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America in 2013, as Told in Charts

One of my favorite things about there being a “New Year” is that people get a feeling that they can better themselves, and start over somewhat. In order for the yearly reset button to be worth anything at all there must be need for change, and thus we have a reason to ask ourselves about the past and what should stay the same, as well as what needs to change. This article by Steve Rattner addresses our nation with plenty of wonderful words, but even better he also does so with charts! I hope that you enjoy this, and if you don’t I beg of you to kick yourself.

-Grady

America in 2013, as Told in Charts

Posted: 31 Dec 2013 09:45 AM PST

Originally published in the New York Times.

Looking back on 2013, many of the economic and political themes seemed familiar: a weak economy. Growing income inequality. Gridlock in Washington. Partisan wrangling over fiscal policy. But others, like the disastrous rollout of the Affordable Care Act HealthCare.gov website and the government shutdown, were new or at least revivals. Below are 10 charts to illustrate a depressing first year of President Obama’s second term:

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Not only did trends of recent years continue in 2013 – particularly the diverging fortunes of the rich and everyone else — but in some ways they accelerated. The stock market, as measured by the Standard & Poor’s index, was up a stunning 32 percent (through Dec. 27). Corporate profits rose to a record $2.1 trillion. Meanwhile, incomes remained nearly flat and jobs tallies grew slowly. Through Oct. 30, earnings were up just 1.4 percent, an even smaller increase than in 2012. The only relative bright spot for the average American was housing; thanks in part to the aggressive efforts by the Federal Reserve to hold down interest rates, sale prices of homes were up by 13.3 percent in September, compared with a year earlier.

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Economic growth — a likely increase in gross domestic product of just 1.8 percent in 2013, after adjusting for inflation — was also unbalanced in other ways, particularly the impact of the government. The nation’s quickly falling deficit (it dropped from $1.09 trillion to $680 billion in a single year) cost dearly in economic activity. Spending by cash-strapped consumers and investment by skittish businesses both grew at slightly below customary rates. A flat-lining Europe dented President Obama’s pledge to double American exports by 2015. On the other hand, home building and related residential activity, depressed since the onset of the financial crisis, provided a second annual lift to the economy.

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Employment remained an overarching problem. While job growth has picked up steam in the last few months, the fall’s higher pace of job creation – around 200,000 per month – would still not be nearly enough to bring unemployment down to pre-recession levels. According to calculations by the Brookings Institution’s Hamilton Project, even if the 200,000 jobs per month rate were maintained, the unemployment rate would not fall to the November 2007 level of 4.7 percent for another five years.

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Not only has the job recovery been sluggish, but also a disproportionate number of those that have been created have been in lower wage occupations, such as retail clerks and fast-food workers. And that trend is projected (by the Bureau of Labor Statistics) to continue; using a simple average, the 10 job categories expected to add the most jobs during the current decade boasted a collective median wage of $32,386 in 2010, roughly $15 per hour and far below the United States median of $51,892 at the time. Seven of the 10 categories pay below this average. Note the conspicuous absence of manufacturing; it may be recovering, but it isn’t what is driving new jobs.

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Wage increases haven’t been paltry because the efficiency of the American worker has flagged; indeed, productivity has continued to chug along. But those productivity gains have simply not been passed on to workers. Between 2000 and 2012, productivity rose by 22 percent while wages increased by 7.7 percent. The divergence was particularly great over the last three years of that period – productivity up 4.6 percent and real wages down 1.1 percent. For this failure of the American worker to be rewarded for his growing output, blame a variety of factors, perhaps most important, globalization, which has allowed companies to move production to whatever part of the planet offers the lowest cost labor. In that respect, American workers remain in a race to the bottom.

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The troubles with the Affordable Care Act’s HealthCare.gov rollout sure grabbed daily headlines this fall. But throughout the commotion, little mention was made of the most fundamental aspect of the law: the way in which it raises nearly $2 trillion over the next decade — mostly from wealthy individuals and health care providers — and uses the money to fund the largest expansion in insurance coverage since Medicare was created nearly 50 years ago. As shown above, the end result should be better health care options for those closer to the bottom end of the income scale, through the Medicaid expansion and creation of exchanges with subsidies for most participants. The intended result: 25 million fewer uninsured Americans. Yes, this is redistribution on a grand scale, and we should all be very proud of it. But as evidenced by Obamacare’s consistently poor poll numbers, most Americans are not feeling charitable toward the less well off.

