QUOTE OF THE DAY
MarketWatch: Is union membership a bad deal for workers?
President Obama is a favorite among organized labor. So it’s surprising that next Wednesday the Labor Department will publish data for 2012 showing that during Obama’s first term, the U.S. unionization rate for American workers declined faster than during two terms of President George W. Bush.
Who would have guessed?
President Obama’s first term has been a disaster for jobs. There are only 460,000 more nonfarm payroll jobs today than when he took office.
As the economy grew over the past year, the total unionization rate declined from 11.8% of wage and salary workers in 2011 to 11.2% in 2012. The private sector unionization rate fell from 6.9% to 6.6%, and the government unionization rate dropped from 37% to 35.9%.
Washington Post: Senate Democrats’ budget plan will reopen battle over taxes
Senate Democrats plan to draft a budget blueprint that calls for significantly higher taxes on the wealthy, oil and gas companies and corporations doing business overseas, reopening a battle over taxes Republicans had hoped to lay to rest with the “fiscal cliff.”
For nearly four years, Senate leaders have ducked their legal duty to craft a comprehensive budget framework. Now, however, Democrats see the budget process as “a great opportunity” to pursue additional tax increases — and to create a fast-track process to push them through the Senate, Sen. Charles E. Schumer (D-N.Y.) said Sunday on NBC’s “Meet the Press.”
“There’s going to have to be some spending cuts, and those will be negotiated,” Schumer, the No. 3 Democrat in the Senate, said in an interview after the show. “But doing a budget is the best way for us to get revenues.”
Seattle Post-Intelligencer: Arizona to tax hospitals to pay for Medicaid
Arizona Gov. Jan Brewer has built a political career in standing up to the federal government over everything from immigration to health care. So she surprised almost everyone when she announced last week that she not only plans to push for an expansion of the state's Medicaid program under the federal health care law — she plans to fund it by raising taxes.
A conservative Republican, Brewer is believed to be the first governor to publicly come up with a way to fund the controversial Medicaid expansion. Not even California Gov. Jerry Brown, a Democrat in a state that largely supports the new federal health plan, has figured out how to pay for a boosted Medicaid plan.
Her proposal to add about 300,000 low-income Arizonans to her state's Medicaid plan relies on funding from hospitals through a so-called provider tax. The idea is already used to fund some Medicaid plans in 39 states, but none have tapped it to pay for the federal expansion and many have at least some room to expand their hospital taxes.
Fiscal Times: Why Robots Are Worse for the Economy Than You Think
Paul Krugman has recently taken a keen interest in the rise of robots and automation — an issue that I have been focusing on since the publication of my book on this subject back in 2009.
In a recent post, Krugman says the following:
Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.
I think there is a fundamental problem with this way of thinking: as jobs and incomes are relentlessly automated away, the bulk of consumers will lack the income necessary to drive the demand that is critical to economic growth.
AEI: Is the US government wildly understating the inflation rate?
It’s hard to find much inflation in the US economy right now. As measured by the Labor Department’s consumer price index, prices increased by just 1.7% in 2012. The core CPI, which excludes food and energy prices, rose by 1.9%.
Nor can much inflation be found in an alternate measure, the Commerce Department’s personal consumption expenditures prices index. It rose 1.45% for the twelve months ending last September. Excluding food and energy, it rose 1.58%. Federal Reserve Chairman Ben Bernanke prefers the PCE price index because he believes it better reflects changes in consumer purchasing habits.
But some skeptics say those government-generated statistics are nonsense. The numbers are skewed — perhaps intentionally — to show inflation much lower than what it really is. Instead of 1% to 2% annual inflation, prices have actually been rising at 10% a year, maybe even faster.
Zero Hedge: What The End Of Cheap Oil Means
On the heels of Chris' recent report clarifying the global net energy predicament, he and PeakProsperity.com contributing editor Gregor Macdonald sit down to talk in depth about the broken relationship between energy costs and economic growth.
For much of the twentieth century, the developed world saw a steady march upwards in wages and living standards, due primarily to huge quantities of cheap, high-yielding liquid hydrocarbon. As we find ourselves bumping along the plateau of Peak Oil's apex, suddenly we find that "growth" is a lot harder to come by.
Of course, if you follow the news today, this is not the story you are hearing. Talk of an energy bonanza and imminent energy independence (in the U.S.) are everywhere, thanks to gas fracking and tight oil production. What is missing from the headlines is the cost side of the equation and a blindness towards future demand.
CARTOON OF THE DAY