April 21, 2005

Don't Blame Me, I Voted for Kerry

More Americans see the economy as getting worse, and Washington with little ideas or plans to do anything about it; from the Washington Post front page:

"Pretty much all round, March now looks like a lousy month for the U.S. economy," J.P. Morgan Chase economists warned clients this week.

The Washington Post/ABC News Consumer Comfort Index, released Tuesday, climbed two points from last week's 2005 low, but it is still down seven points over the past month. Nearly half of those polled this month say the economy is getting worse, the most negative rating in two years of monthly polls.

"People feel vulnerable and besieged," said Lawrence Mishel, president of the labor-oriented Economic Policy Institute, "and they don't hear anybody talking about it."

Yet the only economic bills signed into law this year have tilted against the little guy: Legislation that restricts class-action lawsuits, and a major rewrite of the nation's bankruptcy laws, signed yesterday, that will make it harder for debt-ridden Americans to wipe out their obligations.

One Republican warns his party may feel an effect from this in 2006:
"There is a lot of frustration," said Rep. Vernon Ehlers (R) on Tuesday, as he was returning from his district in western Michigan. Republican leaders "need some seats from the Midwest and Northeast to maintain a majority, and if we continue at the rate we're going, we may well lose a few seats."

Posted by Eric at 02:45 AM | Comments (1)

April 15, 2005

Poor Families and State Income Taxes

A report released earlier this week from the CBPP documents the problems poor families - many near or below the federal poverty line - face with state income taxes:

16 states, poor single-parent families of three pay income taxes. In addition, 31 of the 42 states with an income tax still tax families with incomes just above the poverty line, even though such families typically have difficulty making ends meet.

In some states, families with poverty-level incomes face income tax bills of several hundred dollars. For example, a two-parent family of four in Alabama with income of $19,311 — the 2004 poverty line for a family that size — owes $513 in income tax, while such a family in Hawaii owes $434 and in Arkansas $403. Such amounts can make a big difference to a struggling family. Other states levying tax of $200 or more on families with poverty-level incomes include Indiana, Kentucky, Michigan, Montana, Oregon, Virginia, and West Virginia.

There was no improvement in the taxation of poor families in 2004. Yet some states have enacted changes that will lessen the taxation of the poor in future years. Kentucky, which for 2004 levied the highest tax on a family of four at the poverty level ($652), enacted a low-income credit that, beginning in 2005, will shield poor families from paying income tax.[2] Virginia — with the fourth highest 2004 tax on poverty-level families — enacted a 20 percent non-refundable state Earned Income Tax Credit that will take effect in 2006. In a few states, the income taxes on poor families have increased over the last decade.

What's the problem with these taxes?
Taxing the incomes of working-poor families runs counter to the efforts by policymakers across the political spectrum to provide more assistance to families seeking to work their way out of poverty. Many states reduced income taxes on the poor in the 1990s, and a majority of states now exempt poor families from the income tax. The federal government has exempted such families since the mid-1980s.

Eliminating all or most state income taxes on working families with poverty-level incomes gives a boost in take-home pay that helps offset higher child care and transportation costs that families incur as they strive to become economically self-sufficient. In other words, relieving state income taxes on poor families is making a meaningful contribution toward "making work pay." A dozen states go even further; they not only exempt poor families from income taxation, but also provide a tax rebate that can help such families meet their expenses.

Posted by Eric at 01:27 PM | Comments (0)

Bush's Science and Technology Failure

The United States is falling behind in broadband Internet usage, and the Bush administration has done a terrible job pushing initiatives to develop science and technology. Two of note: Thomas Friedman in a NY Times oped today, "tax cuts can't solve every problem. This administration - which often seems more interested in indulging creationism than spurring creativity - is doing a very poor job of preparing the country for that next level." One example of Bush's failure is "broadband and the latest mobile-phone technology." And this from Thomas Bleha in Foreign Affairs:

In the first three years of the Bush administration, the United States dropped from 4th to 13th place in global rankings of broadband Internet usage. Today, most U.S. homes can access only "basic" broadband, among the slowest, most expensive, and least reliable in the developed world, and the United States has fallen even further behind in mobile-phone-based Internet access. The lag is arguably the result of the Bush administration's failure to make a priority of developing these networks. In fact, the United States is the only industrialized state without an explicit national policy for promoting broadband.

