The second paragraph of an article on a new requirement in California — that all new homes have solar power — told readers:
“It will add thousands of dollars to the cost of home when a shortage of affordable housing is one of California’s most pressing issues.”
It then added:
“That made the relative ease of its approval — in a unanimous vote by the five-member California Energy Commission before a standing-room crowd, with little debate — all the more remarkable.”
The piece then goes on to explain that the energy savings are likely to far exceed the additional costs of the solar installations over the life of a standard mortgage. Given this evidence, it might have been reasonable for the second paragraph to say something like:
“In spite of increasing construction costs, the savings on energy likely mean that the requirement will reduce the cost of home ownership, which is an important issue given the shortage of affordable housing in California.”
That might have left readers with a different view of the new regulation.
The second paragraph of an article on a new requirement in California — that all new homes have solar power — told readers:
“It will add thousands of dollars to the cost of home when a shortage of affordable housing is one of California’s most pressing issues.”
It then added:
“That made the relative ease of its approval — in a unanimous vote by the five-member California Energy Commission before a standing-room crowd, with little debate — all the more remarkable.”
The piece then goes on to explain that the energy savings are likely to far exceed the additional costs of the solar installations over the life of a standard mortgage. Given this evidence, it might have been reasonable for the second paragraph to say something like:
“In spite of increasing construction costs, the savings on energy likely mean that the requirement will reduce the cost of home ownership, which is an important issue given the shortage of affordable housing in California.”
That might have left readers with a different view of the new regulation.
Read More Leer más Join the discussion Participa en la discusión
The NYT did some serious editorializing in a headline that told readers:
“[…]to lower drug costs at home, Trump wants higher prices abroad.”
Sorry folks, the NYT does not know what Trump wants. In fact, a reasonable first guess might be that Trump wants to increase the profits of the pharmaceutical industry, with whom he is very close. The NYT would be on sounder footing with a headline saying “To increase pharmaceutical industry profits, Trump wants foreigners to pay more for drugs.” This headline more closely corresponds to the known facts, but we know the paper doesn’t like attributing motives, except of course when it does.
It is worth noting that the headline writer is following the article which told readers in the first paragraph that Trump:
“[…]has an idea that may not be so popular abroad: Bring down costs at home by forcing higher prices in foreign countries that use their national health systems to make drugs more affordable.”
Why is it so hard for reporters to just report what politicians say and do and not try to tell us what they are thinking?
The NYT did some serious editorializing in a headline that told readers:
“[…]to lower drug costs at home, Trump wants higher prices abroad.”
Sorry folks, the NYT does not know what Trump wants. In fact, a reasonable first guess might be that Trump wants to increase the profits of the pharmaceutical industry, with whom he is very close. The NYT would be on sounder footing with a headline saying “To increase pharmaceutical industry profits, Trump wants foreigners to pay more for drugs.” This headline more closely corresponds to the known facts, but we know the paper doesn’t like attributing motives, except of course when it does.
It is worth noting that the headline writer is following the article which told readers in the first paragraph that Trump:
“[…]has an idea that may not be so popular abroad: Bring down costs at home by forcing higher prices in foreign countries that use their national health systems to make drugs more affordable.”
Why is it so hard for reporters to just report what politicians say and do and not try to tell us what they are thinking?
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
I see my friend Jason Furman is jumping into the debate on efforts by states like New York to develop workarounds for the limit on the state and local tax (SALT) deduction in the Republican tax plan. Jason reminds us that the beneficiaries of the workarounds (like New York’s plan to replace a portion of the state income tax with an employer-side payroll tax) are overwhelmingly higher-income taxpayers. This doesn’t bother me.
As I’ve pointed out before, limiting the SALT deduction is not about raising income taxes on high-income people. It is about raising taxes on high-income people in progressive states.
Suppose Congress proposed to raise the income tax rate by 2.0 percentage points on income above $100k and by 4 percentage points on income over $1 million. (These are roughly the numbers we are talking about given income tax rates in New York and California.) This is a perfectly reasonable plan since these are the people who have been the big gainers in the economy over the last four decades.
