John Irons's Blog


Economic News, Data and Analysis

Opinions on Taxes for Tax Day

Views of Income Taxes Among Most Positive Since 1956

A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is “about right,” with 46% saying “too high” — one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.

Filed under: Economics, Fiscal Policy

No clue

No clue…

Katrina’s Cost May Test GOP Harmony
Congressional Republicans from across the ideological spectrum yesterday rejected the White House’s open-wallet approach to rebuilding the Gulf Coast, a sign that the lockstep GOP discipline that George W. Bush has enjoyed for most of his presidency is eroding on Capitol Hill.
Trying to allay mounting concerns, White House budget director Joshua B. Bolten met with Republican senators for an hour after their regular Tuesday lunch. Senators emerged to say they were annoyed by the lack of concrete ideas for paying the Hurricane Katrina bill.
“Very entertaining,” Sen. John McCain (R-Ariz.) said sarcastically as he left the session. “I haven’t heard any specifics from the administration.”
“At least give us some idea” of how to cover the cost, said Sen. Conrad Burns (R-Mont.), who is facing reelection in 2006. “We owe that to the American taxpayer.”
The pushback on Katrina aid, which the White House is also confronting among House Republicans, represents the loudest and most widespread dissent Bush has faced from his own party since it took full control of Congress in 2002. As polls show the president’s approval numbers falling, there is growing concern among lawmakers that GOP margins in Congress could shrink next year, and even rank-and-file Republicans are complaining that Bush is shirking the difficult budget decisions that must accompany the rebuilding bonanza.

Filed under: Economics, Economy, Fiscal Policy

Wal-Mart Finally Buys US “Products”

Wal-mart, famous for buying goods primarily from China, finally decides to by American.
This seems to be a pretty good return on investment… – Wal-Mart family lobbies for tax cuts
Led by Sam Walton’s only daughter, Alice, the family spent $3.2 million on lobbying, conservative causes and candidates for last year’s federal elections. That’s more than double what it spent in the previous two elections combined, public documents show.
The Waltons declined to discuss their political activities. But a USA TODAY review of public documents reveals a small-town Arkansas family emerging as a political juggernaut on tax issues, extending Wal-Mart’s influence over U.S. society even more.
The Walton support for Bush and other fiscal conservatives assumed new urgency last month when Wal-Mart sweetened its dividend — boosting Walton dividend income above $1 billion a year. Bush’s dividend tax cut, enacted two years ago and set to expire in 2009, will save the family as much as $51 million this year.

Filed under: Fiscal Policy

Budget Failures

Budget Failures – Center for American Progress
“While temporary deficits in times of recession are seen by many to be a logical and desirable result of an economic downturn, the current situation is an undesirable failure of policy.”

Filed under: Economics, Economy, Fiscal Policy

Jobs and Tax Cuts

Worth a read:

American Prospect Online – ViewWeb

The Bush administration has a mantra that we hear whenever some jobs are created: “The tax cuts are working.” But are they? Mark Zandi, president of and a highly respected economic forecaster, gave us the answer in a new report analyzing the factors in the past three years of growth; the administrationís tax cuts, principally for the rich, have had very little to do with it. Increased government spending (particularly on defense) and tax cuts for middle- and lower-income people each contributed more to growth than tax cuts for higher-income people.

The heaviest lifting by far in response to the recession and sluggish recovery has come from lower interest rates. But what the Bush policies failed to fix is only half of this story. Zandi makes the point that better policies could have given us 2.6 percent higher GDP in 2003 and two million more jobs in 2004. Economic performance that vigorous would have, in turn, cut our current fiscal deficit in half. As an engine of growth and jobs, the administrationís policies have clearly been second-rate.

The Bush administration canít possibly believe its own rhetoric that any and all jobs created are due to the tax cuts. After all, the administrationís own regular forecasts since early 2002 have consistently shown that employment would be growing even without any change in policy. Nor have tax cuts been the only policy response to the recession; as Zandi points out, extraordinarily low interest rates (thank you, Federal Reserve Board) have led to stronger housing and auto sales, high levels of cash-out mortgage refinancing, and more business investment.

Filed under: Economics, Economy, Fiscal Policy, Policy

Greenspan on Tax Policy

Alan Greenspan is not so keen on current economic policy…

Greenspan: Odds favor job growth, worries about deficit – Nov. 6, 2003
“Recent budget deliberations are not encouraging,” he said. “The current debate appears to be about how much to cut taxes or how much to increase spending. No significant constituency seems to support taking the actions that will be necessary to move toward, and one hopes achieve, budget balance.”
Greenspan warned that, as Baby Boomers begin to retire and draw down Social Security and Medicare payments within the next decade, the budget picture will get considerably worse, if current tax and spending policies are maintained.
“Such a development could have notable, destabilizing effects on the economy,” he said.

Filed under: Fiscal Policy

Behind the Curve

We’ve had three tax cuts in the past three years, all of which were supposed to have stimulated the economy and added jobs.
So what policy do we need now? More stimulus! (or so says Madrickin the NY Times).

Stimulus Should Focus on Jobs

Many people criticized President Bush’s “growth” policies ó mostly tax cuts on income and dividends weighted toward the well-off ó for providing too little bang for a buck’s worth of stimulus. This seems ever truer.

Given the disturbing state of the economy, a jobs program is what the nation now needs. It might even be just what the electorate wants to hear.

