Daily Digest - September 23: Even Wall Street Sees Inequality Holds Back the Economy

Sep 23, 2014Rachel Goldfarb

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Why Wall Street Cares About Inequality (WSJ)

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Why Wall Street Cares About Inequality (WSJ)

Major Wall Street institutions like Standard & Poor's and Morgan Stanley have put out reports on income inequality. Pedro Da Costa says it's because these companies see what's holding back the economy.

Treasury Announces Rules to Help Curb Benefits of Inversions (Buzzfeed)

The new rules will change how money transferred from foreign subsidiaries and U.S.-based parent companies is taxed, in order to reduce the advantages of inversion, writes Matthew Zeitlin.

The Politics of Pre-K: How A Program Known to Help Poor Mothers Could Doom Your Candidacy (TAP)

Rachel M. Cohen explains why the gubernatorial candidates in Pennsylvania will only talk about pre-K in terms of education, skipping any mention of working mothers or income inequality.

The GOP's Jobs Bill Will Create Few Jobs, But Plenty of Debt (TNR)

The $590 billion deficit increase from the bill's tax breaks proves to Danny Vinik that the GOP doesn't actually care about the deficit as much as it opposes increased government spending.

What Happens to Families on Housing Assistance When the Assistance Goes Away? (WaPo)

The cost of market-rate housing often erases the benefits of positive life changes that take people off housing assistance, writes Emily Badger, and more gradual assistance reductions are costly.

Those Lazy Jobless (NYT)

Paul Krugman says that John Boehner's repetition of the accusation that the unemployed just don't want to work proves that the "closed information loop of the modern right" is particularly effective.

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Taxes Are Never Just a Class Issue

Sep 4, 2014Joelle Gamble

Tax reforms can't solve all economic inequality, because they won't change the reality of race in the U.S. economy.

Tax reforms can't solve all economic inequality, because they won't change the reality of race in the U.S. economy.

The threat of corporate inversions to the American tax base sprung an interesting political dialogue around tax reform in the United States. We’ve seen debates on how to stop the spread of inversions and arguments that they aren’t a problem at all. Some call for the abolition of the corporate tax rate as a whole and others completely reject such suggestions. I find these discussions of tax reform and its effects on the economy informative yet simultaneously slightly disappointing.

What bothers me about how tax reform debates shake out is how absent they can become of socio-political realities, particularly the reality of race.

One line of progressive argumentation follows simply: If everyone pays their fair share of taxes, we can support public spending and job growth, and we’ll all do better. The argument firmly stands, but there is an important caveat.

It’s easy to harken back to the 1950s when tax rates were high, social services were relatively steady and economic security stretched across economic strata. But who was really secure then? Even the high points of job security for the American economy still left African Americans (and other racially marginalized groups) behind. This a structural phenomenon, instituted by socially racist institutions and a deep history of systemically harming the Black community.

We can’t take race out of conversations around economic inequality. The reality of race is that even fixes to the broader federal revenue landscape don’t always address the structural barriers of racism. A rising tide can’t lift all boats, if some boats are bolted to the seafloor.

Black unemployment consistently exceeds that of whites, both post-Recession and since such data has been available. Gaps between white unemployment and black unemployment shrank in 2009. This was not due to falling black unemployment but instead due to skyrocketing white unemployment.

This racial gap in economic success extends beyond the employment rate. In fact, it is deeply entrenched in the way wealth is distributed in the U.S. The gap between median Black wealth and median white wealth stands at about $236,000 dollars. Flagrant discrimination, in part, contributes to this gap. But it is perpetuated by generations of asset accumulation policies that are targeted at those who already own assets.

Corporate tax reform alone isn’t sufficient to fix the effects of decades of second-class status conferred on African Americans. The government does not just need sufficient funding to create equality within the economy. Distribution of these dollars is equally important. It needs to reflect the nuances of structural inequalities built into multiple aspects of our tax code.

Take federal housing spending policies as a prime example. Ending ineffective tax incentives, such as the mortgage interest reduction, can start to tilt the scales toward those who are not already wealthy. Seventy-seven percent of the benefits of the mortgage interest reduction accrued to homeowners with gross incomes of above $100,000. We need to rethink housing subsidies so that the benefits of federal programs do not heavily favor those who already own homes.

