Category Archives: Economy

Keeping the Ladies in Waiting: The Paycheck Fairness Act

Woman's List 2On January 23, 2013 — yes, that’s 2013 — Representative Rosa DeLauro (D-CT3) introduced H.R. 377, the Paycheck Fairness Act.  The House Subcommittee on Workforce Protections has jurisdiction over bills of this nature, and by April 2013 the bill hadn’t moved.  Supporters of the bill filed a discharge petition. As of Tuesday, April 1, 2014 the petition to get a vote on the bill got its 197th signature. (113-1) It is 21 signatures shy of the 218 required.

Discharge petitions are a strategy of questionable value, since depending upon how such maneuvers are analyzed the success rate ranges from about 2% to 9% of all such attempts. [WaPo]

Nor has the idea met with enough support in the U.S. Senate.  As the last signature was being appended to the House Discharge Petition 113-1 in April 2014, Republicans in the Senate were blocking consideration of a companion bill.  [Nation] S. 2199, Senator Barbara Mikulski’s (D-MD) Paycheck Fairness Act was blocked when Senate Republicans refused to lift their filibuster on a 53-44 vote. [rc 103] Senator Dean Heller (R-NV) was among those voting to sustain the filibuster.

Republican opposition to the Paycheck Fairness legislation appears to be a masterpiece of ideological spin.  We, announce the members of the GOP, are really supportive of women’s issues — but government isn’t the answer.

There was this example: “The fact is the Republicans don’t have a war on women, they have a war for women, to empower them to be something other than victims of their gender,” Mike Huckabee said at the Republican National Committee winter meeting in January.” [Nation] Huckabee offers a talking point in which any attempt to assist women (or any other group for that matter) merely serves to create a sense of ‘victimhood’ thus disparaging attempts by individuals to grab their own bootstraps at improve their own economic circumstances. It’s little more than the hoary Moral Hazard Issue, modified and transformed into an excuse to do nothing to help anyone, ever.

And this one:  “All Republicans support equal pay for equal work,” wrote Republican National Committee press secretary Kirsten Kukowski, communications director Andrea Bozek and NRSC press secretary Brook Hougesen in a memo. “And while we all know workplace discrimination still exists, we need real solutions that focus on job creation and opportunity for women.” [Nation]  This might be characterized as the Double Side Step Dance.  Oh, we’re all in favor of equal pay for equal work, but — we need more tax breaks for multi-national corporations, etc. offering more support for those elusive Job Creators.

And these: “Republicans have said that, although they support equal pay for equal work, the bill would increase civil lawsuits. They also say that the bill is unnecessary because discrimination based on gender is already illegal.” [WaPo] Ah, the recurring Republican nightmare, on display with nearly every bill which ever sought to regulate corporate behavior — It will spawn litigation.

The Lily Ledbetter Act was supposed to have done that [TNR]… except it didn’t.  Redundancy is another GOP argument for doing nothing.  The line can be summarized as, “There is no need to improve any employee protections because current statutes already provide enough protection.” This is an argument which neatly avoids the rationale set forth in the legislation which explains the necessity of the proposed improvements.  Witness, the prohibition of penalties for employees who discuss their wages, and the authority of the EEOC to collect data from employers about wages.

And finally: It’s just election year politicking. [NYT] Translation: You’re just trying to make us look bad. If so, it was successful.

So, what might disgorge the Paycheck Fairness Act (equal pay for equal work) from the Congressional bill grinder?

Get Specific:  At town hall sessions, and public Q&A events — Instead of asking “Do you, Congressman Bilgewater or Senator Sludgepump, support equal pay for equal work?” Ask them: What is wrong with prohibiting employers from penalizing employees who discuss their wages or salaries?  What is wrong with allowing the EEOC to collect data on wages and salaries from employers?

If they stammer out that those sound like good ideas, then ask “Why didn’t you support the Paycheck Fairness Act which included those two items?”  Or, if the individual is not an incumbent, ask “Will you support legislation which includes those provisions?”

Get rational: At bottom the Paycheck Fairness Act is of a piece with family finances. [Additional here]  From a previous post:

“The pay gap has some very real economic consequences.   One analysis projects that if the pay gap could be mitigated, and more women could participate in the workforce, we could add about 3 to 4% to our national economy.”

Again, specifics matter.  In Nevada, a woman earns approximately 88 cents for every dollar earned by a man.  Additionally:

“125,402 households in Nevada are headed by women. About 26 percent of those households, or 32,479 households, have incomes that fall below the poverty level. Eliminating the wage gap would provide much needed income to women whose salaries are of critical importance to them and their families.” [NatPart pdf]

Allowing a politician to pontificate about the highly generalized moral hazard of hypothetical victimhood, or rattle on about redundancy and projected litigation only serves to skirt real economic issues faced by real families.  Ask, “What would be the overall economic benefit to Nevada if the $6,319 yearly wage gap between the earnings of men and women were narrowed?”

Playing with the calculator — if only 1,000 of those households in Nevada, headed by women, were to get the same wages as their male counterparts for doing the same job, and that $6,139 gap were closed, the result would be $6,139,000 added to the aggregate demand for goods and services in this state.

Get Out and Vote.

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Filed under Economy, equal pay, Heller, Ledbetter Decision, Nevada economy, Politics, Republicans, Women's Issues, Womens' Rights

Think of the Children

ChildrenSpare me the piteous cries of, “Think of the children and grandchildren!” emanating from the right wing when any allocation of resources is mentioned which could possibly help darn the holes in our social safety net programs.  IT (whatever it might be) will burden them with the horrible no good awful national debt — unless, of course we’re talking about reducing taxes for millionaires, billionaires, oil companies, hedge fund managers, and ….  Nevada’s managed, yet again, to hit the bottom in the Child Well Being category. [RGJ]

One of the nice things about thinking in ideological generalities is that one’s not required to consider the practical, all too real, consequences.  For example, that Nevada ranks 48th in the child well being category in the Kids Count analysis. (pdf)

That would be 48th in overall ranking, 47th in economic well being, 50th in education, 47th in health, and 44th in family/community rank.

