A Recovery Squandered

A Recovery Squandered

Despite a decade of steady economic growth since the Great Recession, America has done remarkably little to address underlying structural weaknesses in the country’s economy and society. The nation has squandered the recovery.

Weekend Reading

How Walker Cost Taxpayers $2.6 Billion
Botching The Great Recession
The Bubble And The Great Recession: The Need For Denial
The Future Of Our Public Postal Service
We're Measuring The Economy All Wrong
The Bailouts For The Rich Are Why America Is So Screwed Right Now
Putting The Con In Foxconn Wisconsin
The Science Is Clear: Dirty Farm Water Is Making Us Sick

Weekend Reading

Passing Through To Corruption
Trickle Down? Not Now, And Not For A While At Best
The Uninsured Are Overusing Emergency Rooms - And Other Health Care Myths
8 Bad Science And Health Ideas That Should Die With 2017
The Places That May Never Recover From The Recession
In A 30-Minute Interview, President Trump Made 24 False Or Misleading Claims
How America Got Addicted To Road Salt - And Why It's Become A Problem
Does Social Media Make People Less Social?
Ex-Sheriff David Clarke To Receive $100,000 Per Year Government Pensions
City May Contest Foxconn Electricity Deal
City Kills Contract With American Sewer
Why Inequality Predicts Homicide Rates Better Than Any Other Variable
Economists Are Obsessed With "Job Creation." How About Less Work?
How Market Competition Really Works
Most Wealth Isn't The Result Of Hard Work. It Has Been Accumulated By Being Idle And Unproductive
If You Look Behind Neoliberal Economists, You'll Discover The Rich: How Economic Theories Serve Big Business

Weekend Reading

Tim Cook's Disingenuous Argument to Justify Apple's $215 Billion Offshore Cash Hoard
Ronald Reagan Wasn't A Ponzi Schemer
Suburbs Trying To Attract Millennials Diverge on Development Patterns
The Sinister Side of Cash
Media Loves Doomsday Stories About the West's Water Crisis. Here's What They Miss
The Freedom Lover's Case for the Welfare State
How to Learn to Love Maths
Undervalued Properties Deprive Schools of Millions in Funds
Life got better for pretty much everyone under Obama

The Economic Recovery Hasn’t Reached America’s Schools

Bursting Bubbles

Real Estate Bubble Explained by Economist Tuesday, February 14, 2006

The term real estate bubble, it is widely known to articles describing the theory of real estate prices going up or rising. Mark Eppli, finance at Marquette University, says that the consumers shouldn't worry. 

He said "I have no problem saying that there is not a real estate bubble. By looking at the short-term, medium-tern and long-term, I think the market isn't going to have a fall out," he adds "I look at the numbers and that's where I get my evidence from," ...

Eppli says while the real estate bubble isn't about to burst, not all is perfect when it comes to the housing market, he said that new homes were overbuilt so the supply right now outstrips the demand, but quickly added "I think that will work itself out. I know there's a lot of concern about it, but it's not something that is going to break the market." 

Marquette's Eppli named president of national real estate organization Wednesday, June 1, 2016

A Marquette University professor of finance with a national profile in commercial real estate has been elected president of the Real Estate Research Institute, the university announced Wednesday. 

Mark Eppli, Ph.D., professor of finance and Robert B. Bell Chair in Real Estate at Marquette, will lead the national nonprofit organization that funds top-tier research on real estate investment performance and market fundamentals for the commercial real estate industry. 

Eppli directs Marquette's Top 10 nationally ranked Center for Real Estate and also was recently named a NAIOP Distinguished Fellow. NAIOP is the leading trade association for commercial real estate professionals. 

"Dr. Eppli represents what's best about Marquette business faculty," said Brian Till, Keyes Dean of Business Administration at the university. "He's a highly engaged scholar and teacher who lends his deep expertise to the broader academic and business communities." 

Let's hope, for the sake of the economy, the Real Estate Research Institute, NAIOP and "what's best about Marquette business faculty," Eppli's scholarly engagement and research has exponentially improved since 2006.

Sunday Reading

Confusion About The Financial Crisis Won't Die
Will Bill Privatize Water Utilities?
Is Ted Cruz Right About The Federal Reserve & The Great Recession?
Bill Would Limit City Control Of Development
Zoning Laws Transfer Wealth In The Wrong Direction
The Case Against Bernie Sanders Is Dumb
Can New Approach End Gerrymandering?

