The Labor Department released its April jobs data last Friday. First, the good news: the labor force participation rate didn’t change from March—good news because it actually means more folks, in absolute terms, are participating, since the US’ population increased from March, and because while participation still is down from last January and remains near 30-year lows, it’s not dropping further. Also, 165,000 new non-farm jobs were added in April—no great shakes compared with what’s needed for actual economic growth, but it’s better than even the upwardly revised number for March. These combined to lower the unemployment rate a tick from March, to 7.5%.
Mark Peters and Neil King, writing in The Wall Street Journal, described the party’s latest escapades, this time in state governments, late last week.
Republican lawmakers in several states are blunting plans by GOP governors to reduce or eliminate income taxes, putting the legislators at odds with figures many in the party see as leading voices on reshaping government.
Friction over tax policy within the GOP has flared in states such as Louisiana, Nebraska, Kansas and Ohio, as Republican lawmakers raise concerns over projected revenue losses from income-tax cuts. Three of those states shelved big income-tax cuts that would be paid for by broadening the sales tax, and in Kansas, legislators will return next week to a continuing debate over the size and speed of proposed cuts.
In a speech by Federal Reserve Chairman Ben Bernanke to the Japan Society of Monetary Economics, a few short years ago, he said
In economics textbooks, the idea that people will save rather than spend tax cuts because of the implied increase in future tax obligations is known as the principle of Ricardian equivalence. In general, the evidence for Ricardian equivalence in real economies is mixed, but it seems most likely to apply in a situation like that prevailing today in Japan, in which people have been made highly aware of the potential burden of the national debt.
AP has some.
A number of misconceptions are shown in their article carried by Fox News. They begin with this:
China is responsible for just a shade over 7% of [US'] total debt. And while it remains the single largest foreign lender (just ahead of Japan), China’s been slowly trimming its holdings, down from nearly 10% a few years ago. Overall, all foreign investors—including national central banks—account for roughly one third of the total outstanding federal government debt.
Never mind that there’s a reason the SEC requires those who acquire 5% of the shares of a company to file public documents identifying that acquisition. That’s enough to start exerting significant influence over the company’s behavior.
There’s this from last fall:
Let’s look at this another way. It’s been widely reported that this “recovery” is the weakest, most anemic post-recession recovery in our nation’s history. Those reports aren’t far wrong. A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more. This Obama recovery has been 6.7% over the entirety of his term in office—nearly four years [as of October 2012. It's not any better today]. Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by last year.
Kevin Williamson, writing in the National Review Online, is not optimistic about our 2023 national debt, projecting our interest costs on the assumption that interest rates won’t rise over the next 10 years (OK, he’s pessimistic; he holds rates at their current near-zero levels only to make a point).
Williamson projected the interest payments on the $26 trillion debt projected for 2023 to be $763 billion at today’s rates. That works out to an interest rate of 2.9%. Those $763 billion would be more than what the Federal government spent on Social Security, national defense, or all nondefense discretionary spending in 2011, Williamson noted.
The Tax Policy Center of the Urban Institute and the Brookings Institution has had time to go over President Barack Obama’s budget “proposal,” and they’ve
found that the budget plan would raise roughly $1.1 trillion over 10 years….
Their graph below illustrates from where those trillion dollars would come.
Notice that. Those at the bottom of the economic totem pole—a strait contributed to in no small way by Obama’s rather cynical wealth redistribution policies—will see a larger drop in their take home pay from Obama’s tax increase than will his highly touted middle class.
As The Wall Street Journal reports,
This week the Federal Aviation Administration (FAA) began furloughing each of its air-traffic controllers for one day out of every 10 to achieve roughly $600 million in savings this fiscal year. The White House dubiously claims that the furloughs are required by the sequester spending cuts enacted in 2011.
President Barack Obama’s hoped for result is
to force airline flight delays until enough travelers stuck on tarmacs browbeat enough Republicans to raise taxes again.
John Cochrane, University of Chicago Booth School of Business Professor of Finance (among other positions), writing in a Wall Street Journal op-ed, proposed an Alternative Maximum Tax. He was on the right track, but he didn’t go far enough.
Here is a partial list of Federal taxes and tax-related limits on our weal which we currently pay:
- Income tax, to tune of $1.2 trillion as recently as 2007
- Cap on tax deferred savings: no more than $6,000 (in 2013) on Roth and Traditional IRAs, including catchup contributions if you’re a geezer; no more than $23,000 (in 2013) for 401(k)s, including catchup contributions
I don’t always disagree with Fox Business on tax reform, but when I do, I prefer smaller, flatter taxes.
They start with a bang (although I really couldn’t tell whether FB agreed with this), quoting NYU Law School Wayne Perry Professor of Taxation David Shaviro:
It’s hard to run an income tax properly because you have to know how assets change in value. In theory, you should be taxed when assets go up and receive deductions when they go down. But people come up with ways of getting around the rules. It’s a cops and robbers game.