These rankings aren’t something to dismiss out of hand. First, the Annie E. Casey Foundation is a private philanthropy based in Baltimore, MD, that specializes in compiling statistics on children’s environments, and promoting cost effective solutions for legislative and community consideration — and it’s been doing this since its inception in 1948.

Nor is the Foundation merely a font of doom and gloom, when speaking of trends in child welfare, they note some progress in the overall safety and well being of children since they started their Data Book project in 1990:

“There also is a positive trend in parental education that benefits kids: A smaller percentage of children live in families in which no parent has a high school diploma — from 22% in 1990 to 15% in 2012. In addition, the teen birth rate is at a historic low and the death rates for children and teens has fallen as a result of medical advances and increased usage of seat belts, car seats and bike helmets.”  [AEC]

So, how did Nevada get into negative territory? In 2008 the number of children in the state whose parents at least 35 hours per week for 50 weeks per year (classified as employment insecurity) was approximately 173,000, or about 26%.  By 2012 that number increased to 226,000 or 34%.  In 2008 there were 54,000 children living in Nevada homes in which at least one parent was unemployed.  In 2012 the number was 79,000, or about 12%.  [AECF]

Measuring by the number of children living in homes in which the family income was less than twice the official federal poverty level and at least one parent was working at least 50 weeks per year (defined as low income working families), Nevada had 68,000 children in that category in 2008, a number which increased to 88,000 four years later. [AECF]

Have we been mentioning that what this state needs are JOBS? Once more, spare me the “we can’t afford it” wailing when we speak to the necessity of maintaining and improving our state infrastructure — and thus creating JOBS.  When the 2007-08 Recession pounded the state of Nevada, Las Vegas lost 1,053 public sector jobs, while the state pared down a total of 2,170. [CEPR] In the Pie/Sky ideological generalities of the right wing this would be a good thing — fewer public employees — but when the brass tacks are counted this means fewer teacher’s aides, librarians, educational special services, kitchen employees, road maintenance workers, parks and recreation employees, police officers, firefighters, and so on. In other words — these aren’t the “bureaucrats” so belittled by the conservatives, they are the people who do jobs which improve communities.

We’ve lost about 4.08% of our state workforce, another 10.77% of our local workforce, and 9.03% of those classified as “state/local” since the Recession. [Governing]

Another grating refrain is the moan that we are “transferring money from the private sector to the public.”   In the rarefied atmosphere of ultra-conservative thinking this means that tax revenue is collected from private sources and used for public services, which is somehow determined to be a “bad” idea.  Since when was it “bad” to have well maintained roads, well stocked libraries, pleasant and useful parks, good schools, safe neighborhoods, responsive fire departments, and all those features which real estate agents tout as part of the “excellent location” of the houses they are trying to sell?

Or, to look at it from the other angle — what effect does it have on a person’s property value to have failing schools, unkempt parks, inadequate libraries, and slow response times from fire and police services?  In this realm, the ultra-conservatives fall easily into the Something for Nothing crowd; they certainly don’t want declining property values, but they don’t want to pay the taxes necessary to keep the value of their property increasing.  They want the assets which factor into their property value — they just don’t want to pay for them.

Private sector employment has done better in the Silver State. Nevada’s climbed up from a dismal 10% unemployment rate this time last year to a 7. 7% unemployment rate as of June 2014. [BLS] That’s a nice 2.3% increase, putting us in the running for the most private sector jobs created in the last year.  If we’d decide to do something about our 149 high hazard dams, our $2.7 billion worth of drinking water infrastructure needs in the next two decades, our $2.9 billion in waste water treatment needs in the same period, our 40 structurally deficient bridges, and the 20% of our roads which are classified as in poor or mediocre condition [ACE] perhaps our employment numbers would be even better?

Perhaps if more parents were working we’d not see the disparity in the numbers of youngsters attending pre-schools?  The number of children from families functioning on less than 200% of the federal poverty level who are not getting some sort of early childhood education increased from 24,000 in 2005-07, to 31,000 between 2010-12.  The number of preschoolers from families in which the income was above 200% of the federal poverty line who were enrolled in some form of early childhood education increased. In 2005-07 about 67% of the kids were not enrolled, a percentage which improved to 60% by the 2010-12 period. [AECF]

The specific indicators on which Nevada’s rankings were based are available online at this location.   As with all compilations, there’s good news and bad news, gaps and spaces.

However, finding indicators of improvement should not divert us from trying to do something about those miserable national rankings.

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Filed under Economy, Nevada politics, Politics

Amodei and the Perils of the Second Question

Amodei 3I lasted for two questions and Amodeian Answers during last evening’s telephone town hall session.  The Second Question I  heard was from “Dorothy from Fernley” asking: “I live in Lyon County, what does the government plan to do to bring jobs…”

The previous post described the nature of any response on offer from Nevada’s 2nd District Congressman, Mark Amodei (R-NV2).  So, imagine the serpentine syntax and the following reply:

Representative Amodei was quick to let the caller know that the House had just passed a Jobs Bill, one that was a “general measure, instead of extending unemployment benefits.”

The Congressman didn’t specify what bill that was, but might have been referring to the Highway Trust Fund bill, or to the Federal Register Act, but those aren’t generally classified as “jobs” bills by the Republican leadership.  The bill to which he was most likely referring was H.R. 4718, amending the IRS code to make bonus depreciation permanent.  The bill “generally” helps businesses, and is an exemplar of Trickle Down in its almost pure form.

The bill passed on an almost  party line vote 258-160. [roll call 404] The Nevada delegation supported the measure. So, what would it do?

