Sign O'il the Times
Was filling up my tank today before heading to the airport in Phoenix, and this woman in her 30s came up to me asking for gas money...
She didn't seem poor or anything -- she was driving a kempt mid-90s Saturn.
I gave her five bucks.
Are we going to be seeing more of this sort of thing as gas prices go up? I noticed in L.A. that diesel, for instance, is well over five dollars a gallon everywhere.
In other news, Daniel is a child...
Yes, he paged me for no apparent reason.
Labels: Economy, Personal, Travel
Bootstraps, My Ass
From
Krugman:
But the fact of the matter is that Horatio Alger stories are rare, and stories of people trapped by their parents' poverty are all too common. According to one recent estimate, American children born to parents in the bottom fourth of the income distribution have almost a 50 percent chance of staying there -- and almost a two-thirds chance of remaining stuck if they're black.
That's not surprising. Growing up in poverty puts you at a disadvantage at every step. I'd bracket those new studies on brain development in early childhood with a study from the National Center for Education Statistics, which tracked a group of students who were in eighth grade in 1988. The study found, roughly speaking, that in modern America parental status trumps ability: students who did very well on a standardized test but came from low-status families were slightly less likely to get through college than students who tested poorly but had well-off parents.Labels: Economy, Politics, Poverty
The Candidates on Poverty
Obama's website on poverty:
Poverty Rising: There are nearly 37 million poor Americans. Most Americans living in poverty work, but still cannot afford to make ends meet. Minimum Wage is Not Enough: Even when a parent works full-time earning minimum wage and EITC and food stamps are factored into their income, families are still $1,550 below the federal poverty line because of the flat-lined minimum wage.Hillary's website on poverty:
.........Nothing.
That's not going to go over well with me...
Labels: 2008 Election, 2008 Primaries, Barack Obama, Democratic Party, Economy, Hillary Clinton, Politics, Poverty
Barack and Hillary on Economics
I read some of Hillary and Barack's economic platforms on their websites... nothing stood out as particularly good or bad as far as differences go.
One thing that bothered me in both was that there is too much concentration on tax cuts... that's buying into the Republican meme that taxes are too high. They're not; they were higher ten years ago and surveys showed that most people didn't complain then. And today, when we have a national debt approaching a trillion dollars, we cannot eliminate revenue sources.
Nothin' here to help me make up my mind... NEXT!
Labels: 2008 Election, 2008 Primaries, Barack Obama, Democratic Party, Economy, Hillary Clinton, Politics
More on Tax Cuts
Here's my former co-blogger Ari's (who is a PhD economist) take on tax cuts as an economic stimulus:
Tax cuts clearly are not the answer. All we've done over the last seven years is push off the inevitable. We were headed for a recession in 2000 that was temporarily stemmed off by the extra $300 or so that people received that year. That should have left us with a low level of growth, but enough that we wouldn't be in a recession in 2001. The reason we did go into a recession then was due to the market crash in September following 9/11. That said, we've never really had any solid growth since then. All we've done is lengthened the impending downturn by fiddling with the economy.
Our economy is governed by two (sometimes opposing) forms of policy:
monetary (the Fed) and fiscal (the government). Time and time again, we've seen that the government messes things up because politically and ideologically driven motivation to change the economy often work contrary to the concept of slow, sustainable growth.
For instance, this current administration decided that it would be a good idea to devalue the US dollar to help US corporations increase their exports. Cheaper dollars mean more sales overseas and therefore more profit (in terms of dollars). The problem was that when faced with the choice between selling something here for $10 or something abroad for $12, the choice was simple -- raise domestic prices. Couple that with the inflation we've been facing on food and fuel, and you've got a situation where the top 1% benefited at the cost of the bottom 99%.
Thirdly, Bernanke's operating as a Bush partisan right now and working to further bail out business by cutting rates any time the market hits a speed bump.
So right now, if we're looking for a quick fix, offer up a tax rebate on payroll taxes. Give working people credits against the first 15,000 they earn on the job which, mind you, is fully taxed for social security and medicare. That'll let them afford those goods that they no longer can buy at current prices.
