March 31, 2023

Economix Blog: Latinos on the Economy: Hard Hit but Hopeful

Latinos have been especially hard hit by the economic downturn, with nearly four in 10 — 38 percent — saying they have skipped meals because they did not have enough money for food, according to a national survey published on Thursday by the Pew Hispanic Center.

With Mitt Romney and Newt Gingrich, Republican candidates for the presidential nomination, duking it out in Florida for Latino votes, the Pew survey paints in the background to show why jobs and the economy, rather than immigration, are the leading issues for many Latinos.

Latinos nationally are keenly aware that they have fared worse than other groups, the Pew survey found. Yet they remain surprisingly optimistic that things will improve for them.

Nearly one-third of Latinos – 28 percent — say that as a result of plunging home values, their mortgages are higher than the current value of their homes, Pew found; that is double the rate of 14 percent found in a national poll conducted last March of homeowners who are underwater. And 7 percent of Latinos who do not own a home said they lost theirs to foreclosure in the past year; 5 percent of the general population that does not own a home reported facing a recent foreclosure in a survey conducted in May 2010.

About 37 percent of Latinos said they had trouble receiving or paying for medical care for their families.

More than half of the Latinos in the United States — 52 percent — are immigrants, according to the Pew Hispanic Center, based on census data. The economic pain is more severe among them than among native-born Latinos, with 43 percent of the immigrants surveyed saying they missed meals because they could not buy food.

Yet two-thirds of Latinos said they expected their finances to improve in the coming year, and about two-thirds expected their children to do better than they did, Pew found. In a Pew survey conducted last March, only 48 percent of the general public expected the next generation to have better lives.

About 11 percent of Florida’s registered Republicans are Latinos, according to official figures from the Florida secretary of state. Florida’s Latinos include many Cubans, who vote Republican more frequently than other Latinos and whose views may diverge from those of the Hispanic population as a whole.

Elsewhere on the campaign trail, Mr. Romney has taken a hard line on immigration, saying illegal immigrants should “self-deport.” Mr. Gingrich has said he also opposes amnesty for illegal immigrants, but he would give legal status to some who have lived in the country for many years and to illegal immigrant students who agreed to serve in the military. Latinos nationwide overwhelmingly support policies to give legal status to illegal immigrants, Pew has found. Mr. Romney is betting that the economic issues will be more urgent to Latinos in Florida, where the housing crisis has been especially deep and long-lasting.

The survey is based on telephone interviews from Nov. 9 to Dec. 7 of a national sample of 1,220 Latinos, with a margin of sampling error of plus or minus 4 percentage points.

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New Web Piracy Arrest as Site Founder Is Denied Bail

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Campaign Stops: Gingrich Offstage

Newt Gingrich likes the “elite media” more than he lets on.

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Nokia Posts $1.38 Billion Loss in Fourth Quarter

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Campaign Stops: Gingrich Offstage

Newt Gingrich likes the “elite media” more than he lets on.

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Economix Blog: Simon Johnson: A Question for Newt Gingrich


Simon Johnson, former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

Newt Gingrich has surged in recent polls and now has a chance to establish himself as the front-runner in the Republican presidential primaries. But as Mr. Gingrich ascends, he will need to answer a difficult question: What is his policy for Wall Street’s too-big-to-fail banks?

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This a pertinent issue for all American voters in 2012 – both for the primaries and for the general election. It speaks directly to who wins and who loses in American society and why).

It is also a question that Mr. Gingrich is likely to be asked during the Republican debate on Monday, perhaps in the context of Europe’s financial problems (the planned topics for the debate between Mr. Gingrich and Jon Huntsman are national security and foreign policy).

Mr. Gingrich’s career path creates a number of potential vulnerabilities around this issue.

No doubt Mr. Gingrich will seek to deflect the issue – as he did on Oct. 11, during a previous debate, when in response to a Wall Street-related question he said, “If you want to put people in jail, you ought to start with Barney Frank and Chris Dodd.”

