For those of you that aren’t news junkies, Mitt Romney was caught on tape at a May 17 fundraiser proclaiming: “Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect. … My job is not to worry about those people. I’ll never convince them that they should take personal responsibility and care for their lives.” Here’s a look at these 47 percent of Americans and why his suggestion that they don’t take personal responsibility for their lives is complete nonsense.

1) The 47 percent are mostly employed or elderly: More than 80 percent of the 47 percent that don’t pay federal income tax are either elderly or are employed (and thus still pay the payroll tax). The remaining tax units overwhelmingly make less than $20,000 a year (which is below the federal poverty line for a family of four).

2) Today’s nontaxpayers (federal income tax, that is) are tomorrow’s or yesterday’s taxpayers. Contrary to Romney’s implication, these are not two distinct groups; rather, people go back and forth between the two groups over their lifetime. In fact, most of the 47 percent are either seniors who already paid federal income taxes over the course of their working life or young people who will do so once they hit their mid-20s. By the time they reach 50, there’s a nearly 80 percent chance they’ll be paying the federal income tax.Read more

Robert Samuelson’s op-ed in Sunday’s Washington Post argues that the United States has reached or passed “the practical limits of ‘economic stimulus.’” He’s wrong, and much of the evidence he points to on the fiscal side ranges between grossly misleading and simply inaccurate. Several points:

• More fiscal expansion—particularly deficit-financed spending on infrastructure, aid to states, safety net spending, and well-targeted tax cuts—would accelerate economic growth and boost employment. This may be disputed on editorial pages, but it is not disputed by economists paid for their economic analysis. See analyses from Moody’s Analytics, Macroeconomic Advisers, or EPI’s own analysis of President Obama’s American Jobs Act, most of which Congress has not acted upon. Claims to the contrary are also belied by concern about the so-called “fiscal cliff” professed by both sides of the political aisle; politicians are worried that budget deficits closing too quickly will push the economy into a double-dip recession, as the Congressional Budget Office has forecast under its current law baseline.
• The point of the American Recovery and Reinvestment Act (ARRA) and subsequent ad hoc fiscal stimulus was to boost aggregate demand, not primarily “to inspire optimism by demonstrating government’s commitment to recovery.” Increased aggregate demand from ARRA kicking in and ramping up was responsible for arresting the economy’s rapid contraction in 2009 and the simultaneous deceleration (and eventual reversal) of job losses, not the confidence fairy.Read more

The Obama administration announced another trade case against China, this one focused on China’s blatant, illegal subsidies to exporters of auto parts. These subsidies have helped China take a growing share of the huge U.S. auto parts market, at a cost of tens of thousands of good manufacturing jobs. EPI researchers reported on the breadth and depth of these illegal subsidies earlier this year and warned that they threatened to decimate employment in the U.S. industry just as it got back to its feet after the Great Recession. As EPI’s Rob Scott and Hilary Wething wrote in January: “Chinese auto-parts exports increased more than 900 percent from 2000 to 2010, largely because the Chinese central and local governments heavily subsidize the country’s auto-parts industry; they provided $27.5 bil­lion in subsidies between 2001 and 2010 (Haley 2012).” The U.S. trade deficit in auto parts with China reached $9.1 billion in 2010 and has continued to grow.

It’s great to see President Obama stand up for fair trade, even if the timing is provoking some skepticism in the media. As I’ve pointed out to several reporters, Republican presidential nominee Mitt Romney has been calling on Obama to get tougher on China’s unfair trade practices. Romney can hardly complain when the president does exactly what Romney recommends. And with tens of thousands of good jobs at stake, it would have made no sense for Obama to delay this case until after the election; every month of delay would just mean more bankrupt manufacturers, more plant closings, and more jobs lost.

The administration, following its standard, cautious practice, has not tackled the full extent of illegal Chinese subsidies. Rather, it’s gone after the low-hanging fruit, the clearly prohibited, high-profile, publicly reported, targeted subsidies that depend on export volume. There’s much more to do. In a report for EPI, Usha Haley, Professor of International Business at Massey University in New Zealand, documented more than $27 billion in Chinese government subsidies to the auto parts industry from 2001 to 2011 and identified another $11 billion in subsidies planned for the future. Preventing this massive intervention will be critical if the U.S. auto parts industry is to get back on its feet, let alone to thrive and grow. The case announced today was a logical place to start.

I’m told that it’s the one-year anniversary of the beginning of the Occupy Wall Street (OWS) activities. Smarter political minds than mine can tell you why OWS either mattered or not, or matters still or not. My quick take on them (a wholly unoriginal one) is that they introduced an element into the economic conversation that was not simply obsessing about the size of the budget deficit and how to reduce it.

Given that this deficit conversation was  inane and destructive, the OWS movement deserves great credit for breaking it up. Further, given that the element OWS introduced in the nation’s conversation—the growth of inequality in recent decades—is the most important economic trend in the past generation, they deserve even further credit; they didn’t just interrupt a dumb conversation, they tried to start a relevant one.

