Open thread March 8, 2013 Dan Crawford | March 8, 2013 11:13 pm Tags: open thread Comments (16) | Digg Facebook Twitter |
Question for the legal nerds out there. Dean Baker has an article at CEPR arguing that the DOJ should break up the Wall Street behemoths with antitrust laws.
I like the idea, but I found it problematic. Here are my loosely put together thoughts on the issue:
Basically, although not as heavily regulated as utilities, there is the argument that banks and financial institutions are exempt from A/T laws because they are regulated, ala utilities and the like. Moreover, the Suisse case from 2007 showed the SCOTUS deference to securities laws regulating the financial markets over A/T where there is a clear conflict between the two. Though not necessarily dispositive of A/T laws regulating the banks and financial institutions, but it is persuasive that courts will be apprehensive letting another entity/set of laws other than the SEC/FINRA/FDIC/etc. regulate the financial and banking markets.
My question is, does anyone know of anything directly on point that exempts banks from A/T litigation?
I wrote up a new blog post last night that is very angrybear style, concerning the complete lack of an effect of OASDI (our largest single tax) on the economy as it was phased in over ~50 years. I would appreciate any feedback from AB readers as to what I could do to improve the data or argument.
Chad, I read it. But am withholding comment until I have more time to think it through.
One problem I am seeing right away is that for the first fifty years of SSs existence Real Wage increases tended to vastly outpace the nominal increases in FICA. And most people (pace Laffer) don’t actually have tax rate calculaters in their head but have a reasonably good idea of purchasable basket of goods compared to their parents.
This feels like a different argument than the Supply Side argument that relies on differing responses to changing marginal rates. But since I tend to reject the psychological and historical bases of Laffer style theory it is hard for me to sort out where my objections to both actually lie.
If I get it better sorted out I will leave something more focused over there.
Just wanted you to know that this Bear at least took a first look and if time allows this weekend will take a second and third.
Lots of good news on the employment front the past three months.
But I don’t see it in the SS numbers.
Payroll taxes are up in 2013 VS 2012 and 2011, but the rate of increase has slowed:
Jan/Feb/Mar Year over year % gains in PR taxes:
2011 – 4.21%
2012 – 5.53%
2013 – 1.35%
I can’t explain this. Someone else perhaps?
7.7% unemployment is not a good number for SS.
And I would take a look at your numbers if you know, you actually gave a cite for them.
The Social Security Report traditionally came out on March 30 though in recent years it has been quite late, perhaps we can have a better year over year discuss upon then. But monthly numbers are pretty tricky, particularly when you are citing a 1.35% increase for Jan to March 2013 over the same period in 2012 on the 9th of March and at that presumedly on sort of time lag. Are you extrapolating receipts for the rest of the month or just using a crystal ball? It would seem that improved employment numbers for February wouldn’t show up until March checks anyway leaving me scratching my head as to the possible validity of your numbers.
Can you throw me a line here?
com’on krasting, you’re at zero hedge; you know that a lot of those jobs are part time, under 30 hours, to avoid obamacare mandates…
and of the new full time jobs out there, most are paying under $14 an hour…
I read your post, and I really don’t understand Bruce Webb’s caveats.
I think you get the results you do because “it’s obvious” that’s the way it would work out.
SS is a way to “save” your money safe from inflation, etc, and, because it is pay as you go, return it instantly to “the economy” without the complications of the “investment” market. So the “tax” never actually affects the economy at all.
and as someone else has also pointed out
that SS “savings” earns interest “automatically” by pay as you go with wage indexing. you automatically get a :”return on investment” that is at least the rate of inflation plus the average growth in the economy.
nor is this “savings” subtracted from whatever it is economists call savings: as long as at some point people are going to cash in some of the return from their Investments, the net savings “in the economy” will not be greater than the net savings due to SS.
left as an exercise for the reader.
Webb – You think I make this stuff up?
SSA publishes a flash report for March on March 1. The data is for the current quarter.
Yes, this is a preliminary number, and there will be adjustments. But I have found that the estimates are actually pretty damn close.
I’m looking at a decelerating trend, when it should be the other way around.
Thanks for the link Krasting and I will look at it.
And frankly you have a history of just making up data series based on your own never disclosed methodologies and passing them off as objective fact, so in that respect Thou Doth Protest Too Much.
