Via Wonkette...

Gas Tax Holiday: Hillary Places Economists Beneath Large Transportation Unit

From this morning's ABC "town hall" with Hillary Clinton, about the gas tax holiday:

STEPHANOPOULOS: "But can you name an economist who thinks this makes sense?"
CLINTON: "Well, I'll tell you what, I'm not going to put my lot in with economists."

Silly George, the Clintons don't listen to economists for economic advice. Spanky the Money Octopus tells them all they need to know.

Hillary and Economists | Posted May 4, 2008 11:02 PM by John Irons

Want to work with me? See below. Feel free to forward to anyone you think might be interested...

Employment opportunities at EPI

Policy Analyst

The Economic Policy Institute is seeking to hire an economic policy analyst to work on a variety of high-profile, policy-related projects, with a focus on federal fiscal policy.

The policy analyst will conduct economic analyses and help to develop policies to promote economic growth and opportunity, especially through strategic public investments. A successful candidate will combine strong research, quantitative, and analytic skills with strong writing and communication skills. Responsibilities of the job include collection and analysis of data, synthesis of economic research, and the analysis and development of policy proposals. The analyst will work closely with EPI's researchers and partners to develop and promote a progressive policy agenda.

The policy analyst will report to EPI's research and policy director. Minimum qualifications include a Bachelors degree in economics, public policy, or a related field; and at least 2 years experience as a research assistant, policy analyst, or in a similar position. An advanced degree, additional policy experience, and/or in-depth expertise in federal economic policy are a plus.

Pay commensurate with experience and established pay scales, with an excellent benefit package.

The Economic Policy Institute is a nonprofit, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy. The Research and Policy department conducts research on labor markets, education, international trade, race and ethnicity, and fiscal policy.

The Economic Policy Institute is an Equal Opportunity Employer.

To apply send cover letter, resume, and writing sample via email to: researchjob@epi.org. They can also be mailed to Research Dept, Economic Policy Institute (Suite 300 East), 1333 H St NW, Washington, DC 20005 or faxed to: 202-775-0819. Please send inquiries to above email address. No phone calls please.

Policy Analyst | Posted 10:54 PM by John Irons

Here's a preview of the link to a new paper due out today...

A Feeble Recovery: The fundamental economic weaknesses of the 2001-07 expansion

Evidence is mounting that the U.S. economy is in a recession. If this is the case, a complete business cycle from 2001 through the end of 2007 (or perhaps the start of 2008) is now on the books, and the economic performance of the current decade can be held up in comparison to that of past business cycles. By almost all measures, the most recent expansion was the worst since WWII.

Weak expansion | Posted May 1, 2008 09:59 AM by John Irons

I agree with Len Burman on this one - the gain from a gas tax holiday would likely go to refining companies, not consumers.

(Econ 101 students: be sure to prep yourselves for final exam questions analyzing the impact of the tax holiday; if I were still teaching, I'd be sure to pose a question or two...)

USATODAY.com

Gas-tax holiday among McCain's plans for economy Dems say cuts 'will bankrupt our government'

By Kathy Kiely
USA TODAY

PITTSBURGH -- Presidential candidate John McCain on Tuesday proposed sweeping tax cuts to jump-start the economy, including a summer-long gas-tax holiday starting Memorial Day.

[...]

One concern: the possible impact of a tax moratorium on the federal highway trust fund, which is supported by the 18.4-cent-a-gallon tax on gasoline. The American Road & Transportation Builders Association estimates that the gas-tax holiday could blow a $9 billion hole in the highway construction budget and threaten 310,000 jobs.

A USA TODAY analysis showed that McCain's gas-tax proposal could save motorists $6.8 billion in taxes during the summer. Len Burman of the non-partisan Urban Institute said the money won't necessarily go back to consumers. Refineries already are running high to meet summertime gasoline needs, Burman said, so if demand for gas increases, so will prices. He said that means "a huge windfall for refiners," not consumers.

Gas tax holiday. | Posted April 30, 2008 05:14 PM by John Irons

Was on CNN today talking about what you should do with your stimulus check... some thoughts...

DO! Go out to dinner.
And make it a restaurant that serves locally-grown food. Your rebate will boost the need for waiters, cooks, and other employees. Your money will then be recycled directly back into the economy.

DON'T! Go see a movie.
Adding one more ticket sale will not result in many more employees or more movies being made in the short run. It will add to the box-office take, and perhaps lead to more movies down the road, but that's years from now.

DO! Home Repair
Been putting off fixing that leaky faucet, sweeping the chimney, or replacing that inefficient AC? By doing those repairs now, you will keep repairmen, construction workers, and other trades people working and recycle those dollars back into the economy.

DON'T! Stock up on essentials
You may boost the economy this month, but you'll reduce demand next month as you work thorough your supplies.

DO! Be a tourist in your own town
Go to the local museum, mini-golf course, local restaurants, and get a massage.

DON'T! Buy a ticket to Rome or go on a road trip.
With the dollar at record lows, fuel prices at record highs, it's better to spend money close to home than to spend it abroad or on gas.

DO! Drink a micro-brew or Bud.

DON'T! Drink wine from abroad.

Stimulus check | Posted April 28, 2008 05:02 PM by John Irons

Come see me in real life...

EPI's Agenda for Shared Prosperity

Investing in U.S. Infrastructure April 29, 2008 9:30 AM - 12:00 PM

An Agenda for Shared Prosperity forum

Tuesday, April 29, 2008
9:30 AM-Noon

EPI, 1333 H Street, NW; East Tower, Suite 300, Washington, DC

[See below to RSVP]

In a time of economic weakness, public investments in our nation's infrastructure can provide short-term stimulus while also building the foundation for long-term economic growth. The Economic Policy Institute will sponsor a timely forum on Investing in U.S. Infrastructure to address critically needed federal investments in infrastructure, including transportation, school buildings, and information networks.

Please join the Economic Policy Institute's Agenda for Shared Prosperity and Gov. Edward Rendell and others for a lively discussion of policy strategies to invest in physical infrastructure.

Registration & Breakfast
9:30-10:00 AM

Keynote & Discussion
10:00-10:30 AM

Infrastructure investment. | Posted 05:00 PM by John Irons

A minor redesign is in the works. The banner ads posed a problem with the old layout...

Redesign | Posted April 23, 2008 11:03 PM by John Irons

Snapshot on the share of taxes from various sources...

Corporate tax declines and U.S. inequality

Over the last 60 years, the U.S. tax code has dramatically shifted away from corporate taxes and toward taxes on individuals, especially through the payroll tax, the financing backbone of Social Security and Medicare. In the 1950s, the corporate income tax brought in, on average, one of every four dollars in federal tax revenues. By the 2000s, however, it raised just one of every 10 tax dollars.

The shrinking share of corporate taxes was made up by an increase in payroll taxes to fund social insurance and retirement programs. Excise and other taxes--such as fuel taxes, phone taxes, etc.--shrank as well over the last 60 years, while the individual federal income tax rose slightly, from an average of 43% of total federal revenue in the 1950s to 46% in the 2000s (see chart).

Corporate and individual taxes. | Posted April 15, 2008 08:18 AM by John Irons

From a couple years ago...

The Check Is in the Mail

OK, I admit it. I like doing my taxes. This annual ritual gives me the chance to sit down and reflect on the financial year that just passed and to think about my family's financial future. Tax time reminds me to spend a bit less and put a bit more into savings.

Filing your taxes is also one of the few common experiences that virtually all Americans share, and complaining about tax day and the IRS -- in a somewhat perverse way -- brings all of us closer together.

Check in the Mail | Posted 08:17 AM by John Irons

I've said this before... the use of private debt collectors is a bad idea...

Collectors Cost IRS More Than They Raise - washingtonpost.com

The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

Since 2006, the agency has used three companies to go after a $1 billion slice of the nation's unpaid taxes. Despite aggressive collection tactics, the companies have rounded up only $49 million, little more than half of what it has cost the IRS to implement the program. The debt collectors have pocketed commissions of up to 24 percent.

