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Occupy Ourselves!

October 26th, 2011 . by economistmom

occupy-wall-street-20-oct-2011-cropped-proto-custom_28

(photo from Talking Points Memo)

So what is this Occupy Fill-in-the-Blank movement all about?   I’ve been hearing the words “openness,” “honesty,” “engagement,” “dialogue,” “listening,” “attention,” and “responsibility” a lot.  Funny that these are words one often hears in relationship counseling or personal therapy sessions.  And that’s no coincidence.  Like the situations when we are having troubles in our relationships–our interactions with others–often we learn that the first place we have to look is within ourselves.  What’s our own role in this mess of a relationship?  We may want to pull our hair out over the bad behavior of others and blame them for our troubles, but usually at least part of the blame lies within ourselves, in our own part of the interaction and how we did or did not react to what the “other” did or did not do.

And that’s why I started thinking that the Occupy Fill-in-the-Blank movement should start with “Occupy Ourselves.”  I wrote about it this way in my latest column in the Christian Science Monitor (the online version now available here):

What started as the “Occupy Wall Street” demonstration has turned into an “Occupy fill-in-the-blank” movement – with the blank being anything we blame for our own economic troubles.

The main target seems to be the vaguely defined “1 percent” – that tiny minority of the wealthiest individuals and biggest corporations, the only ones those with economic and political power seem to serve. So the Occupy movement targets the big banks – the culprits that got us into the financial crisis. Or the millionaires, because income inequality is at an all-time high. Or Congress, the lobbyists, and others in power who have failed to do good. All of them – it’s their fault.

It’s not that the outrage isn’t justified. Policymakers catering to the oil and gas industry, to Wall Street, and to the rich and powerful deserve part of the blame. So do banks, ratings agencies, regulators, and others who set the stage for the financial crisis that triggered the recent ballooning of America’s debt. And as the wealthy have gotten wealthier, policymakers have chosen to only reduce their tax burdens.

Meanwhile, policymakers seem to care much less about the poor. The share of Americans living in poverty has steadily increased over the past decade to more than 15 percent – the highest percentage since 1993 and approaching where it was when LBJ launched the nation’s “war on poverty.” How is that fair?

But we also have to recognize that our economic problems began long before the financial crisis and that the boundary between the wealthy 1 percent and the 99 percent that the protesters claim to represent isn’t so crisp. Those big subsidies to the oil and banking industries also benefit the rest of Americans through lower gasoline prices and cheaper credit. And the majority of American voters went along with politicians who proposed very expensive deficit-financed tax cuts and deficit-financed prescription drug coverage, even though our young people – the very core of the Occupy movement – are the ones who will be stuck with the bill.

We all had a role in this, not just that 1 percent.

If there is a “change we believe in,” we can’t just complain about the status quo. We have to spell out the better life we want and the trade-offs we’re willing to make to get there.

These are difficult trade-offs we each need to contemplate. Doing better for the other 99 percent of us requires real money, and that money has to come from somewhere. Are we willing to steer more federal funds to the most effective forms of spending in terms of both short-term stimulus and longer-term economic growth – policies that would also benefit Americans more broadly – and away from the less effective, less beneficial forms?

Would we be willing to receive less generous benefits from Social Security or Medicare or have our tax deductions reduced? Would we be willing to let go of our portion of the Bush tax cuts rather than insist that only millionaires and billionaires need to sacrifice theirs? And most important, if we want our “occupying” to catalyze real change, would we be willing to speak up loud and clear about our willingness to make these specific trade-offs to our policymakers?

In the end, it’s easy to occupy Wall Street and protest what’s wrong. Far harder is to occupy ourselves with the tough choices that could move America away from its crisis path and toward surer footing as the world’s leading economy.

That’s the protest message we need to hear.