It did not have to be this way. Until recently, the United States led the world in Internet development. In the late 1960s and 1970s, the Department of Defense's Advanced Research Projects Agency conceived of and then funded the Internet. In the 1980s, the National Science Foundation partially underwrote the university and college networks -- and the high-speed lines supporting them -- that extended the Internet across the nation. After the World Wide Web and mouse-driven browsers were developed in the early 1990s, the Internet was ready to take off. President Bill Clinton and Vice President Al Gore showed the way by promoting the Internet's commercialization, the National Infrastructure Initiative, the Telecommunications Act of 1996, and remarkable e-commerce, e-government, and e-education programs. The private sector did the work, but the government offered a clear vision and strong leadership that created a competitive playing field for early broadband providers. Even though these policies had their share of detractors -- who claimed that excessive hype was used to sell wasteful projects and even blamed the Clinton administration for the dot-com bust -- they kept the United States in the forefront of Internet innovation and deployment through the 1990s.

Things changed when the Bush administration took over in 2001 and set new priorities for the country: tax cuts, missile defense, and, months later, the war on terrorism. In the administration's first three years, President George W. Bush mentioned broadband just twice and only in passing. The Federal Communications Commission (FCC) showed little interest in opening home telephone lines to outside competitors to drive down broadband prices and increase demand.

Oh, what could have been with Al Gore, a man who understands technology.

Posted by Eric at 11:59 AM | Comments (2)

April 14, 2005

Corporate Tax Cheats

The top 275 corporations in America pay an average of 17.3 percent on taxes; more from Robert Kuttner:

The statutory corporate rate is 35 percent. The fact that the taxes actually paid were less than half that amount reflects a blend of special-interest laws, shelters, and outright tax-cheating. As McIntyre observes, in the 1950s, U.S. corporations paid 4.8 percent of the gross domestic product in taxes. By 2004 that had fallen to 1.6 percent.

In recent years, the likelihood of a high-income individual, corporation, or partnership being audited has drastically declined. The IRS enforcement budget is down almost one-third since the mid-1990s. Even as Congress has larded up the tax code with new, complex shelters and special-interest provisions that invite abuse, it has limited the IRS budget to the point where taxpayer assistance offices are closing and the hands of the IRS are tied when it comes to in policing tax cheats.

For more on corporate tax cheats, and how they pull it off, check out this .pdf from Citizens for Tax Justice.

Posted by Eric at 05:11 PM | Comments (0)

March 29, 2005

Good News, Bad News

In today's New York Times (via the Stakeholder), we find some good news:

The Bush administration said Monday that it had sent the first of some 20 million applications to low-income people who might qualify for financial assistance with Medicare's new prescription drug benefit.
Yes, helping the poor, yes, good good.
But lawyers and other advocates for low-income people said the form was so complex that they expected fewer than 5 percent of the people to respond.
Oh geez. I guess ... that's bad news.

Posted by Eric at 10:51 AM | Comments (0)

March 15, 2005

Odd Economics

Link via Eschaton, another Halliburton folly; Houston Chronicle:

Iraq needed fuel. Halliburton Co. was ordered to get it there — quick. So the Houston-based contractor charged the Pentagon $27.5 million to ship $82,100 worth of cooking and heating fuel.

In the latest revelation about the company's oft-criticized performance in Iraq, a Pentagon audit report disclosed Monday showed Halliburton subsidiary KBR spent $82,100 to buy liquefied petroleum gas, better-known as LPG, in Kuwait and then 335 times that number to transport the fuel into violence-ridden Iraq.

Pentagon auditors combing through the company's books were mystified by this charge.

"It is illogical that it would cost $27,514,833 to deliver $82,100 in LPG fuel," officials from the Defense Contract Audit Agency noted in the report.

Enter funny PR job:
Halliburton spokeswoman Wendy Hall said the figures were taken out of context.