IRS debt collectors | Posted 08:12 AM by John Irons

Regular readers will notice new banners top and right. They should soon be populated with something more than Ad Council filler...

Forbes.com to Launch Business and Finance Blog Network - Forbes.com

Forbes.com to Launch Business and Finance Blog Network 03.24.08, 9:37 AM ET Today Forbes.com, home page for the world's business leaders, announced the creation of a Business and Finance Blog Network, comprised of a community of pre-screened, influential business and financial blogs.

The Blog Network's content will focus on senior business decision makers and high-net-worth investors. Topics will be relevant to the banking, trading, hedge fund management, affluent investing, and senior business decision-making communities. Participation in the network is by invitation only, and all blogs are vetted by Forbes.com editors for appropriate content, and to ensure that they are in keeping with the Forbes editorial brand.

The network will allow advertisers to target a highly engaged, exclusive niche audience of senior business decision makers and affluent investors easily and effectively. Four hundred-plus blogs have already joined the network, with many more expected to sign on before the official launch in the next few weeks.

Forbes Network | Posted April 12, 2008 10:11 PM by John Irons

I don't think the unease cited in the Pew report is just because of the recession. The latest recovery (since 2001) seems to be one of the worst, and maybe the worst, of the post WWII era.

Middle class grow fearful about their prospects - Stocks & economy- msnbc.com

The survey by the Pew Research Center, a Washington-based research organization, paints a mixed picture for the 53 percent of adults in the country who define themselves as "middle class," with household incomes ranging from below $40,000 to more than $100,000.

It found that a majority of Americans said they have not progressed in the past five years. One in four, or 25 percent, said their economic situation had not improved, while 31 percent said they had fallen backward. Those numbers together are the highest since the survey question was first asked in 1964. Among the middle class, 54 percent said they had made no progress (26 percent) or fallen back (28 percent).

Middle class economic survey | Posted April 9, 2008 04:46 PM by John Irons

For the press clips file...

Obama Casts Wide Blame for Financial Crisis and Proposes Homeowner Aid - New York Times

Both warned of a national credit crisis and advanced proposals to amend bankruptcy laws to aid those facing housing foreclosure. Each endorsed Democratic legislation -- sponsored by Senator Christopher J. Dodd of Connecticut and Representative Barney Frank of Massachusetts -- to create a housing security program in the Federal Housing Administration that would provide incentives to refinance mortgages carrying onerously high interest rates.

"They are very close; they are pointing to very similar proposals," said John Irons, research and policy director for the Economic Policy Institute, a labor-oriented research center. "There are minor differences, but when you compare their proposals with McCain, that's night and day. The Democrats are more like noon and 12:30."

Noon and 12:30 | Posted March 28, 2008 10:26 AM by John Irons

Cap and Lease Carbon

by John Irons

Global warming is fast becoming a reality. Unless significant action is taken to reduce greenhouse gas emissions, we can expect irreversible environmental and economic damage. While there is little serious debate on the need to reduce emissions-especially of carbon dioxide-there is a substantial debate on how to reduce these emissions. In theory, either a direct quantity restriction (cap-and-trade) or a price mechanism (tax) could be used to reduce production of carbon dioxide. But there is a policy stalemate on which is better.

Cap and Lease | Posted March 20, 2008 11:13 AM by John Irons

In a preview of what will likely be a hot issue in the general election, the 3 remaining presidential candidates took a stance on Bush's tax changes during the budget debate yesterday.

Both Democrats and McCain supported extending reductions for low-income taxpayers, families with kids, and married couples. Only McCain supported extending the other tax cuts that primarily benefit high-income individuals.

From Reuters:

All three senators, including McCain, voted for a Democratic proposal to permanently extend a 10 percent tax rate, mostly for low-income earners, along with a child tax credit and marriage penalty relief. All were all set to expire in 2010.

A Republican amendment that would have extended the remaining Bush tax cuts was defeated. McCain voted for it, while Obama and Clinton opposed it.

Afterwards, the Obama and McCain camps crossed swords - with Obama pointing to McCain's flip-flop on the issue...

"He made a decision to reverse himself on that, that was how I guess you got your ticket punched to be the Republican nominee," Obama told reporters. "But he was right then and he's wrong now."

McCain responded he looked forward to a potential debate on taxes with Obama during a general election campaign.

"Senator Obama has stated very clearly his desire to increase Americans' taxes. That'll be one of the great debates we have if he is the nominee of his party," McCain told reporters.

Tax preview | Posted March 14, 2008 11:21 AM by John Irons

Yesterday the House and Senate passed nearly identical versions of a budget blueprint for next year. The congressional budgets are largely status quo--spending and revenues are similar to this year's levels, and include slight increases to domestic spending relative to Bush's proposal.

Over time, however, the budgets assume a declining level of discretionary spending (which is the spending that Congress allocates on an annual basis for things like national defense, infrastructure, community development, and many other programs.) They also assume that some of the Bush tax changes would be reversed, while leaving some room for extending tax cuts for low and moderate income taxpayers.

Update: To put this into context, here is the historical data with 5 year outlook under Bush's proposed budget. Note that the defense portion is too low, since Bush does not include spending on Iraq in the out years.

Budget passes | Posted 10:31 AM by John Irons

My colleague Jared points out the recent drop in real hourly and weekly wages.

Real wage reversal persists

by Jared Bernstein

Data released this morning by the Bureau of Labor Statistics show that a combination of slower wage growth and faster inflation has led to falling real hourly and weekly earnings for most workers.

The Figure shows the yearly change in real earnings for the approximately 80% of the workforce that are non-managers in services and blue-collar factory workers. After handily beating inflation last year, wage growth began to slow as the economy lost speed in the last quarter of 2007. A year ago, annual hourly wage growth before inflation was 4.3%; this year (from January 2007 to January 2008), it was 3.7%.

Yearly change in real earnings, hourly and weekly (January 2007 - January 2008)

Inflation, conversely, driven up by higher energy prices, is growing about twice as fast as was the case one year ago.

This combination has led to the dramatic shift in the buying power of workers' paychecks. A year ago, real hourly and weekly earnings grew on a yearly basis by over 2%; this January, they are both down by about 1%. Note also that over the past two months, due to the decline in average weekly hours--a function of the weakening job market--real weekly earnings are falling more quickly than hourly earnings.

These trends have important implications. First, falling real wages will likely lead to diminished consumption, reinforcing slower macroeconomic growth. Second, the reality of squeezed paychecks for most workers helps to explain the primacy of economic concerns among voters in the presidential primaries.

Wages down | Posted February 20, 2008 11:25 AM by John Irons

If you're interested in front pages...

Newseum | Today's Front Pages | Gallery View

All the news. | Posted February 13, 2008 08:29 PM by John Irons

DeLong has moved towards stimulus (see below).

To be most effective, however, the Senate still needs to add on 1) unemployment insurance, 2) aid to states, and 3) direct job creation via school and bridge repair.

UI may be added today. State aid is not part of the mix, but I suspect will come up before too long as more states feel the revenue pinch. And unfortunately infrastructure spending is not part of the mix.

On the last point. Critics often argue that infrastructure spending takes too long to impact the economy. But...

1. If we spend the $ on repairs - there is little to no planning needed. We already know which bridges are unsafe, and what schools need to get spruced up.
2. The planning lag is much shorter than in the past. Remember the Minneapolis bridge collapsed last August? There are already boots on the ground, workers are pouring concrete for the footing of a new bridge.
3. Even if the spending takes longer (say a year or so), we will likely still see higher unemployment. The last 2 recessions show that employment takes significantly longer to recover than the end of the official recession.
4. And so what if we're slightly late? These are projects we will need to do anyway - so lets just speed them up a bit.

Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal

More on the Stimulus Package

On the phone just now, Larry Summers just moved me appreciably toward enthusiastic support of the stimulus package by arguing, roughly:

* The big arguments against the stimulus package are two:
o It will become a destructive lobbyist Christmas tree
o It will increase the deficit and yet fail to stimulate the economy
* We appear to have dodged the bullet on the first argument
* The second argument is incoherent because:
o The U.S. government is not going to go bankrupt
o Hence the reason to fear increasing the deficit is the fear that increasing the deficit will reduce national saving
o But if the stimulus package fails to boost spending, it will be because people save their tax rebate checks, in which case the stimulus will have no effect on national saving. Hence you can believe:
+ Either that the stimulus package will be ineffective as a stimulus but will not reduce national saving--in which case it is a zero.
+ Or that it will be effective as a stimulus--in which case it will be both good for employment and probably good for national saving as well, because few things are worse for national saving than a recession.
+ But the argument that the stimulus package is bad because it will be ineffective at boosting demand and will reduce national savings is not coherent

Stimulus | Posted February 6, 2008 03:50 PM by John Irons

Spending

• The budget would spend $3.1 trillion in FY2009.
• Non-security discretionary spending under the proposal will decline by about 2 and a half percent after adjusting for inflation, security-related spending would see about a 5 and a half percent increase.
• Department of Defense would see a 5 percent increase after adjusting for inflation and will total over $500 billion, which is
  
  
  
  • 1 out of ever 6 dollars spent by the federal government
    
  • More than all non-security discretionary spending combined.
    

• The budget assumes sharp declines in both security and non-security discretionary spending over the next 5 years. By 2012, security spending would decrease by 22 percent, while non-security would decrease by 18 percent.
• The budget contains at least $3 billion in reduction to grants to states in 2009.

Deficits:

• The deficit for 2009 under the proposal is $407 billion, or 2.7 percent of GDP; thus, debt as a share of the economy would increase this year.
• The proposal suggests declining deficits, and that a surplus would be reached in 2012, however this conclusion is built on an illusion:
• Despite a stated desire for a permanent solution, the budget only includes a 1 year patch of the AMT. Extending the patch would cost around $100 billion in 2012.
• The budget only includes $70 billion in war spending for 2009 (by contrast, 2008 funding totaled over $108 billion) and no spending thereafter.
• The budget contains tens of billions in annual cuts to health care for the elderly and the poor that are unlikely to be enacted. In 2012, the budget includes $50 billion worth of cuts.
• The budget assumes sharp declines in both security and non-security discretionary spending over the next 5 years. By 2012, security spending would decrease by 22 percent, while non-security would decrease by 18 percent.

Revenue

• The proposal would reduce federal revenues by $117 billion in 2009, and over $2.3 trillion over the next 10 years. The 10-year figure is an understatement of the revenue loss since it does not include a fix for the AMT.
• The Budget includes the impact of a stimulus package, which would reduce revenues by $125 billion in 2008, and $20 billion in 2009 (and small revenue increases in later years.

Economy

• The budget assumes only a very mild economic slowdown:
• Real GDP for calendar year 2008 is assumed to be 2.7 percent, returning to 3 percent next year.
• Unemployment is assumed to average just 4.9 percent.

For the reception on the Hill see...

Bush Unveils $3.1 Trillion Spending Plan - washingtonpost.com

Budget is Out | Posted February 4, 2008 11:38 AM by John Irons

Bush's final budget will be released tomorrow - here's the link once it goes live. I don't think anyone is expecting this to be anything but DOA on capital hill.

The bottom line will probably show growing deficits in next year or two, and then some improvement thereafter. However, the supposed improvements later in the budget window, will be an purely an illusion since the budget will likely:

• not include full out-year costs for military operations in Iraq.
• not include cost of AMT reform.
• assume large cuts in health care for the elderly and poor.

These are tricks used by the administration in recent budgets, and looks to be the same this year as well according to press reports.

In his new budget, to be unveiled Monday, President Bush will call for large cuts in the growth of Medicare, far exceeding what he proposed last year, and he will again seek major savings in Medicaid, according to administration officials and budget documents....The president's budget will not seek money for another full year of the wars in Iraq and Afghanistan.

Update: Looks like the war spending included won't even include a full-year request.

Pentagon won't detail war spending plan - Los Angeles Times

WASHINGTON -- When the Pentagon unveils its budget request Monday for the next fiscal year, it will back away from a commitment it made to Congress just a year ago -- to estimate how much the wars in Iraq and Afghanistan are likely to cost.

Last year, for the first time since the wars began, department budget officials detailed war spending plans for the year ahead at the same time it told Congress what its normal operating expenses would be.

But this year, although the Pentagon will go into great detail about how it plans to spend the billions of dollars it gets to run its normal operations, it will include only what officials call a "place-holder" for war funding.

Budget Fiction | Posted February 3, 2008 01:30 PM by John Irons

I've been out sick with a nasty cold this past week. I hope to return to posting soon.

In the meantime:

Opus Comics, by Bloom County's Berkeley Breathed - Salon

Payback for pollsters and the rabid, slobbering media

Out Cold. | Posted 01:27 PM by John Irons

Marketplace: Huge deficit seen. Does it matter now?

The Congressional Budget Office has announced the deficit for fiscal 2008 is going to hit almost $220 billion -- not counting war spending or an economic stimulus package. But analysts say there are bigger things to worry about. Danielle Karson reports.

Listen to this Story

Deficits and Stimulus | Posted January 24, 2008 08:20 AM by John Irons

Science and the 2009 Budget

Federal Budgets Matter Tremendously for Science

President Bush's last budget is unlikely to expand dedicated and critical federal spending on science. It's a problem that must be overcome.

By John Irons | Wednesday, January 23rd, 2008 | Share This | Print Print

In early February, the president will release his last budget proposal of his tenure in office. For policy analysts, the annual budget ritual is an interesting chance to take a look behind the political rhetoric and to gauge the priorities of the president and, shortly thereafter, Congress. It is easy to give a speech promoting science and technology, but concrete action will only arise if science programs are adequately funded through the budget.

Funding Science | Posted 08:16 AM by John Irons

Been busy with the day job - lot's to do thinking about economic stimulus. The link below contains a stimulus proposal, congressional testimony, blog posts from colleagues, etc. I will try to post some media appearances as time allows...

EPI Recession Watch | EPI

Strategy for an economic rebound Because the United States is either already in a recession or is headed for one, policy makers need to act now to craft an effective economic stimulus package to spur growth and job creation. Without a stimulus of sufficient magnitude, the U.S. economy is likely to see a decline in growth or even a formal recession, leading to higher unemployment, declining or stagnant wages, and a host of other economic problems. A package that provides $140 billion of stimulus--1% of GDP--would begin to reverse our economic course by creating an additional 1.4 to 1.7 million jobs. EPI unveils a broad-based, three-part prescription for stimulating the economy in its new Briefing Paper, Strategy for Economic Rebound--Smart Stimulus to Counter the Economic Slowdown.

Update - a few of note:

• Marketplace: Can Congress help subprime now?

• NBC news service, picked up several place includingRecession watch - News - Charleston, SC

• Marketwatch. Picked up many other places as well, includingPay-for-performance digs in with employers -- baltimoresun.com

• Was also on CNN monday (Lou Dobbs), talk radio in San Francisco on tuesday. Will be on bloomberg thursday evening.
  

Stimulus | Posted January 16, 2008 06:42 PM by John Irons

More evidence of a general slowdown from the CBO...

FT.com / World / US & Canada - US public finances feel the pinch

US public finances feel the pinch

The economic downturn in the US is starting to hit government revenues, the head of the Congressional Budget Office has told the Financial Times.

In an interview, Peter Orszag, the CBO director, said the slowdown "is showing up in revenue". Tax receipts were softer "across revenue as a whole" but "the slowing is most marked in corporate tax receipts".

Revenue impact | Posted January 12, 2008 04:58 PM by John Irons

Here's the monthly employment growth as well as the unemployment rate since 2000. Seems to be a clear labor market slowdown...

