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Economic News, Data and Analysis

Stem Cell Research

My father has Multiple Sclerosis – an incurable condition. Current medication options are keeping the progression at bay, but he, like millions of others, need science to move faster.
Bush’s decision to veto more federal funding is shameful. And I mean that literally – he has disgraced his office and himself by using the goverment and the people’s money as if it were his plaything — by not allowing federal funding because he has a personal ideological axe to grind.
And, as the following passage illustrates, his position is morally reprehensible as well. The question is whether embryos that are already slated for the trash can be used instead to find cures for people like my father. Bush says “no”. Those who did not override the veto said “no.” Imbiciles.

Boing Boing: Bush’s threat to veto stem cell funding is morally bankrupt
Bush’s threat to veto stem cell funding is morally bankrupt
Scott Rosenberg of Salon has an excellent blog entry explaining why Bush’s threat to veto federal funding of stem cell research is shamefully ridiculous.

Here is why Bush’s position is a joke: Thousands and thousands of embryos are destroyed every year in fertility clinics. They are created in petri dishes as part of fertility treatments like IVF; then they are discarded. If Bush and his administration truly believe that destroying an embryo is a kind of murder, they shouldn’t be wasting their time arguing about research funding: They should immediately shut down every fertility clinic in the country, arrest the doctors and staff who operate them, and charge all the wannabe parents who have been wantonly slaughtering legions of the unborn. But of course they’ll never do such a thing. (Nor, to be absolutely clear, do I think they should.) Bush could not care less about this issue except as far as it helps burnish his pro-life credentials among his “base.”

Filed under: Policy

Eroding the Publics Right to Know

Good policymaking and accurate evaluation of public policy depends on the public having good information.
Looks like we’re getting less of it these days.

Open The Government – Let’s Reverse the Pattern of Secrecy
OpenTheGovernment.org Releases New 2005 Secrecy Report Card:
Government Secrecy Still Growing with Few Controls
Government agencies are expanding secrecy in many areas, according to the findings of a report released today. The 2005 Secrecy Report Card, the second annual report on secrecy from OpenTheGovernment.org, found secrecy in 2004 extended to more classified activity, more federal advisory meetings, more new patents deemed “secret,” more domestic surveillance, and more new state laws restricting public access to information.

Filed under: Policy

Einstein – 100 years later

——————————————————————————–
From: John Irons
Sent: Friday, April 08, 2005 11:31 AM
To: All Center
Subject: Einstein 100 years later
FYI – 2005 is the 100th anniversary of some of Einstein’s ground-breaking work: 1905 was a banner year for Einstein and all of physics. His 1905 work included papers on special relativity (including the famous E=mc^2 equation), some work on Brownian motion, and on black-box radiation which in part led to modern quantum mechanics (and a Nobel Prize).
There is a very good op-ed in the NY Times on this work, Einstein, and the cosmic implications of the quantum-level work (which Einstein never quite believed!)
Much of this work took years (or even decades) to fully develop and to gain widespread acceptance; but they did change how people think about the world in which we live.
As Keynes said back in ’36, “It is ideas, not vested interests, which are dangerous for good or evil.” And also: “ideas … both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.”
Best,
John
(Actually, the full quotation is from The General Theory of Employment, Interest and Money:
“But apart from this contemporary mood, the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, whom hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.”
You can see why economists love to quote this!)
_____________________________________
John S. Irons, Ph.D.
Director of Tax and Budget Policy
jirons@americanprogress.org

Filed under: 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 Economy.com 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 administration’s 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 administration’s policies have clearly been second-rate.

The Bush administration can’t possibly believe its own rhetoric that any and all jobs created are due to the tax cuts. After all, the administration’s 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

House preserves $100,000 per person in tax breaks for millionaires

OMB Watch – Federal Budget – Weblog
The House of Representatives has declined to limit the massive tax cuts on millionaires. The cuts for millionaires average $120,000 per person; a defeated proposal would have cut that to $24,000.