"The implication is definitely misleading," Hall said. "Transporting fuel into Iraq was a mission fraught with danger, which increased the prices that firms were willing to offer for transportation."

Right.

Posted by Eric at 11:35 AM | Comments (3)

March 14, 2005

Bankruptcy Bill Said to Hit Poorest Americans Hardest

OneWorld.net: "Millions of Americans could be plunged into financial ruin if a bill giving credit card companies long-sought relief from unpaid loans gets final Congressional approval, a broad array of consumer protection, economic justice, and civil rights groups warned."

Posted by Eric at 08:09 AM | Comments (5)

March 12, 2005

Study: President's Budget to Increase Deficits by $1.6 Trillion Over Ten Years

Center on Budget and Policy Priorities study:

The analysis of the President’s budget released on March 4 by the Congressional Budget Office confirms that the President’s budget does not reduce the deficit.[1] In fact, according to CBO, adoption of the policies proposed by the President would increase the deficit by $104 billion over the next five years (2006 through 2010) and $1.6 trillion over the next 10 years (2006 through 2015), compared with the deficits that would occur if there are no changes in current policies.

The bulk of this increase in projected deficits was hidden in the President’s budget, because that budget only showed deficits through 2010. Although it was clear to observers that the tax cuts proposed by the Administration would push deficits up after 2010, the CBO estimates show for the first time how large the increases in the deficit would be in the five years following the years shown in the President’s budget ...

More.

Posted by Eric at 10:56 AM | Comments (5)

January 19, 2005

The Wealth Gap Problem

According to civil rights advocates, "Economic equality has become the paramount civil rights issue of the 21st century." From the AP:

Fewer blacks than whites own their houses, get fair loans, invest in the stock market or sit on corporate boards, or have any real control over much of the trillions of dollars flowing in mutual funds, pension plans and the financial markets, they said.

"Very real gains have been made on some parts of the economic front and the education front and most particularly on the job front," said Thomas Shapiro, professor at the Heller School for Social Policy and Management at Brandeis University. "(But) those gains are being reversed through widening racial wealth gaps." ... In 1999, during a boom economy, Shapiro said, black middle-class families on average had one-fourth of the wealth of similarly educated, similarly employed white middle-class families.

The disparity was even starker across all income groups -- black families as a whole had only 10 cents in wealth for every dollar white families had, according to government figures.

There are historical reasons -- generations of poverty, a legacy of slavery and laws that kept them from education, housing and good jobs. But advocates say there also is persistent discrimination in mortgages and other loans.

More: How Bush has widened the wealth gap.

Posted by Eric at 04:28 PM | Comments (13)

January 18, 2005

Bush's Jobs Plan: Failure

From EPI's Jobs Watch site:

The Bush Administration called the tax cut package, which took effect in July 2003, its "Jobs and Growth Plan." The president's economics staff, the Council of Economic Advisers (CEA, see background documents), projected that the plan would result in the creation of 5.5 million jobs by the end of 2004—in other words, 306,000 new jobs in each of the 18 months from June 2003 to December 2004. Even without the passage of Bush's tax cut plan, the CEA projected that the economy would generate 228,000 jobs a month.

With the newly released payroll employment data for December 2004 it is now possible to assess whether the administration's tax cut strategy produced the employment growth that was projected (see table and figure below). The final verdict is grim. Job growth over the last 18 months has fallen short by 1,703,000—more than one-third less than the number of jobs the administration said would be created without the tax cuts. Given that the economy failed to produce the number of jobs expected with no policy change, it seems hard to argue that the tax cuts were a successful strategy in adding any jobs—the promised 1.4 million additional jobs never materialized. The announced revisions (up 236,000 in March 2004) to the payroll employment series (see Data Note below) do not materially change this assessment ...

Charts, graphs, etc avail at the site.