Jobs Picture | Posted January 10, 2008 02:54 PM by John Irons

It's always interesting to see myself translated, and what the result looks like when Babel Fished back. I sound very militant below...

Le pétrole cher frappe une économie américaine déjà fragilisée - Yahoo! Actualités

La pilule sera-t-elle aussi facile à avaler cette fois? Certains en doutent.

"Beaucoup de gens ont été surpris par la résistance de l'économie ces dernières années", estime John Irons, directeur des recherche à l'Economic Policy Institute. La différence cette fois est que "nous avançons en territoire inconnu", du fait de la décélération de l'économie.

Via babel fish:

Will the pill be also easy to swallow this time? Some doubt it.

"Much of people were surprised by the resistance of the economy these last years", estimates John Irons, director of research in Economic Policy Institute. The difference this time is that "we advance in unknown territory", because of the deceleration of the economy.

BabelFished | Posted 12:47 PM by John Irons

I recently wrote about Huckabee's fair tax gambit and wondered why he was getting away with proposing a tax increase on the middle class.

Brad DeLong runs with the idea, and with one thrust of his mighty sword, skewers Huckabee, the FairTax, and the Media's reporting on economic issues.

Mike Huckabee wants to abolish the IRS | Salon.com

Mike Huckabee wants to abolish the IRS

His loopy tax plan would be an economic disaster -- but it's more honest than the schemes being peddled by the establishment Republican candidates.

[...]

This is part of a pattern with Huckabee. Anxious to distinguish himself on policies from his competitors but without the staff and the network to perform due diligence on policy proposals, he ends up with ideas that aren't fully worked out and don't make much substantive policy sense.

Does the FairTax make political sense? It is hard to see how -- at least not if people know what he is really proposing. After all, a lot more people make between $30,000 and $200,000 a year than make more than $200,000. Politicians prefer, other things being equal, to take positions that are advantageous to more people rather than those that are advantageous to fewer.

So why is Huckabee doing this?

I believe the reason is that he is counting on people not knowing what he is really promising. I believe he is counting on the nigh total fecklessness of America's press corps -- a fecklessness that I at least now see as deployed with a sharp partisan edge.

He also references my favorite blog...

As economist John Irons laments on his blog, ArgMax.com: "I'm not sure how he is getting away with adopting the FairTax as part of his platform. Wouldn't Democrats be skewered in the media if they proposed a tax increase on people making between $30,000 and $200,000?" Yes.

And so the circle of life continues....

Taxabee | Posted January 7, 2008 06:08 PM by John Irons

Yuck.

Oil pushes to $100

NEW YORK (CNNMoney.com) -- Oil prices kicked off the first trading day of 2008 by hitting a new high of $100 a barrel Wednesday on violence in oil-rich Nigeria, the prospect of more interest rate cuts, a halt in Mexican imports and the expectation of yet another drop in U.S. crude supplies.

U.S. crude for February delivery jumped $4.02 to $100 a barrel on the New York Mercantile Exchange. The previous trading record was $99.29 set Nov. 20. Oil prices ended 2007 by gaining nearly 60 percent for the year, the largest jump this decade.

Yuck. | Posted January 2, 2008 04:39 PM by John Irons

Larry Summers argues for a targeted and temporary fiscal stimulus. But is $50 to $75 billion, or 0.36% to 0.54% of GDP big enough?

The State of the U.S. Economy (application/pdf Object)

Any actual fiscal stimulus program would have to be worked out in the context of events as they unfold and should be walled off from longer term policy considerations where actions to assure long term fiscal sustainability are essential. It is reasonable to suggest that stimulus approaching $50-$75 billion -- roughly in the range of 1/2 of 1% of GDP -- is likely to be appropriate. The largest part of this stimulus should come in the form of tax cuts distributed equally among all taxpayers and recipients of tax refunds. Other elements of a stimulus package should include extension of unemployment insurance benefits given that long term unemployment is already at recession levels, temporary step-ups in food stamp benefits which can be executed and have effect very quickly, and tax measures to eliminate from taxation the so-called income that homeowners receive when they are foreclosed, a step that has just been passed by Congress.

Too small? | Posted 12:20 PM by John Irons

Looking for most recent polling data on the presidential primaries?

Try:

• Pollster.com
• RealClearPolitics.com

Presidential horse race tracking | Posted December 20, 2007 07:49 AM by John Irons

Jon Henke thinks my description of the economic right is "obstructively cynical."

He's probably correct. Perhaps I've spent too much time debating Heritage Foundation economists.

http://www.qando.net/ - Left VS Right: the economic perspective

John Irons at ArgMax offers a competing list of his own characterizations of the Right. They are, I think, obstructively cynical...but interesting, nonetheless.

Right economics? | Posted December 16, 2007 06:48 PM by John Irons

Since Huckabee's rise in the polls, I'm getting more and more press calls about the so-called "Fair Tax." The bottom line is that the FairTax -- a flat sales tax that would replace all other federal taxes including income, corportate, estate, etc -- really has no chance of going anywhere; so most of us economists don't spend too much time thinking about it.

The president's tax reform panel from a couple years ago devoted a chapter to a national retail sales tax and does a good job as anyone of taking it seriously and then dismissing it (see chapter 9 of the final report).

Their analysis shows the obvious -- a flat rate sales tax would indeed mean a substantial tax increase on the middle-class and a massive cut at the top. (See figure below).

Getting back to Huckabee - I'm not sure how he is getting away with adopting the fair tax as part of his platform. Wouldn't democrats be skewered in the media if they proposed a tax increase on people making between $30,000 and $200,000?

An aside, this came from the NYTimes article on Huckabee, and Fair Tax...
"Some reputable economists think the scheme is practicable." Note they don't say desirable or politically viable... Not exactly a vote of confidence...

Mike Huckabee - Presidential Election of 2008 - Elections - Evangelical Movement - Religion - Politics - Republican Party - New York Times

Huckabee's answer to his opponents on the fiscal right has been his Fair Tax proposal. The idea calls for abolishing the I.R.S. and all current federal taxes, including Social Security, Medicare and corporate and personal income taxes, and replacing them with an across-the-board 23 percent consumption tax.

Governor Huckabee promises that this plan would be ''like waving a magic wand, releasing us from pain and unfairness.'' Some reputable economists think the scheme is practicable. Many others regard it as fanciful. (For starters, it would require repealing the 16th Amendment to the Constitution.) In any case, the Fair Tax proposal is based on extremely complex projections.

Huckabee does not have an impressive grasp of its details. When I suggested, for example, that consumers might evade the tax simply by acquiring goods and services for cash on the black market, he seemed genuinely surprised.

Fair Tax not so fair. | Posted December 14, 2007 06:24 PM by John Irons

I think Mankiw gets it wrong here. I think Mankiw's definition of the "right" economists is too idealistic (at least by inside-the-beltway standards.) His description of the "right" is really center, or even center-left. My characterization of the right is below.

Greg Mankiw's Blog: How do the right and left differ?

How do the right and left differ? The conclusion of today's ec 10 lecture:

In today's lecture, I have discussed a number of reasons that right-leaning and left-leaning economists differ in their policy views, even though they share an intellectual framework for analysis. Here is a summary.

• * The right sees large deadweight losses associated with taxation and, therefore, is worried about the growth of government as a share in the economy. The left sees smaller elasticities of supply and demand and, therefore, is less worried about the distortionary effect of taxes.


• * The right sees externalities as an occasional market failure that calls for government intervention, but sees this as relatively rare exception to the general rule that markets lead to efficient allocations. The left sees externalities as more pervasive.


• * The right sees competition as a pervasive feature of the economy and market power as typically limited both in magnitude and duration. The left sees large corporations with substantial degrees of monopoly power that need to be checked by active antitrust policy.


• * The right sees people as largely rational, doing the best the can given the constraints they face. The left sees people making systematic errors and believe that it is the government role's to protect people from their own mistakes.


