Download ECONOMIC POLICY

Economic Policy
12/17/12
Today’s Goals- Be able to explain
1. GNP vs GDP
2. Monetary Policy and how the Fed Reserve Board
carries it out
3. Fiscal Policy
4. Economic Theories for Fiscal Policy- Keynesian vs
Supply Side
5. Progressive vs Regressive Taxes
6. Regulation
7. Expropriation and Eminent domain
8. Growing Economic Inequality in the USComparative view
ECONOMIC POLICY
___________ __________ __________all
goods and services produced by the
nationals of a country. This means that
whatever Americans produce around the
world counts, even if it is in Japan or
France. We add that stuff in and subtract
out goods made by foreign nationals here
in the States
.
.
_________ ______ _______is the more up-to-date term. Its basic
meaning is the value of all final goods and services produced within a
national boundary (ie within our DOMESTIC borders) . For example,
the Toyotas produced by USA Toyota in KY.
Often expressed per capita or PPP or by annual growth
Economic and political systems are deeply entwined
Extremes:
At one end: ______________ A type of economic system where the
resources are state owned and their allocation and use is determined
by the centralized decisions of a planning authority –better at
industrializing than at providing __________ goods.
At the other:_______ _________ the French expression for "to
leave alone”: argues that the government should have as little as
possible to do with the economy because private ownership,
market-based decision making, and free trade will optimize public
welfare and raise the standard of living; view was especially
popular between the Gilded Age and the Great Depression.
Other measures of the economy
http://data.bls.gov/map/servlet/map.servlet.MapToolServlet?state=53&d
atatype=unemployment&year=2008&period=M12&survey=la&map=co
unty&seasonal=u
And remember indicators of
development—economic and social
Union Laws
• National Labor Relations Act (1935)• Right to work states in periwinkle
collective bargaining is guaranteed,
blue
protection from employer retaliation
• Taft-Hartley Act (47)- reaffirmed
collective bargaining but placed
restrictions on unions
1. Made closed shops illegal- required to
join unions as a condition of
employment
2. Agency shops- new employees can
choose to join/not join a union, if they
don’t join they must pay a fee that can
be used during collective bargaining
3. Right-to-work states- not required to
join or pay membership fees, critics
say this results in free riders (people
benefit from collective bargaining but
don’t have to support it with union
dues)
January 26, 2009
How the Government Dealt With Past
Recessions
Recession- a period of general economic decline
Specifically: a decline in GDP for two or more
consecutive quarters
http://www.nytimes.com/interactive/2009/01/26/business/economy/2009
0126-recessions-graphic.html
The Economy is
something voters
care about
2006 Midterm elections
__________POLICY: tries to control the size of the total supply of
money (and other highly liquid financial assets that are close
substitutes for money) available in the national economy in order to:
control inflation, and/or speed up/slow economic growth, and/or
manage the level of unemployment and/ or influence the exchange
rates at which the national currency trades for other foreign currencies
3 Things the FRB does to manipulate the _________ of money
(1) It can set discount rates for money that banks borrow from the
regional Fed. Reserve banks--if rate down, more people can
borrow, more money available in economy but concern is
___________
(2) Federal Funds Rate- the interest rate banks can charge each
other for overnight loans. Lower rates = increased money supply
(3) it can increase or decrease the reserve requirements that banks
must keep--if lower, more money in economy, (also brings down
interest rates) but concern is _____________
(4) it can buy (Quantitative easing) and sell govt. securities (bonds,
treasury notes and other govt. IOUs which are savings devises.) When
the govt. buys, it puts more money in circulation, and takes securities
out of circulation, With more money around, interest rates tend to
drop, so more private money is borrowed and spent. But concern is
_______If the Fed sells securities, it takes money out of circulation, (it
is going into savings) causing interest rates to rise by making
borrowing harder.
