Center for Effective Government presents side by side budget comparisons:
Apparently, President Obama’s budget is going to include some kind of penalty for people who have accumulated more than $3 million in retirement accounts. The details are not yet known, but I think we know enough to say that this is a terrible idea. A sizable body of work in public finance suggests that consumption taxes are preferable to income taxes. Completely replacing our tax system with a better one is, however, hard. Retirement accounts, such as IRAs and 401k plans, are one way our tax code has gradually evolved from an income tax toward a consumption tax. The use of these accounts should be encouraged, not discouraged.
By the way, exceeding $3 million in such accounts is not very difficult for an individual who is financially successful and frugal. Under current law, a self-employed person can put about $50,000 a year in a SEP-IRA. If he does that every year for 40 years, and his savings earn a return of 5 percent per year, he will retire with about $6 million.
Pro Growth Liberal notes another aspect of Greg Mankiw’s outlook:
Greg explains by noting some folks can readily put away $50,000 a year. The median worker, however, cannot. But there may be something else afoot here as Brian Beutler explains:
One way experts believe financial managers avoid the current annual contribution limit to IRAs is by using IRAs to participate in investments and assigning those investment interests a nominal value vastly below fair market.
Brian cites as an example some clever tax planning done by a chap named Mitt Romney.
Margaret Thatcher, Polarizing Right-Winger
The major news media celebrated Margaret Thatcher upon her death. They seem to praise her stubbornness and ability to move the UK to support her very conservative anti-union, pro-deregulation and privatization policies and talk of her impact on the UK. David Brooks, a typical voice on the right who saw Thatcher as a hero of conservative politics, has this to say in his op-ed in the New York Times today, The Vigorous Virtues, New York Times (Apr. 9, 2013).
Margaret Thatcher was a world historical figure for the obvious reasons. Before Thatcher, history seemed to be moving in the direction of Swedish social democracy. After Thatcher, it wasn’t.
She lionized the self-made striver. …She championed a certain sort of individual …: “upright, self-sufficient, energetic, adventurous, indepedent-minded, loyal to friends and robust against foes.” (quoting Shirley Letwin)
Today, bourgeois virtues like industry, competitiveness, ambition and personal responsibility are once again widely admired …. Today, technology is central to our world and tech moguls are celebrated. Tony Blari and Bill clinton embraced and ratified her policy shifts. Millions more have been influenced by her idea of what makes an admirable individual.
A.C. Grayling presents a much more realistic–and somber–view of Thatcher’s “contribution” to the UK in his op-ed, Thatcher’s Divided Isle, New York Times (Apr. 9, 2013).
It is hard to think of a more divisive figure in British politics than Margaret Thatcher.
Her admirers laud her for breaking Britain’s once-powerful trade unions, and liberalizing the City of London’s financial services industry; these acts, they say, halted the country’s economic decline. Her detractors blame her for destroying much of the country’s manufacturing base by refusing to aid struggling industries and effectively annihilating the mining sector by emasculating the National Union of Miners. Her premiership will always be remembered for the bloody battles between workers and the police, and the high unemployment and sudden appearance of industrial wastelands that followed.
Mrs. Thatcher left behind a changed and divided Britain. She dismantled local government structures
which meant that urban decay and the effects of unemployment were not adequately countered. …..[S]he did little to advance the cause of women generally. …She was also unfriendly towards homosexuals. …
She began the deregulation of banking that led ultimately to Britain’s contribution to the global financial crisis of 2008. She reversed the trend of greater social integration and diminishing of the wealth gap that had characterized Britain in the three decades after 1945. Postwar convergences in class and wealth disappeared and former divisions resurfaced as consumerism and social incivility followed quickly on her brusque reorganization of British society. …
This much is quite clear: Thatcher wanted to break unions, privatize public resources, and deregulate industries. She pushed the same ideological conservative manifesto that Ronald Reagan did in the USA. Reagan’s legacy (and Thatcher’s) regretably lives on today as we face daunting inequalities of opportunity and resources, inequalities that underlie a host of other problems in society. It traces back to the use of Friedman’s Chicago School “free market” theories to push lower taxes for the wealthy, expanded use of more regressive taxation and less supportive social insurance programs (the calls for a VAT or national sales tax to replace income taxation, the demands for Social Security cuts and Medicare premium increases, etc.), treating government as “the problem” rather than an essential part of the solution, unquestioning admiration of the wealthy few as “responsible” “job creators” and an accompanying trend to treat the poor and lower income (Romney’s “47%”) as irresponsible bums living off so-called “entitlements”. The result is the expansion of harmful extremes of inequality from coupling regressive tax policies with wealthy corporatists’ capture of elective officials (think Citizen’s United) and hence of legislative policies.
cross posted with ataxingmatter
The headline numbers in the employment report were very weak as payroll employment rose by only 88,000 and the household survey reported a -206,000 drop in employment while the labor force fell by -496,000. The futures markets are reacting very badly. But the workweek expanded and aggregrate hours worked increased 0.3% as compared to 0.5% last month.