• * The right sees government as a terribly inefficient mechanism for allocating resources, subject to special-interest politics at best and rampant corruption at worst. The left sees government as the main institution that can counterbalance the effects of the all-too-powerful marketplace.


• * There is one last issue that divides the right and the left--perhaps the most important one. That concerns the issue of income distribution. Is the market-based distribution of income fair or unfair, and if unfair, what should the government do about it? That is such a big topic that I will devote the entire next lecture to it.

Here, I think, is a better description of "the right" in Mankiw's approach.

• * The right sees taxation as an attack on freedom, and therefore taxes are un-American
• * The right sees "government failure" as a larger problem than market failure. So even when a market failure exists, government intervention will still make things worse.
• * The right sees market power as a sign of superior management ability, so attempts to curb monopoly power is punishing success.
• * The right sees people as fundamentally irrational, and the purpose of the market is to reward those that are more rational.
• * The right sees the market allocation of resources as optimal in all cases, so, by definition, government intervention makes things worse off.
• * The right is agnostic about income distribution. Whatever an unfettered market determines is, by definition, "fair", thus any intervention that impacts the income distribution is unfair.

Mankiw on economic ideology. | Posted December 12, 2007 11:05 PM by John Irons

This can't be good for consumption during the holiday season...

CNN.com - CNN Political Ticker Economy outpaces war on list of voters' worries «

More than half the American public -- 57 percent -- now believe the nation is in a recession, compared to 42 percent who do not, according to new CNN/Opinion Research Corporation poll released Tuesday. (Full poll results [PDF])

That number is up significantly from the October survey, when only 46 percent believed the U.S. economy was in recession.

Public Opinion on Recession | Posted 12:11 AM by John Irons

Rant of the day...

I know people who are literally throwing out all of their kids' toys. Salvation army is bringing thousands of volunteers to check their toys, or even removing them from their shelves all together. I've had to take a Baby Einstein block away from my 9-month old because it had lead paint.

Bush's leadership at the consumer products safety commission appears to be as inept as "heckuvajob" Brown at pre-katrina FEMA -- chairman Nord is still doing her best to not do her job.

If there's lead in toys, who knows what's in the $billions worth of cheap crap at wal-mart?

Why the heck aren't politicians having a field day on this?

...end rant...

• Charities wary of toys after recalls - Tampa Bay News, Weather, Breaking News and Sports for St. Petersburg, Clearwater, Sarasota - ABC Action News
  
• Lead Paint Toys - Salvation Army Stops Selling Toys Because of Lead - thedailygreen.com
  

Lead paint. | Posted December 10, 2007 07:52 PM by John Irons

ArgMax is #1! Ok, so they're in alphabetical order... but still...

Top 10 Economics Blogs You're Not Visiting (But Should Be)

1. ArgMax Dec 3 Schiff Ranking: 69.

The Economics at About.com has had only two guides in its 10+ year history. I am the second, John Irons, who runs ArgMax, was the first.

Why I visit: Among other things, ArgMax has intelligent discussion of economic policy from (in my view) a slightly left-of-centre view. A lot of the better U.S. economics blogs seem to be written by Republicans (not that there's anything wrong with that!), so guys like Irons and Brad De Long make for a welcome counterbalance.

Top 10 | Posted December 8, 2007 12:40 PM by John Irons

The mortgage deal coordinated by the White House initially seemed to be to be a good idea. Freezing rates for several years might strike a balance which would be cheaper to home lenders and borrowers, and also reduce the potential spillover to the macroeconomy.

However, as details emerge on the specifics, I'm not so sure this will have a sizeable impact. The odd restrictions on who would qualify would seem to undermine macro-stabilization. (This is especially of concern when you consider that the risk to the economy is not just from foreclosures, but also from reduced consumer spending that would result from higher payments).

It looks like there is a squeeze in who qualifies. If you are struggling to get by (or had a temporary financial issue which caused you to miss a payment or two): no help. If you were cautious and can afford (by industry's definition) higher payments and/or have a good credit score: no help.

Only those in the middle would seem to gain.

I'm afraid this will impact too few people to impact the macroeconomy.

On Mortgage Relief, Who Gains the Most? - New York Times

One of the financial industry's lead negotiators estimated that at most 20 percent of subprime borrowers whose payments will increase sharply over the next 18 months -- 360,000 out of 1.8 million people -- would qualify for rapid consideration of a special five-year freeze on interest rates.

The number of people who actually obtain help would be smaller, because each borrower would face tests aimed at weeding out those considered too hopelessly in debt and those who make too much money to justify relief.

In one curious twist, the plan could eliminate many who have good credit scores or managed to improve their credit scores, because the good ratings would be a sign they do not need help.

Yummm, donuts. | Posted December 7, 2007 09:08 AM by John Irons

Obviously not good news...

American Teens Trail Peers in Science, Math - washingtonpost.com

American teenagers have less mastery of science and mathematics than peers in many industrialized nations, according to scores on a major international exam released today.

Education experts say results of the 2006 Program for International Student Assessment highlight the need for changes in classrooms and in the federal No Child Left Behind law. The average science score of U.S. 15-year-olds lagged that of students in 16 of 30 countries in the Organization for Economic Cooperation and Development, a Paris-based group that represents the world's richest countries. U.S. students were further behind in math, trailing counterparts in 23 countries.

[...]

On the science portion, U.S. students, most of them 10th-graders, earned an average score of 489 on a 1,000-point scale, 11 points below the average of the 30 countries. Canada, Japan and Korea were among the countries in which students outperformed American counterparts. U.S. students were on par with eight countries and outperformed five.

In math, only four countries had average scores lower than the United States. Students in 23 countries earned a higher average score, and those in two countries did about the same as the Americans.

The ranking of U.S. students in math and science is about the same as it was in 2003.

1+1=? | Posted December 4, 2007 01:30 PM by John Irons

What makes for good graphic design for graphs? That is the question on my mind as of late.

Below is a graph from the St. Louis federal reserve publication National Economic Trends. Simple and to the point for a brief time series. The publication also has other, more complicated time-series charts, most of which are nicely done with a minimum of chart-junk.

But more complicated graphics stress the limits of the black-and-white, for-print design.

Political scientist turned graphic designer Edward Tufte used to be the go-to guy for this kind of question, but the Visual Display of Quantitative Information is starting to look a bit dated.

It would be nice to have a collection of well-done data-based charts and graphs to use as reference and for brainstorming.... just a thought.

Pretty charts wanted. | Posted December 2, 2007 11:23 PM by John Irons

Interesting way to profit from $100 oil...

Design Glut - LIMITED EDITION Crude Necklace

When and if crude hits $100/barrel, Design Glut will produce 100 limited edition Crude Necklaces with a high gloss black surface finish. The pieces can be seen a symbol of mourning for the fossil fuel era.

The pieces will be engraved with $100.00 and the date. They will sell exclusively on the Design Glut website. Buyers will have a choice between powder-coated brass ($100) or a black-patina 18 karat gold ($1000).

Design Glut's aim with the limited-edition release is to create a historical marker, in hopes that one day, when you are charging your electric car with your children, you can say, "I remember when crude hit $100."

$100 oil. | Posted 09:48 PM by John Irons

Stan Collender is not optimistic about a budget for '08, ... or '09.

And You Can't Make Me! | Capital Gains and Games

My column on nationaljournal.com this week deals with the continuing refusal of the Bush administration to work with Congress on appropriations, or much of anything else. The reason: "winning" rather than "governing' is what's important to this White House.

That may not be much of a surprise to anyone, but this might be (and remember you heard it here first): never mind the fiscal 2008 appropriations, it now must be considered unlikely that many (or perhaps any) of the fiscal 2009 spending bills will be enacted. This means that the federal government may run on a continuing resolution for four consecutive years and that many federal departments and agencies will be operating in 2009 at 2006 spending levels. The impact on the federal government's aility to do much of anything, especially when a crisis arises, will be severely compromised.