One rather brutal way to describe the bill is that it adds some $287 billion to the Federal budget deficit without doing much more than allowing businesses to write off the costs of capital improvements and investments more quickly.  [HuffPo]

If a person is waiting for a job in Yerington, Fernley, or Silver Springs — this bill doesn’t shorten the time. First, the corporation would have to make a capital investment or improvement, and the investment would have to be an expansion, and if it were an expansion, then it would have to expand in Lyon County…. you get the picture.  Describing the bill as “generally” promoting jobs is generous indeed.

More importantly, under the Austerian/Trickle Down Theory of Republican economics this kind of measure is supposed to have an overall stimulative effect.  First, bonus depreciation breaks have been in effect from 2008 to 2013.  Secondly, according to the Congressional Research Service report, (pdf) they weren’t all that stimulative:

“A temporary investment subsidy was expected to be more effective than a permanent one for short-term stimulus, encouraging firms to invest while the benefit was in place. Its temporary nature is critical to its effectiveness. Yet, research suggests that bonus depreciation was not very effective, and probably less effective than the tax cuts or spending increases that have now lapsed.”

It was a bust.  However, it was a tax break and Republicans believe, as an article of faith, that all tax breaks have a stimulative effect on the economy.

Not only was it a bust, but at the moment it is an expensive bust; again according to the CRS analysis:

“If bonus depreciation is made permanent, it increases accelerated depreciation for equipment, contributing to lower, and in some cases more negative, effective tax rates. In contrast, prominent tax reform proposals would reduce accelerated depreciation. Making bonus depreciation a permanent provision would significantly increase its budgetary cost.”

Remember how all those major corporations are forever telling us that the are paying the highest corporate tax rate in the Universe and that they can’t compete with other corporations based in foreign lands?  Well, here’s a tax break they can enjoy:

“Compared to a statutory corporate tax rate of 35%, bonus depreciation lowers the effective tax rate for equipment from an estimated 26% rate to a 15% rate. Buildings are taxed approximately at the statutory rate. Total tax rates would be slightly higher because of stockholder taxes. Because nominal interest is deducted, however, effective tax rates with debt finance can be negative. For equity assets taxed at an effective rate of 35%, the effective tax rate on debt-financed investment is a negative 5%. The rate on equipment without bonus depreciation is minus 19%; with bonus depreciation it is minus 37%.”  [CRS pdf]

Someone has to love the part wherein the capital improvements or investments are financed, the interest is deducted, and the effective tax rate can be a negative — what’s not to love? Except:

#1. The tax break was supposed to be a temporary stimulus for business expansion, with a temporary incentive for business spending.

#2. The way the current bill is drafted it’s going to cost the Federal government about $263 billion in lost revenue — from corporations, not the little guys.

#3. The CBPP informs us: ” Under current law, companies pay far less than the statutory 35 percent corporate tax rate on the profits flowing from those investments.  In some cases, they pay nothing and actually receive a tax subsidy.  Bonus depreciation only increases this favorable tax treatment.”

While the residents of Lyon County, Nevada are waiting for some business to expand and start hiring — the accountants at the corporate HQ of Soakem & Runn, Inc.  are tasked with finding yet more ways they can reduce their federal tax liability.  Therefore, the Lyon County residents must wait for the corporation to take its deductions, decide to use the money saved to expand the business, decide to locate the firm’s new improvements in the county, and take the plunge to build or expand operations.  Please do not hold your breath during this process.

Meanwhile, the extension of unemployment benefits, so disparaged by Representative Amodei have a far more immediate stimulative effect on the economy.

When we were discussing the extension of unemployment benefits back in 2011, the Congressional Budget Office estimated (pdf) that the cost of the extension would be approximately $44.1 billion during the first year. [Roosevelt Inst]  Yes, there is a cost, but the money circulates back into state and local economies.  The Congressional Budget Office estimated more recently that not extending unemployment benefits puts an approximate 0.2% “drag” on the overall economy. [CNN]  The percentage may not sound like much but when we consider that our gross national product is $17,268.7 billion [FRED] that isn’t chump change.

Instead of waiting for Soakem & Runn, Inc. to decide whether to use the new tax break for any expansion, and to determine what kind of expansion that will be, and if it will actually be in the county — Lyon County citizens might pin their hopes more realistically on the continued growth in the American GNP:

US GNP

With all due respect, they’ll have a shorter wait watching the GNP and GDP charts than they’ll have waiting for the corporations to decide how to apply their new tax breaks.  However, there’s more, as Representative Amodei tried to get more specific about Lyon County.

He referred to the need to pass the “Yerington Bill” which would create jobs and passed in the 112th Congress, but not in the present 113th.  Again, we’ll have to speculate that he meant the bill to assist the Pumpkin Hollow Mining operations, [PHM] one which has previously gotten itself mired in partisan politics, wherein an amendment was attached allowing Border Patrol agents to bypass environmental laws they deemed too restrictive.  [LVSun]

Representative Horsford (D-NV4) and Senator Heller (R-NV) are both supportive of the bill so it may have some future… but again the residents of Lyon County will have to wait.   It’s July 16th, and the House is only scheduled to be in session for nine more days until the month long August break, after which the House will have ten working days in September, another two in October, seven in November, and finally another eight working days in December. [House Cal. pdf]  That leaves a total of 36 legislative working days from now until the end of the year.  Again, Lyon County residents might want to just keep watching the GNP and GDP trends.

 

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Filed under Amodei, Congress, corporate taxes, Economy, Nevada economy, Nevada politics, Politics, tax revenue, Taxation

The Economic Idiocy of Immigration Protests

Earlier this month Senator Harry Reid (D-NV) commented on the House Republican refusal to move on the Comprehensive Immigration Policy Reform bill stalled on their side of the Congress:

“Comprehensive immigration reform would have added an average of 121,000 more jobs per year over the next 10 years,” Reid said. “Unfortunately, House Republicans, under the influence of the Tea Party, refused to bring it up for a vote. Their refusal is costing our economy added growth that we need.” [The Hill]

The comment underpins a simple concept:  Refusal to consider comprehensive immigration policy reform comes at the cost of American economic growth.  The figures cited by Senator Reid are fairly common.