Posted by Eric at 10:53 AM | Comments (3)

December 22, 2004

Losing Under the Bush Plan

How would private accounts benefit those on Social Security? From the Economic Policy Institute:

Indeed, in its primary plan, President Bush's commission on Social Security proposed to slash the guaranteed portion of Social Security by 16% for people who retire in 2022 and who had previously opted for private accounts; the cuts would increase to 40% for those who retired in 2042 and by 62% for those in 2075. To sell those deep cuts, the commission touted the benefits of private accounts, which would require the federal government to borrow several trillion dollars over the next three or four decades. (The additional borrowing would stop once benefit reductions exceeded the new funds going into private accounts.)

Even with the commission's overly optimistic projections of returns on private accounts, future retirees would lose big under the commission's plan. The combined income from guaranteed benefits and these new private accounts would fall 7%, 12%, and 23% short of the benefits scheduled under current law for 2022, 2042, and 2075, respectively. By their own admission, the commission's privatization proposal would cut benefits significantly ... Economists at Goldman Sachs (GS) have found that the commission used excessively high returns in their projections for both stocks and bonds.1 Using more plausible assumptions about returns and the fact that people are willing to pay to reduce risk, the GS economists have estimated a more realistic risk-adjusted return of 2.7% on personal accounts, far less than the 4.6% used by the commission. They find that a medium income, one-earner couple in 2075 would receive $600 a month in annuity income from a personal saving account-barely half as much as the $1,167 projected by the commission. When added to the $1,156 guaranteed benefit proposed by the President's commission, that generates a monthly total of $1,755—42% less than the $3,009 anticipated under Social Security current law. That's a much larger reduction than the 23% cut under the commission's overly optimistic assumptions.

Posted by Eric at 11:32 AM | Comments (7)

December 15, 2004

Walmart vs. Costco

Since I linked to BuyBlue yesterday, someone sent me this related article from a little while back: "Wal-Mart = Bush. Costco = Kerry. Costco's Winning."

On the left: Costco Wholesale Corp. Last week, Jeffrey Brotman and James Sinegal, chairman and chief executive office of Costco, respectively, joined the list of executives who endorsed John Kerry for president. The company is based in Washington (a blue state in the past four elections, and one that Kerry leads, by a 53-45 margin according to the Aug. 2 Zogby poll), and a list of its locations bears some resemblance to the Kerry-Edwards campaign: strong on the affluent coasts and virtually nonexistent in the comparatively poor Great Plains and in the Old Confederacy ... Costco also has the sort of labor policy that would bring a smile to Barbara Ehrenreich's face. Pay starts at $10 an hour. About one in six employees is represented by a union, and workers receive nice health benefits. Sinegal has a non-zero-sum view of employee relations. Give people good jobs at good wages, and they'll be more likely to work harder, less likely to leave, and less likely to steal. As Helyar reported, Costco's turnover "is a third of the retail industry average of 64%," and "shrinkage"—the amount of inventory lost to theft—"is about 13% of the industry norm."

On the right: Wal-Mart Stores, Inc. Founded in Arkansas (a blue-turned-red state), it grew by spreading into the adjacent South and Great Plains. Like today's Republican Party, it focuses intensely on rural areas and generally avoids cities. (Republican conventioneers won't be able to shop at a Wal-Mart when they visit New York City.) As this Bloomberg story notes, "Sixty-seven percent of Wal-Mart's stores are in the 30 states that voted for Bush and Cheney in 2000."

The company's labor policies are state-of-the-art, for the 1890s. It has been investigated for hiring contractors who allegedly hired illegal aliens to clean Wal-Mart stores and for locking them inside overnight. (One wonders if the Wal-Mart employees who in April were bused in to hear Vice President Dick Cheney sing the company's praises at Wal-Mart's headquarters were similarly confined.) In June, a federal judge certified a class-action lawsuit filed on behalf of female Wal-Mart employees who claimed discrimination. The average wage at Wal-Mart, which has no unions and bitterly opposes raising the minimum wage, is lower than Costco's lowest wage. Turnover at Wal-Mart, according to the Economist, is 44 percent, meaning it "has to hire an astonishing 600,000 people every year simply to stay at its current size."

So yes, now you can feel a little better about buying a 300 pound jar of mayonnaise.