Budget meltdown. | Posted 05:50 PM by John Irons

So, if you're Al Hubbard, the outgoing chair of the NEC, do you put this on your resume? Seems like this is not exactly a flattering list of accomplishments...

Bush Chooses New Economic Adviser - New York Times

Hubbard has helped direct White House policy on entitlement reform, energy security, climate change, housing and trade investment policy. Among other issues, Hubbard has been deeply involved in the debate over the State Children's Health Insurance Program and Bush's proposal for a major shift in tax policy to, for the first time, treat health insurance costs as taxable income.

Record of outgoing NEC chair. | Posted November 28, 2007 07:28 PM by John Irons

The Center for American Progress has released first part of a series on economic policy...

Progressive Growth: Transforming America's Economy through Clean Energy, Innovation, and Opportunity

Progressive Growth

The Center for American Progress offers a fiscally responsible investment plan to:

Grow our economy through the transformation to a low-carbon economy and leadership in innovation, technology, and science.

Recreate a ladder of economic mobility so that Americans may make a better life for themselves and their families, and America may be a land with a thriving and expanding middle class prospering in the global economy.

CAP's Economic Strategy | Posted 01:07 PM by John Irons

Dani Rodrik points us to an interesting website with data on carbon emissions....

Dani Rodrik's weblog: More than you ever wanted to know on CO2 emissions

More than you ever wanted to know on CO2 emissions

Want to know how much CO2 is emitted by the power plant across town, and how it compares to the one in the city you are planning to move? The Center for Global Development has just launched a web site that will tell you exactly that. In fact, the site has emissions data for every single power plant in the world--some 50,000+ power plants and 20,000+ power-producing companies.

Called the CARMA (CARbon Monitoring for Action) website and database, the site focuses on the global power sector, the largest carbon emitter industry. It has reported or estimated data on current emissions, emissions in 2000, and future emissions based on published capacity expansion plans. It is a downloadable database, with tools for ranking and comparing power facilities, power companies, and geographic areas.

For those plants that have not reported their emissions publicly, CARMA provides "estimates based on the latest plant-level technical information, a statistical model fitted to data for thousands of publicly-reporting facilities, and adjustments for national differences in capacity utilization."

This is an amazing treasure trove of data. It will set into motion an interesting experiment on what transparency can achieve with respect to public activism and corporate responses.

New Website with CO2 data. | Posted November 26, 2007 12:25 AM by John Irons

I just got my annual web hosting bill... (ouch!) ... please click on an ad to support Argmax.com.

Support Argmax.com | Posted November 16, 2007 07:54 AM by John Irons

Lawrence Lessig has an interesting post on the top democratic contenders. It's refreshing to see an evaluation of the candidates on some of the non-top-tier issue - in this case access, information and privacy policy. As you'll see, he's for Obama.

4Barack (Lessig Blog)

Second, on the important: As you'll read, Obama has committed himself to a technology policy for government that could radically change how government works. The small part of that is simple efficiency -- the appointment with broad power of a CTO for the government, making the insanely backwards technology systems of government actually work.

But the big part of this is a commitment to making data about the government (as well as government data) publicly available in standard machine readable formats. The promise isn't just the naive promise that government websites will work better and reveal more. It is the really powerful promise to feed the data necessary for the Sunlights and the Maplights of the world to make government work better. Atomize (or RSS-ify) government data (votes, contributions, Members of Congress's calendars) and you enable the rest of us to make clear the economy of influence that is Washington.

And access to government data. | Posted November 15, 2007 07:00 PM by John Irons

Collender is better know for his "budget battles" column for the National Journal and for being the most quotable budget guy around. Should be a good read.

Capital Gains and Games | Washington, Wall Street and Everything in Between

Policymakers and the financial services community think about each other all the time, but neither really understands what the other is doing. This blog, written by Stan Collender, is intended to change that.

Stan Collender has a blog. | Posted November 13, 2007 10:08 PM by John Irons

Last year, a historian weighed in on Bush's potential legacy as well. Here's the bit on the economic record....

The Worst President in History? : Rolling Stone

The heart of Bush's domestic policy has turned out to be nothing more than a series of massively regressive tax cuts -- a return, with a vengeance, to the discredited Reagan-era supply-side faith that Bush's father once ridiculed as "voodoo economics." Bush crowed in triumph in February 2004, "We cut taxes, which basically meant people had more money in their pocket." The claim is bogus for the majority of Americans, as are claims that tax cuts have led to impressive new private investment and job growth. While wiping out the solid Clinton-era federal surplus and raising federal deficits to staggering record levels, Bush's tax policies have necessitated hikes in federal fees, state and local taxes, and co-payment charges to needy veterans and families who rely on Medicaid, along with cuts in loan programs to small businesses and college students, and in a wide range of state services. The lion's share of benefits from the tax cuts has gone to the very richest Americans, while new business investment has increased at a historically sluggish rate since the peak of the last business cycle five years ago. Private-sector job growth since 2001 has been anemic compared to the Bush administration's original forecasts and is chiefly attributable not to the tax cuts but to increased federal spending, especially on defense. Real wages for middle-income Americans have been dropping since the end of 2003: Last year, on average, nominal wages grew by only 2.4 percent, a meager gain that was completely erased by an average inflation rate of 3.4 percent.

The monster deficits, caused by increased federal spending combined with the reduction of revenue resulting from the tax cuts, have also placed Bush's administration in a historic class of its own with respect to government borrowing. According to the Treasury Department, the forty-two presidents who held office between 1789 and 2000 borrowed a combined total of $1.01 trillion from foreign governments and financial institutions. But between 2001 and 2005 alone, the Bush White House borrowed $1.05 trillion, more than all of the previous presidencies combined. Having inherited the largest federal surplus in American history in 2001, he has turned it into the largest deficit ever -- with an even higher deficit, $423 billion, forecast for fiscal year 2006. Yet Bush -- sounding much like Herbert Hoover in 1930 predicting that "prosperity is just around the corner" -- insists that he will cut federal deficits in half by 2009, and that the best way to guarantee this would be to make permanent his tax cuts, which helped cause the deficit in the first place!

The rest of what remains of Bush's skimpy domestic agenda is either failed or failing -- a record unmatched since the presidency of Herbert Hoover.

Cover story. | Posted 10:00 PM by John Irons

Joe Stiglitz nominates Bush for worst president ever on the economy.

The Economic Consequences of Mr. Bush: Politics & Power: vanityfair.com

The Economic Consequences of Mr. Bush The next president will have to deal with yet another crippling legacy of George W. Bush: the economy. A Nobel laureate, Joseph E. Stiglitz, sees a generation-long struggle to recoup. by Joseph E. Stiglitz December 2007

The American economy can take a lot of abuse, but no economy is invincible.

When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.

[...] a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris--or even the Yukon--becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands--or so he says--that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.

Up to now, the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression, is the odds-on claimant for the mantle "worst president" when it comes to stewardship of the American economy. [...]

Sliglitz on Bush in Vanity Fair. | Posted 08:07 PM by John Irons

The NY Times has an interesting article on insect swams. Connection to economies should be obvious. But does being more intelligent than your average ant lead to more or less complicated group behavior?

From Ants to People, an Instinct to Swarm - New York Times

By studying army ants -- as well as birds, fish, locusts and other swarming animals -- Dr. Couzin and his colleagues are starting to discover simple rules that allow swarms to work so well. Those rules allow thousands of relatively simple animals to form a collective brain able to make decisions and move like a single organism.

Deciphering those rules is a big challenge, however, because the behavior of swarms emerges unpredictably from the actions of thousands or millions of individuals.

Looks like an economy to me. | Posted 12:10 PM by John Irons

Rangel tax bill has a provision to get rid of the IRS's outsourcing of tax collections. Apparently Bush is threatening a veto (in part) due to this provision. Next thing you know, the CIA will be outsourcing interrogations...

