The wealth gaps between whites and minorities have grown to their widest levels since the U.S. government began tabulating them a quarter-century ago. The recession and uneven recovery have erased decades of minority gains, leaving whites on average with 20 times the net worth of blacks and 18 times that of Hispanics, according to an analysis of new Census data.
The analysis shows the racial and ethnic impact of the recent economic meltdown, which ravaged housing values and sent unemployment soaring. It also offers the most direct government evidence yet of the stark wealth divide, a disparity between predominantly younger minorities whose main asset is their home and older whites who are more likely to have 401(k) retirement accounts or other stock holdings.
"I am afraid that this pushes us back to what the Kerner Commission characterized as `two societies, separate and unequal,'" said Roderick Harrison, a former chief of racial statistics at the Census Bureau, referring to the 1960s presidential commission that examined U.S. race relations. "The great difference is that the second society has now become both black and Hispanic."
The median wealth of white U.S. households in 2009 was $113,149, compared to $6,325 for Hispanics and $5,677 for blacks, according to the analysis released Tuesday by the Pew Research Center. Those ratios, roughly 20 to 1 for blacks and 18 to 1 for Hispanics, far exceed the low mark of 7 to 1 for both groups reached in 1995, when the nation's economic expansion lifted many low-income groups to the middle class.
The white-black wealth gap also is the widest since census began tracking such data in 1984, when the ratio was roughly 12 to 1.
"What's pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade, because that was the American dream, are seeing big declines," said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality.
Stock holdings play an important role in the economic well-being of white households. Stock funds, IRA and Keogh accounts as well as 401(k) and savings accounts were responsible for 28 percent of whites' net worth, compared with 19 percent for blacks and 15 percent for Hispanics.
"There's a good chance the wealth gap will widen further," Smeeding said, citing the stalled housing market. "What we need to do is help lower-income people move up."
According to the Pew study, the housing boom of the early to mid 2000s particularly boosted the wealth of Hispanics, who were disproportionately employed in the thriving construction industry. Hispanics also were more likely to live and buy homes in states such as California, Florida, Nevada and Arizona, which were in the forefront of the real estate bubble, enjoying early gains in home values.
Those gains quickly shriveled in the housing collapse. After reaching a median wealth of $18,359 in 2005, the wealth of Hispanics _ who had derived nearly two-thirds of their net worth from home equity _ declined by 66 percent by 2009. Among blacks, who now have the highest unemployment rate at 16.2 percent, their household wealth fell 53 percent from $12,124 to $5,677.
In contrast, the median household wealth of whites dipped a modest 16 percent from $134,992 to $113,149, cushioned in part by a stock market recovery that began in mid-2009.
"The findings are a reminder, if one was needed, of what a large share of blacks and Hispanics live on the economic margins," said Paul Taylor, director of Pew Social & Demographic Trends. "When the economy tanked, they're the groups that took the heaviest blows."
The latest data come as President Barack Obama and congressional leaders face an Aug. 2 deadline to figure out a deal to cut deficits and raise the debt ceiling or risk seeing the U.S. default on its financial obligations. Democrats and Republicans have been wrangling over proposals that could cut trillions of dollars from programs such as the Medicare health plan, mainly for older Americans, and the government's retirement plan, Social Security; they also are divided over whether to bring in new tax revenue, such as by closing corporate tax loopholes or increasing taxes for the wealthy.
In a White House meeting last week, the NAACP, the National Association for the Advancement of Colored People, and other black groups urged Obama to resist deep cuts such as in housing assistance or safety net programs including Social Security and Medicaid, a medical program mainly for the poor and uninsured, saying it would disproportionately hurt urban areas with some of the highest rates of poverty and unemployment. The U.S. poverty rate currently stands at 14.3 percent, with the ranks of the working-age poor at the highest level since the 1960s. Some analysts believe the poverty rate will climb higher when new figures are released in September.
"Typically in recessions, minorities suffer from being last hired and first fired. They are likely to lose jobs more rapidly at the beginning of the recession, and are far slower to gain jobs as the economy recovers," said Harrison, who is now a sociologist at Howard University. "One suspects that blacks who lost jobs in the recession, or who have tried to help family members or relatives who did, have now spent whatever savings or other cashable assets they had."
Other findings:
_About 35 percent of black households and 31 percent of Hispanic households had zero or negative net worth in 2009, compared with 15 percent of white households. In 2005, the comparable shares were 29 percent for blacks, 23 percent for Hispanics and 11 percent for whites.
_Asians lost their top ranking to whites in median household wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Similar to Hispanics, many Asians were concentrated in states like California that were hit hard by the housing downturn. More recent arrivals of new Asian immigrants, who tend to be poor, also pushed down their median wealth.
_Across all race and ethnic groups, the wealth gap between rich and poor widened. The share of wealth held by the top 10 percent of U.S. households increased from 49 percent in 2005 to 56 percent in 2009. The threshold for entry into the wealthiest top 10 percent, however, dipped lower: from $646,327 in 2005 to $598,435.