We tried to argue that many of the claims of the OWS movement were well-supported by economic-data—see our paper here. Since then, we have released our newest edition of The State of Working America—see the website (and data) here—which further cements the case that inequality was  the primary barrier to decent growth in low– and middle-income households living standards, and which links the growth of this inequality to intentional policy decisions made explicitly to redistribute income upwards. Read more

Four years ago, we published Grading Education: Getting Accountability Right. We surveyed national samples of adults, school superintendents, state legislators and school board members and concluded that they all supported a balanced set of goals for public education, including not only basic skills but also reasoning, social skills, preparation for civic participation, a good work ethic, good physical and emotional health, and appreciation of the arts and literature. Accountability systems based heavily on basic math and reading skills will undermine these balanced goals by creating incentives to shift instruction towards those aspects of the curriculum on which the school or teachers are being evaluated.

You can read the introduction and summary of Grading Education for more. You can also look at a summary of the goals survey. In addition, a chapter summarizing how other fields—medicine, job training, law enforcement—have learned about the dangers of standardized accountability was published separately. And an appendix reprints a sample of letters and statements we have received from teachers describing how standardized testing, and preparation for it, has destroyed creative and successful curricula and instruction nationwide.

EPI assembled a group of prominent testing experts and education policy experts to assess the research evidence on the use of test scores to evaluate teachers.Read more

Ben Bernanke made news yesterday by committing to provide more accommodative monetary policy in an effort to spur a faster recovery—and specifically linking his moves to the Federal Reserve’s disappointment in the labor market recovery so far.

This is a welcome, if still insufficient, development.

Bernanke’s move comes after a widely-circulated paper by Michael Woodford was presented at the Fed’s Jackson Hole conference. The paper argued that the main beneficial impact of Fed easing was through its impact on expectations—that is, if the Fed could convince the public that it will not pull the plug on its support to the economy even if inflation begins to pick up, then they can convince businesses and households to start spending (the mechanisms is that the higher expected inflation rates can drive real interest rates lower even as the Fed’s nominal policy interest rates are stuck at zero). Woodford argues that the most powerful way these expectations are changed are simply through the Fed’s “forward guidance,” or, well, talking.

This raises two quick issues. Read more

It was bound to happen, whether in Chicago or elsewhere. What is surprising about the Chicago teachers’ strike is that something like this did not happen sooner.

The strike represents the first open rebellion of teachers nationwide over efforts to evaluate, punish and reward them based on their students’ scores on standardized tests of low-level basic skills in math and reading. Teachers’ discontent has been simmering now for a decade, but it took a well-organized union to give that discontent practical expression. For those who have doubts about why teachers need unions, the Chicago strike is an important lesson.

Nobody can say how widespread discontent might be. Reformers can certainly point to teachers who say that the pressure of standardized testing has been useful, has forced them to pay attention to students they previously ignored, and could rid their schools of lazy and incompetent teachers.

But I frequently get letters from teachers, and speak with teachers across the country who claim to have been successful educators and who are now demoralized by the transformation of teaching from a craft employing skill and empathy into routinized drill instruction using scripted curriculum.Read more

Rebecca Mead understands what too many of my friends do not. In an excellent blog post for the New Yorker, Mead warns that the neo-liberal education “reform” movement is not primarily about improving educational opportunities for poor, urban minority students. It’s about breaking teachers unions.

Chicago is currently ground zero for the so-called reformers, and Mayor Rahm Emanuel is their latest champion, picking up the same cudgel that Joel Klein and Michelle Rhee wielded in New York and Washington, D.C. Emanuel has provoked a strike by 29,000 school teachers, refusing to settle unless the teachers’ union gives in to high stakes testing.

Rhee once admitted that she would be happy to see the entire D.C. school system turned over to private charter schools, and my guess is that Emanuel feels the same way about Chicago. Chicago’s public school teachers, who devote their lives to the education of the city’s poor, mostly minority children, know the direction Emanuel and his school CEO are heading; they’ve seen Arne Duncan and his successor close schools, charterize schools, increase class sizes, and divert money from the school budget.Read more

As the Chicago public schools  teachers strike continues, with no resolution of the  conflict in sight, the mayor and CEO might do well to reflect on two key lessons imparted by a scholar whose research on Chicago school reforms is universally hailed as in-depth, groundbreaking, and unimpeachable. Anthony Bryk is the creator of the Consortium on Chicago School Research and current president of the Carnegie Foundation for the Advancement of Teaching.

Bryk and his CCSR colleagues’ 2010 book, Organizing Schools for Improvement: Lessons from Chicago, has become a bible for evidence-based education policymakers across the country. While their data and methods are so complex that the authors advise many readers to skip the long chapter explaining them, two key findings jump out as relevant to the battle being waged now in Chicago over the current round of attempted reforms.

First, Bryk says, contrary to current popular reform policies, which advocate relatively quick-fix single-shot changes like replacing teachers or principals, turning over schools to new management, or closing them altogether, improving a school and sustaining those improvements is a complex, long-term process. Indeed, after much mulling, he and his colleagues liken the process most closely to that of baking a cake. It requires five ingredientsRead more

Although Hispanic and black families have the highest poverty rates of the major racial and ethnic minorities, the latest poverty data holds some positive news. The poverty rate for Hispanic families with children under 18 years old declined 1.6 percentage points (Figure A). Black families showed a 1.1 percentage-point decline, but this decline was not statistically significant. Non-Hispanic white and Asian American families had small increases that were not statistically significant.

By family type, for all families with children under 18 years old, only families headed by single1 fathers showed a real decline.Read more