See Stop the Madness! By Derek Douglas, John S. Irons, Bobby Lepore on the IRS sending cases to private debt collectors.

Paul Krugman - Op-Ed Columnist - New York Times Blog

PS: I missed this:

The White House also said language in the bill to terminate an IRS program farming out delinquency cases to private debt collectors would subject it to a veto.

Privatization -- and tax farming, no less, which went out with the French Revolution -- trumps aid to the middle class.

Yet another bad idea. | Posted November 9, 2007 10:23 PM by John Irons

Profile from a couple months back. | Posted November 8, 2007 06:27 PM by John Irons

So, this is obviously not good news. Nor is it a surprise that home equity withdrawals are on the decline.

Using the numbers from below, the $350 bill drop in MEWs is about 3.6% of consumption, or 2.5% of GDP.

Homeowners Feel the Pinch of Lost Equity - New York Times

Only a year ago, money taken out of houses was still more than 9 percent of the nation's disposable income, Mr. Zandi calculated, using a sampling of Equifax credit reports to supplement Fed data. By this fall, it had dropped to about 5 percent, a difference of about $350 billion a year.

Much of the attention in the recent collapse of the housing boom has focused on those in danger of losing their home or facing higher monthly payments in their adjustable mortgages. But the broader effect on the economy is likely to come from the much larger group of homeowners who can no longer count on rising home values to bolster their wealth.

Consumer spending accounts for about 70 percent of all economic activity in the United States, or about $9.8 trillion, so even a slight dip in home borrowing takes huge amounts of money out of the flow. The prospect of a slowdown, combined with the squeeze on households from higher oil costs, is sending shivers through the retail world, as apparel merchants, furniture dealers and electronics stores brace for the possibility that the all-important holiday shopping season will disappoint. Automakers are bemoaning sluggish sales.

Just in time for the holiday season. | Posted 11:15 AM by John Irons

Three Levels of Assets; Radiohead's Happy Tune - November 8, 2007 - The New York Sun

RADIOHEAD A WINNER

The BBC reported that the strategy employed by the band Radiohead to release its album online and let fans decide how much to pay was a failure, with 62% opting to pay nothing. But John Irons at argmax.com writes that it was a huge success. Of those who did pay for the album, the average price was $6. "So if my math is right, this means that the average across all downloaders is $2.28. Now, I don't know what the industry standard is for the per CD royalties that the band collects (vs. what the record company keeps), but I wouldn't be surprised if this is not too far off." Plus, Mr. Irons notes, Radiohead's strategy "probably introduced thousands of people to the band and will help expand their fan base for future releases and concerts."

New York Sun, that is. | Posted 08:12 AM by John Irons

CNN.com - CNN Political Ticker Americans have economy on the brain «

Americans have economy on the brain

WASHINGTON (CNN) - The state of the economy is the number-one issue on the minds of Americans as the presidential election approaches, according to a CNN/Opinion Research Corporation poll released Wednesday morning.

Eighty-two percent of Americans said the economy will be extremely or very important to their vote for president. Economic conditions edged out Iraq by two points, with 80 percent of those surveyed saying that the war is 'extremely or very important' to their vote.

Also, among the top five issues on the public's mind when contemplating their next vote for president are health care (76 percent), terrorism (76 percent), and Iran (73 percent).

The state of the overall economy weighed more heavily on the minds of voters than specific economic issues such as gas prices (67 percent), poverty (65 percent), taxes (63 percent) and immigration (61 percent).

The CNN/Opinion Research Corporation telephone poll of 1,024 American adults was conducted over the weekend and had a sampling error of plus-or-minus 3 percentage points.

CNN poll put economy as #1 issue. | Posted November 7, 2007 08:39 PM by John Irons

I've heard the Radiohead experiment presented as a failure since 62 percent of downloaders paid nothing. (Background: Radiohead is a band that released an album online and let fans decide how much, if anything, they'd like to pay.)

To me, however, this seems like it could be a huge success. Of those that paid, the average price was $6. So if my math is right, this means that the average across all downloaders is $2.28. Now, I don't know what the industry standard is for the per CD royalties that the band collects (vs what the record company keeps), but I wouldn't be surprised if this is not too far off. Plus, this mechanism probably introduced thousands of people to the band and will help expand their fan base for future releases and concerts.

I'm not sure this model will work for all bands, but this is far from a failed experiment as many have suggested.

BBC NEWS | Entertainment | Most 'paid nothing for Radiohead'

Most 'paid nothing for Radiohead'

Nearly two-thirds of downloaders paid nothing for Radiohead's latest album, a survey has suggested.

Fans were invited to put their own price on the 10 MP3 files that made up In Rainbows, from nothing to £100.

But internet monitoring company Comscore found that only 38% of downloaders willingly paid to do so.

The average price paid for the album was $6 (£2.90), the study - based on a survey of the online behaviour of over two million internet users - found.

American fans were the most generous, paying on average $8.05 (£3.85), compared to the $4.64 (£2.22) paid by those outside the US.

Risks

Of those who were willing to pay, the largest percentage (17%) paid less than $4 (£1.90). However 12% were willing to pay between $8-$12, (£3.80 - £5.71).

Not too bad. | Posted 07:29 PM by John Irons

Utah is set to have a voter referendum on school vouchers. From the bit of TV watching I did while there over the last 4 days, it looks like an ugly battle.

The big battle seems to swirl around an ad using Oreos to demonstrate the impact of vouchers. (A google search of "oreo Utah vouchers" yields 26,400 results.) Here's the original ad, and a more accurate demonstration/reply from a public school teacher. The alternative Salt Lake weekly has a nice cover story as well.

Latest polls have the issue going down to defeat.

Ezra Klein is looking at the DC experience.

Ezra Klein: Vouchers in DC

Vouchers in DC

Since I've been involved in this debate, I've been trying to read up on the various voucher programs that have actually been implemented. To that end, I just grabbed RAND's Rhetoric versus Reality: What We Know and What We Need to Know About Voucher and Charter Schools. RAND, it goes without saying, is no hotbed of left wingery. But their "Academic Achievement" section begins with this:

The newest experimental voucher evidence comes from the federally sponsored voucher program in Washington DC, established in 2004, known as the DC Opportunity Scholarship Program. The U.S. Department of Education released the findings of the first-year achievement impact study, led by Patrick Wolf of the University of Arkansas, in June 2007. Because the program was oversubscribed, scholarships were awarded by lottery. To examine total program impact on student achievement, the study compared the results of lottery winners with those of lottery losers (regardless of whether the winners actually used their scholarships or whether the losers attended public schools). The authors found no impact, positive or negative, on average test scores in reading or math. Similarly, they found no impact of the effect of using a voucher to attend a private school on average reading or math test scores.

Given that a lot of this conversation has actually been about the DC public school system, this data is relatively important. Again, it doesn't mean that experimentation couldn't have positive impacts -- say, under charter schools, where pubic accountability is retained -- but this intense focus on vouchers stems from a commitment to economic orthodoxy, not because the programs have any proven results.

I'm always interested in local politics and policy when I travel. | Posted November 5, 2007 09:33 PM by John Irons

Just got back from Salt Lake City. Seems like a nice place, and The Marra seemed to enjoy it.

Back. | Posted 09:21 PM by John Irons

Excellent! Click on the link to generate a new release.

Instant Ben: A Fake FOMC Press Release Generator -- October 31, 2007

Fake Federal Reserve Release Release Date: October 31, 2007

For immediate release

The Federal Open Market Committee decided to increase its target for the federal funds rate by 50 basis points to 5 3/4 percent.

The Committee thinks on evenly-numbered days that a miserly stance of monetary policy, coupled with wondrous underlying growth in Tiger Woods game, is providing qualified support to economic activity. However, the precipitous decline of crop-circle incidents has lowered, generally speaking, ethanol prices, increased earnings upgrades, and lowered, generally speaking, equity and debt markets. These developments, along with the neutral stance of monetary policy and ongoing ebbing in wages, should foster moderated economic stability over time.

