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Economix Blog: This Time, Economy Is Overshadowed

June 7, 2013 by Leave a Comment

10:49 a.m. | Updated

The covert data miners at the National Security Agency stole the thunder of the more predictable number crunchers at the Bureau of Labor Statistics on Friday morning, when the release of the May jobs numbers drew merely a low rumble. The economy added 175,000 jobs last month, slightly more than expected, but the unemployment rate ticked up to 7.6 percent.

The numbers offer a “modest relief,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics, a market intelligence firm. He predicted in an e-mail, however, that the numbers in June and July would be “materially weaker than May,” adding, “Talk of tapering will not be quieted by this report but still seems premature.”

Alan B. Krueger, the chairman of the White House Council of Economic Advisers, saw nothing but good news in the report: “While more work remains to be done, today’s employment report provides further confirmation that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”

Posting on the White House blog, Mr. Krueger defended the increase in the unemployment rate to 7.6 percent from 7.5 percent by noting an increase in the labor participation rate, “a sign that more workers felt encouraged to search for a job.”

But another liberal economist, Adam S. Hersh of the Center for American Progress, was less impressed:

It’s unclear whether Reince Priebus, the Republican Party chairman, intended to create a little rhyme, but here is the first paragraph of his poetic-for-Washington  statement:

We’re happy that a few Americans were able to find jobs in the last month, but millions of unemployed and underemployed Americans are still waiting for the recovery President Obama promised years ago. This is the status quo—well below where our economy needs to be to grow.

Mr. Priebus continued, “Reports have come out showing he’s lost control of his government: the IRS has been squandering taxpayers’ hard-earned dollars on luxurious million dollar trips and conferences.”

Don’t like the numbers? Don’t blame us, said Representative Eric Cantor, the House majority leader, noting that the Republican-led chamber passed a jobs training bill and a measure to advance the Keystone XL pipeline in May.

But Representative Steny Hoyer, the Democratic whip, did blame the Republicans: “The best remedy Congress can provide for our economy is a big and balanced solution to deficits that replaces the irrational Republican policy of sequester.”

May also featured the rekindling of a political fight over the interest rate for federally subsidized student loans, which are set to double in July unless Congress acts. An analysis by Joshua Shapiro of the economic consulting firm Maria Fiorini Ramirez Inc., pointed to significance for that debate with a broader look at unemployment numbers from recent months, which unlike May, showed drops in the participation rate.

“Making things worse from a social perspective,” Mr. Shapiro wrote in an analysis circulated by e-mail, “the drop in the participation rate has not been due to aging baby-boomers retiring, but rather has been centered in younger workers, many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

Article source: http://economix.blogs.nytimes.com/2013/06/07/this-time-economy-is-overshadowed/?partner=rss&emc=rss

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Economix Blog: Obama Adviser’s View of Unequal Opportunity

January 13, 2012 by Leave a Comment

Alan B. KruegerJoshua Roberts/Bloomberg NewsAlan B. Krueger

What Mitt Romney a few days ago called “the bitter politics of envy,” President Obama’s chief economic adviser instead described Thursday as the basic economics of unequal opportunity.

As long as the rich keep getting richer and the middle class languishes, he said, the economy as a whole will suffer.

Alan B. Krueger, the chairman of the White House’s Council of Economic Advisers and an accomplished labor economist, presented chapter and verse of the administration’s understanding of income inequality, economic opportunity and the fortunes of the middle class in a speech to the Center for American Progress, a research group closely aligned with the administration’s viewpoint.

His theme: “Rising inequality has been bad for the U.S. economy.”

It is a thought that Mr. Obama has incorporated into his core economic message, notably in his speech in Osawatomie, Kan., and it is an argument that will very likely echo again through the State of the Union address on Jan. 24.

But rarely is the economic evidence for the administration’s now-familiar talking points presented in such detail. Mr. Krueger’s 10-page text was more pedantic than polemic, less a stump speech than a statistical one. (Mr. Krueger, while a professor at Princeton, was a contributor in the past to the Economic Scene column of The New York Times and to this blog.)

He called the emerging data on income distribution “mind boggling.” And he presented a case, as Mr. Obama has done recently, that the trend is only going to become more pronounced in the years ahead, making it harder and harder for poor and middle class people to move up the economic ladder. And that, he argued, would be bad for economic growth.

A few of his key points:

“I could see why someone could support tax cuts for top income earners if they had materially benefited the U.S. economy, but the macro evidence is clear that the economy did not perform better after last decade’s tax cuts than it did after taxes were increased on top earners in the early 1990s.”

