Robert Samuelson devoted his column this week to the issue of government regulation. He refers to an estimate from the industry-funded Competitive Enterprise Institute that “the costs of complying with federal rules and regulations totaled nearly $1.9 trillion in 2015, equal to about half the federal budget ($3.7 trillion in 2015).” It is important to understand the nature of this estimate.
Suppose that I have been in the habit of dumping my sewage on my neighbor’s lawn. Now imagine the government puts in place a regulation prohibiting me from doing this so that I have to install a sewage system to dispose of my sewage in a more proper manner. The Competitive Enterprise Institute estimate would count the cost of my sewage system as a cost of regulation.
This is of course not a cost to the economy, it is just a situation where they forced me to stop imposing costs on my neighbors. This is how one can get a figure like $1.9 trillion a year as the cost of regulation.
Anyone seriously looking at regulations would want to know their net cost. Many regulations, such as bans on smoking, which have led to huge reductions in incidents of cancer, bans on leaded gas, which led to large reductions in crime in addition to the direct health benefits, and the 1990 Clean Air Act, have had enormous economic benefits. Honest people would be sure to mention this fact in discussing the impact of regulation.
Robert Samuelson devoted his column this week to the issue of government regulation. He refers to an estimate from the industry-funded Competitive Enterprise Institute that “the costs of complying with federal rules and regulations totaled nearly $1.9 trillion in 2015, equal to about half the federal budget ($3.7 trillion in 2015).” It is important to understand the nature of this estimate.
Suppose that I have been in the habit of dumping my sewage on my neighbor’s lawn. Now imagine the government puts in place a regulation prohibiting me from doing this so that I have to install a sewage system to dispose of my sewage in a more proper manner. The Competitive Enterprise Institute estimate would count the cost of my sewage system as a cost of regulation.
This is of course not a cost to the economy, it is just a situation where they forced me to stop imposing costs on my neighbors. This is how one can get a figure like $1.9 trillion a year as the cost of regulation.
Anyone seriously looking at regulations would want to know their net cost. Many regulations, such as bans on smoking, which have led to huge reductions in incidents of cancer, bans on leaded gas, which led to large reductions in crime in addition to the direct health benefits, and the 1990 Clean Air Act, have had enormous economic benefits. Honest people would be sure to mention this fact in discussing the impact of regulation.
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Donald Trump’s business empire appears to be an infinite cesspool of corruption, with his unethical practices continuing into his presidency. Given such a target rich environment for real news stories, it is difficult to see why the NYT would devote space and resources to pursuing a major non-story. The paper apparently thinks that it is some sort of scandal that Trump accepted energy efficiency tax credits for some of his buildings, since he opposes the tax credits and is committed to eliminating them.
Sorry, that makes zero sense. People take advantage all the time of provisions in the tax code they think are wrong. Why shouldn’t they?
Warren Buffett has famously complained that it is ridiculous that he can pay a lower tax rate than his secretary, based on the fact that most of his income is taxed at the 20 percent capital gains rate rather than the 25 percent marginal tax rate on ordinary income that his secretary is presumably paying. In spite of making this complaint, Mr. Buffett still opts to take advantage of the lower rate on capital gains.
Like many other economists, I think the mortgage interest deduction in its current form is terrible policy. Nonetheless, we all (or the homeowners among us) use the mortgage interest deduction on our taxes.
It’s difficult to see any hypocrisy in following the rules as written, even if one thinks the rules should be changed. This is just a lazy piece on the NYT’s part, it should be spending its time reporting real scandals. There is no shortage in this category in the Trump administration.
Donald Trump’s business empire appears to be an infinite cesspool of corruption, with his unethical practices continuing into his presidency. Given such a target rich environment for real news stories, it is difficult to see why the NYT would devote space and resources to pursuing a major non-story. The paper apparently thinks that it is some sort of scandal that Trump accepted energy efficiency tax credits for some of his buildings, since he opposes the tax credits and is committed to eliminating them.