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Trust in many American institutions has been declining, but few institutions have fallen so far out of grace as Congress. Last year, I showed that the previous Congress was the least productive Congress in modern times, including the famous Do-Nothing Congress of 1947-48, passing just 238 laws, 37 percent of the average of the 32 Congresses that preceded it. In 2013, the first year of this Congress, the number of new laws passed fell further, to 55 (as of Nov. 30), seven fewer than during the same period in 2011. As a result, Congress now stands dead last in approval rating among key American institutions – far below other braches of government, below news outlets, below banks and even below big business.

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Congress well deserves that poll standing, in significant part because of the damage that it has done to the federal budget. The combination of Republican determination to cut spending and Democratic insistence that none of the entitlement programs (such as Medicare and Social Security) be meaningfully affected has resulted in the utterly inane policy of starving key domestic programs, including education, infrastructure and research and development. The recent budget fight and subsequent agreement did nothing to change that trajectory. As shown by the red line above, all that resulted was avoiding the worst two years of forced budget cuts to these programs; for the 10 years beginning in 2008, this important spending will rise slightly in nominal numbers but will fall by 5 percent, after adjusting for inflation.

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The dysfunction in Washington has taken its toll in other important ways. Not only has business confidence been shaken, but each new political battle has also been terrifying for consumers. Back in the summer of 2011, when the United States had its AAA credit rating removed by S.&P. after it flirted with default, consumer confidence recorded the second biggest two-month drop ever, behind only the aftermath of Hurricane Katrina. A smaller decline occurred at the end of 2012 when Congress nearly went over a fiscal cliff. Beginning this past July, consumer confidence dropped to its lowest level in nearly two years as a result of the government shutdown, the A.C.A. problems and related battles. Now, a two-year budget nearly in hand, Americans’ moods seem to have improved. At a time when we need consumers to spend (prudently), these periods of faltering confidence have real economic consequences.

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In contrast to the mood in most of the country and the still slow economy, Silicon Valley is partying again, albeit not quite like 1999. The Facebook initial public offering in May 2012 helped usher in a resurgence of excitement among investors for anything that looks like a sexy new high-tech service. This year’s poster child I.P.O. was Twitter, which set a new record of one kind among recent major technology I.P.O.’s: its valuation of more than 28 times its revenues. That didn’t daunt investors; the stock promptly more than doubled and now trades at 65 times revenues. (Of course, there are no profits.)

Gallup Poll: The Largest Problems Facing America

This is really a sad story. Having the people’s government fail them, and then to have them feel hopeless against it seems to reflect a broken democratic society in my opinion. And just turning this into an opportunity to complain that there is a government is about as counterproductive as anything else that we can take away or do from here…

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Glenn Beck and Penn Jillette Have a Conversation about Liberty, and Yes I Actually Love It…

Penn and Glenn

I have found Glenn Beck to be repugnant on multiple occasions (i.e.: when he called the President racist, which got him fired from Fox News essentially), and I’ve been disappointed in some of his theatrics. However, I do appreciate that he does have some interesting things to say sometimes, and I find that this is particularly true when he sits down with people who he respects who are somewhat different from him. I think the Penn Jillette is probably the best example of that in which I’ve seen. I do like Penn Jillette, I really appreciate his uniquely bold convictions. As this is a long video I’ll let them do the talking, but feel free to give your feedback.

Also, if you are interested in what it means to be a libertarian by any measure you should give this chart a look over. I find libertarianism fascinating, and I tend to believe that the majority of our nation to be more libertarian (other than when I see polling that the majority of the nation is ok with our citizenry being data mined by multinational corporations as well as the government…). I felt that I should share this chart to contrast with Glenn’s chart that he shows at the beginning of this discussion. I think that his approach is interesting, but I think that the political spectrum could be just as well if not better explained by this chart below.Ok, The End.

nolan_chart

Click on this picture to learn more about the Nolan Chart

Deficit Reduction, Minus the Reduction – Steve Rattner

Deficit Reduction, Minus the Reduction.

This was published in the New York Times on April 11th, 2013, but I thought that it was worth sharing. This type of policy debate is not simple, but that doesn’t mean that people shouldn’t try to know about it, And Steve Rattner puts it into a great perspective. So maybe just give it a quick look.