“Rising inequality and slow income growth for the vast middle class have harmed the U.S. economy — namely, by encouraging many families to borrow beyond their means to try to maintain their consumption, and by reducing aggregate consumption.”

“If another $1.1 trillion had been earned by the bottom 99 percent instead of the top 1 percent, annual consumption would be about $440 billion higher. This would be a 5 percent boost.” (He added that there were caveats to this calculation.)

It follows that “the economy would be in better shape and aggregate demand would be stronger if the size of the middle class had not dwindled as a result of rising inequality.”

The policy prescriptions that he said flow from this analysis are not surprising: they are the core of the Obama election-year agenda, and include carrying out the new health care law, further extending the payroll tax cut, maintaining strong regulations on the financial sector and ending “unnecessary tax cuts for the wealthy.”

So whatever the economic evidence Mr. Krueger has assembled, it might not be a practical plan to put these words of his on a bumper sticker: “Support for equality of opportunity should be a nonpartisan issue.”

Nor is Mr. Romney, who can recite his own economic rationale for moving the country in the opposite direction, likely to abandon his “envy” line anytime soon.

Article source: http://feeds.nytimes.com/click.phdo?i=c1abae688107c4672d752a2b335bac42

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For Children of Same-Sex Couples, a Student Aid Maze

October 14, 2011 by Leave a Comment

Further confusing matters, her mothers had since split and married other women; they have six children among them. “It was so stressful and so frustrating to try to fit our family into those forms when so clearly it wasn’t going to fit,” said the student, who is now a senior at a university in Illinois and wanted to remain anonymous to keep her family’s financial affairs private. “You feel like you are lying no matter what you do.”

The aid form, the Free Application for Federal Student Aid, is the single most important document in determining how much and what type of financial aid students get. But the form, informally called Fafsa, has not kept up with the changing composition of families, in large part because the federal agency that issues it has to abide by the Defense of Marriage Act, which recognizes only heterosexual marriage. Because these students cannot fully portray their family’s finances, the amount of aid they receive may not fairly reflect their needs.

“In some cases, they are robbed of aid they would have otherwise received, and in other instances they benefit from it,” said Crosby Burns, special assistant for the Lesbian, Gay, Bisexual and Transgender Research and Communications Project at the Center for American Progress, a research organization that recently published a report about these issues in the financial aid process.

This is not solely an issue for children of same-sex parents. Any children with unusual family circumstances — whether their parent is in jail, involved in a messy divorce or simply refuses to provide support — can have trouble filling out the form. The form’s length and complexity is often a deterrent for would-be students with lower incomes, too. No numbers are available on the number of students from gay and lesbian families who are affected, though Gary Gates, a demographer with the Williams Institute, which studies sexual orientation law and policy issues, has calculated that about 220,000 children under age 18 are being raised by same-sex parents.

Though it is not immediately clear from the actual form, officials from the Department of Education, which issues it, said that applicants with two married mothers or fathers must fill out the Fafsa as if the couple were divorced. They must choose the legal parent who provides more support, which means that the other parent’s income and assets are often ignored. That can give the impression that the student requires more aid — or less — than one from an identical family headed by heterosexual parents. Applicants with same-sex partners, meanwhile, may not be able to include their spouses or other dependents on the form. Other gay students, who are now out on their own because their families have cut off support on learning about their sexual orientation, have difficulty establishing themselves as financially independent. (In some instances, however, colleges could choose to include more information provided by the student and include it in their calculations.)

“Since most other financial aid depends on the application for federal aid, these distortions will trickle down throughout the entire financial aid application process, even outside the federal government’s support,” Mr. Burns said.

The section of the financial aid form that asks for parental information has two lines: one for the applicant’s father/stepfather and another for mother/stepmother. The form also asks for the parents’ marital status, as well as the applicant’s marital status, using the federal definition.

“There is the stigma and indignity of having to list them as divorced, when they are, in fact, not,” said Emily Hecht-McGowan, director of public policy at the Family Equality Council, “It creates confusion and this extra step that children raised by L.G.B.T. parents have to go through,” she added referring to lesbian, gay, bisexual and transgender individuals.

An undergraduate at Harvard, meanwhile, said his challenge was trying to figure out how to get financial aid while excluding his parents. He said that when he was home during winter break in his sophomore year, he told his parents he could not change his sexual orientation. His parents promptly decided to cut off their financial contribution to his studies, he said, and asked him to leave the family home. (The student wanted to remain anonymous to protect his parent’s identities.) He scraped together the last of his savings to get a plane ticket back to Harvard, and his resident dean helped him find a place to stay for the remainder of the break.

