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ALEC Policies Sell ‘Snake Oil to the States’

2:11 pm in Uncategorized by ThirdandState

Would billionaires spend millions to influence your  vote if it had no value?

Would billionaires spend millions to influence your vote if it had no value

By Sharon Ward, Third and States

Three national organizations offered a scathing criticism of policies endorsed by the American Legislative Exchange Council, or ALEC, in a conference call with reporters last week. Their findings strike a stake in the heart of ALEC claims that its view of the world — lower taxes, fewer workplace protections, and diminished public investments — is good for the public.

Pennsylvania state lawmakers who look to ALEC for guidance on economic policy should stand up and take notice.

Iowa Policy Project research director Peter Fisher discussed a recent report he co-authored with researchers from Good Jobs First, concluding that the tax, budget, and economic prescriptions put forth by ALEC simply don’t work.

Selling Snake Oil to the States took a look at ALEC’s annual Rich States, Poor States report, which ranks states based on their “economic outlooks” as defined by ALEC. The factors should come as no surprise: states with low taxes and right-to-work laws rank high by ALEC; those with progressive taxes, corporate income taxes, and worker protections rank far behind.

Fisher compared the ALEC rankings with actual state performance on real economic indicators over a four-year period. Do ALEC’s policy prescriptions improve state economies? The answer is no.

Between 2007 and 2011, researchers found no relationship between a high ALEC ranking and employment. They did find a correlation on personal incomes and poverty rates among states ranked high by ALEC, but it was a negative one — the better a state fared on the ALEC scale, the worse it did in real life. As Fisher said during the conference call:

It should be hardly surprising that policies to keep wages low have the effect of lowering the state’s income. … The ALEC policy prescriptions for states will not lead to growth and prosperity but to further inequality and lower incomes.

The Center on Budget and Policy Priorities examined sweeping tax and budget policies that ALEC is currently lobbying for in the states. The policies largely encompass deep tax cuts for wealthy individuals, investors, and corporations that will leave middle- and lower-income families paying more.

Both reports note that the ALEC agenda promotes low wage growth for families, fewer workplace protections, and strategies to starve public investments in education, health care, and other priorities — all of which reputable economists agree are critical to job creation and economic growth.

It is an article of faith among Pennsylvania lawmakers that ALEC policies are good for the economy. These reports provide clear and convincing evidence to the contrary: the arguments that the ALEC agenda are good for real people are nothing but snake oil. The policies are good for the businesses that pour millions into ALEC to promote this agenda.

Governor Tom Corbett has hidden large expensive new tax cuts to profitable corporations in his budget proposal released this month. This and other ALEC agenda items won’t create jobs, but they will lead to greater inequality, slower income growth, and continued starvation of our public schools, transit systems, and other priorities.
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Morning Must Reads: Bailouts for the Banks and Cake for the 99%

6:57 am in Uncategorized by ThirdandState

WTF cake (Photo: sanfranannie, flickr)

WTF cake (Photo: sanfranannie, flickr)

A blog post by Mark Price, originally published at Third and State.

What is good for the financial sector is good for the 99% 1%.

For the financialization of America wasn’t dictated by the invisible hand of the market. What caused the financial industry to grow much faster than the rest of the economy starting around 1980 was a series of deliberate policy choices, in particular a process of deregulation that continued right up to the eve of the 2008 crisis. Not coincidentally, the era of an ever-growing financial industry was also an era of ever-growing inequality of income and wealth. Wall Street made a large direct contribution to economic polarization, because soaring incomes in finance accounted for a significant fraction of the rising share of the top 1 percent (and the top 0.1 percent, which accounts for most of the top 1 percent’s gains) in the nation’s income. More broadly, the same political forces that promoted financial deregulation fostered overall inequality in a variety of ways, undermining organized labor, doing away with the ‘outrage constraint’ that used to limit executive paychecks, and more.

The Pittsburgh Post-Gazette reviews employment law in Pennsylvania and notes that there are two sets of rules, the rules for the rest of us (we are employed at will and rarely get a severance) and the rules for top executives. Read the rest of this entry →

Morning Must Reads: Unemployment Up, Incomes Down

11:26 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The New York Times this morning leads with a story based on a report by a private consulting firm called Sentier Research LLC. In the chart that follows, the quote below the plummeting red line is a measurement of income for the typical household and the skyrocketing black line is the unemployment rate. If you come across anyone arguing that we should do nothing to spur job growth, it is probably because profits measured as a share of national income reached their highest share since World War II, even while incomes have been decimated by high unemployment.

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

In what is the most painful irony of all, this report, which also documents a rise in inequality, is only available for a fee of $20. The research is based on a new data series (which itself is assembled from public data sources) created by a private consulting firm run by two former Census Bureau employees. To paraphrase my colleague Stephen Herzenberg, you never hear people explain that they left the private sector to get rich in the public sector.

And in completely unrelated news. Wink! Wink! Nudge! Nudge! Say no more! The Patriot News has a new version of its annual list of public-sector workers who earn more than $100,000 a year. Anybody see the Patriot-News build a nice database of CEO pay in the region? Me neither.

You can find some CEO pay figures here.

Paul Krugman this morning reviews the hysterical reactions in some quarters to the Occupy Wall Street Movement and ends up putting the Plutocrats on the couch for some psychoanalysis. To badly paraphrase Freud, sometimes socialism for the rich is just greed.

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens. Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

The Pittsburgh Post-Gazette ran a weekend story covering student loan debt; regular blog readers will see the touch of Keystone Research Center fall intern Sean Brandon.

Finally this morning, I caught some interesting comments on the Occupy Pittsburgh Campaign.

[Duquesne University associate professor of economics professor Antony] Davies, however, expressed surprise that the ideals of Occupy Wall Street — which grabbed the nation’s attention when New York City police arrested 700 protesters crossing the Brooklyn Bridge on Oct. 1 — would find such willing ears here. “Of all the cities in the country, I think this would be the least likely to have protests like this,” Davies said. “This area was the most shielded from the economic downturn. When the rest of the country had 10 percent unemployment, we were at 7 percent.”


The greatest antidote to nonsense is data.

The graph that follows plots the unemployment rate in Allegheny County since 1990. That the unemployment rate today remains higher than it has been in more than two decades suggests that all is not well in the City of Pittsburgh. Sure, unemployment is higher in many other places, but for the thousands of new people in Pittsburgh experiencing unemployment, such relative differences are cold comfort.