_____Policy the
use of
government
expenditure and
revenue collection
to influence the
economy
Fiscal Policy
1. Keynesian Economic Theory
• Advocates gov’t taking an active role to stimulate the economy
during a recession
• Temporary mixed economy
• Spending helps increase demand
• Multiplier effect- people who’s jobs are saved continue consuming
goods, that in turn keeps people in jobs to meet the stable demand
• After the economy recovers, gov’t spending can be reduced
• Examples: FDR’s New Deal policies: WPA (roads/highways, public
buildings), CCC (national and state parks, flood/erosion control),
TVA dams),
• Reagan’s defense spending increases (although he criticized
Keynesianism)
Keynesianism in Action –recent
bailouts
1. Economic Stimulus Act of 2008
• Tax rebates- most individuals received $600, $300 per dependent child
• Tax breaks to businesses for investing in new equipment
• $152 billion
2. Cash for Clunkers (2009)- Car Allowance Rebate System
• $3 billion program
• $3,500 or $4,500 credit for buying new (old car had to be 25 years old) and fuel
efficient cars
3. TARP- Troubled Asset Relief 2008
• Originally passed under Bush
• Obama released the second half in 2009
• $700 billion to prevent
• gave banks the right to submit a bid price to sell their toxic mortgage-backed
securities to the Treasury Dept. and buy stock
• “Too big to fail”
• Also help stabilize companies like General Motors
• Many companies (including GM) have repaid their loans
American Recovery and Reinvestment
Act of 2009
• $787 billion total- Passed under Obama
• Tax relief: 116 billion: New payroll tax credit of $400 per
worker , $15 billion Expansion of child tax credit- A $1,000
credit to more families, 6.6 billion: Homebuyer credit:
$8,000 refundable credit for all homes bought between
1/1/2009 and 12/1/2009
• $51 billion tax expenditures for companies: renewable
energy
• $155 billion Healthcare- $86 billion Medicaid, $25.8 health
information technology (digitizing records)
• $100 billion Education: $53.6 billion to school districts to
help prevent layoffs
• $40 billion to unemployment benefits
• $105.3 Infrastructure Projects
American Recovery and Reinvestment
Act of 2009
Supply-side economics
• Became popular during the 80’s (Reagan) until 2008
• Advocates return to free markets, less gov’t programs/spending,
and monetarism (keep money supply low to resist inflation)
• Taxes and regulations hurt economic growth
• Lower taxes = more motivation to work, companies have more
money to hire more workers, people can invest/save more money
• Spending increases national deficit and debt- could cause interest
rates to increase
• Examples- Bush $1.3 trillion 10 year tax cut following the 2001 dotcom recession
• Truman’s lack of action during the Great Depression
• Margaret Thatcher (G.B.) slashed gov’t programs
“This is an essential
short-term measure
to ensure the viability
of the American
banking system,”
President Bush said
.
Tuesday morning
http://www.nytimes.com/2008/10/15/business/economy/15bailout.html?hp
Income Taxes
If you work in the United States, you will probably incur some sort of federal income tax liability
each year. Most people will also owe state income taxes, A few cities and townships add another
layer to the mix of taxes you’ll pay; this list details what the various state and local governments
charge.
The amount you owe — for federal, state and local taxes — is determined by how much you earn
each year. The United States uses a progressive tax system, which means the more money you
earn, the higher your tax rate. The chart above lays out the different tax brackets and rates, which
depends on your filing status (single, married couples filing jointly, married filing separately,
etc.).
a flat tax can be regressive . . . .
Suppose there is a 10% flat payroll
tax. Paying it will be a much bigger
sacrifice for someone who makes
$10,000 than someone who makes
$100,000. The marginal benefit of
an extra dollar of income has a
diminishing property and is nonlinear.
The FICA tax is levied on employers, employees, and certain self-employed individuals.
Revenue goes to Social Security and Medicare. In 2000, the employee’s contribution to the
retirement part of the FICA tax was 6.2 percent of the first $76,200 earned in wages and
salaries. (Medicare is withheld on all wages and tips.) People with income from interest
and dividend payments do not have to pay any Social Security tax on this income.
1. Over the wage and salary income range of $0 to $76,200, was the Social Security tax
regressive, progressive, or proportional? Why?
Proportional; the same percentage (6.2%) was taken of all earned income over the
given range.
2. For employees who earned more than $76,200, was the Social Security tax regressive,
progressive, or proportional? Why?
Regressive; they paid no social security tax on earned income over $76,200, so their
average tax rate would be lower than the rate for people who earned $76,200 or less.
However, they did pay income tax on these earnings, so their total liability for all
taxes may have been proportional or even progressive.
3. For people with income from interest and dividend payments, is the Social Security tax
regressive, progressive, or proportional? Why?
Regressive; they pay no Social Security tax on the interest and dividend part of their
income, so their average tax rate would be lower than the rate for people who do not
receive any interest or dividend income. They do owe income tax on most of this
income, so their total tax liability may be proportional or even progressive.
But not all taxes within
the federal system are
equally progressive. The
estate tax is the most
progressive federal tax.
The individual and
corporate income taxes
are also progressive. In
contrast, payroll taxes for
Social Security and
Medicare are regressive,
claiming a larger share of
income from lowerincome than from higherincome households.
