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Monday, October 20, 2014

Polarization and Inequality

Pew reports that Democrats are more likely than Republicans to say that inequality is a major national challenge.
There is also partisan disagreement on the most important reasons for the gap between the rich and the poor. Republicans (39%) are most likely to say it exists because some people work harder than others. Democrats (17%) and independents (23%) are much less likely to blame the poor’s work ethic.
Republicans (28%) also say inequality is a product of government economic policies, a view held by 24% of Americans overall. Democrats (20%) and independents (25%) are less likely to point the finger at government, putting more emphasis on shortcomings of the U.S. education system. A fifth of Democrats and 17% of independents (17%) cite the educational system as the most important reason for the rich-poor gap compared with just 9% of Republicans.
Republicans and Democrats also strongly disagree on the role of taxes in addressing the gap between the rich and the poor. About seven-in-ten Republicans (71%) favor a policy of low taxes on the wealthy and corporations to encourage investment and economic growth as a means of reducing inequality. The same number of Democrats (71%) back high taxes on the rich and companies to support programs that help the poor. A plurality of independents (48%) also favor high taxes.

Sunday, October 19, 2014

Outside Money

Jim Rutenberg writes at The New York Times:
In 2010, the Citizens United decision by the Supreme Court effectively blew apart the McCain-Feingold restrictions on outside groups and their use of corporate and labor money in elections. That same year, a related ruling from a lower court made it easier for wealthy individuals to finance those groups to the bottom of their bank accounts if they so chose. What followed has been the most unbridled spending in elections since before Watergate. In 2000, outside groups spent $52 million on campaigns, according to the Center for Responsive Politics. By 2012, that number had increased to $1 billion.
The result was a massive power shift, from the party bosses to the rich individuals who ran the super PACs (as most of these new organizations came to be called). Almost overnight, traditional party functions — running TV commercials, setting up field operations, maintaining voter databases, even recruiting candidates — were being supplanted by outside groups. And the shift was partly because of one element of McCain-Feingold that remains: the ban on giving unlimited soft money to parties. In the party universe, rich players like the Wylys, Tom Steyer or the Kochs were but single planets among many. The party bosses had to balance their interests against those who brought just as much to the table in the form of money or votes. A party platform has to account for both the interests of the oil industry and those of the ethanol industry; those of the casino industry and those of the anti-gambling religious right; those of Wall Street and those of labor.

With the advent of Citizens United, any players with the wherewithal, and there are surprisingly many of them, can start what are in essence their own political parties, built around pet causes or industries and backing politicians uniquely answerable to them. No longer do they have to buy into the system. Instead, they buy their own pieces of it outright, to use as they see fit. “Suddenly, we privatized politics,” says Trevor Potter, an election lawyer who helped draft the McCain-Feingold law.

Saturday, October 18, 2014

Bodegas and Butt-legging

In Federalist 21, Alexander Hamilton explained:
It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, "in political arithmetic, two and two do not always make four." If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds.
Michael Wilson reports at The New York Times:
A pack of Marlboros purchased at Virginia’s low prices and sold at New York City’s going rate can put five or six dollars in the seller’s pocket. These smuggled cigarettes are not hard to find — the city’s Department of Finance said inspections yielded these cigarettes in 48 percent of bodegas visited in recent inspections. They are tucked away in compartments and camouflaged with fake tax stamps.
In early 2002, the city, the state and the federal government collected a combined $15.80 in taxes on every carton of cigarettes sold here. Today, that number is $68.60, or almost $7 a pack. With the increases in taxes, more packs flowed up from the South, in cars and overstuffed minivans and in the underside luggage compartments of passenger buses, said Maureen Kokeas, director of the office of tax enforcement for the city’s Department of Finance. The cigarettes are kept in storage units and quietly sold, a carton or three at a time, to bodegas.
A bodega owner caught last week with 10 cartons of smuggled Marlboros and Newports explained the math. He had bought them the day before from a man he did not know. “He charged me $65 a carton,” he told deputies. That is far cheaper than cartons bought or sold in New York. He shook his head in despair as the deputies took the cigarettes away, his $650 cash investment headed to an incinerator on Long Island, up in smoke.

