Making minor improvements... but want to redesign to incorporate twitter, posterous.

Also thinking about moving from movable type to a hosted platform to better cross-post.

Best idea I've heard in a while...

» Create Your Own "Extended Warranty Fund"

Create an "extended warranty fund" Instead of buying warranty after warranty, why not create an "extended warranty fund." In other words, whenever a retailer offers you an extended warranty, simply transfer that amount of money into a dedicated savings account*.

If/when problems arise, you can simply pay for the repairs (or replacement) out of your warranty fund. And once the fund builds up to a sufficiently healthy size, you can back off on your contributions.

There are two main benefits to self-insuring in this way. First, you'll get to earn interest on the money as it accrues. Second, you'll be the one that gets to keep the cash when your stuff doesn't break.

Sure, there are bound to be some instances in which you would've been better off with the extended warranty, but remember... These warranties are designed to be profitable. Thus, more often than not, you'll come out ahead by skipping them entirely.

I've been trying to track this article down for months... must read for those interested in setting the record straight.

• Persistence of Myths Could Alter Public Policy Approach - washingtonpost.com

John Irons (jsirons) on Twitter

jsirons

Now live on Twitter...

Views of Income Taxes Among Most Positive Since 1956

A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is "about right," with 46% saying "too high" -- one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.

We're hiring a labor economist at EPI... see link for details on how to apply...

Employment opportunities at EPI

Living Standards/Labor Economist

The Economic Policy Institute is looking for an experienced economist for our flagship Living Standards program. In that position, the successful candidate would work with the Living Standards team to undertake a variety of research and analytical projects. They would be responsible for monitoring and commenting on current economic conditions, including labor market conditions; trends in income and wage outcomes; factors that impact low- and moderate-income workers; and others. They would also be expected to analyze and comment on related economic policies.

The position also includes a significant component of research dissemination and communication; working with EPI's external/communications team to communicate findings to the media, public-interest organizations, the academic community, and policy makers in Congress and the administration.

The successful candidate would also help set the direction of the program by identifying new areas of inquiry and shaping programmatic activities.

The position reports directly to the Research and Policy director, but will also work closely with EPI's president.

Romer/Bernstein estimate job impact to be between 3 and 4 million... see The Job Impact of the American Recovery and Reinvestment Plan.

Just posted at EPI...

A rescue plan for Main Street

A package that provides funding for infrastructure, aid to states, and other provisions would begin to reverse our economic course by creating jobs while meeting national priorities. The package should also include a down-payment on longer-term reforms, as well. This memo outlines some elements that should be essential components of a more comprehensive recovery package and briefly examines the impact it would have on the economy and job creation.

The GAO is out with its first report on the Treasury's TARP/CPP program. Implementing the transparency and accountability requirements should be a high priority for the new administration.

(Also, be sure to check out the nifty TED spread chart on page 50, and the bond-treasury spread on 51. And, if you want to scare yourself, the foreclosure chart on page 55.

TROUBLED ASSET RELIEF PROGRAM

Through the capital purchase program (CPP)--a preferred stock and warrant purchase program--Treasury provided more than $150 billion in capital to 52 institutions as of November 25, 2008. GAO recognizes that TARP has existed for less than 60 days and that a new program of such magnitude faces many challenges, especially in this current uncertain economic climate. However, Treasury has yet to address a number of critical issues, including determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments. Moreover, further actions are needed to formalize transition planning efforts and establish an effective management structure and an essential system of internal control.

Irons/Bivens - May 1, 2008:

While it will be many months before an "official" recession is declared, evidence shows that the economic expansion that began in 2001 has almost surely ended.1 Furthermore, if these trends continue, the start of a new recession will likely be dated either at the end of the last quarter of 2007, or at some point during the first quarter of 2008.

Business Cycle Dating Committee, National Bureau of Economic Research - December 1 2008

The Month of the Peak

The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession.

Things have been crazy at the day job with the economy melting down and the election. Any hopes for a post election letdown are slipping away. Here's my public event schedule for the next few weeks...

• Nov 13th - Kerner Commission/Eisenhower foundation event at EPI, talking about revenue options for progressive reform


• Nov 18th - CAF event on the hill re: economic stimulus and investment in infrastructure


• Nov 19th - CBPP/SFAI conference on the current and projected state of the economy, prospects for stimulus


• Dec 1 - Innovation conference (EPI/UC Davis) on green jobs

Now on to the hard work of fixing the economy...

Obama gets endorsements from two <sarcasm>socialist</sarcasm> publications: The Economist and Financial Times

An endorsement of Barack Obama | It's time | The Economist

FT.com / Comment & analysis / Editorial comment - Obama is the better choice

It's been a busy couple of weeks. Below is some of what I've done...

