Economy & Budget

Dodd-Frank needs to be amended to stop another meltdown

A lot of what’s in Dodd-Frank was hotly debated two years ago, but there was nearly unanimous agreement in Congress that we had to make sure taxpayers would never again have to bail out a too big to-fail bank.     

Just before the financial crisis, the largest banks’ assets amounted to 43 percent of the U.S. economy. At the end of 2011, the five largest banks’ assets had increased to 56 percent.


Minimum wage myths that keep our teens out of work

Here we go again. In a sure sign that it’s an election year, advocates for a higher minimum wage have renewed their efforts to make President Obama’s promise of a $9.50 federal minimum wage come true. In a recent op-ed, the union-backed Economic Policy Institute (EPI) chimed in, re-hashing the familiar progressive case that labor costs don’t factor in to hiring decisions. 

Ironically, both EPI and President Obama have supported a higher minimum wage while simultaneously lamenting the current lack of employment opportunities for young adults. The evidence suggests that accomplishing that second goal means giving up on the first.


The dynamics of market credit for low end consumers

A recent Wall Street Journal article examined how the Feds use of low interest rate policies has failed to reach those in need the most. Aptly calling it the “credit divide,” the article finds that “Fed officials have been frustrated in the past year that low interest rate policies haven’t reached enough Americans to spur stronger growth, the way economics textbooks say low rates should.”  That conclusion is of no surprise to many, especially to the 73 million unbanked and underbanked Americans who don’t even figure into the Feds’ equation. That’s because extending credit to these individuals has never been seen as a meaningful contributing factor to the overall health of the economy. Sure there have been special initiatives like the FDIC’s small dollar loan program a few years back, which by all measurable accounts failed. Not because banks weren’t willing to participate in the pilot program, but at the end of the day, without FDIC incentives banks simply couldn’t make money.


Defense industry, strategy at major crossroads

The U.S. defense industry faces as much uncertainty in the next six months as any time since the Berlin Wall fell.

Unsteady attempts by lawmakers to avoid sequestration now make hundreds of billions of dollars in debilitating federal budget cuts a real possibility. And there is the November election, offering binary choices for voters and little hope of long-term resolutions of the issues dearest to the defense industry.
Essentially, the defense industry is losing control of its future. The high-volume alert from industry officials of hundreds of thousands of layoffs if sequestration happens is a hard-to-miss sign that this cyclical business is in the midst of profound transformation.


Addressing fiscal challenges and growing the economy

Federal Reserve Chairman Ben Bernanke’s testimony to Congress could not have been any clearer. In his prepared remarks for his Senate testimony Tuesday, he said “The most effective way that Congress could help support the economy right now would be to work to address the nation’s fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery. Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence.” In this regard, considering that 2012 is an election year, it’s hard to be optimistic that Congress will soon be following the Chairman’s advice.


Congress has unfinished business on the transportation front

After almost three years of delay, Congress recently passed a new surface transportation authorization bill, called Moving Ahead for Progress in the 21st Century or MAP-21. There is much to like in the new bill, both in its substantive provisions and in the process by which it was finally enacted. MAP-21 incorporates important first steps toward the implementation of key recommendations of the Bipartisan Policy Center (BPC) on performance management, program consolidation, and expansion of TIFIA credit support.


January tax increase more than just peanuts

Remember the Peanuts cartoon strip where Lucy tells Charlie Brown that she’ll hold a football while he kicks it? Charlie Brown refuses at first, not trusting Lucy. But, then Lucy would say something to persuade Charlie Brown to change his mind. And every time Charlie Brown would sprint to kick the ball, Lucy would pull the ball away, sending Charlie Brown flying into the air, landing on his back with a thud. The comic ends with Lucy pointing out to Charlie Brown that he never should have trusted her in the first place.


An actuarial ombudsman for the public

Although the Supreme Court upheld the Affordable Care Act (ACA), it’s still unclear whether we can truly afford the provisions in the law. Congress passed, and the President signed, the ACA with the promise that it wouldn't add to the federal deficit. Even after the Supreme Court decision, however, the only true debate now is over how much it will add to the deficit.


The Farm Bill fiscal cliff

In addition to the expiration of the Bush tax cuts and looming sequestration required by last year’s Budget Control act, the country is rapidly approaching another fiscal cliff in regard to agriculture. We reach its edge on September 30th, if no agreement is in place to reauthorize or extend the current Farm Bill that expires on that date. Though its price tag is not of the same order as its brethren, the impact could echo across rural America and through our local grocery stores.