The numbers are based on the Census Bureau's Survey of Income and Program Participation, which sampled more than 36,000 households on wealth from September-December 2009. Census first began publishing wealth data from this survey, broken down by race and ethnicity, in 1984.
http://www.taiwannews.com.tw/etn/news_content.php?id=1663005
Tuesday, July 26, 2011
AP-GfK Poll: Worries about debt rising once again
WASHINGTON (AP) -- Just last fall, Americans were feeling better about their personal finances. Now they're starting to worry more about how they'll pay off debts as they feel the nation's economic recovery wobbling.
With Congress deadlocked over how to deal with the national debt, household debt is causing stress for nearly half the country, according to a new Associated Press-GfK poll. One in five adults worries about debt most or all of the time. If they bought something on a credit card in the past month, more than a third say they won't pay it off when the bill comes.
The increased stress represents a reversal from last fall's AP-GfK poll, which found increasing confidence about personal finances. Debt-related stress is up 17 percent from that November survey, bumping such worries back up to levels seen in 2009 and in the spring of last year.
"It's not that our debt is huge. It's just hard to make it, month to month," said Theresa Telford, 45, a teacher's aide raising four kids with her husband, a sheriff's deputy. "It seems like everything is going up, but wages aren't going up."
Telford is also nervous because she's watched so many people lose their jobs in her small town of Davenport, Wash., and some of her friends still can't find work. Although the recession officially ended in June 2009, Americans display little faith in a recovery hobbled by grinding unemployment, slow economic growth, volatile gasoline and food prices and political feuding over how to stem the skyrocketing national debt. Consumer confidence fell to a seven-month low in June in the Conference Board's survey.
"We're starting to be fearful again that things may fall apart," said Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the survey. Lavrakas and other researchers have found that debt can be bad for the health as well as the wallet. Those suffering the most anxiety over their debt are at risk for stress-related illnesses, such as ulcers, depression or heart attacks.
The poll found that households earning more than $75,000 had the biggest increase in debt-related stress since November. But stress levels continue to be highest within the most vulnerable groups: households that have lost jobs, people with family incomes below $20,000, single parents, and adults without high school diplomas. Married moms and adults under 30 years old showed significantly more anxiety than in the fall.
In all, more than 40 million Americans are feeling serious stress over the money they owe, whether it's for credit cards, mortgages, car loans or other debts, the poll indicates.
It's a tough period for high school dance instructor James J. Moran of Shelton, Conn. He doesn't get paid during summer break, except for the occasional dancing or acting jobs he lands.
"For three months I scrape by and I can only afford to make the minimum payments on my credit cards," said Moran, who owes more than $5,000 on his cards and about $14,000 in student loans. "I put more toward the debts when I can, but when I can't that's when I really worry."
The news isn't all bleak. Although it ticked upward, the Debt Stress Index based on the AP-GfK poll came in at 29.2, still within the range considered moderately low. Most people say they are handling their credit cards well in lean times.
Nine out of 10 people with credit cards say they trust themselves to handle debt. Most say they use credit cards because they're more convenient than cash. About half say they charge only what they can afford to pay for at the end of the month.
"Am I going off and buying things right now? No," said Donald Doane, 53, of Duluth, Minn. Doane said he carries "a little debt but nothing I can't handle" on a low-interest credit card that he reserves for emergencies and big purchases.
A salesman for Savories Catering in Duluth, Minn., Doane tracks the economy by how much his customers spend on wedding receptions and office parties. "People are spending," he said, "it's just that they're being more frugal."
Americans have been borrowing less and saving more in response to the Great Recession and its aftermath. Credit card borrowing increased in May, only the second monthly gain since August 2008, according to the Federal Reserve's latest figures. The total is still down 18.5 percent from its peak in August 2008.
The AP-GfK poll put median credit card debt in June at $800, the same as in November. Average debt was down slightly from November at $3,200. About four in 10 people surveyed owe more than $1,000 in credit card debt. One in every 10 owes $10,000 or more.
Lavrakas said the poll provides a snapshot of the typical American who's seriously stressed by debt: a working parent, in his or her 30s or early 40s, who doesn't have a high school diploma and is raising a family on household income of less than $20,000.
Those reporting the highest stress levels were more likely than others to say they had debt due to medical bills, that their financial situation was "very poor," that they charge things they know they cannot pay off when the bill comes and that they don't trust themselves to manage their credit cards. They are pessimistic about the future, both because of their personal finances and the nation's.
"The most stressed people are at the lower financial tiers, and that's just the reality of their life," Lavrakas said. "The optimism that some of them may have had last fall didn't pan out. They've sunk into being pessimistic and they have good reason to be."
Troy Clawson, a disabled former construction worker in Felsenthal, Ark., said he has been worrying more about his debts - his mortgage and car payments, medical bills for himself and his wife, and store credit cards at Wal-Mart and an auto repair shop.
So Clawson, 60, is trying to be more cautious and avoid pulling out his credit cards. "I don't really like to," he said, "but sometimes it's necessary when you're in a bind."