“Numerous studies and the nonpartisan Congressional Budget Office found that the Senate’s bill would lead to significant economic growth as immigrants fully enter into our society and economy. Over the next 10 years, the Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744, would increase our gross domestic product, or GDP, by 3.3 percent and would raise the wages of all Americans by a cumulative $470 billion, while creating on average 121,000 jobs each year.” [CAP]

Where does this come from? Once more, we have to look at the demand side of the supply/demand equation.  Tired of having me call it “aggregate demand?”  The total demand for goods and services, can also be described clumsily as  the willingness on the part of people to part with their wealth in order to possess some goods or receive some services.  Put in the simplest possible terms, the more people the more demand.

However, it’s not just the addition of more human beings that factors into economic growth, it’s how much wealth or income they have available to part with at the check out counter which factors in as well.

Here’s the point at which the ‘They’re Taking Our Jobs” Crowd of screamers has missed the macro-econ bus by at least an hour.  If Congress were to enact S. 744, the Comprehensive Immigration bill as it passed the Senate, we’d have about 10.4 million new legal U.S. residents — who need cars, kitchen tables, television sets, toothbrushes, towels, shoes, homes, rugs, lamps, sofas, and all the other Stuff of Life — who would be permanent residents. [CBO]   Therefore, those purchases and payments would not be interrupted by temporary status.  That’s money into the economy! Money into the economy equates to economic growth.  It doesn’t get much simpler.

The “They’re Making Our Wages Lower” Crowd is similarly out of touch with reality.  Currently our undocumented residents are part of the Shadow Economy, and being in the shadows means that about 8 million people are working in a system in which their earnings are not declared.  If as an employer my avarice exceeds my common sense, then I can keep “wages depressed” by hiring undocumented individuals for less than what I should have to pay a fully qualified resident — the fact that as an employer I have the option to function in the shadows depresses wages.  The wages paid is not an option for the worker — it’s a decision on the part of the employer, and the greediest among us will opt for the expedient of hiring someone for whom earnings aren’t declared.

Immigration protest graffiti

Bring people out of the shadow economy, bring their earnings out of the shadows, and watch the increase in money available to be spent in our commercial and retail sectors.   Again, the more money, the more spending, the more spending the more economic growth.   It’s hard to miss this point but several individuals who seem to be challenged by the spelling of illegal (“illeagle”) have done so.

And, by the way, declared earnings are taxable, thus adding to the funding of Social Security, etc., and apply toward the reduction of the debt and deficit some people are perpetually bellowing about.

In short, we’re losing about $80 billion annually in terms of economic output by stalling on Comprehensive Immigration Policy reform, along with absorbing an estimated $40 billion in annual budget deficits.  Additionally, we risk losing some 40,000 STEM graduates — in fields we really shouldn’t want to vacate for competitors.  [WH]

It might be interesting to find out how the following question would poll:

Do you believe that the United States should continue to operate with $80 billion in lost economic output and risk the loss of 40,000 STEM university graduates or should the Congress take action?

OK, that’s a question in the Push Poll manner of pseudo-research, but it makes the point — continued opposition to Comprehensive Immigration Policy reform makes no sense.

At least it makes no sense in economic terms, but the right wing conservatives seem incapable of contemplating the issue in economic terms in either the macro or micro realms.  It appears to have become a tribal, racial, emotional, primitive reaction to Us vs. Them.  At the least it’s xenophobic in the classic manifestation of NINA signs, and outlawing German language classes during World War I.

NINA

At the worst, it’s racist, harkening back to the faces of anti-integration supporters during the modern Civil Rights Movement.  I’ll repost this image for emphasis:

Murrieta Little Rock

* There’s more from DB back issues:  Here, here, and here.  For the human, and humanitarian side click over to the Nevada Progressive.

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Filed under Economy, Immigration, Nevada politics, Politics

Rep. Mark Amodei and the GOP Big Bank Pacification Program

Amodei 3Nevada Congressman Mark Amodei (R-NV2) is pleased with the Republican version of the House Financial Services Committee and Appropriations Committee 2015 version of a budget for the Department of Justice, the SEC, and the Department of the Treasury.   The Big Banks and Wall Street Players are pleased with it too.  They should be, part of the bill is straight out of the Financial Sector Playbook, one being implemented by Eugene Scalia’s law firm to gut the Dodd Frank Act for financial regulation.   A little background is in order.

The Back Story

The recovery from the latest Recession has been impressive, but perhaps not what it could have been had not some Austerianism crept into the mixture.  Public sector employment (teachers, social worker, firefighters, law enforcement….) is trailing or declining in some areas. Private sector employment has done well.

The Department of Labor issued its “employment situation report” six days ago, in which we discovered 288,000 jobs were created, and the unemployment rate is now 6.1%.  [DoL]

Private Sector Job Growth

About the same time, the St. Louis Federal Reserve tracked corporate profits (after tax) currently at $1,906.8 billion. [FRED] The graph looks like this:

Corporate ProfitsThe data points indicate a recovery for the private sector which took a pounding during the Recession but have bounced back quite nicely. Even during the Recession, corporate profits did not fall below levels seen during the period from 1980 to 2000.

The good news is, obviously, that the economy has generated private sector jobs in positive territory for the last 52 months, which should be tempered by watching corporate activities very closely — given the propensity of the financial sector to create booms/busts of increasingly volatile proportions.  There is also the no-so-small question of corporate hoarding. (A matter for another day.)

