Enlighten Radio:A Bullet Stew Served on the Moose Turd Cafe, The Ghostly Poems on the Poetry Show

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Blog: Enlighten Radio
Post: A Bullet Stew Served on the Moose Turd Cafe, The Ghostly Poems on the Poetry Show
Link: http://www.enlightenradio.org/2017/10/a-bullet-stew-served-on-moose-turd-cafe.html

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What is West Virginia’s Economic Outlook? [feedly]

What is West Virginia's Economic Outlook?
http://www.wvpolicy.org/what-is-west-virginias-economic-outlook/

The Bureau of Business and Economic Research at West Virginia University released their annual Economic Outlook Report for the state earlier this month. According to the report's forecast, West Virginia is expected to experience modest job growth, with employment forecasted to grow at an average rate of 0.7 percent per year for the next five years.  That's below the projected national average of 0.9 percent per year, and as the report notes, would result in West Virginia not reaching it's 2012 level of employment until 2021.

BBER's employment growth forecast of 0.7 percent is one of the lower forecasts for the state that they have made in recent years. This may be a reflection that past forecasts have consistently been too rosy, with West Virginia under performing. For example West Virginia is about 50,000 jobs short of where BBER's 2013 forecast said the state would be in 2017.

The main gist of the report is that after several years of struggling economically compared to the rest of the country, West Virginia is beginning to slowly rebound, but will continue to trail the rest of the country. Notably, the report expects the coal industry to stabilize, and manufacturing employment to grow, but with most of the growth coming from the opening of two major facilities in the eastern panhandle.  The report also notes West Virginia's demographic challenges, and says that economic development strategies should focus on ways to improve health and education outcomes.

The report does not, however, make any mention of the state's Right to Work (RTW) law. And while the state's Right to Work law, passed in 2016, had been on hold, the state Supreme Court ruling putting into effect on September 15th wasn't a big surprise to its advocates.

It would have taken minimal effort for the BBER to include the impact of RTW in their Economic Outlook. As you may remember, the BBER published an analysis of the economic impact of RTW in 2015 that was funded by the West Virginia legislature. The analysis showed how much RTW would increase the state's average annual GDP and employment growth, two of the same measures that BBER uses for their Economic Outlook reports. And while their RTW report was criticized for its flawed methodology and unrealistic results, they have stood by its analysis.

But, despite standing by their RTW study's results, and the fact everyone expected the Supreme Court to hold up the state's RTW law, BBER did not include it in their analysis, nor did they mention that the Economic Outlook would change substantially once the law went into effect.

For example, BBER's RTW analysis says that the impact of RTW would add a .056 percent annual increase in annual employment growth. In it's Economic Outlook Report, BBER projects that employment growth will average 0.7 percent annually. So now that RTW is law, the state's average annual employment growth should be 1.26 percent, an 80 percent increase over the original forecast. That translates into an additional 21,000 jobs by 2022.

Not only would including the RTW analysis add 21,000 jobs to West Virginia's Economic Outlook, it would also show a sharp reversal for West Virginia's growth compared to the nation. After years of lagging behind national growth, including BBER's RTW impact would show West Virginia exceeding national growth rates by 40% over the next five years.

Including BBER's RTW analysis completely changes their Economic Outlook report, transforming the story from one about a state whose economy is going to continue to trudge along, to one that is on the verge of an unprecedented economic turnaround. If it makes such a huge difference, why not at least mention it? While the report may have been drafted while the fate of the state's RTW law was still up in the air, BBER had already done the work and could have easily mentioned  its potential effects. And now that RTW is officially law, BBER is still promoting the Economic Outlook that doesn't include it. And is they did happen to include the impact of RTW in this year's report, and just forgot to mention it, that means the employment forecast for West Virginia didn't change from last year, implying either that RTW had no impact, or that West Virginia's economy went completely south from last year to this year.

