Following the failure of the budgetary super committee to come to an agreement in the fall, members of Congress admitted to being ashamed of the institution and the implacable partisanship that stymies it. As part of the deal to raise the debt ceiling, the 12-member super committee of six Democrats and six Republicans from both houses of Congress set about trying to identify $1.5 trillion in budgets cuts for the next 10 years. Compromise had little chance, even though failure to compromise triggers $1.2 trillion in across-the-board budget cuts — an outcome few in either party publicly ... Read More
Simon Johnson Critiques Democracy vs. Financialization
December 6, 2011 • By • Leave a Comment
For many on the right side of the U.S. political spectrum, the financial meltdown that began in 2008 resulted from a government push to bring the American Dream of home ownership to the masses. And while President Clinton made home ownership a central tenet of his economic plan — a goal George W. Bush also embraced — there were greater forces at work, according to Simon Johnson, professor of Global Economics and Management at MIT and the former chief economist at the International Monetary Fund. In his 2010 bestseller, 13 Bankers: The Wall Street Takeover and The Next Financial ... Read More
Spain’s Vacant Airport Typifies European Woes
November 18, 2011 • By • Leave a Comment
Spaniards headed to the polls Sunday, worried about their crisis-wracked economy — Europe’s fourth-largest — and performed a ‘Berlusconi’ (or a Papandreou) on their socialist prime minister, Jose Luis Rodriguez Zapatero, replacing him with center-rightist Mariano Rajoy. But are Europe’s deepening problems the result of honest mistakes — or a lax attitude toward corruption? In one Spanish town, the line between a bad governor and good criminal has proven hard to draw. Our Marc Herman reports from the scene. A half million dollars is a lot to spend for eight ferrets. So when the ... Read More
Scandals Do Drive Voters — When Abuse of Power Is Involved
November 7, 2011 • By • Leave a Comment
Political scandals are, in a sense, like car crashes: They attract our attention because they bring out our morbid curiosity. Will this be the end of a big-time politician’s career? Or will the voters simply shrug? Newly published research suggests the answer depends upon the type of misbehavior that has been uncovered. It finds that while sex scandals tend to get the most media coverage, they have the least impact on voters’ views. “On average, financial scandals are worse than moral ones, and abuses of power amplify the negative effects,” said University of Illinois political ... Read More
#OWS: What Took So Long?
October 24, 2011 • By • Leave a Comment
Among the many issues raised by the Occupy Wall Street movement, perhaps the most basic is: What took so long? Why did three years elapse between the time reckless financial traders nearly brought down the global economy and large numbers of people began collectively expressing outrage? A new psychological study provides at least a partial answer. It finds people are strongly motivated to perceive the socioeconomic system they live under as fair and just, and links this pro-status-quo impulse with a reluctance to protest against the Wall Street bailout. “It is extremely difficult for ... Read More
#OWS: Have We Entered the Age of Protest?
October 13, 2011 • By • Leave a Comment
The Occupy Wall Street movement is in many ways a sign of the moment. The unemployment rate has been hanging out around 9 percent for more than two years. Income inequality is rising. Washington's political system has devolved into dysfunction. There is, in other words, plenty to protest. But there's another way to think about what's going on in Zuccotti Park (and its far-flung spinoffs): People have many legitimate grievances these days, but they're also more prone to protest than in the past. Occupy Wall Street, in this sense, represents a particular moment in time when people are really ... Read More
Do the Rich Really Make All the Jobs?
September 22, 2011 • By • Leave a Comment
In Washington shorthand, many politicians have begun interchangeably substituting the phrase "people who have a lot of money" with the more hopeful term "job creators." With every new debate over raising taxes or lowering the deficit, the two meanings seem to move closer. All job creators, this rhetoric implies, are rich. And all rich are job creators. But are these two groups really one and the same? "Everything I've studied says the answer is yes," said Tim Kane, a senior scholar with the entrepreneur-oriented Kauffman Foundation. He adds, though, that there isn't a single data set ... Read More
If Postal Service Diversifies, It Can Deliver
September 7, 2011 • By • Leave a Comment
When U.S. Postmaster General Patrick Donahoe told a Senate committee this week that the U.S. Postal Service had some pretty big bills coming up and no money to pay them, he really just updated an old story with new facts. The USPS has been pretty much in "check in the mail" mode for years, and the current liquidity crunch just caps years of declining volume (especially in the most profitable niches), greater competition on the delivery front and online, and higher operating costs. To banish an estimated $20 billion shortfall by 2015, Donahoe asked the legislators to let the ... Read More
Old Money Caught in the Great Redistribution
September 2, 2011 • By • Leave a Comment
Older Americans are bearing the brunt of the economic downturn, the most severe since the Great Depression, economists say. Between mid-2007 and early 2009, when stocks and real estate values collapsed to their lowest point, U.S. households aged 60-69 experienced a decline in net worth of $312,000, on average, compared to an average decline of $177,000 for households overall. That's according to "Intergenerational Redistribution in the Great Recession," a study for the National Bureau of Economic Research. In a deep recession, households approaching the end of their life cycle (there's a ... Read More
Mortgage Interest Deduction on the Chopping Block?
July 28, 2011 • By • Leave a Comment
There was a rare sight in debt-ceiling-obsessed Washington on Thursday afternoon at the Urban Institute: Liberals and libertarians were agreeing on a controversial and politically ugly policy proposal. The home mortgage interest deduction, a sacred cow of the tax code that allows homeowners to write off a chunk of their monthly mortgage payments, must be wound down. Economists with the libertarian Reason Foundation, the progressive Center for American Progress, and the Urban-Brookings Tax Policy Center all concluded as much. Even a quick glance at the numbers reveals that this tax ... Read More