Friday, October 17, 2014

The Economic Devastation of Newspapers

Overall the economic devastation would be difficult to exaggerate. One statistic conveys its dimensions: the advertising revenue of all America's newspapers fell from $63.5 billion in 2000 to about $23 billion in 2013, and is still falling. Traditional news organizations' financial well-being depended on the willingness of advertisers to pay to reach the mass audiences they attracted. Advertisers were happy to pay because no other advertising medium was as effective. But in the digital era, which has made it relatively simple to target advertising in very specific ways, a big metropolitan or national newspaper has much less appeal. Internet companies like Google and Facebook are able to sort audiences by the most specific criteria, and thus to offer advertisers the possibility of spending their money only on ads they know will reach only people interested in what they are selling. So Google, the master of targeted advertising, can provide a retailer selling sheets and towels an audience existing exclusively of people who have gone online in the last month to shop for sheets and towels. This explains why even as newspaper revenues have plummeted, the ad revenue of Google has leapt upward year after year—from $70 million in 2001 to an astonishing $50.6 billion in 2013. That is more than two times the combined advertising revenue of every newspaper in America last year.
The other online innovation that has devastated newspapers is Craigslist, the free provider of what the newspapers call “classified advertising,” the small items in small print used by individuals and businesses for generations to buy and sell real estate and merchandise, and to hire workers. Twenty years ago classifieds provided more than a third of the revenue of The Washington Post. Craigslist has destroyed that business for the Post and every major paper in the country.

Thursday, October 16, 2014

California Again Leads the Nation ... In Poverty

The Census Bureau has issued a new report, The Supplemental Poverty Measure: 2013.

From the news release:
The supplemental poverty measure serves as an additional indicator of economic well-being and provides a deeper understanding of economic conditions and policy effects.
Unlike the official poverty rate, the supplemental poverty measure takes into account the impact of different benefits and necessary expenses on the resources available to families, as well as geographic differences in housing costs. For example, the measure adds refundable tax credits to cash income, which reduces the supplemental poverty rate for all people by nearly three percentage points (18.4 percent to 15.5 percent). For children, the supplemental poverty rate of 16.4 percent would rise to 22.8 percent if refundable tax credits were excluded.
Last year's report found that California had the nation's worst poverty rate.

California. 23.4
DC 22.4
Nevada . 20
Florida. 19.1
Arizona . 19
Hawaii. 18.4
Louisiana. 18.3
Georgia. 17.5
New York. 17.5
S. Carolina. 16.4

Wednesday, October 15, 2014

Hate Congress, Love My Own Lawmaker

In the U.S., the majority believes that most members of Congress are out of touch with average Americans, more focused on special interests than the needs of their constituents, and are corrupt. Americans are slightly more likely to say each of these things than they were in the past. At the same time, they are much less likely to say these descriptions fit their local member of Congress than to say they fit most members.

 Americans’ Views of Congress: Most Members and Your Member

Tuesday, October 14, 2014

Obamacare Problems

Lanhee Chen writes at Bloomberg:
A report out today from the Republican staff of the Senate Budget Committee highlights a critical point about Obamacare: The law’s negative effect on labor markets helps explain why it will increasedeficits by $131 billion over the next 10 years. This finding stands in stark contrast to Democrats’ repeated assertions that the law will reduce the deficit.
The public dialogue on Obamacare has thus far largely focused on how the law affects premiums and limits access to certain health insurance plans or doctors. While these side-effects are troublesome, it is perhaps more significant that Obamacare has had -- and will continue to have -- a substantial impact on labor markets, jobs and the budget picture.
Obamacare appears to affect employment in two ways: It decreases the supply of labor (the number of people in the labor market), as well as the demand for labor (the number of jobs available). This phenomenon was aptly named the “health care employment squeeze” in a study released by the American Health Policy Institute last month. In short, Obamacare creates an employment double whammy: The cost to many employers of hiring workers goes up, since those with more than 50 employees have to provide increasingly expensive health care, while employees’ incentives to work go down, because they can get federal subsidies to buy insurance outside the workplace.
Politico reports:
Obamacare premiums aren’t rising everywhere. They just have a way of finding the states with the biggest Senate races. And that could be very bad timing for Democrats in two of the party’s key contests.
Double-digit rate hikes for individual health insurance plans have become an issue in the Louisiana and Iowa Senate races over the past week, where the Republican candidates are hammering their Democratic opponents for the steep premium increases on the way next year for some customers under the Affordable Care Act.