Tag Archives: economics

Paul Krugman: Sanders Needs to Distance Himself from ‘Fantasy Economics’

Nobel Prize winning, progressive-leaning economist Paul Krugman said in an op-ed on Wednesday that the Bernie Sanders presidential campaign needs to distance itself from unrealistically rosy predictions regarding the potential consequences of his economic proposals, or else risk making Jeb Bush’s policy proposals “look realistic.

Krugman takes issue with the fact that the Sanders campaign’s policy director praised University of Massachusetts Amherst economics professor Gerald Friedman’s comprehensive analysis of Sanders’ economic proposals as “excellent work.

According to CNN Money’s Tami Luhby, Friedman predicted that the sum of Sanders’ policies, if passed into law, would push median household income to “$82,200 by 2026, far higher than the $59,300 projected by the Congressional Budget Office.” He suggested that unemployment would drop to 3.8 percent and that the labor participation rate would surge back to 1999 levels.

In addition, [Friedman claimed that] poverty would plummet to a record low 6%, as opposed to the CBO’s forecast of 13.9%. The U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation’s $1.3 trillion deficit would turn into a large surplus by Sanders’ second term,” Luhby added.

[RELATED: DNC Chair: Superdelegates Exist to Protect Party Leaders from Grassroots Competition]

Following the release of Friedman’s predictions, a group of former chairs of the Council of Economic Advisers under Bill Clinton and Barack Obama, specifically Alan Krueger, Austan Goolsbee, Christina Romer, and Laura D’Andrea Tyson, signed an open letter to Sen. Sanders and Friedman which said, “We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.

Krugman, in his Wednesday op ed for The New York Times, parroted the fears of the former CEA chairs and wrote, “OK, progressives have, rightly, mocked Jeb Bush for claiming that he could double growth to 4 percent. Now people close to Sanders say 5.3???

The point is not that all of this is impossible, but it’s very unlikely — and these are numbers we would describe as deep voodoo if they came from a tax-cutting Republican,” said Krugman, who argued that Friedman’s predictions regarding the growth and unemployment effects of Sanders’ policies are unlikely to take place in the face of a “long-term downward trend” in the labor participation rate due to an “aging population.”

[RELATED: Reality Check: After Being Trounced By Sanders in NH, Clinton Still Wins More Delegates Thanks to DNC Insiders]

Sanders needs to disassociate himself from this kind of fantasy economics right now. If his campaign responds instead by lashing out [against the former CEA chairs’ open letter] — well, a campaign that treats Alan Krueger, Christy Romer, and Laura Tyson as right-wing enemies is well on its way to making Donald Trump president,” concluded Krugman.

On February 3, the Committee for a Responsible Federal Budget released a fact check of offsets that Bernie Sanders has proposed in an effort to fund his single-payer healthcare plan, which stated, “By our rough estimates, his proposed offsets would cover only three-quarters of his claimed cost, leaving a $3 trillion shortfall over ten years. Even that discrepancy, though, assumes that the campaign’s estimate of the cost of their single-payer plan is correct. An alternate analysis by respected health economist Kenneth Thorpe of Emory University finds a substantially higher cost, which would leave Sanders’s plan $14 trillion short. The plan would also increase the top tax rate beyond the point where most economists believe it could continue generating more revenue and thus could result in even larger deficits as a result of slowed economic growth.

Sanders’ chief policy adviser Warren Gunnels called the former CEA chairs “the establishment of the establishment” and told NPR, “[The open letter criticizing Sanders’ embracing of Friedman’s projections] does not bother us at all. What bothers us is the fact that the U.S. has more kids living in poverty than nearly any major country on Earth.

For more 2016 election coverage, click here.

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Jason Stapleton: The Greed and Envy of Bernie Sanders

Today on the show Jason breaks down the dangerous ideas of one of the most economically illiterate men in America today.

The Jason Stapleton Program is live from 11:05 am to noon eastern. Enjoy replays from earlier episodes before and after the live show. You can also find recorded episodes on iTunes.

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Did you miss today’s episode? Enjoy a highlight below:

D.I.N.K.s Should Pay Higher Taxes?

Today’s political pundits come up with strategies to shift the tax burden to certain groups instead of suggesting the obvious: lower the tax burden for all by shrinking the size of government.

Slate.com’s blogger

“Who should pay more? Nonparents who earn more than the median household income, just a shade above $51,000. By shifting the tax burden from parents to nonparents, we will help give America’s children a better start in life, and we will help correct a simple injustice.”

Wait, What? Simple injustice? Really?

Basically, Salam is singling out D.I.N.K.s (Double Income No Kids) to punish them.

My wife and I used to be D.I.N.K.s and it was great. Sales people loved us too. Because they knew we had money. I remember when we would tell the appliance salesman that we had no kids and saw his face light up as he pushed us toward a more expensive flatscreen T.V.

This is what people like Salam need to know: stealing from people via taxation is morally repugnant and it’s bad for the economy too. Taking away more money from D.I.N.K.s to waste on government programs will hurt the economy and hurt the salesman trying to sell me that new flatscreen. D.I.N.K.s are spenders. They are an important demographic and part of the engine that makes the American economy thrive.

I really hate even subjecting the Benswann.com readers to this type of thinking. The lack of knowledge of basic economics is shocking, but this is what the Liberty movement is fighting against.

