Posts tagged with: Economy of the United States

hobbylobby1The Supreme Court recently heard oral arguments in the Hobby Lobby contraception case. But which arguments will have the most influence on the justices? Michael McConnel, a respected Religion Clauses scholar from Standford, explains which four arguments are most likely to be important:

Cutting through the politicized hype about the Hobby Lobby and Conestoga case (“Corporations have no rights!” “War on Women!”) the Justices during oral argument focused on four serious legal questions, which deserve a serious answer:

(1)  Could Hobby Lobby avoid a substantial burden on its religious exercise by dropping health insurance and paying fines of $2,000 per employee?

(2)  Does the government have a compelling interest in protecting the statutory rights of Hobby Lobby’s employees?

(3)  Would a ruling in favor of Hobby Lobby give rise to a slippery slope of exemptions from vaccines, minimum wage laws, anti-discrimination laws, and the like?

(4)  Has the government satisfied the least restrictive means test?

I think the answer to all four questions is “no.” I offer brief thoughts on each below.

Read more . . .

federal-budget

What is the President’s budget?

Technically, it’s only a budget request—a proposal telling Congress how much money the President believes should be spent on the various Cabinet-level federal functions, like agriculture, defense, education, etc.

Why does the President submit a budget to Congress?

The Congressional Budget Act of 1974 requires that the President of the United States submit to Congress, on or before the first Monday in February of each year, a detailed budget request for the coming federal fiscal year, which begins on October 1.

If it’s due the first Monday in February, why are we just now hearing about it?

President Obama turned in his budget late—again. This will be Obama’s fifth late budget submission in five years, making him the first President to present three consecutive late budgets. According to the House Budget Committee, “All presidents from Harding to Reagan’s first term met the statutory budget submission deadline in every year.” Reagan and Clinton both missed their deadlines once in eight years.

What is the function of the President’s budget request?

The President’s annual budget request serves three functions:
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noun_project_19538As the US federal government sidled up to the debt ceiling earlier this week without quite running into it, one of the key arguments in favor of raising the debt ceiling was that it is immoral to breach a contract. The federal government has creditors, both from whom it has borrowed money and to whom it has promised transfer payments, and it has an obligation to fulfill those promises.

As Joe Carter argued here, “Member of Congress who are refusing to raise the debt ceiling (or raise taxes) until their ancillary demands are met are acting immorally, since they are refusing to pay the debts they themselves authorized.”

But as Connie Cass writes, the idea that the United States has never defaulted isn’t quite true. As she writes,

America has briefly stiffed some of its creditors on at least two occasions.

Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren’t getting paid.

A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. The Treasury Department blamed the mishap on a crush of paperwork partly caused by lawmakers who — this will sound familiar — bickered too long before raising the nation’s debt limit.

So if it is immoral to default, then America has done so at least twice.
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wmartIn light of the ongoing discussion over fast-food wages, I recently wrote that prices are not play things, urging that we reach beyond the type of minimum mindedness that orients our imaginations around artificial tweaking at the bottom instead of authentic value creation toward the top. Prices don’t equip us the whole story, but they do tell us something valuable about the needs of others and how we might maximize our service to society.

But though I have a hearty appreciation for the role that low-wage employers like McDonald’s play — due in large part to my 5-year stint working for The Ronald — I’m also grateful that other companies like Costco are able to provide higher wages to many low-skilled workers.

When we observe such differences — one prosperous company paying $7 per hour while another pays $12 — it can be easy to get worked up, pointing our fingers at greedy executives, idols of efficiency, unwise allocation of company funds, etc. Yet while any assortment of these drivers may indeed contribute to how wages are set, and though executives bear heavy moral responsibility on such matters, it’s helpful to remember that (1) we’re greatly limited in understanding the books of the companies we critique, and (2) executives aren’t the only ones influencing prices.

Over at Bloomberg, Megan McCardle does a marvelous deep-dive on this very sort of thing, starting with a comparison of Costco and Walmart wherein she ponders why the former offers higher wages than the latter.

A summary:

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Alejandro Chafuen, president and chief executive officer of the Atlas Economic Research Foundation and board member of the Acton Institute, recently wrote a piece for Forbes.com discussing youth unemployment in the United States. According to the latest report, U.S. youth unemployment is at 16.2 percent which is more than double the adult unemployment rate. The unemployment rate for youth in Europe is currently at 24 percent. Chafuen asks, “Can we learn from the European experience?”

Using data compiled by the economic freedom indices of the Fraser Institute in Canada, and the Heritage Foundation, in the United States, we recently looked at how economic freedom, labor regulations, social spending, and regulatory climate, correlated with youth unemployment. Against our preconceptions, at least as shown with our simple static analysis, there were no convincing results.  I will spare the reader the statistical jargon and graphs and focus on apparent contradictions. (more…)

Blog author: jcarter
posted by on Thursday, June 13, 2013

Among the most significant economic challenges in America today is getting Americans to understand what an economy is.

measure-economyWhen the Latin term oeconomia was first used in the 1500s it meant “household management.” A few centuries later, the term political economy was used in reference to the economies of states or polities. It wasn’t until the modern era, though, that “economy” became to refer primarily to the production and distribution of national income and wealth and lost almost all connection to the household.

