Thursday ReadsPosted: December 6, 2012 Filed under: 2012 elections, morning reads, U.S. Economy, U.S. Politics | Tags: Academy Awards, Benghazi attacks, blue states, consumer demand, Dinesh D'Souza, Earth at night, Gerald Molan, health insurance industry, Jared Bernstein, Joel Kotkin, Medicare age increase, NASA, red states, secession, supply side fairy tales, taxes, taxing the rich, unemployment 31 Comments
The New York Times has added more fodder for the Republicans’ Benghazi attacks. James Risen Mark Mazzetti and Michael S. Schmidt report that: U.S.-Approved Arms for Libya Rebels Fell Into Jihadis’ Hands.
The Obama administration secretly gave its blessing to arms shipments to Libyan rebels from Qatar last year, but American officials later grew alarmed as evidence grew that Qatar was turning some of the weapons over to Islamic militants, according to United States officials and foreign diplomats.
Of course there’s no evidence that this had anything to do with the Benghazi attacks, but I’m sure that won’t stop Senators McNasty, Huckleberry Closetcase, and their new pal Senator Kelley Ayotte from pretending otherwise.
No evidence has emerged linking the weapons provided by the Qataris during the uprising against Col. Muammar el-Qaddafi to the attack that killed four Americans at the United States diplomatic compound in Benghazi, Libya, in September.
But in the months before, the Obama administration clearly was worried about the consequences of its hidden hand in helping arm Libyan militants, concerns that have not previously been reported. The weapons and money from Qatar strengthened militant groups in Libya, allowing them to become a destabilizing force since the fall of the Qaddafi government.
Also at the NYT, Jared Bernstein once again explains why politicians (and the media) in the Village need to stop obsessing on taxes and start focusing in increasing employment and, along with it, consumer demand.
WITH the budget-and-tax showdown dominating headlines, most Americans probably missed an even more ominous story: according to a report by the Congressional Budget Office, America’s underlying growth rate — that is, the best the economy could do, under optimal conditions, without driving up inflation — has slowed from just under 4 percent a year in 2000 to just under 2 percent today.
Why does this matter? For one thing, the combination of a lower underlying growth rate, which you could think of as the economy’s speed limit, and a less equitable distribution of that growth was a reason middle-income households did so badly and poverty went up in the 2000s.
During the 1990s, in contrast, stronger demand for goods and services led to much faster job growth and the last real gains experienced by middle- and lower-income households. Faster growth in those years also spun off a lot more government revenues, which interacted with slightly higher tax rates to take the budget from deficit to surplus.
Read the whole thing and fantasize what we could be doing if we had smarter leadership in DC.
Back in Republican la-la land, Joel Kotkin at Forbes claims that blue states are committing suicide by supporting raising tax rates on the rich.
With their enthusiastic backing of President Obama and the Democratic Party on Election Day, the bluest parts of America may have embraced a program utterly at odds with their economic self-interest. The almost uniform support of blue states’ congressional representatives for the administration’s campaign for tax “fairness” represents a kind of bizarre economic suicide pact.
Any move to raise taxes on the rich — defined as households making over $250,000 annually — strikes directly at the economies of these states, which depend heavily on the earnings of high-income professionals, entrepreneurs and technical workers. In fact, when you examine which states, and metropolitan areas, have the highest concentrations of such people, it turns out they are overwhelmingly located in the bluest states and regions.
Really? Then how come we did so much better under the Clinton tax rates in the ’90s? After all, that’s all that is happening–except that the first $250,000 of these poor rich people’s money will still be taxed at the Bush rates. But that’s not how Kotkin sees it.
The people whose wallets will be drained in the new war on “the rich” are high-earning, but hardly plutocratic professionals like engineers, doctors, lawyers, small business owners and the like. Once seen as the bastion of the middle class, and exemplars of upward mobility, these people are emerging as the modern day “kulaks,” the affluent peasants ruthlessly targeted by Stalin in the early 1930s.
OMB!! “Wallets…drained!” “Stalin!” Let’s all freak out!