Posted by Eric at 12:47 AM | Comments (16)

December 08, 2004

Some States Taking Up Minimum Wage Slack

No surprise, this administration and Congress won't do much on the minimum wage. Still, some states are taking up the slack, reports the Economic Policy Institute:

The president and Congress are poised to beat a disgraceful record currently held by their predecessors of the 1980s—eight years without raising the minimum wage. Each year the federal government fails to act, workers pay the price, as the rising cost of living erodes the value of their paycheck.

In response, states are stepping in to make sure that workers in their states don't suffer from federal neglect. Since 1997, when the federal minimum was raised to $5.15, the number of states with higher rates than the federal has gone from five to 13.1 On November 2nd, voters in Florida and Nevada overwhelmingly (71% in Florida and 68% in Nevada) approved ballot measures to join these states in setting minimum wages above the federal level. They also joined two states—Washington and Oregon—in requiring moderate annual adjustments to the state minimum wage to account for changes in the cost of living.

The last time the federal government failed so badly to meet its responsibility to low-wage workers was in the 1980s, and states stepped in then as well. Between 1979 and 1989, the value of the federal minimum wage fell 29.5% (in inflation-adjusted dollars). In 1979 only Alaska had a higher minimum wage than the federal level. However, by 1989, 15 states had responded to this federal inaction by raising their minimum wages.

Posted by Eric at 05:19 AM | Comments (26)

November 19, 2004

Little Big Companies

"How did corporations like Halliburton get millions in government contracts designated for small minority businesses?" Mother Jones:

Partnerships between multinational companies and tribal businesses, most of them Alaska native corporations, have skyrocketed in recent years—in large part because of a provision in federal law that exempts tribal companies from rules that apply to other minority-owned businesses. The system was established in the mid-1990s to help native communities, where unemployment rates often exceed 40 percent. But it has also become a way for large corporations with no Native American ownership to receive no-bid contracts, an avenue for federal officials to steer work to favored companies, and a device for speeding privatization. “It’s a loophole gone wild,” Charles Tiefer, an expert in federal contract law, recently told the trade journal Washington Technology. “I have seen little evidence that this produces jobs in Alaska as opposed to profits for those entrepreneurs skillful enough to exploit it.”

A Mother Jones analysis of federal contracting records shows that no-bid, or “sole-source,” awards to native companies have risen dramatically since the late 1990s (see chart). Back in 1999, the largest tribal firms received just $195.5 million worth of no-bid work, or roughly 3 percent of the awards under the federal government’s program to assist small and minority-owned companies. By 2003, however, large tribal companies were getting $1.3 billion worth of contracts without any competition, accounting for nearly 15 percent of the minority program. Bruce Pozzi, a spokesman for Olgoonik, says the company decided to “jump on this bandwagon” after it realized how much money other native companies were making. Olgoonik has 175 employees, but only 7 of them are tribal members and thus shareholders of the corporation.

Posted by Eric at 01:01 PM | Comments (17)

November 08, 2004

[ACORN] Report finds lending disparities

[ACORN] Report finds lending disparities for minorities and low-income people.

Nationally, the study found that even upper-income African-Americans were more than twice as likely (2.6 times) to be turned down than upper-income whites. Findings also show that larger gains in lending to minorities and lower income people were made in the earlier 1993-1998 time period, while disparities increased in the more recent five years since 1998. Although, lending to minorities and lower income families has increased, it is still at low levels compared to their share of the population and the quality of these loans has changed.

Posted by Eric at 05:23 AM | Comments (8)

November 07, 2004

[Economic Policy Institute] Tax cuts

[Economic Policy Institute] Tax cuts meet October target, cumulative impact falls far short

The October job growth of 337,000 jobs exceeded the Bush Administration's projections by 31,000. However, the overall projection that 4,896,000 jobs would be created over the last 16 months is not close to having been realized. In reality, since Bush’s “Jobs and Growth” tax cut plan took effect, there are 2,738,000 fewer jobs than the administration projected would be created. In fact, job creation failed—often by a large margin—to meet the administration's projections in 13 of the past 16 months.

Posted by Eric at 07:38 AM | Comments (5)