Tag Archives: Economic

A government shutdown will cost us billions

They claim they want to shrink government spending but the irony is mind-boggling:  Shutting down the government will cost billions of dollars.  What’s wrong with the TEApublicans strategy here?

Congress, you’re doing a terrible job. (Andrew Harrer/Bloomber)

WAPO – Wonk Blog

To understand what Congress is risking every time it nears a shutdown, consider what past ones have cost. In 1996, the Office of Management and Budget tallied the two major shutdowns of the decade at about $1.4 billion. Adjusting for inflation would bring that total to more than $2 billion in today’s dollars.

But as an analysis (pdf) by Roy Meyers, a political scientist at the University of Maryland, found, that estimate left out a lot. It didn’t account for the lost value of work that wasn’t done or the $300 million the federal parks would have taken in or the reduced pace of IRS audits. And then there are the less visible consequences.

Meyers suggests that contractors might start charging the government a premium after shutdowns to compensate for the uncertainty of their payments. And a large body of work shows that unstable budget processes at the state level raise borrowing costs, meaning some of the costs are permanent, or at least long-lived.

Even getting near a shutdown costs money. The government must prepare, and that means a lot of hours spent on nothing useful.

“You have to pull people off whatever they’re doing to inform employees about what they can do and when they can come in,” said Stan Collender, a budget expert at Qorvis communications. “You have to prepare to change the Web sites with new information about what to do during the shutdowns. You have additional security costs for the buildings because you have to lock them up so no one can get in. You have additional maintenance costs in terms of heating and cooling. And let’s say you’re a supplier who is supposed to deliver parts to the government on Oct. 2. What do you do?”

The irony, Collender added, is that “Republicans who are so big on uncertainty and government efficiency would never think it’s prudent to ask a business to operate the way they’re asking government to operate. Can you imagine a business telling employees, ‘We might shut down, and keep an eye out for an e-mail telling you whether to report next week’?”

Which gets to a final cost that none of these analyses are considering: the cumulative toll these bouts of brinksmanship are taking on consumer and business confidence.

During the 2011 government shutdown debate, Gallup’s Economic Confidence Index tumbled 24 points. It rebounded after the deal was reached, but then fell 30 points during the debt-ceiling debate. And Gallup wasn’t alone in that finding.

Continue reading here…

4 Comments

Filed under 113th Congress, TEApublicans

Paul Krugman Appears On ‘Newsnight,’ Battles British Conservatives On U.K. Austerity Policies (VIDEO)

The Huffington Post

For most Americans, a trip to London means drinking a few pints and maybe taking a picture of one of those guards with the hats. For Paul Krugman, it means critiquing the entire direction of Britain’s economic policy.

Krugman, the Nobel Prize-winning economist and left-leaning New York Times columnist, appeared on the BBC program “Newsnight” this Wednesday, jousting with two British deficit hawks over the U.K.’s austerity agenda.

The Brits — venture capitalist Jon Moulton and Conservative Member of Parliament Andrea Leadsom — argued that the British government has to reduce spending if the country is to dig itself out of the economic slump it’s been in. Krugman countered that such a strategy could cause Britain’s economy to implode — since, he said, the public and private sectors need to circulate money to each other in order for anyone to prosper.Krugman Newsnight

“We are not a household. We are an economy,” said Krugman. “Your spending is my income, and my spending is your income.”

As Krugman pointed out during the “Newsnight” segment, and later in a NYTcolumn, the austerity question is one that extends beyond Great Britain. Eurozone countries are in the midst of their own austerity struggle right now, one whose effects have been felt most strongly in Greece, where government spending cuts have resulted in riots and strikes and boosted the political fortunes of the far-left, anti-austerity Syriza party.

And in the United States, economists and politicians are engaged in an ongoing debate over the best way to jump-start the lagging economy — and here, too, Krugman hasrepeatedly counseled against the kind of major government spending cuts that conservative policymakers have championed.

Krugman’s argument is that such cuts would cause a major contraction in the American economy, a point that even Mitt Romney, the presumptive Republican nominee for president, appeared to echo in an interview with Time a few days ago.

Comments Off

Filed under Paul Krugman

Dear Congress…

DEAR CONGRESS,

Last year I mismanaged my funds and this year my family and I cannot decide on a budget.

Until we can come to a unified decision that fits all of our needs and interests, we will have to shut down our check book and will no longer be able to pay our taxes.

I’m sure you’ll understand. Thank you very much for setting an example we can all follow!!!

Related articles

Comments Off

Filed under U.S. Politics

Since 2009, 88 Percent Of Income Growth Went To Corporate Profits, Just One Percent Went To Wages

This sort of information needs to be shouted from every rooftop in America.  Americans should know the just how the economy has been manipulated to allow such an income disparity between the rich and the middle class and working poor.

What part of “grossly inequitable” does the GOP not understand?  Income levels between the working class and the “well off” should have never gotten to this point.

One could call it greed, which is bad enough and considered one of the seven deadly sins, but this goes beyond greed, these numbers show that the GOP is complicit with corporations in sabotaging our Democracy by making corporations the most powerful “people” in America!  My question is…to what end?

Think Progress

After the longest recession since WWII, many Americans are still struggling while S&P 500 corporations are sitting on $800 billion in cash and making massive profits. Now, economists from Northeastern University have released a study that finds our sluggish economic recovery has almost solely benefited corporations. According to the study:

“Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only .1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. …The absence of any positive share of national income growth due to wages and salaries received by American workers during the current economic recovery is historically unprecedented.”

The New York Times adds, “According to the Bureau of Labor Statistics, average real hourly earnings for all employees actually declined by 1.1 percent from June 2009, when the recovery began, to May 2011, the month for which the most recent earnings numbers are available.”