Taken as a whole, the federal tax system is progressive: on average, households with higher
incomes pay a larger share of their income in federal tax than do those with lower incomes. In
other words, the overall average effective tax rate-total tax paid as a percentage of incomerises as income rises
Among OECD countries only
Mexico, Turkey, Korea,
and Japan had lower taxes than
the United States as a percentage
of GDP. In many European
countries taxes exceeded 40
percent of GDP, but those
countries generally provide much
more extensive government
services to their citizens than the
United States does.
The United States relies less on
consumption taxes—17 percent of
total 2006 tax receipts—than any
other OECD country. Revenue
from such taxes averaged 32
percent of total taxes among the
30 OECD countries. Mexico, in
contrast, collected 56 percent of
its 2006 tax revenue from
consumption taxes.
The Earned Income Tax Credit (EITC) is a federal income tax
credit for low-income workers who are eligible for and claim
the credit. The credit reduces the amount of tax an individual
owes, and may be returned in the form of a refund.
http://en.wikipedia.org/wiki/Earned_Income_Tax_Credit
Trend since the 1980s is
market _______________
Balance of Trade. The value of a nation's exports minus the
value of its imports. The balance of trade is positive if exports
exceed imports; negative if imports exceed exports.
http://www.brightpointinc.com/flexdemos/ustrade/ustradedeficit.html
Trade deficit
OTHER ways the gov’t impacts the economy:
Subsidy: Monetary assistance granted by a government to a person or
group in support of an enterprise regarded as being in the public interest.
OTHER ways the gov’t impacts the economy:
Regulation . . . Or deregulation
March 18, 2008
More examples of regulation
Justices Take Up On-Air Vulgarity Again
By LINDA GREENHOUSE
WASHINGTON — March 18 2008The issue of vulgar
speech on the nation’s regulated airwaves, a flash point
for decades, reached the Supreme Court again on
Monday.
The justices agreed to give the Federal
Communications Commission a chance to defend its
decision to start punishing broadcasters for the isolated
and fleeting on-air use of expletives, an abrupt change in
the commission policy that a federal appeals court last
year found procedurally improper.
It has been almost exactly 30 years since the Supreme Court ruled in the “seven
dirty words” case that the First Amendment did not bar the government from
regulating the broadcasting of speech that, while “indecent,” was not actually
obscene. The broadcast at issue then was a 12-minute monologue by the comedian
George Carlin, titled “Filthy Words,” that deliberately challenged federal regulators
by highlighting “the words you couldn’t say” on the public airwaves.
In a 2-to-1 ruling last June, the appeals court did not address the First Amendment challenge
directly. Rather, it held that the commission had violated ordinary principles of administrative
law by making “a dramatic change in agency policy without adequate explanation.” The appeals
court vacated the commission’s order, instructing the F.C.C. to “articulate a reasoned basis for
this change in policy.”
At the same time, the appeals court majority made it clear that any explanation would face a high
hurdle. “We are skeptical” that any explanation “would pass constitutional muster,” the court said
in an opinion by Judge Rosemary Pooler.
Noting that all the words at issue were “fully protected by the First Amendment,” Judge Pooler
continued, “We are sympathetic to the networks’ contention that the F.C.C.’s indecency test is
undefined, indiscernible, inconsistent and, consequently, unconstitutionally vague.”
In its Supreme Court appeal, Federal Communications Commission v. Fox Television Stations,
No. 07-582, the commission said the ruling placed it in an “untenable position” by leaving the
commission “accountable for the coarsening of the airwaves while simultaneously denying it
effective tools to address the problem.”
As cable television viewers are well aware, the commission’s authority to regulate indecency
is limited to the broadcast medium; whether the indecency horse is out of the barn may become
an issue as the case moves forward. That will be early in the court’s next term. Kevin J. Martin,
the F.C.C. chairman, said in a statement he was pleased the Supreme Court had accepted the
appeal. “I continue to believe we have an obligation to enforce laws restricting indecent language
on television and radio when children are in the audience,” Mr. Martin said.
The Parents Television Council, a group whose members filed the original complaints, also said it
was pleased. Of the 234 complaints the commission received after the 2003 Golden Globes
broadcast, all but 17 were generated by the Parents Television Council.
For years after that ruling, despite its victory, the F.C.C. exercised its power with a light hand,
disclaiming the authority to punish fleeting words that did not reflect “deliberate and repetitive
use in a patently offensive manner,” as the commission said in a public notice in 1987.
In an “industry guidance” document it issued in 2001, the commission said that in deciding
whether to punish a broadcaster with fines or license revocations, it would consider “whether the
material dwells on or repeats at length descriptions of sexual or excretory organs or activities.”
That document said that “the full context in which the material appeared is critically important.”