 

Deficit Reduction, Minus the Reduction

Bill Maher Says “Taxes Are Too High” – Washington Times

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By Cheryl K. Chumley

Liberal HBO “Real Time” host Bill Maher says he may leave California, due to the state’s high tax rate.

“Liberals,” he said, during a recent broadcast,” you could actually lose me.”

He made the comments during a panel discussion of current Capitol Hill budget policy that included the participation of MSNBC Rachel Maddow, who blasted Rep. Paul Ryan’s proposal as beneficial to the rich.

“The Ryan budget is a document that says the big problems in American right now are that rich people do not have enough money. They need relief from confiscatory tax rate,” she said, Newsbusters reports.

Mr. Maher answered: “You know what? Rich people — I’m sure you’d agree with this — actually do pay the freight in this country.”

Mr. Maher then cited statistics that California millionaires pay nearly 40 percent to the federal government and another near 15 percent to the state.

“I just want to say liberals — you could actually lose me. It’s outrageous what we’re paying — over 50 percent. I’m willing to pay my share, but yeah, it’s ridiculous,” he said, Newsbusters reports.

via Bill Maher threatens to leave California — due to high taxes – Washington Times.

 

Grady’s Comments:

Taxes are tragically one of the most divisive topics in our nations political hemisphere,  and there is more that the populist portion of this nation would agree on than there is for them to disagree on, if there is an honest discussion. Paying taxes is no fun, but investing in society can do great things! Unless of course if you don’t like the internet, interstate highways, etc… I mean, most people take advantage of, and seem to enjoy a lot that public investment has wrought. There is plenty of disagreement to be had, but there is a disconcertingly dishonest narrative, for the most part, that Democrats want TONS of taxes, and Republicans want 0% (ZERO) taxes… People in either party want a government that has basic functionality, and that isn’t free. Due to a toxic environment for debate and discussion I sadly think that people’s understanding of what it takes to have a government that works is very skewed. In polling people repeatedly show that they don’t know what is most expensive, and they don’t know what benefits they receive from paying taxes. And when people don’t realize they they are a part of the problem things can get ugly… It’s like dating someone who thinks that they are low maintenance  but they very clearly to everyone else are high maintenance… Why won’t their friends just say something?!!

Now, with all of that said – there is little disagreement from as far as I can tell that people almost across the board want a simpler, more flat tax code. And if rates are to be staggered the majority of people in polling that I’ve seen have said that they think that those with more should pay higher rates (Adam Smith himself thought this was best) – but there is a limit to this approach, and I think that popular opinion on this is also changing. I think that we are going to find our selves in the near future with a voting populous that wants an even flatter tax code, and they might call for more people to pay. This however will be increasingly hard to achieve with growing income disparity breaking barriers at increasing speeds.

At the end of the day I agree with Bill’s comments. I think that there are a lot of people with a lot of money who pay too much in taxes. However, there are a number of people who don’t pay near as much in taxes, in terms of their rate especially, and it’s a real problem not just because of simple fairness, but because of the side-affects of having such an imbalanced society. Our convoluted tax code allows for those who don’t work to pay half of the rate of those who do work (ie: capitol gains, and the carried interest), and that’s before they add in deductions which could dwindle those rates into oblivion with the right tax lawyers/ninjas.

As this is somewhat of a confusing conversation with so many contrasting stories about people who do and don’t pay taxes we simply need to recognize that our tax system is broken, and from there move towards a system where work should be incentivized. If you hear people talk about the “1%” take note of what they’re saying, and then consider that the real problem in having that stereotype continually repeated is that we are lumping together some people who do pay taxes, and some people who don’t. I want to talk about it, but I want to Really talk about it – it’s just not simple. Most of the people who don’t “pay their fair share” (pay a normalish rate) have so much money that they don’t look like the other 99% of the top 1%… We are talking about very few people, but a LOT of money. When a millionaire like Bill Maher (who is quite liberal) talks about paying too much in taxes he is getting at a very real problem that is very confusing to the public, because when it comes to paying taxes it’s a game, and if you’re reading this you are probably losing…

From All Sides, Fiscal Plans Fall Far Short of What’s Needed – Steve Rattner

From All Sides, Fiscal Plans Fall Far Short of What’s Needed.

