Dean Baker's Blog, page 446

Mitt Romney's Income Was Not Taxed at the Corporate Level

I really don't want to waste my time talking about Governor Romney's tax returns, but come on folks. He was asked on 60 Minutes about whether it was fair that he paid a 14 percent tax rate on his income, compared to the much higher tax rate paid by many middle income families. According to the Huffington Post's account, he responded by saying:

"It is a low rate, ... And one of the reasons why the capital gains tax rate is lower is because capital has already been taxed once at the corporate l...

The Fiscal Cliff Won't Live Up to the Hype

That's what Brad Plumer tells us. As we like to say here at BTP, if everyone in Washington agrees, it's got to be wrong.

Work Sharing: The Hidden Secret of Germany's Economic Success

The NYT had an article that reported on Germany's relative economic success and attributed it to the labor market reforms that reduced benefits for unemployed workers and took other steps to weaken workers' bargaining power. While these reforms undoubtedly had the effect of reducing Germany's labor costs and thereby allowing it to accumulate a large trade surplus in the euro zone (which meant that countries like Greece, Spain, and Ireland would have large trade deficits), this is only part of...

Work Sharing: The Hiddden Secret of Germany's Economic Success

The NYT had an article that reported on Germany's relative economic success and attributed it to the labor market reforms that reduced benefits for unemployed workers and took other steps to weaken workers' bargaining power. While these reforms undoubtedly had the effect of reducing Germany's labor costs and thereby allowing it to accumulate a large trade surplus in the euro zone (which meant that countries like Greece, Spain, and Ireland would have large trade deficits), this is only part of...

All Economists Do Not Agree that Mitt Romney's Tax Rate Should be Low

Any time you hear anyone tell you that "all economists agree," get out your gun. Unless the question pertains to the shape of the earth, this is almost certainly not true.

It is most definitely not the case that economists agree that Mitt Romney should be paying his current 14.1 percent tax rate or less as Washington Post readers were told by Dylan Matthews today. Matthews rests his case on some arguments in the literature concerning scenarios in which we both look to an infinite future horiz...

Robert Samuelson Wants the Government to Stop Trying to Help People Into the Middle Class

His piece today notes that many people who start college don't finish and that many people got themselves into bad mortgages that they could not afford in the housing bubble years. He therefore concludes that government really cannot do much to ensure low income people a path to the middle class:

"What also cannot be wished away are on-the-ground realities that impede middle-class status for more Americans. Only one-third of children born to the poorest fifth of Americans graduate high school...

The Fed Has Always Sought to Counteract Recessions

The Washington Post has a piece on how Federal Reserve Board Chairman Ben Bernanke transformed the Fed so that it now has an active role in boosting the economy. In fact it is difficult to see anything qualitatively different about the role that Bernanke has set for the Fed. As the piece notes, high employment is part of its mandate. In past recessions, the Fed has sharply reduced the federal funds rate to help boost the economy.

As can be seen the Fed lowered the federal funds rate from 19...

Another Post Editorial on the Budget Runs in the News Section

The Washington Post has long felt that the distinction between news reported and editorializing was outdated. Hence it had no compunctions about running a piece on the budget that begins:

"Senior Republicans say they will be forced to retreat on taxes if President Obama wins a second term in November, clearing the biggest obstacle to a deal with Democrats to defuse a year-end budget bomb that threatens to rock the U.S. economy."

Wow, a year-end "budget bomb" that threatens to "rock" the econo...

NYT Discovers Retirement Income Problem

They may have been a bit slow, but better late than never. It is encouraging to see the NYT strongly endorse the proposal to have California offer a state managed retirement plan to workers in the private sector who don't have a pension at their workplace. That fact that it took so long is a bit annoying to those of us who have been working on this issue for the last 15 years or longer, but no one ever accused the NYT of being on the cutting edge of anything. Anyhow, better late than never.

...

Ross Douthat Is at Least Half Right

Douthat's column today lashes out at the economy of the Washington metropolitan area. Douthat describes it as an economy of exploitation as highly paid lobbyists thrive on efforts to manipulate government policy to advance their interests. Douthat is 100 percent on the mark here. This is a town chock full of 6 and 7-figure buffoons. People who draw paychecks in the hundreds of thousands or even millions but who have no discernible skills other than an impressive contact list.

What he gets wr...