Daily Report for Executives – House Kills Democratic Plan to Hike Taxes
The GOP-controlled House voted mostly along party lines June 24 to defeat a Democratic-drafted resolution revising the fiscal year 2005 budget resolution (S. Con. Res. 95) by raising taxes $19 billion on those making more than $1 million a year and funneling the funds to deficit reduction and domestic programs.
[…]
Democrats said their plan would ask the richest taxpayers to give up part of their tax cut for one year at a time of war and record deficits when more of the tight federal dollars are directed into defense and homeland security accounts, leaving priorities such as education and health care to feel the budget squeeze.
Specifically, the resolution offered by House Appropriations Committee ranking member David Obey (D-Wis.) would limit the tax cuts of those with adjustable gross incomes of at least $1 million a year in 2005 to $24,000 instead of what Obey said is the $120,000 tax break they would get under current law. Obey said even a lower $24,000 tax cut for the rich would be 24 times larger than the tax relief for those earning $50,000 a year.
“That’s hardly an outrageous sacrifice,” Obey said.
Reducing the tax cut for wealthier taxpayers would produce $18.9 billion in 2005, of which $4.7 billion would go to deficit reduction with the rest directed to eight priority areas such as health care, veterans’ benefits, education, and increased homeland security efforts.

Filed under: Economics, Policy

Corporate Profits at Record Highs, While Labor Compensation at 38-year Lows

OMB Watch – Economy and Jobs Watch: Corporate Profits at Record Highs, While Labor Compensation at 38-year Lows

Recent data show a major shift in the balance between corporate
income and labor compensation. As a share of the economy labor
compensation has not been this low in almost 40 years (since 1966), and
after-tax corporate profits are at the highest levels ever recorded by the Bureau of Economic Analysis.

Since it’s peak in 2001, as a share of gross domestic product
(GDP), labor compensation has decreased by about 4 percent (from 67 to
63 percent) and corporate profits have increased by about 4 percent
(from 8 to 12 percent) — see chart below. After taxes, corporate
profits reached 9.6 percent of GDP — the highest level recorded dating
back to 1947.



(Components are percent of GDP; source: graphic adopted from National Economic Trends, St. Louis Federal reserve.)

Over the past year, the overall economy, as measured by GDP, has
grown consistently at a rate of about 5 percent, and is seen by many to
be a sign that the economy has, at long last, come out of the 2001
recession. The conventional wisdom is that increased overall production
will eventually make its way into the pocketbooks of ordinary
Americans. However, this recovery appears to be different — in part
because of the dismal performance of employment in the postrecession
period — but also because it appears that a lower proportion of
national income is going towards labor.

An economic recovery is not real unless there is widespread
participation in the economy, and the economic benefits accrue to a
broad base of Americans. The current recovery appears to be failing
that test.