The approach changed soon after that, when the NBC broadcast of the 2003 Golden Globe
Awards drew complaints for the expletive that the singer Bono used as an adjective to express his
delight at receiving an award for best original song. The commission overruled its own
Enforcement Bureau, which had denied the complaints on the basis of the existing policy, and
found that the fleeting expletive fell within the definition of indecency, because it “invariably
invokes a coarse sexual image” that made its broadcast “shocking and gratuitous.”
The commission did not impose a penalty against NBC, because the network “did not have the
requisite notice” of the new approach, the commission said in its “Golden Globe Awards Order”
in 2003.
Complaints about two other broadcasts, of the Billboard Music Awards on the Fox network,
eventually led to the case the justices accepted Monday. The entertainers Cher, in receiving an
award, and Nicole Richie, in presenting one, both used common expletives that generated
complaints. Once again, the commission did not impose a sanction, but it made the new policy
official and put broadcasters on notice there would be future penalties. A coalition of broadcasters
challenged the new policy in the United States Court of Appeals for the Second Circuit, in New
York, raising constitutional and statutory objections.
Supreme Court Rules that Government Can Fine for 'Fleeting
Expletives'
By Robert Barnes, Washington Post Staff Writer
Wednesday, April 29, 2009
The Supreme Court said yesterday that the Federal Communications Commission may
penalize even the occasional use of certain expletives on the airwaves but left for
another day the question of whether such a policy is constitutional.
The court's narrow ruling said the FCC -- prompted by Cher's use of the F-word during
a 2002 live broadcast and similar remarks by what Justice Antonin Scalia called "foulmouthed glitteratae from Hollywood" -- was justified in changing its policy in 2004 to
fine broadcasters up to $325,000 every time certain words are allowed on the air.
For Now . . .
The networks also challenged the rule under the First Amendment, but, like the U.S.
Court of Appeals for the Second Circuit in New York, the Supreme Court did not rule
on the question of constitutionality.
"Whether [the policy] is unconstitutional will be determined soon enough, perhaps in
this very case," Scalia wrote in sending the case back to the appeals court. In the
meantime, any suppressed "references to excretory and sexual material surely lie at the
periphery of First Amendment concern."
More ways the govt can impact the
economy
EXPROPRIATION: seizing private property for public
use:
done for highways, urban redevelopment, parks,
Process: Govt exercises the right of Eminent domain
(subject to limits put on it by the 5th amendment
“takings clause” and applied to the states thru the
14th amendments DP clause)
____CPI_____________). A monthly measure of changes in the prices of
goods and services. It is the most widely accepted measure of inflation.
_Farm Bill_________________The major agricultural legislation in the U.S.,
which expires every four or five years. Outlines provisions on commodity
programs, trade, conservation, credit, agricultural research, food stamps, and
marketing.
___Federal Reserve System________The central bank of the U.S. consisting
of 13 district banks and a centralized decision-making body, the Board of
Governors. : 1) provides currency upon demand to member banks, 2) provides
check-clearing services, and 3) regulates the money supply by buying and
selling government securities, changing the reserve requirement, and changing
the discount rate. Although a creation of government, with the Board of
Governors being appointed by the President, the System has generally
maintained independence in its own policy decisions and on wider economic
events and policies.
_Fiscal Policy________A macroeconomic policy tool used by the government
to regulate the total level of economic activity within a nation. Examples include
setting the level of government expenditures and the level of taxation.
___GNP______________A measure of the market value of goods and services
produced by the labor and property of a nation. Includes receipts from that
nation's business operations in foreign countries, as well as the share of
reinvested earnings in foreign affiliates of domestic corporations.
__Inflation_______A sustained rise in the general price level, generally
measured by the Consumer Price Index (CPI).
_Monetary Policy__________. A macroeconomic policy tool used to influence
interest rates, inflation, and credit availability through changes in the supply of
money available in the economy. In the U.S., the Federal Reserve implements
monetary policy changes.
___Recession___________A cyclical downward movement in the economy
involving at least two consecutive quarters of a decline in the real (inflationadjusted) GDP
___Reserve Requirement______________The amount of reserves (i.e.,
money) that the central bank requires a commercial bank to hold (i.e., money
that cannot be used for loans).
____tariff_______A tax that a government assesses on goods as they enter (or
leave) a country. May be imposed to protect domestic industries from imported
goods and/or to generate government revenue.
_Deficit_______ when current expenditures exceed current revenues.
Most frequently used to describe the situation in which government
revenues (i.e., taxes) fail to cover government expenditures
__Surplus____When current revenues exceed current expenditures.
Most frequently, used to describe the situation in which government
revenues (i.e., taxes) exceed government expenditures
Balance of trade The value of a nation's exports minus the value of its
imports. It is positive if exports exceed imports; negative if imports
exceed exports.