• Testimony: Transportation and Infrastructure Committee
• "A rescue plan for main street" EPI Policy Memorandum #132
• National Journal Experts Blog
• Google's "Knol debates" vs CATO
• C-Span Washington Journal
• NPR Marketplace
• The Hill, Support for 2nd stimulus strengthening
• CQ: A Concrete Stimulus Plan: Infrastructure and Recovery

Quoted on stimulus in CQ below. Also, stay tuned - I'm scheduled to testify before the House Transportation and Infrastructure Committee next week.

CQ Politics | A Concrete Stimulus Plan: Infrastructure and Recovery

The research and policy director at the liberal-leaning Economic Policy Institute, John Irons, says that if the nation goes into a recession -- and there's a growing consensus that it's already there -- employment opportunities will be needed not just in the short term, but for months down the road. "With recessions the job market takes a lot longer to recover," Irons said. "So whatever we can put into the pipeline, it's not like we won't need it in six months or a year."

Obama is advertising on Xbox 360 online games. See pics:

here, and here.

Confirmed: Obama Is Campaigning on Xbox 360! - GigaOM

Last week we noted unconfirmed sightings of an "Obama for President" billboard in the Xbox 360 racing game Burnout Paradise. Today we're able to report that it is, in fact, an official advertisement placed by the senator's campaign team.

"I can confirm that the Obama campaign has paid for in-game advertising in Burnout," Holly Rockwood, director of corporate communications at Electronic Arts, the game's publisher, told me via email, noting that EA regularly allows ad placements in their online games. "Like most television, radio and print outlets, we accept advertising from credible political candidates," she continued. "Like political spots on the television networks, these ads do not reflect the political policies of EA or the opinions of its development teams."

The Prize in Economics 2008 - Press Release

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 to Paul Krugman Princeton University, NJ, USA

"for his analysis of trade patterns and location of economic activity"

International Trade and Economic Geography
Patterns of trade and location have always been key issues in the economic debate. What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions. He has thereby integrated the previously disparate research fields of international trade and economic geography.

Krugman's approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale. Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another.

Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products - for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.

Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman's theories have shown that the outcome of these processes can well be that regions be

I think we all know now to read the fine print when it comes to mortgages....

Gene and Jared note the fine print of the McCain bailout.

Jared Bernstein and Gene Sperling: Ouch! McCain's Housing Solution Is a Gift from Taxpayers to Banks

But today we learned of a detail that makes his plan significantly different -- and much worse. The McCain plan uses taxpayer dollars to buy distressed mortgages at their full, face value from the banks and lending institutions that are currently stuck with them. Only then, after we the taxpayers have fully absorbed the cost to the lender of these troubled loans, does the homeowner get the benefit of the lower principal.

That's right folks...it's private profits and social losses. Instead of an effort to safeguard taxpayers as Senator Obama has called for and the Frank-Dodd bill goes to great lengths to do, this plan takes from taxpayers to provide unjustifiable subsidies to financial institutions - even those who engaged in deceptive or outright fraudulent practices to induce people into homes they could not afford.

What did I say?

Finance et Investissement : Le plan Paulson toujours entre les mains du Congrès

Le plan Paulson toujours entre les mains du Congrès

Le temps presse...

23 septembre 2008

Par Léonie Laflamme Savoie

Publicité
 
« Un plan de sauvetage ne doit pas être simplement un cadeau pour des compagnies qui ont pris de mauvaises décisions », soutiennent les économistes de l'Economic Policy Institute (EPI).

Alors que le Congrès américain est toujours divisé sur son intention d'approuver ou non le plan de sauvetage que le secrétaire au Trésor Henry Paulson a conçu afin de sauver l'industrie financière américaine, les débats font rage quant à la validité et à la viabilité du plan en question.

« De la façon dont le plan Paulson est structuré, les payeurs de taxes vont vraisemblablement payer pour des dettes dites toxiques avec peu de certitudes qu'ils rentabiliseront leurs dépenses », souligne John Irons, directeur de la recherche à l'EPI.

Il suggère plutôt que le gouvernement américain agisse un peu plus comme un investisseur privé en suivant la ligne de pensée démocrate et en exigeant des titres d'entreprises en échange de chaque dette achetée.

« Si le prêt fonctionne et que la compagnie se remet à faire des profits, le gouvernement pourra les vendre à son avantage alors que si la firme fait défaut, il aura le droit de réclamer une part des actifs qui resteront », suggère John Irons.

Up today at EPI with two colleagues.