But suppose this tax increase only applied to people in New York, California, Connecticut, New Jersey, and a few other states with high tax rates, which also tend to vote Democratic in presidential elections. Are we all fine with this? Of course, if we tried to undo this selective tax increase with either legislation or some clever trick, then Jason would point out how regressive this reversal would be.
His calculations would be and are right, but I don’t give a damn. Making it more difficult for states to raise the taxes they need to support progressive social spending is bad policy. And it is especially bad policy in a context where we can expect little by way of progressive measures out of Washington any time soon.
This means if we want to see headway on quality affordable child care, free college, expanded health care coverage, it will come from states like New York and California. The Republicans quite explicitly wanted to make it more difficult for states to be able to pursue progressive policies, which is why they limited the SALT deduction. So no, I have no problems trying to reverse this cheap trick.
Since Jason raised the topic of corporate taxes, we do have an easy route to radically reduce the opportunity for tax evasion/avoidance and also the waste associated with tax accounting. Just require corporations to give us a non-voting equity stake equal to the desired tax rate. (If we want to tax corporations at a 25 percent rate, then we require corporations to give us non-voting shares equal to 25 percent of the total outstanding.)
The non-voting shares are treated just like other shares. If the company pays a $2 a share dividend to its voting shares, it also pays $2 for each of the government’s shares. If it buys back 10 percent of its shares at $100 a share, it buys back 10 percent of the government’s shares at $100 a share.
It’s fun, easy, and gets us the money we want out of the corporate sector. Now if we could just get some folks in Washington thinking seriously about corporate tax reform.
I see my friend Jason Furman is jumping into the debate on efforts by states like New York to develop workarounds for the limit on the state and local tax (SALT) deduction in the Republican tax plan. Jason reminds us that the beneficiaries of the workarounds (like New York’s plan to replace a portion of the state income tax with an employer-side payroll tax) are overwhelmingly higher-income taxpayers. This doesn’t bother me.
As I’ve pointed out before, limiting the SALT deduction is not about raising income taxes on high-income people. It is about raising taxes on high-income people in progressive states.
Suppose Congress proposed to raise the income tax rate by 2.0 percentage points on income above $100k and by 4 percentage points on income over $1 million. (These are roughly the numbers we are talking about given income tax rates in New York and California.) This is a perfectly reasonable plan since these are the people who have been the big gainers in the economy over the last four decades.
But suppose this tax increase only applied to people in New York, California, Connecticut, New Jersey, and a few other states with high tax rates, which also tend to vote Democratic in presidential elections. Are we all fine with this? Of course, if we tried to undo this selective tax increase with either legislation or some clever trick, then Jason would point out how regressive this reversal would be.
His calculations would be and are right, but I don’t give a damn. Making it more difficult for states to raise the taxes they need to support progressive social spending is bad policy. And it is especially bad policy in a context where we can expect little by way of progressive measures out of Washington any time soon.
This means if we want to see headway on quality affordable child care, free college, expanded health care coverage, it will come from states like New York and California. The Republicans quite explicitly wanted to make it more difficult for states to be able to pursue progressive policies, which is why they limited the SALT deduction. So no, I have no problems trying to reverse this cheap trick.
Since Jason raised the topic of corporate taxes, we do have an easy route to radically reduce the opportunity for tax evasion/avoidance and also the waste associated with tax accounting. Just require corporations to give us a non-voting equity stake equal to the desired tax rate. (If we want to tax corporations at a 25 percent rate, then we require corporations to give us non-voting shares equal to 25 percent of the total outstanding.)
The non-voting shares are treated just like other shares. If the company pays a $2 a share dividend to its voting shares, it also pays $2 for each of the government’s shares. If it buys back 10 percent of its shares at $100 a share, it buys back 10 percent of the government’s shares at $100 a share.
It’s fun, easy, and gets us the money we want out of the corporate sector. Now if we could just get some folks in Washington thinking seriously about corporate tax reform.
Read More Leer más Join the discussion Participa en la discusión
Heather Long’s piece in the Washington Post telling readers, “Trump wants a $15 billion spending cut. That’s about 1 percent of the cost of his tax bill,” badly misled readers. The $1.5 trillion cost of the tax bill is a ten-year figure. The $15 billion in spending cuts are meant to hit in a single year. Presumably, Trump and his Republican allies will look for similar cuts in future years. This means that the cuts are 10 percent of the cost of the tax bill.
