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Obama Nominates F.T.C. Economist to Top Regulatory Post

April 26, 2013 by Leave a Comment

President Obama has nominated Howard Shelanski, the top economist at the Federal Trade Commission, to direct the White House office overseeing all federal regulations.

If confirmed, Mr. Shelanski will direct the Office of Information and Regulatory Affairs, a branch of the White House Office of Management and Budget. The Senate this week confirmed Sylvia Mathews Burwell to lead the budget office.

Mr. Shelanksi, an economist and lawyer who was a clerk for Justice Antonin Scalia of the Supreme Court, has taught at Georgetown University Law Center and at the University of California, Berkeley. He currently serves as the director of the commission’s bureau of economics.

His previous posts include chief economist at the Federal Communications Commission and senior economist on the White House Council of Economic Advisers during the Clinton administration.

Although it is little known outside of government, the Office of Information and Regulatory Affairs, (known as OIRA, pronounced “oh, Ira”) is a powerful perch from which regulations large and small from every agency of the executive branch are surveyed and, frequently, altered.

The last permanent director of the office, Cass R. Sunstein, a Harvard University law professor and close friend of Mr. Obama, drew the ire of business, consumer and environmental advocates for what they called a heavy hand in rewriting or rejecting proposed federal rules. Mr. Sunstein said that his only mission was to apply common sense and cost-benefit analysis to rules that affected health, safety, the environment and the economy.

Mr. Sunstein stepped down last August to return to Harvard.

Government watchdog groups follow OIRA closely because of the power it wields over regulation. Robert Weissman, the president of Public Citizen, said he was looking for assurances that Mr. Shelanski would not bow to industry pressure to soften important health and safety rules.

“Right now, OIRA is stalling food safety rules, worker safety rules and energy efficiency standards, in some cases flouting legal deadlines set by Congress and typically with no explanation,” Mr. Weissman said in a statement. “OIRA’s role has been to weaken regulations, never strengthen them. Senators should ask Shelanski if he will encourage strong, protective rules and end lengthy delays if confirmed.”

Article source: http://www.nytimes.com/2013/04/27/us/politics/obama-nominates-ftc-economist-to-top-regulatory-post.html?partner=rss&emc=rss

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Economix Blog: Buffett vs. Mankiw on Taxes

January 25, 2012 by Leave a Comment

DAVID LEONHARDT

DAVID LEONHARDT

Thoughts on the economic scene.

By inviting Debbie Bosanek, Warren Buffett’s secretary, to sit in the first lady’s box at the State of the Union address, President Obama has signaled that he intends to talk about the tax rate on some investments. Mr. Obama and Mr. Buffett both argue that many investment managers pay too little tax, because the tax code treats their pay as an investment return — and thus taxes it at a much lower rate than ordinary income. Mr. Buffett has famously said that, as a result, his secretary pays a higher tax rate than he does.

The tax rate on many investment gains is 15 percent, while the top tax rate on ordinary income is 35 percent.

This gap goes a long way toward explaining why Mitt Romney, the Republican presidential candidate, pays a lower tax rate than many affluent Americans.

N. Gregory Mankiw, a Harvard economist and former adviser to President George W. Bush who is now advising Mr. Romney, has questioned the notion that Mr. Buffett actually pays a higher tax rate than his secretary. Writing in The New York Times in 2007, Mr. Mankiw, who is a contributor to the “Economic View” column in The Times’s Sunday Business section, argued:

Another piece of the puzzle is that Mr. Buffett’s tax burden is larger than it first appears, because he is a major shareholder in Berkshire Hathaway.

When the [Congressional Budget Office] studies the tax burden, it includes all federal taxes, including individual income taxes, payroll taxes and corporate income taxes. In its analysis, payroll taxes are borne by workers, and corporate taxes by the owners of capital. For the richest 1 percent of the population, 9.3 percentage points of their 31.1 percent tax rate comes from the taxes that corporations have paid on their behalf. The corporate tax would undoubtedly loom large if the C.B.O. were to calculate Mr. Buffett’s effective tax rate.

Mr. Mankiw’s main point is that Mr. Buffett’s true tax rate is higher than he says, because he is effectively paying corporate taxes, through his ownership stake in companies.

We invited the Center on Budget and Policy Priorities, a liberal-leaning research group in Washington, to respond to Mr. Mankiw’s argument. Chuck Marr, the center’s director of federal tax policy, wrote in an e-mail message:

Professor Mankiw identifies the best source of information on this subject: the Congressional Budget Office. Let’s take a closer look, though, at the story that the latest numbers tell. They show a country in the midst of a stunning increase in inequality, with incomes at the top rising more than ten times as fast as the incomes of middle-class Americans. At the same time, taxes have been cut dramatically for the richest people in the country – one reason why deficits have gone up in recent years. The 29.5 percent average tax rate faced by the top 1 percent used to be 37 percent in 1979.