Well, long story short, I agree with Mr. Rattner again. I think that he’s right that neither side has had a sufficient plan, but that doesn’t make their proposals equal (that would be just too convenient for the Ralph Nader’s of the world, who I actually do like). I think that in the middle of these debates it would have been wonderful to watch real reforms take place. Let’s look at it from a health stand point, as if our nation was a human body – we are having a very hard time trying to stop the bleeding from our wounds after having fallen on our face in a drunken stupor, but we don’t seem willing to stop the drinking that is causing our wounds inside and outside of our body… Does that make senses? We have a broken system, and it can’t get better until we have a discerning decision making body that wants to live and thrive. I have plugged this group multiple times before, but maybe it takes some outside ideas to get things working again, and I think No Labels might be our 12 step program… If for no other reason I encourage you to check out their plans for reform that would help us move forward, especially their plan to Make Congress Work.

– Grady

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From All Sides, Fiscal Plans Fall Far Short of What’s Needed

The Radical Is Romney, Not Ryan – Steve Rattner

After hearing Governor Romney muddy the waters in the last debate I was really frustrated to find out that he muddied the waters even more than I had initially though… He said that we should just throw all of the studies out about the campaigns approaches to taxes and spending because we all have different studies making opposing arguments, and it’s just a push, we can’t know which one is right… Well, as it turns out, the studies that Romney was referring to ended up being Blog Posts (and yes I realize this is a blog post – I just don’t claim that it could go toe-to-toe with Obama’s actual study). If you want to read more about Romney’s “tax study” problem click here (The truth about Romney’s ‘six studies’). Other than that I think that this Rattner article is really interesting and I encourage you to read it.

Cheers,

Grady

 

The Radical Is Romney, Not Ryan

OCTOBER 15, 2012

Originally published in the New York Times

MITT ROMNEY, moderate. That earnestly sought post-debate public image contrasts starkly with Mr. Romney’s actual positions on many issues, especially the future trajectory of government spending.

Clinging tightly to a studied vagueness when pressed for unpopular specifics, Mr. Romney has put forward a budget framework that would not eviscerate Medicare and Social Security, as is commonly believed, but would slash everything else that’s not defense.

President Obama should use Tuesday night’s debate to press Mr. Romney to defend — or even just explain — these proposed cuts, which would be far more draconian than those advanced by his running mate, Paul D. Ryan. Mr. Ryan is widely viewed as the real fiscal hawk, but in key areas, his views on spending levels are actually closer to Mr. Obama’s than to Mr. Romney’s.

All in all, Mr. Ryan and Mr. Romney do see the future similarly — over the next decade, they want government spending reduced to about 20 percent of the United States’ gross domestic product, below the historic average of around 21 percent. (Recognizing that an aging society costs more, Mr. Obama proposes to hold spending at its current level, 23 percent.)

These differences may not sound like much, but by 2023, each percentage point of G.D.P. could represent about $250 billion in federal spending.

Though Vice President Joseph R. Biden Jr. brought it up repeatedly in his debate with Mr. Ryan on Thursday, Social Security — the single biggest government expenditure — is not on the battlefield. Mr. Romney and Mr. Ryan have each backed away from threats to privatize or cut it and now propose to spend the same amount on it as Mr. Obama would in the coming decade.

That’s not the case with Medicare. Mr. Obama and Mr. Ryan have each endorsed similar packages of about $950 billion of savings over 10 years, while Mr. Romney has opposed any reduction, making it virtually impossible for him to achieve his overall spending limit.

To be sure, Mr. Romney and Mr. Ryan agree — and differ with Mr. Obama — on many matters, like how to contain the growth in Medicare spending and whether to raise the eligibility age.

And they part company from Mr. Obama when it comes to the Affordable Care Act (the Republicans demand its repeal, claiming it would save about $1.6 trillion) and Medicaid (Messrs. Romney and Ryan want it turned over to the states and want to cut nearly 20 percent from Mr. Obama’s planned levels).

But with respect to nearly half the budget, Mr. Romney and Mr. Ryan widely diverge from each other.

Mr. Romney is calling for a huge increase in defense spending — roughly $2 trillion more over the next decade than Mr. Ryan wants to spend, which is only $400 billion above Mr. Obama’s budget — even though the military is not asking for such an increase. Such an increase would force giant reductions, about 40 percent, in everything that’s left.

“Everything else” isn’t some catchall of small items, like feeding Big Bird. We’re talking about a vast array of programs including civilian and military pensions, food stamps, unemployment and disability compensation, the earned income and child tax credits, family support and nutrition, K-12 education, transportation, public safety and disaster relief. And on and on.