Of course, being larger doesn’t make them better since the cuts are focused on programs that benefit low- and moderate-income people. But if we’re keeping score, it is worth trying to be accurate.
It is also worth noting that neither Long nor any of her deficit hawk sources in this piece say a word about the implicit debt the government is creating for people through granting patent and copyright monopolies. Granting these monopolies is an alternative way to direct spending for the government to finance things like research and creative work.
The money committed as a result of these monopolies in the form of higher market prices is enormous. In the case of prescription drugs alone, it is likely more than $380 billion a year, or almost 2.0 percent of GDP. Adding in the cost of medical equipment, software, and other areas could well push the sum to more than $1 trillion a year, more than six times the cost of the Trump tax cuts.
Anyone who is really concerned about the liabilities that the government is creating for future taxpayers has to include the cost of these government granted monopolies. If they don’t factor in patent and copyright rights into their assessment of future burdens, they are either just trying to scare people to push a political agenda or very confused.
Heather Long’s piece in the Washington Post telling readers, “Trump wants a $15 billion spending cut. That’s about 1 percent of the cost of his tax bill,” badly misled readers. The $1.5 trillion cost of the tax bill is a ten-year figure. The $15 billion in spending cuts are meant to hit in a single year. Presumably, Trump and his Republican allies will look for similar cuts in future years. This means that the cuts are 10 percent of the cost of the tax bill.
Of course, being larger doesn’t make them better since the cuts are focused on programs that benefit low- and moderate-income people. But if we’re keeping score, it is worth trying to be accurate.
It is also worth noting that neither Long nor any of her deficit hawk sources in this piece say a word about the implicit debt the government is creating for people through granting patent and copyright monopolies. Granting these monopolies is an alternative way to direct spending for the government to finance things like research and creative work.
The money committed as a result of these monopolies in the form of higher market prices is enormous. In the case of prescription drugs alone, it is likely more than $380 billion a year, or almost 2.0 percent of GDP. Adding in the cost of medical equipment, software, and other areas could well push the sum to more than $1 trillion a year, more than six times the cost of the Trump tax cuts.
Anyone who is really concerned about the liabilities that the government is creating for future taxpayers has to include the cost of these government granted monopolies. If they don’t factor in patent and copyright rights into their assessment of future burdens, they are either just trying to scare people to push a political agenda or very confused.
Read More Leer más Join the discussion Participa en la discusión
I generally agree with Paul Krugman’s columns, and this is the case with his piece today on Republican efforts to kill Obamacare. However, there is one point where I have to take issue. Krugman tells readers:
“G.O.P. sabotage disproportionately discourages young and healthy people from signing up, which, as one commentator put it, ‘drives up the cost for other folks within that market.'”
The problem with Krugman’s comment is the “young” part. The exchanges need healthy people, it doesn’t matter whether or not they are young. In fact, it is much better for the economics of the exchanges if the healthy people are older, they pay much higher premiums.
The best way to understand the point is to think of the premiums as a tax. Old-timers like myself (ages 55 to 64, the oldest pre-Medicare age cohort) pay premiums or taxes, that are three times as high as young people. While people in this oldest age grouping are on average in worse health and have higher costs than younger people, a very large minority have trivial medical costs, just like most young people.
The exchanges come out much more ahead with a healthy older person than a healthy young person since they pay three times as much in premiums and cost the system no more money. There is an issue that the pricing is skewed somewhat against the young (true actuarial risk should put the premium ratio around 3.5 to 1, rather than 3.0 to 1), but this is of relatively little consequence for the finances of the exchanges.
It’s not a big deal in the scheme of things, but the inclusion of “young” in this story can be misleading. The key to keeping the exchanges working is getting healthy people to sign up, full stop.
I generally agree with Paul Krugman’s columns, and this is the case with his piece today on Republican efforts to kill Obamacare. However, there is one point where I have to take issue. Krugman tells readers:
“G.O.P. sabotage disproportionately discourages young and healthy people from signing up, which, as one commentator put it, ‘drives up the cost for other folks within that market.'”
The problem with Krugman’s comment is the “young” part. The exchanges need healthy people, it doesn’t matter whether or not they are young. In fact, it is much better for the economics of the exchanges if the healthy people are older, they pay much higher premiums.