This was a crowd-pleasing one-liner – Representative Frank and former Senator Dodd have their names attached to the financial reform legislation of 2011, and bashing that bill is standard Republican rhetoric.

But Mr. Gingrich will find it difficult to avoid the substance of this issue for much longer for a simple reason: Mr. Huntsman has figured out that breaking up megabanks is both sensible economics and good Republican primary politics.

Mr. Gingrich claims to be the true conservative, but the awkward – for him – truth is that on all issues related to the financial sector, Mr. Huntsman has the conservative high ground. He understands that “too big to fail” is not a market, it’s a government subsidy program, and that these subsidies are large, hidden, unfair and incredibly dangerous.

As I explained last week, Mr. Huntsman is drawing on deep thinking around these issues by some of the most serious intellectuals on the right of the American political spectrum. He is also tapping into the deep and articulate resentment in the American nonfinancial sector; people who run the businesses that generate most of the jobs in the United States fully understand that the current structure of Wall Street does not serve us well.

So it will be hard for Mr. Gingrich to respond adequately on substance. As Mr. Huntsman told Bloomberg News, speaking of other presidential candidates more broadly:

They want to be able to point out the deficiencies in front of some crowds, but they want to take money from the banking sector. They’re not going to get contributions from the banking sector if they’re specific about how they want to remedy the situation.

Mr. Gingrich was reported to be in New York this week, seeking to raise a lot of money quickly. It seems reasonable to presume that much of the available quick money is close to the heart of Wall Street.

Mr. Gingrich will also have to address the issue of whose money he took while speaker of the House in the mid- to late 1990s. This was a period in which big banks were pushing hard for the repeal of Glass-Steagall – the last remaining restrictions on what they could do and, effectively, on their scale.

Mr. Gingrich may argue that it was the Clinton administration that argued forcefully for full financial-sector deregulation, and there is some evidence that is so. But there was also a bipartisan consensus around the issue and, as far as I can ascertain, Mr. Gingrich was a central part of that.

There was an intense debate on details during Mr. Gingrich’s tenure, and a great many campaign contributions entered the fray. I have not yet seen a detailed analysis of what Mr. Gingrich received and what he oversaw – and from whom. Presumably such information will be forthcoming as his candidacy advances.

Mr. Gingrich could, of course, now turn his back on megabanks – and brand them a dangerous form of European lemon socialism (socialized losses; private gains). He did say something vaguely along these lines in 2010.

But this is not the time for vagueness or generalities. Mr. Huntsman has a specific, detailed financial overhaul program that offers the most plausible way forward for forcing the big banks to become substantially smaller and also safer. I’ve discussed this approach with leading experts, both on the right and on the left, and my assessment is that these are the most ambitious and most sensible proposals we have seen from any politician.

Mr. Gingrich has no such plan – at least not on his Web site or elsewhere in the public domain.

So, Mr. Gingrich, do you agree that too-big-to-fail banks should be broken up, as Mr. Huntsman has proposed? What are your detailed, specific proposals for how to do this? Will you endorse Mr. Huntsman’s plan?

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Most Presidential Candidates Are Not the 99 Percent

A look at the finances of those vying for the presidency shows that almost all of them rank at the very top of the country’s earners. In other words, they are the 1 percent.

The possible exceptions are Representative Michele Bachmann of Minnesota and Representative Ron Paul of Texas, whose annual household earnings may not exceed the estimated cutoff of $700,000 for the top 1 percent, and Gov. Rick Perry of Texas, who has yet to file a financial disclosure.

Buddy Roemer, the former governor of Louisiana, probably does not make the cut either, which may be one reason Mr. Roemer paid a visit to the protest encampment in Zuccotti Park in Manhattan to express his solidarity.

But Mitt Romney, whose fortune, totaling as much as a quarter of a billion dollars, dwarfs those of his rivals; Jon M. Huntsman Jr., whose father owns a global chemical company; Newt Gingrich, a successful author; Herman Cain, a businessman who reports earnings of over $1.2 million; and Rick Santorum, the former senator, who took in over $700,000 last year, are all solidly in the 1 percent, as measured by assets, income or both.