If BBER and other advocates of RTW were confident in their promises about the policy, one would think they would be eager to incorporate it into their official Economic Outlook report, and travel the state telling everyone about the tens of thousands of jobs that are coming. But BBER and other RTW fans aren't very eager to do so. Instead of being transparent and accountable to the claims made to get RTW passed, those claims are being ignored. Is it believable that West Virginia is poised to lead the nation in job growth the next five years? No, but that was the claim made to get RTW passed. And now that it is law, those promises have been forgotten.

 -- via my feedly newsfeed

Two must read opeds on the Trump tax plan [feedly]

Two must read opeds on the Trump tax plan
http://jaredbernsteinblog.com/two-must-read-opeds-on-the-trump-tax-plan/

There are a few must-read opeds out there today on the administration's tax plan.

I found this first one to be extremely resonant as it's just a bucketful of common sense from an entrepreneur who lives in the real world, as opposed to the world of the DC tax cut debate, where, as former Treasury Secretary Larry Summers strongly argues, falsehoods flourish.

Marcus Ryu, co-founder of a successful software company (Guidewire Software), writes:

As an entrepreneur myself and a friend to many others, I know that lower tax rates will not motivate more people to start companies. People start companies for many reasons: a compelling idea, ambition for fame and fortune, a desire to be one's own boss, frustration with one's employer. I have never heard someone say, "I would have started a company, but tax rates were too high" or "I wouldn't have started this company, but then George W. Bush cut tax rates, so I did."

He goes on to point out that the tax code is already plenty friendly to those who would start companies, with privileged rates on capital gains and (as Summers stresses) the ability to largely write off the costs of capital investments.

Moreover, as I and other have repeatedly argued, investment capital is uniquely cheap right now, such that Ryu argues that (my bold):

…lowering the corporate tax rate isn't going to make us create jobs any faster. What [it] would do is increase our post-tax profitability, which effectively transfers money from the federal government to our shareholders. One consequence of this would likely be a one-time increase in our stock price, but with no impact on our operations or employment plans. In theory, this could have the benefit of making it easier to raise cash by issuing more stock to the public, but with interest rates at historical lows for years, American corporations have had no trouble getting capital.

Both Ryu and Summers then stress that wasting trillions in lost revenue will make it even harder than it is already to make the necessary public investments that are going wanting as we speak, in physical (infrastructure) and human capital. Summers notes that it's a big mistake to jack up "the budget deficit at a time when we should be preparing for the next downturn, for rising entitlement costs and potentially for the need for increased national security spending." Larry's also long advocated for infrastructure investment, and I'd add the damages increasingly linked to climate change to the list of why this is precisely the wrong time to be significantly cutting revenues.

Ryu gets the last word, as he perfectly sums up the absurdity of this proposed plan:

I am an entrepreneur and a businessman, but I am also a citizen. I believe tax cuts that deepen our already severe inequality in income and wealth are not in the long-term interests of any citizens, not even the very wealthy. Extreme inequality is corroding our civil society, poisoning our politics, and undermining our effectiveness as a nation. This is an extremely hard problem to solve, but when you're in a deep ditch, the first thing to do is stop digging.

 -- via my feedly newsfeed

Trump’s two-step: Health care and fiscal sabotage [feedly]

Trump's two-step: Health care and fiscal sabotage
http://jaredbernsteinblog.com/trumps-two-step-health-care-and-fiscal-sabotage/

I wanted to bang out a quick note tying a few points together regarding health care and tax policy.

When President Trump said yesterday that his new health care executive order directing agencies to allow people to buy health coverage that doesn't have to meet ACA standards "will be costless to the government," he was surely wrong. This is especially the case when you add in his decision to stop paying cost-sharing reductions (CSRs), or subsidies to insurers to lower the costs of coverage to low-income policy holders.

This may seem counterintuitive. If insurers can offer lower-standard (i.e., cheaper) coverage, and if the government can cease paying a subsidy that was to amount to $9 billion next year, why would the government face higher costs?