We need corporate tax reform to ensure that all participants in our economy are paying their fair share. But we also need a federal benefits structure that ensures that the concept of a "fair share" considers our history of discrimination when determining which Americans need those benefits most.

Joelle Gamble is the National Director of the Roosevelt Institute | Campus Network.

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Daily Digest - September 3: Soaring Inequality Isn't Inherent to the System

Sep 3, 2014Rachel Goldfarb

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Democracy in the Twenty-First Century (Project Syndicate)

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Democracy in the Twenty-First Century (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz says that wealth inequality, thrown into the spotlight by Thomas Piketty, is the result of government-supported distortion of the market.

A Competition to Make the City More Resilient (Tech President)

Roosevelt Institute Fellow Susan Crawford explains how the RISE:NYC contest was structured to ensure that it sparked sustainable and innovative ideas to protect the city from future storms.

How Amazon Plans to Storm Cable's Castle (Bloomberg View)

Susan Crawford suggests that Amazon's purchase of Twitch, a live-streaming video game platform, aims to increase its negotiating power with Internet service providers.

America’s Growing Food Inequality Problem (WaPo)

Researchers have found a growing dietary quality gap that parallels income inequality, says Roberto A. Ferdman. The study says the gap is partially cost-driven, since healthy food is pricier.

New Voter Guide Follows the Money (NYT)

Derek Willis looks at Crowdpac, a site that is creating a voter guide based on campaign finance data. Crowdpac argues that the source of campaign dollars says the most about a candidate.

It's Time to Raise the Minimum Wage. If Congress Would Rather Suck Up to the Koch Brothers, We'll Raise It Anyway (The Guardian)

Sarah Jaffe says that as long as politicians see wealthy donors instead of workers as their base, organizers must continue to take the wage issue out of legislators' hands.

Fast-Food-Worker Civil Disobedience? (Philadelphia Daily News)

Will Bunch reports on the planned acts of civil disobedience, including sit-ins and marches, that will represent a major escalation of the fast-food strikes tomorrow.

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Daily Digest - August 21: Time to Consider the Mortgage Deduction?

Aug 21, 2014Rachel Goldfarb

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How a Widely Beloved Tax Deduction Really Just Benefits the Well-Off and Exacerbates Inequality (TAP)

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How a Widely Beloved Tax Deduction Really Just Benefits the Well-Off and Exacerbates Inequality (TAP)

The mortgage interest deduction primarily benefits those who make at least $100,000 a year, and dwarfs funding for housing programs for the poor, writes Alex Ulam.

  • Roosevelt Take: In his latest white paper on tax reform, Roosevelt Institute Chief Economist Joseph Stiglitz suggests changes to the mortgage interest deduction that would make it more equitable.

What Would Real Economic Justice Look Like in Ferguson? (The Nation)

Michelle Chen reports on organized labor's involvement in Ferguson, MO, where a millennial labor group called Future Fighters is asking protesters want they want their community to look like.

Fed Dissenters Increasingly Vocal About Inflation Fears (NYT)

The newly released minutes from the Federal Reserve's July meeting show that some Fed officials feel the central bank has done all it can to improve the economy, writes Binyamin Appelbaum.

CEOs are Dumb When it Comes to This (MarketWatch)

Simon Constable reports on a new study that shows that stock option compensation isn't really considered in dollars: CEOs tend to get the same number of options regardless of the stock's value.

Why Bank of America Probably Won’t End Up Actually Paying US$17B in Mortgage Securities Settlement (Financial Post)

Consumer relief as negotiated in this settlement and others rarely cost the banks much at all, says Jeff Horwitz. But with few other sources of consumer relief, advocates welcome this one.

The Latest Attack on Labor, From The Group That Brought Us ‘Harris v. Quinn’ (In These Times)

Moshe Marvit explains the National Right to Work Committee's latest tactic, which aims to end exclusive representation in public sector unions and weaken collective bargaining.

New on Next New Deal

Mean and Lean Local Government

In his video speculation for the Next American Economy project, Stefaan Verlhurst, Co-Founder of GovLab, projects how municipal governments might shift tactics to take advantage of broader resources.

