The Voices

jaredbernsteinblog.com — As others have noted, conservatives who’d like bash the President on the economy are having an awfully hard time right now, as the recovery proceeds apace.  So, they’re stuck with “yeah, things are getting better, but if we were in charge, they’d be even better!” This, of course, is the flipside of a rap with which I’m intimately familiar: “sure, things are bad — but without our actions, they’d be even worse!” Neither are convincing to most people, because most people don’t engage in the economist’s counterfactual: the path the economy would have taken absent your interventions.  Thing is, I know and believe my counterfactual.  It comes from tried and true modeling based on the historical relationships of how advanced economies respond to stimulus. What I don’t get is their counterfactual. Other than unconvincingly waving hands, muttering how things should be better, how the EPA and OSHA rules are killing businesses, yada, yada — let’s see some analysis.

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nytimes.com — When Facebook goes public later this year, Mark Zuckerberg plans to exercise stock options worth $5 billion of the $28 billion that his ownership stake will be worth. The $5 billion he will receive upon exercising those options will be treated as salary, and Mr. Zuckerberg will have a tax bill of more than $2 billion, quite possibly making him the largest taxpayer in history. He is expected to sell enough stock to pay his tax. But how much income tax will Mr. Zuckerberg pay on the rest of his stock that he won’t immediately sell? He need not pay any. Instead, he can simply use his stock as collateral to borrow against his tremendous wealth and avoid all tax. Why is this? Our tax system is based on the concept of “realization.” Individuals are not taxed until they actually sell property and realize their gains. A drastic change is necessary to fix this fundamental flaw. The fix is called mark-to-market taxation.

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newdeal20.org — Last week’s job numbers were generally positive. Now if those numbers pick up steam, if the housing market begins to recover, if Europe doesn’t sink the U.S. economy, if the situation in the Middle East and especially Iran doesn’t cause oil prices to spike, and if we don’t immediately disrupt government spending through premature austerity, we could see some major job growth in 2012.
What about those who still have a job? We focus on the unemployed for many good reasons. But the economy also has major problems for those with jobs. Personally, many friends of mine have discussed how they want to move on and quit their current jobs and were putting in the energy to find new ones. They’ve mostly failed and are taking it as a personal failure. Except it’s less a personal failure than a macroeconomic one.

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americanprogress.org — General economic theory holds that companies will produce more of a good if its price is higher, or if it receives subsidies. Funny that these rules didn’t seem to apply to Big Oil in 2011, when the highest oil price since 1864 and $2 billion in subsidies to the five largest oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell — yielded lower oil production than in 2010. But these five oil companies combined made a record-high $137 billion in profits in 2011 — up 75 percent from 2010 — and have made more than $1 trillion in profits from 2001 through 2011.[1] This exceeds the previous record of $136 billion in profits in 2008. Let’s dig a little deeper into this mystery to see why these companies are making more money while Americans see less oil and pay more at the pump.

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epi.org — The Tax Policy Center’s new report on the distribution of tax expenditures strengthens the case for increasing tax progressivity and raising needed revenue by ending the preferential treatment of capital income (subject to a 15 percent tax rate versus a top marginal income tax rate of 35 percent). TPC’s analysis looks at seven broad categories of individual income tax expenditures: exclusions, above-the-line deductions, the preferential treatment of capital gains and dividends, itemized deductions, nonrefundable tax credits, refundable tax credits, and other miscellaneous tax expenditures. Guess which category of tax expenditure provides by far the most lopsided benefit to upper-income households?

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truth-out.org — George Washington was a hypocrite. O.K., that’s not what I believe. But it’s apparently what Senator Scott Brown of Massachusetts believes. Mr. Brown, in his campaign for re-election, is going all out on the proposition that Elizabeth Warren is a big hypocrite. According to Brian McGrory, a columnist at The Boston Globe, Mr. Brown, a Republican, “seems to be fuming that his main Democratic rival, Elizabeth Warren, has done pretty well for herself financially.” You see, Ms. Warren has been crusading to help the endangered middle class — but she herself is a well-paid Harvard professor, who would end up paying higher taxes as a result of the policies she advocates. See the hypocrisy? Neither do I. I’ve written about this before; somehow the notion has entered our politics that supporting a cause that isn’t in your personal financial interest makes you a hypocrite. It’s really bizarre.

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jaredbernsteinblog.com — I’ve always thought the national minimum wage is a lot more important than most people tend to think. By definition, it sets a floor on the low end of the job market, though to their credit, many states now set their minimums above the federal level of $7.25. Lots of low-wage workers and their families depend on it, and its long slide, as shown in the figure below, especially over the Reagan years, contributed to wage losses and working poverty for many who toil to this day in low-end services. Of course, when someone raises the idea of a raise, you hear a huge outcry from some in the business lobby. Such workers, they say, will now be “priced out of the labor market.” Yet, you hear the opposite from groups that represent low-wage workers interests, groups like the National Employment Law Project, or NELP (proud disclosure: I’m on their board). Hmmm…who you gonna believe?

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