I think there are better options out there for a bailout, but the failure today is not something to celebrate. A better package would include more liquidity infusion in exchange for equity in bailed-out firms; but options are limited given the political environment and the need to do something quickly...

Bailout plan must help the middle class and grow the economy

Bailout plan must help the middle class and grow the economy

by Lawrence Mishel, Ross Eisenbrey, and John Irons

Congress is currently haggling over an agreement to bail out the financial markets. While a final agreement is still up in the air, we must not forget than inaction is not an option. Without action to shore up the banking system, financial markets may very well freeze up, stalling the overall economy. And without action to spur job creation and support working people, the labor market will freeze and fundamental economic weaknesses will continue.

Far from being an unforeseeable natural disaster, the current financial crisis is a predictable outgrowth of excessive risk-taking, regulatory failure, and lack of accountability in corporations and government. Unfortunately, we are now in a position of having to act to lower the risk of a global market meltdown.

The administration's initial proposal to shore up the markets was offensive; it essentially asked for a $700 billion blank check for the Treasury secretary with no oversight, no review, and no transparency. Members of Congress this weekend hammered out a better version that includes taxpayer protections, transparency requirements, and government oversight, as well as provisions that will begin to provide assistance to homeowners. Far from ideal, it nevertheless could have been a step forward if Congress had enacted it.

More...

New survey of economists...

Economists Favor Obama -- Political Wire

Economists Favor Obama A new poll of economists finds Sen. Barack Obama is overwhelmingly preferred over Sen. John McCain by a 66% to 28% margin.

The survey consisted of 523 economists who are both U.S. citizens and members of the American Economic Association.

Exactly which of these fundamentals are "strong"?

• Unemployment rising from below 5% to over 6%,
• 37 million people living in poverty (including 13 million kids), 5 million more than in 2000.
• Median household incomes still below 1999 levels,
• 46 million people without health insurance,
• $400+ billion federal deficit,
• rank of 15th among developed nations in broadband penetration,
• housing market in collapse,
• investment bank failures and bailouts,
• gas at $3.50+ or higher, oil at $100 a barrel or higher.
• One of the weakest recoveries on record.

When 'fundamentals' matter - First Read - msnbc.com

"Fundamentals of our economy are strong" was the key phrase. But it wasn't new.

First Read searched through our database of the candidates' speeches and found McCain had used the phrase at least 16 other times, between Jan. 1st and June 5th of this year.

It was a regular portion of his stump speech during the Republican primary, but there was about a three-month gap after June 5th -- effectively when the general election began -- when McCain did not use the now-maligned turn of phrase.

Then on Aug. 20th, McCain appeared on conservative Laura Ingraham's radio show and made the claim yet again. The Obama campaign has since tried -- futilely -- to make it stick.

But on this rare day when the economy was in full focus, it seemed to break through.

ChartJunk does a better chart of Obama vs. McCain tax policy. Be sure to click through for the chart.

chartjunk » Blog Archive » Tax Plans (that's one for you, nineteen for me).

Tax Plans (that's one for you, nineteen for me). There's a graph that Obama supporters are sending around, showing the differences between the Republican and Democrat tax cut proposals. It shows that Obama is not in fact planning to raise taxes - he's planning to cut them for all but the very, very rich. I couldn't help but notice though - the graph is still massively weighted towards the interests of the super-rich. For example, the bottom two-thirds of the population are given only a third of the space on the graph, while the top 0.1% of the population - one in a thousand people - gets almost 10%. What's more, an "average tax cut" is then given, which seems to have been derived from taking a total of the nine income brackets shown and dividing it by nine. Journalists should really volunteer to take remedial arithmetic, you know. Once again, this ignores that one of the brackets represents one thousandth of the population.

So let's make this a bit more accurate - let's keep all the brackets, but draw it to scale.

Still on paternity leave, but I may be making some opening remarks at the event below...

Corporate and High Income Tax Cuts and The Economy

The Economics, History, and Public Debate of Supply-Side Policies

September 12, 2008, 12:00pm - 2:30pm

About This Event
Since the late 1970s and building through the era of Ronald Reagan, there has been an ongoing debate about the effectiveness of supply-side economics. Do tax cuts spur economic growth and pay for themselves with higher revenues on additional economic activity stimulated? This debate will be revived in the coming year as the incoming President and Congress will soon decide whether to renew of a variety of tax cuts adopted starting in 2001 and set to expire in 2010. Economists now have years of experience with this tax policy. What does the evidence show us? What has been the public debate about tax policy and supply-side and has it shifted in light of growing inequality and limited sharing of the benefits of economic growth?