Then later for a better long term fix, instead of rescinding that program, alter it so that it gets paid for by removing the cap on payroll taxes where people earning six figures pay the same total amount in taxes as upper middle class people (payroll taxes only affect the first $90K or so of your income).
Why would that fix work in the short run? Simple. Poor people spend every cent they have. Rich people spend a smaller portion of it. That quick boost could help us smooth out our consumption over this tight period that has now become inescapable. And in the long run? It should still provide a large enough stream of income to keep our entitlements from drying up.
To really fix the system... We're going to need to clean house of all the supply-siders in the Fed and Treasury Department and go back to what worked in the 1940s, 1950s, 1960s, and 1990s. And that's going to take a few years and a patient Democratic president.
Labels: Economy
Tax Cuts for Every Occasion
The other night on Lark St., I was chatting (yelling back and forth with) two (ugh) Republicans, and ridiculing that the basic Republican solution to any problem is to cut taxes. Today, Devilstower on DKos
has more on the subject:
In 1959, Mattel introduced a doll named "Chatty Cathy." Pull Cathy's string, and she could say eleven different things. That's ten more things than Republicans have to say about the economy....No matter what the situation, Republicans have only one response. In the 1980s, the first pass at Reaganomics left the US with a crippling debt that took a decade to get under control. Then, before a sensible policy had time to repair the excesses of the 80s, Bush arrived to double-down on the damage. Again they showered gifts on the rich and poured funds into the coffers of corporations where executives rewarded themselves with bonuses that would make Scrooge McDuck blush. In the meantime, the middle class was not seeing a wave of new jobs or an increase in salary. Because, as we saw in the 1980s and have demonstrated conclusively over the last seven years Reaganomics is a lie. Cutting taxes at the top and reducing regulation benefits only the top of the corporate economy. There is no trickle down, because greed expands to absorb any excess.The part in bold is the money quote -- when you hand corporations extra money, they either give it to the executives or divvy it up among the shareholders. It does not create jobs. Why? For one, there are no repercussions for not investing the money, and second, if there's no extra demand for your product, why create extra supply just because you have the money?
On the other side, if a corporation can demonstrate increased demand, a bank will be more than happy to give the corporation a loan... and in that case, the corporation will have to pay back the loan, so it has to invest in increasing the supply to match the demand.
Smart government incentives, ones which require corporations to make certain investments, can work too, if there are requirements and accountability built in.
The one part I did agree with my Republican drinking colleagues about is what happens when you increase taxes on corporations -- their knee-jerk Randian response is to cut jobs, almost (maybe more than that) just to spite the government. Creating jobs are their last priority when they get free money, and cutting them are among the first when they lose it, unless demand is hot.
So, what is the real solution to our economic problems? Probably doing things to ignite demand (
though that has its own issues), but some areas of the economy are so overheated,
like real estate, that it's going to be a very steep fall to bring demand pricing up to equilibrium with supply pricing.
It's just very clear to me that cutting taxes by $150 billion, particularly taxes on corporations and the wealthy, is harmful in an environment where we have nearly a trillion dollars in debt and the dollar is so weak.
I don't even think giving people a few hundred dollars in rebates will help; it won't go towards consumption... people are up to their ears in debt after the last few years and they'll just take that money to pay down mortgages, loans, and credit cards.
Lowering interest rates is problematic too, as encouraging people to borrow in order to stimulate the economy is what caused a large portion of the mess in the first place.
So what is the solution? Damned if I know, I'm not an economist. But Ari is. So I'm going to try to get him to weigh in.
Labels: Economy, Republican Party
Enough With Artificial Economic Stimuli
Trying to fix an economy that's largely in the hole largely because of the ephemerality of previous artificial stimuli like the 2001 Bush tax cuts or the constant lowering of interest rates combined with Greenspan's encouragement for people to take ARM mortgages,
Bush is launching another artificial, reckless economic stimulus package:
Bush said that Congress and the administration need to settle on a temporary economic package that could be implemented quickly to "keep our economy growing and create jobs." While Bush focused on taxes, Democratic and Republican leaders in Congress have been working on a package that would also include extending and perhaps increasing unemployment benefits and a temporary increase in food stamps."Letting Americans keep more of their money should increase consumer spending," he said.