Sorry, that makes zero sense. People take advantage all the time of provisions in the tax code they think are wrong. Why shouldn’t they?
Warren Buffett has famously complained that it is ridiculous that he can pay a lower tax rate than his secretary, based on the fact that most of his income is taxed at the 20 percent capital gains rate rather than the 25 percent marginal tax rate on ordinary income that his secretary is presumably paying. In spite of making this complaint, Mr. Buffett still opts to take advantage of the lower rate on capital gains.
Like many other economists, I think the mortgage interest deduction in its current form is terrible policy. Nonetheless, we all (or the homeowners among us) use the mortgage interest deduction on our taxes.
It’s difficult to see any hypocrisy in following the rules as written, even if one thinks the rules should be changed. This is just a lazy piece on the NYT’s part, it should be spending its time reporting real scandals. There is no shortage in this category in the Trump administration.
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The Washington Post must think that U.S. trade policy is really awful. Why else would they continually lie to their readers and claim that the cause of the sharp job loss in manufacturing in recent years was automation?
For fans of data rather than myths, the basic story is that manufacturing has been declining as a share of total employment since 1970. However there was relatively little change in the number of jobs until the trade deficit exploded in the last decade. Here’s the graph.
Manufacturing Employment
Source: Bureau of Labor Statistics.
And, there was no great uptick in productivity coinciding with the plunge in employment at the start of the last decade. It would be nice if the Washington Post could discuss trade honestly. This sort of reporting gives fuel to the Donald Trumps of the world.
In this context, it is probably worth once again mentioning that the Washington Post still refuses to correct its pro-NAFTA editorial in which it made the absurd claim that Mexico’s GDP quadrupled from 1987 to 2007. The actual figure was 83 percent, according to the International Monetary Fund.
The Washington Post must think that U.S. trade policy is really awful. Why else would they continually lie to their readers and claim that the cause of the sharp job loss in manufacturing in recent years was automation?
For fans of data rather than myths, the basic story is that manufacturing has been declining as a share of total employment since 1970. However there was relatively little change in the number of jobs until the trade deficit exploded in the last decade. Here’s the graph.
Manufacturing Employment
Source: Bureau of Labor Statistics.
And, there was no great uptick in productivity coinciding with the plunge in employment at the start of the last decade. It would be nice if the Washington Post could discuss trade honestly. This sort of reporting gives fuel to the Donald Trumps of the world.
In this context, it is probably worth once again mentioning that the Washington Post still refuses to correct its pro-NAFTA editorial in which it made the absurd claim that Mexico’s GDP quadrupled from 1987 to 2007. The actual figure was 83 percent, according to the International Monetary Fund.
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Most of us know that politicians don’t say what they really believe about the world. Unfortunately, the folks who write for the Washington Post haven’t learned this basic fact. This explains why in an article on Donald Trump’s plan to cut large parts of the domestic budget:
“To the president and his supporters who see a bloated bureaucracy with lots of duplication and rules that choke jobs, the budget cuts are a necessary first step to make government run more efficiently.”
Of course, this is what the president and his supporters say. It may have nothing to do with what they “see.” For example, it is well known that reducing enforcement at the Internal Revenue Service will amount to a net loss for the government, as the savings on salaries will be more than offset by a loss of revenue.
Given this fact, we can believe, apparently like the Post, that Trump’s people are dumber than rocks, or we can believe that they want to make it easier for their friends to cheat on their taxes. Both are possible, but apparently the Post wants readers to rule out the latter possibility.
This logic applies to the cuts more generally. For example, the reason Republicans may want to cut funding for the Environmental Protection Agency is so that their friends have the option of dumping waste in their neighbors’ drinking water rather than having to pay the cost of cleaning it up. They may support reductions in financial regulation so that their friends can make more profits ripping off unsuspecting customers.
It would be best if the paper did not try to tell us people’s motives when they have no basis for their assessment.
