This week Senator Bernie Sanders and Representative Barbara Lee are introducing bills in the Senate and House for a financial transaction tax (FTT). Their proposed tax is similar to, albeit somewhat higher than, the FTT proposed by Senator Brian Schatz earlier this year. The Sanders-Lee proposal would impose a 0.5 percent tax on stock transactions, with lower rates on transfers of other financial assets. Senator Schatz’s bill would impose a 0.1 percent tax on trades of all financial assets.

At this point, it is not worth highlighting the differences between the bills. Both would raise far more than half a trillion dollars over the next decade, almost entirely at the expense of the financial industry and hedge fund-types. In the case of the Schatz tax, the Congressional Budget Office estimated revenue of almost $80 billion a year, a bit less than 2.0 percent of the budget. The Sanders-Lee tax would likely raise in the neighborhood of $120–$150 billion a year, in the neighborhood of 3.0 percent of the federal budget.

While the financial industry will make great efforts to convince people that this money is coming out of the middle-class’ 401(k)s and workers’ pensions, that’s not likely to be true. This can be seen with some simple arithmetic.

May 2019, David Rosnick

Dean Baker
Truthout, May 20, 2019

Eileen AppelbaumThe Hill, May 16, 2019

(This post first appeared on my Patreon page.) Earlier this month, New York Times reporter Binyamin Appelbaum wrote a moving piece on Ady Barkan. Ady is a lifelong activist who is now dying from A.L.S., often known as Lou Gehrig’s disease.

It is an incredibly sad story, Ady is just 35 years old. He is married with a young son. While I’m sure he would like to spend the time he has left with his loved ones, he is determined to use whatever energy he can to push for universal Medicare.

I was sitting next to him last month when we were both testifying on universal Medicare. Ady was in a wheel chair, having lost control over most of his muscles. He could not speak and instead had a mechanical voice speak out the words he typed.

It was clear that it was not easy for him to be there. He was sweating profusely in a room that was not particularly warm. It was a very impressive show of determination for a cause to which he is very committed.

I actually first met Ady through his work on a different topic, the Fed Up campaign, which was designed to push the Federal Reserve Board to prioritize full employment and higher wages. Fed Up was about bringing the voices of ordinary workers and community activists into the debate on monetary policy. Ady was one of the lead organizers with the Center for Popular Democracy, the group that spearheaded the Fed Up campaign.

As Appelbaum points out in this piece, the Fed Up campaign was remarkably successful in getting the Fed to take the concerns of working people more seriously. In general, the Fed is far more responsive to the concerns of the financial industry.

Dean Baker
Truthout, May 13, 2019

The Wall Street Journal's opinion page has never been a place where reality is a binding constraint. Andy Kessler demonstrates this fact in a column that tells us that the Consumer Price Index (CPI) overstates the true rate of inflation by at least 2.0 percentage points annually and possibly as much as 5.0 percentage points.

The immediate basis for this observation is an interview Alan Greenspan gave in which he said:

"Because products are continuously changing, ..... when new products go on the market, they come in at relatively high prices. Henry Ford’s Model T came in at a very high price, and the price went down as technology improved. You didn’t start to pick up the price level until well into that declining phase.”

“So there is a bias in the statistic. You’re getting statistics which are not correct. ... If you had a 2% inflation rate as currently measured, it’s the equivalent of zero for actually what consumers are buying.”

As Kessler describes it, "pretty heady stuff from the former Fed head."

Perhaps, but it's hardly new. Greenspan made the same observation more than a quarter-century ago. He told Congress back then that the CPI overstates inflation by at least 1.0 percentage point, and possibly as much as 2.0 percentage points. He suggested that Congress could use this alleged fact as a way to reduce the budget deficit, since Social Security payments (post-retirement) were linked to the CPI, as were income tax brackets. If the annual inflation adjustment in these measures was 1.0-2.0 percentage points lower, it would drastically reduce Social Security benefits over time and raise a great deal of tax revenue.

May 10, 2019

May 10, 2019 (Prices Byte)

Dear America,

A working mother recently wrote to the New York Times asking what really makes for a “family friendly” company. Her workplace experiences were the opposite of the company’s stated commitment to the notion and she wanted to know if her expectations were too high. The reply that followed was not so much a definition of a family friendly workplace, but advice: “Even if you are short on funds, it is worth it for you to go into (potentially further) debt at this time to pay for as much day-to-day help as you can get.” In other words, if you’re looking for a better work-life balance, you’re on your own in 2019 America.

A survey on work-family stress due to lack of childcare support conducted among working mothers from the US and other industrialized countries found “it was American moms uniquely who blamed themselves for their own stress and thought it was their own job to resolve it.”

In honor of Mother’s Day, CEPR is publishing a curated selection of original research reports from academic institutions and nonprofits on the current state of child care and early education in the US. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people's lives as well as encouraging inclusive conversations on improving the lives of families across the country.

Brookings Institution

What is the market price of daycare and preschool?

This report uses nationally representative data from the 2016 Early Childhood Program Participation Survey in order to calculate hourly and annualized prices for parents who purchase at least eight hours a week of center-based care for a child under the age of five without a disability or without outside financial help in paying child care fees. Ultimately, the author is looking to find the market price of center-based daycare and preschool for young children by analyzing the age of the child, region of country, parental education, parental income, and hours of attendance.

(This post first appeared on my Patreon page.)

I had the opportunity to testify last week before the House Rules committee on Medicare for All. Incredibly, this was apparently the first time the topic had been explicitly addressed in a congressional hearing. In my testimony, I argued that a Medicare for All program would be affordable, but the key factor was reducing the cost of input prices, like prescription drugs, medical equipment, and doctors’ pay. I also briefly laid out what I considered the key features of a transition from the current system. I want to go into this issue in a bit more detail here.

I listed four main steps as being key in the transition:

1. Fix the current Medicare system;

2. Allow a Medicare buy-in;

3. Take measures to reduce input prices;

4. Lower age of Medicare eligibility to 64.

These four steps should allow for an orderly phase in of a universal Medicare system. They also should quickly provide substantial benefits to most of the population in the form of better quality/lower cost health care.