The wealth is not limited to Republicans. Though President Obama was not in the 1 percent in 2006, before his entry to presidential politics, he earned between $1.8 million and $6.8 million last year, largely from book royalties.

The gap between the candidates and the electorate is especially striking in an election season in which the economy is foremost in people’s minds and politicians are trying to demonstrate that they can feel the pain. Many people believe that those responsible for the financial crisis escaped punishment with the help of political allies.

Democrats have more or less embraced the Wall Street protesters, while Republicans have wavered between dismissing them and trying to redirect their anger from Wall Street to the White House.

The protesters are far from the only potential voters disturbed by the growing wealth divide. In a recent New York Times/CBS News poll, 69 percent of respondents said that Republican policies favored the rich. Twenty-eight percent said the same of Mr. Obama’s policies, while only 23 percent thought his policies favored the middle class. Sixty-six percent said the country’s distribution of wealth should be more even.

The wealth of the candidates exacerbates the sense that politicians are far removed from middle-class American lives. “You want to know that elected leaders understand the consequences of their political decisions,” said Kathleen Hall Jamieson, the director of the Annenberg Public Policy Center at the University of Pennsylvania. “Does that candidate understand what I’m going through right now? What my family is going through? Do they know what it’s like to lose your home, to lose your job?”

Of course, presidential politics has long been a sport for the rich, and candidates need not be middle-class themselves to convince voters that they understand. Some, like Mr. Cain and Mr. Perry, may win people over with their stories of ascent from humble beginnings.

But even bootstraps are not strictly necessary. “A rich person can represent the 99 percent,” said Judy Goldstock, a retired social worker protesting in Zuccotti Park. “Look at Kennedy.” 

Mr. Romney has scolded his audiences at times for “attacking people based on their success.” And Mr. Cain proclaimed, “If you don’t have a job and you’re not rich, blame yourself.” (Or, he later amended,
blame Mr. Obama.)

The 99 percent meme has shifted the debate from the days when President Obama spoke of raising taxes on families that made more than $250,000. “Many people could see a future in which they might make $250,000,” Ms. Jamieson said. “Very few can see a future in which they would be a member of the 1 percent.”

The alienation is evident in a study of mothers who shop at Wal-Mart, where pollsters found that the women did not believe their elected officials could understand what it was like to be consumed by the price of milk, gasoline and college tuition.

“We asked, ‘If your elected officials knew about your life what would they do?’ And somebody said, ‘Cry,’ ” said Margie Omera, the founder of Momentum Analysis, a Democratic polling firm that along with Public Opinion Strategies, a Republican firm, has been tracking the women since May 2010. “They always want to know, ‘When is my bailout going to come?’ ”

In focus groups, the women discussed the satisfaction they derived from watching “Undercover Boss,” a reality show in which top executives take a turn at the bottom of the ladder in their own companies.

Membership in the 1 percent can be measured by wealth or by income. By household wealth, the cutoff point would be a projected $9 million in 2010, according to an analysis of the Federal Reserve Board’s Survey of Consumer Finances by Edward Wolff, an economist at New York University. The cutoff for annual household income would be about $700,000, Mr. Wolff said. (Using Internal Revenue Service figures, which count earnings differently, the Congressional Budget Office puts the earnings cutoff at $350,000 for the 1 percent in 2007.

At Zuccotti Park, protesters described the 1 percent variously as people who “can just make money with money,” “the ones so interested in making profits that they’re willing to lay off hundreds of thousands of people a year,” and “anyone who doesn’t create a product.”

Even by the numbers, though, it is hard to tell precisely where the candidates stand. The majority have not released tax returns, and their financial disclosure forms give only a range of assets and income. Mrs. Bachmann’s income was listed at $280,000 to $840,000, and Mr. Paul’s was $360,000 to $1.1 million, which included their Congressional salaries of $174,000.