All told, Mr. Romney would allocate $6.9 trillion for these items, compared with the $9.3 trillion proposed by his own running mate (and Mr. Obama’s $12 trillion, which itself represents a 9 percent reduction from current levels, after adjusting for inflation).

No doubt some of what is buried within “other mandatory and nondefense discretionary spending” can be eliminated. Perhaps Americans won’t miss a few national parks or the space program.

But also nestled within this category are critical outlays for investments in infrastructure and research.

Eating the seed corn is never advisable, yet that’s what Washington is already doing. The share of spending on infrastructure (roads, airports, dams and the like) fell from 2 percent of G.D.P. in 1971 to 1 percent in 2010.

More — not less — government money needs to be invested in these kinds of growth-generating projects (not to mention education and training).

I recognize that in the real world, cuts on the scale envisioned by Mr. Romney will prove politically untenable, which would force a President Romney to rethink his agenda.

But as a statement of intent, it’s Mr. Romney — not Mr. Ryan — who has produced the budget that would more dramatically reduce the services offered by government, and in ways that would shock and outrage most Americans. We can only hope that Mr. Obama will draw those contrasts clearly in the debate.

via The Radical Is Romney, Not Ryan.

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© Steven Rattner 2012

Beyond Obamacare – by Steve Rattner (Maybe The Toughest Debate in Healthcare)

This article is one of the more challenging articles that you’ll probably read in a while about reforms and actual policy. Steve Rattner is addressing healthcare costs for elderly citizens in the latter years of their life. People don’t like to think about themselves getting older, or their loved ones getting older, but this is a conversation that we need to have. I don’t want to do a spoiler and tell you the conclusion that he comes to, but it is definitely a hot topic, and I don’t know exactly how I feel about it… But, Steve Rattner has continually shown himself to be a politically moderate realist, and innovative pragmatist in the market. I’m ready to hear this debate, but I expect it to get very ugly on the fringes…

Beyond ObamaCare

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© Steven Rattner 2012

via Beyond Obamacare.

Morning Joe – Rattner’s Charts: Hours worked, wages increase in June jobs report

Morning Joe: Hours worked, wages increase in June jobs report.

If you read this blog on even a semi-regular basis by now you are probably aware that I am a fan of a man name Steve Rattner (Twitter, Wikipedia). He is an economist/financier (who was actually the car czar in charge of the automobile bailout). Rattner is very helpful to a person like myself who looks for information that hopefully supersedes politics (as can be seen by him and Mika joking about Elizabeth Warren due to Rattner being a democrat who supports her republican opponent to be a United States Senator from Massachusetts). These graphs show a lot of interesting information, but what is said about them on the show helps make a lot of sense of the information actually trying to be addressed. So, feel free to click the link at the top of this post to go to the video, or you can read the text of their conversation.

Mika:

How would you characterize the numbers? Bad, dismal?

Steve:

Certainly worse than we expected and better than we feared. We had to previous pretty bad months. I think people were hoping for over 100,000 jobs this last month in June and we got 80,000 jobs. It was a disappointment, but I think people are accustomed to the fact we’re in a slow growth.

Mika:

Is there any growth in specific sectors?

Steve:

Yeah, that’s part of the issue though. When you break it down by sectors you see a varying pattern that helps explain why things are sluggish. If you look at this chart you’ll see, going back to the beginning of the recovery, sectors like professional and business services, education and health, have grown very significantly and, in fact, are now at or above their pre-recession levels. You hear a lot of talk these days about manufacturing, which is growing again, although not back to where it was before the recession started. But here’s a point that we’ve discussed before that’s very important. You’ve got very, very large sectors like government, like construction, which you can think of as home building that are still down in the doldrums. Look at construction which had no recovery even as there has been some recovery in the jobs, so that’s a big part of the problem. You’ve got roughly 30% of the economy where the jobs are simply not growing or including finance, media, a lot of very important industries.

Mika:

Construction? I would assume that a huge percentage of construction being off is related to the housing situation.

Steve:

Sure, that’s home building. Yes.

I thought that this chart was very interesting because it should be noted that with a steeper recession there is a steeper path to recovery, which I have blogged about before (click here if you’d like to read the post comparing President Reagan & President Obama’s recoveries).

And this number might seem menial, but think of it like the analogy about the weakest link in the chain so as long as you can imagine that at least everyone who has a job in this country is a part of that chain.

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