But figuring out how to pay tuition was a bigger hurdle. Students under the age of 24 generally must have their parents fill out the Fafsa, unless they can persuade their institution to grant them independent status, which colleges have the power to do. But the Harvard student said that he was told that the university typically required students to take two years off to be deemed independent. “When I first heard this, I was mildly panicking,” he said. “I had no idea what I could do for two years or where I could do it.”

Ultimately, the university agreed to grant him independent status, as long as he took out about $10,000 in total loans, kept a part-time job, and visited a counselor (which made him uncomfortable, since his only experience with therapists was with those who tried to convince him that he could change his sexuality). He was also required to get a letter from his parents explaining why they cut off financial support — something he knew he could not possibly do.

Article source: http://feeds.nytimes.com/click.phdo?i=a700ad8b1de0ed6f708851579f27c315

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Hedge Fund Chief Takes Major Role in Philanthropy

September 16, 2011 by Leave a Comment

“I haven’t done that much so there hasn’t been that much to talk about,” Mr. Steyer, 54, said in an interview recently in the offices of his firm, Farallon Capital Management.

What a difference a year makes. First, Mr. Steyer and his wife, Kat Taylor, found themselves on center stage in the nonprofit world when they signed onto the Giving Pledge, the public commitment by the wealthy to give away at least half of their fortunes.

Then Mr. Steyer joined a former secretary of state, George P. Shultz, in a crusade against a ballot measure aimed at halting the imposition of California’s stringent clean energy standards.

Now he is working with his brother Jim, 55, to build the Center for the Next Generation, a nonprofit organization that aims to be a loud voice in major public policy debates.

“Politics push elected officials to consider the short term in their decision making,” Tom Steyer said. “We think someone needs to be talking about what we as a society want for the future and the investments we need to make to get there.”

The organization intends to tackle children’s issues and the environment, developing analyses and research, and campaigns across all media platforms to highlight the findings. “We’ve spent hundreds of billions of dollars on war over the last 10 years at the same time we’ve been spending less and less on kids,” Jim Steyer said. “That’s fiscally insane and morally bankrupt, but no one is talking about it.”

More and more of the nation’s big philanthropists are devoting their money to influencing public policy, like Charles and David H. Koch, the billionaires behind the Tea Party movement, or Peter B. Lewis and Herb and Marion Sandler, who seeded the liberal Center for American Progress.

Such efforts make many uncomfortable, but the Steyer brothers (Tom is a Democrat, Jim is an independent) say the new center will be “fiercely” nonpartisan and work only to get the public to think and talk more about major issues in California and the country at large.

“I believe there is a huge void in American society because no one likes to speak out,” Tom Steyer said. “One of the reasons I admire Warren Buffett so much is that he has the courage of his convictions and steps up and takes part in the public debate.”

He pointed to the Kaiser Family Foundation’s prominent role in the health care debate as a model for the Center for the Next Generation. “We will take the issues of this lost generation head on,” said Matt James, the former Kaiser executive who is the center’s chief. “This will be an aggressive campaign and one that we plan to run for many years, as that is what it will take to begin to turn the tide.”

Tom Steyer and Ms. Taylor have pledged $15 million over five years to seed the center’s operations, but it must also raise money on its own. The Ford Foundation already has contributed $500,000, and, given the brothers’ network of connections, fund-raising is the least of the organization’s worries. “I call myself a member of the Jim Steyer repertory company,” his friend Geoffrey Cowan of the University of Southern California joked.

Just 13 months apart in age, the Steyer brothers’ early life comes right out of “The Catcher in the Rye,” minus its protagonist’s angst. They shared a bedroom in an apartment on New York’s Upper East Side, attending the Buckley School, then Phillips Exeter Academy and Yale — where their father, Roy, had attended law school in a class with Potter Stewart, Cyrus R. Vance Sr. and Gerald R. Ford — and Stanford.

After business school at Stanford, where he met Ms. Taylor, Tom Steyer worked at Goldman Sachs, where his boss on the firm’s vaunted risk arbitrage desk was Robert E. Rubin, who later was Treasury secretary. “One thing I remember about that time is his résumé,” Mr. Rubin said. “He had graduated summa cum laude from Yale and was captain of the Eli soccer team, and that combination struck me as pretty unusual.”

Article source: http://feeds.nytimes.com/click.phdo?i=4cc74d47a18607709dc301fd89cc83d1

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