The Progressive Case for Abolishing the Corporate Income Tax
Reform of the corporate income tax is shaping up to be one of the big issues facing Congress in 2017. Republicans are pushing for big cuts in the corporate tax rate. Most observers seem to assume that conservatives and progressives will be at swords points over those cuts, but they should not be. There is ... Read more
Is US Fiscal Policy About to Go Procyclical, Yet Again? How Can We Tell?
As 2017 begins, the US economy is in the middle of a boom, or at least a boomlet. The official unemployment rate is at or below its target level, stock market indicators are hitting all-time highs, and the Fed is starting to get serious about raising interest rates. All this is reflects the expectation of ... Read more
How Occupational Licensing Undermines Labor Fluidity
A healthy economy requires a fluid labor market. Even when total employment and output are stable, the labor market is in constant motion. Jobs disappear when firms close or downsize. Other jobs appear when new firms open or old ones expand. People move freely from one job to another in search of career advancement or ... Read more
Does the Social Safety Net Provide Enough Incentive to Work?
One of the most common criticisms of social safety net programs is that they discourage work. As House Speaker Paul Ryan has put it, they risk becoming a “hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” ... Read more
The Case for Breaking Up Too-Big-To-Fail Banks
The presidential campaign has brought new attention to the problem of banks that are too big to fail (TBTF). As everyone agrees, the largest banks are bigger than ever. As the following chart shows, the share of all bank assets held by the four largest banks rose from 33 percent in 2007 to 41 percent ... Read more
The Geithner-Summers Plan Is Worse Than You Think
The Geithner-And-Summers Plan (GASP) to buy toxic assets from the banks is rightly scorned as an unnecessary give-away by virtually every independent economist who has looked at it. Its only friends are the Wall Street firms it is designed to bail out. In an earlier article, one of us (Sachs, FT, March 23) described the ... Read more
As Unemployment Rate Hits a New Low, More Slack Remains in the Labor Market than Meets the Eye
The Bureau of Labor Statistics reported today that the unemployment rate dropped to 5.6 percent in December, a new low for the recovery. For the first time in years, the unemployment rate has fallen to the range of 5.25-5.75 percent that the Fed considers consistent with its mandate to maintain full employment. In the same ... Read more
It’s the American Economy Stupid!
The obituary of the American century has been written, but there are very good reasons to believe that the USA will continue to play a dominant role in the 21st century. This is the first of 2 pieces that examines the resilience of American economic power. There are fundamental economic, financial, political, military and social ... Read more
On Labels, Dove vs. Hawk
I generally follow the convention of referring to monetary policymakers as “hawks” or “doves.” But what really do these terms mean? Are they appropriate or meaningful distinctions? On this topic, Cleveland Federal Reserve President Sandra Pinalto says: I’ve been part of the Federal Reserve for a long time, more than 28 years. Those labels actually ... Read more
Universal Basic Income vs. Unemployment Insurance: Which is the Better Safety Net?
A universal basic income (UBI) and unemployment insurance (UI) are two possible forms of social insurance for an economy in which job loss is a significant risk. Which works better? How generous should either program be? Would a combination of the two be best of all? These are the questions that Alice Fabre, Stéphane Pallage, ... Read more