Thursday , April 27 2017
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Jared Bernstein: On the economy

Debt/GDP and growth

I was just on a tax panel this AM with my pal Maya MacGuineas. Maya suggested that high debt levels lead to lower economic growth. Using Richard Kogan’s data on debt as a share of GDP and real GDP/working-age person (which is closer to productivity growth than GDP growth, but seems like a relevant metric here; you get the same results with GDP/person) back to the beginning of time (1792!), here are two scatterplots. The first plots debt/GDP against this growth measure and the second plots the...

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Dynamic scoring, interest rates, and “crowd out”

I’ve got a piece over at the WaPo on why, when Treasury Sec’y Mnuchin says that Trump’s tax plan–which I suspect does not exist yet outside of some broad principles–“will pay for itself,” you should…um…disbelieve him. Such claims abuse “dynamic scoring,” the process by which analysts estimate macroeconomic feedback effects from tax cuts. I provide a number of reasons why dynamic scoring abuse–DSA, or claims that tax cuts get anywhere close to paying for themselves–is a serious disease: —The...

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Supply-side, trickle-down nonsense on the NYT oped page

There’s a robust debate to be had as to why the NYT published this op-ed on the alleged economic benefits of trickle-down tax cuts, as virtually every paragraph touts an alternative fact. It is the opinion page, I guess, and the authors advise (or at least advised) the president, so I can see why it’s there. But it does require debunking, so thanks NYT, for some make work. Here’s much of the article’s text, followed by my comments in italics: In the aftermath of the health care blowup,...

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OTEpc #7: Inclusive immigration policies

Episode #7 of the On the Economy podcast, on the fiscal and economic impacts of immigration, is yours for the clicking. Our guests–Erica Williams and Meg Wiehe, take us through their timely, important research about the benefits of inclusive immigration policies for unauthorized immigrants. And violinist virtuoso Hilary Hahn “joins” us (I can dream, can’t I?) to crush a cadenza. Enjoy, and feel free to submit questions to otepodcast@gmail.com. Share the post "OTEpc #7: Inclusive...

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Tax day! And does anybody, other than the obvious suspects, really want a big regressive tax cut?

Here’s a useful editorial from the WaPo on a long-time CBPP theme: fully fund the damn IRS, damnit! Stiffing the agency is increasingly a back-door way for R budget cutters to provide an implicit tax cut to their funders: Attacking the IRS is a particularly expensive way to play to the crowd. It rewards tax cheats at everyone else’s expense. Commissioner John Koskinen estimates that the government loses at least $4 for every $1 cut from the IRS and is losing some $4 billion to $8 billion a...

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Just a little free-floating nervousness re the business cycle to start out your week…

Over at WaPo, re current economic conditions. I mention the slowing of real, blue-collar wages in the piece as something that’s important in terms of a constraint on consumer spending (70% of GDP, fyi). Their hourly pay has been flat over the past year, same with their weekly earnings. Basically, in 2015, their nominal pay accelerated as the job market tightened while inflation went south, riding on energy-price declines. Since then, it’s reversed: the pace of their nominal wage growth has...

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I’m concerned re the lack of nominal acceleration of the blue-collar wage.

I said I’d get back to my tweet from this AM showing the deceleration in real wage growth, particularly for blue-collar workers. This is not exactly the stuff of 140 characters. One can decompose the change in real weekly earnings for private-sector workers into three parts: changes in nominal hourly earnings, inflation, and average weekly hours worked. As the table below shows, the growth in real weekly earnings equals nominal wage growth – inflation + hours growth. See data note for...

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UBI & I

A few weeks ago, Jason Furman and I participated in one of those Intelligence Squared debates on the premise that the Universal Basic Income is the safety net of the future. We were opposed and that has surprised some of my friends and colleagues who figured I would be for a UBI. We’re hoping to write up our thoughts one of these days, but in the meantime, I wanted to quickly jot down a provisional answer to those who ask me about this. For the uninitiated, a UBI is a plan by which the...

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Hilary Hahn, stop ruining my productivity!

I’m not saying she’s an agent of conservative economics, but it’s getting to the point where I cannot get to my work without a strong dose of Hilary Hahn playing this live version of Mozart’s violin concerto #3. This morning, it was the third movement, which begins just before minute 17. Especially in the age of Trump, with all the phony posturing, chaos, meanness, alternative facts, and so on, this display of pure music and talent, nurtured by years of dedicated practice is more essential...

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