The AP-GfK poll was conducted June 16-20 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide, including 715 who have credit cards. Results for the full sample have a margin of sampling error of plus or minus 4.1 percentage points.
http://hosted.ap.org/dynamic/stories/U/US_AP_GFK_POLL_STRESSING_OVER_DEBT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-07-25-14-04-39
With Congress deadlocked over how to deal with the national debt, household debt is causing stress for nearly half the country, according to a new Associated Press-GfK poll. One in five adults worries about debt most or all of the time. If they bought something on a credit card in the past month, more than a third say they won't pay it off when the bill comes.
The increased stress represents a reversal from last fall's AP-GfK poll, which found increasing confidence about personal finances. Debt-related stress is up 17 percent from that November survey, bumping such worries back up to levels seen in 2009 and in the spring of last year.
"It's not that our debt is huge. It's just hard to make it, month to month," said Theresa Telford, 45, a teacher's aide raising four kids with her husband, a sheriff's deputy. "It seems like everything is going up, but wages aren't going up."
Telford is also nervous because she's watched so many people lose their jobs in her small town of Davenport, Wash., and some of her friends still can't find work. Although the recession officially ended in June 2009, Americans display little faith in a recovery hobbled by grinding unemployment, slow economic growth, volatile gasoline and food prices and political feuding over how to stem the skyrocketing national debt. Consumer confidence fell to a seven-month low in June in the Conference Board's survey.
"We're starting to be fearful again that things may fall apart," said Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the survey. Lavrakas and other researchers have found that debt can be bad for the health as well as the wallet. Those suffering the most anxiety over their debt are at risk for stress-related illnesses, such as ulcers, depression or heart attacks.
The poll found that households earning more than $75,000 had the biggest increase in debt-related stress since November. But stress levels continue to be highest within the most vulnerable groups: households that have lost jobs, people with family incomes below $20,000, single parents, and adults without high school diplomas. Married moms and adults under 30 years old showed significantly more anxiety than in the fall.
In all, more than 40 million Americans are feeling serious stress over the money they owe, whether it's for credit cards, mortgages, car loans or other debts, the poll indicates.
It's a tough period for high school dance instructor James J. Moran of Shelton, Conn. He doesn't get paid during summer break, except for the occasional dancing or acting jobs he lands.
"For three months I scrape by and I can only afford to make the minimum payments on my credit cards," said Moran, who owes more than $5,000 on his cards and about $14,000 in student loans. "I put more toward the debts when I can, but when I can't that's when I really worry."
The news isn't all bleak. Although it ticked upward, the Debt Stress Index based on the AP-GfK poll came in at 29.2, still within the range considered moderately low. Most people say they are handling their credit cards well in lean times.
Nine out of 10 people with credit cards say they trust themselves to handle debt. Most say they use credit cards because they're more convenient than cash. About half say they charge only what they can afford to pay for at the end of the month.
"Am I going off and buying things right now? No," said Donald Doane, 53, of Duluth, Minn. Doane said he carries "a little debt but nothing I can't handle" on a low-interest credit card that he reserves for emergencies and big purchases.
A salesman for Savories Catering in Duluth, Minn., Doane tracks the economy by how much his customers spend on wedding receptions and office parties. "People are spending," he said, "it's just that they're being more frugal."
Americans have been borrowing less and saving more in response to the Great Recession and its aftermath. Credit card borrowing increased in May, only the second monthly gain since August 2008, according to the Federal Reserve's latest figures. The total is still down 18.5 percent from its peak in August 2008.
The AP-GfK poll put median credit card debt in June at $800, the same as in November. Average debt was down slightly from November at $3,200. About four in 10 people surveyed owe more than $1,000 in credit card debt. One in every 10 owes $10,000 or more.
Lavrakas said the poll provides a snapshot of the typical American who's seriously stressed by debt: a working parent, in his or her 30s or early 40s, who doesn't have a high school diploma and is raising a family on household income of less than $20,000.
Those reporting the highest stress levels were more likely than others to say they had debt due to medical bills, that their financial situation was "very poor," that they charge things they know they cannot pay off when the bill comes and that they don't trust themselves to manage their credit cards. They are pessimistic about the future, both because of their personal finances and the nation's.
"The most stressed people are at the lower financial tiers, and that's just the reality of their life," Lavrakas said. "The optimism that some of them may have had last fall didn't pan out. They've sunk into being pessimistic and they have good reason to be."
Troy Clawson, a disabled former construction worker in Felsenthal, Ark., said he has been worrying more about his debts - his mortgage and car payments, medical bills for himself and his wife, and store credit cards at Wal-Mart and an auto repair shop.
So Clawson, 60, is trying to be more cautious and avoid pulling out his credit cards. "I don't really like to," he said, "but sometimes it's necessary when you're in a bind."
