Eddie Lazear and Rob Portman Try to Communicate

Eddie Lazear and Rob Portman try to communicate with the Washington Times, rather than stick to the administration's message:

House or Senate shake-up likely to end tax cuts By Patrice Hill THE WASHINGTON TIMES October 5, 2006:

Rob Portman, director of the Office of Management and Budget... Council of Economic Advisers Chairman Ed Lazear made a pitch for extending the personal and investment tax cuts, which they believe spurred growth in the economy and stock market.

But they conceded that the tax cuts have not prompted more people to get work and contribute to the economy, while they cut deeply into government revenue and contributed to record budget deficits that have not shown much improvement until recently.

"We do not say the tax cuts pay for themselves," said Mr. Lazear. "The point is that they created a positive environment for income growth" while helping make the 2001 recession shallower than it otherwise would have been....

"We've had 9 percent growth in the stock market this year. ... How fast do you want it to increase?" [Lazear] said. "To my mind, this is solid growth and we're happy with it." Despite the revenue surge this year, the administration is projecting a precipitous drop in revenue growth to 2.4 percent in fiscal 2007, in large part because of generous cuts in the alternative minimum tax enacted by Congress. Also cutting revenue by $17 billion, they said, is the administration's decision to eliminate the telephone excise tax that President Theodore Roosevelt enacted to pay for the Spanish-American War, and to refund some of that tax....

As in past years, Mr. Portman said the White House will ask Congress to approve tens of billions more in spending on the war after it presents its budget in February. Such supplemental spending requests have been criticized as dishonest budgeting by the Committee for a Responsible Federal Budget and other government watchdog groups.

Mr. Lazear said he sees economic growth bottoming out at around 3 percent this year and next. The economy cannot grow as fast as the 4 percent average growth rates attained in the late 1990s, he said, because growth in the labor force has slowed sharply this decade.

"It's a function of the aging work force and slower population growth," he said. Mr. Lazear conceded that the cut in the top tax rate from 38 percent to 33 percent and other Bush tax cuts should have provided an incentive for more people to work, but instead both men and women have been dropping out of the labor force.

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Needless to say, this raises some obvious questions, which I will steal from an anonymous economist:   1. Presumably, these tax increases would apply only to those Americans who survive the additional terrorist attacks that will be brought to fruition because the Democrats control the Congress? 2. Making reference to your comment:  "We do not say the tax cuts pay for themselves," said Mr. Lazear.  Have you by any chance told the President that?  Because he says all the time that the tax cuts paid for themselves. 3. You apparently say that the tax cuts were successful in that "We've had 9 percent growth in the stock market this year.”  But we had faster growth in the stock market after the tax increases of 1993 (which focused almost exclusively on those with the greatest income and wealth, who are the biggest individual players in the stock market).  Can you reconcile those two experiences with your high regard for the tax cuts?

Comments

[Stuart]

Now back the truck up a second...did someone mention using taxes to pay for wars?

[save_the_rustbelt]

The Spanish-American war is over already?

Hey, send some of that income growth out here, the foreclosure auctioneers are dying of exhaustion, too much work.

[anne]

"Also cutting revenue by $17 billion, they said, is the administration's decision to eliminate the telephone excise tax that President Theodore Roosevelt enacted to pay for the Spanish-American War, and to refund some of that tax...."

Oh, be still my heart, that comes to, let me see, little more than a month and a half in what it costs to be occupying Iraq, but who's counting anyway? No matter, we will pay in flesh and blood and psyches and morality and material for the lunatic tragedy in Iraq for decades.

[Ken Houghton]

Can someone please explain "created a positive environment for income growth" in the context of "conceded that the tax cuts have not prompted more people to get work and contribute to the economy"?

[Esq.]

Income growth? What income growth? The new bankruptcy law requires the Office of the United States Trustee (part of the Department of Justice) to calculate the median income for various household sizes of each state. The new numbers came out October 1st.

Here in NJ, the median incomes fell in nominal terms since last year. Data available here: http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm

[anne]

http://economistsview.typepad.com/economistsview/2006/10/paul_krugman_th_1.html

October 6, 2006

Paul Krugman: The War Against Wages
Edited by Mark Thoma

Paul Krugman looks at one war that is being won, the war against wages:

NY Times: Should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages. ...

[C]onsider the latest news from Wal-Mart. Wal-Mart already has a well-deserved reputation for paying low wages and offering few benefits...; last year, an internal Wal-Mart memo conceded that 46 percent of its workers' children were either on Medicaid or lacked health insurance. Nonetheless, the memo expressed concern that wages and benefits were rising, in part "because we pay an associate more in salary and benefits as his or her tenure increases."

The problem from the company's point of view, then, is that its workers are too loyal; ... not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo suggested to deal with this problem was a shift to hiring more part-time workers...

And the strategy is being put into effect. ... Wal-Mart ... wants to transform its work force to 40 percent part-time from 20 percent." Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won't get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, "managers have suddenly barred older employees with back or leg problems from sitting on stools."

It's a brutal strategy. Once upon a time a company that treated its workers this badly would have made itself a prime target for union organizers. But Wal-Mart doesn't have to worry about that, because it knows that these days the people who are supposed to enforce labor laws are on the side of the employers, not the workers.