Americans Voters Defy Reason

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Many of us Canadians are confused by the U.S. midterm elections. 

Consider, right now in America, corporate profits are at record highs, the country's adding 200,000 jobs per month, unemployment is below 6%, U.S. gross national product growth is the best of the Organization for Economic Cooperation and Development (OECD) countries. 

The dollar is at its strongest levels in years, the stock market is near record highs, gasoline prices are falling, there's no inflation, interest rates are the lowest in 30 years, U.S. oil imports are declining, U.S. oil production is rapidly increasing, the deficit is rapidly declining, and the wealthy are still making astonishing amounts of money. America is leading the world once again and respected internationally — in sharp contrast to the Bush years. Obama brought soldiers home from Iraq and killed Osama bin Laden. 

So, Americans vote for the party that got you into the mess that Obama just dug you out of? This defies reason. 

When you are done with Obama, could you send him our way? 

Richard Brunt
Victoria, British Columbia

Democrats Punished Again (And Again) For Republican Policies

Merely 7 years after the Republicans handed the country to Barack Obama with deficits percolating, housing collapsing, unemployment rising, scandals and fraud running rampant, and retirement accounts disappearing...they're back.

Tuesday's election was supposedly an indictment, a referendum, on the performance of Barack Obama (and, by proxy, Democrats, in general).

Voters decided - thanks to gerrymandering, voter suppression, and our embarrassing turnout (Wisconsin 57%?!) - that the party (Republicans) that has obstructed every piece of legislation Obama proposed, was responsible for the Great Recession and income inequality rivaling the Great Depression, and whose policies have blatantly favored the top 1% for the past half-century, these people should be guiding us again.

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Democrats were given an economy that was tanking. We can thank the Republicans' deregulation and tax cuts for that. The Republicans then proceeded to refuse to negotiate, bargain or capitulate on any and all legislative proposals. They opposed every effort of the Democrats to keep us out of another Great Depression and to get the economy up and moving again.

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Yet, despite the calamitous circumstances left in their collective lap, and no cooperation from Republicans, Democrats did pass infrastructure, health care and other important policies which steadily improved the economy.

Lets take a closer look at the Democrats' and Obama's "terrible" record.

For the first time since 2008, the unemployment rate is below 6%.

For the first time in 14 years, we have created over 200,000 job per month for nine months in a row.

[source]

Since 2009, the deficit has been reduced by two-thirds under Barack Obama.

Republicans give lip-service to restraining government spending. Barack Obama has the lowest annualized percent growth in federal spending since 1980, the lowest of all presidents during the period.

Stocks had plummeted and took many Americans' retirement accounts down, too. Obama's stock market gains rank among the best of any president.

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Due to the Republicans lying about everything and the media's complacency in the face of such deception, the "blame the Democrats and Obama" construction was allowed to gather steam. Yet, nearly all of the Republicans' accusations and claims are false.

Barack Obama and the Democrats have been far from perfect. But further improvement would have been made by doing more of what they did do, not less. More infrastructure spending, universal health care, etc.

We already know what Republican policies do to an economy. Since the 1980s, we have seen the destructive results (again and again) from their policies.

Republicans (repeatedly) drive the American economy into the ditch. And, time after time, voters punish Democrats for not getting the car out of the ditch quickly enough (even in the face of Republican obstructionism). Wake up, people! This needs to stop!

Weekend Reading

U.S. Jobs Total Surpasses Pre-Recession Level
Walker Job Promises Appear Out Of Reach
WMC Head, UWM Professor Discuss Wisconsin Job Creation
Sheriff David Clarke: You Just Can't Take Him Seriously
Chief Judge Tells Sheriff Clarke Probation Must Be Considered In Nearly All Sentencings
DA John Chisholm Fires Back At Sheriff David Clarke
Privatisation And Government Debt
American Fared Better After Great Depression Than Today

Comparing State Pension Costs To Corporate Subsidies And Tax Breaks

Putting State Pension Costs In Context 

PUTTING PENSION COSTS IN CONTEXT: NEW REPORT SHOWS CORPORATE TAX SUBSIDIES AND LOOPHOLES OFTEN EXCEED STATE RETIREMENT COSTS 

Attacks on Pensions, Safety Net Programs, Distract from Corporate Giveaways that Exacerbate Economic Inequality 

Washington D.C., January 30, 2014 — State lawmakers who are considering drastic cuts to the retirement benefits of state workers are simultaneously giving away billions of dollars in corporate tax subsidies and loopholes, often in amounts far exceeding the cost of pensions, according to a new report. 