___Discount Rate_____ The interest rate the central bank charges on
loans to commercial banks
___exchange rate_____ The price of one currency in terms of another
currency
Import quotaThe maximum quantity or value of a commodity allowed to
enter a country during a specified time period.
protectionism____________ism Tariff or nontariff trade barriers imposed
by a government to protect a domestic industry
Trade barriers_______ _________Regulations governments use to
restrict imports from, and exports to, other countries. Examples include
tariffs, embargoes, import quotas, and unnecessary sanitary restrictions
expropriation________taking out of an owner's hands (especially taking
property by public authority)
subsidy_________ financial support
Neo-liberalism________ ism political movement that espouses
privatization and other free market policies as a means of promoting
economic development and securing political liberty
1.Monetary policy—Point is to manipulate the _supply_________ of money and
credit in the economy. Key player is the_Fed_________. It can decrease the cost to
borrow money by __lowering___________ interest rates,
___lowering_______________ the reserve requirements and
__buying____________ securities, but it risks ___inflation____________.
2.__Fiscal_________ Policy A macroeconomic policy tool used by the government
to regulate the total level of economic activity within a nation. Examples include
setting the level of government expenditures and the level of taxation.
3.Practicing Keynesian economic theory where the key is to create the right level of
__demand___________ in the economy. If it is too ___low____________ you
stimulate with programs. If it is too great, you risk inflation so you cut (ha!).
President __FDR__________ is best example.
4.__antitrust__________ laws allow the __Justice________ Department to bring
suit against companies that have monopolized a certain product or service.
5.Consumer policy: The _F___________ _____T________ ___C_______________
regulates trade and advertising; the ___F____________ and ______D____
______A_________ monitors the health safety of food and approves new drugs for
sale.
Today's poverty rate is a bit less than
it was when there were 200 million
Americans in 1967 - 12.6 percent last
year, according to a Census Bureau
report last month.
But because the overall population has
increased, the number of those in
poverty has also grown - from 28
million to 37 million over the same
period. Whether an individual is likely
to be officially designated as poor
depends in large part on race. For
non- Hispanic whites the poverty rate
is 8.3 percent; for African-Americans,
24.9 percent; and for those of Hispanic
origin, 21.8 percent
Gini coefficients for the United States at various times, according to the
US Census Bureau:
•1970: 0.394
•1980: 0.403
•1990: 0.428
•2000: 0.462
•2005: .469
•2006: .470 (highest index reported)
•2007: .463
•2008: .466
•1929: . 450
The Gini coefficient is often used as an _______ ________metric. Here, 0 corresponds
to perfect income equality (i.e. everyone has the same income) and 1 corresponds to
perfect income inequality (i.e. one person has all the income, while everyone else has
zero income). While most developed European nations tend to have Gini coefficients
between 0.24 and 0.36, the United States Gini coefficient is above 0.4, indicating that
the United States has greater inequality
.
Gini Coefficient World CIA Report 2009
Human Poverty Index
Ranking
Country
HPI-2
Probability at birth of not
surviving to age 60 (%)
People lacking functional
literacy skills (%)
Long-term unemployment
(%)
Population below 50% of
median income (%)
1
Sweden
6.3
6.7
7.5
1.1
6.5
2
Norway
6.8
7.9
7.9
0.5
6.4
3
Netherlands
8.1
8.3
10.5
1.8
7.3
4
Finland
8.1
9.4
10.4
1.8
5.4
5
Denmark
8.2
10.3
9.6
0.8
5.6
6
Germany
10.3
8.6
14.4
5.8
8.4
7
Switzerland
10.7
7.2
15.9
1.5
7.6
8
Canada
10.9
8.1
14.6
0.5
11.4
9
Luxembourg
11.1
9.2
-
1.2
6.0
10
Austria
11.1
8.8
-
1.3
7.7
11
France
11.2
8.9
-
4.1
7.3
12
Japan
11.7
6.9
-
1.3
11.8
13
Australia
12.1
7.3
17.0
0.9
12.2
14
Belgium
12.4
9.3
18.4
4.6
8.0
15
Spain
12.5
7.7
-
2.2
14.2
16
United Kingdom
14.8
8.7
21.8
1.2
12.5
17
United States
15.4
11.6
20.0
0.4
17.0
18
Ireland
16.0
8.7
22.6
1.5
16.2
19
Italy
29.8
7.7
47.0
3.4
12.7
The Human Poverty Index is an indication of the standard of living in a country, developed by the UN. For
highly developed countries, the UN considers that it can better reflect the extent of deprivation compared to
the Human Development Index. http://en.wikipedia.org/wiki/Human_Development_Index
The 2009 Poverty Guidelines for the48 Contiguous States and the
District of Columbia
Persons in family
Poverty guideline
1
$10,830
2
14,570
3
18,310
4
22,050
5
25,790
6
29,530
7
33,270
8
37,010
For families with more than 8 persons, add $3,740 for each
additional person.