So as average wages fall, and nearly 14 million people remain unemployed, America’s economic recovery has almost entirely benefited corporations. This development adds another chapter to the decline of the middle class, whose incomes are shrinking and wages are stagnating. Last year, top executives’ salaries increased 27 percent, while workers’ salaries increased only 2 percent. At the moment, income inequality in America is the worst it’s been since the 1920s, as the richest 1 percent make nearly 25 percent of the country’s income.

1 Comment

Filed under Economic Inequality, Economy, GOP Malfeasance

TRMS:GOP/Paul Ryan’s bogus budget proposal

We can always count on Rachel to decipher the smoke and mirrors games of the GOP. 

The Rachel Maddow Blog

The new Republican budget proposal by Congressman Paul Ryan of Wisconsin leans on an economic forecast from the conservative Heritage Foundation.

You can see another, older Heritage forecast above. The predicted growth in jobs from President Bush’s economic strategy did not square with reality. Matt Yglesias dug up the chart and writes, “If you believe George W Bush unleashed an unprecedented economic boom with great jobs performance, rising incomes, and the paying off of the national debt then you’ll find a lot to like about Rep Ryan’s plan.”

Mr. Ryan’s “Path to Prosperity” is now in video form, below. Bonus: Simon Johnson’s “National Debt for Beginners.”

Comments Off

Filed under GOP, GOP Budget Cuts, GOP Lies, GOP Malfeasance, Rachel Maddow, Rep. Tim Ryan

Vanity Fair: Inequality – Of the 1%, by the 1%, for the 1%

Vanity Fair

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats.

That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin.

The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.       Read more…

 

Related Articles

Comments Off

Filed under Inequality, Vanity Fair

Banana republic

The income gap between the rich and the poor is becoming more clear everyday…

Daily Kos DiaryMeteor Blades

An imbalance between rich and poor is the oldest and most fatal ailments of all republics.
       – Plutarch

The Census Bureau reports that the gap between rich and poor reached its widest amount since records started being kept in 1967. Add that to the Joint Economic Committee’s Income Inequality and the Great Recession  and the Census Bureau’s report on Income, Poverty, and Health Insurance Coverage in the United States: 2009 and you’ve got a nasty little synopsis of economic failure.

Americans in the top 20 percent of income – $100,000 or more a year – collected 49.4 percent of all income. Those below the poverty line earned 3.4 percent. This ratio of 14.5-to-1 in 2009 was an increase from 13.6 to 1 in 2008. In 1968, the ratio was 7.69 to 1.

[...]

As we’ve been reminded the past year, quite a slew of rightist ideologues have not given up their dream of getting that rich-poor ratio into banana republic territory by pushing additional tax cuts for the wealthiest and by further shredding of the safety net, including Medicaid, Medicare and the grand-daddy of all, Social Security.

The JEC report noted:

Over  the  past  three  decades,  income  inequality  has  grown  dramatically.    After  remaining  relatively  constant  for  much  of  the  post‐war  era,  the  share  of  total  income  accrued  by  the  wealthiest  10  percent  of  households  jumped  from  34.6  percent  in  1980  to  48.2  percent  in  2008.  Much  of  the  spike  was  driven  by  the  share  of  total  income  accrued  by  the  richest  1  percent  of  households.  Between  1980  and  2008,  their  share  rose  from  10.0  percent  to  21.0  percent,  making  the  United  States  as  one  of  the  most  unequal  countries  in  the  world.

[...]

It’s not as if there aren’t policy changes that could return that ratio to a more reasonable level. Revamping trade policy, creating disincentives for companies to off-shore jobs, reinstituting a truly progressive income tax system, boosting the minimum wage, making unionizing easier, providing a real safety net that adapts good ideas from Europe, and creating programs to spur the creation of rivals to corporate hegemony over everything. These latter could include state banks like North Dakota’s and worker-owned and -operated businesses.

While all of that could improve matters, and ought to be part of the platform of any political party that claims to really supportive of rank-and-file Americans, it will take more than these few remedies to create a new, environmentally sustainable economics for the 21st Century in which inequalities in income and wealth are reduced along with the power of the oligarchy. However, merely getting to the point of even seriously considering such a shift in thinking will require persuading vastly more Americans that their ultimate rulers are oligarchs.

Comments Off

Filed under Economic Inequality, Economy

Who You Gonna Believe? – Paul Krugman

I’m a bit late in blogging about this, but it’s important enough to post anyway:

The New York Times – Paul Krugman

I went through my mail today, and got the usual batch of letters declaring that I’m wrong about everything, and that we should do the opposite of anything I say. Hey, it’s a free country.

But I found myself wondering, as I often do, about the determination with which people believe pundits who please them ideologically, no matter how wrong they have repeatedly been — wrong in ways that, if you believed them, cost you money.

Suppose you had spent the last five years actually believing what you read from the usual suspects — the WSJ opinion pages, National Review, right-wing economists, etc.. Here’s what would have happened:

In 2006 you would have believed that there was no housing bubble.

In 2007 you would have believed that the troubles of subprime couldn’t possibly spread to the financial system as a whole.

In 2008 you would have believed that we weren’t in a recession — and that the failure of Lehman was unlikely to have bad consequences for the real economy.

In 2009 you would have believed that high inflation was just around the corner.

At the beginning of 2010 you would have believed that sky-high interest rates were just around the corner.

Now, we all make mistakes and get things wrong — although it’s striking how often the trolls on this blog feel the need to accuse yours truly of saying things I didn’t. But after this string of errors, wouldn’t you at least begin to suspect that the people you find congenial have a fundamentally wrong-headed view of how the world works?

Guess not.

Comments Off

Filed under Economy