Filed under: Data, Economics, Economy, Policy, Recession

Talking to Communists

Remarks by John S. Irons (Senior Policy Analyst, and Economist, OMB Watch)
Prepared for the Visit of the Delegation from the Ho Chi Minh National Political Academy (Vietnam) to Temple University
Wednesday, April 22, 2004
It is a pleasure to be here today. I hope I can give you a small taste of the kinds of work that citizen advocacy groups pursue here in the US. Rather than trying to summarize all the kinds of work undertaken by thousands of organizations, I thought it would be more useful to describe my organization in more detail. While each organization is unique and might focus on different policy areas, or take different tactics towards policy change, we often share a similar approach to policy advocacy.
My organization, OMB Watch, is an independent, non-governmental, nonprofit organization whose mission is to promote government accountability and citizen participation.
We believe that a responsive and responsible government must be accountable to the people and must operate in the open. Sound governmental and economic policy, as well as good decision-making, critically depends upon the public’s right to know what the government is doing; and it is important for citizens to provide input on policy choices and to hold their government accountable for their actions.
My organization is devoted to monitoring the activities of the federal government, including the Office of Management and Budget (OMB), other governmental agencies, and throughout the legislative process in Congress.
OMB Watch was formed 20 years ago to lift the veil of secrecy shrouding the powerful White House Office of Management and Budget (OMB) – an agency which oversees much of the executive branch of government and which therefore has a large amount of power to affect the implementation of policy. We receive the vast majority of our funding from grants from private foundations, with private donations from individuals making up most of the rest – we do not receive funding from the government.
The organization’s mission centers on four main areas: regulatory policy; public access to government information; participation in the policy making process by nonprofit organizations; and the federal budget. We are primarily focused on domestic federal policy.
On the regulatory side, we work to monitor the federal government’s rulemaking process, and regulations, especially in the area of the environment. We believe that the government plays an important role in establishing sensible safeguards and protections for workers and the public.
In the area of public access to government, we operate a website called “RTK Net” which provides Internet access to government databases on the environment – the data allows citizens to assess the impact of factories on their local environmental conditions. We also chair an anti-secrecy coalition – made up of nonprofits, journalists, and others – which seeks to advance the public’s right to know and to reduce secrecy in government.
We also believe that an important means for citizen participation is through nonprofit organizations. As a result we also follow issues and policy that would affect the ability of nonprofits to be engaged in policy advocacy. We work to encourage organizations to be more engaged in the policymaking process, and to speak out on matters of importance to them.
As an economist, my work primarily involves the federal budget – both tax policy as well as government expenditures. This includes 1) policy research and analysis, 2) dissemination of government budget information, including explanations of the complexities of the government’s budget, as well as the implications of tax and budget decisions, and 3) organizing other non-profit organizations to effectively speak out on tax and budget issues. We believe that the federal government has a unique, important, and necessary role in society, and work to ensure that the government works in the best interest of all its citizens.
The success of our system of government requires that government operate in the open in order to be responsive to the public, to foster trust and confidence in government, and to encourage public participation in civic and government institutions.
We hope that our (small) organization makes a difference in keeping the government as open as possible, educates others about the importance of citizen participation, and contributes to a healthy and vibrant society.

Filed under: Background, Economics, Economists, Policy, Politics

Independent Sector on Government Support

An exerpt from “Purpose, Power, and Participation: Ideas for the Future of Our Sector” by Diana Aviv, President and CEO, INDEPENDENT SECTOR

Independent Sector | 2003 Annual Conference
[…]
First, I believe we must act to preserve our capacity for service, and that means taking a hard look at our relationship to government—or I should say, governments in the plural. Government policy and priorities and funding have a profound effect on the lives of Americans and for that matter on the fortunes of other nations. Laws, regulations, and policy directions determine who is included and who is excluded, who is protected and who is prosecuted, who is assisted and who is left out. Nothing more clearly reflects our nation’s priorities and our values than our national and state and local budgets.
Right now about one dollar in three in the budgets of nonprofits comes from federal or state or local government. And among those nonprofits involved in health and human services, government’s share of the budget is more than one dollar in every two, about 52 percent. Because of recently enacted large tax cuts, a soft economy, the cost of foreign and domestic wars on terrorism, and growing entitlement programs, gigantic deficits are expected to loom over us for the next five to ten years. The government pie is shrinking—and legislators in Congress and the state houses are making choices, choices that often reflect their values and their priorities and that almost always reflect the new constricted economy.
We can spend our efforts quarreling with each other about which of our diverse interests—helping poor people, protecting the environment, fostering the arts, and so forth—which interests deserve to survive in a time of austerity. But that is the last thing we ought to be doing. We should not be clashing over crumbs. We should be fighting for substantial and sustainable support from the federal government and the states. That cannot be done simply by reallocating what is left of the pie. It is time for us to press for a larger pie—whether that includes rolling back the massive tax cuts of recent years or increasing public revenues in some other way. State legislatures and governors of both parties began down this road just a few months ago to close their state budget gaps. In the years ahead these all too modest efforts should be augmented as a result of actions focused on public office holders, both Republican and Democrat, mounted by all of our organizations, working together, regardless of our particular interests. This is not a partisan statement or even a political one. Members of both parties in a number of cities and state houses have been working toward such goals.
[…]

Filed under: 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 — mostly tax cuts on income and dividends weighted toward the well-off — 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 (washingtonpost.com)
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

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