The ironic geography of the Democratic drive can be seen most clearly by examining the distribution of the classes now targeted by the coming purge. The top 10 states with the largest percentage of “rich” households under the Obama formula include true blue bastions Washington, D.C., which has the highest concentration of big earners, Connecticut, New Jersey, Maryland, Massachusetts, New York, California and Hawaii. The only historic “swing state” in the top six is Virginia, due largely to the presence of the affluent suburbs of the capital. These same states, according to the Tax Foundation, would benefit the most from an extension of the much-lambasted Bush tax cuts.
Hey Joel, maybe it’s not all about taxes, even though that’s all that seems to matter to you. Maybe some blue state folks think the whole economy would benefit if more people got back to work, earned some money and spent it–as suggested by Jared Bernstein in yesterday’s NYT (see above).
As Zandar notes, Kotkin then goes on to show how Republicans can use the home mortgage deduction and other methods to punish the blue state richies for voting for Obama.
– Keep the tax rate on capital gains the same.
– Raise income taxes on the top income bracket for 2013, those making $398,350 and up (single filers, married joint filers, or head of household).
– Means-test, or eliminate entirely, the mortgage interest deduction (which benefits taxpayers in areas with the highest real estate values and mortgages – i.e., Hawaii, D.C., New York, California and Connecticut).
– Means-test or eliminate entirely the federal deduction of state and local taxes, which is disproportionately utilized by those in high-tax blue states: “In 2005, taxpayers in California and New York together made up 20 percent of those claiming the deduction and accounted for 30 percent of its value. Itemizers in New York, New Jersey, Connecticut, and California claimed on average over $12,000 per household.”
Talk about a sore loser! Kotkin must be really bitter about Romney’s failure to get those blue state dopes to vote for him.
Meanwhile all those Romney voters in the red states are dreaming about seceding from the union. But if they did, asks The Nation, “Who’d Pay for Their Massive Government Handouts?”
In the wake of Obama’s victory, citizens in several states submitted petitions to secede from the United States. It is something of an irony that the very states seeking secession from “big government”—like Louisiana and Alabama—have been among the top beneficiaries of that selfsame government. Put bluntly, the government would be far smaller without them, and they would seriously struggle far more without it. Indeed, were they to become independent, most would be failed states in need of a bailout. Only this time their benefactor would be not the federal government but the International Monetary Fund, of which the United States is the principal donor. Louisiana and Alabama would go the way of Greece and Spain.
Oh, the irony of it all! And here’s another irony for Republicans to chew on. From TPM: Why Insurers Are Wary Of Raising The Medicare Age
House Republican leaders want to avoid the fiscal cliff with a proposal that would gradually raise the Medicare eligibility age to 67. Democrats are broadly reluctant to cut benefits, but President Obama was willing to accept the policy last year in failed deficit reduction talks with House Speaker John Boehner, and top Democrats have left the door open to including that measure in a grand budget bargain.
It may seem counter-intuitive: why would an industry threatened by government insurance not want it to shrink?
The reason: hiking the Medicare eligibility age would throw seniors aged 65 and 66 off Medicare and into the private market, forcing insurers, who will soon be required to cover all consumers regardless of health status, to care for a sicker, more expensive crop of patients.
“The risk pool issue is important,” the insurance industry source said. “[I]f you add more older and sicker people to the pool, that’s definitely going to have any impact on premiums.”
The policy would save the federal government $113 billion over a decade, according to the Congressional Budget Office. But it achieves that by raising the cost of private insurance: the Kaiser Family Foundation projected that a Medicare age of 67 would raise costs for under-65 patients by an average of $141 in 2014. (In practice it would be phased in.)
And even more Republican stupidity: Right wing nutcases are all bent out of shape because their favorite crazy propaganda movie didn’t get any Oscar nominations.
Gerald Molan, the director of the extremely anti-Obama movie, 2016: Obama’s America , is mad that his and Dinesh D’Souza’s film [“2016”] wasn’t on the shortlist of documentaries nominated for an Academy Award.
“The action confirms my opinion that the bias against anything from a conservative point of view is dead on arrival in Hollywood circles,” he complained to the Hollywood Reporter.
It couldn’t possibly have anything to do with the fact that the movie is based on a pack of lies and right wing conspiracy theories, could it?
