It's Still The Economy, Stupid |
Thursday, May 01, 2003 Ron K., sitting in for host Markos at the Daily Kos, takes a more detailed look at Bush's job creation track record (or lack thereof):
Intermission Time at the Job-Demolition Derbyposted by MB | 12:11 PM | One scoop, or two?
U.S. April ISM Manufacturing Index Falls to 45.4 Now, I know that the mighty Alan Greenspan assured Congress, and by extension, the American public, yesterday that an economic recovery was just around the corner.
FED CHAIRMAN SUGGESTS THAT RECOVERY HAS BEGUN Or perhaps:
FED REPORT SETS STAGE FOR DISPUTE OVER GROWTH Of course, Greenspan's pronouncement of the recession's demise was somewhat premature, and in the months following that assertion, the economy spiraled downward once again. Double-dipping, it was termed then. It still is.
Wednesday, April 30, 2003 The Washington Post on Tax Cuts
Jonathan Weisman has an article entitled "President Says $550 Billion Reduction Would Create More Jobs". Here's a nice bit of reasoning by the president: "Some members of Congress support tax relief but say my proposal is too big," Bush said in his Saturday radio address. "Since they already agree that tax relief creates jobs, it doesn't make sense to provide less tax relief and, therefore, create fewer jobs." If you have the sniffles, an ounce of Nyquil will make you feel somewhat better. The only logical conclusion is to drink the whole bottle. The article continues directly: But few economists would argue that tax policy is so straightforward. Taken to its extreme, Joel Slemrod, a tax economist at the University of Michigan, said that Bush's argument would support eliminating taxes altogether for the sake of job creation. Here are the president's numbers: Advisers calculated in February that the president's full, $726 billion package would create 1.4 million jobs through 2004. The House's trimmed down, $550 billion package would create just over a million jobs, by the White House's calculation. A $350 billion package would create 425,000 fewer jobs, White House spokesman Ari Fleischer told reporters last week. Doing a little math, these numbers translate respectively into per-job-created costs of $518,000, $550,000, and $609,000 for the smallest tax cut. Note how the numbers assume increasing returns (i.e., lower cost-per-job) to tax cuts? Most things in economics are subject to diminishing returns (it's such a common phenomenon that we call it The Law of Diminishing Returns).
Other highlights from the story:
There's more, read the whole thing. All in all, a pretty damning story for tax cut supporters.
I talked a little bit about "dynamic scoring", the new name for the theory that lowering tax rates increases tax revenue, here. Matt Yglesias has a quip here on a NYT story from April 17th summarizing the results of various economic models' predictions about the effects of the Bush proposal--they are all negative, even the models that incorporate dynamic scoring. AB UPDATE: CalPundit has more here, in a post that draws upon some excellent sleuthing by Max Sawicky, whose post is here. posted by Angry Bear | 3:44 PM |Brad Delong on Alan Murray's praising of Voinovich ringing false:
Alan Murray praises Senator Voinovich for his "emperor's new clothes" stand: pointing out that deliberately unbalancing the federal budget in the long term is very bad policy--not the kind of thing that anyone can pretend is best for America. One quibble, however: Murray writes that since "the president's hand-picked congressional budget director, Douglas Holtz-Eakin, has cast doubts... with his 'dynamic scoring' report" on the "easy argument that tax cuts will spur growth and offset their cost." What "easy argument"? If you took your economics seriously--had not long since abandoned any claim to be more than a pure political hack--the argument that cutting dividend taxes by this while widening the long-run budget deficit by that would significantly boost economic growth has always been as hard to make as it would be to climb Mt. Everest in your gym shorts. [more]posted by MB | 3:19 PM | CEO Pay
For those who like to get outraged over CEO pay, take a look at this CNN/Money story. I actually have no problem with high CEO pay, as long as it is tightly linked to the performance of the company. I should probably also add, as long as the compensation committee is independent and not beholden to the CEO. Jack Welch, Lou Gerstner, and Stanley Gault all made huge contributions to their companies, to their employees, and to the economy (the latter two saved their respective companies, IBM and Goodyear, from ruin). When the pay is not linked to performance, as is the case with severance packages and to some degree stock options, then the pay levels are in fact pretty outrageous.
Why do companies offer generous severance packages? One theory is that the compensation committee is controlled by the CEO. Another is that it allows them to give lower pay during the CEO's tenure by reducing the risk the CEO faces. Of course reducing the risk the CEO faces in this fashion reduces the link between CEO pay and company performance, to some extent invalidating the theory behind high pay in the first place. AB P.S. I also talked about this issue in a post on dividend taxes at my native blog, angrybear.blogspot.com. P.P.S. Thanks to Wampum for setting this up and for inviting me to contribute. posted by Angry Bear | 3:11 PM |Tuesday, April 29, 2003 The Angry Bear is joining in the fray at It's Still the Economy, Stupid, in between his home blog and "tenurable activities". It'll be good to see more fur fly as he gives the opposition a few well deserved swats here and there. posted by MB | 2:07 PM |Forget the So-called-liberal-media: It's the Pollyanna Press now
The Employment Cost Index for total compensation rose 1.3 percent from December 2002 to March 2003, following a 0.7 percent gain from September to December 2002, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Benefit costs increased 2.2 percent and continued to substantially outpace the 1.0 percent gain in wages and salaries for civilian workers in March. The Employment Cost Index (ECI), a component of the National Compensation Survey, measures quarterly changes in compensation costs, which include wages, salaries, and employer costs for employee benefits, for nonfarm private and State and local government workers.
Workers' Wages, Benefits Up 1.3 Percent Spin, spin, spin. posted by MB | 6:17 AM |Sunday, April 27, 2003 Brad DeLong's take on the Bush Stimulus (???) Plan:
It's an Industrial Sealant! No, It's a Dessert Topping!posted by MB | 8:37 AM | |
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