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Daily Digest - August 20: Inequality Among Roots of Ferguson Unrest

Aug 20, 2014Rachel Goldfarb

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Ferguson's Race Injustices Have Their Roots in Economic Inequality (The Guardian)

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Ferguson's Race Injustices Have Their Roots in Economic Inequality (The Guardian)

Suzanne McGee ties the situation in Ferguson, MO to the severe economic inequality facing the Black community in the U.S., which she says limits Black access to political power as well.

Meet the Ordinary People Who Are Mobilizing Around Monetary Policy (WaPo)

Activist groups concerned with democratizing the discussion of monetary policy are sending low-wage workers to speak a Federal Reserve conference in Wyoming. Ylan Q. Mui reports.

The Tax Dodge That Has Plagued the U.S. for More Than a Decade (The Atlantic)

Joe Pinsker looks at the history of companies looking to reincorporate abroad to dodge U.S. corporate income taxes, and explains how the process has changed (and yet not) in the past decade.

  • Roosevelt Take: Roosevelt Institute Chief Economist Joseph Stiglitz proposes a full slate of corporate income tax reforms in his latest white paper.

Lagging Demand, Not Unemployability, Is Why Long-term Unemployment Remains So High (EPI)

In a new report, Josh Bivens and Heidi Shierholz argue that long-term unemployment is still a component of cyclical weakness in the economy from the recession, rather than a structural shut-out.

How to Save the Net: Don’t Give In to Big ISPs (Wired)

Netflix CEO Reed Hastings calls on the Federal Communications Commission to expand its focus to regulate the relationships between companies like his and the Internet service providers.

OSHA fines company $1M for violating truckers' hours-of-service rule (The Hill)

The Occupational Safety and Health Administration's fine is about protecting workers and the public, reports Tim Devaney. Trucker rest rules are in the limelight after high-profile crashes.

San Diego Defies Mayor, Raises Minimum Wage (CNN Money)

Katie Lobosco reports that the city council overturned the mayor's veto, approving a gradual minimum wage hike that ties the wage to inflation, as well as paid sick leave.

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Daily Digest - August 19: With Inequality, It's Women and Children First

Aug 19, 2014Rachel Goldfarb

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Among the Poor, Women Feel Inequality More Deeply (NYT)

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Among the Poor, Women Feel Inequality More Deeply (NYT)

The burden of inequality falls more heavily on poor women, says Patricia Cohen, because they are more likely to be raising a family and get little support for the "second shift" of household management.

Blame Employers, Not Workers, for Any Skills Gap, Economist Says (WSJ)

Josh Zombrun looks at a new working paper from a University of Pennsylvania economist, which argues that employers who complain about lack of skills are accountable for refusing to provide training.

The Hunger Crisis in America’s Universities (MSNBC)

Ned Resnikoff reports on how colleges across the country are tackling rising food insecurity. Many are looking to Michigan State University, home of an established campus food pantry, for guidance.

A Co-op State of Mind (In These Times)

Ajowa Nzinga Ifateyo looks at the rise of worker cooperatives in New York City in light of the City Council's new $1.2 million initiative to support and grow such enterprises.

What Does the Fed Have to do with Social Security? Plenty (AJAM)

Dean Baker notes that Federal Reserve policy can influence unemployment rates, and when more people work, especially in low- and middle- wage jobs, Social Security revenues increase.

How Outdated Parking Laws Price Families Out of the City (CityLab)

A-P Hurd argues that requiring developers to build parking lifts the costs of housing out of the affordable range for most families. Hurd looks at a more family-friendly urban housing model.

New on Next New Deal

Curbing Campus Sexual Assault is Not About the Money

Campus Network's Hannah Zhang responds to critics of the Campus Accountability and Safety Act who call the bill's fines outsized to the problem of sexual assault on campuses.

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Lenny Mendonca: The Inconvenient Truth About Inequality

Aug 13, 2014

The Next American Economy project brought together 30 experts from various disciplines to envision tomorrow's economic and political challenges and develop today's solutions. Their assignment: be bold, and leave the conventional wisdom -- and their own opinions -- behind. In today's video, Lenny Mendonca of McKinsey & Company discusses the groundwork that's been laid for a serious national debate about inequality -- and the forces working to silence it.