After falling to below trend last year hours worked is now back on the 0.2% trend displayed earlier in the cycle. So basically it looks like the headline numbers are overstating the weakness.
Interestingly, my bond valuation model still says that the 10 year T Bond yield should be about 1.5%.
The model still has fed funds in it, but nothing else to capture other measure of fed policy..
Average hourly earnings were essentially unchanged last month, but the smoothed data still implies that wage gains have bottomed.
Average weekly earnings also still looks like it has bottomed.
This was one of the better employment reports of this cycle. Private payroll employment grew 246,00
while government employment fell about 10,000 for a net gian of of 236,000. The household survey also showed a nice gain of 170,000.
On a year over year change basis both series are showing nice gains.
The workweek also increased 0.1% and the index of aggregate hours worked grew 0.5% of all workers and 0.9% for production workers. The index is now back to the trend established early in the cycle.
Average hourly earnings growth has bottomed and are starting to move up very nicely.
With all this stalemate posturing in Washington, today Chris Hayes has come up with the best idea I have heard yet to move the players. And, in my opinion actually solve our economic depression.
I watched Dr. Wolff (Professor emeritus, UMass) on this past week episode with Bill Moyers. At the end of this show, Mr. Moyers invited the viewers to submit questions to Dr. Wolf who has agreed to return in a couple of weeks to answer them.
Here is he with an interview by Julianna Forlano of Absurdity Today report. If you are not familiar with Julianna, she does a very funny short news broadcast on the issues of the moment. I am a subscriber. It’s is worth your time for sure.
This is the first part of 4. It is about 12 minutes. I want to say, at the end, Dr. Wolff is also pointing out that the cuts do not come all at once.
I figure this video is also posted in response to the video rjs linked to in comments to Bev’s post.
I promise, there are numbers here, but lets have some fun first and write a screen play to set up the point. It is long, but…
I was watching C span Washington Journal this morning. Rep Marsha Blackburn was the guest. I got to listen to her explanation of how the Social Security funds flow and just had to post the clip. Copied from the transcript of the clip:
THEIRS MONEY THAT GOES TO MEDICARE AND SOCIAL SECURITY AND I THINK IT IS JUST IS SO INAPPROPRIATE THAT THE FEDERAL GOVERNMENT DOES NOT USE THAT AS A TRUST FUND BUT THEY MOVE IMMEDIATELY TO THE GENERAL FUND AND STACK UP IOU’S THAT ARE SITTING IN A CABINET IN WEST VIRGINIA.
What she says should not be allowed to stand and if C-span were half of what it used to be, she would not have had the following go uncorrected. Thus I leave it to the Angry Bears to correct her here and thus document her ignorance of the subject.
I have not watched this lady before. I could not help but think she is just a more polished version of Sarah Palin. She is totally capable of pulling off what we used to call a “snow job” when writing their essay.
This was another tepid employment report not much different than the reports in 2012.
Payroll employment rose 168,000 and the household survey showed a gain of only 17,000
Private payrolls expanded 168,000 while government employment fell 9,000.
Perhaps more importantly the year over year change in employment is showing significant signs of weakness, Both the household survey and payroll data show that the year over year gain in employment has peaked.
The revisions also significantly changed the pattern of hours worked in 2012. Originally, hours worked fell well below trend in mid-2012 and were strengthening back to trend at year-end. Now
it appears that hours worked were not as weak as originally reported. But with the average workweek unchanged in January, the January hours worked fell 0.2%.
On the other hand the apparent bottoming of average hourly earnings growth is still intact and was actually strengthening in January.
The growth in average weekly earnings fell back to only 1.2% versus 1.7% in December and the low of 1.0% in October. It is going to be very hard for consumer to absorb the increase in payroll and income taxes in early 2013. Prospects for consumer spending in early 2013 do not appear promising.