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Missouri Legislature Fails to Override Tax-Cut Veto

September 11, 2013 by

After more than an hour and a half of debate on the floor, 94 members voted in favor of overriding the veto and 67 against it, falling well short of the 109 votes needed to defeat the veto.

Mr. Nixon, a Democrat, prevailed against a Legislature with Republican supermajorities in both chambers on a core Republican issue. Barnstorming the state through the summer, he argued that the tax cut would decimate financing for education, mental health and other vital services. He scoffed at the Republican argument that the cuts would bring businesses and jobs to the state.

“With the economy we’ve got right now, the thing that employers say to me is, ‘I need trained workers, I need people with math and science backgrounds, I need people that are good in it,’” Mr. Nixon said in an interview last week. “They don’t say to me, ‘Get me a third of a point less on some tax line somewhere.’”

Mr. Nixon enraged some opponents by withholding $400 million in state spending that he said he could not release if the tax cut became law. He successfully stitched together a broad coalition of support from education interests, with more than 100 school boards across the state passing resolutions to sustain the governor’s veto.

During debate on the tax bill in the House on Wednesday, lawmakers stuck largely to political talking points. Supporters said it was essential to making Missouri business friendly, while opponents contended that it would deal a blow to financing crucial educational and other services.

Representative T.J. Berry, the bill’s Republican sponsor, accused the governor of misleading the public as he spoke on the House floor on Wednesday, urging his colleagues to override the veto. The 109 votes required for an override was identical to the number of Republicans in the chamber.

“The intent is a perfect intent,” Mr. Berry said. “We want to help the people of Missouri grow, and if we do not grow, we will be down here fighting over smaller and smaller pies, trying to provide the services that we all want.”

Hundreds of protesters descended on the Capitol and packed the legislative chambers to push for overrides of the governor’s vetoes. They rallied outside the building before lawmakers gathered. Many wore green T-shirts from the Grow Missouri Coalition, which has been one of the chief advocates calling for an override of Mr. Nixon’s veto. Others wore stickers that read, “I support Missouri’s Second Amendment Preservation Act,” a reference to a bill that would prevent federal gun laws from being enforced in the state.

Efforts to override the gun bill hit a bump this week when the Republican floor leader in the Senate, Ron Richard, said he was withdrawing his support for the bill because of concerns over its legality.

In his veto message, Mr. Nixon wrote that “the federal government’s supremacy over the states’ “is as logically sound as it is legally well established.”

Neighboring Kansas passed a law this year that exempts all guns that are made and remain in the state from federal restrictions, as well as a bill that expands the right of concealed carry to public buildings.

Article source: http://www.nytimes.com/2013/09/12/us/missouri-legislature-fails-to-override-tax-cut-veto.html?partner=rss&emc=rss

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Economix Blog: Immigration and Innovation

February 12, 2013 by Leave a Comment

A. Mushfiq Mobarak is an associate professor of economics at the Yale School of Management.

The United States economy has a comparative advantage in science and innovation. The country of Apple, Google, Facebook, Ford, General Motors, Boeing, Microsoft and FedEx thrives by creating new products and introducing entirely new markets. The American economy is innovation-driven, and such innovation requires, first and foremost, people with good ideas and skilled workers who can transform those ideas into marketable products. Where does all this talent that our economy is built on originate? Are we the innovation leaders because we have a monopoly on talent in the world?

The basic data suggest otherwise. American secondary school students consistently rank toward the bottom among their counterparts in other countries of the Organization for Economic Cooperation and Development in tests measuring science and mathematics aptitude. The United States has sustained its primary position as developer of new scientific knowledge and product innovations, despite the deficiencies in math and science training, with the immigration of skilled workers.

Talented people across the world are attracted to the institutions that the United States has carefully cultivated to support innovation. By any reasonable assessment, a clear majority of the world’s top universities are in the United States. These universities attract talent from all over the globe. Most engineering Ph.D.’s granted at American universities now go to people born abroad. In a recently published paper, my colleagues and I show that these foreign-born doctoral students create new scientific knowledge and fuel innovation at science and engineering labs at American universities. In that paper, increases in the supply of foreign students subsequently result in significantly greater publications and citations from science and engineering departments in the United States. Many of those students remain in the country after graduation and contribute to the innovations produced by American companies.

Such data on the contributions of foreign students to American innovation strongly support the spirit and the central provisions of immigration reform proposals offered by the White House and by Senators Orrin Hatch, Marco Rubio, Amy Klobuchar and Chris Coons. (Three of the senators are members of the Senate Judiciary Committee, which will take up the issue of comprehensive immigration reform at a hearing on Wednesday.) If talented foreigners want to study and work in the United States, economic logic and the data suggest that we should welcome them. American companies working in the very sectors where our comparative advantage lies benefit from their presence. Such a policy also creates other rare but significant benefits for the future of the nation. A typical profile of a recent Nobel laureate is a United States citizen or someone trained or teaching at an American university, but who was born in a foreign country.

