drag on economic growth.”

This 90 percent line has been hugely influential—fears of debt stabilizing at some higher ratio essentially drive the now-ubiquitous calls for aggressive 10-year deficit reduction targets.

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Over the next several days and weeks, I’ll be reviewing the provisions of the 844-page comprehensive immigration reform bill, the Border Security, Economic Opportunity, and Immigration Modernization Act, with an eye on those elements that will particularly affect the operation and outcomes of the labor market.

Let’s start with the most important provision first. Secure Borders delivers on its most important goal: granting legal status to almost all of the eleven million immigrants currently here without authorization to work. Every undocumented immigrant who came before January 2012, who passes a criminal background check and pays $500 will be given a provisional status that will allow them to work.

That single, dramatic step will change their lives for the better, improve the labor market prospects of every other legal resident with whom they compete for jobs, and free their employers from the taint and guilt of an illegal employment relationship. It won’t make these immigrants full citizens or give them the full rights of other residents of the United States, but it will remove them from the precarious status of working illegally, with the terrifying threat of discovery and deportation always hanging over their heads. They will be free to join unions, to ask for, demand, or strike for higher pay, and will be free to quit and look for a better job with another employer. The job lock and fear that keep so many of the undocumented underpaid or underemployed will end immediately.

For that, I take my hat off to the Gang of Eight.

One of the most influential findings in the never-ending debate over American fiscal policy came from a 2010 paper by economists Carmen Reinhart and Kenneth Rogoff—“Growth in a Time of Debt.” They claimed to have identified a clear debt ratio (total public debt divided by  gross domestic product) threshold above which countries’ economic growth would significantly slow. This 90 percent debt ratio has been referenced by budget writers, policymakers and others arguing for steep reductions in budget deficits soon.

We didn’t buy it. In the same year their paper was released, I co-authored a paper (along with John Irons) looking at the historical record for the U.S., and found very little evidence that such a threshold existed (and we weren’t alone in our skepticism). Further, we noted that the causality of any such finding was deeply in doubt—slow growth could lead to high debt as surely (actually, much more surely) as high debt could impede growth.

Most importantly (if not most thrillingly), we argued (in the first bullet-point!) that “there is no compelling theoretical reason why the stock of debt at a given point in time should harm contemporaneous economic growth.”

And it turns out that there is no longer any compelling empirical reason to think that the 90 percent threshold is operable any more either, as a new working paper by Herndon, Ash and Pollin makes clear. After receiving the original Reinhart and Rogoff data set (collegially provided by the original authors), they found a number of errors that, when corrected, essentially overturn the finding that debt ratios of over 90 percent are associated with slower growth. Mike Konczal reviews the paper in some detail here.

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The Republican majority on the House Education and Workforce Committee could raise the minimum wage, cover more employees with overtime protection, pass paid sick days legislation, pass a paid family leave bill, or do a host of other things to make life easier for America’s working families. Instead, as Judith Lichtman of the National Partnership for Women and Families testified last week, they have chosen to weaken overtime protections and shift more power from employees to their bosses.

The Republicans have trotted out a bill introduced back in 1995 and unsuccessfully pushed again by business lobbyists in 2003. They call H.R. 1406 the Working Families Flexibility Act, apparently because it will bend and twist working families even more than they already are as they try to balance the needs of home and work. Rather than give employees the flexibility to take a paid day off when they or their kids are sick, the bill gives their employers the flexibility not to pay them overtime when it is earned.

Lichtman does a great job of pointing out what a sham the bill is, and the National Partnership has also published a good fact sheet that points out that the bill greatly increases the risk that employees will work overtime but never get paid for it. The chance that thousands of businesses will fail each year while holding millions of dollars of unpaid overtime credits in leave banks is very real. Half a million businesses fail in an average year.

Judy Lichtman politely calls H.R. 1406 “smoke and mirrors.” I think it’s fair to call it a fraud, for the truth is that the law already permits the only benefit the bill claims to provide, time off for employees who work overtime. Nothing in current law prevents an employer that makes an employee work overtime from paying for that overtime and then providing unpaid compensatory time off to the employee at a later date.

Happy tax day! Here are a few stories we found interesting in the past couple weeks:

• A Tax System Stacked Against the 99 Percent (New York Times)
• Mortgage Interest Deduction Is Ripe for Reform (CBPP)
• How the I.R.S. Hurts Mothers (New York Times)
• African Americans Chained by President Obama’s CPI Proposal (Global Policy TV)
• Sequestration Effects: Cuts Sting Communities Nationwide (Huffington Post)

Around the enactment of the lame-duck budget deal, which permanently extended the Bush-era tax cuts and most  expiring income tax provisions for roughly 99 percent of households, policymakers were claiming to be preventing the largest tax hike in American history. Yet every worker saw their taxes go up between 2012 and 2013.

And during the “fiscal cliff” policy debates, some conservatives (wrongly) warned that full expiration of the Bush tax cuts would push the economy back into recession. Neither event occurred, but enough other fiscal retrenchment is slated for 2013 that the labor market will likely experience renewed deterioration—in large part because the expiring two-percentage-point Social Security payroll tax cut went ignored during the policy debate.

So with tax day upon us, here’s a brief overview of the budgetary and economic impacts of tax changes for 2013. Notably, the relatively well targeted payroll tax cut’s expiration is the tax change overwhelmingly felt by the vast majority of households, whereas other tax changes were rather progressively targeted. Correspondingly, the expiration of the payroll tax cut will exert a fairly sizable drag on economic growth in 2013, whereas tax changes more targeted to upper-income households pose only about one-fifth as much of a drag per dollar.

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A version of this post originally appeared at the Fiscal Times.

Over at Forbes, Tim Worstall didn’t take kindly to an op-ed I authored for The Fiscal Times pointing out that research by two economists, Peter Diamond and Emmanuel Saez, indicates that individual income tax rates are currently well below their revenue-maximizing rates. He accuses me of misrepresenting their work … by completely misrepresenting their work, as well as mine. The crux of his ire with my “propaganda” is this paragraph in my piece:

“Most importantly, recent economic research has shown that productive economic activity is relatively unresponsive to increases in the top income tax rate, and the top income tax rate is well below the levels where it maximizes revenue. Economists Peter Diamond and Emmanuel Saez estimate that the revenue maximizing income tax rate is 73 percent (combing federal, state and local taxes).”

Worstall: “No, that is not what that paper says. What it does say is that in a tax system with no allowances then that peak of the Laffer Curve, that revenue [maximizing] rate, is 73 percent. What it also says is that the peak in a system with allowances is more like 54 percent.”

Nope, that’s totally wrong. What the paper says — it’s on page 7 — is that in today’s system the best estimate of the revenue-maximizing rate is 73 percent. Period.

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