The Economic Policy Institute and the Center for American Progress invite you to this event featuring prominent economists, writers and pollsters to discuss the impact and history of supply-side.

Papers by Professor Frankel, Michael Ettlinger, Vice-President for Economic Policy at the Center for American Progress and John Irons, Research and Policy Director at the Economic Policy Institute, will be also be released.

Panel 1: The Economics of Supply-Side

Featured Speakers:
Lawrence Summers, Charles W. Eliot University Professor, Harvard University; former Secretary of the Treasury and Chief Economist of the World Bank
Gene Sperling, Senior Fellow, Center for American Progress; former National Economic Advisor to the President and Director of the National Economic Council
Jeffrey Frankel, Harpel Professor of Capital Formation and Growth, Harvard University's Kennedy School of Government and director of the program in International Finance and Macroeconomics at the National Bureau of Economic Research; former Member of the Council of Economic Advisors

Moderated by:
Sarah Rosen Wartell, Executive Vice President for Management, Center for American Progress

Panel 2:  The History and the Public's View

Featured Speakers:
Jonathan Chait, Senior Editor, The New Republic, and author of The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics
Anna Greenberg, Senior Vice President, Greenberg Quinlan Rosner

Moderated by:
Christian Dorsey, Outreach Coordinator, Economic Policy Institute

A light lunch will be served at 11:30 a.m.

Alice Bay Irons, born Monday...

Long article on Obama and economics coming this weekend. Haven't read it yet, but noted this quote which I think sums up much of Obama's approach.

Magazine Preview - Barack Obama, A Free-Market-Loving, Big-Spending, Fiscally Conservative Wealth Redistributionist - NYTimes.com

"My core economic theory is pragmatism," [Obama] said, "figuring out what works."

One for the clips file from LA Times...

McCain and Obama tax plans diverge on wealth - Los Angeles Times

McCain and Obama tax plans diverge on wealth True to party doctrine, the GOP candidate's economic proposals would ease the burden on the rich, while the Democratic candidate's would increase it. By Stephen Braun, Los Angeles Times Staff Writer August 21, 2008 WASHINGTON -- One in a series of occasional stories

-- The sharpening rhetoric between John McCain and Barack Obama over their competing plans to overhaul the nation's tax system has underscored one of the most profound differences between them -- how they would target America's wealthiest taxpayers.

[...]

Democratic-leaning economists say McCain's plan offers little new aid to squeezed middle-class families. And they question whether corporations and wealthy Americans would convert McCain-era tax savings into new investments that would bolster the economy.

"McCain does nothing about income inequality," said John Irons, research and policy director for the Economic Policy Institute, a center-left think tank backed by labor interests. "It's skewed toward upper-income Americans to the exclusion of most everyone else."

Phil Gramm - who called Americans a bunch of whiners about the economy - seems to be back in favor at the McCain camp.

Op-Ed Columnist - It's the Economy Stupor - Op-Ed - NYTimes.com

Meanwhile, The Times reports that, according to associates, Mr. McCain still "dials up" Phil Gramm, the former senator who resigned as co-chairman of the campaign after calling America a "nation of whiners" and dismissing the country's economic woes as nothing more than a "mental recession." And Mr. Gramm is still considered a top pick for Treasury secretary.

New research by Broda/Parker suggests the answer is "yes". The rebate checks seem to have increased consumption.

Did the 2008 US tax rebates work? | vox - Research-based policy analysis and commentary from leading economists

This spring, the US government handed out $100 billion in tax rebates. Twentieth century economic thinking - permanent income hypothesis, Ricardian equivalence, and the like - suggests that most would have been saved, as Martin Feldstein recently argued. Not so. Recent research on microdata shows that the typical family increased spending by 3.5% when the rebate arrived, boosting overall nondurable consumption by 2.4% in 2008Q2. The number should be 4.1% in 2008Q3.

[...]

Conclusion

The Economic Stimulus Act of 2008 was aimed at increasing disposable income temporarily through tax rebates in the hope this would stimulate spending and end or at least mitigate the severity of a US economic slowdown. We find that to a significant extent they succeeded. The stimulus payments are initially being spent at significant rates. These rates are slightly higher than those observed in 2001 when fiscal policy has been credited with helping end the 2001 recession.

In the wake of McCain's latest misleading ad, MSNBC echoes the Tax Policy Center's analysis:

Who'd give more to the middle class? - First Read - msnbc.com

From NBC's Domenico Montanaro McCain claims in an ad released today that "Obama voted to raise taxes on people making just $42,000. He promises more taxes on small business, seniors, your life savings, your family."