Because as long as the ACA's premium subsidies remain in place (income-based subsidies that offset the cost of coverage in the nongroup market), destabilizing insurance markets by raising insurers costs (ending CSRs) and invoking adverse selection (the new EO) will lead to more, not less, government spending on health care. I'll unpack that in a second, but this is a consistent tactic in Republican slash-and-burn health-care policies: the ignoring of risk-pooling as a cost control.

As CBO recently noted, participating insurers are "still required to bear the costs of CSRs even without payments from the government." So, premiums for the benchmark "silver" plan would quickly rise, they estimate, by 20 percent. "When premiums for silver plans increased under the policy, tax credit amounts per person for purchasing insurance in the nongroup market would increase because the credits are directly linked to those premiums." This dynamic would add, they estimate, $200 billion to the deficit over a decade.

To the extent that the EO allows healthier people to enroll in plans that don't comply with ACA standards, this too leads to higher premiums for the less healthy population now left behind in the diluted risk pool. If that's the case, their premium subsidies would have to rise as well.

Now, consider these changes in tandem with Trump and the Republicans' plan to add maybe $2 trillion to the deficit through their big, wasteful, regressive tax cut.

In other words, while they're busy simultaneously sabotaging health care markets with one hand, they're cutting off the future resources that will be invoked by that sabotage with the other hand.

It could be a diabolical scheme; it could be just ignorance. Most likely, it's just a manifestation of the basic mandate from their wealthy donors to cut taxes and shrink government. But it's very clear what it isn't: representative governance that meets people's needs in a fiscally responsible manner.

 -- via my feedly newsfeed

Links for 10-13-17 [feedly]

Links for 10-13-17
http://economistsview.typepad.com/economistsview/2017/10/links-for-10-13-17.html

• Rethinking Monetary Policy in a New Normal - Lael Brainard
• Independent Workers and Policy: Krueger's Moynihan Lecture - Tim Taylor
• The ubiquitous Spanish dollar—a photo essay - Moneyness
• Ten years after the crisis: Looking back, looking forward - VoxEU
• Monetary easing and the Bank of Japan's balance sheet - VoxEU
• Just how tight is the U.S. labor market? - Equitable Growth
• Richard Thaler, Nobel laureate - VoxEU
• The Lost US Lead in Education - Tim Taylor
• We're About to Fall Behind the Great Depression - The New York Times
• Hassett's Evidence on Transfer Pricing and the U.S. Trade Deficit - EconoSpeak
• Trade effects of deep agreements - VoxEU
• Quantifying the effect of the Bank of Japan's equity purchases - VoxEU
• Long-Term U.S. Treasury Bonds Have Lost Their 'Specialness' - NBER Digest
• Minutes of the Federal Open Market Committee - The Fed

 -- via my feedly newsfeed

Paul Krugman: Let Them Eat Paper Towels [feedly]

Paul Krugman: Let Them Eat Paper Towels
http://economistsview.typepad.com/economistsview/2017/10/paul-krugman-let-them-eat-paper-towels.html

"The betrayal and abandonment of three and a half million of our own people":

Let Them Eat Paper Towels, by Paul Krugman, NY Times: The situation in Iowa remains horrifying. More than a third of the population has been without clean water for three weeks, and waterborne diseases appear to be spreading. Only a sixth of the population has electricity..., health care system is a shambles, and sheer hunger may be a problem in some remote areas.

Fortunately, the federal government is going all out to aid its citizens in distress..., while praising the often heroic efforts of Iowa residents to help themselves. And generous aid, he promises, will continue as long as it's needed.

O.K., I lied. The dire situation I just described is in Puerto Rico, not Iowa (which happens to have just about the same number of U.S. citizens). And my upbeat portrayal of the federal response ... is the opposite of the truth. What we're actually witnessing, in effect, is the betrayal and abandonment of three and a half million of our own people. ...