This story reminds me of a quote from Frédéric Bastiat which is so true even today, “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”

Well, hopefully we can can change this mindset through the new media and through the great leaders in the Liberty movement.

Here are some of the leaders who woke me up from my dogmatic slumber: Ben Swann, Ron Paul, Tom Delorenzo, Lew Rockwell, Tom Woods, and Dr. Jon Boulet who first introduced me to Austrian economics. There are many more as well. I recently heard Jeffrey Tucker give a speech that was fascinating regarding how markets and innovation side step government regulation.

The challenge is getting these leader’s messages out to more people and break through the noise. We need more messaging that advances economic freedom and personal liberty, not the message of government control and the confiscation of property.

I for one wish people like Salam would leave me and my wallet alone. I’m taxed enough already.

Please comment in the section below.

Senator Bernie Sanders (I-VT) “Why should taxpayers subsidize starvation wages?”

During a Congressional panel discussion on Thursday, Indpendent Senator Bernie Sanders of Vermont blasted the Walton family for what he sees as their tax-subsidized fortune.  He contends that they maintain their status as some of the wealthiest people in the world by paying poverty wages to their 1.4 Million US employees.  He states the taxpayers are left paying for the rest for the workers and their families with taxpayer subsidized Medicaid, food stamps, housing, and other government benefits.

Sanders was calling into question whether its morally or ethically right for a massively wealthy and profitable company to have such high rates of full times employees on government assistance.  He says the discussion about income inequality inside the Beltway are divorced from reality, and that the lobbyists and representatives for these large corporations are getting rich off fighting for corporations that hoard the earnings of the labor for just the executives and board of directors, as well as shareholders.  Sanders said in the 1950’s the average working class wage was (today’s equivalent of) $37/hour.

He said today the average wage is $8.80, with the net result of exploding rates of poverty and workers needing help just to pay their bills and raise their children.

Sanders said there are more people living in poverty today than in the history of the US.  This is likely due to big boxes stores and mega-corporations running the small mom & pops stores out of business, the ones that populated every neighborhood into the 1970’s, where wealth stayed in the town.  Now with mega-corporations, the labor is extracted from a town the benefits don’t go right back reinvested into the neighborhood, they get moved out to the shareholders that are in other parts of the country, or other parts of the world.  Sanders nearly edges into the idea that shareholders at the mega-corporations that exploit workers are similar to a modernized slave owner.  The shareholder and executives of the corporation own the labor whereas the laborer just barely subsists for their 40 hours per week.

Sanders goes on to say between 2009 and 2012, 95% of all new income generated went to the 1%.  He also says the top 1% owns 38% of the nation’s wealth.

The bottom 60% of people own 2.3% of the entire nation’s wealth.  He asks the panel if this makes moral or economic sense.  He asks is it okay that one family (The Waltons) own more wealth than the bottom 40% of the American people.  He also says the Walton family is the wealthiest family in America, and yet they are the biggest recipient of welfare in the US due to the taxpayer covering the gap on their employees needs.   The Walton’s are reportedly worth $100 Billion.  They are the largest employer in America.

Senator Sanders posted his panel discussion to YouTube.  There is much more in the less than 7 minute clip, check it out here and tell us what you think and feel about the issue.

 

(VIDEO) VP of White Castle says, “$15 minimum wage means layoffs”

President Obama is now shifting his attention to advocate for an increased federal minimum wage. According to the Guardian,

“The federal minimum wage currently stands at $7.25 an hour, or about $15,000 a year. Obama renewed his call for it to be increased, and has already indicated he will back a Senate measure to increase the minimum statutory pay to $10.10. Republicans in the House oppose the measure, which they say would be harmful to business.”

“To more than double the federally mandated starting wage wouldn’t be bad for White Castle, it would be absolutely catastrophic,” Jamie Richardson, vice president of White Castle, told CNBC’s “Closing Bell” on Wednesday.

Economist Paul Krugman, disagrees with Richardson and is pushing for increased minimum wages.

But most classical economists disagree with Krugman. When the government increases the minimum wage artificially above the market price for unskilled labor, it causes an increase in unemployment and hurts low-skilled job seekers.

Economist Thomas Sowell states in Basic Economics, “Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.”

Those who are fighting against a minimum wage hike believes that a federal minimum wage law is misguided, and only helps one group of people: politicians.

Classical economists agree that increasing the minimum wage is a bad idea because it increases unemployment. An increase to the minimum wage decreases the demand for labor and increases the supply of labor which causes low-skilled workers to lose jobs and prevents others from finding new ones.

Economists like Sowell notes that Switzerland, one of the wealthiest nations, does not have a minimum wage and has a very low unemployment rate. So why do politicians, and some economists, advocate a minimum wage increase?

Sowell believes that it’s simply politics. The fact that the economic data indicates the minimum wage actually hurts low-skilled workers is not politically feasible juxtaposed with the idea of a social “safety net” for low-skilled workers.

Despite the economic data, the debate on increasing the minimum wage lives on. Princeton economist Alan Krueger told CNBC that he supports the President’s proposal to increase the minimum wage.

“I think our country will do a lot better if we have more shared prosperity,” Krueger said.

“I think we’re hurting opportunities for the next generation because the bottom half of the country has struggled so much over the past couple of decades,” the former chairman of Obama’s Council of Economic Advisers added. “Raising the minimum wage a modest amount, like the president proposed, helps lower-wage workers and I think that will be good for our economy.”