Some of the same idea comes through in this interview I gave to Talking Points Memo’s Kyle Leighton, in a column titled “Bipolar Inequality” (a phrase I accidentally coined while sitting in the Milwaukee airport on the phone with Kyle; apparently sleep deprivation sometimes inspires my creativity):

Diane Lim Rogers, Chief Economist at the fiscally hawkish Concord Coalition, made similar points about the more reckless economic policies of the past decade: Much of the distaste with both Washington and Wall Street comes back to fact that DC is simply unwilling to change course.

“The difference is that during the Clinton years the rising tide was lifting all boats,” Lim Rogers said in an interview with TPM. “Low-income households were still doing better. Even then, the rich did really well, despite their taxes being raised.”

But what’s different now is that income inequality isn’t a political tenet of the left: it’s truly hurting people. Lim Rogers said the poverty rate is actually of more concern than the rich doing better given the circumstances.

“The outrage is not that the rich are richer,” she said. “It’s that the poor have gotten poorer — the inequality has become bipolar.”

Which could help explain why when OWS [Occupy Wall Street] provided the spark, many Americans didn’t discount the movement as disaffected liberals who have no real point: it’s a real issue borne out by the numbers…

While Gallup showed that only 22 percent of Americans considered themselves supporters of OWS, other polls have shown larger amounts of support. Because, as Lim Rogers points out, the movement has centered on a more inclusionary focus.

“As the definition of the rich keeps shrinking, the movement feels like it gets more spirited,” she said. “OWS is getting the support of most americans, because how can you disagree with the fact the top 1 percent has done well, but that poverty is increasing. I’m not surprised that OWS is doing well, and I think it’s justified. What Americans may not have a grasp of is that we are all part of the problem, because we continue to support politicians that support these policies.”

My point is that even those of us who are not in the top 1 percent of the income distribution may actually benefit from and at least implicitly support the policies that are perceived as “those policies that cater to the top 1 percent.”  And the policies that we think are letting down just the bottom 99 percent are actually letting down all 100 percent of us.  It’s not ever going to be as easy as neatly sorting out the blame vs. the burden into the 1 vs. 99 percent.  We’ll have to sort it out within each of ourselves first.

(Like those “protesters” in the photo above appear to be doing, actually.  Just Say “Om.”)

A Good “I Told You So” Book

October 13th, 2011 . by economistmom

lost-decades-book

If you want a great explanation about how everything fell apart over the past decade and how we’ll still be struggling to recover over the next decade, get yourself a copy of this book:  “Lost Decades: The Making of America’s Debt Crisis and the Long Recovery” by Menzie Chinn (now a professor at U. of Wisconsin and co-author of the amazing Econbrowser blog, then one of my colleagues at the Council of Economic Advisers at the end of the Clinton Administration and first months of the Bush Administration) and Jeffry Frieden (a political scientist at Harvard).  I find this account absolutely riveting; even though I already knew a lot of the main plot, I’ve learned a lot more about the underlying subplots and the most significant (good and evil, smart and foolish) characters.  And coming from Menzie, the whole real-life story has this wonderful, reflective, melancholy “insider” perspective.  I read it as screaming  “I told you so.”

The last chapter is called “What Is to Be Done.”  If those taking part in the outrage of the “Occupy___” movement want to bring some heavy artillery in terms of policy substance into their demands, this is a good place to start.

If you’re in the DC area, both of the authors will be talking about their book at the IMF tomorrow (Friday) afternoon, and I’ll be one of the discussants.  Nobel laureate George Akerlof is moderating.  (Not bad, huh?!)  RSVP to attend the (free) event here.

Time to Rally for Sane Tax Policy!

