Economics Daily Digest: Stock buybacks, tax reform, right to work

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Tuesday February 10, 2015 · 5:05 AM PST

2015/02/10 · 05:05

By Rachel Goldfarb, originally published on Next New Deal

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Stock Buybacks Are Killing the American Economy (The Atlantic)

Nick Hanauer blames the high percentage of corporate profits going to stock buybacks for our slowed economy; that money could otherwise go to higher wages or new corporate investments.

As economic power has shifted from workers to owners over the past 40 years, corporate profit’s take of the U.S. economy has doubled—from an average of 6 percent of GDP during America’s post-war economic heyday to more than 12 percent today. Yet despite this extra $1 trillion a year in corporate profits, job growth remains anemic, wages are flat, and our nation can no longer seem to afford even its most basic needs. A $3.6 trillion budget shortfall has left many roads, bridges, dams, and other public infrastructure in disrepair. Federal spending on economically crucial research and development has plummeted 40 percent, from 1.25 percent of GDP in 1977 to only 0.75 percent today. Adjusted for inflation, public university tuition—once mostly covered by the states—has more than doubled over the past 30 years, burying recent graduates under $1.2 trillion in student debt. Many public schools and our police and fire departments are dangerously underfunded.

Where did all this money go?

The answer is as simple as it is surprising: Much of it went to stock buybacks—more than $6.9 trillion of them since 2004, according to data compiled by Mustafa Erdem Sakinç of The Academic-Industry Research Network. Over the past decade, the companies that make up the S&P 500 have spent an astounding 54 percent of profits on stock buybacks. Last year alone, U.S. corporations spent about $700 billion, or roughly 4 percent of GDP, to prop up their share prices by repurchasing their own stock.

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Monday February 09, 2015 · 5:43 AM PST

2015/02/09 · 05:43

By Rachel Goldfarb, originally published on Next New Deal

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Under GOP Plan, Pay More for Junk Insurance, Leave More Uninsured (The Hill)

Roosevelt Institute Senior Fellow Richard Kirsch breaks down the Republican plan for replacing the Affordable Care Act, which he says will allow barebones high-cost plans instead of real coverage.

It's easy to be cynical about the Republican plan, because the political blowback if it were implemented would be massive. But one other provision in the plan just underlines that cynicism. The plan keeps the $700 billion in Medicare cost reductions that the GOP made the centerpiece of their campaign ads attacking ObamaCare in the 2010 and 2012 elections.

All this in the hope that five Supreme Court justices can be convinced to make a politically motivated ruling in the King v. Burwell case. The thinking is that if Republicans can show some alternative to the ACA, the five conservative justices will be more willing — despite overwhelming, settled judicial practice by the court — to overturn the section of the ACA that provides tax credits to the more than 9 million people who get coverage from insurance purchased through the federal exchange. Cynicism anyone?

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Friday February 06, 2015 · 5:30 AM PST

2015/02/06 · 05:30

By Rachel Goldfarb, originally published on Next New Deal

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Youth Agenda a Glaring Omission in Rauner's State of the State (State Journal-Register)

Campus Network members Rachel Riemenschneider and Samuel Wylde point to the NextGen Illinois youth policy agenda as a collection of young people's concerns that are being overlooked.

Getting young people to engage in politics can be nearly impossible, but apparently even when they do, their requests fall on deaf ears.
Between May and September last year, thousands of young Illinoisans came together online and in person to discuss issues that are important to them, many of which were overlooked in Gov. Bruce Rauner’s State of the State address Wednesday.

NextGenIL, a project run by the Roosevelt Institute Campus Network, Young Invincibles, and a collection of dedicated partner organizations, convened college students from across Illinois to craft a collection of policies to improve the state for the future. Seventy-six caucuses at colleges and universities, coffee shops and town halls culminated in a conference where 600 of us shared our ideas and opinions on a range of issues affecting Illinois today.

By the end of the conference, we voted on what we considered the 10 most important issues for the youth of Illinois. And we made sure those issues showed up on Rauner’s desk.

We now see the real challenge is getting those issues on his agenda.

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Thursday February 05, 2015 · 5:19 AM PST

2015/02/05 · 05:19

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The Internet Is Back to Solid Regulatory Ground (NYT)

Roosevelt Institute Fellow Susan Crawford says that by regulating Internet infrastructure as a utility, the Federal Communications Commission is going back to its roots of solid legal authority.