The Department of Health and Human Services issues the poverty
guidelines for administrative purposes—for instance, to determine
whether a person or family is eligible for assistance through various
federal programs
The conventional Census income distribution data are based on the concepts of "money income." Money income includes
earnings, interest, dividends, rents, Social Security retirement benefits, pension or retirement income, survivors' benefits,
disability benefits, veterans' benefits, workers' compensation, alimony, and some cash welfare benefits.
Increasingly, Americans receive "non-cash" incomes that are not included in the Census income distribution figures based on
"money income." For example, many Americans receive health insurance from their employers. Such insurance is an
important augmentation to salaries. Families who have health coverage are clearly better off, ceteris paribus, than those who
must pay health costs out of pocket.
Similarly, the poor and the elderly receive extensive and costly non-cash benefits from the government. In 2002, the
government spent $522 billion on means-tested aid to the poor and the near poor.8 This aid included cash, food, housing,
medical care, and social services such as subsidized day care. Virtually none of this assistance was included in the Census
income distribution figures. In the same year, the government spent $257 billion subsidizing medical care for the elderly
through the Medicare program; this assistance was also ignored in the Census income distribution figures.
200 million in 1967
Social Welfare and
the Environment
A few things to
consider…
In a federal system, the welfare of the citizens is a shared responsibility
Welfare Reform was part of the “devolution revolution”
Food stamps are an entitlement program, with eligibility guidelines set by Congress and the
federal government paying for benefits while states pay most administrative costs.
Eligibility is determined by a complex formula, but basically recipients must have few assets and
incomes below 130 percent of the poverty line, or less than $27,560 for a family of four.
Personal
Responsibility and
Work Opportunity
Act of 1996
"Welfare to Work"
people on welfare must find a job in 2 years, or lose benefits
5 year life time limit
ends federal entitlement status since it goes to states as fixed amount,
regardless of how many are on welfare rolls
money given to states in form of block grants
One of the places states most often “act as laboratories” . .
Which they can do in our ____________ system
It’s a part of the
“RepublicanRevolution”, Newt
Gingrich’s Contract with America
in the
“welfare reform” starts in the states
July 5, 2009
Safety Net Is Fraying for the Very Poor
By ERIK ECKHOLM
Government “safety net” programs like Social Security and food stamps have pulled growing
numbers of Americans out of poverty since the mid-1990s. But even before the current
recession, these programs were providing less help to the most desperately poor, mainly
nonworking families with children, according to a new study by the Center on Budget and
Policy Priorities, a private group in Washington.
The recession is expected to raise poverty rates, economists agree, although the impact is being
softened by the federal stimulus package adopted this year, which temporarily expanded
measures like food stamps, child tax credits, unemployment benefits and housing and tuition
aid.
In view of the gloomy employment report last week, economists are debating whether to
increase stimulus funds over all. But in a side argument, poverty experts are also asking
whether elements of the package aimed at the most vulnerable Americans should be extended
beyond their scheduled expiration in two years or even made permanent.
The new safety-net study found that federal aid programs had helped tens of millions of
Americans stay afloat in recent years, especially those with low-end jobs who benefited from
rising tax credits.
Going into the recession that began in late 2007, however, “the safety net was already
enfeebled for jobless families,” said Arloc Sherman, a senior researcher at the center on budget
priorities and author of the new study.
Dems vs republicans on
the role of govt
The latest extension
of the Welfare state:
Environmental Agency Tightens Smog Standards
March 13, 2008 By MATTHEW L. WALD
Tens of millions of people live in
counties that do not meet the
federal requirements for air
quality. Smog over Los Angeles
WASHINGTON — The Environmental Protection Agency announced a modest tightening of the smog
standard on Wednesday evening, overruling the unanimous advice of its scientific advisory council for a
more protective standard.
The administrator, Stephen L. Johnson, said that by law he was forbidden to consider costs in setting the
standard, but urged Congress to change the law so future administrators could do just that.
The standard, stated in terms of average concentrations of ozone at ground level over an eight-hour period, is
now 84 parts per billion. Mr. Johnson’s decision, if it survives court review, would lower that to 75, although
implementation could be decades away. Late last year a scientific advisory panel recommended 60 to 70 parts
per billion.
“I’ve made the most health-protective eight-hour ozone decision in the nation’s history,” said Mr. Johnson.
