Last night’s vice presidential debate was a good, lively, back-and-forth between Vice President Joe Biden and Rep. Paul Ryan (Wis.). The statement I singled out below was one that I found troubling (among a few)—and one that does a huge disservice in informing American voters on what changes in tax policy essentially mean. About halfway through the debate, Ryan said:

“Now, we think that government taking 28 percent of a family and business’s income is enough. President Obama thinks that the government ought to be able to take as much as 44.8 percent of a small business’s income.”

Far too often when discussing tax policy you will hear lawmakers and pundits use phrases such as the one above—government is “taking X percent of a family’s or a business’s income.” This, whether purposeful or not, unfortunately promotes misinformation regarding how tax rates work. A voter might hear something like what Ryan said and think, “I make $200,000, which puts me in the 33 percent bracket, which means government is literally going to take $66,000, or around a third of my total income, in taxes ($66,000 is 33 percent of $200,000).” This is wrong on a number of levelsRead more

Sen. Paul Wellstone (D-Minn.) was an inspiration to millions, an unrelenting advocate for the poor, for the disabled, for victims of domestic violence, and for the powerless in our society. When Wellstone and his wife and daughter died in a plane crash 10 years ago, along with staff members and the plane’s crew, the nation lost one of its most important and original voices. We also lost one of our most effective advocates for decency in political life, for justice, and for peace in the world.

We were honored to work closely with Sen. Wellstone on issues of worker safety, labor standards, unemployment insurance, and budget policy. After his death, EPI named its conference room the Paul Wellstone Room, and in our work we still look to his example and courage in telling the truth, fighting for the well-being of the poor and all working families, and treating everyone with the respect and dignity they deserve.

In These Times has published a remembrance of Sen. Wellstone, written by Peter Dreier of Occidental College, that captures how rare he was and what a tremendous loss his death was to Minnesota, to the United States, and to the world.

In the vice presidential debate last night, Rep. Paul Ryan (Wis.) cherry-picked statistics from the Congressional Budget Office on the number of people covered by employer-sponsored health insurance once the Affordable Care Act (ACA) takes full effect. Several fact-checkers (PolitiFact, Washington Post, CNN, Huffington Post, Wall Street Journal, Think Progress) have already challenged his assertion that 20 million people would lose their employment-based health insurance. His number comes from a CBO report, which explored various extreme scenarios for employers under the ACA. That report states: “in CBO and JCT’s judgment, a sharp decline in employment-based health insurance as a result of the ACA is unlikely.”

What’s often left out of this story is the fact that, even in this extreme and unlikely scenario, 29 million more Americans will have insurance (under the ACA). Even if the extreme scenario where 20 million no longer retain insurance through their employer, the vast majority of them will be able to find high-quality, fairly-priced insurance through the new exchanges. Unlike today, the insurance exchanges will be well-run insurance markets where consumers can’t be discriminated against for having pre-existing conditions and where many will be offered subsidies to make insurance affordable. Further, as the CBO estimates, it is expected that those who no longer received ESI would receive “an increase in taxable wages and salaries.”

In that same report, the CBO illustrates another scenario where 3 million more Americans would receive employment-based insurance under the ACA. Their best guess was 5 million fewer, and 31 million more insured overall. So, while the scenario Ryan cherry-picked is highly unlikely, if it comes to bear, Americans without employer-sponsored health insurance will still be captured by the ACA safety net.

The budget plan of Republican presidential nominee Mitt Romney includes large unspecified consequences; these are tallied here, and the complete implications of the plan are briefly illustrated. The tally includes not only the unspecified tax increases his plan dictates that have been the subject of much debate, it also includes the less-discussed unspecified budget cuts necessitated by a proposal to cap federal outlays at 20 percent of the economy.

• To meet Romney’s commitment to limit spending as a percent of the economy to 20 percent while at the same time increasing defense spending to 4 percent of GDP, would require nondefense spending cuts totaling $6.1 trillion from 2014–2022, according to an analysis by the Center on Budget and Policy Priorities (CBPP). The Romney campaign has proposed only $2.4 trillion of specific spending reductions.  It has not specified the other $3.7 trillion in spending cuts necessary to achieve its budget plan.
• Similarly, over the next decade Romney proposes $5 trillion in tax cuts, a widely-discussed figure that in fact appears to be understated.1 Beyond suggesting possibly capping the dollar value of itemized deductions—doing so could increase taxes on middle-income households and even fully eliminating itemized deductions would not keep upper-income households from receiving a net tax cut—the Romney campaign has not identified any specific changes in tax policies to offset these tax cuts, but in the Oct. 3 debate Romney stated his tax plan would be revenue neutral.
• In combination, over the next decade the Romney budget plan would necessitate $11.1 trillion of spending cuts and tax increases. It specifies just $2.4 trillion of these, thereby hiding $8.7 trillion of painful decisions. Read more

The series of small strikes at Walmart stores around the country reminds me of the first outbreak of what became the Arab Spring, in the sense that it’s so unexpected and requires so much courage that you can’t help being astonished.  Democratic protest at Walmart is rarer than in any Arab dictatorship. Walmart, after all, is far more powerful financially than Tunisia, where the first Arab Spring protest occurred. In fact, Walmart’s $400 billion-plus revenues are about 10 times larger than the entire GDP of Tunisia.