The result is that the share of after-tax income flowing to the top 1 percent has surged from 7.5 percent in 1979 to 17 percent. This represents a shift upward of hundreds of billions of dollars each year. With huge budget deficits on the horizon and working and middle-class families struggling, it is time to reverse course and return the tax burden at the top to more reasonable levels.

Look for more discussion of this issue on both Mr. Mankiw’s blog and the center’s blog. And The Times’s Caucus blog will be following the State of the Union address all night.

Article source: http://feeds.nytimes.com/click.phdo?i=b4b27135fd5d38c24260418233346e19

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Economy Hampers Deficit Panel, Budget Office Says

September 14, 2011 by Leave a Comment

At the same time, the director, Douglas W. Elmendorf, told a powerful new Congressional committee on deficit reduction that the government’s growing debt would “lead to lower output and incomes” and could “increase the probability of a sudden fiscal crisis.”

As the 12-member panel began its race against a November deadline to recommend substantial federal savings, Mr. Elmendorf said its task had become more difficult because the outlook for the economy had worsened in the last month.

“We expect employment to expand very slowly during the rest of this year and next year, leaving the unemployment rate close to 9 percent through the end of 2012,” Mr. Elmendorf said.

The panel is supposed to recommend ways to reduce federal deficits by at least $1.2 trillion over 10 years, or else the government will make across-the-board cuts in many federal programs to achieve those savings.

Under the law, the committee must take a final vote by Nov. 23, but Mr. Elmendorf said his office would need a legislative proposal by early November to assess its impact on the deficit.

Republican members of the panel said growth in federal spending — for Medicare, Medicaid and Social Security, in particular — was the main factor in the nation’s fiscal problems. Mr. Elmendorf said spending for the big three benefit programs would account for 12.2 percent of the gross domestic product in 2021, compared with an average of 7.2 percent in the last 40 years.

The difference, 5 percent of the economy, “is a very big number,” Mr. Elmendorf said.

Democrats said higher revenues were essential. Federal revenues are equivalent to 15.3 percent of the G.D.P. this year, compared with an average of 18 percent over the last 40 years, the budget office said. Under current law, which provides for the expiration of Bush-era tax cuts in 2013, revenues will grow to nearly 21 percent of the economy by 2021, it said.

Representative Chris Van Hollen, Democrat of Maryland and a member of the committee, said that without higher revenues, “you are talking about dramatic cuts in health and retirement security for America’s seniors.”

But Representative Dave Camp, Republican of Michigan and chairman of the House Ways and Means Committee, said, “Federal revenues have equaled or exceeded 20 percent of G.D.P. only three times: in 1944 and 1945, during World War II, and in 2000,” when the government ran a surplus.

Two Republicans on the deficit reduction committee, Senator Jon Kyl of Arizona and Representative Fred Upton of Michigan, said they believed that the government could save large amounts of money by rooting out fraud and waste in benefit programs.

Mr. Elmendorf told lawmakers that “there is no evidence” to suggest that such antifraud efforts could produce a large share of the $1.2 trillion in deficit reduction the panel is supposed to recommend.

The budget office director put a price tag on the cuts that would occur automatically if legislation originating in the committee did not become law by Jan. 15.

Military spending would be cut by $454 billion over 10 years, Medicare by $123 billion and other domestic programs by more than $300 billion, he said. With these cuts, the government would have less need to borrow, so debt-service costs would be reduced by nearly $170 billion over 10 years, he added.

Senator Rob Portman, Republican of Ohio and a member of the panel, said the goal of saving $1.2 trillion to $1.5 trillion was formidable but realistic in the larger context of federal spending. The budget office estimates that the federal government will spend $44 trillion in the coming decade.

One of the most difficult questions for the panel is how to reduce the budget deficit without threatening the fragile economic recovery.

Mr. Elmendorf said, “There is no inherent contradiction between using fiscal policy to support the economy today,” with tax cuts or additional spending, and “imposing fiscal restraint several years from now.”

However, Republicans were skeptical of that approach. Too often, they said, the additional spending, though labeled temporary, has become permanent, as with some provisions of the economic stimulus law adopted in 2009.

On one point lawmakers agreed on Tuesday.

“All problems are easier to solve with a strong, growing economy,” said Senator Patrick J. Toomey, Republican of Pennsylvania.

Senator John Kerry, Democrat of Massachusetts, said, “We need growth, not just revenue and not just cuts.”

Article source: http://feeds.nytimes.com/click.phdo?i=6e3e47cdb3c9782319105d99cb322770

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