Economic Links: 9-29

Here's the explanation from S&P as to why they downgraded America's credit rating

here's a chart of job losses during this downturn compared to all downturns since the Great Depression

This piece compares Congress' reaction to the Great Depression in 1934 and the Great Recession today

According to the WSJ, wealthier households pay more than their fair share of taxes

According to The Economist, during past budget crunches we've been more willing to raise taxes

Also according The Economist's calculations, the US has lower effective tax rates on a $100K income than most other developed countries

Here's the original op-ed by Warren Buffet, and Obama's budget suggesting we should adopt "the Buffet Rule"

Here's an update on the Deficit Panel (or "supercongress") which is facing pressure to go beyond their original  debt cutting mandate

Here's what Americans are spending less on during this economic downturn

Here's a chart of our debt to GDP ratio throughout our nation's history

And here's a chart of the same ratio for all the world's countries

Here's an interactive exploration of the deficit and would it would take to balance the budget

here's how most readers decided to close the deficit

Links, 9-26-11

The biggest news is that Congress has reached a deal to avoid a government shutdown.  Or, perhaps more accurately, FEMA's budgeting pre-empted the debate from continuing.  Republicans wanted to offset federal disaster spending with other cuts while Democrats did not . . . FEMA says it now thinks it has just enough money to fit aid for the latest floods, hurricanes, etc. into its normal operating budget.

Rick Perry still has a large lead in the latest poll on the Republican primaries, but the same poll also finds that Romney is more likely to beat Obama next November.  As the race has increasingly focuses on these two candidates, they have traded barbs -- with Perry now focusing on Romney's well-to-do background.  Meanwhile, many remain unhappy with their choices and are eager for others, particularly NJ Governor Chris Christie to join the race . . . Nate Silver asks whether Chris Christie's potential entrance into the presidential race is a bigger threat to Mitt Romney or Rick Perry.

Obama announced that states would be given waivers to the No Child Left Behind law, which both avoids dramatic increases in the number of schools declared failing over the next three years and circumvents partisan bickering in Congress.

Liberal sites have given a lot of attention to Massachusetts Senatorial Candidate Elizabeth Warren's statement about the "social contract" and "class warfare" while on the campaign trail.  Here's a conservative rebuttal.

Here's a delicious (pun intended) political story about potatoes.  The new recommendations from the USDA call for far fewer potatoes to be served in schools in order to make breakfasts and lunches healthier . . . so members of Congress from both sides of the aisle who reside in large potato producing states (e.g. CO and ME) are banding together to make sure the new rules aren't put into place.


Joshua Holland runs down eight policies Republicans used to support, but now oppose

Links, 9-22-11

Despite House Speaker John Boehner's assurances that the bill would pass, the House yesterday failed to pass a temporary spending bill that would allow the government to function from October 1st through November 18th and provide aid to victims of the recent hurricanes, wildfires, tornadoes, and floods.  6 Democrats voted "yes" and 48 Republicans voted "no".

Democrats remained nearly united against the measure because they saw the amount of disaster assistance — $3.65 billion — as inadequate, and they objected to the Republicans’ insistence on offsetting some of the cost with cuts elsewhere.

The vote also showed the Republican leadership’s continuing struggle to corral the most conservative members of the caucus, as more than 40 Republicans rejected the measure because they did not believe it cut spending enough.

Since Republicans control the House, they could go back to the drawing board and devise a plan to placate some of those 48 members that would then pass.  But the Democrats control the Senate and Majority Leader Harry Reid and Minority leader Mitch McConnell already passed a bill supported by Democrats and 10 Republicans that provides twice as much disaster assistance.


The other big news of the day was that Troy Davis, a convicted murderer, was put to death in Georgia.  After years of appeals and protests, thousands of people in the United States and around the world had come to believe that Davis was innocent.  After delivering a petition signed by 630,00 people -- including 51 members of congress -- to the Georgia Parole Board, supporters were hopeful.  But the Parole Board voted 3-2 in favor of rejecting the appeal.