September 29th, 2011 . by economistmom
The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Moneybrawl - The Extinction of Subway, Bill O’Reilly & the Super Rich
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

I wish I had even a fraction of the talent that Jon Stewart and Stephen Colbert–the “sanity ralliers”–have in explaining tax and budget policy in engaging ways. The Jon Stewart segment above is my latest favorite, but here’s a great one by Colbert on the “Buffett Rule.” In my Tax Notes column this week on “Evolved Tax Policy,” I argue that as our economy grows and changes shape over time, so should our tax policy. Why should we use our experience in the past to guide our policymaking more than our hopes and expectations for the future? How do I wish tax policy would better “evolve?” Here are a few ways I listed in my column (see the full column–if you are a Tax Notes subscriber–for more details):

Here are some forms of tax policy evolution we could use right now:

    1. recognizing that expanding the economy via tax policy isn’t as simple as cutting taxes and that tax cuts involve costs as well as benefits;

    2. allowing smart tax policymaking to at least occasionally trump clever tax policy politics;

    3. acknowledging that Wagner’s Law — which holds that the public sector is a luxury good — may apply, suggesting that the optimal size of government and hence the optimal level of revenue/GDP grow over time with the economy; and

    4. realizing or recognizing that because part of that growing role of the public sector may be the redistributive role, especially if wealth income inequality increase with aggregate income growth, the progressivity of the tax system may need to increase over time to partially compensate.

What is an example of how we’re NOT “evolving” on tax policy?  The fact that proposals for “flat taxes” seem to be back in vogue.  Take Republican presidential candidate Herman Cain’s “999 Plan.” A reporter called me about it, which was the only reason I went to the Cain website to check it out for a few seconds, which was all it took to “get” what his proposal is basically about:  (i) switching to a consumption-based tax system that exempts income from capital–which on its own is “regressive”; (ii) switching to a single (”flat”) marginal tax rate schedule–which on its own is (also) “regressive”; and then (iii) switching to a not-just-double-but-triple tax of consumed income (instead of saved income) through the 9 percent business tax (exempting capital income) and the 9 percent sales tax (which naturally exempts savings) that are layered on top of the 9 percent income tax (which exempts capital income as well)–which means all that regressivity I already listed is tripled!  Where did the 9 percent rates come from, I was asked by the reporter–and would it be revenue neutral?  My response:  “probably because 9 is one digit long” and theoretically, yes, it’s possible that a triple tax on consumed income with no or few exemptions which has an effective rate of 9+9+9 or 27 percent could indeed be revenue neutral.  (From Cain’s description of the 999 base, it’s not clear what is exempt other than charitable deductions–oh, and all of capital income, of course.)

I don’t know if I’ll feel compelled to say anymore about the Cain tax plan unless the candidate actually seems to have a decent chance of getting the Republican nomination, but on the way to seeing if that happens I hope people recognize how insane his tax plan is (without needing any detailed analysis).  This is one plan where my biggest reaction to the plan is not that it doesn’t raise enough revenue.  Like I said, theoretically it could, but why would we ever want to do it that way?

It’s sort of an example of what I called “Neanderthal tax policy” in my Tax Notes column.  So please don’t take it seriously.  Yeah, I know–it’s hard to believe I can say you should take the guys from Comedy Central–Jon Stewart and Stephen Colbert–more seriously than some of these presidential candidates when it comes to their wisdom on tax policy.  But you should.

If Only REINing in the Deficit Were As Easy As RAIN

September 8th, 2011 . by economistmom

rainfall-totals-noaa-rain-map-090811-600x212

Just had to “tweet” that!  Mainly wanted to combine a complaint about the rain and a link to my Tax Notes column (reprinted on the Concord Coalition site, here) that argues that the first easy thing the debt limit deal’s “super committee” could do is commit to strict pay-as-you-go rules on the Bush tax cuts–and on other expiring tax cuts and on spending as well, by the way, but the biggest difference this would make in on tax policy.

Committing to pay-go rules on the Bush tax cuts wouldn’t be so hard in terms of making tax policy.  I explain in my column that there are three main ways we could get there–each with their economic and political pros and cons:

1. Do Nothing. Allow all expiring tax cuts to expire as specified under current law. That would mean reverting to Clinton-era marginal tax rates. (Hmmm, what was so bad about those tax rates for our economy?)