But when it comes to promises, it's worth pointing out that, according to the non-partisan Tax Policy Center's analysis of both candidates' proposed plans, Obama would cut taxes for those making in the range of $38,000 to $66,000 three to almost eight times more than McCain would.

Under Obama's plan, according to the center, by 2009, those making $37,595 would see an average increase in their income of 3.6%, or a tax cut of $892; those making an average of $66,354 would see an increase in their income of 2.4%, or a tax cut of $1,042.

On the other hand, Under McCain's plan, those making $37,595 would see an increase in their income of only about 0.5%, or $113 tax cut; those making $66,354 would see only an increase of 0.7% in their income, or a tax break of $319.

Looks like I have some night-time reading with Bush's final budget document. Here's Stan Collender:

Bush Midsession Budget: Absolute Silliness | Capital Gains and Games

There is also absolutely no indication that the White House understands in any way that this year's deficit is not just the result of things that have happened the past few months,. Nussle's statement indicates that had it not been for the need to deal with the economic slowdown, all would be well in the budget world.

That's just plain silly. The policies put in place in the first seven years of the Bush administration -- with the president's full and active support, encouragement, and insistence -- have more to do with the current fiscal situation than anything that has happened since this past January. There are many, but the most important are:

* The tax cuts enacted in 2001 and 2003
* The more than $500 billion spent on activities in Iraq and Afghanistan
* Medicare Part D
* The big increases in the national debt and corresponding increases in annual interest payments

All of these dwarf the amount that will be spent in the "bipartisan growth package."

The silliness continued...

Obama has been pushing hard on energy policy recently. His comprehensive approach combines a broad-based approach to carbon reductions (through cap-and-trade) with a variety of targeted incentives to move us to a more efficient economy fueled by renewable energy. The plan also comes with rebates to help consumers get by. Details here and bullets below.

McCain's approach is all about drilling and nuclear. It's pretty thin by way of actual policy. What do I mean thin on policy? His documents say he "supports Flex-Fuel vehicles" but there is no policy, he simply "calls on automakers" to make a faster switch. He says cellulosic ethanol shows "great potential" but does not offer solutions to speed the development. He says modernizing the electric grid would save energy, but only says he will "reduce red tape" to allow for more investment. The only real substance is a $2 billion support of the coal industry and his cap-and-trade policy (though the later is flawed in how it allocates permits). More drilling and a gas tax holiday are purely gimmicks that will have little or no impact on consumers.

New Energy for America

Obama's comprehensive New Energy for America plan will:

• Provide short-term relief to American families facing pain at the pump
• Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
• Within 10 years save more oil than we currently import from the Middle East and Venezuela combined
• Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America
• Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025
• Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050

My EPI colleagues have analyzed the Tax Policy Center's analysis of the Obama and McCain's health are plans. Main points below...

Obama health plan outperforms McCain plan in coverage and efficiency

• Efficiency. Over the 10-year period analyzed by the TPC, Senator Obama's plan provides far greater "bang-for-the-buck," spending far less per capita for its coverage of the uninsured population (see Figure A below).
• Cost. The costs of the plans over the 10-year period are in the same ballpark: the Obama plan costs roughly $1.6 trillion, while the McCain plan costs $1.3 trillion (the Obama plan spends roughly 20% more than McCain's) (see Figure B).
• Coverage. The Obama plan makes a much bigger dent in covering the uninsured population. On average over the 10-year period, the Obama plan covers over 47% of the forecasted uninsured population, while the McCain plan covers less than 5% (see Figure C).

GDP posts a modest gain - but still not strong enough to tighten the labor market. Also look at the revision in Q4 from last year.

GDP Picture, July 31, 2008

Even with boost from stimulus, economy just limps along

by EPI economist L. Josh Bivens

U.S. gross domestic product (GDP) grew at a 1.9% annual rate in the second quarter of 2008, following growth of 0.9% in the first quarter of the year, according to a Commerce Department report released today.

While positive growth obviously is better than negative, the underlying trends in the working-age population and productivity mean that GDP growth of less than 2.5% is a recipe for job-loss, rising unemployment, and falling wages. For example, the 0.9% growth rate of the first quarter of this year was accompanied by the loss of 247,000 jobs, and the second quarter's 1.9% growth was accompanied by a loss of another 191,000. Furthermore, wage growth for non-supervisory workers (80% of the private sector workforce) has lagged inflation in five of the first six months of this year.

Today's report also included revisions to GDP going back three years, based on more complete source data. These revisions show that GDP actually shrank in the last quarter of 2007 (falling at a 0.2% annual rate). If anybody was taking comfort in the fact that quarterly GDP reports had yet to show negative growth, that solace is now gone.