Putting State Pension Costs in Context by Good Jobs First examines 10 states where elected officials are threatening to undermine retirement security by cutting the pension benefits of their teachers, firefighters, police officers, and hundreds of thousands of other public employees. The states included in the report are: Arizona; California; Colorado; Florida; Illinois; Louisiana; Michigan; Missouri; Oklahoma; and Pennsylvania. 

The findings show that in each state, the revenue lost to corporations through loopholes and tax breaks outpaces the current cost of pension benefits to state employees. 

“In states across the country, politicians are attempting to solve the budget woes caused by Wall Street and the Great Recession by cutting the pension benefits of public employees,” said Philip Mattera, Research Director of Good Jobs First. “It is often stated that budgets are a matter of priorities. And our research shows that corporate interests are generally prioritized over teachers, firefighters, police officers, and thousands of other employees who dedicate their lives to public service.” 

The average retirement for a member of the Louisiana State Retirement fund is $19,000 a year. Yet, Louisiana gives away about $1.8 billion a year to corporations through corporate subsidies and tax loopholes—totaling about five times the annual pension cost for state workers. 

Pennsylvania loses nearly $4 billion annually as a result of corporate subsidies and loopholes—more than two and half times the cost of public pensions. Pennsylvania’s state pensions average a modest $24,000 a year. In Michigan, corporations also enjoy about $1.8 billion in subsidies and tax breaks – more than three times the cost of meeting the state’s commitment to retirees. The list goes on. 

These ten states were chosen for analysis because their legislatures are underfunding pensions or elected officials are threatening to cut pension benefits. Actuarial analysis provided the normal cost of funding pensions on a yearly basis, which excludes the costs of making up for past underfunding. Data was derived by examining the latest state tax expenditure reports, state budget documents, and reports by state tax and budget watchdog groups. 

“As a matter of honest accounting and fair budgeting, state leaders should examine all forms of spending before they single out pensions or any other expense,” said Mattera. “Corporate tax breaks and loopholes are often poorly understood and little-noticed because they do not get debated as appropriations, nor do they often get sunsetted or audited. But over time they add up to hundreds of millions, or even billions, of dollars per year.”

Correcting The Right-Wing Myths About Detroit

Don’t buy the right-wing myth about Detroit

In the wake of Detroit’s bankruptcy, you may be wondering: How could anyone be surprised that a city so tied to manufacturing faces crippling problems in an era that has seen such an intense public policy assault on domestic American manufacturing? You may also be wondering: How could Michigan officials possibly talk about cutting the average $19,000-a-year pension benefit for municipal workers while reaffirming their pledge of $283 million in taxpayer money to a professional hockey stadium? ...

It’s a straightforward conservative formula: the right blames state and municipal budget problems exclusively on public employees’ retirement benefits, often underfunding those public pensions for years. The money raided from those pension funds is then used to enact expensive tax cuts and corporate welfare programs. After years of robbing those pension funds to pay for such giveaways, a crisis inevitably hits, and workers’ pension benefits are blamed — and then slashed. Meanwhile, the massive tax cuts and corporate subsidies are preserved, because we are led to believe they had nothing to do with the crisis. Ultimately, the extra monies taken from retirees are then often plowed into even more tax cuts and more corporate subsidies.

Just How Generous Are Detroit's Worker Pensions for Retirees?

"My basic takeaway was that [Detroit's] pension system itself was not overly generous," said Jean-Pierre Aubry, assistant director of State and Local Research at Boston College's Center for Retirement Research... 

Retired general city workers, such as librarians or sanitation workers, received average payments of $18,275 a year in 2011, according to the Detroit General Retirement System... 

While retired Detroit firefighters and police officers receive more generous pension checks than auto workers -- checks averaged almost $30,000 a year in 2011 -- they often don't receive the added bonus of Social Security payments.

