The Misguided Arguments against Social Security Reform, Part II: (The Prequel)
e21’s last editorial on Social Security reviewed some analytical mistakes commonly committed by opponents of Social Security reform. Such mistakes include both implausible hopes that Social Security’s shortfall might disappear by itself, as well as a failure to appreciate the harm done by further delays in its correction. Our last piece addressed both of these areas of confusion in significant detail. Read more...
Getty ImagesThe Misguided Arguments Against Social Security Reform
The ancient Greek playwright Aeschylus is often credited with the well-worn maxim, “In war, truth is the first casualty.” Judging by the commentary circulated whenever a hint of Social Security reform is in the air, Social Security politics are the equivalent of war for many people. Sorting out Social Security fact from Social Security fiction can become practically a full-time job for those who take it on. Read more...
Getty ImagesRound 2 on Lessons from Germany
U.S. commentators, like Jonathan Chait and Paul Krugman, have taken issue with holding out Germany’s economic recovery as a success story – one that contains lessons for U.S. policymakers. Contrary to their claims, Germany’s recovery does not appear to just be about trade flows and global demand for their manufactured goods. 50% of their second quarter GDP came from private sector consumption and investment growth. Read more...
More Capital and Robust Growth Can Peacefully Coexist
The next stage of financial regulatory reform is rulemakings to determine how much capital banks must hold to buffer against potential losses. A key question policymakers will need answered is the extent to which tougher regulatory standards will reduce lending and inhibit economic growth. Read more...
Getty ImagesThe Future of Finance is Very Uncertain
Earlier this week, FDIC Chair Sheila Bair argued that the “road to safer banks runs through the Basel process.” While she correctly defined many of the objectives in her FT op-ed (i.e. higher capital requirements), her optimism about how the current process is unfolding is worrisome. Read more...
Financial Reform: Wrong Diagnosis, Wrong Cure
Will the recently enacted financial reform law fix the problems that caused the economic crisis? That’s hard to say, since nobody really agrees what caused the crisis in the first place and the the Financial Crisis Inquiry Commission, which was created by President Obama in May 2009, isn't due to release its findings until December 2010. Read more...
Getty ImagesLessons from Germany’s Economic Recovery
After a tepid recovery from a deeper recession, the German economy seems to have achieved an “escape velocity,” which – to borrow a term from Larry Summers – has thus far eluded the U.S. Why has the German (and broader European) economy sizzled at the same time as the much touted “Summer of Recovery” in the U.S. has fizzled? Read more...
Taxes Aren’t the Problem, Spending Is
Fareed Zakaria had an interesting, but misguided piece, “Raise My Taxes, Mr. President!” in last week’s edition of Newsweek echoing what has become a familiar line from the left. However, in claiming that current tax rates are most to blame for our disastrous fiscal condition, Zakaria is wrong. Read more...
Getty ImagesAn Underreported Counterview on Fed Policy
The latest transcript from the Fed reveals a growing concern about the downside risk of deflation. Increasingly, monetary experts are discussing what additional steps the Fed can take to buttress the stalled economy – all while it keeps interest rates low for an extended period of time. Yet, Raghuram Rajan – who is widely known for his prescient warnings on the financial crisis – offers a noteworthy counter perspective. Read more...
Federal Stimulus Kicks Costs Down the Road
Today, the House returns from its six-week summer recess to vote on an emergency spending package for the states. The measure, which includes $16 billion to help states with Medicaid costs and another $10 billion for school districts, has already cleared the Senate. So, here we are again roughly 18 months after the February 2009 "stimulus." States are (still) facing big holes in their budgets. And, Congress is about to pass yet another state patch or bailout. Read more...
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