From the beginning, Donald Trump — who literally seems to think that he deserves praise for throwing a few rolls of paper towels into a crowd — has suggested that Puerto Rico is responsible for its own disaster, and he has systematically denigrated the efforts of its people to take care of one another. ...

Meanwhile, it took almost three weeks ... before Trump asked Congress to provide financial aid — and his request was for loans, not grants, which is mind-boggling when you bear in mind that the territory is effectively bankrupt.

And then came Thursday morning... Trump ... appeared to threaten to cut off aidfrom the Federal Emergency Management Agency and the military. ...

The simple fact is that millions of our fellow citizens are facing catastrophe. How can we be abandoning them...?

Much of the answer, no doubt, is ... race. Puerto Ricans would doubtless be getting better treatment if they were all of, say, Norwegian descent.

But let's be fair: Trump is also working ... to destroy health care for millions of other Americans, many of them working-class non-Hispanic whites — the very people who voted for him... I wouldn't go so far as to call him an equal-opportunity monster — he clearly has a special animus toward minorities — but his self-centeredness and complete lack of empathy extend quite widely.

Whatever the precise mix of motives, what's happening in Puerto Rico is utterly shameful. And everyone who enables the regime perpetuating this shame shares part of the guilt.

 -- via my feedly newsfeed

Nominating Kevin Warsh as Fed Chair would be the latest way Trump reneged on promises to put workers’ interests over financial elites [feedly]

Nominating Kevin Warsh as Fed Chair would be the latest way Trump reneged on promises to put workers' interests over financial elites
http://www.epi.org/blog/nominating-kevin-warsh-as-fed-chair-would-be-the-latest-way-trump-reneged-on-promises-to-put-workers-interests-over-financial-elites/

A consistent drumbeat in Donald Trump's campaign for the presidency was a promise that he would stand up for the American working class against financial elites who had rigged policy to enrich themselves, a message that clearly resonated with some voters. He has reneged on this commitment in virtually every area of public policy, including providing better health care coverage than Obamacare, crafting better trade agreements, making sure tax cuts go to the middle class, and standing up for workers' rights at work.

This month, workers who supported Trump may see another betrayal. It has been reported that Trump may pick Kevin Warsh, who married into a billionaire family, to replace Janet Yellen as the next Chair of the Federal Reserve Board of Governors (BOG). Decisions made by the Fed's BOG are extraordinarily important for American workers. In recent years, pressure has built for the Fed to begin applying the brake to America's economic recovery by raising interest rates. The rationale for this is that the Fed must slow growth to tamp down inflationary pressures. Warsh has consistently been on the side advocating for slowing growth to fight inflation. But these inflationary pressures appear nowhere in either wage or price data. And if the Fed hits the brake prematurely, millions of Americans could lose opportunities to work, and tens of millions could see smaller wage increases.

One underappreciated aspect of raising interest rates is that they will put upward pressure on the value of the U.S. dollar, and this stronger dollar will make U.S. exports less competitive on world markets while making foreign imports cheaper to American consumers. This will in turn lead to rising trade deficits which stunt growth in manufacturing employment. Warsh knows about this argument, but he just doesn't really care.

"I would say that the academy's view, the broad view of folks at the IMF and economics departments at elite universities, is that if only the dollar were weaker, then somehow we'd be getting this improvement in GDP arithmetic, we'd have an improvement in exports and we'd be getting much closer to trend. That's not a view I share. My own views are that having a stable currency, now more than ever, provides huge advantages to the U.S. The U.S. with the world's reserve currency is a privilege, but it is a privilege that we can't just look to history to remind us of; it's a privilege we have to earn and continually re-earn. And so it does strike me that those that think that dollar weakness, made possible by QE as one channel for QE, is the way to achieve these vaunted objectives are going to be sorely disappointed."

Read more

 -- via my feedly newsfeed