What’s happened since those days, not so long ago, when ‘irrational exuberance for asset classes and insane valuations” ran amok an crashed the U.S. economy?  When Wall Street creates new vocabulary like “Quantum Entanglement Trading,” some ears need to perk up.  The argument that faster trading combined with new technologies is nothing new under the Sun is perfectly plausible, what is less comprehensible are terms like Dark Pools, upon which some light cast upon Barclay’s transactions is less than pleasing. [BusWeek]

Even less pleasing was the moment when Goldman Sachs “lost control” of its Dark Pool, and Goldman “lost oversight of what was happening in their dark pool and it ended up that a number of people had trades settled at less than best national price.” [Forbes]

The Dodd Frank Act was supposed to rein in some of these excesses, and to give investors more power to insure they were trading “at the best national price.” It was also supposed to put the brakes on some of the more egregious activities in derivative trading.  The Wall Street boys figured out a way around that too:

“…traders have recently forged a path around these so-called margin requirements in order to allow them to harvest larger profits via larger bets: They are repackaging some derivatives known as swaps into another financial product known as futures. Futures are less stringently regulated, meaning investors can stake out larger positions while reserving smaller amounts of cash.” [HuffPo]

The GOP Big Bank Pacification Program

What do we know so far?  First, that the private sector recovery could be stronger (especially if we’d ever decide to DO something about our crumbling infrastructure and backlog of maintenance). Secondly, that Wall Street will be Wall Street, and with the advent of the financialists new ways to generate ‘wealth’ will be created even if these don’t actually add up to any real expansion of manufacturing or commercial activities.  On the corporate side there’s the stock buy back strategy which can be combined with the offshore parking ploy; on the financial end there’s the newly discovered joys of playing in dark pools and renaming your Swaps as Futures. What could possibly go wrong?

And now we come back to the point wherein Representative Amodei tells us how pleased he is with the House Financial Services Committee rendition of an FY 2015 budget providing for those departments and agencies which regulate financial behavior in this country.

Here’s Representative Amodei’s gush over the budget provisions for the Security and Exchange Commission:

“Included in the bill is $1.4 billion for the Securities and Exchange Commission (SEC), which is $50 million above the fiscal year 2014 enacted level and $300 million below the President’s budget request. The increase in funds is targeted specifically toward critical information technology initiatives. (1) The legislation also includes a prohibition on the SEC spending any money out of its “reserve fund” – essentially a slush fund for the SEC to use without any congressional oversight.  In addition, the legislation contains requirements for the (2) Administration to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act, and a (3) prohibition on funding to require political donation information in SEC filings.”  (numbering, emphasis added)

Let us Parse: (1) What’s so wrong about that SEC Reserve Fund?  It was established in the Dodd Frank Act:

“The Dodd-Frank Act established a Reserve Fund for the SEC and gives the agency authority to use the Fund for expenses that are necessary to carry out the agency’s functions. Each year, starting with FY 2012, the SEC is required to deposit into the Fund up to $50 million a year in registration fees, while the remainder is deposited into the Treasury as general revenue. The balance of the Fund cannot exceed $100 million.” [SEC pdf]

And what will the Reserve Fund be used to do? We know that most of the FY 2013 Reserve Fund money went to upgrade EDGAR and other information technology, and then there was the remainder:

“The remainder of the Reserve Fund in FY 2013 will be used on a number of IT projects, including development of Market Oversight and Watch Systems that will provide the SEC with automated analytical tools to review and analyze market events, complex trading patterns, and relationships; development of fraud analysis and fraud prediction analytical models; and deployment of natural speech, text, and word search tools to assist our fraud detection efforts. Additionally, the SEC plans to develop analytical environment, databases, and intake systems for market data, mathematical algorithms, and financial data.” [SEC pdf]

Then the SEC added another project in its FY 2014 budget justification, the Consolidated Audit Trail.

 “The SEC plans to invest Reserve Fund dollars to develop the SEC’s ability to intake CAT data and store it in the EDW, as well as to develop analytical tools and a single software platform that will allow the SEC to identify patterns, trends, and anomalies in the CAT data. The tools and platform will allow seamless searches of data sets to examine activity to reveal suspicious behavior in securities-related activities and quickly trace the origin.” [SEC pdf]

But what happened to these plans to monitor the financial markets with an eye toward reducing the instances of fraud and abuse?

H.R. 3547, the omnibus 2014 spending bill passed by Congress and signed into law by President Obama last week, contains more bad news for the SEC than just the meager 2% increase it provides for the SEC’s budget. A provision in the new law quietly strips away half of a $50,000,000 Reserve Fund that the SEC uses to improve its technology resources.” [Securities Docket]

Not too put too fine a point to it, but — the Congress of the United States found a way to defund the very activities of the SEC which might allow the agency to technologically keep up with the high frequency traders, the dark pools, and the latest Wall Street tech.  That should keep the Big Banks Pacified?

The Big Banks ought to be especially pleased by the label  “slush fund” attached by Representative Amodei to their funds to improve the technological capacity of the agency.  If Representative Amodei is displeased with the “lack of Congressional oversight” over the expenditures in the SEC Reserve Fund, then he may have missed the two documents readily available online wherein the SEC described for Congress precisely what they wanted the Reserve Fund to implement. See: SEC FY 2014 Budget Justification (pdf) the executive summary of the Reserve Fund is on page 10, and the SEC FY 2013 Budget Justification (pdf), the executive summary of the Reserve Fund is on page 9.

Why would anyone, facing the increasing speed and technicality of modern financial market operations, want to call the funds allocated to assist in the improvement of oversight and fraud detection a “slush fund?”  Perhaps because they don’t want the SEC to keep up with the Big Banks, high flying hedge funds, and wealth management groups?