To cleanse your palate of right wing and DC craziness, try watching this video from NASA that show views of the Earth from space. Here’s a still shot:
So what are you reading and blogging about today? I’ve been a little out of the loop for the past couple of days, so I look forward to clicking on your links!
Late Night: Those Wonky GOP Numbers GuysPosted: October 14, 2012 Filed under: 2012 presidential campaign, open thread, U.S. Politics | Tags: Mitt Romney, Paul Ryan, taxes, wonky numbers guys 6 Comments
Behind the Scenes at the Paul Ryan Workout Shoot
Romney/Ryan Tax Plan Revealed!
This is a very serious, wonky, math-infused open thread!!
American Entrepreneurship on the Decline … Yet … not for the reasons you’d thinkPosted: July 10, 2012 Filed under: 2012 elections, Economic Develpment, Economy | Tags: How Republican Policies kill Small Businesses, Regulation, Small Businesses, taxes 7 Comments
One of the great symbols of US spirit has always been its small businesses. It’s one of those myths that seems to carry everywhere including to views of us in other countries. There are two related memes that go along with this mythic American institution that are not borne out by statistics. The first is that small businesses are the source of employment growth in the country. This is not true. Most small businesses that do not fail stay small. The majority of job growth comes from medium to large businesses. Midsize business are far more important. (Data from the BLS.) The second meme is that either too much regulation or uncertainty created by the government is causing depressed job growth. This is simply not true either.
What does this mean? By any reasonable interpretation, it is mid-size companies that are generating the bulk of the jobs in the recovery. From an economic development perspective, it means that job growth is more likely to come from mid-size companies that are adding several workers or perhaps a couple of dozen new employees, rather than the smallest or largest businesses.
And what are these businesses most worried about today? According to a recent survey by the National Federation of Independent Business (here):
“The two principal impediments to current small-business growth are business uncertainty and weak sales… The single most important indicator that would renew small-business owner confidence in business conditions is increased sales in their businesses.”
The economic recovery is a demand issue.
There is also some strange set of lies out there that the increase in taxes proposed by the Obama Administration on those making over $250k is going to kill small business. Not true again! This tax hike would likely impact only about 3.5% of small businesses. The majority of these are partnerships formed by doctors and lawyers. They are not your average mom and pop store. I just heard Haley Barbor repeat this lie on CNN last night.
But to what extent would Obama’s tax plan actually affect small businesses?
In its latest estimate last month, Congress’s nonpartisan Joint Committee on Taxation found that in 2013, just 3.5 percent of small business tax filers would pay a higher rate — about 940,000 individuals, many of whom are lawyers and doctors in partnerships. But those few percent account for 53 percent of all small business income.
GOP aides accept those facts but they say those few small businesses are the ones overseeing growing companies whom the nation is counting on to hire. According to a variety of analyses, the lion’s share of the tax hike would be absorbed by Americans earning well over $1 million.
Late in 2010, when the same debate played out, William Gale, co-director of the nonpartisan Tax Policy Center, called it a “myth” to suggest that ending the tax cut on top marginal rates would hurt small businesses.
“This claim is misleading,” Gale wrote in the Washington Post. “If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn’t the way to go — it would miss more than 98 percent of small-business owners and would primarily help people who don’t make most of their money off those businesses.”
There’s a new study covered by The Washington Monthly that shows that entrepreneurship and small business ownership is on the decline. Get ready for this result. It’s primarily Republican policies that are killing small businesses and not over regulation, over taxation or over anything else. Here’s some interesting information about the decline and how some of it is due to other things too.
Data kept by the Small Business Administration, for instance, shows that the share of the working-age population that is self-employed has been declining since 1994. The share fell steadily until 2002, stayed level between 2003 and 2006, then began to drop again. Overall, between 1994 and 2009, the share declined nearly 25 percent.
This drop in the number of self-employed citizens relative to the overall working population is also captured by the Bureau of Labor Statistics, which isolates nonfarm workers. The BLS survey asks workers if they are employed by a private company, a nonprofit organization, or the government, or are self-employed. Self-employed workers are further separated into those who have incorporated their businesses and those who have not.