Filed under: Economy, Fiscal Policy, Policy, Politics, Recession

Revising History

It seems that President Bush is running around claiming that he “inherited an economy in recession.” (See below.)
Just to be clear, the NBER declared the beginning of the recession to be in March 2001, AFTER the current administration took charge.
This isn’t to say that Bush somehow caused the initial recession (although it certainly didn’t help that VP Cheney was running around in the country in late 2000 and early 2001 telling everyone how the economy was in bad shape.)
It is also unlikely that the recession was caused by any Clinton policy – the recession was largely a result of decreases in business investment – and the federal government simply didn’t do anything in the late 1990s that would have had a significant impact on the short-run macroeconomic situation.
The important question is not whose fault is the recession, but rather what has been the response of the administration to the economic situation. We have seen 3 major tax cuts – one per year – totaling around $1.75 trillion over ten years (and this is a gross underestimate since the cost assumes that many of the provisions are allowed to sunset) each of which were sold as economic and job stimulus, but which in reality had very little to do with good counter-cyclical fiscal policy, or with the current economic problems.
The result? Unemployment continued to increase and is up to 6.1%, and there have been 2.5 million jobs lost since March 2001. As a result of the revenue reductions from the tax cuts and the weak economy, the federal budget has gone from a record surplus to a record $400 billion deficit.
We are continually told that the Republican Party is a supporter of personal responsibility. The administration should not be playing the blame game when it comes to the economy, and should take responsibility, at the very least, for the ineffectual policy response and the current dismal budget situation.
The original NBER announcement
The latest update

As 2004 Nears, Bush Pins Slump on Clinton (
With the start of his reelection campaign in the past two weeks, President Bush has revived his pastime of blaming his predecessor, Bill Clinton, for the economic recession.
“Two-and-a-half years ago, we inherited an economy in recession,” he told donors at a Bush-Cheney ’04 reception yesterday in Miami. He has raised the same accusation in fundraising appearances since mid-June in Washington, Georgia, New York, Los Angeles and San Francisco.
It’s a good applause line for a crowd of red-meat political supporters. The trouble is it’s a case of what the president has called, in another context, revisionist history. The recession officially began in March of 2001 — two months after Bush was sworn in — according to the universally acknowledged arbiter of such things, the National Bureau of Economic Research. And the president, at other times, has said so himself.
The bad news came on Nov. 26, 2001. The NBER, led by an informal economic adviser to Bush, Martin Feldstein, pronounced that economic activity peaked in March 2001, “a determination that the expansion that began in March 1991 ended in March 2001 and a recession began.”
At the time, Bush accepted the verdict with perfect accuracy. “This week, the official announcement came that our economy has been in recession since March,” he said in his radio address the next weekend. “And unfortunately, to a lot of Americans, that news comes as no surprise. Many have lost jobs or seen their hours cut. Many have seen friends or family laid off. The long economic expansion that started 10 years ago, in 1991, began to slow last year. Many economists warned me when I took office that a recession was beginning, so we took quick action.”
Until the NBER’s official pronouncement, Bush had avoided the “R” word. He spoke earlier in 2001 of an “economic slowdown” as administration officials noted, correctly, that the pace of economic growth began to slow (but not contract) in 2000, under Clinton’s watch. “In terms of how you call it, what the numbers look like, we’ve got statisticians who will be crunching the numbers and let us know exactly where we stand,” Bush said in October 2001. “But we don’t need numbers to tell us people are hurting.”

Feldstein’s NBER, which earlier said it gives “relatively little weight” to the quarterly growth figures from Commerce, is not joining in the revision. Two weeks ago, it issued an updated report sticking by its assessment that the recession began in March 2001.

Filed under: Economics, Economy, Fiscal Policy, Policy, Politics, Recession

The Rich are Getting Richer

Data from the IRS shows that the average income of the 400 wealthiest US taxpayers was $173.9 million in 2000. On average they paid 22.4% of their income in taxes.
With recent tax changes, their average tax burden is likely to be even smaller.
According to the Times, “[h]ad President Bush’s latest tax cuts been in effect in 2000, the average tax bill for the top 400 would have been about $30.4 million ó a savings of $8.3 million, or more than a fifth, according to an analysis of the I.R.S. data by The New York Times. That would have resulted in an average tax rate of 17.5 percent.”
Can I be rich too? Please?
Click for:
Data on the top 400
Data on the returns with income over $200,000

Very Richest’s Share of Income Grew Even Bigger, Data Show
The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in the year 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service. But their tax burden plummeted over the period.
The data, in a report that the I.R.S. released last night, shows that the average income of the 400 wealthiest taxpayers was almost $174 million in 2000. That was nearly quadruple the $46.8 million average in 1992. The minimum income to qualify for the list was $86.8 million in 2000, more than triple the minimum income of $24.4 million of the 400 wealthiest taxpayers in 1992.
While the sharp growth in incomes over that period coincided with the stock market bubble, other factors appear to account for much of the increase. A cut in capital gains tax rates in 1997 to 20 percent from 28 percent encouraged long-term holders of assets, like privately owned businesses, to sell them, and big increases in executive compensation thrust corporate chiefs into the ranks of the nation’s aristocracy.
This year’s tax cut reduced the capital gains rate further, to 15 percent.

Filed under: Data, Economics, Fiscal Policy

No Excuse

There is no excuse for this Republican delay.

Low-Income Child Tax Credit Must Wait, Republicans Say
Senate Republican leaders said today that because of the press of Medicare legislation, there would be no agreement with the House this month to increase the child tax credit for 6.5 million low-income families.
The announcement means that a final compromise on the credits, if one is reached, may not come until after the government begins sending checks of $400 a child to middle-class families.
The checks, to be sent to about 25 million families, will be mailed starting the week of July 25. Because the House and Senate have been unable to reach agreement on how to proceed with the credits for low-income families, which were left out of the tax bill signed by President Bush last month, the checks for those families could not go out until mid-September at the earliest, Treasury officials have said.

Filed under: Economics, Fiscal Policy, Policy, Politics