The AP-GfK poll was conducted June 16-20 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,001 adults nationwide, including 715 who have credit cards. Results for the full sample have a margin of sampling error of plus or minus 4.1 percentage points.
http://hosted.ap.org/dynamic/stories/U/US_AP_GFK_POLL_STRESSING_OVER_DEBT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-07-25-14-04-39
MILLOY: Show us the bodies, EPA
The House will soon vote to (slightly) rein in the Obama Environmental Protection Agency. But this much-needed baby step by Congress will only happen if Republicans have the knowledge and muster the courage to withstand a final bare-knuckles assault by EPA’s enviro allies.
The House Appropriations Committee passed last week the fiscal 2012 EPA budget that would cut the agency’s budget by $1.7 billion - 18 percent - and delay for one year several of its new and/or planned regulatory programs targeting coal-fired electric utilities. It’s hardly landmark legislation but it’s a start.
Troubled by the agency’s high-cost-for-imaginary benefit programs covering emissions of greenhouse gases, mercury, sulfur dioxide and nitrous oxides, the committee’s bill calls for a timeout on the EPA’s rules pending a study of their impacts.
But the EPA and its allies aren’t taking such reasonableness lying down. Leading their pushback is the Environmental Defense Fund (EDF), which is making utility giant American Electric Power (AEP) the whipping boy example for Republicans and businesses that dare question - let alone rise against - EPA oppression.
The EDF is running a billboard and TV ad campaign accusing AEP and, by extension, anyone else that opposes EPA overregulation, of pushing a “dirty air bill” that will kill 17,000 people per year in the name of “polluter profits.”
The TV ad for this theme features a young girl in a hospital bed supposedly having an asthma attack. She’s wearing a nebulizer face mask and chest compression device that is rhythmically but disturbingly squeezing the child, giving the appearance that she is in severe respiratory distress, by implication from air pollution.
But like the EPA’s 17,000-lives-saved statistical fabrication, the ad is a fake.
If you look closely at the girl, as opposed to what is being done to her, she is, in fact, calmly sitting up in bed and not in any respiratory distress whatsoever. The ad is a total put-on. Moreover, asthma attacks aren’t treated with chest-compression devices, which are instead more typically used for cardiopulmonary resuscitation.
The apparent reason the EDF used the chest compression device in the commercial was to fabricate pulsating drama for its false message that efforts to rein in the EPA threaten children’s health.
Another EDF commercial features a sonogram of a fetus with beating heart and a voiceover that asserts, “The developing fetus and young children are thought to be disproportionately affected by mercury exposure. …” The voiceover then asks, “How many lives will be damaged? How many lives is OK?” by AEP’s effort to block EPA regulation.
But there is no evidence that ambient levels of mercury or mercury emissions from U.S. power plants have harmed anyone. In any event, nature is responsible for the vast majority of mercury emissions (70 percent), while U.S. power plants are responsible for less than 1 percent of global emissions.
So what can Republicans and industry do to defend themselves from these groundless and scurrilous attack ads?
To paraphrase cinematic sports agent Jerry McGuire, “Show me the bodies.”
While that may sound harsh, given that the EPA is about to kill hundreds of thousands of jobs and cost our crippled economy countless billions of dollars, Republicans must demand some sort of proof that the alleged harms are indeed happening.
The EPA says air pollution kills tens of thousands of people annually. This is on a par with traffic accident fatalities. While we can identify traffic accident victims, air pollution victims are unknown, unidentified and as far as anyone can tell, figments of EPA’s statistical imagination.
It ought not to be too much to ask the EPA to produce some tangible evidence that air pollution is causing actual harm to real people. The EPA should have to demonstrate that its ever-tightening air quality and emissions standards are producing actual benefits.
Consider that the EPA and its enviro-buddies are essentially accusing coal-fired utilities of killing and injuring hundreds of thousands of people annually. Have you ever wondered why there are no class-action lawsuits against utilities for billions of dollars in damages?
Apparently, even trial lawyers have no confidence that EPA science holds up to scrutiny.
In the past two weeks, EPA chief Lisa Jackson and the chairman of EPA’s clean air advisory committee have both indicated that there is no limit to EPA’s clean air regulatory authority. In the name of public health, for example, the EPA could regulate ground-level ozone to below naturally occurring levels without regard to cost.
That situation, as well as what the EPA is doing today, are not what Congress intended when it amended the Clean Air Act in 1970, 1977 and 1990. We can no longer afford the EPA’s clean air charade. The EPA has no clothes - if only congressional Republicans would open their eyes and notice.
http://www.washingtontimes.com/news/2011/jul/20/show-us-the-bodies-epa/?page=2
The House Appropriations Committee passed last week the fiscal 2012 EPA budget that would cut the agency’s budget by $1.7 billion - 18 percent - and delay for one year several of its new and/or planned regulatory programs targeting coal-fired electric utilities. It’s hardly landmark legislation but it’s a start.
Troubled by the agency’s high-cost-for-imaginary benefit programs covering emissions of greenhouse gases, mercury, sulfur dioxide and nitrous oxides, the committee’s bill calls for a timeout on the EPA’s rules pending a study of their impacts.