The best way to understand the point is to think of the premiums as a tax. Old-timers like myself (ages 55 to 64, the oldest pre-Medicare age cohort) pay premiums or taxes, that are three times as high as young people. While people in this oldest age grouping are on average in worse health and have higher costs than younger people, a very large minority have trivial medical costs, just like most young people.
The exchanges come out much more ahead with a healthy older person than a healthy young person since they pay three times as much in premiums and cost the system no more money. There is an issue that the pricing is skewed somewhat against the young (true actuarial risk should put the premium ratio around 3.5 to 1, rather than 3.0 to 1), but this is of relatively little consequence for the finances of the exchanges.
It’s not a big deal in the scheme of things, but the inclusion of “young” in this story can be misleading. The key to keeping the exchanges working is getting healthy people to sign up, full stop.
Read More Leer más Join the discussion Participa en la discusión
Ben Casselman’s NYT piece on economist Tim Kane’s run for a congressional seat in Ohio called my attention to an economists’ poll that I had missed. The poll posed the following question to a group of elite economists:
“An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.”
Of the whole group, 64 percent either strongly disagreed or disagreed. Only 5 percent agreed. (The rest were uncertain or didn’t answer.)
This outcome is striking because standard trade models absolutely predict that some people will be losers from trade. The basic story is that workers in an sector where the U.S. has a comparative disadvantage will end up with lower pay as a result of removing trade barriers.
To make it concrete, suppose the auto industry is protected by a 20 percent tariff barrier and we make the tariff zero. The expected result is that we would have fewer workers employed in the auto industry. The workers who lose jobs in the industry will, in general, get lower pay in their new jobs, as will the workers who remain employed in the industry.
The argument for free trade is that the gains in aggregate will be larger than what these workers lose. In principle, the winners can redistribute to the losers and make everyone better off, but there is no dispute that the workers in the auto industry are made directly worse off by the removal of the tariff taken by itself.
What is striking is that there is considerable research by many economists, most notably a group led by MIT economist David Autor, showing that workers in Michigan and Ohio were badly hurt by the trade opening to China in the last decade. In effect, these economists were asked whether they thought autoworkers were hurt by the elimination of a tariff on imported autos after they had been shown evidence of large-scale job loss and wage declines in the sector.
The vast majority still said “no.”
Ben Casselman’s NYT piece on economist Tim Kane’s run for a congressional seat in Ohio called my attention to an economists’ poll that I had missed. The poll posed the following question to a group of elite economists:
“An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.”
Of the whole group, 64 percent either strongly disagreed or disagreed. Only 5 percent agreed. (The rest were uncertain or didn’t answer.)
This outcome is striking because standard trade models absolutely predict that some people will be losers from trade. The basic story is that workers in an sector where the U.S. has a comparative disadvantage will end up with lower pay as a result of removing trade barriers.
To make it concrete, suppose the auto industry is protected by a 20 percent tariff barrier and we make the tariff zero. The expected result is that we would have fewer workers employed in the auto industry. The workers who lose jobs in the industry will, in general, get lower pay in their new jobs, as will the workers who remain employed in the industry.
The argument for free trade is that the gains in aggregate will be larger than what these workers lose. In principle, the winners can redistribute to the losers and make everyone better off, but there is no dispute that the workers in the auto industry are made directly worse off by the removal of the tariff taken by itself.
What is striking is that there is considerable research by many economists, most notably a group led by MIT economist David Autor, showing that workers in Michigan and Ohio were badly hurt by the trade opening to China in the last decade. In effect, these economists were asked whether they thought autoworkers were hurt by the elimination of a tariff on imported autos after they had been shown evidence of large-scale job loss and wage declines in the sector.
The vast majority still said “no.”
Read More Leer más Join the discussion Participa en la discusión
It looks like another case where we have a skills mismatch. In a NYT column criticizing Sean Hannity’s housing investments, Bill Sapotio tells us that the housing industry:
“[…]still needs some 200,000 workers, with some of that shortfall no doubt linked to current immigration policy, or the fear of it. The need is so great that the Home Depot Foundation is putting up $50 million to help train and hire skilled workers.”