[FCC Chairman Tom Wheeler] is not proposing to "regulate the Internet" or the websites of businesses that use the Internet to reach customers. This would not constrain what Americans can say online, nor would it constrain the extraordinary innovation that has come about because of the Internet's borderless and permission-free nature.

Tom Wheeler is simply saying that the F.C.C. should have solid legal authority over the physical wires, tubes and towers located in the United States that move information from Point A to Point B. And that's all he's doing.

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Tuesday February 03, 2015 · 5:39 AM PST

2015/02/03 · 05:39

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Budget Day Feels a Lot Like Groundhog Day (Marketplace)

Roosevelt Institute Fellow Mike Konczal says that year after year, the president's budget tried to compromise with Republicans from the start, but this year's has broken off that routine.

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Monday February 02, 2015 · 5:38 AM PST

2015/02/02 · 05:38

By Rachel Goldfarb, originally published on Next New Deal

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Don't Trade Away Our Health (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the Trans-Pacific Partnership's intellectual property agreements will raise drug prices unnecessarily and slow innovation.

The secrecy of the T.P.P. negotiations makes them maddeningly opaque and hard to discuss. But we can get a pretty good idea of what’s happening, based on documents obtained by WikiLeaks from past meetings (they began in 2010), what we know of American influence in other trade agreements, and what others and myself have gleaned from talking to negotiators.

Trade agreements are negotiated by the office of the United States Trade Representative, supposedly on behalf of the American people. Historically, though, the trade representative’s office has aligned itself with corporate interests. If big pharmaceutical companies hold sway — as the leaked documents indicate they do — the T.P.P. could block cheaper generic drugs from the market. Big Pharma’s profits would rise, at the expense of the health of patients and the budgets of consumers and governments.

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Friday January 30, 2015 · 5:16 AM PST

2015/01/30 · 05:16

By Rachel Goldfarb, originally published on Next New Deal

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Wal-Mart’s Manufacturing Recovery? (The Hill)

Roosevelt Institute Senior Fellow Damon Silvers says that Wal-Mart's manufacturing initiative is really just an attempt to make people forget the company's influence on offshoring jobs.

Sadly, even Wal-Mart’s poster child for its U.S. manufacturing initiative, Element Electronics, seems to be little more than window dressing. Wal-Mart sells Element televisions marketed as “American-assembled” at Wal-Mart stores nationwide, yet as The Wall Street Journal reported last year, the TVs arrive in the U.S. nearly completely assembled from China in boxes labeled “Assembled in the U.S.A.” Workers in South Carolina check for defects, install a memory card and put the TVs back in the boxes, to be shipped to Wal-Mart. This is not the kind of high-skill, high-investment manufacturing that will help rebuild the American middle class.

Wal-Mart says it wants to be part of the solution of rebuilding our manufacturing sector. But to walk the walk, Wal-Mart needs to sell a much higher percentage of goods in its stores that are actually manufactured in the U.S., thus helping to stop the offshoring of jobs and creating real, quality manufacturing jobs in America. And if Wal-Mart wants to really make a difference for American families, the company should listen to its 1.3 million associates when they speak out for “$15 and full time” — an income a person can actually live on.

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Thursday January 29, 2015 · 5:11 AM PST

2015/01/29 · 05:11

By Rachel Goldfarb, originally published on Next New Deal

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Census Says 16m U.S. Children are Living on Food Stamps, Double the Number in 2007 (The Guardian)

One in five American children would go hungry without food stamps, writes Jana Kasperkevic, which makes continued Republican efforts to cut the program especially worrying.

A large part of Ryan’s argument rests on the premise that federal aid weakens the ability of people to stand on their own feet. Political discussions about public assistance programs in America frequently lead to heated partisan debates about whether poor Americans are living on the government’s largesse.

But the census data released today defies a number of stereotypes about Americans who depend on public assistance.

For instance, it’s not just children with single parents who are at risk of going hungry. Even though the number of families with single mothers that depend on food stamps rose by 30% in the last seven years, the number of families with married parents who receive food stamps almost doubled, reaching 5.2 million. That’s compared to just 2.7 million in 2007.