The Supreme Court briefly delayed the execution last night, but declined to stay the execution and removed the last legal hurdle around 11pm.  The Supreme Court has shown an increasing reluctance to intervene in death penalty cases since the retirement of Sandra Day O'Connor shifted the court rightward.  O'Connor was replaced by Anthony Kennedy, formerly considered a member of the conservative wing of the court, as the swing vote.  New Chief Justice John Roberts has led an ascendant conservative wing consisting of Clarence Thomas, Antonin Scalia, and Samuel Alito to a record number of 5-4 decisions in which the liberal wing (consisting of Obama appointees Elena Kagan and Sonia Sotomayor, Stephen Breyer, and Ruth Bader Ginsburg) has consistently formed a 4-vote minority.

Links, 9-21-11

Rick Perry is solidifying his reputation as an excellent fundraiser, which likely will only help his current lead in the polls.  Especially since NJ Governor Chris Christie and House Budget Chair Paul Ryan have both declined to run on multiple occasions.

Forbes released their annual list of the 400 wealthiest individuals in the country.  Despite the economic downturn, the group did quite well last year.  Bill Gates maintained his top spot, and Mark Zuckerberg was the biggest gainer.

I posted earlier in the week that Obama's tough stance on the debt negotiations was due largely to the fact that he felt that House Speaker John Boehner had refused to negotiate in good faith the last time around.  It should be no surprise, then, that Boehner is now on the attack against Obama and his jobs plan:

Watching the president here over the last couple of weeks has been a bit disappointing, and it’s been a bit disappointing because it’s pretty clear that the president’s decided to forget his role as president and leader of our nation in a time of economic uncertainty and to begin the campaign for his reelection some 14 months away. Our country needs leaders.

Obama's Deficit Plan

Yesterday, President Obama unveiled his deficit plan  -- which would lower the deficit by a total of $3.1 trillion over 10 years (according to the CBO) through a variety of spending cuts and around $1 trillion in tax increases.  But the big news was the new tone he took in the speech.  For most of his term Obama has tried to present himself as the centrist or the reasonable adult when proposing new ideas (which, he would emphasize, are compromises between the desires of the two parties).  With his approval rating at an all-time low, frustration growing about the Democratic base, and still smarting from what the administration perceived as three slaps to the face by House Speaker John Boehner, his tone turned more strident and he promised to veto any plan that did not include tax increases.

“I will not support — I will not support — any plan that puts all the burden for closing our deficit on ordinary Americans. And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share,” Mr. Obama said. “We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”

David Brooks writes that this signals a return to politics as usual, headlining his op-ed "Obama Rejects Obamaism".  In a news analysis, the NY Times writes that

This time, rather than trying to identify common ground, the administration is entering the negotiations in the same kind of tough position that Republicans adopted during the debt-ceiling debate, emphasizing the traditional financial priorities of the Democratic Party.

Meanwhile, Congressional Republicans focused on the fact that much of the spending cuts included in the plan would already happen anyway (e.g. savings from reducing troops in Afghanistan and Iraq) and criticized the plan as "class warfare."

The Jobs Bill

Unemployment has been stubbornly high for years now: while the stimulus package likely saved or created somewhere near the goal of 4 million jobs, the country lost 8.8 million jobs during that time frame -- resulting in the current 9.1% unemployment rate.  Many are starting to believe that something new is necessary to spur more job creation.

On September 8th, President Obama addressed a joint session of Congress to propose a new jobs bill (here's a handy chart and summary) composed of an extension of payroll tax cuts, hiring incentives for businesses, an infrastructure bank, and aid to local and state governments, and paid for by the elimination of various tax breaks for businesses and the wealthy.

