Friday, June 29, 2012

Illustrating the Success of Health Care Reform

Jonathan Gruber is uniquely qualified to present this video - he advised then-Governor Romney as well as President Obama on how to design the reform.

Update - A flashback to Nov. 2011. How does Obamacare differ from Romneycare? Ask Jonathan Gruber, economist and sometime pottymouth.

Monday, June 25, 2012

A look back: "Sliding Into The Great Depression"

Professor Brad DeLong wrote the following in 1997. I'm quoting from his work liberally, because it echoes so strongly today:

At its nadir, the Depression was collective insanity. Workers were idle because firms would not hire them to work their machines; firms would not hire workers to work machines because they saw no market for goods; and there was no market for goods because workers had no incomes to spend.

Long-term unemployment means that the burden of economic dislocation is unequally borne. Since the prices workers must pay often fall faster than wages, the welfare of those who remain employed frequently rises in a depression. Those who become and stay unemployed bear far more than their share of the burden of a depression. Moreover the reintegration of the unemployed into even a smoothly-functioning market economy may prove difficult, for what employer would not prefer a fresh entrant into the labor force to someone out of work for years? The simple fact that an economy has recently undergone a period of mass unemployment may make it difficult to attain levels of employment and boom that a luckier economy attains as a matter of course.Once an economy had fallen deeply into the Great Depression, devalued exchange rates, prudent and moderate government budget deficits (as opposed to the deficits involved in fighting major wars), and the passage of time all appeared equally ineffective ways of dealing with long-term unemployment. Highly centralized and unionized labor markets like Australia's and decentralized and laissez-faire labor markets like that of the United States did equally poorly in dealing with long-term unemployment. Fascist "solutions" were equally unsuccessful, as the case of Italy shows, unless accompanied by rapid rearmament as in Germany.

Even today (Feb. 1997), economists have no clean answers to the question of why the private sector could not find ways to employ its long-term unemployed. The very extent of persistent unemployment in spite of different labor market structures and national institutions suggests that theories that find one key failure responsible should be taken with a grain of salt.

But should we be surprised that the long-term unemployed do not register their labor supply proportionately strongly? They might accurately suspect that they will be at the end of every selection queue. In the end it was the coming of World War II and its associated demand for military goods that made private sector employers wish to hire the long-term unemployed at wages they would accept.

At first the unemployed searched eagerly and diligently for alternative sources of work. But if four months or so passed without successful reemployment, the unemployed tended to become discouraged and distraught. After eight months of continuous unemployment, the typical unemployed worker still searches for a job, but in a desultory fashion and without much hope. And within a year of becoming unemployed the worker is out of the labor market for all practical purposes: a job must arrive at his or her door, grab him or her by the scruff of the neck, and through him or her back into the nine-to-five routine if he or she is to be employed again.

This is the pattern of the long-term unemployed in the Great Depression; this is the pattern of the long-term unemployed in Western Europe in the 1990s. It appears to take an extraordinarily high-pressure labor market, like that of World War II, to successfully reemploy the long-term unemployed.

Friday, June 22, 2012

PPI Policy Brief: How to Boost the Economy by Helping Homeowners

With 33 percent of homeowners still underwater (meaning they owe more than their house is worth), a massive wave of refinancing would allow borrowers who are current on their mortgages to lower their mortgage rate. Cutting their payments by thousands of dollars a year would help them pay down debt and put money back into the economy. The good news is that the benefits far outweigh any small costs the programs would incur. A bill that would allow 12 million borrowers with GSE loans to refinance would provide $2,600 in annual savings to these households. Approximately $1.83 trillion in refinanced mortgages would lower American mortgage payments by $31 billion a year. The GSEs would even see between $11 to $18 billion in new revenues from upfront costs.

Read the full brief

Romney Economics: Outsourcing Doesn't Work

Saturday, June 16, 2012

Independent Foreclosure Review

All Requests for Review Forms must be submitted online or postmarked no later than July 31, 2012.

If your primary residence was involved in a foreclosure process between January 1, 2009 and December 31, 2010, you may qualify for a free Independent Foreclosure Review.

