A roundup of economic news from around the Web.
- Fed Seats: Mark Thoma asks why so many Fed seats are unfilled. ” For whatever reason, the administration has not taken full advantage of its chance to shape monetary policy during the downturn. The number of open positions is a large fraction of the Federal Reserve Board, and it skews the balance of power on the Federal Open Market Committee (where monetary policy is decided) toward the regional banks. Many of the regional bank presidents are inflation hawks, more so than the Governors, so this may have affected the Feds policy choices. By filling the open positions, president Obama could have given the current Board a better chance of dealing with the many complex problems it needs to address, and it could have shaped the types of policies that have been enacted.”
- Ryan’s Budget Plan: Writing for the Tax Policy Center’s TaxVox blog, Howard Gleckman notes that Republican Rep. Paul Ryan’s budget plan falls short of meeting his goal of balancing the budget and paying off the national debt by 2080. “TPC found Ryans plan generates much less revenue than he projects. If all taxpayers chose the simplified system, it would produce about 16.8 percent of GDP by 2020, far below the 18.6 percent he figures for that year. If taxpayers chose the system most favorable to their situation, the Ryan plan would produce even less revenueabout 16.6 percent of GDP. What does that mean in dollars? CBOs most realistic projection of revenues (assuming most Bush tax cuts are extended and many middle-class families continue to be exempted from the Alternative Minimum Tax) figures the existing tax system would raise about $4.2 trillion in 2020. By contrast, Ryans plan would generate about $3.7 trillion, or $500 billion less in that year alone. While TPC didnt model the Ryan plan beyond 2020, the pattern of revenues it generates suggests it would be decades before it reaches his goal of 19 percent of GDPvery likely sometime after 2040. Top-bracket taxpayers would overwhelmingly benefit from Ryans tax cuts.”
- Benefits and Unemployment: On EconLog, David Henderson agrees with Paul Krugman that the real problem in the employment market is a lack of jobs, but extended unemployment benefits could still be keeping some people from working. ” For it not to apply during the recessions, it would have to be the case that workers literally can’t find jobs so that whether the benefit is zero or $500 a week, the person remains unemployed either way. Is it really plausible that this applies to all workers? Ask yourself this. You lose a job that paid, say, $40K a year ($800 a week) before tax and now you can get $25K a year ($500 a week) before tax–and, moreover, you don’t pay the 7.65% employee portion of the payroll tax on that $500. You see a job that pays, say $30K a year. Do you think you might hold out for one that pays, say, $35K? There’s nothing in this analysis that says you’re lazy. What it says is that, in economists’ usage of the language, “You’re rational.” Here’s the test: Can you find people getting unemployment benefits who have turned down jobs?”
Compiled by Phil Izzo