According to the BLS, the number of Americans who are both self-employed and not incorporated has fallen significantly as a share of the working-age population, from 461 per 10,000 in 1990 to 359 in 2011. This decline—more than 22 percent—reversed a long trend in the opposite direction during the 1970s and ’80s. The BLS data shows a somewhat different picture when it comes to self-employed persons who incorporate their businesses. As a share of the working-age population, their ranks grew 35 percent between 1989 and 2008, before dropping off sharply in 2009. Yet this increase in incorporation may be evidence not so much of rising entrepreneurship as of existing unincorporated one-person firms deciding to change their legal status—to take better advantage of new limited liability laws in many states, for instance, in order to cut their tax bills.
Even if we accept this number without question, however, the total share of the self-employed dropped steadily over the last two decades. In 1994 there were roughly 663 self-employed (incorporated and unincorporated) for every 10,000 working-age Americans; by 2009 this number was down to 606, an 8.5 percent decline.
If anything, there’s good reason to believe that this decline in entrepreneurship is even steeper than government data shows, thanks to what appears to be systematic miscategorization by the government of what counts as a true independent company. Since the 1990s, large companies have increasingly relied on temporary help to do work that formerly was performed by permanent salaried employees. These arrangements enable firms to hire and fire workers with far greater flexibility and free them from having to provide traditional benefits like unemployment insurance, health insurance, retirement plans, and paid vacations. The workers themselves go by many different names: temps, contingent workers, contractors, freelancers. But while some fit the traditional sense of what it means to be an entrepreneur or independent business owner, many, if not most, do not—precisely because they remain entirely dependent on a single power for their employment.
Again, it’s not taxes and it’s not over-regulation responsible for the decline. Here are the two major reasons.
Perhaps the most common complaint among small business entrepreneurs is a shortage of financing. While the rise of the venture capital business might give the impression that financial support for entrepreneurs has never been easier to obtain, the truth is that only a tiny fraction of start-ups have access to venture funds. To get their businesses up and running, the vast majority of entrepreneurs today tend to rely at first, as they always have, on a combination of personal savings and contributions from family and friends. But with family balance sheets ravaged by stagnant wages and skyrocketing costs for health care and higher education, fewer and fewer average families have the savings needed to invest in a small business.
The effects of the radical consolidation in the banking industry that began in the 1980s are equally dramatic. Relatively few bank officers today have the leeway and local knowledge to lend to established local businesses, much less new ventures. This is especially true in bad times, when big institutions come under great pressure both from Wall Street and regulators. In Maryland, for example, Bank of America made 312 SBA-guaranteed loans to local businesses in 2007. In 2010, it made two. Consolidation also concentrates the power of a few financial institutions over small businesses, and radically raises the risk that entire funding systems can collapse all at once. The near breakdown of CIT Group in early 2009—averted only by a last-minute deal with bondholders—would have cut more than a million small businesses off from some of the most important forms of day-to-day business financing.
The single biggest factor driving down entrepreneurship is precisely the radical concentration of power we have seen not only in the banking industry but throughout the U.S. economy over the last thirty years. This revolutionary remaking of almost every economic activity in the nation was set in motion in 1981, when officials in the Reagan administration all but suspended traditional enforcement of America’s antimonopoly laws, a change in policy then adopted by every subsequent administration. Since then, regulators have done almost nothing to stop the great waves of mergers and acquisitions, with the result that control over most major economic activities is now more consolidated than at any time since the Gilded Age.
The effects have been nowhere more dramatic than in those sectors that have always been most congenial to individual proprietorships, like retail, services, farming, and small manufacturing. These were the activities most affected, for instance, by the type of “roll-up” strategies pioneered by financiers like Mitt Romney’s Bain Capital. In the case of the office-supply retailer Staples, Bain’s investment helped propel the company from a one-store operation to a 2,000-store international behemoth. Similar plays resulted in Home Depot capturing a vast proportion of the nation’s hardware business, in Best Buy capturing a vast proportion of America’s electronics business, and in Macy’s capturing a vast proportion of all department store sales. Just one company, Wal-Mart, now controls upward of 50 percent of some lines of grocery and general merchandise business—commerce that a generation ago was divided among tens of thousands of families.
So, next time you think that Republicans are the small business friendly party, think again. It’s clearly the drive towards monopoly, market concentration and policies that benefit the One Percenters that’s killing US small business.