And I will be really surprised to see how SSA manages to project March receipts in a Report dated March 1 in the face of very dynamic employment numbers. I mean yesterdays employment number came in about 100,000 above consensus estimates, are you telling me that SSA somehow nailed that number and all wages associated with it in a report dated a week ago?
Back after a fact check.
Okay check the numbers and really don’t see the significance, except noting that in 2012 the initial UN,ber of March was adjust up by $2.4 billion. Which suggests that before we get too granular we would wait for whatever adjustment is made to the 2013 estimate, particularly if actual employment numbers for Feb-Mar come in in advance of estimates.
So basically I make nothing of these numbers, the preliminary nature of which makes for a low signal to noise ratio.
And not to put too fine a point on it your credibility would be enhanced if you gave your links up front.
“I read your post, and I really don’t understand Bruce Webb’s caveats.
I think you get the results you do because “it’s obvious” that’s the way it would work out.
At first approximatation, it IS obvious: the government taxes, say, an extra $20 billion for SS one year and also increases payouts by the same, resulting in no net effect on the economy. The entire debate about multipliers, dead-weight losses, etc is about the secondary effects that pile on top of this. As far as I can tell, those secondary effects are pretty much negligible or are cancelling each other out. If SS is having a negative effect on the economy either by disincentivizing work or by causing people to hide or shift income, it is not showing up in the data.
In general, I think conservatives make three mistakes when it comes to taxes
1: They ignore either the income effect or the substitution effect, one of which is usually working against their argument. This is why they believe paying rich people more makes them work more, but they also believe paying poor people more causes them to work less. They seem to grasp both substitution and income effects, but only the one that is working in their favor on any particular issue.
2: The ignore the fact that poor people spend their money faster than rich people. Taxes tend to shift money from rich to poor, thus increasing the overall velocity of money in the economy.
3: They confuse stealing jobs/business from elsewhere via tax subsidies with “creating” jobs. This is a negative-sum race to the bottom that should be thwarted whenever possible, not something to be praised.
Webb – The March payroll data was maybe 100k above expectations, but that does not change these big numbers by much. If all of those jobs averaged $60k a year, it would have added $60m to SS. Not noticeable.
On the revisions.
If you look at 2012 data the Jan and Feb revisions from prior quarter were: 11.7B and 2.5b. For 2013 the Jan/Feb #s were 11.8b and 2.5b. Very small YoY changes.
So it is not the adjustments that bring the results lower than what I had assumed they would be.
There is a 3rd column of adjustments. This an adjustment to what was assumed to be the case in the same Q one year earlier. Note that it is 4.7b in 2013 and only 2.4b in 2012.
This adjustment says that 2012 was a bit stronger than first assumed. But it also means that 2013 is not as strong as the total results show by way of comparison.
Anyway, thanks for your input.
i agree with your comment re SS not affecting the economy even by secondary effects, as shown by the data.
and i am grateful that you point this out.
it is hard for me to understand what your point is. 12.4% of payroll below the cap goes into SS.
approximately the same amount goes out at the same time as benefits.
this will affect the balance in the Trust Fund and ultimately requiring the government to pay back the money it has borrowed from SS.
the only valid question is when SS can no longer draw from the Trust Fund… more than as an “occasional” reserve reliably replaced in a timely manner… will SS raise the payroll tax enough to pay “presently scheduled” benefits… a tax increase of eighty cents per week per year over the next 20 years would meet present official predictions of the “actuarial deficit.” or will the government… not the people… decide that it is better to cut the benefits by ten ti twenty-five percent… say 250 dollars a month from a thousand dollar a monty pension… in order to save the workers eighty cents per week.
The workers won’t be asked, even though they will have to try to make do with that 750 dollar a month pension when they get too old to have other options.
This is an approximation. It is as honest as I can make it in a short comment. And I have discussed it at length elsewhere. And still get called a liar by a friend who is anxious to preserve his “Rosser’s Equation” expertise.
And a fool by one bk who thinks that since no one will raise the tax… eighty cents per week per year… the only thing we can do is stop fighting and accept means testing… which will be far uglier than he can imagine.
as will cutting benefits, Professor Rosser notwithstanding.
And, dare i say it, almost as ugly as raising the retirement age, so some good liberal people with good jobs can devote half of that eighty cents per week to their own personal early retirement plans.
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