We Need A Federal Bailout for Detroit's Pensions

Does $1,500 a month after hauling garbage cans your whole adult life really sound like a fortune? ...

Retired Detroit employees didn't cause the financial crisis of 2008, which hit the pension plan's investment fund hard. Yet they're being handled as if they were morally equivalent to the Wall Street creditors who did. As the New York Times reports, the unelected city manager's plan would "treat bondholders the same as retirees" and ask them both to sacrifice... 

The average Detroit city pension is slightly less than $19,000 per year. For police and firefighters, pensions are their only source of retirement income. (They don't have Social Security.)

Five myths about Detroit

The real culprit in the city’s decline has been federal policies that put corporate health ahead of community health, such as free-trade agreements that sacrifice U.S. jobs for foreign trade...

Detroit’s major financial problem is that its shrinking tax base has meant years of declining revenue. Remember, the city has lost more than 1 million residents since its population peaked in the 1950s. Those who blame pensions confuse cause and effect — like blaming a personal bankruptcy on a pesky car loan after one’s salary was cut in half. The difference, of course, is that getting rid of a car you can no longer afford isn’t the same as reneging on a promise to 21,000 retirees.

Elizabeth Warren 2016

It appears as though if we (Democrats, leftists, Labor, environmentalists, the reality-based, etc.) really want change, we need Elizabeth Warren leading the way. The strongest, most relentless, and most lucid voice of public service and public policy.

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Weekend Reading

How The Case For Austerity Has Crumbled
Lessons Of The North Atlantic Crisis For Economic Theory & Policy
Crisis Before & After The Creation Of The Fed
How They Do It Elsewhere
Why Did The U.S. Financial Sector Grow?
Let's Get Real About The Stock Market
Top CEO Pay Ratios

Phil Needs A Mulligan

Phil Mickelson, a man who makes millions playing golf, is upset that he may have to pay more in taxes.

"If you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate's 62, 63 percent," he said. "So I've got to make some decisions on what I'm going to do."

First of all, lets get what is obviously wrong out of the way - Mickelson doesn't pay 63 percent of his income back in taxes. I think all that sun on those beautiful golf courses must be burning Phil's brain.

Sadly, the article goes along with this 63% fantasy. This is a common mistake in tax reporting - differentiating tax incidence (the amount of total earnings paid in taxes) versus marginal tax rate (the portion of earned income and the tax rate which applies to that portion). If one is going to write an article about some millionaire bitching about the taxes he/she pays, at least do the leg-work and find the actual tax rate.

"There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn't work for me right now," he said. "So I'm going to have to make some changes."

Yes, this poor man. He'll have to wait on that 9th home and 6th BMW.

We're in the second worst depression in the history of the country and Mickelson has the nerve to complain about not being as big of a millionaire? People are out of work and losing their homes, but Mickelson can't get that 5,000 square foot addition on his 4th home and that's equivalent and just as important.

According to Wikipedia, "Although ranked second on the 'all-time money list' of tournament prize money won, Mickelson earns far more from endorsements than from prize money. According to one estimate of 2011 earnings (comprising salary, winnings, bonuses, endorsements and appearances) Mickelson was then the second-highest paid athlete in the United States, earning an income of over $62 million, $53 million of which came from endorsements."

As Len Burman (Professor of Public Affairs at the Maxwell School of Syracuse University) commented, "Please stop whining and give thanks for being able to earn a fabulous living playing a game and selling golf clubs (even after tax). 99.999% of people would never have that option, no matter how hard they worked on their swing." [Burman also estimates, "In net, Mickelson will owe about 52% of his marginal* earning in federal and state taxes."]

Update:
Phil's agent and public relations people must have told him what a douche his comments make him look like. He's begun the apology tour.

*Marginal tax rate: tax payers are divided into tax brackets or ranges, which determine which rate taxable income is taxed at. As income increases, earnings will be taxed at a higher rate than the first dollar earned.

Spending, GDP & Other Republican Fairy Tales

Republicans are trying to use fear to convince voters that government spending as a percent of GDP is growing and must be cut. "Spending is out of control! If we don't stop it, we're doomed!"

As the first graph below shows, over the last century, at various points, spending as a percent of GDP was at, near or above it's current level. It was much higher after the Great Depression and during World War II. 

