US Politics Mega-thread - Page 165

On March 14 2013 18:12 McBengt wrote:


European economic history disagrees. Higher minimum wage tends to go hand in hand with increased growth. Businesses don't stop hiring or lay off employees because of higher minimum wages, that is a myth. Getting more people with spending capacity into the system easily outweighs the cost of the wage increase.

On March 15 2013 01:45 Sermokala wrote:
I don't get why people are taking paul ryans plan seriously as a budget plan. Even ryan himself is saying that its just as partisan as the democrat budget plan (which they haven't released one before the ipad was released). Like I said a few weeks ago this is just the GOP's new plan of slow and steady compromise until a budget is finalized with concessions and compromise's from each side.

Ryans budget plan is just the stupid unacceptable first offer in an barter for them to start at some point where it advantages them more then anything else.

In the ongoing Washington budget battles, one word gets more of a workout than most: balanced.

This single word illustrates the vast distance between the parties. Democrats and Republicans are working from very different definitions of the term in discussing their budget proposals being unveiled this week. ...

What neither side is saying: We know our "balanced" budgets are dead on arrival. The Democratic version is expected to pass only in the Democratically controlled Senate; the Republican version is expected to pass only in the GOP-controlled House. But neither of these vision documents will actually guide federal policy or government spending. They are markers, position papers, political documents complete with numbers and graphs. If you're an optimist hoping for a big deficit-reduction deal, they're opening offers on the path to a grand bargain. If you're a pessimist or maybe just a realist, they're a sign of the intractable differences between the parties and proof that we'll keep stumbling from one man-made fiscal crisis to the next.

On March 15 2013 01:37 JonnyBNoHo wrote:

It's not a myth. There's academic research to back it up. Some (not all) will cut back in one way or another which will offset some (or all, or more than all - we don't know ex-ante) of the gains from increased wages.

There's also this problem:

Link to blog article
Link to CBO report

Many people at or near minimum wage also receive government benefits. As the above chart shows, increasing their earnings will have little affect on their disposable income - it gets eaten away by taxes and lost benefits.

On March 14 2013 13:10 KwarK wrote:

We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing.

On March 15 2013 05:24 ziggurat wrote:

Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested.

http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.html
http://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazer

I have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear.

The chances of a government shutdown at the end of the month keep going down.

On Thursday, House Speaker John Boehner avoided one more tripwire when he rejected conservative demands that Republicans use government funding legislation to pick a fight over defunding the Affordable Care Act.

“Trying to put Obamacare on this vehicle risks shutting down the government,” Boehner told reporters at his weekly Capitol briefing.”That’s not what our goal is. Our goal is to reduce spending.”

Assuming the Senate passes its spending measure this week, the House will have to take it up and clear it by March 27 — the day the government’s budget authority expires. If Democrats support the bill in large numbers, that shouldn’t be a problem. But the question is whether House Republicans will oppose it this time around now that conservatives have endorsed using it to pick a fight over Obamacare.

On March 15 2013 05:28 KwarK wrote:

My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity.

On March 15 2013 07:28 ziggurat wrote:

My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country.

On March 15 2013 07:40 KwarK wrote:

Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US.

On March 15 2013 07:44 Vegetarian wrote:


If the debt increased then how can you consider it austerity?

On March 15 2013 01:37 JonnyBNoHo wrote:

It's not a myth. There's academic research to back it up. Some (not all) will cut back in one way or another which will offset some (or all, or more than all - we don't know ex-ante) of the gains from increased wages.

There's also this problem:

Link to blog article
Link to CBO report

Many people at or near minimum wage also receive government benefits. As the above chart shows, increasing their earnings will have little affect on their disposable income - it gets eaten away by taxes and lost benefits.

On March 15 2013 07:55 Danglars wrote:

Thank you so much for posting this. The graph goes a long way towards proving the point of a poverty trap. Once your government assistance makes up so much of your income, then increasing your wage in a job you might get laid off/fired from does not make sense

On March 15 2013 08:08 oneofthem wrote:

the entirety of the disincentive is from changes in income assistance received outside of the job. so this really has nothing to do with the core logic of raising income to overcome reservation wage by idle labor. it's an attenuating circumstance that might be true for a small portion.

of course whether this is a labor supply or demand problem is key. this makes the fact that wage labor drives consumption pretty important. the economy circulates money. demand(of stuff, not of labor) propped up by debt can only last for so long. you need workers to have money to sustain the virtuous cycle.

On March 15 2013 07:51 Vegetarian wrote:
If you had even a basic understanding of economics you would be able to see how your own post contradicts itself. But clearly, you don't understand what austerity is, why it would be implemented, and what short and long term effects it would have on a given economy.

On March 15 2013 08:37 Danglars wrote:

The disincentive for attempting meaningful job advancement is much more than just outside of job income assistance. At the risk of repeating myself, the government assistance is virtually guaranteed as long as you persist in the same state of wages. Taking a better job that takes a lot more effort and responsibility might mean more money, but you also assume risk of losing the level of government assistance for the new income level. This all would be for a job you can get fired from, whereas benefits are guaranteed for your marriage state, kids, and income. Put in all that extra effort striving for the Walmart manager's job, secretary position, better retail job? Sounds like a bad deal to me.

I don't really know of a labor economics study describing of people discouraged from education advancement and job advancement from worry about losing their government benefits at great personal lifestyle cost. I get my personal Walmart check and can count on my CHIP, TANF, Medicaid, EITC and others. Why take on education responsibilities like night school, and the attendant loans, to prepare me for a job that pays me more money, with the guarantee that I lose most of those if I experience success? In a sense, this is a criticism of the current disincentivising welfare system as a whole, more than just a critique of the minimum wage system (for the full part, see + Show Spoiler [my previous post] +)

On March 15 2013 05:23 ControlMonkey wrote:
I remember getting a pay rise and moving past a threshold in the low income tax offset and actually getting a small net pay cut as a result.