The Clean Air Act requires periodic review, and the announcement Wednesday updates a standard from 1997.
But John M. Balbus, a physician and the chief health scientist at the Environmental Defense Fund, said,
“Clearly at some point you get to a level where additional benefits just aren’t worth it, but I don’t think we’re
there at 75.”
“The E.P.A.’s own risk estimates show that between 75 and 70, there will be hundreds more deaths and
thousands more visits to emergency rooms, and hundreds of thousands of more lost school days,” he said.
Regardless of which figure was chosen Wednesday, tens of millions of people live in counties that do not
meet the current standard of 84. And the timetable for meeting the new one could be decades, depending on
the severity of the problem, city by city.
Places that violate the current standards include Southern and Central California, the Houston, Dallas and
Atlanta areas, and a swath of counties from the Washington, D.C., area through central Massachusetts.
E.P.A. figures for 2004 to 2006 show there were 166 counties around the country that could have met a
standard of 75 parts per billion but not 70. They include populous ones, like Miami-Dade in Florida, King
County in Washington, and the Bronx in New York.
In all, 345 counties now violate the standard of 75 parts per billion. Bringing them into compliance would
prevent 900 to 1,100 premature deaths a year, according to the agency, and result in 5,600 fewer hospital or
emergency room visits. Reaching the standard will cost $8.8 billion a year, according to the agency, but the
figure does not take account of health benefits.
Counties that cannot meet the standard face the threat of limits on new highways and industries. Technically
the administrator set a standard on ground-level ozone, which is the main ingredient of smog. Ozone is
formed by the action of sunlight on two kinds of pollutants, volatile organic compounds, which come from
gasoline and various industrial processes, and nitrogen oxides, which are produced in cars and power plants.
Ground-level ozone is also a greenhouse gas.
While many groups and elected officials complained, not all the complaints were in the same direction. The
Edison Electric Institute, the trade association of the investor-owned utilities, said in a statement that the
precise relationship between ozone and human health was still the subject of scientific dispute.
“E.P.A. is promising health benefits that people may never receive, even though they’ll end up paying for
them at the pump and through higher energy bills,” said a statement from John Kinsman, the utility group’s
senior director for the environment. “Hundreds of counties haven’t been able to meet the current standard set
a decade ago, and moving the goal posts again will inflict economic hardship on these areas without speeding
air quality improvement.”
But others said the Bush administration was setting its sights too low.
“It will be close to a decade from now before the first ounce of pollution is reduced by any industry,”
said S. William Becker, executive director of the National Association of Clean Air Agencies, whose
members are state and local officials.
“That decade is an eternity in terms of technological advancement,” Mr. Becker said.
The debate in coming days is likely to center on why Mr. Johnson chose a number outside the range
recommended by his 23-member scientific advisory board.
Representative Henry A. Waxman, Democrat of California and head of the House Committee on
Oversight and Government Reform, told Mr. Johnson in a letter that the decision was similar to one in
2006 to overrule a recommended standard on fine particles. The decisions “suggest that science is not
the primary basis for your decisions,” he wrote, asking for an explanation.
Remember this example of
statutory construction
Car and truck tailpipe emissions account for about one-fourth of the
country’s greenhouse gas emissions.
Justices Say E.P.A. Has Power to Act on
Harmful Gases NYT April 3 2007
Environmental Agency Tightens Smog
Standards
March 13, 2008
By MATTHEW L. WALD
Tens of millions of people live in counties that
do not meet the federal requirements for air
quality. Smog over Los Angeles
WASHINGTON — The Environmental Protection Agency announced a modest tightening of the smog
standard on Wednesday evening, overruling the unanimous advice of its scientific advisory council for a
more protective standard.
The administrator, Stephen L. Johnson, said that by law he was forbidden to consider costs in setting the
standard, but urged Congress to change the law so future administrators could do just that.
The standard, stated in terms of average concentrations of ozone at ground level over an eight-hour period, is
now 84 parts per billion. Mr. Johnson’s decision, if it survives court review, would lower that to 75, although
implementation could be decades away. Late last year a scientific advisory panel recommended 60 to 70 parts
per billion.
“I’ve made the most health-protective eight-hour ozone decision in the nation’s history,” said Mr. Johnson.
The Clean Air Act requires periodic review, and the announcement Wednesday updates a standard from 1997.
But John M. Balbus, a physician and the chief health scientist at the Environmental Defense Fund, said,
“Clearly at some point you get to a level where additional benefits just aren’t worth it, but I don’t think we’re
there at 75.”
“The E.P.A.’s own risk estimates show that between 75 and 70, there will be hundreds more deaths and
thousands more visits to emergency rooms, and hundreds of thousands of more lost school days,” he said.