Since 1935, U.S. workers considering whether to join a union have been protected by the National Labor Relations Act... For a long time the law was effective: workers were reasonably well protected against employer intimidation, and the union movement flourished.

In the 1970's, however, employers began a successful campaign to roll back unions. ... thanks to America's political shift to the right. And now that the shift to the right has gone even further, political appointees are seeking to remove whatever protection for workers' rights that the labor relations law still provides.

The Republican majority on the National Labor Relations Board ... has just declared that millions of workers who thought they had the right to join unions don't. You see, the act grants that right only to workers who aren't supervisors. And the board, ruling on a case involving nurses, has declared that millions of workers who occasionally give other workers instructions can now be considered supervisors.

As the dissent from the Democrats on the board makes clear, the majority bent over backward, violating the spirit of the law, to reduce workers' bargaining power.

So what's keeping paychecks down? Major employers like Wal-Mart have decided that their interests are best served by treating workers as a disposable commodity, paid as little as possible and encouraged to leave after a year or two. And these employers don't worry that angry workers will respond to their war on wages by forming unions, because they know that government officials, who are supposed to protect workers' rights, will do everything they can to come down on the side of the wage-cutters.

[anne]

http://www.nytimes.com/2006/10/02/business/02walmart.html?ex=1317441600&en=78fff88e79def631&ei=5090&partner=rssuserland&emc=rss

October 2, 2006

Wal-Mart to Add More Part-Timers and Wage Caps
By STEVEN GREENHOUSE and MICHAEL BARBARO

Wal-Mart, the nation's largest private employer, is pushing to create a cheaper, more flexible work force by capping wages, using more part-time workers and scheduling more workers on nights and weekends.

Wal-Mart executives say they have embraced new policies for a large number of their 1.3 million workers to better serve their customers, especially at busy shopping times — and point out that competitors like Sears and Target have made some of these moves, too.

But some Wal-Mart workers say the changes are further reducing their already modest incomes and putting a serious strain on their child-rearing and personal lives. Current and former Wal-Mart workers say some managers have insisted that they make themselves available around the clock, and assert that the company is making changes with an eye to forcing out longtime higher-wage workers to make way for lower-wage part-time employees.

Investment analysts and store managers say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent. Wal-Mart denies it has a goal of 40 percent part-time workers, although company officials say that part-timers now make up 25 percent to 30 percent of workers, up from 20 percent last October.

To some extent, Wal-Mart is simply doing what business strategists recommend: deploying workers more effectively to meet the peaks and valleys of business in their stores. Wall Street, which has put pressure on Wal-Mart to raise its stock price, has endorsed the strategy, with analysts praising the new approach to managing its workers. In the last three years, the stock price has fallen about 10 percent, closing at $49.32 a share on Friday.

"They need to be doing some of this," said Charles Grom, an analyst at J. P. Morgan Chase who covers Wal-Mart. It lets the company schedule employees "when they are generating most of their sales — at lunch, in the evening on the weekends."

But Sally Wright, 67, an $11-an-hour greeter at the Wal-Mart in Ponca City, Okla., said she quit in August after 22 years with the company when managers pressed her to make herself available to work any time, day or night. She requested staying on the day shift, but her manager reduced her schedule from 32 hours a week to 8 and refused her pleas for more hours, she said.

"They were trying to get rid of me," Ms. Wright said. "I think it was to save on health insurance and on the wages." ...

[anne]

Thus we find ourselves in the anti-New Deal era, though there is no surprise there. So much for workers, at least they won't still be paying for the Spanish American War though.

[anne]

Notice, by the way, as I am continually reminded, how Republicans from the President to the Speaker of the House of Representatives are repeatedly using the term Joe McCarthy used, the "Democrat Party."

[a different chris]

>the tax cuts have not prompted more people to get work and contribute to the economy

Note that it isn't really a question in their minds that the "environment" is not better, that people shouldn't be looking at the tax advantages and dropping everything to get a job.

It's just that the people are too stupid to behave as they are supposed to.

So they wonder how they can make people behave more like their models, as the models of Economic Man are Not To Be Questioned.

And the reaction is always, let's give them a taste of the whip then!.

And you get the no more SS for you!! stuff and all the other neo-liberal crap.

Christ I can model today's mainstream economists better than they can model me. That's depressing.

[a different chris]

Oh, I forgot to applaud heartily at the death of the telephone tax.

I have this abiding - although not very well grounded in fact - faith that the thinner the tax code gets the better chance we have for progressive government.

But changes like that should be revenue neutral, at the moment, anyway.

[andres]

Hmm. Probably because he doesn't want to get called a Chicken Little, Krugman fails to mention that the last era in which workers' real wages were stagnant or falling was in the 1920's, and that a good deal of the financial crisis of 1929-1933 was caused precisely by the scarcity of consumer demand due to low wages, leading a great many businesses that had borrowed to default.

[dubblblind]

Given the relentless war that Bush and the Rethugs have waged against the middle class the November elections have become, simply put, an IQ test. Are you really as stupid as the Rethugs think you are?