Lost 62k jobs last month. Manufacturing continues the drop despite the weak dollar... manufacturing has lost 353,000 jobs since this time last year.

Employment Situation Summary

Nonfarm payroll employment continued to trend down in June (-62,000), while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and employment services, while health care and mining added jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

From The New Republic...

TRB: The Illusionist

McCain is promising to cut taxes by $300 billion per year on top of the Bush tax cuts, which he would make permanent. In addition to this, he promises to balance the budget in his first term. When asked how he could possibly pull this off, McCain has asserted that he could eliminate all earmark spending, saving $100 billion per year.

I don't find this explanation persuasive. The first point I'd make is that $100 billion is, in fact, less than $300 billion. The second point I'd make is that McCain won't even cut $100 billion, or anywhere close. By conventional measures, earmarks only account for $18 billion per year. McCain gets his number by employing an unusually broad definition of what constitutes an earmark. McCain's definition includes things like aid to Israel and housing for members of the military that are not "pork" as the term is understood. When asked if he would eliminate those programs, he replied, "Of course not."

So we're left with a pot of money closer to $18 billion. And McCain surely won't eliminate even that. He has frequently found himself campaigning at places funded by federal earmarks and beloved by the local citizenry, and he keeps inadvertently showing how impossible it is to fulfill his promises. Last month, McCain visited a hospital in Pennsylvania and met an ovarian cancer patient who's being treated with a clinical trial program funded by an earmark. Asked if he would eliminate that program, he replied, "It's the process I object to. ... When you earmark in the middle of the night, you have no budgetary constraints."

Bush's claim that his tax cuts for high-income individuals are good for small business again fails to hold up under scrutiny. (For more on small businesses and taxes, see "Reforming the Tax Code to Assist Small Businesses" (pdf))

Bush: 43M families hurt if tax cuts expire - Jun. 2, 2008

"It turns out that 75% of taxpayers who benefited from the reduction of the top bracket were small business owners," Bush said, noting that small businesses pay taxes at individual income tax rates. "So when you hear 'tax the rich' you're really talking about taxing Mom and Pop businesses."

Williams said that it's true that the majority of taxpayers in the top income tax bracket (currently 35%) report business income, but those taxpayers don't represent the majority of small business owners.

According to a Tax Policy Center analysis, over 90% of small business owners report income that puts in them in the 26% tax bracket or below.

Many of the top-bracket taxpayers who report self-employment income get most of their income from salaries, investments and stock options, Williams said. Of those taxpayers, only 50% make more than half of their total income from their business, and 25% get less than a tenth of their income from their small business, he said.

I was on a panel yesterday talking climate change, specifically my cap-and-lease proposal. My segment begins at 1:23:50

Click to watch

C-SPAN | Capitol Hill, The White House and National Politics - C-SPAN

Center for American Progress Discussion on the New Progressive Agenda With the inauguration of a new president in 2009 comes an opportunity for new progressive policies. The Center for American Progress hosts a discussion to explore ideas put forth in "Democracy: A Journal of Ideas," and debate the contours of the new progressive agenda. Washington, DC : 2 hr. 30 min.

The New York Review of Books looks to try and pigeonhole Obama as a "behavioralist".. That's too simple. Behavioral economics has many useful insights, but it's still too early and too incomplete to be a cohesive theory of everything economics.

Economics: Which Way for Obama? - The New York Review of Books

Should Obama win the nomination, political considerations may well force upon him a more interventionist position, but his first inclination is to seek a path between big government and laissez-faire, a trait that reflects his age--he was born in 1961--and the intellectual milieu he emerged from. Before entering the Illinois state Senate, he spent ten years teaching constitutional law at the University of Chicago, where respect for the free market is a cherished tradition. His senior economic adviser, Austan Goolsbee, is a former colleague of his at Chicago and an expert on the economics of high-tech industries. Goolsbee is not a member of the "Chicago School" of Milton Friedman and Gary Becker, but he is not well known as a critic of American capitalism either. As recently as March 2007, he published an article in The New York Times pointing out the virtues of subprime mortgages. "The three decades from 1970 to 2000 witnessed an incredible flowering of new types of home loans," Goolsbee wrote. "These innovations mainly served to give people power to make their own decisions about housing, and they ended up being quite sensible with their newfound access to capital."

[...]

If Obama isn't an old-school Keynesian, what is he? One answer is that he is a behavioralist--the term economists use to describe those who subscribe to the tenets of behavioral economics, an increasingly popular discipline that seeks to marry the insights of psychology to the rigor of economics. Although its intellectual roots go back more than thirty years, to the pioneering work of two Israeli psychologists, Amos Tversky and Daniel Kahneman, behavioral economics took off only about ten years ago, and many of its leading lights, among them David Laibson and Andrei Shleifer, of Harvard; Matt Rabin, of Berkeley; and Colin Camerer, of Caltech, are still in their thirties or forties. One of the reasons this approach has proved so popular is that it appears to provide a center ground between the Friedmanites and the Keynesians, whose intellectual jousting dominated economics for most of the twentieth century.

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.

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.

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.

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.

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.

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

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

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).

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.

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.

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.

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).

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."

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.

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.

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.

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.

If you're interested in front pages...

Newseum | Today's Front Pages | Gallery View

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

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

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.

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

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

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.

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.
  

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".

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

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.

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....

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.