The problem with this story is wages are not rising especially rapidly in construction. According to the Bureau of Labor Statistics, the average hourly pay of production and non-supervisory workers in the sector rose 3.9 percent. That’s not bad, but before the recession, they were rising over 4.0 percent annually and sometimes over 5.0 percent.
Average Hourly Wage in Construction: Production and Non-Supervisory Workers
Source: Bureau of Labor Statistics.
If there actually is a shortage of construction workers as this piece claims, then we seem to have more evidence of employers who lack the skills necessary to do their job. They apparently don’t understand that if you want to hire more workers, you have to offer higher pay.
It looks like another case where we have a skills mismatch. In a NYT column criticizing Sean Hannity’s housing investments, Bill Sapotio tells us that the housing industry:
“[…]still needs some 200,000 workers, with some of that shortfall no doubt linked to current immigration policy, or the fear of it. The need is so great that the Home Depot Foundation is putting up $50 million to help train and hire skilled workers.”
The problem with this story is wages are not rising especially rapidly in construction. According to the Bureau of Labor Statistics, the average hourly pay of production and non-supervisory workers in the sector rose 3.9 percent. That’s not bad, but before the recession, they were rising over 4.0 percent annually and sometimes over 5.0 percent.
Average Hourly Wage in Construction: Production and Non-Supervisory Workers
Source: Bureau of Labor Statistics.
If there actually is a shortage of construction workers as this piece claims, then we seem to have more evidence of employers who lack the skills necessary to do their job. They apparently don’t understand that if you want to hire more workers, you have to offer higher pay.
Read More Leer más Join the discussion Participa en la discusión
That is what readers of its lead editorial must be wondering. The editorial criticized Trump’s trade policies, pointing out that the policies are creating uncertainties for businesses.
It then notes that Trump appears to view uncertainty as being a positive outcome:
“Last month, in fact, the president all but confessed that he sees uncertainty as a weapon against them in talks over revising the North American Free Trade Agreement. ‘We can negotiate forever,’ he said. ‘Because as long as we have this negotiation going, nobody is going to build billion-dollar plants in Mexico.'”
The editorial then responds:
“Oh no? Canada and Mexico can, and do, hedge against Mr. Trump’s unpredictability by pursuing closer economic ties with China and Europe.”
It is not clear what sort of economics the Post is using here. In standard trade models, the United States benefits when the economies of our trading partners are stronger. If greater integration between Canada and Mexico and China and Europe allow them to grow more rapidly, they will be better customers for US products. Also, insofar as greater integration leads to increased efficiencies for their producers, it means that we will be able to buy lower-priced imports, benefiting US consumers.
If the Post has an economic model whereby we are supposed to be scared because our trading partners are becoming more integrated, it should share it with its readers. (Maybe it will get a Nobel Prize in economics.) As it is, this just looks like a cheap scare tactic to advance its trade agenda.
That is what readers of its lead editorial must be wondering. The editorial criticized Trump’s trade policies, pointing out that the policies are creating uncertainties for businesses.
It then notes that Trump appears to view uncertainty as being a positive outcome:
“Last month, in fact, the president all but confessed that he sees uncertainty as a weapon against them in talks over revising the North American Free Trade Agreement. ‘We can negotiate forever,’ he said. ‘Because as long as we have this negotiation going, nobody is going to build billion-dollar plants in Mexico.'”
The editorial then responds:
“Oh no? Canada and Mexico can, and do, hedge against Mr. Trump’s unpredictability by pursuing closer economic ties with China and Europe.”
It is not clear what sort of economics the Post is using here. In standard trade models, the United States benefits when the economies of our trading partners are stronger. If greater integration between Canada and Mexico and China and Europe allow them to grow more rapidly, they will be better customers for US products. Also, insofar as greater integration leads to increased efficiencies for their producers, it means that we will be able to buy lower-priced imports, benefiting US consumers.
If the Post has an economic model whereby we are supposed to be scared because our trading partners are becoming more integrated, it should share it with its readers. (Maybe it will get a Nobel Prize in economics.) As it is, this just looks like a cheap scare tactic to advance its trade agenda.
Read More Leer más Join the discussion Participa en la discusión
Read More Leer más Join the discussion Participa en la discusión