(2) Oh, those regulatory costs and burdens!  This has a familiar ring to it.  Here’s where Eugene Scalia, son of Antonin,  enters the picture:

“Eugene Scalia is a lawyer of extraordinary skill. In less than five years, the 50-year-old son of Supreme Court Justice Antonin Scalia has become a one-man scourge to the reformers who won a hard-fought battle to pass the 2010 Dodd-Frank Act to rein in the out-of-control financial sector. So far, he’s prevailed in three of the six suits he’s filed against the law, single-handedly slowing its rollout to a snail’s pace. As of May, a little more than half of the nearly four-year-old law’s rules had been finalized and another 25 percent hadn’t even been drafted. Much of that breathing room for Wall Street is thanks to Scalia, who has deployed a hyperliteral, almost absurdist series of procedural challenges to unnerve the bureaucrats charged with giving the legislation teeth.” [MJ]

And what has the Scalia Scion done to create this successful stall ball strategy?

“Scalia’s legal challenges hinge on a simple, two-decade-old rule: Federal agencies monitoring financial markets must conduct a cost-benefit analysis whenever they write a new regulation. The idea is to weigh “efficiency, competition, and capital formation” so that businesses and investors can anticipate how their bottom line might be affected. Sounds reasonable. But by recognizing that the assumptions behind these hypothetical projections can be endlessly picked apart, Scalia has found a remarkably effective way to delay key parts of the law from going into effect.” [MJ]

So, when Representative Amodei says he wants the “Administration to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act,” he’s chiming right in, cheerleading if you will, for the stall ball tactics of the Wall Street barons as practiced rather successfully  by their Scalia Scion lawyer.  That should help keep the Big Banks Pacified?

(3) And, Representative Amodei is only too pleased to help the corporations and Big Banks hide their political donations — because he doesn’t want the SEC to be able to require corporations and large banks to tell the  public and their shareholders about their political activities!

Representative Amodei gives every appearance of being a major cheerleader for Team Wall Street, and its efforts to avoid regulation, supervision, and monitoring by the Securities and Exchange Commission — no doubt he, and other Republicans in Congress, will be delighted to participate in the GOP’s Big Bank Pacification Program.

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Filed under Economy, financial regulation, Politics, Republicans

Another Day, Another Drill Baby Drill Bill

Oil RigAnother day, another bit of living proof Republicans don’t have a clue how world oil markets work…or if they do they don’t care, and they are perfectly pleased to do the bidding of multi-national oil corporations. Witness their shiny new bill: Lowering Gasoline Prices to Fuel an America That Works Act, or H.R. 4899, for which Rep. Mark Amodei (R-NV2) and Rep. Joe Heck (R-NV3) were pleased to vote, but which didn’t fool Rep. Steven Horsford (D-NV4) or Rep. Dina Titus (D-NV1). [rollcall 368]

The bill is a Christmas Wish List from the Oil Barons to the U.S. Congress, it’s Drill Baby Drill, and Shale Smacking Goodness — for the oil barons.

The bill’s authors assume the American public has a density equivalent to the API standard for heavy crude, i.e. an API gravity of less than 20°.

We’d have to be that dense in order to believe that more offshore drilling is going to have a perceptible impact on gasoline prices.  To demonstrate that we have an API gravity of at least light sweet crude, (37° to 42°) let’s review.

What factors determine oil prices?  There’s a picture for that –

Oil Price DiagramThere’s a supply side and a demand side, which in our good old capitalist system creates the prices.   On the supply side, crude oil comes from both OPEC and non-OPEC countries. The demand side is determined by consumption from countries that either are, or aren’t, members of the Organization of Economic Cooperation and Development, aka OECD. [EIA]  The blithe assumption on offer is that if the U.S. drills for more crude oil, and puts more crude oil on the market, the lower the price will be at the pump.  Not. So. Fast.

All those arrows point, not to your local refinery — much less your most convenient filling station — they point to the Spot Price.  The price of oil also depends on the demand for it, and there are two more charts to illustrate who’s demanding what.  First, let’s look at the non-OECD countries, like China, India, and Saudi Arabia:

Non OCEDWithout getting into too much gory detail, the blue columns represent demand from countries like China, India, and Saudi Arabia. The price and consumption trends tend to follow one another.  Now, let’s take a look at the other graph — the one illustrating the OECD countries, the United States and most of Europe.

OECD chartWhat do we learn from this illustration?   The EIA explains:

“The Organization of Economic Cooperation and Development (OECD) consists of the United States, much of Europe, and other advanced countries. At 53 percent of world oil consumption in 2010, these large economies consume more oil than the non-OECD countries, but have much lower oil consumption growth. Oil consumption in the OECD countries actually declined in the decade between 2000 and 2010, whereas non-OECD consumption rose 40 percent during the same period.”

Consumption is higher in developed countries — that’s just about obvious with our higher rate of vehicle ownership — but we have a lower rate of oil consumption growth.  While oil consumption rates were going down in the U.S. and Europe, non-OECD consumption rates were going up, up by 40% as the EIA reports.  Notice that the price and the consumption lines don’t track for OECD countries — that would be us — as they do for the non-OECD countries — that would be China, India, and Saudi Arabia.

Now, let’s return to that spot price.

“The spot price is the current market price at which an asset is bought or sold for immediate payment and delivery. It is differentiated from the forward price or the futures price, which are prices at which an asset can be bought or sold for delivery in the future.” [InvestAns]

The spot price is set in the ‘markets,’ i.e. the commodities market. For today’s prices Bloomberg News “Energy” page provides what the w-o-r-l-d price is for crude oil and refinery products.  Now we can approach the obvious question — who benefits from increased offshore drilling in U.S. waters?

A quick look at the two charts above should provide a major clue — it would be the areas with the highest consumption growth rate, i.e. the non-OECD countries — China, India, Saudi Arabia, etc.  Since oil is sold on the w-o-r-l-d market it will most likely go where there is the most demand.

Thus, what Representatives Heck and Amodei are supporting is the increase in offshore oil leases for multi-national oil corporations to sell the oil on the world market, in which it will probably go to those countries (non-OECD) like China, India, Brazil, etc. in which the consumption growth rate is higher.