The disclosures exclude the candidates’ homes and other noninvestment property, as well as the salaries of their spouses. Most disclose income over a period longer than a year, from which The New York Times calculated annual earnings. The candidates were likelier to rank in the elite in income rather than in assets. Mr. Cain’s net worth topped out at $6.6 million, for example, and Mr. Santorum’s at $2.6 million.

Mr. Perry appears to be among the least affluent of the leading candidates. He earns $150,000 a year as governor, and his wife makes $60,000 a year at a nonprofit organization. But the couple have made money in real estate deals, including one that pushed their income above $1 million in 2007. Various news organizations have estimated the Perrys’ net worth at just over $1 million.

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Economix Blog: Bruce Bartlett: The Republican Idea of Tax Reform


Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the forthcoming book “The Benefit and the Burden.”

Back in 1995, flush from taking control of both the House and Senate for the first time since 1954, Republicans made tax reform one of their first priorities. House Speaker Newt Gingrich and Senate Majority Leader Bob Dole asked Jack Kemp, the former congressman and secretary of housing and urban development, to lead a commission that would report back with recommendations for fundamental tax reform.

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Among the members of the Kemp commission, formally the National Commission on Economic Growth and Tax Reform, was Herman Cain, then the chief executive of Godfather’s Pizza. I assisted the commission in a voluntary capacity, along with a number of other Republican tax policy wonks. I still have a copy of the commission report, issued in January 1996, that Mr. Cain and the other commission members signed.

I don’t have much recollection of Mr. Cain’s contribution to the commission’s work, but I don’t have much recollection of mine, either. I remember him as being very friendly and easy to work with.

In the end, the Kemp commission didn’t come up with a specific tax reform plan. Its report set forth only a set of general principles that didn’t add much to what everyone already knew about the Republican tax philosophy. It didn’t matter very much; it quickly became clear that Congressional Republicans were losing interest in tax reform, which implies revenue-neutrality, in favor of tax cuts.

Tax cuts had effectively been off the table since 1981, as budget deficits made them politically impossible. Republicans today prefer to forget that Ronald Reagan signed into law 11 major tax increases, including the Tax Equity and Fiscal Responsibility Act of 1982, the largest peacetime tax increase in American history.

Office of Management and Budget

Of course, there was still a net tax cut during the Reagan administration. The same source of the table above, the federal budget for fiscal year 1990, shows that revenue was $264.4 billion lower in 1988 than it would have been without the 1981 tax cut. But Reagan effectively took back half of it by his last year in office.

It was their inability to simply cut taxes that really made Republicans interested in tax reform, which had historically been of more interest to Democrats. It was only by pairing tax increases with tax cuts that Republicans could keep alive their goal of reducing statutory tax rates. Their ultimate goal has long been to abolish progressivity by having a single tax rate that applies to everyone.

In the 1980s, Republicans settled for incremental progress toward this goal, which explains their support for the Tax Reform Act of 1986.

But in their hearts, Republicans don’t ever want to raise taxes; they only want to cut them. Consequently, tax reform has always taken a back seat to tax cuts whenever political and economic conditions permitted them. Those conditions began to emerge just as the Kemp commission finished its work.

Bill Clinton, in his budget for fiscal year 1997, which was released in early 1996, projected a federal budget surplus by 2001. It turned out that the tax increases initiated by George H.W. Bush in 1990 and by Mr. Clinton in 1993, which were strenuously opposed by virtually all Republicans, did exactly what they were supposed to do and sharply reduced federal budget deficits.

Nevertheless, Republican dogma insists that tax increases just fuel spending and never reduce the deficit. As the Republican tax guru Grover Norquist put it last week, when taxes are on the table there are no spending cuts. “When taxes are off the table, you get spending cuts,” he said.

My friend Grover is factually wrong. Spending as a share of the gross domestic product fell after both the 1990 and 1993 budget deals, in large part because of tough budget controls that Republicans abandoned in 2002 so that they could cut taxes without restraint. And contrary to Mr. Norquist’s theory, the tax cuts of the George W. Bush years did not constrain spending, which rose as a share of the G.D.P. almost every year of his administration (as the raw data confirms).