States’ Battles Over Energy Grow Fiercer With
U.S. in a Policy Gridlock
A coal-fired power
plant in Kansas,
owned by Sunflower
Electric. A state
environmental official
rejected two
Sunflower plants.
March 20 2008 Utility executives in Kansas were shocked last fall when a state environmental
official rejected two coal-fired power plants because of the millions of tons of carbon-dioxide
emissions they could produce. In a state where coal generates 73 percent of the electricity, the
pro-coal forces were unable to work their will.
That ineffectiveness will be underscored as early as Friday if Gov. Kathleen Sebelius, as
expected, vetoes an effort by the Kansas State Legislature to ensure the plants are approved. A
handful of lawmakers seeking a new energy policy are blocking the attempt to override.
The struggle over those plants is an example of a growing trend in climate-change politics. In the
absence of clear federal mandates for emissions from smokestack industries, states that have
been proving grounds for new environmental approaches to energy are becoming
battlegrounds as well.
“There are certainly battles happening all over the nation,” said Steve Clemmer, the Clean Energy Program
research director at the Union of Concerned Scientists. In Kansas and Washington State, the battles are
over individual plants. Other fights, as in California, are over how to structure carbon controls —
essentially, who will have to pay, and how much. Some, as in Minnesota, are over how much renewable
energy must be created and what forms are appropriate.
And that list does not take into account major battles between the states and the federal government,
exemplified by the Environmental Protection Agency’s refusal to let California control greenhouse-gas
emissions from automobiles.
What to do about the greenhouse-gas emissions from fossil fuels — particularly the coal that fuels the lion’s
share of electricity in 25 states — is a question Washington has largely dodged. But politics, like nature,
abhors a vacuum. The national gridlock over climate-change policy has led to an ever-increasing number of
state initiatives.
Currently 18 states seek to cap carbon dioxide emissions for industry and 25 support mandates for renewable
energy; renewable-mandate legislative battles are under way in Ohio and Michigan. There are three
multistate compacts intended to limit emissions and allow trading of carbon allowances; governors of 10
Midwestern states, including Ms. Sebelius, joined such a pact last fall.
The trend has not been slowed by the Bush administration’s approval of new gas-mileage standards for
new trucks and cars, or its nearly simultaneous refusal to give California and 17 other states the waiver
needed to control emissions from cars.
For example, Washington State last year passed a law limiting the amount of greenhouse-gas emissions that
any new power plant could produce. After the law was passed, regulators blocked a power plant that would
be partly coal-fired, saying it would emit an illegal amount of carbon dioxide.
But in a state reliant on emission-free hydropower, that is a less controversial decision than the rejection of
new coal plants in Kansas.
You’d better be thinking federalism-no
national energy policy
For Pods of Whales, Celebrity Status and Now a Lawsuit
September 8, 2006
A group of killer whales swimming near the shore of San Juan Island
. . . Last year, southern resident killer whales — the 90 current members of J, K and L pods — were added to
the endangered species list.
By November, the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service,
an arm of the Department of Commerce, plans to establish boundaries for the “critical habitat” the three
pods need to survive: 2,500 square miles in Puget Sound and the Strait of Juan de Fuca that also constitute
one of the nation’s busiest waterways for commercial shipping. (can you say . . . “the devil is in the details . .
.. . And discretionary power”)
Once that map is completed, federal agencies will be required to consider the killer whales’ well-being before
approving projects or policies that would affect these waters wherever they are deeper than 20 feet. Thus,
most areas close to the shoreline would not be affected, the fisheries service said.
Orca protection, though, has brewed its own legal battle in a region familiar with debates about endangered
salmon and the northern spotted owl. Washington’s homebuilders and farmers, assisted by a conservative
legal foundation, have sued the federal government to strip the killer whales of their endangered status.
(are you thinking . . . .litigious culture . . . . And amicus briefs. . . And regional cleavages . . . )
Lawyers for these groups say the government should not distinguish orcas in Puget Sound from a healthy
global population numbering in the tens of thousands. The state’s Farm Bureau and Building Industry
Association warn, in particular, that local governments (hmm would that be federalism) might react to
federal protection of the orcas by locking up land near streams or along the coast to improve water quality for
the orcas and for salmon, their main food source.
“Radical environmentalists” are using killer whale protection to block otherwise legal economic activity, said
Russell C. Brooks, a lawyer at the Pacific Legal Foundation, which is handling the case for the plaintiffs.
“It all comes back to limiting development, limiting land use, limiting whatever, from people that probably
want to run the nation’s economic policy out of a tree house,” Mr. Brooks said.