To add insult to the injuries, the oil companies aren’t developing the leases they currently hold

“As of May 2012, nearly 72 percent of  the area on the Outer Continental Shelf (OCS) that companies have leased for oil and gas development – totaling 26 million acres – are not producing or not subject to pending or approved exploration or development plans. ” [Dept Interior, May 2012 pdf] [TP]

One might quibble with how the Department of the Interior categorized lands undergoing seismic and geophysical testing as not “active,” but the fact remains — about 2/3rds of the current leases aren’t producing.  The quibblers do make a legitimate point, not all leases will yield production.  Yet the thrust of the latest  Republican incarnation of Drill Baby Drill, as evidenced by the title of the bill itself, it that somehow more leases will automatically mean lower prices at the pump. Once more, glance back to the OECD chart and notice that the consumption and the price lines don’t match.

In the immortal words of oil-man President George W. Bush: “I know it’s in Texas, probably in Tennessee that says, ‘Fool me once, shame on … shame on you. Fool me… You can’t get fooled again!‘” [Time]

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Filed under Economy, energy, energy policy, Politics

Yes, It’s a Drought

Drought Map JuneNevada is an arid state, but there’s arid and then there’s drought.  The Reno Gazette Journal provides a good summary of what northern Nevadans can expect from the current drought conditions.

Nevada has a “Drought Response Committee” and the water conservation plan, adopted in 2012 is available (pdf) online.  As of now Churchill, Lander, Mineral, Pershing, Clark, Lyon, Nye, Washoe,and Humboldt counties have been officially designated as “primary natural disaster areas.” [unce]

For those wishing not to make a bad situation worse in northern Nevada, the Truckee Meadows Water Authority has a simple check list of things ordinary citizens can do to mitigate water shortages.  For example, have you checked the toilet for leaks?  If not, the household could be wasting (and paying for) up to 100 gallons of water per day.  Multiply that by 365 days and the wastage is almost alarming, especially considering how much the water costs in the first place.  Have you installed a water saving shower head? In reality all that’s really needed for a nice shower is about 2 1/2 gallons per minute.  In short, if you’d like to save water, and thereby save on your water bill — check for leaks — faucets, toilets, shower heads — and find the savings on your monthly bill.

The EPA also provides water conservation tip sheets, such as the one for residents and homeowners.  There are other helpful fact sheets, like the one from WaterSense.

The forecasting isn’t all that comforting for anyone who’d like to blithely ignore the warning signs from the March 2014 state publication on water resources. (pdf)

And, there are now some 2,700,553 persons in the state of Nevada directly affected by the current drought.  It’s obviously time to pay attention.

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Filed under ecology, Economy, Water

Three Flies in the Happy Salve of the Unemployment Numbers

U.S. Labor Secretary Perez provided a happy note on employment figures in the latest BLS release:

The economy in May continued its steady recovery from the Great Recession, and we have now added 9.4 million new private-sector jobs over 51 consecutive months. The economy generated 217,000 new jobs in May — the fourth consecutive month exceeding 200,000 new jobs — and the unemployment rate held steady at 6.3 percent.

Music to the ears of Nevadans still struggling to find jobs or full time employment.   The next portion of Perez’s remarks might also find empathic ears in the Silver State — there are still 3.4 million Americans experiencing long term unemployment.  Current estimates have approximately 20,000 Nevadans in the LTU category. [DB]

Flies in the Ointment

Long term unemployment: Efforts by Nevada’s Senators have yet to yield any positive legislative results for those having that unfortunate long term unemployment experience. [LVRJ]  The previous attempt to address the problem expired on May 31st, and Senators Heller (R-NV) and Reed (D-RI) are trying to create an acceptable bill to alleviate the problem. [NatJ]

The fate of these efforts, of course, hangs in the House of Representatives in which Speaker John Boehner has said he will not bring a bill forward unless it speaks to “job creation.” [NatJ] In Boehner parlance this has nothing to do with spending for infrastructure related employment or job training funds, the Speaker clearly means more tax cuts. For example, House Republicans considered the research and development tax credits to be Job Creators — at the cost of $156 billion over the next decade with no offset to cover the expense.  And, of course, the House GOP would like to make these and other tax extenders permanent.  The reasons should be clear when we look at what the tax extenders actually do.

“The largest tax extenders include the general research and experimentation (R&E) tax credit and a provision that allows financial services firms to defer corporate taxation indefinitely on some foreign earnings.  Other extenders allow select industries such as retail, restaurants, and movie and television production to claim greater up-front tax deductions.  In addition to these corporate provisions, there are a number of individual tax extenders, the largest of which is the deduction for state and local sales taxes, as well as a group of energy tax extenders.” [CBPP] (emphasis added)

If this begins to appear as though there are some very specific corporations and sectors lining up for some very helpful tax benefits — all of which would add to the federal deficit, and some of which aren’t all that useful to the overall economy — you’ve got the picture.

Not to be entirely too blunt about it, but the 1.3-3.4 million long term unemployed Americans including the 20,000 Nevadans, may not see any relief unless the House Republicans can get indefinitely deferred corporate taxation on foreign earnings.

Exactly how indefinitely deferring corporate taxes on foreign earnings translates into American jobs is one of those Mysteries of the Trickle Down Cult.  We are to accept on faith that when the sacrificial offering is made — education, Medicare, job training, SNAP, etc. — the smoke and  incense rising from the Capital Dome will please the megalomaniacs such that they will stop using assets to fund stock buybacks and stashing money in off shore accounts, and will, instead, expand their enterprises.  The fact that we’ve not actually seen this happen in the last 40 years only means, according to the Cultists, that we’ve not clapped our hands hard enough.

So long as the Trickle Down Cult maintains its altars in the offices of various members of Congress, and appeases the demi-gods of K Street Lobby Shops,  the prospect of any assistance for the long term unemployed remains dim.