The Next American Economy project brought together 30 experts from various disciplines to envision tomorrow's economic and political challenges and develop today's solutions. Their assignment: be bold, and leave the conventional wisdom -- and their own opinions -- behind. In today's video, Lenny Mendonca of McKinsey & Company discusses the groundwork that's been laid for a serious national debate about inequality -- and the forces working to silence it.

"Thomas Piketty and Capital will be to this decade what Al Gore and An Inconvenient Truth were to the last decade," speculated McKinsey & Company Co Director Emeritus Lenny Mendonca. Piketty's findings on inequality are much discussed among academics and progressives; however, there is a set of vested interests preventing real policy discussion on the topic of inequality.

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Daily Digest - August 7: What Piketty's 'Capital' Means for Marginalized Americans

Aug 7, 2014Rachel Goldfarb

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How Gender Changes Piketty’s ‘Capital in the Twenty-First Century’ (The Nation)

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How Gender Changes Piketty’s ‘Capital in the Twenty-First Century’ (The Nation)

Roosevelt Institute | Campus Network National Director Joelle Gamble joins The Nation's roundtable on feminism and the economy to discuss how Piketty's findings affect women and people of color.

New York: Young Ideas for Social Cohesion (UBM's Future Cities)

Jordan Fraade writes about the Roosevelt Institute Summer Academy's NYC Policy Expo as an example of young people not just moving to cities, but developing policy to improve them.

The 1% May Be Richer Than You Think, Research Shows (Bloomberg)

Jeanna Smialek reports on new research that shows the wealth of the 1 percent to be significantly undercounted. She speaks to Roosevelt Institute Chief Economist Joseph Stiglitz, who isn't surprised.

Bank of America Offers U.S. Biggest Settlement in History (NYT)

In reaction to another case that turned out badly, Bank of America has offered a $16 billion settlement for its sale of toxic mortgage securities, write Ben Protess and Michael Corkery.

Cold Porridge For Regular People: The Myth of the Goldilocks Economy (TAP)

Robert Kuttner says that only the wealthy could consider this economic climate not too hot or too cold – for everyone else, there aren't enough jobs and wages are staying flat.

The Market Basket Protests And The American Worker (On Point)

Tom Ashbrook takes a close look at the protests happening at Market Basket supermarkets, in which the managers are pushing to keep a CEO who they feel has workers' best interests at heart.

New on Next New Deal

Progress, Yet No Progress: The Two Lines of Defense Against Too-Big-To-Fail

The largest banks' "living wills," meant to facilitate an orderly bankruptcy process, aren't good enough, and Roosevelt Institute Fellow Mike Konczal says that shows that Too-Big-to-Fail isn't entirely solved.

As Tech Advances, Big Business Will Reap the Benefits

In his video speculation for the Next American Economy project, Robert Litan of the Brookings Institution says that existing businesses are capturing the benefits of new technology, to the detriment of new firms.

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Daily Digest - August 5: Basic Needs Shouldn't Need to Be Bought

Aug 5, 2014Rachel Goldfarb

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The Real Solution to Wealth Inequality (The Nation)

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

The Real Solution to Wealth Inequality (The Nation)

Roosevelt Institute Fellow Mike Konczal and Bryce Covert write that instead of trying to increase individuals' purchasing power, basic needs should just be taken off the market altogether.

Why Is the Economy Still Weak? Blame These Five Sectors (NYT)

Neil Irwin examines the possible causes for the underperformance of several economic sectors based on careful predictions of what their output ought to be in a healthier economy.

The NLRB-McDonald's Ruling Could be the Beginning of a Franchise War (LA Times)

Michael Hiltzik suggests that as the National Labor Relations Board places more responsibility on franchisors like McDonald's, those companies will try to pass costs to their franchisees.

A University President Gave up $90,000 to Give His Minimum Wage Workers a Raise (Vox)

By reducing his own salary, the interim president of Kentucky State University has ensured a raise from $7.25 an hour to $10.25 an hour for the school's lowest-paid workers.

As Congress Adjourns, GOP Declares “Omission Accomplished” (OurFuture.org)

Congress left for summer recess with the GOP having blocked almost everything from passing, but Richard Eskow also calls out the Democrats for failing to give them more progressive proposals to block.