But the EPA and its allies aren’t taking such reasonableness lying down. Leading their pushback is the Environmental Defense Fund (EDF), which is making utility giant American Electric Power (AEP) the whipping boy example for Republicans and businesses that dare question - let alone rise against - EPA oppression.
The EDF is running a billboard and TV ad campaign accusing AEP and, by extension, anyone else that opposes EPA overregulation, of pushing a “dirty air bill” that will kill 17,000 people per year in the name of “polluter profits.”
The TV ad for this theme features a young girl in a hospital bed supposedly having an asthma attack. She’s wearing a nebulizer face mask and chest compression device that is rhythmically but disturbingly squeezing the child, giving the appearance that she is in severe respiratory distress, by implication from air pollution.
But like the EPA’s 17,000-lives-saved statistical fabrication, the ad is a fake.
If you look closely at the girl, as opposed to what is being done to her, she is, in fact, calmly sitting up in bed and not in any respiratory distress whatsoever. The ad is a total put-on. Moreover, asthma attacks aren’t treated with chest-compression devices, which are instead more typically used for cardiopulmonary resuscitation.
The apparent reason the EDF used the chest compression device in the commercial was to fabricate pulsating drama for its false message that efforts to rein in the EPA threaten children’s health.
Another EDF commercial features a sonogram of a fetus with beating heart and a voiceover that asserts, “The developing fetus and young children are thought to be disproportionately affected by mercury exposure. …” The voiceover then asks, “How many lives will be damaged? How many lives is OK?” by AEP’s effort to block EPA regulation.
But there is no evidence that ambient levels of mercury or mercury emissions from U.S. power plants have harmed anyone. In any event, nature is responsible for the vast majority of mercury emissions (70 percent), while U.S. power plants are responsible for less than 1 percent of global emissions.
So what can Republicans and industry do to defend themselves from these groundless and scurrilous attack ads?
To paraphrase cinematic sports agent Jerry McGuire, “Show me the bodies.”
While that may sound harsh, given that the EPA is about to kill hundreds of thousands of jobs and cost our crippled economy countless billions of dollars, Republicans must demand some sort of proof that the alleged harms are indeed happening.
The EPA says air pollution kills tens of thousands of people annually. This is on a par with traffic accident fatalities. While we can identify traffic accident victims, air pollution victims are unknown, unidentified and as far as anyone can tell, figments of EPA’s statistical imagination.
It ought not to be too much to ask the EPA to produce some tangible evidence that air pollution is causing actual harm to real people. The EPA should have to demonstrate that its ever-tightening air quality and emissions standards are producing actual benefits.
Consider that the EPA and its enviro-buddies are essentially accusing coal-fired utilities of killing and injuring hundreds of thousands of people annually. Have you ever wondered why there are no class-action lawsuits against utilities for billions of dollars in damages?
Apparently, even trial lawyers have no confidence that EPA science holds up to scrutiny.
In the past two weeks, EPA chief Lisa Jackson and the chairman of EPA’s clean air advisory committee have both indicated that there is no limit to EPA’s clean air regulatory authority. In the name of public health, for example, the EPA could regulate ground-level ozone to below naturally occurring levels without regard to cost.
That situation, as well as what the EPA is doing today, are not what Congress intended when it amended the Clean Air Act in 1970, 1977 and 1990. We can no longer afford the EPA’s clean air charade. The EPA has no clothes - if only congressional Republicans would open their eyes and notice.
http://www.washingtontimes.com/news/2011/jul/20/show-us-the-bodies-epa/?page=2
Wednesday, July 20, 2011
How Even Scholars Missed 90 Years of Tax-Cut History
Second Of Three Parts
The arguments of the proponents and opponents of tax-rate reductions have been arguments about two fundamentally different things:
(1) The distribution of existing incomes and existing tax liabilities.
(2) Incentives to increase incomes by reducing tax rates, so as to get individuals and institutions to take their money out of tax shelters and invest it in the economy.
Proponents and opponents of tax-rate reductions not only had different arguments, they were arguments about very different things, and the two arguments largely went past each other untouched.
Empirical evidence on what happened to the economy in the wake of those tax cuts in four different administrations over a span of more than 80 years has also been largely ignored by those opposed to what they call "tax cuts for the rich."
Confusion between reducing tax rates on individuals and reducing tax revenues received by the government has run through much of these discussions over these years.
Famed historian Arthur M. Schlesinger Jr., for example, said that although Andrew Mellon, secretary of the treasury from 1921 to 1932, advocated balancing the budget and paying off the national debt, he "inconsistently" sought "reduction in tax rates."
Nor was Schlesinger the only highly regarded historian to perpetuate economic confusion between tax rates and tax revenues. Today, widely used textbooks by various well-known historians have continued to misstate what was advocated in the 1920s and what the actual consequences were.
According to the textbook "These United States" by Irwin Unger, Mellon, "a rich Pittsburgh industrialist," persuaded Congress to "reduce income tax rates at the upper-income levels while leaving those at the bottom untouched."