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Wednesday January 28, 2015 · 5:10 AM PST

2015/01/28 · 05:10

By Rachel Goldfarb, originally published on Next New Deal

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Hard Choices on Easy Money Lie Ahead for Fed Chief (WSJ)

Janet Yellen's second year as Federal Reserve Chair begins with the difficult task of creating consensus on raising interest rates, write Jon Hilsenrath and Pedro da Costa.

Ms. Yellen’s judgments could define her tenure as the Fed’s leader. She has taken a more centrist policy view as its chairwoman than she did as vice chairwoman or as president of the San Francisco Fed. In those earlier positions, she advocated for aggressive and sustained easy-money policies. As chairwoman, she has sought a middle ground with colleagues.

Her first year in office demanded a great deal of planning, but not many nail-biting decisions. Former Fed Chairman Ben Bernanke had already set policy for 2014 on cruise control, announcing in late 2013 that the Fed would gradually wind down, or “taper,” its monthly bond purchases. Ms. Yellen ended the purchases in October after a series of gradual reductions.

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Tuesday January 27, 2015 · 5:27 AM PST

2015/01/27 · 05:27

By Rachel Goldfarb, originally published on Next New Deal

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No Snow Days for Low-Wage Workers (AJAM)

Most low-wage workers don't have the option of missing work during snowstorms, writes E. Tammy Kim, and may risk being fired if lack of public transit prevents them from getting there.

A massive disruption like a blizzard hits low-wage employees hardest, said Amy Traub, senior policy analyst at liberal think tank Demos. “There is no working from home if you’re a sales associate or if you’re a cashier. If they can’t get to work because of weather, you miss a paycheck. If the store closes early or works with a skeleton staff, you miss a paycheck.”

Some states and municipalities battling the storm — Massachusetts, Connecticut, New York City and Jersey City, N.J. — require employers to provide paid time off. But laws typically do not apply to very small businesses; nor do they cover missed work due to lack of child care or a shutdown in public transit. “There’s no recourse if [the boss] says, ‘Come here or you’re fired,’ unless you have a union contract,” Traub said.

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Monday January 26, 2015 · 5:04 AM PST

2015/01/26 · 05:04

By Rachel Goldfarb, originally published on Next New Deal

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Obama Declares Recovery of American Economy (UP with Steve Kornacki)

Roosevelt Institute Chief Economist Joseph Stiglitz discusses the tax proposals in the State of the Union address, and explains where they could have done more to promote prosperity.

Roosevelt Take: Read Stiglitz's suggestions for reforming the U.S. tax code in his 2014 white paper, "Reforming Taxation to Promote Growth and Equity."

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Friday January 23, 2015 · 5:24 AM PST

2015/01/23 · 05:24

By Rachel Goldfarb, originally published on Next New Deal

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The Politics of Economic Stupidity (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz says the economy's "near-global stagnation" is the result of "stupid politics," meaning austerity policies that slow demand.

For the past six years, the West has believed that monetary policy can save the day. The crisis led to huge budget deficits and rising debt, and the need for deleveraging, the thinking goes, means that fiscal policy must be shunted aside.
The problem is that low interest rates will not motivate firms to invest if there is no demand for their products. Nor will low rates inspire individuals to borrow to consume if they are anxious about their future (which they should be). What monetary policy can do is create asset-price bubbles. It might even prop up the price of government bonds in Europe, thereby forestalling a sovereign-debt crisis. But it is important to be clear: the likelihood that loose monetary policies will restore global prosperity is nil.

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Economics Daily Digest: Stock buybacks, tax reform, right to work

Economics Daily Digest: GOP health care plans, HAMP, jobs report

Economics Daily Digest: Young people's ideas, franchises, opposition party

Economics Daily Digest: Internet as utility, the eurozone, the Fed's accountability

Economics Daily Digest: The president's budget, Obamacare's costs, net neutrality

Economics Daily Digest: Trans-Pacific Partnership and drug costs, the president's budget

Economics Daily Digest: Wal-Mart and manufacturing, infrastructure spending, the sharing economy

Economics Daily Digest: Food stamps, step-up in basis, interest rates

Economics Daily Digest: Raising rates, workers' worth, inequality skewing our perspectives

Economics Daily Digest: Snow risks some people's jobs, union health benefits, sharing economy

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