Most of us know that politicians don’t say what they really believe about the world. Unfortunately, the folks who write for the Washington Post haven’t learned this basic fact. This explains why in an article on Donald Trump’s plan to cut large parts of the domestic budget:
“To the president and his supporters who see a bloated bureaucracy with lots of duplication and rules that choke jobs, the budget cuts are a necessary first step to make government run more efficiently.”
Of course, this is what the president and his supporters say. It may have nothing to do with what they “see.” For example, it is well known that reducing enforcement at the Internal Revenue Service will amount to a net loss for the government, as the savings on salaries will be more than offset by a loss of revenue.
Given this fact, we can believe, apparently like the Post, that Trump’s people are dumber than rocks, or we can believe that they want to make it easier for their friends to cheat on their taxes. Both are possible, but apparently the Post wants readers to rule out the latter possibility.
This logic applies to the cuts more generally. For example, the reason Republicans may want to cut funding for the Environmental Protection Agency is so that their friends have the option of dumping waste in their neighbors’ drinking water rather than having to pay the cost of cleaning it up. They may support reductions in financial regulation so that their friends can make more profits ripping off unsuspecting customers.
It would be best if the paper did not try to tell us people’s motives when they have no basis for their assessment.
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That would be news for Republicans in Congress. The vast majority of the tax cuts they are pushing would go to the richest ten percent of the population, with close to half going to the richest one percent. It is very misleading to describe them as proponents of a big middle-class tax cut.
That would be news for Republicans in Congress. The vast majority of the tax cuts they are pushing would go to the richest ten percent of the population, with close to half going to the richest one percent. It is very misleading to describe them as proponents of a big middle-class tax cut.
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The Washington Post left a very important fact out of an article on Republican efforts to ban voluntary state sponsored retirement plans. The Republicans are trying to make such plans impractical by reversing a Labor Department ruling that exempted employers with workers contributing to the plans from being subject to ERISA provisions. The basis for the Labor Department ruling is that the employers are simply mailing in a check on a worker’s behalf, not running a plan.
The Republicans in Congress who want to insist that ERISA rules apply to employers, making it a substantial burden on them, say that they are doing it to protect workers’ savings. These are the same people who are trying to reverse the Fiduciary Rule, which requires investment advisers act in the best interest of their clients, and to gut the Consumer Financial Protection Bureau.
Anyhow, the Post neglected to mention the difference in fees between 401(k)s and the state-sponsored plans. The average fee on 401(k) is around 1.0 percent of the money in a worker’s account. Many plans charge more than 1.5 percent. By contrast, state sponsored plans are likely to have fees in the range of 0.2–0.3 percent.
The difference can easily come to $30,000 over the course of a middle-income worker’s career. This is money that is being transferred from workers to the financial industry. Most people would likely consider this a substantial sum of money. It should have been noted in this piece.
The Washington Post left a very important fact out of an article on Republican efforts to ban voluntary state sponsored retirement plans. The Republicans are trying to make such plans impractical by reversing a Labor Department ruling that exempted employers with workers contributing to the plans from being subject to ERISA provisions. The basis for the Labor Department ruling is that the employers are simply mailing in a check on a worker’s behalf, not running a plan.
The Republicans in Congress who want to insist that ERISA rules apply to employers, making it a substantial burden on them, say that they are doing it to protect workers’ savings. These are the same people who are trying to reverse the Fiduciary Rule, which requires investment advisers act in the best interest of their clients, and to gut the Consumer Financial Protection Bureau.
Anyhow, the Post neglected to mention the difference in fees between 401(k)s and the state-sponsored plans. The average fee on 401(k) is around 1.0 percent of the money in a worker’s account. Many plans charge more than 1.5 percent. By contrast, state sponsored plans are likely to have fees in the range of 0.2–0.3 percent.
The difference can easily come to $30,000 over the course of a middle-income worker’s career. This is money that is being transferred from workers to the financial industry. Most people would likely consider this a substantial sum of money. It should have been noted in this piece.
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