2. Do It Big. Extend some or all of the marginal tax rates under the Bush tax cuts, but fully offset the costs of extending the low rates by broadening the tax base and reducing some tax expenditures (for example, limiting itemized deductions or reducing the exclusion of employer-provided health benefits). This is the fundamental tax reform approach.

3. Do It to the Rich. Extend some or all of the Bush tax cuts — particularly those that affect middle-income taxpayers (lower tax rates, child tax credit, marriage penalty relief) — and fully offset the costs by imposing an extra tax on the very rich, such as a surtax on households with incomes in excess of $1 million.

I admit that’s still not as easy as rain, but it’s also far easier than the super committee having to do full-blown fundamental tax reform within the next few months.  And not being able to do all of fundamental tax reform right now isn’t a reason to avoid committing to a budget rule that would encourage smart and fiscally-responsible tax reform in the future.

If We Can’t Laugh About It…

July 20th, 2011 . by economistmom

debt-ceiling-crisis-cartoon
(Cartoon by Marshall Ramsey of Creators Syndicate.)

…then all we’d have to do is cry! For your amusement (just try to smile!), here’s a collection of “budget and deficit cartoons” put together by U.S. News and World Report. I found it via a link on this blog post by Leslie Marshall discussing what the new CBS News poll tells us–and why we should be a bit depressed about it and need cartoons like this to cheer us up:

To read the polls is not only confusing, but it shows how confused we the people are. Some polls show Americans want to cut spending, but they don’t want to raise taxes. Other polls show a majority of Americans want the Bush tax credits to end for the wealthy. And after Rep. Paul Ryan put forth his machete to Medicare, he was booed at town hall meetings, and a Democrat won a congressional seat in a district which had been a Republican stronghold for decades…

It sickens me when I hear the GOP talk about leaving something for our children and future generations when their proposals cut more education and Medicare and Social Security, making those programs a memory for our children. And without them, our children will be financially strapped, taking care of sick and elderly parents and grandparents.

Here’s another cartoon from the collection I want to highlight (this one by Chan Lowe for Tribune Media Services), because for awhile I’ve been wondering if someone could make a visually-informative video of this taking all the big things off the table–to make this same point:

off-the-table-cartoon-chan-lowe

Being Civilized About Taxes

June 13th, 2011 . by economistmom

civilized-on-irs-building

Here’s my inaugural column for Tax Notes, as reprinted on the Concord Coalition’s website today.  Note that the title of the regular column is “Taxes for a Civilized Society,” but the specific title of the inaugural column is (the very slightly different) “Being Civilized About Taxes.”  At any rate, you can find the whole text of the column (originally published on 6/6/11 in Tax Notes) here (on Concord’s site) without a Tax Notes subscription, and here (on the Tax Notes site) with one.  Next week’s column, scheduled to come out in Tax Notes on 6/20, is all about how reducing tax expenditures is like the “tastes great and less filling” approach to cutting the deficit.  (Learn more about Tax Notes here.)

(Imaginary) Conversations Between Paul Ryan and the President

June 2nd, 2011 . by economistmom

paul-ryan-and-barack-obama

Len Burman and Ruth Marcus have both dreamed up their own fantasized versions of “adult conversations” between House Budget Committee Chairman Paul Ryan and President Obama–or as they both refer to them “Paul and Barack.”  Check them out.  If only our policymakers could be so openly and honestly communicative with each other.

(I maintain this is one important way in which policymaking probably would go differently–and I believe better–if we had more women in charge.  Note that Len’s version, while more truthful than the real conversations, is still more “tit-for-tat” compared with Ruth’s “heart-to-heart” version.)