Thus "Mellon won further victories for his drive to shift more of the tax burden from the high-income earners to the middle and wage-earning classes."
But hard data show that, in fact, both the amount and the proportion of taxes paid by those whose net income was no higher than $25,000 went down between 1921 and 1929, while both the amount and the proportion of taxes paid by those whose net incomes were between $50,000 and $100,000 went up — and the amount and proportion of taxes paid by those whose net incomes were over $100,000 went up even more sharply.
Another widely used textbook, co-authorized by a number of distinguished historians, two of whom won Pulitzer Prizes, said of Mellon:
"It was better, he argued, to place the burden of taxes on lower-income groups" and that a "share of tax-free profits of the rich, Mellon reassured the country, would ultimately trickle down to the middle- and lower-income groups in the form of wages and salaries."
What Mellon actually said was that tax policy "must lessen, so far as possible, the burden of taxation on those least able to bear it." He therefore proposed sharper percentage cuts in tax rates at the lower-income levels — and that was done.
Mellon also proposed eliminating federal taxes on movie tickets, because such taxes were paid by "the great bulk of the people, whose main source of recreation is attending the movies in the neighborhood of their homes." In short, Mellon advocated the direct opposite of the policies attributed to him.
The very idea that profits "trickle down" to workers depicts the economic sequence of events in the opposite order from that in the real world. Workers must first be hired and paid before there is any output produced to sell for a profit, and independently of whether that output subsequently sells for a profit or at a loss.
With investments, whether they lead to a profit or a loss can often be determined only years later, and workers have to be paid in the meantime, rather than waiting for profits to "trickle down" to them.
The real effect of tax-rate reductions is to make the future prospects of profit look more favorable, leading to more current investments that generate more current economic activity and more jobs.
Those who attribute a trickle-down theory to others are attributing their own misconception to others — including a highly successful businessman like Andrew Mellon — as well as distorting both the arguments used and the hard facts about what actually happened after the recommended policies were put into effect.
There is no need to presume that the scholars who wrote these history textbooks were deliberately lying, in order to protect a vision. They may simply have relied on a peer consensus so widely held and so often repeated as to be seen as "well-known facts" requiring no serious re-examination.
The results show how unreliable peer consensus can be, even when it is a peer consensus of highly intellectual people, if those people share a very similar vision of the world and treat its conclusions as axioms rather than as hypotheses that need to be checked against facts.
These history textbooks may also reflect the economic illiteracy of even leading scholars outside the field of economics, who nevertheless insist on reaching conclusions on economic issues.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=578785&p=1
The arguments of the proponents and opponents of tax-rate reductions have been arguments about two fundamentally different things:
(1) The distribution of existing incomes and existing tax liabilities.
(2) Incentives to increase incomes by reducing tax rates, so as to get individuals and institutions to take their money out of tax shelters and invest it in the economy.
Proponents and opponents of tax-rate reductions not only had different arguments, they were arguments about very different things, and the two arguments largely went past each other untouched.
Empirical evidence on what happened to the economy in the wake of those tax cuts in four different administrations over a span of more than 80 years has also been largely ignored by those opposed to what they call "tax cuts for the rich."
Confusion between reducing tax rates on individuals and reducing tax revenues received by the government has run through much of these discussions over these years.
Famed historian Arthur M. Schlesinger Jr., for example, said that although Andrew Mellon, secretary of the treasury from 1921 to 1932, advocated balancing the budget and paying off the national debt, he "inconsistently" sought "reduction in tax rates."
Nor was Schlesinger the only highly regarded historian to perpetuate economic confusion between tax rates and tax revenues. Today, widely used textbooks by various well-known historians have continued to misstate what was advocated in the 1920s and what the actual consequences were.
According to the textbook "These United States" by Irwin Unger, Mellon, "a rich Pittsburgh industrialist," persuaded Congress to "reduce income tax rates at the upper-income levels while leaving those at the bottom untouched."
Thus "Mellon won further victories for his drive to shift more of the tax burden from the high-income earners to the middle and wage-earning classes."
But hard data show that, in fact, both the amount and the proportion of taxes paid by those whose net income was no higher than $25,000 went down between 1921 and 1929, while both the amount and the proportion of taxes paid by those whose net incomes were between $50,000 and $100,000 went up — and the amount and proportion of taxes paid by those whose net incomes were over $100,000 went up even more sharply.
Another widely used textbook, co-authorized by a number of distinguished historians, two of whom won Pulitzer Prizes, said of Mellon:
"It was better, he argued, to place the burden of taxes on lower-income groups" and that a "share of tax-free profits of the rich, Mellon reassured the country, would ultimately trickle down to the middle- and lower-income groups in the form of wages and salaries."
What Mellon actually said was that tax policy "must lessen, so far as possible, the burden of taxation on those least able to bear it." He therefore proposed sharper percentage cuts in tax rates at the lower-income levels — and that was done.