Differentiated Rates: The unemployment rate varies by ethnicity and gender — adult males have a 5.9% unemployment rate, adult females a 5.7% rate. African Americans have an 11.5% unemployment rate, Hispanic workers a 7.7%, and Asian’s a rate of 5.3%.  Whites have a 5.4% overall unemployment rate.  African Americans constitute about 8.9% of Nevada’s population, Hispanics about 27.3% and whites some 77.1%. [Census]

It would be ever so much more helpful if the bigot brigades would lay down their epithetic weaponry and stop calling the unemployed “lazy takers,” who would rather sit on the stoop and drink beer than seek gainful employment.  If 88.5% of African Americans, for example, ARE employed, and 92.3% of Hispanic Americans ARE working then that says far more than their critics may be wont to admit. If we want to address the variations in unemployment rates then business & manufacturing locations, educational and job training opportunities, and transportation need to be included in the discussion.

Unnatural natural unemployment rate: An unpleasant feature of the unemployment discussion, whether discussing rates for long term unemployment or rates for diverse sub-communities, is that we may be looking at a “new normal”  as that pertains to the natural unemployment rate. Heretofore, we’ve assumed a natural unemployment level of about 4.5%.  When the professional forecasters from the Federal Reserve discussed the Recession and employment in 2011 the natural unemployment rate was up to 6.7%.  The rate is now reported (Q2 2014) at 5.5%. [FRED] The fact that the natural rate is dropping is good, and 5.5% certainly looks better than the 6.7% of three years ago. However, unless steps are taken which directly meet the needs of the unemployed (funding infrastructure related employment, funding public services, funding job training), we could be looking at an increase of perhaps 1.5% to 1.7% in the natural rate.  In other words, in our new normal — more people are going to be unemployed.

Three flies in our happy ointment are sufficient for one day, although we do need to talk about wage stagnation, and the increase in employment which pays lower wages than what a person had previously been making.  Let’s leave that for another day, and be pleased for the moment that the private sector is adding jobs, and has been doing so for the last 51 consecutive months.

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Filed under Economy, Nevada economy, Politics, unemployment

FYI: Nevada School Districts by Percentage of Free or Reduced Price School Lunches

From the Nevada Department of Education for FY 2011-2012:

NV school lunch free percentage

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Filed under Economy, education, Politics

Can’t Sleep In The Beds They Make, May Not Be Able To Sleep In Their Own Either

The median hourly wage of a housekeeper or maid in Nevada’s “traveler accommodation” sector is $15.71.  [DETR] We know what medians are — half the wage earners are above this level, the other half below.  So, if our median wage earning housekeeper works 40 hours per week, for 50 weeks per year the gross earnings would be $31,420.  The actual median annual income is reported as $32,680. [DETR] Again, we know that half are earning below this amount.  Let’s compare these numbers to the living wage required in the community most likely to employ housekeepers — Las Vegas.

A single person with no dependents would need to earn $20,036 to make the living wage level in Las Vegas.  A person supporting one child would need annual earnings of $43,001. [MITedu] The median annual earnings of a housekeeper in Las Vegas obviously don’t reach this level.  Why are we looking at these numbers?

Because — the Economic Policy Institute released a report yesterday demonstrating that people working in the accommodations sector can’t afford to sleep in the beds they’re making.  At one point, back in the 1960′s and 1970′s a housekeeper could afford a room, but the current wage stagnation in the sector now means that the housekeeper can only afford 78% of the average room cost ($106/day).   Once more, why does this matter?

It’s not like the Department of Labor hasn’t been trying to tell us, ” A review of 64 studies on minimum wage increases found no discernible effect on employment,” but the myth remains that raising minimum wages cuts jobs is still recited like a mantra among business interests in spite of every solid study to the contrary — and there’s another study rejecting the mythology this morning.

“In April, the Paychex/IHS survey, which looks at employment in small businesses, found that the state with the highest percentage of annual job growth was Washington — the state with the highest minimum wage in the nation, $9.32 an hour. The metropolitan area with the highest percentage of annual job growth was San Francisco — the city with the highest minimum wage in the nation, at $10.74.” [WaPo]

Harold Meyerson’s analysis repeats what advocates of increasing minimum wages have been saying all along:

“What critics of a higher minimum wage ignore is that, by putting more money into the pockets of the working poor — a group that necessarily spends nearly all its income on such locally provided basics as rent, food, transport and child care — an adequate minimum wage increases a community’s level of sales and thereby creates more jobs.” [WaPo]

But, but, but… sputter the opponents of any increase in the minimum wage, Singapore has no minimum wage and look how well those people are doing.  Easy now. That evidence comes with some significant caveats.  First, their budget provides public funds to subsidize private company worker’s pay, and secondly the Singapore government is the largest shareholder in Singaporean companies, to the tune of some 54% ownership. [AXW]  I’m not at all assured that U.S. companies would be eager to adopt a system in which in exchange for wage subsidies the company would agree to make the government a major shareholder.

Another reason for looking at minimum wage and living wage issues is the recent action by the House Appropriations Committee which would slash HUD funding for housing assistance.

“The House Appropriations Committee this week approved a fiscal year 2015 funding bill covering the Department of Housing and Urban Development (HUD) that makes disproportionately deep cuts in housing assistance for low-income families.” [CBPP]

Here’s a graphic representation of what this would mean for low income families.

Housing cutsNot to put too fine a point to it, but the House appears determined to cut programs for low income families while they are singularly unresponsive to any and all calls for closing tax loopholes and gimmicks for the upper 0.01% or eliminating subsidies for the Oil and Gas Giants.

Meanwhile, the housekeepers cleaning up after the Memorial Day weekend revelers in Nevada, continue to try to make financial ends meet, as the House of Representatives pursues more ways to make life even more difficult for struggling American families.  If this pursuit continues our housekeepers may not only be unable to rent a motel room — they may not be able to sleep in their own beds.

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Filed under Economy, Nevada economy