Polling guru Nate Silver breaks down all the recent polls on the various parts of the plan and finds that, much like the health care plan, the individual pieces are mostly popular among Americans.  As such, he predicts that Democrats will focus on advocating for the individual pieces while Republicans will campaign against the bill as a whole, or even just the idea of the bill.  Expect to hear the word "jobs" from Democrats and the word "stimulus" from Republicans.

Liberal columnist Paul Krugman, who has long criticized Obama's economic plans for not being bold enough, writes

I was favorably surprised by the new Obama jobs plan, which is significantly bolder and better than I expected. It’s not nearly as bold as the plan I’d want in an ideal world. But if it actually became law, it would probably make a significant dent in unemployment.

Conservative columnist David Brooks writes that he can support a portion of the bill even though it is, in a lot of ways, another stimulus package

There is clearly now a significant risk of a double-dip recession. That would be terrible for America’s workers, fiscal situation and psyche. This prospect is enough to shock even us stimulus skeptics out of our long-term focus. It’s enough to force us to contemplate the possibility of another stimulus package . . . 

Personally, my bottom line is this: I think the president has earned a second date. He’s put together a moderate set of stimulus ideas. His plan may not be enough to jolt prosperity, but it might maintain its current slow growth.

Some firms, however, say they won't dramatically increase hiring because of the bill.

Links 9-7-11

*Thomas Friedman writes that Obama's jobs speech tomorrow is an excellent time for some truth-telling.  He writes about a recent column that argues dictatorships and democracies are failing for the same reason: they're not telling the truth to their citizens.

Can you remember the last time you felt a national leader looked us in the eye and told us there is no easy solution to our major problems, that we’ve gotten into this mess by being self-indulgent or ideologically fixated over two decades and that now we need to spend the next five years rolling up our sleeves, possibly accepting a lower living standard and making up for our excesses?

He also uses the upcoming 9/11 anniversary to compare our nation's response to 9/11 to our nation's response to the cold war: "we used the cold war and the Russian threat as a reason and motivator to do big, hard things together . . . We used the cold war to reach the moon and spawn new industries. We used 9/11 to create better body scanners and more T.S.A. agents."

*Local cigarette smokers have found a loophole in the tobacco tax laws.  Since only manufactured cigarettes are taxed, they can visit local tobacco shops, purchase tobacco and rolling papers, and put them in the new tobacco rolling vending machines.

*An op-ed from Sunday argues that research has found that happier workers work harder but that this seems to be forgotten by companies and bosses.  More specifically, the simple act of making progress contributes more to worker satisfaction than any other factor . . . but supporting progress was ranked dead last by managers when surveyed as important motivators for their employees.

*What's the best way to tell how badly damaged a location is during hurricane season?  The Waffle House Index has been suggested.

Links, 9-6-11

Liberals and environmental groups are fuming after Obama backtracked on his promise to have the EPA enforce stricter ozone pollution limits.  Said the director of moveon.org, a leading liberal group, “Stuff like this is devastating to the hope and passion that fuels the volunteers that made the president’s 2008 campaign so unique and successful.”

The US Postal Service is on the verge of bankruptcy due to a confluence of factors.  Law mandates that they must have post offices, and deliver mail to, even the most isolated, rural locations, that postage can be raised no faster than inflation, and that mail must be delivered 6 days per week.  Meanwhile, contracts with postal workers' unions and a massive decline in mail (due to both the internet and the recession) have reduced business without reducing payrolls.

Robert Reich discusses perhaps the largest economic question for the future of America: what should we do about the declining middle class?  Over the past 30 years, the incomes of the wealthiest Americans have skyrocketed while the rest of the workers' wages have been virtually flat.  In the past, increases in productivity yielded increases in wages, but the two have split the last 30 or so years -- due, mostly, to a combination of globalization, computers, and the decline of unions.

For related reasons, Jim Hoffa -- a major union leader -- over the weekend called many American companies unpatriotic for not spending money on American workers.

A recent poll found that 8 in 10 Americans believe we're currently in a recession (officially, we're not), which might be related to the job numbers released last week . . .