This is a frequent mistake in reporting on the tax proposal, as in this Post article telling us:

"Under the Trump plan, pass-through businesses get a substantial reduction in taxes."

This is wrong since pass-through corporations already don't pay any taxes, so their taxes can't be reduced unless we have a negative income tax for them. The tax cut applies to income from pass-through corporations.

This distinction matters for two reasons. First, it means that taxpayers with the same income will pay different tax rates depending on its source. Under the plan passed by the Senate, anyone can get a 23 percent reduction in their tax bill if they arrange for their income to come through a pass-through corporation.

While this tax break is not likely to do much to promote economic growth, it will be rocket fuel for the tax shelter industry. There will be a flood of pass-through corporations created as higher-earning workers, like doctors and lawyers, arrange to have their income paid to them from their pass-through corporations rather than as normal wage income. (Yes, this is supposed to be illegal, but the Republicans have spent two decades gutting the IRS's enforcement capabilities. If you think the IRS, given its current resources, will be able to prevent widespread evasion, please contact me so I can sell you some digital currency.)

Fox News and Atlantic Magazine have zero shame. The latter has a major article telling readers that Social Security is "the grandparents stealing from the grandchildren."

The piece is a cornucopia of misstatements about Social Security and Medicare, most importantly implying that today seniors get some big windfall from the programs and that it somehow comes at the expense of our grandchildren. Both parts of this claim are seriously wrong.

In the case of Social Security, most people retiring in the near future will actually get back from the program roughly the same amount that they paid in, using standard interest rates. Low- and-moderate income people will get back somewhat more, whereas "high earners" (defined as people earning around $75,000 a year) will get back less.

The average value of Medicare benefits will exceed tax payments, but this is due to the high cost of medical care in the United States. While we don't have better health care outcomes in the United States than in Germany, Canada, or other wealthy countries, we do pay around twice as much per person as these other countries. The difference is the greater price of drugs and medical equipment, the cost of insurance, and the pay of doctors. A serious article would look at how these big actors in the health care industry are stealing from our grandchildren, but not the Atlantic.

The other part of the story is the implication that somehow the Social Security and Medicare received by seniors is limiting our ability to ensure a decent standard of living for our children and grandchildren. This is lunatic land. As the Republicans are showing right now, we are not near any limits in our ability to run larger deficits. We could always impose higher taxes on the rich who have been the big gainers from economic growth over the last four decades, due to their rigging of the economy.

We could also reverse some of the rigging. For example, ending patent monopolies on prescription drugs and allowing them to be bought at free market prices would save us close to $370 billion a year, roughly half of which would take the form of savings to the government. Expansionary fiscal and monetary policy that allows the unemployment rate to fall to lower levels also disproportionately benefits those at the bottom of the income ladder, benefiting our children and grandchildren by giving their parents jobs and the bargaining power to get pay increases at those jobs.

December 13, 2017

December 13, 2017 (Prices Byte)

This interview with Marco Ramiro Lobo, a non-voting member of the Honduran electoral authority (TSE by its Spanish acronym) was published on December 3rd by El Faro. In the days since, the TSE has conducted a partial review of actas in an attempt to satisfy concerns raised by international observers and the political opposition, and has agreed to recount the 5000 actas discussed in the interview. However, both the second and third-place finishers continue to reject the results provided by the TSE, which they say has lost all credibility. Both parties filed legal challenges to the results requesting a full vote-by-vote recount and the annulment of the elections, respectively. More than two weeks since the election, many questions remain about how things went so wrong.

He’s an alternate member but, after the president of the Supreme Electoral Tribunal (TSE in Spanish) of Honduras, he is the most visible of the tribunal’s four magistrates. He doesn’t have a vote, but he has a voice and he has made certain that he is heard. Marco Ramiro Lobo was appointed by the Honduran congress three years ago, and today he appears to be the magistrate most opposed to the decisions of the tribunal’s president, David Matamoros. He’s demanding an in-depth investigation of two system failures by the TSE’s vote-tallying technology. He admits that the TSE bears the primary responsibility for the political and social crisis gripping Honduras a week after its presidential election.

The tribunal consists of a magistrate, President David Matamoros, from the National Party, a representative from the Liberal Party, Erick Rodríguez, a member of the tiny Democratic Christian Party, Saúl Bonilla, and Lobo, a member of the small Party of Democratic Unification (UD). The Honduran congress refused to name a representative from the Free Party or the Party for Innovation and Unity (PINU), which make up the Opposition Alliance headed by Salvador Nasralla and Mel Zelaya, who are currently denouncing the reported results as fraudulent.

On Saturday, December 1, Stephen Schwarzman — CEO of private equity firm Blackstone Group and noted Trump advisor — hosted a fundraiser at his home for the President. In addition to many of Trump’s wealthy friends, the event was attended by Treasury Secre

As the labor market has tightened, many of us have looked to trends in wage growth to see evidence that we could be hitting full employment. While the tighter labor market has led to gains for those at the middle and bottom of the wage distribution, it has not led to a general acceleration in wage growth. The year-over-year increase in the average hourly wage was just 2.5 percent for November, roughly the same as it has been for the last two years.

In spite of the weak wage growth, news outlets continually tell us that employers are unable to find workers with the necessary skills. The argument is that more people would be hired if only the unemployed workers had the skills required by employers.

This story doesn't fit with the weak wage growth story since there are always workers with the necessary skills — they just might work for competitors or in another city. The way employers attract these workers is by offering a higher wage. If we don't see wages rising, then this story doesn't really make sense. (Employers would always like to find workers who will accept below-market wages; so what?)

Nonetheless, we often see people citing the Bureau of Labor Statistics data on job openings and hires to argue the case that companies can't find workers with the needed skills. There has been a fall in the ratio of monthly hires to job openings over the last decade. This is taken as evidence that employers have positions that are going unfilled because they can't find skilled workers. A closer look at the data indicates otherwise.

Dean Baker
Truthout, December 11, 2017

The recently proposed merger of two giant players in healthcare — CVS Health, one of the nation’s largest pharmacies, and Aetna, one of the largest health insurance companies — will create a healthcare behemoth. With annual revenues of about $240 billion,

December 8, 2017