One might be tempted to conclude from this narrative that our immigration system is working well, but this conclusion is premature and dangerous for two reasons. First, the United States is not the only country in the market for that talent. Three of the five most recent Nobel laureates from Britain were not born there. Australian and British educators were overjoyed with the quality of their international student applicant pool when the United States instituted restrictions on student visas after 9/11. Other countries deliberately pursue immigration policies to spur innovation.

Second, it’s impossible to know the counterfactual: how much better off we would have been had our immigration policies been more welcoming to skilled people? American citizens like Bill Gates, Sergey Brin and Mark Zuckerberg made brave decisions to drop out of school and start some of the most successful companies in the history of the planet. As a former foreign doctoral student, I can attest that under current immigration policies, such decisions are not easy to make for foreign students. For noncitizens trying to create a foothold in this country, it is virtually impossible to take the risks that these remarkable people took. With no clear path to citizenship, talented entrepreneurs who are foreign-born find it very risky to start businesses. Their options are limited to taking a salaried position with an employer who could sponsor their visa, or to marry an American. Our policies could be revised to promote entrepreneurial risk-taking by the top talent regardless of their country of origin, because just one Microsoft, or a Google or a Facebook, can change the world.

The blueprint offered by Senator Hatch and colleagues is full of sensible provisions, including work permits for spouses of H-1B workers. Talented people often meet and marry other educated, talented people, and having those productive spouses sit at home is a dead-weight loss to the United States economy. Residents at any major university town in the country will recognize ads from over-qualified babysitters “informally” willing to look after your children.

This bill will receive predictable pushback with simplistic arguments from special interest groups worried about skilled migrants undercutting American wages. But as other research has shown, immigrants make a net positive contribution to the United States economy, as they create more jobs than they take away, and their presence increases income per worker in the United States. Arguments that skilled immigrants will displace American workers, and thereby prevent young Americans from pursuing degrees in science, fail to recognize that entrepreneurs and innovators start new companies and invent new products that employ more skilled workers. Do we really believe that people like Sergey Brin or Albert Einstein took away more jobs than they created? Or that Facebook, Instagram or exciting new product lines from Google or Microsoft do not attract more young Americans to science

If skilled foreigners getting stuck to their visa sponsors in indentured low-wage work is a concern, then visa policies should be reformed to allow foreign-born entrepreneurs the flexibility to start their own businesses, not to pursue policies that keep them from our shores. Indeed, the White House’s proposal for immigration reform includes such a provision for a “start-up visa” for foreign-born entrepreneurs.

Another counterargument to high-skilled immigration involves the concept of “brain drain” – worries that by attracting talent here, we are taking away the best and the brightest from other countries that have greater need for that talent. The fact is, these immigrants typically contribute more to their countries of origin than people who are prevented from leaving at all. This is because of the tremendously higher productivity of workers educated in the United States. Labor is the second largest export from Bangladesh, the country where I was born, and remittances account for over 10 percent of our gross domestic product. I, like many other first-generation immigrants, have continued contributing to the development of my country of birth, by combining the skills I acquired in the United States with my context-specific knowledge to pursue research and policies that address some of the key public health and development challenges in Bangladesh. One project demonstrates, for example, that promoting internal (rural to urban) seasonal migration is a very cost-effective way to counter a recurring pre-harvest famine.

The internal migration strategy works because it creates a better match between where people are and where the complementary inputs (capital, jobs) are during certain seasons, and this leads to enhanced efficiency and productivity. Attracting talented people to the United States and allowing them to interact with the innovative universities and companies creates similar efficiency gains that can be a win-win for the source countries and for the United States.

Article source: http://economix.blogs.nytimes.com/2013/02/12/immigration-and-innovation/?partner=rss&emc=rss

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Economic Scene: The German Example

June 8, 2011 by Leave a Comment

Germany has been a frequent cudgel in recent fights over the American economy. When Germany has grown faster than the United States, stimulus skeptics like to point across the Atlantic Ocean and say that austerity works. When it has grown more slowly, people who think the American stimulus made a big difference — including me — return the favor.

But the full story is more interesting than any caricature. In the last decade, Germany has succeeded in some important ways that the United States has not. The lessons aren’t simply liberal or conservative. They are both.

With our economy weakening once again — and with Chancellor Angela Merkel of Germany visiting the White House this week — now seems to be a good time to take a closer look.

The brief story is that, despite its reputation for austerity, Germany has been far more willing than the United States to use the power of government to help its economy. Yet it has also been more ruthless about cutting wasteful parts of government.