But Walmart is very like Tunisia in two key ways: its workers tend to be impoverished while the benefits of its economic activity accrue to a tiny elite (principally, the Walton family). The World Bank reports that Tunisia is a highly unequal society:

“Tunisia continues to be a low-wage, low-value added economy, unable to absorb an increase in skilled workers. Cronyism and anticompetitive practices allowed a privileged minority to enjoy the lion’s share of the benefits of growth and prosperity.”

The striking Walmart workers’ complaints about poverty level wages contrast sharply with the Walton family’s shocking wealthRead more

“Sleight of Hand,” an article in the November-December issue of The American Prospect, describes how federal, state, and local housing policies, including the public housing program, were designed a half-century ago to segregate our major metropolitan areas, and how the residential patterns created by public policy at that time persist to this day.

The article does so by way of describing the childhood of Joel Klein, former New York City schools chancellor and now CEO of a Rupert Murdoch company selling technology and software to public schools. Klein has often used his life story to prove an educational theory—that poor quality teachers are the cause of disadvantaged children’s failures. The life story is that he grew up poor, in public housing, “a kid from the streets” with little interest in education until a high school teacher “saw something that I hadn’t seen in myself.” And this life story, Klein and his allies imply, proves that if only disadvantaged students today had the kind of teacher from whom he had benefited, they too would excel and succeed. Read more

The last generation has been marked by a stark disconnect between productivity growth (up 80 percent between 1973 and 2011) and slow or stunted wage growth. The real hourly wages of the median worker grew less than 4 percent over this span, and real hourly compensation (wages and benefits) grew only 10.7 percent. The graphic at the end of this post parses this dismal wage record by gender, by wage decile, and by business cycle (wage dated updated through 2012, in June 2013).

For all workers, the erosion of real wages was broad and uneven from 1973 through 1995. The upturn of 1995–2000, the latter part of the 1989–2000 business cycle, brought a brief respite of across-the-board wage growth, some of which spilled past 2000 (although the wage growth from 2000–2007 skews much more to higher earners). The current recession and recovery (2007–2012) have brought with them wage losses for most workers.

For men, the pattern is even starker. Real wages begin falling for low-wage men in the mid-1970s, and this spread across all but the highest percentiles through 1979–1989 and through the first half of the 1990s (1989–1995). The late 1990s brings some relief, but this is short-lived: wage growth grinds to a halt in 2000–2007 and then loses ground—for all but highest earners—from 2007–2012.

For women, wage growth has been generally stronger. All wage levels show growth of at least 8 percent over the full 1973–2012 span, although the gains at the top (almost 60 percent for the 90th percentile, more than 70 percent for the 95th) are much more dramatic. Read more

I decided to dig a bit deeper into Bureau of Labor Statistics (BLS) data to gauge the divergence of employment growth in the household survey and the establishment survey in September and recent times. It is, after all, the divergence between these two series in September’s jobs report that generated outrageous charges of BLS economists manipulating the data (the household survey showed employment growth of 873,000 in September, which pushed the unemployment rate down to 7.8 percent from 8.1 percent in spite of a surge of new workers into the labor force).

The BLS, being the highly professional agency that it is, provides documentation on how the two series differ and compares the trends obtained in each series on an apples-to-apples basis (or, as close as they can get it); this information is available when the numbers are released each month. That is impressive, by the way. BLS will also share, on request, a spreadsheet providing the actual adjustments made to reconcile the two series over the last 12-month period (using “not seasonally adjusted” data, which is why they show it for the same month a year apart).

The bottom line is that the household survey has shown comparable employment growth as the payroll survey over the last year and less employment growth than in the payroll survey since the trough in June 2009. That’s pretty strong evidence that the trends in the household survey are not spectacular or implausible Read more

Wednesday night, Republican presidential nominee Mitt Romney added to the myriad of promises that make up his part-exceptionally detailed, part-mystery meat tax agenda—promising that none of his tax cuts would add to the deficit, that the middle class would see a tax break, and that upper-income households would see no tax break. Yesterday, I explained at length why these pledges, coupled with his specific tax cutting plans that cannot be written off, are mathematically impossible. Romney’s tax plan didn’t add up before Wednesday night, and it’s now further into the realm of fantasy. But the Washington Post’s Robert Samuelson didn’t get the memo; instead he’s drinking Romney’s tax cut Kool-Aid.

Essentially, Samuelson is giving greater weight to vague promises—promises that don’t add up, mind you—than to the very detailed plan Romney has laid out for cutting individual and corporate income taxes and eliminating the individual and corporate Alternative Minimum Taxes, estate tax, and Affordable Care Act taxes, among other tax cuts. In doing so, he unjustifiably criticizes President Obama for Read more