Mellon also proposed eliminating federal taxes on movie tickets, because such taxes were paid by "the great bulk of the people, whose main source of recreation is attending the movies in the neighborhood of their homes." In short, Mellon advocated the direct opposite of the policies attributed to him.
The very idea that profits "trickle down" to workers depicts the economic sequence of events in the opposite order from that in the real world. Workers must first be hired and paid before there is any output produced to sell for a profit, and independently of whether that output subsequently sells for a profit or at a loss.
With investments, whether they lead to a profit or a loss can often be determined only years later, and workers have to be paid in the meantime, rather than waiting for profits to "trickle down" to them.
The real effect of tax-rate reductions is to make the future prospects of profit look more favorable, leading to more current investments that generate more current economic activity and more jobs.
Those who attribute a trickle-down theory to others are attributing their own misconception to others — including a highly successful businessman like Andrew Mellon — as well as distorting both the arguments used and the hard facts about what actually happened after the recommended policies were put into effect.
There is no need to presume that the scholars who wrote these history textbooks were deliberately lying, in order to protect a vision. They may simply have relied on a peer consensus so widely held and so often repeated as to be seen as "well-known facts" requiring no serious re-examination.
The results show how unreliable peer consensus can be, even when it is a peer consensus of highly intellectual people, if those people share a very similar vision of the world and treat its conclusions as axioms rather than as hypotheses that need to be checked against facts.
These history textbooks may also reflect the economic illiteracy of even leading scholars outside the field of economics, who nevertheless insist on reaching conclusions on economic issues.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=578785&p=1
Tuesday, July 19, 2011
Our Biggest Challenge And Highest Priority: JOBS
Tom Donohue
President and CEO, U.S. Chamber of Commerce
The 26 foot tall banner that stretches across the front of the U.S. Chamber of Commerce headquarters in Washington, D.C., spells out our nation’s biggest challenge and our highest priority in one word—J-O-B-S. That banner has served as a reminder to us and to all of Washington for nearly 15 months where our focus must be.
But over that same time period, we’ve seen the economy sputter. The June jobs report showed a discouraging rise in unemployment—9.2%. It’s more than 16% when you include part-timers who can’t find full-time work and those who have dropped out of the workforce altogether. A new survey released by the Chamber shows that 64% of small business executives say that they are not expecting to add to their payrolls in the next year. Another 12% plan to cut jobs.
That’s the bad news. The good news is that the fundamental can-do spirit of the American people hasn’t changed—neither has its free enterprise principles. We saw that firsthand at the Chamber’s second annual Jobs Summit on July 12, bringing together businesses large and small to brainstorm what it’s going to take to keep and create jobs and to turn around the economy.
The Chamber believes that stronger and faster economic growth is the best way to successfully put Americans back to work. For the past two years, however, we’ve treated the symptoms with few results. We must clear away government impediments and the resulting uncertainty that has strangled businesses, stifled our economy’s ability to grow, and slowed job creation. With government out of the way and the principles of free enterprise driving growth, we can deliver more customers for businesses, more revenues for government, and, most importantly, more jobs for Americans.
How do we do that? We must increase domestic energy production and reinvest in our nation’s crumbling transportation, energy, and water infrastructure. We must expand trade to send more American goods to customers across the globe, starting with ratification of free trade agreements with Colombia, Korea, and Panama. Regulatory burdens that hamstring American businesses must be eliminated so we can bring certainty back to the markets. And we must make long-term investments in our workforce, in our capital markets, and in technology innovations that will keep us globally competitive.
America has strong demographics, abundant natural resources, the world’s most productive workers, and a long history of picking ourselves up when we are down. We can do it again—and we must do it again to ensure our future prosperity.
President and CEO, U.S. Chamber of Commerce
The 26 foot tall banner that stretches across the front of the U.S. Chamber of Commerce headquarters in Washington, D.C., spells out our nation’s biggest challenge and our highest priority in one word—J-O-B-S. That banner has served as a reminder to us and to all of Washington for nearly 15 months where our focus must be.
But over that same time period, we’ve seen the economy sputter. The June jobs report showed a discouraging rise in unemployment—9.2%. It’s more than 16% when you include part-timers who can’t find full-time work and those who have dropped out of the workforce altogether. A new survey released by the Chamber shows that 64% of small business executives say that they are not expecting to add to their payrolls in the next year. Another 12% plan to cut jobs.
That’s the bad news. The good news is that the fundamental can-do spirit of the American people hasn’t changed—neither has its free enterprise principles. We saw that firsthand at the Chamber’s second annual Jobs Summit on July 12, bringing together businesses large and small to brainstorm what it’s going to take to keep and create jobs and to turn around the economy.
The Chamber believes that stronger and faster economic growth is the best way to successfully put Americans back to work. For the past two years, however, we’ve treated the symptoms with few results. We must clear away government impediments and the resulting uncertainty that has strangled businesses, stifled our economy’s ability to grow, and slowed job creation. With government out of the way and the principles of free enterprise driving growth, we can deliver more customers for businesses, more revenues for government, and, most importantly, more jobs for Americans.