Like then, we were now in the midst of an economic downturn second only to the Great Depression. And, we've been involved in war for the last decade. Overall, an extremely similar situation. 

Spending then was almost twice what it is now. And that spending, after the Great Depression, created the middle class. 

Today, the middle class is shrinking. Plus, we're spending a lot less to rebuild our economy. We should be afraid of austerity, not spending.

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It's great to hear all this talk of decreasing federal government spending...but, the fact of the matter is, most government spending is done at the state and local level. At the federal level, money goes to defense, Social Security and Medicare. At the state and local level, spending is on police, education, and libraries, amongst other necessities. Regardless, this spending is done because citizens like these programs and services. If we cut federal spending, that just means states have to pay more - which means, they have to tax more to pay for the services citizens want.

Austerity U.S.A.

Paul Krugman - again - dismantles the meme of an expanding and frivolously spending government: 

"Disappointing GDP number — we’re not growing fast enough to make any significant headway on reducing the output gap — but hey, no need for further Fed action.

But let’s talk right now about fiscal policy. I wrote this morning about our de facto austerity. Here’s another indicator. Look at government (all levels) purchases of goods and services, that is, actually buying stuff as opposed to transfer payments like Social Security and Medicare. Here’s the past decade:

Obama, far from presiding over a huge expansion of government the way the right claims, has in fact presided over unprecedented austerity, largely driven by cuts at the state and local level. And it’s therefore an amazing triumph of misinformation the way that lackluster economic performance has been interpreted as a failure of government spending."

Midweek Reading

How Much of U.S. Consumables Are Made In China?
How The Great Recession & The Slow Recovery Compare Historically
Low Capital Gains Taxes Fuel Inequality, Not Investment
The Corporate Bankruptcy Scam
Why The GOP Should Stop Invoking Reaganomics

Jobs

Mitt Romney feels President Obama has made the recession worse.

The latest jobs numbers dispute this fantasy.

John Boehner conceded the latest jobs figures were good, but claims Republican can do better.

To the graphical record:

Since George W. Bush had the worst record for job creation of any president, the claim by Republicans that they know how to create jobs also falls flat. President Obama, in the first three years of his first term, has created more jobs than Bush created over his entire two terms.

President Obama (with 23 consecutive months of private sector job growth) hasn't made things worse, and we have recent historical evidence debunking the claim Republicans can do better. Their policies drove the car into the ditch, Obama has had to get it out. Let's not give the wheel back to the Republicans.

Sunday Reading

The Book Of Jobs
Corporate Profits Up. Taxes Not.
Fannie And Freddie Fantasies
Top 5 Tax Myths of The GOP Spin Machine
How Many Colberts Are There?
Structural Adjustment For The Middle Class?
The City Solution
Urban Development Legends
What Is The Contribution Of The Financial Sector?
What Is The Real Unemployment Rate, And How Could We Tell?

It Was Wall Street

Numerous cranks are continuing their efforts to revise the cause of our current economic downturn. They claim (wrongly and completely unsupported by evidence) that the government - Fannie Mae, Freddie Mac, the Community Reinvestment Act, etc. - was responsible for the economic recession.

It wasn't inept/crooked Wall Street, bankers, or ratings agencies selling junk mortgage-backed-securities and collateralized-debt-obligations.

New York mayor Michael Bloomberg, the 12th richest person in the U.S., is the most recent revisionist attempting to rewrite history.

The definitive takedown of this nonsense is David Min's Faulty Conclusions Based On Shoddy Foundations. And, the documentary Inside Job is a great primer on the real culprits behind our current crisis.

For Further Reading:
An Autopsy of Fannie & Freddie
An Obtuse & Deceptive Accounting
The Banker, In The Office, With The CDO
The Big Lie Goes Viral
Brooks Discovers It Was All Fannie's Fault
Did Fannie Cause The Disaster?
Dispelling More Campaign Myths
Drowning In Delusions
Fannie, Freddie, and You
Fannie & Freddie Did Not Cause The Housing Crisis
Fannie & Freddie Did Not Start The Crisis
Fannie & Freddie's Future
The Myth of Fannie, Freddie, Barney Frank & The Housing Bubble
Peter Wallison Discusses Fannie & Freddie For The American Spectator
Things Everyone in Chicago Knows
Why Wallison Is Wrong About The Genesis Of The Housing Crisis