Although the timing of that decline remains uncertain, the Committee perceives that over the thirty-three seconds the upside and downside risks to the attainment of sustainable growth are not balanced. The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward ass-kicking growth for the next little while.

Click Fed Chairman Bernanke Ben to create another fake FOMC release!

Someone's got too much time on their hands. | Posted October 31, 2007 01:58 PM by John Irons

Will be interesting to see if the housing downturn (and financial worries) will show up in tomorrow's GDP release. In the morning, check in at EPI.org to see Josh Bivens' take.

Home Prices Are Down, and So Is Confidence - New York Times

Home prices dropped again in August and consumer confidence remained at the lowest level in two years, reinforcing investors' bleak expectations for the economy, a new report showed today. The trouble signs came as Federal Reserve policy makers began a two-day meeting that could culminate in an interest rate cut.

The Case-Shiller survey found that prices of homes across 20 major United States metropolitan areas fell 4.4 percent for the 12 months through August, the steepest drop since 2001, when the survey began. The measure, which is released by Standard and Poor's, is considered more accurate than comparable government reports and offers investors more evidence that the housing sector is facing its worst stretch since the early 1990s.

Will GDP be able to shrug off the housing/credit crunch? | Posted October 30, 2007 06:31 PM by John Irons

From Conde Nast Porfolio. (This came out in July, but just saw it today...)

A-List Blogs for C-Level Execs - Business Intelligence - Portfolio.com

A-List Blogs for C-Level Execs by Michelle Haimoff/Hannah Trierweiler We wouldn't waste your time with anything but the must-reads. A-List Blogs for C-Level Execs

[...]

Argmax
www.argmax.com/mt_blog
This economic news, data, and analysis blog was started by John Irons, the director of tax and budget policy at the Center for American Progress. Previously, Irons served as an economics guide at About.com.

From Conde Nast Porfolio | Posted October 29, 2007 07:09 PM by John Irons

What I did this morning...

C-SPAN: WASHINGTON JOURNAL - ENTIRE PROGRAM

ON WASHINGTON JOURNAL Monday, October 29

[watch] J.D. Foster, Heritage Foundation, Economic Fiscal Policy Senior Fellow & John Irons, Economic Policy Institute, Research and Policy Director

Topic was Rep Rangel's tax reform bill.

These call-in programs are useful as a reminder that people don't think about taxes in isolation (as we economists often do), but rather they fit tax policy into their broader thinking about the world--the show's callers jumped into all kind of areas including immigration, war on iraq, etc.

What I did this morning... | Posted 11:45 AM by John Irons

Alan Reynolds yet again argues in the WSJ that there has been no increase in income inequality. Most objective observers agree that income inequality has indeed grown, and that the top 1% (and top 0.1%, 0.01%) have all gotten relatively richer than the rest of of us.

A similar column (and other work) from a couple yrs ago did not stand up to scrutiny: See Gary Burtless of Brookings, and Piketty and Saez.

But say he was right - and that pre-tax income inequality was always as skewed as it is today. What does that say about the tax code? Well, it might then say that the top 1% will do fine no matter what the top marginal tax rate is - we've had a wide range of top marginal tax rates over the last 75 years. So increasing by a few percentage points would be just fine. Somehow I don't think he'd agree.

The Truth About the Top 1% - WSJ.com

The Truth About the Top 1% By ALAN REYNOLDS October 25, 2007; Page A23

Key legislators and presidential hopefuls in the Democratic Party have proposed raising the top two tax rates. They're also suggesting extra surtaxes for war, for alleviating the Alternative Minimum Tax, for Social Security, and for subsidizing compulsory health insurance. Barack Obama and John Edwards advocate taxing capital gains at 28%; Hillary Clinton favors taxing dividends at the surtaxed income-tax rates.

The argument for these proposals has nothing to do with the impact of higher tax rates on incentives and the economy. It is all about "fairness" -- defined as reducing the top 1%'s share of income.

This political exercise invariably begins by citing dubious statistics about pretax incomes among the top 1% (1.3 million tax returns) as an excuse for raising tax rates on the top 5%, among others. Echoing speeches from Sen. Clinton, Business Week recently exclaimed, "According to new Internal Revenue Service data announced last week, income inequality in the U.S. is at its worst since the 1920s (before the Great Depression). The top percentile of wealthy Americans earned 21.2% of all income in 2005, up from 19% in 2004."

These statistics are extremely misleading.

Alan Reynolds on top 1 percent. | Posted October 25, 2007 02:51 PM by John Irons

Looks like an ambitious tax plan. The individual side replaces the AMT with a surtax on high-income taxpayers and beefs up the EITC. The corporate side looks like an 1986-style reform - close loopholes in exchange for lower rates.

A Tax Plan as Trial Run for '09 Law - New York Times

On individual taxes, the heart of his plan calls for eliminating the alternative minimum tax -- which was originally created to prevent millionaires from taking too great advantage of tax breaks but now touches people with upper middle incomes and is poised to affect tens of millions of families with incomes as low as $50,000 a year.

Eliminating the alternative tax would reduce projected revenue by almost $800 billion over the next 10 years, according to Congressional estimates.

Mr. Rangel's bill would also expand some tax breaks for middle- and low-income people. It would increase the standard deduction, at a cost of $48 billion over 10 years. And it would widen the earned- income tax credit, which primarily benefits working single parents with low incomes, to include more low-income workers who do not have children. That would cost $29 billion over 10 years.

To offset the cost of those reductions, the bill would impose a new "replacement tax" for the top 10 percent of income earners who would have otherwise had to pay the alternative minimum tax.

The replacement tax would not apply to couples with incomes as low as $200,000, but aides to Mr. Rangel said many people with incomes as high as $500,000 would still end up with at least slightly lower taxes than under current law.

In effect, the bill would roll back a big part of Mr. Bush's tax cuts for people with top incomes. In that respect, it is similar to the general positions on taxes that most of the Democratic presidential contenders have taken.

Looks interesting... | Posted 11:32 AM by John Irons

Well, so much for that theory...

Think Progress -- CA Guard Warned Of 'Less Effective Response' To Fires Due To Equipment Shortages Caused By Iraq

CA Guard Warned Of 'Less Effective Response' To Fires Due To Equipment Shortages Caused By Iraq

The San Francisco Chronicle reported last May that the California National Guard had been depleted and warned that severe "equipment shortages could hinder the guard's response to a large-scale disaster," such as a "major fire":

In California, half of the equipment the National Guard needs is not in the state, either because it is deployed in Iraq or other parts of the world or because it hasn't been funded, according to Lt. Col. John Siepmann. While the Guard is in good shape to handle small-scale incidents, "our concern is a catastrophic event," he said.

[...]

At a press conference five months ago, Gov. Arnold Schwarzenegger (R-CA) echoed these concerns, stating, "A lot of equipment has gone to Iraq, and it doesn't come back when the troops come back." The Chronicle reported that the California National Guard was missing about $1 billion worth of equipment.

Now, as 14 major wildfires rage across the state, those earlier warnings are materializing. While California currently has approximately 1,500 Guardsmen serving in Iraq, the strains on the disaster response teams are compounded by the missing personnel and equipment.

Oh, wait. | Posted October 24, 2007 05:50 PM by John Irons

DeLong steers us to Surowieki in the New Yorker (online) re: supply siders.

At some point long ago I think people would occasionally use the phrase "supply-side economists" - but now it's just "supply-siders" -- which is much better, since "supply-side economist" has since become an oxymoron.

Tax Evasion: Online Only: The New Yorker

Tax Evasion The great lie of supply-side economics. by James Surowiecki October 29, 2007

In American politics, supply-side economics is the monster that will not die. The supply-side argument that, in the United States, tax-rate cuts pay for themselves--that, after cutting taxes, the government actually ends up with more revenue--has little or no support within the mainstream economic profession, and no hard empirical data to back it up. Myria