How do we do that? We must increase domestic energy production and reinvest in our nation’s crumbling transportation, energy, and water infrastructure. We must expand trade to send more American goods to customers across the globe, starting with ratification of free trade agreements with Colombia, Korea, and Panama. Regulatory burdens that hamstring American businesses must be eliminated so we can bring certainty back to the markets. And we must make long-term investments in our workforce, in our capital markets, and in technology innovations that will keep us globally competitive.
America has strong demographics, abundant natural resources, the world’s most productive workers, and a long history of picking ourselves up when we are down. We can do it again—and we must do it again to ensure our future prosperity.
Modern Poverty Includes AC and Xbox
When Americans think of poverty, we tend to picture people who can’t adequately shelter, clothe, and feed themselves or their families.
When the Census Bureau defines “poverty,” though, it winds up painting more than 40 million Americans — one in seven — as “poor.”
Census officials continue to grossly exaggerate the numbers of the poor, creating a false picture in the public mind of widespread material deprivation, writes Heritage Foundation senior research fellow Robert Rector in a new paper.
“Most news stories on poverty feature homeless families, people living in crumbling shacks, or lines of the downtrodden eating in soup kitchens,” Rector says. “The actual living conditions of America’s poor are far different from these images.”
Congress is tying itself in knots figuring out how to cut spending and bring down a $14 trillion national debt. Lawmakers might well take a much closer look at the nearly a trillion dollars spent each year on welfare even though many recipients aren’t what the typical American would recognize as poor and in need of government assistance.
What is poverty? Americans might well be surprised to learn from other government data that the overwhelming majority of those defined as “poor” by the Census Bureau were well-housed and adequately fed even in the recession year 2009. About 4 percent of them did temporarily become homeless.
Data from the Department of Energy and other agencies show that the average poor family, as defined by Census officials:
● Lives in a home that is in good repair, not crowded, and equipped with air conditioning, clothes washer and dryer, and cable or satellite TV service.
● Prepares meals in a kitchen with a refrigerator, coffee maker and microwave as well as oven and stove.
● Enjoys two color TVs, a DVD player, VCR and — if children are there — an Xbox, PlayStation, or other video game system.
● Had enough money in the past year to meet essential needs, including adequate food and medical care.
Rather than report such detailed surveys, Rector and co-author Rachel Sheffield write, the media “amplified” the Census Bureau’s annual misrepresentation of poverty over the past 40 years. News reports routinely suggest that poor Americans typically are homeless and hungry — and U.S. foes and rivals such as Iran, China, and Russia are delighted to report the same.
“Regrettably, most discussions of poverty in the U.S. rely on sensationalism, exaggeration, and misinformation,” Rector says. “But an effective anti-poverty policy must be based on an accurate assessment of actual living conditions and the causes of deprivation.”
http://www.nationalreview.com/corner/272081/modern-poverty-includes-ac-and-xbox-ken-mcintyre
When the Census Bureau defines “poverty,” though, it winds up painting more than 40 million Americans — one in seven — as “poor.”
Census officials continue to grossly exaggerate the numbers of the poor, creating a false picture in the public mind of widespread material deprivation, writes Heritage Foundation senior research fellow Robert Rector in a new paper.
“Most news stories on poverty feature homeless families, people living in crumbling shacks, or lines of the downtrodden eating in soup kitchens,” Rector says. “The actual living conditions of America’s poor are far different from these images.”
Congress is tying itself in knots figuring out how to cut spending and bring down a $14 trillion national debt. Lawmakers might well take a much closer look at the nearly a trillion dollars spent each year on welfare even though many recipients aren’t what the typical American would recognize as poor and in need of government assistance.
What is poverty? Americans might well be surprised to learn from other government data that the overwhelming majority of those defined as “poor” by the Census Bureau were well-housed and adequately fed even in the recession year 2009. About 4 percent of them did temporarily become homeless.
Data from the Department of Energy and other agencies show that the average poor family, as defined by Census officials:
● Lives in a home that is in good repair, not crowded, and equipped with air conditioning, clothes washer and dryer, and cable or satellite TV service.
● Prepares meals in a kitchen with a refrigerator, coffee maker and microwave as well as oven and stove.
● Enjoys two color TVs, a DVD player, VCR and — if children are there — an Xbox, PlayStation, or other video game system.
● Had enough money in the past year to meet essential needs, including adequate food and medical care.
Rather than report such detailed surveys, Rector and co-author Rachel Sheffield write, the media “amplified” the Census Bureau’s annual misrepresentation of poverty over the past 40 years. News reports routinely suggest that poor Americans typically are homeless and hungry — and U.S. foes and rivals such as Iran, China, and Russia are delighted to report the same.
“Regrettably, most discussions of poverty in the U.S. rely on sensationalism, exaggeration, and misinformation,” Rector says. “But an effective anti-poverty policy must be based on an accurate assessment of actual living conditions and the causes of deprivation.”
http://www.nationalreview.com/corner/272081/modern-poverty-includes-ac-and-xbox-ken-mcintyre
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