Because of that shift, we often see a confusion of terms and concepts. Take, for instance, the opening sentence of this recent news report:

The U.S. economy grew at a modest 2.4 percent annual rate from January through March, slightly slower than initially estimated.

The problem with this is that “U.S. economy” is conflated with gross domestic product (GDP) — the market value of all officially recognized final goods and services produced within a country in a given period of time. While GDP can potentially be an important economic indicator, it is not a true measure of the nation’s economy (aka political economy).

Derek Scissors provide a superb explanation for why a better measurement is one that gauges the original economy:
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Blog author: jcarter
posted by on Thursday, December 6, 2012

Now that we know what the fiscal cliff is all about, what are the plans for dealing with it? Below are the four approaches that have been proposed:

The Democrats’ Plan

Treasury Secretary Timothy Geithner offered the White House’s fiscal cliff proposal to Republicans in the last week of November. Although the proposal wasn’t released to the public, news reports say it was basically a reprise of Obama’s most recent budget request and contained the following items:

• End the Bush tax cuts for those making more than $250,000. The result would be $1.6 trillion in new taxes over 10 years, $160 billion a year.
• Cuts to Medicare and other entitlements over 10 years equal to $400 million, or $40 million a year.
• Additional stimulus spending of $50 billion.
• Authority to allow President Obama to to raise the debt limit without asking Congress in order to prevent “fiscal cliff”-style triggers from being put in place in the future.
• The White House also counts “savings from ending the wars in Iraq and Afghanistan” in their savings tally, even though no one has proposed maintaining war spending over the next decade at the current rate.

Reception: The Republicans rejected Obama’s plan but offered to let it be voted on in the Senate. However, yesterday Senate Majority Leader Harry Reid (D-Nev.) blocked a vote on the president’s proposal.
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In a recent ABC News/Washington Post poll on methods to avoid the “fiscal cliff”, sixty percent of Americans support raising taxes on incomes more than $250,000 a year (73 percent of Democrats, 63 percent of independents, and 39 percent of Republicans).

But how much will that affect the deficit?

The federal budget deficit in 2012 was $1.1 trillion. But a number with that many zeros—$1,100,000,000,000—is difficult to grasp, so let’s put it in some perspective

This is what $100 million (0.0001 trillion) looks like.

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Is spartan austerity driving us over the fiscal cliff?

The latest step in the budget dance between House Republicans and the White House has to do with where tax increases (or revenue increases in general, depending on what is called what) fit with a deal to avoid the so-called “fiscal cliff.” As Napp Nazworth reports, President Obama has apparently delivered an ultimatum: “there would be no agreement to avert the ‘fiscal cliff’ unless tax rates are increased on those making more than $250,000 per year.”

On one level it seems reasonable to talk about addressing a deficit from both directions: cutting spending and raising revenue. But as Ray Nothstine put it so well earlier this week, without some structural (and cultural) changes to the way Congress works, it would be insane to think that giving politicians more money is going to change how they spend it. One definition of insanity is doing the same thing over and over again and expecting a different result. Historically “politicians spend the money as fast as it comes in – and a little bit more.” Without some kind of balanced budget agreement, something with real teeth, why should we think things will be any different this time around? (I’ve talked about a more promising “both/and” budget solution before.) As Ray and I have concluded elsewhere, “In the case of the federal spending, the government has proved to be untrustworthy with very much. It’s time to see if the politicians in Washington can learn to be trustworthy with less.”
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There’s a saying that when goods cross borders, armies don’t (it’s the correlative to the observation attributed to Bastiat: “If goods cannot cross borders, armies will.”). The point is that trade tends to bring people together who might otherwise have cause to be hostile. One of the themes at Acton University, which begins in just a few hours, is globalization and various Christian responses. That’s sure to be the case again this year, as we have just about 70 countries represented among the various participants.

It’s within this context that I want to pass along a noteworthy story I heard yesterday on our statewide public radio station, Michigan Radio. It focuses on what automaker General Motors did when faced with parts shortages following the Fukushima earthquake.

GM added a local Japan-based “War Room” to its response, focusing on solving problems on the ground to get the supply-chain back up and running. As Tracy Samilton reports, “Once the suppliers became convinced GM wasn’t there to dump them, they were awfully happy for their customer’s help. Whatever GM could do, it did. One supplier ran out of a special form of hydrogen peroxide. GM found another source for it and shipped it in from Korea. The company hired trucks.”

So when you have companies with global reach across borders and global supply chains to match, you get a different kind of “War Room,” those focused on putting “the links of the Japanese supply chain back together, often just in time to keep an assembly line from shutting down.”

As Samilton summarizes the lessons of the parts crisis, “People involved in the effort say they grew as human beings, grew closer to each other, met people in the company they might never have known. It was tough. But War Room veterans are keen to point out that they’re not the heroes of this story.”

Ron Mills, head of engineering at GM’s Tech Center, puts it this way,

“We all worked really hard here, but at the end of the day, I did go home, right? And I ate well, and people in Japan could not do that. They had to work hard and also go back and try to find food and clothing and shelter for them and their families and which – I was just in awe of how hard and how they were able to endure.”

The GM workers were driven both by a sense of self-preservation and need as well as genuine concern for their Japanese partners, a concern that became more concrete and palpable as the invisible hands up the supply chain became increasingly visible.