The Independent Foreclosure Review will determine whether individual borrowers suffered financial injury and should receive compensation or other remedy because of errors or other problems during their home foreclosure process.

If you believe you are eligible to participate in the program, you may complete and submit a Request for Review Form. It is important that you complete the form to the best of your ability; all information you provide can be useful.

For help completing the online form or to have questions answered, call 1-888-952-9105. Monday through Friday, 8 am - 10 pm ET -- Saturday, 8 am - 5 pm ET

Wednesday, June 13, 2012

The Truth About Taxes

A blip on the radar

May 22, 2012:

On Tuesday, (Sen.) Corker called the trading loss a "blip on the radar" of J.P. Morgan's financial statements and warned against new rules that could end up "making these highly complex organizations even more risky than they already are." (source: The Wall Street Journal)

June 12, 2012:

Over the past two weeks, the cost of providing that protection has jumped by about $1 billion for every $100 billion of protection, which could put JPMorgan's losses as high as $8 billion. Just a few weeks ago, sources were telling CNNMoney that the losses could be in the $6 billion to $7 billion range. (source: CNN Money)

June 13, 2012:

"It's not about Congress worried about whether JPMorgan is going to make it or not — I mean, this is a blip on the radar screen," (Sen. Corker) said on CNN’s "Starting Point."

"This is not about the bank being in trouble. I mean, $2 billion is less than two months' worth of earnings at JPMorgan. It's a well-capitalized institution," Corker said. (source: The Hill)

Senator Corker, the next time the GOP attempts to defund public media like NPR and PBS, I'd like to hear you oppose the attempt. After all, if $8 billion is a blip on the radar screen, what's $451 million? A sixteenth of a blip?

H. R. 589 would have cost about $16 billion - or, using Senator Corker's math, two blips.

Thursday, June 7, 2012

Congress - We Can't Wait

Here's the White House's fact sheet on the American Jobs Act - Congress has had it since September 2011. You can track the bill's progress in our sidebar on the right: it's S.1549

Saturday, June 2, 2012

Why Scott Walker Must Be Recalled

Reason One: Dropping the Bomb - from Politifact Wisconsin:

Walker contends he clearly "campaigned on" his union bargaining plan.

But Walker, who offered many specific proposals during the campaign, did not go public with even the bare-bones of his multi-faceted plans to sharply curb collective bargaining rights. He could not point to any statements where he did. We could find none either.

While Walker often talked about employees paying more for pensions and health care, in his budget-repair bill he connected it to collective bargaining changes that were far different from his campaign rhetoric in terms of how far his plan goes and the way it would be accomplished.

We rate his statement False.

(Editor’s note: After this item was posted, a conversation surfaced between Walker and a person impersonating Walker campaign contributor and industrialist David Koch. In an audiotape released Feb. 23, 2011, Walker compares his union plan to a history-making act and portrayed his union plan as a "bomb."

Walker aides acknowledge the tape is real, but say Walker simply was saying privately what he has said publicly about his budget-repair bill.

Of a meeting with his cabinet, Walker in the tape says: We talked about what we were going to do, how we were going to do it. We had already built plans up. This was kind of the last hurrah before we dropped the bomb.")

Reason Two: Divide and Conquer

Reason Three: Right to Work - from Talking Points Memo:

During the Wisconsin recall debate, moderator Mike Gousha asked Republican Gov. Scott Walker whether he would veto a right-to-work bill — restricting private-sector unions — if it reached his desk from the legislature.

"I've said it's not gonna get there," Walker said. Gousha asked again, would he veto it?

"I've said it's not gonna get there, you're asking a hypothetical. And the reason I say that is I saw what happened over the last year and half. And I don't want to repeat that discussion. I think most people in the state, Democrat and Republican alike, want to move forward."

Walker never said no. Why? Because he sides with the Koch brothers, multimillion-dollar donors to his campaign. He sides with Diane Hendricks, who donated $500,000 to his campaign. He sides with money. Not Wisconsin.

It all comes down to one day. Wisconsin - Vote June 5th