“Three Stooges”-Style Budgeting

April 1st, 2011 . by economistmom

three-stooges250px-healthywealthy

My boss at the Concord Coalition, Bob Bixby, offers a very unique perspective on how the budget process is going, suggesting it goes beyond “childish.”  (In fact, Bob and I have often remarked to each other that we’re sure that real kids could outdo the adults in providing some pretty common-sense–and not just cute–suggestions on how to solve our budget woes.)  Bob’s set-up for the “Stooges” analogy (check out the video that goes with the blog post for Bob’s further explanation):

Moe, Larry and Curly are fighting in the back seat of the car. No one is in the driver’s seat. As the boys settle down, Curly looks up and says, “Hey, don’t look now but we’re about to be killed.”

Leave it to The Three Stooges to provide the perfect metaphor for what passes as a budget debate in Washington these days.

It appears that we’re headed for a government shutdown in April and a possible default in May all because politicians can’t stop squabbling over a few billion dollars from a small slice of the budget while our overall fiscal policy is headed for a cliff.

I’m not familiar enough with the Stooges’ individual personalities to figure out which of our leaders correspond best to each of the Three Stooges.  Any Three Stooges aficionados out there who also have been paying attention to how our leaders have been behaving in these debates?  Who is Moe?  Who is Larry? And who is Curly?

Oh, and how fitting… it is April Fools’ Day, after all!

Happy 80th Birthday to the Original Economist Mom!

March 4th, 2011 . by economistmom

rivlina_brookings

Today is Alice Rivlin’s 80th birthday!  Alice has been my role model for as long as I’ve been an economist (nearly 30 years if you define my “birth” in that role as when I graduated with my undergrad econ college degree), which is nearly a decade or so longer than I’ve been a mom (my oldest child turns 20 this year).

Alice is a great role model as both economist and mom.  It turns out our birthdays are just two days apart (I turned 49 on March 2nd, which by the way is exactly the day Jon Bon Jovi–another kind of kindred spirit you might say–also turned 49), that Alice’s dad was an scientist and professor like mine, that she grew up in the Midwest, that she’s had a lot of very important economic policy jobs in DC at places I have worked at and still hope to work at (and maybe even rise to) someday, and that she managed all her professional success while raising three kids (two sons and one daughter, which I think is probably energy-equivalent to my three daughters and one son).

What I only learned yesterday when I was looking for Alice’s specific birthdate and came across this more detailed bio about Alice’s personal life was that Alice, just like me, also went through a divorce after a marriage of 22 years which produced several kids.  I have turned to Alice in the past for her advice on my professional path, knowing she had already traveled a similar path with incredible success.  But it seems there might be much more of her wisdom about life in general that I could tap into.

Oh, and we’re both kind of short.  (She “exceeds” me in this respect, too, though.)  ;)

Anyway, when I started this blog nearly three years ago, I thanked Alice for being a great role model and mentor, pointing out that long before I became an economist and a mom and the penned “Economist Mom,” Alice had been the kind of “Economist Mom” I only aspire to be.  The genuine, original Economist Mom.  I’m just a cheap copy.

So Happy Birthday, Alice!  Here’s to the Original Economist Mom. Today in particular I celebrate your life and all your achievements, but you continue to inspire me in so many ways everyday–and not as much for all you’ve accomplished as for who you are.

UPDATE 3/7:  Here’s a photo of the original and copycat Economist Moms from Alice’s birthday party this past weekend:

alice-80th-birthday-party-march2011

Economics in Plainer English

February 1st, 2011 . by economistmom

On Tuesday I am part of panel for the Urban Institute’s “First Tuesdays” event, “What Policymakers, The Public, The Press, and Parents Need to Know About Economics…In 90 Minutes or Less.” I’m pretty sure I’m unofficially responsible for the “Parents” part of the billing.  My official assignment is the part about “the bottom line on how government uses your dollars.”  I’m planning on bringing out my usual EconomistMom analogies between the federal budget and a family budget.  Hope you’ll “tune in” for the live webcast, accessible via the link on the event page.

I’m happy I’ll be speaking alongside my friends Donald Marron and Gene Steuerle as Bob Reischauer plays “Oprah,” and I’m also looking forward to meeting the Economist magazine’s Greg Ip.

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