QUOTE OF THE DAY
AEI: Deconstructing the myth of middle-class stagnation
Don Boudreaux and Mark Perry make several great points in arguing against the theory of multi-decade “middle-class stagnation” in the US:
1. The consumer price index overstates inflation and thus understates wage growth.
2. The focus on wages ignores the rise in fringe benefits. Indeed, “health benefits, pensions, paid leave and the rest now amount to an average of almost 31% of total compensation for all civilian workers according to the BLS.”
3. While income inequality has grown, the gap between the lifestyle of the middle class and that of the rich has closed. Paris Hilton has an iPad, you have an iPad. Or how about air travel:
Today, air travel for many Americans is as routine as bus travel was during the disco era, thanks to a 50% decline in the real price of airfares since 1980. Bill Gates in his private jet flies with more personal space than does Joe Six-Pack when making a similar trip on a commercial jetliner. But unlike his 1970s counterpart, Joe routinely travels the same great distances in roughly the same time as do the world’s wealthiest tycoons.
Public Sector Inc.: Texas Eyes Pension Debt
Close and honest students of public pension policy have long known that pension problems are by no means unique to strong union blue states. The Center for Retirement Research at Boston College maintains the Public Plans Database, a survey of 126 state and local plans across the nation. Out of the ten plans with the lowest funded ratios (all below 50%), half have public sector unionization rates of less than a third (source: unionstats.com).
Texas comptroller Susan Combs has decided to make a signature issue out of pension reform, or at least the need to increase public awareness of the threat posed to state and local finances by pension mismanagement and underfunding. For it happens to be the case that Texas, too, has a pension problem. The State Budget Crisis Task Force estimates that, on a market value basis, major state and local pension plans in Texas are underfunded by $46.3 billion, a sum only slightly lower than New York's (although Texas' unfunded liability on a per capita basis is about $600 less than New York's). Houston currently devotes 13.4% of its general fund spending to pensions, a figure which is projected to rise to 17% by 2017.
Real Clear Markets: Two Governors Propose Radical Tax Reform
The interminable fiscal cliff negotiations in Washington produced almost no substantial reform of taxes despite a general agreement that both our income and corporate tax codes are dense, confusing and layered with perverse incentives that favor some economic activities over others at the expense of overall growth.
"The existing tax code makes compliance difficult," IRS Taxpayer Advocate Nina Olson recently wrote, "leaving many [taxpayers] unaware how their taxes are computed and even what rate of tax they pay. It enables sophisticated taxpayers to reduce their tax liabilities and...it undermines trust in the system."
Just weeks into the new year, however, two governors have decided to raise the stakes in the debate about tax reform in America by proposing to dramatically reshape their state tax systems. Within days of each other Louisiana's Bobby Jindal and Nebraska's Dave Heineman recommended eliminating their states' personal and corporate income taxes, major sources of revenues in both states, and replacing the lost proceeds with additional sales tax revenues (Jindal also wants to dispose of his state's franchise tax). Both proposals are designed to be revenue-neutral, that is, to generate enough new revenue to replace what the cuts with forego.
Bloomberg: United States of Crisis Seen Costing Jobs, Wasting Money
With the stroke of his pen the day after New Year’s, President Barack Obama extended a $5 billion farm-subsidy program that he opposes and many farmers say they no longer need.
The day before, the U.S. Senate and House -- where there is broad agreement that the direct farm payments program should be scrapped -- both voted to keep the money flowing as part of a last-minute agreement to avert most of more than $600 billion in automatic tax increases and spending cuts slated to take effect this month.
The story of how an agriculture program widely seen as outdated lived to see another day in a capital obsessed with budget-cutting highlights the unintended consequences of the dysfunction that has taken hold in Washington. Obama and congressional Republicans have settled into what economists, government officials and lawmakers from both political parties agree is a damaging pattern of governing by crisis, to the detriment of economic growth, the government’s standing at home and abroad, and the nation’s fiscal health.
Investor's Business Daily: Obamacare Bars Expansion of Best-Performing Hospitals
While ObamaCare highlights and rewards physician-owned hospitals for their high patient value, the law also effectively bars any more from ever being built. Provisions withhold Medicare funds from any physician-owned hospital built after 2010.
That was a big victory for traditional hospitals, which claim their physician-owned rivals don't take as many low-paying Medicaid patients and thus are unfair competition. For years the AHA and the Federation of American Hospitals lobbied Congress to stop the expansion of physician-owned hospitals.
New York Times: Kansas Considers Ending Income Tax
President Obama stood on the steps of the Capitol in Washington on Monday afternoon and laid out an expansive liberal agenda for the nation. Inside the Kansas State Capitol here this week, Gov. Sam Brownback and Republican legislators have been drafting what could be a blueprint for the other side.
On Wednesday, lawmakers received a bill to inch the state closer to eliminating income taxes, a centerpiece of a broad legislative vision that many in the Republican Party here hope will serve as a model of conservative governance for other states, if not the nation, to follow.
CARTOON OF THE DAY