Bush outlined several criteria for the package to meet: It must be "big enough to make a difference in an economy as large and dynamic as ours," it must be built on "broad-based tax relief," it must take effect right away but be temporary, and it must not include any tax increases.Specifically, he called for tax incentives for businesses, including small companies, to make new and major investments this year. "Giving them an incentive to invest now will encourage business owners to expand their operations, create new jobs and inject new energy into our economy in the process," Bush said.He also called for tax relief for individuals — probably to come in the form of one-time rebates. But he did not say how much money Americans would get to keep or the amount of other tax incentives that could be in the package. Nor did Bush detail how the nation would pay for such a plan.Of course not. But you'll get a little money back to distract you from our trillion-dollar debt and from the fact that most of the tax breaks will go to corporations and people much wealthier than you (well, most of you):
A White House plan is looking at rebates of up to $800 for individuals and $1,600 for married couples. Incredible.
Update: From the awesome
Atrios, who follows the economy better than any other blogger I read regularly (and after having mono, I now have a ton that I do read regularly -- wait until I update the Daily Rounds list):
John Hardwood said the proposed stimulus would involve checks cut to people and the checks would be a "credit against the payroll tax."Wonder if he was being precise. If so, the money's coming out of those social security file cabinets instead of general revenue.Labels: Economy, George Bush
Ottawa, ON -- Flint
Flint, Michigan, is one of Michael Moore's favorite subjects. It's a city where 80,000 auto workers used to live, but today there are fewer than 8,000. It's one of the most depressed (and depressing) places in the country, and that was apparent as I drove through.
There were plenty of empty lots to be seen:
But what's the one place that had customers? Wal-Mart.
Click here for photos of Flint, MichiganLabels: Economy, Travel
Albany -- Supper's Ready!
I am completely swamped with work, needing to put in several more hours tonight to meet an AM deadline, but I didn't want to go a whole day without posting.
Looks like we took some relief too soon; Hurricane Katrina may very well be the biggest humanitarian disaster this country has seen since the Great Depression. I wish that I could show more empathy for the victims, but this is simply beyond anything I can comprehend... My heart is sick, but not as sick as it should be for the people, towns, and cities that have been devastated.
Katrina may exacerbate an already worsening situation; for the fourth year in a row, the poverty rate in the U.S. has risen.
The proverbial shit is hitting the fan in Israel; the Likud Party is in shambles while Labor scrambles to fill the void.
Pat Buchanan calls for the President's head on an issue very near and dear to him -- Wetbacks ;) .
I've been listening today to an album I've been trying to get my hands on for over a year, Genesis's Archive 1967-1975. It's great... especially a live version of the epic Supper's Ready. Genesis's music from the 1970s is unknown to most, but I highly recommend it.
Work time!
Labels: Economy, George Bush, Israel, Katrina, Music
Albany, NY -- Bankruptcy Bill
The LA Times has a compelling story
concerning people who aren't getting disability payments when they're supposed to. Not surprisingly, the laws are increasingly being changed to favor the insurance companies over real, live people. And those real, live people are
now declaring bankruptcy in record numbers. A big problem we face in our country is that it's too easy for the average Joe to enter into debt. I receive several envelopes weekly from Wilmington, in the home state of Joe Biden (D-MBNA). Everyone appears to be offering credit these days. The house of cards is going to come crashing down when interest rates rise again. And, if it weren't for our convoluted semi-private medical system, people wouldn't have these medical debts, which account for half of bankrupcies in this country. According to this article,
health care costs are making it difficult for people to start small businesses.
The right-wing press is
all over Cindy Sheehan, but according to Frank Rich
is failing miserably. Maybe Ms. Sheehan should've been Kerry's campaign manager?
Labels: Democratic Party, Economy