The results are intriguing. After performing worse than the American economy for years, the Germany economy has grown faster since the middle of last decade. (It did better than our economy before the crisis and has endured the crisis about equally). Just as important, most Germans have fared much better than most Americans, because the bounty of their growth has not been concentrated among a small slice of the affluent.

Inflation-adjusted average hourly pay has risen almost 30 percent since 1985 in Germany, the kind of gains American workers have not enjoyed since the ’50s and ’60s. In this country, hourly pay has risen a scant 6 percent since 1985.

Germany also managed to avoid a housing bubble, unlike the United States, Britain, Ireland, Spain and other countries. German children have stronger math and science skills than ours. Its medium-term budget deficit is smaller. Its unemployment rate is like a mirror image of ours: 6.1 percent, well below where it was when the financial crisis began in 2007. Our rate has risen to 9.1 percent.

I’m not saying that the United States should want to become Germany. Americans remain considerably richer. We have the innovative companies — Wal-Mart, Google, Apple, Facebook, Twitter — that make other countries swoon. We remain the world’s immigration Mecca.

Yet for all the strengths of the United States, almost nobody claims that the economy is in especially good shape. It so happens that our current out-of-town guests could teach us a few things.

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The first lesson is that it’s really possible to make government more efficient. Like much of Western Europe, Germany long had a unemployment benefits system that discouraged work. But almost a decade ago, it began to make some changes.

It cut many benefits, in both duration and level, and it reduced the incentives to retire early. It also began trying to move the long-term unemployed into the labor force.

Specifically, the government took a fresh look at people who had not worked in years to determine who could and couldn’t work. The able and healthy were matched with potential employers. If they took a low-paying job, which was often the case, they would still receive a small portion of their benefits for a time. If they refused to work, their benefits were reduced anyway.

“The incentives to take up work were strengthened,” says Felix Hüfner of the Organization for Economic Co-operation and Development, “and also the sanctions were strengthened.” Sure enough, the reforms have nudged more people back into the labor force — and work tends to beget more work, as people develop skills and have more money to spend.

In the United States, short-term jobless benefits are not generous enough to be a major problem. But the Social Security disability program, which is one reason nearly 20 percent of working-age American men are not working, would benefit from some German-like reforms. So would those public sector pensions that encourage people to retire at 55 or 60.

Beyond the job market, Germany has also made a big effort to improve its education system. Eric Hanushek, a Stanford University economist, notes that Germany’s performance on the main international math, reading and science tests have become such a matter of national concern that the name of the tests — Pisa — is now a household word. “In the U.S.,” he says, “Pisa is still a bell tower in Italy.”

The math scores of German students have risen significantly since 2000, extending their existing lead over American students. Germany’s national average is now higher than the average in Massachusetts, this country’s top-performing state. And there is obviously a connection between strong technical skills and a strong manufacturing sector.

But the German story is not merely about making government more efficient. It’s also about understanding the unique role that government must play in a market economy.

That role starts with serious regulation. American regulators stood idle as the housing bubble inflated. German banks often required a down payment of 40 percent.

Unlike what happened here, German laws and regulators have also prevented the decimation of their labor unions. The clout of German unions, at individual companies and in the political system, is one reason the middle class there has fared decently in recent decades. In fact, middle-class pay has risen at roughly the same rate as top incomes.

The top 1 percent of German households earns about 11 percent of all income, virtually unchanged relative to 1970, according to recent estimates. In the United States, the top 1 percent makes more than 20 percent of all income, up from 9 percent in 1970. That’s right: only 40 years ago, Germany was more unequal than this country.

Finally, there are taxes. Germany does not have a smaller budget deficit because it spends less. Germany, you’ll recall, is the original welfare state. It has a smaller deficit because it is more willing to match the benefits it wants with the needed taxes. The current deficit-reduction plan includes about 60 percent spending cuts and 40 percent tax increases, Mr. Hüfner says. It’s like trying to lose weight by both eating less and exercising more.

As I suggested before, the American economy’s strengths may still be greater than the German economy’s. But Germany sure does seem more serious about dealing with its weaknesses.

And us? Well, lobbyists for the mortgage bankers and the N.A.A.C.P. have recently started pushing for less stringent standards for down payments. Wall Street is trying to water down other financial regulation, too.

Some Democrats say Social Security and Medicare must remain unchanged. Most Republicans refuse to consider returning tax rates even to their 1990s levels. Republican leaders also want to make deep cuts in the sort of antipoverty programs that have helped Germany withstand the recession even in the absence of big new stimulus legislation.

There is no getting around the fact that financial crises wreak terrible damage. It’s too late for us to prevent that damage, and it will take a long time to recover fully. It is not too late to learn from our mistakes.

Article source: http://feeds.nytimes.com/click.phdo?i=23df9bd56d09f42582a8fea5d853685e

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