The United States Needs Corporate 'Loyalty Oaths' (The Daily Beast)

"Non-desertion agreements" as requirements for federal contractors would help to ensure companies choose to pay U.S. corporate taxes, writes Jonathan Alter.

New on Next New Deal

Will Syracuse Become New York's Second Economic Capital?

In her video speculation for the Next American Economy project, Amy Liu, Co-Director of the Metropolitan Policy Program at Brookings, predicts cities will step up as drivers of innovation and investment.

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Education Left Behind

Jul 31, 2014Edyta Obrzut

Young people in Illinois recognize that many aspects of the state's education system are broken, and they have some first steps for improving it.

Young people in Illinois recognize that many aspects of the state's education system are broken, and they have some first steps for improving it.

“Part of what is at risk is the promise first made on this continent: All, regardless of race or class or economic status, are entitled to a fair chance and to the tools for developing their individual powers of mind and spirit to the utmost. This promise means that all children by virtue of their own efforts, competently guided, can hope to attain the mature and informed judgment needed to secure gainful employment, and to manage their own lives, thereby serving not only their own interests but also the progress of society itself’”   — A Nation at Risk, 1983

In August of 1981, Secretary of Education Terrell Bell chartered the National Commission on Excellence to review and synthetize scholarly research on public schools nationwide, with a special focus on the educational experience of teenage youth. In their report, A Nation at Risk, they promised a comprehensive change to the students, their parents, and teachers. Years after National Commission on Excellence’s promise was made, The Roosevelt Institute | Campus Network and Young Invincibles have banded together under the NextGen Illinois project in order to bring a youth-led agenda to state government officials. It is time to assess what has been done and what needs to be improved to completely fulfill the dream of equal access to the quality education and equality of opportunity for young people in the state of Illinois.

To that end, the NextGen project is hosting a series of caucuses across the state that offer an opportunity for young people to brainstorm and create a youth-lead policy agenda for the state of Illinois on issues that matter most to them. They foster discussion about state level politics and some of the most significant problems that are facing Illinois today. Through their participation, young adults offer their own insight about potential solutions to those problems that can result in positive change in their communities.

The NextGen project held its second caucus at DePaul University on Tuesday, May 27, where students pointed out several problems with the current education system in Illinois, including inequality in the distribution of education funding and challenges created by a centralized curriculum. In this system both teachers and students feel pressures created by the demands of accountability and insufficient resources.

Youth from the DePaul caucus further explained that demand for academic achievement and penalties for low-test scores have put extraordinary emphasis on accountability with both students and teachers being measured on their efficiency. The idea of consequences vs. high achievement creates a problem in which teaching in public schools is mostly directed toward test preparation rather than challenging and interesting classes. The lowest scoring schools are struggling with fewer funds and risk being placed on probation or being closed.

The use of standardized tests in high stakes decisions about the individual student is also problematic, as not all students receive an equal opportunity to learn. As recently as 2010, Illinois received a grade of F in equitable distribution of funds per pupil and in relation to the students’ poverty. Education funding distribution in Illinois has been assessed as regressive and unfair. And to make matters worse, in 2009, Illinois law makers cut assistance for P-12 education from the General Fund by more than $861 million (12%). Without addressing these problems, current practices focused on test scores and accountability may only deepen inequality. The top-down accountability model is shifting responsibility for the failure of the educational system from the state to the individuals and hurts not only teachers and parents, but most of all, kids. NextGen youth believe that market-style competition is not working well for them and that it is time to change it.

What can we do to get education back on track? Young people who participated in the caucus at DePaul argue that Illinois has to reevaluate its budget and increase funding for education. Students believe that improved support from the state to schools, granted on a per student basis, will be more effective. They believe that each student should have the same access to quality education and resources so youth can obtain proper preparation for college and competition on the job market. NextGen participants also stress the importance of early career exploration courses and financial counseling, which will help students in their life after high school.

Students’ commitment to the issue of improving the Illinois public schools demonstrates the significance of the problem. They emphasize that improving educational outcomes of students in Illinois requires an effective educational reform that can only take place by including parents, teachers, and most of all- youth into the policy making process. High rate of participation in the NextGen caucuses by Illinois youth proves that if we try hard, we can make a difference!

Edyta Obrzut is the NextGen Illinois Research Fellow for the Roosevelt Institute | Campus Network.

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