The point is that once deficits started to disappear, Republicans lost interest in tax reform and turned their attention instead to tax cuts. In 1997, they were successful, joining with Democrats to cut the capital gains rate and create tax credits for children and education, among other things. Of course, in the 2000s, Republicans cut taxes heavily without regard to the budget deficit.

It is only because they have invested so much effort in attacking President Obama for budget deficits that actually arose in large part from Republican policies, like the Medicare Part D program and two unfunded wars, that Republicans are somewhat inhibited from offering more tax cuts today.

This is what has turned their attention back toward tax reform, like Mr. Cain’s 9-9-9 plan, which apparently has evolved into a 9-0-9 plan, and the flat tax, which Gov. Rick Perry of Texas now champions.

While tax reform is a worthy goal — and long overdue — the recent interest by Republicans in the subject should not be taken too seriously. They are only biding their time until political conditions allow them to once again cut taxes.

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Fox News and Hannity at the Top After 15 Years

Knowing the crowd would get a kick out of it, one of Mr. Hannity’s guests, the Republican presidential contender Newt Gingrich, chimed in. “That’s gonna get them their biggest rating of the night.”

Mr. Hannity had come to Atlanta not to stick it to CNN — though that proved to be fun, too — but to take note of a remarkable anniversary in the city where he was plucked by Roger Ailes out of relative obscurity 15 years ago, when the Fox News Channel was born.

Few thought Fox could unseat CNN, then the country’s dominant cable news channel, but it did, upending the television news business in the United States and providing conservative politicos a powerful megaphone.

Now, Fox is the envy of the media industry for its popularity, and perhaps too for its consistency — something that Mr. Hannity embodies, as the only host on the channel to have the same time slot, 9 p.m., for all 15 years.

Fox’s popularity — it’s the No. 4 cable channel in prime time this year, according to the Nielsen Company — has allowed it to gradually raise its advertising prices and its carriage fees and become one of the News Corporation’s biggest profit centers. The company will soon be going back to distributors to renew its carriage deals, most likely for far more than the roughly $1 per subscriber that the channel earns now. Fox had suggested it should be in the same league as ESPN, which costs about $4 per subscriber. Distributors know that some subscribers feel they can’t live without hosts like Mr. Hannity and his all-important lead-in, Bill O’Reilly.

Mr. Hannity, 49, who calls himself a Reagan conservative, has taken to heart the former president’s famous speech about displaying “bold colors” instead of “pale pastels.” He rarely if ever wavers from his views and campaigns relentlessly against President Obama.

“With all of the most successful cable news shows, you know what you are getting every night — they have a clear identity and mission,” said Dan Abrams, a former general manager of MSNBC and a former 9 p.m. host there. “There is probably no host on cable whose identity and mission is clearer than Sean Hannity’s.”

Viewers have rewarded that clarity. “Hannity” had an average of 2.1 million viewers in the first nine months of the year, 528,000 of whom were in the 25- to 54-year-old demographic that advertisers covet — a subgroup that numbered as many as CNN and MSNBC had put together.

“Our viewers are loyal to us, and we’re loyal to them,” said John Finley, Mr. Hannity’s executive producer, who is a symbol of behind-the-scenes stability, having worked on the show for 12 years. The open-to-the-public show in Atlanta, he said, was a way to thank viewers, part of Fox’s 15th anniversary tour across the country.

At a staff party last month Mr. Ailes, then as now the chief executive and chairman of Fox News, pointed out that its prime-time lineup had changed just “a few times” in 15 years while the other cable news channels “have collectively changed it 63 times.”

Like Mr. Hannity, Mr. O’Reilly is a Fox original, having started as the 6 p.m. host and having stayed put at 8 p.m. since 1998. The third prime-time host, Greta Van Susteren, has had the 10 p.m. spot since 2002.

“Shows, stars, I mean it’s sad, you know?” Mr. Ailes said of the competition, as if looking in the rearview mirror. “I called and asked them all to move to the second floor wherever they were working. Because when they jump, I don’t want it to hurt.”

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