What Happens if Europe Cuts Off the Greek Banks?

Feb 10, 2015J.W. Mason

Over the past week, it's become clear that the real leverage the European authorities have over Greece is via the banking system. What does Greece need continued loans for? Not to pay for public expenditures, thanks to its primary surplus. Not to pay for imports — Greece has a (small) trade surplus. Not to service current debt, if it defaults. What does need to be financed is the flow of deposits out of Greek banks to the rest of Europe.

Over the past week, it's become clear that the real leverage the European authorities have over Greece is via the banking system. What does Greece need continued loans for? Not to pay for public expenditures, thanks to its primary surplus. Not to pay for imports — Greece has a (small) trade surplus. Not to service current debt, if it defaults. What does need to be financed is the flow of deposits out of Greek banks to the rest of Europe.

So what happens if that financing is cut off, as the European Central Bank is threatening? The usual answer is the collapse of the Greek banking system, followed immediately by Greece’s forced exit from the eurozone. But what concretely are the mechanics of this? What is the exact chain of events from an end to ECB financing to Greek exit from the euro? I don't know the answer to this, but the more I think about it, the less confident I am in the conventional wisdom.

What concretely does it mean that the ECB is providing liquidity support to Greek banks? As far as I can tell, it is this: When a holder of a deposit in a Greek bank wants to make a payment elsewhere, either to purchase a good or asset outside Greece or to move the deposit to a different bank, the Greek bank must transfer an equal quantity of settlement assets to the bank receiving the deposits. These settlement assets are normally acquired on the fly by issuing a new liability in the interbank market, but if other banks are unwilling to accept the liabilities of Geek banks, they can be borrowed directly from the ECB against suitable collateral. This is the lending that the ECB is threatening to cut off.

What if the Greek banks couldn't acquire settlement assets? Then other banks would not accept the deposits, and it would be impossible to use deposits in Greek banks to make payments. Depositors would find their accounts frozen and, in the normal course of events, the banks would be shut down by regulators.

But Greece still has a central bank. My understanding is that much of the day-to-day business of central banking in Europe is carried out by the national central banks. In principle, even if Greek banks couldn't acquire settlement assets by borrowing from the ECB, they could still borrow from the Greek central bank. This wouldn't help with payments to the rest of Europe, since reserve balances at the Greek central bank wouldn't be accepted elsewhere. But I don't see why the Greek central bank couldn't keep the payments system working within Greece itself.

If the Greek central bank is willing to provide liquidity on the same terms as the ECB, what's going to force the Greek banks to shut down? It's not as though there's any Europe-wide bank regulator that can do it.

In a sense, this would be a kind of soft exit, since there would now be a Greek euro that would not be freely convertible into a non-Greek euro. But I don't see why it would have to be catastrophic or irreversible. Transactions within Greece could continue as before. It might not make much difference for routine trade, either, since the majority of Greek imports come from outside the EU.

Where it would make a difference is precisely that it would prevent Greek depositors from moving their funds out of the country. (Greek banks would also presumably be limited in their ability to provide physical cash to depositors, but I don’t think this is important.) In effect, by cutting Greece off from the European interbank payment system, the ECB would be imposing capital controls on Greece's behalf. You could even say that, if the threat of cutting off liquidity support can trigger a run on Greek banks, actually doing so would ensure that there isn't one.

Now maybe I'm wrong about this. Maybe there is a good reason why the Greek central bank can't maintain the payment system within Greece. But I also think there's a larger point here. I'm thinking about the end of the gold standard in the 1930s, when breaking the link with gold was considered an unthinkable catastrophe. And yet the objective basis of the money system in gold turned out to be irrelevant. I think, in the same way, the current crisis may be revealing the reflexive, self-referential nature of money. On a certain level, the threat against Greece comes down to: "You must make your money payments, or we will deprive you of the means to make your money payments."

The rule of the money system requires that real productive activity be organized around the need for money. This in turn requires that money not be too freely available, but also that it not be too scarce. Think of Aunt Agatha in Daniel Davies' parable. Suppose her real goal is to run her nephew's life — to boss him around, have him at her beck and call, to know that he won't make any choices without asking if she approves. In that case, she always has to be threatening to cut him off, but she can't ever really do it. If he knows he's getting money from her, he won't care what she thinks — but if he knows he isn't, he won't care either. He has to be perpetually unsure. And in keeping with Davies' story, the only thing Jim actually needs the money for is to continue servicing his debt to Aunt Agatha. The only real power she has is a superstitious horror at the idea of unpaid debts.

In this way I've tentatively convinced myself that all Syriza needs to do is hold firm. The only way they can lose is if they lose their nerve. Conversely, the worst outcome for the ECB and its allies would be if they force Greece into default and everyone watches as the vengeful money-gods fail to appear.

UPDATE: It turns out that Daniel Davies is making a similar argument:

Capital controls are arguably what Greece needs right now - they have balanced the primary budget, and they need to stop capital flight. From the ECB's point of view, I'd agree that the move is political, but it also means that they are no longer financing capital flight.

There's a sensible negotiated solution here - with a lower primary surplus than the program (in which context I think Varoufakis' suggestion of 1.5% is not nearly ambitious enough), a return to the structural programs (the Port of Piraeus really does need to be taken out of the political sphere), and an agreement to kick the headline debt amount into the far future (in service of which aim I don't think all the funny financial engineering is helping).

The fall-back is a kind of soft exit, with capital controls. But the massive, massive advantage of capital controls over drachmaisation is that they  preserve foreign exchange. Greece imports fuel and food. With capital controls, it can be sure of financing vital imports.

The fact that Davies is thinking the same way makes me a lot more confident about the argument in this post.

J.W. Mason is a Fellow at the Roosevelt Institute.

Note: A version of this post originally appeared at The Slack Wire.

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Daily Digest - February 10: What Happened to Reinvesting Corporate Profits?

Feb 10, 2015Rachel Goldfarb

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Stock Buybacks Are Killing the American Economy (The Atlantic)

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

Stock Buybacks Are Killing the American Economy (The Atlantic)

Nick Hanauer blames the high percentage of corporate profits going to stock buybacks for our slowed economy; that money could otherwise go to higher wages or new corporate investments.

Obama and Congress Offer Bogus Rhetoric on Tax Reform (AJAM)

David Cay Johnston says that both the Democrats and the Republicans are only discussing tax reform that benefits the political donor class, instead of reform that help average Americans.

  • Roosevelt Take: In a white paper released last year, Roosevelt Institute Chief Economist Joseph Stiglitz proposed a tax plan that would promote equity and growth for all.

Right-to-Work Laws are Every Republican Union-Hater's Weapon of Choice (The Guardian)

There are no philosophical or economic arguments in favor of right-to-work laws, writes Michael Paarlberg, only a political preference for supporting employers over workers.

Illinois Governor Acts to Curb Power of Public Sector Unions (NYT)

Monica Davey and Mitch Smith report on Governor Rauner's executive order, which will strip public sector unions of the fair share dues that non-members pay for the benefits they get anyway.

Red States' New Tax on the Poor: Mandatory Drug Tests for Welfare Recipients (TNR)

Elizabeth Stoker Bruenig points out that only certain public funds require invasive tests to ensure recipients are worthy of assistance. Other forms of welfare, like public schools, are simply accepted.

In at Least 22 States, Your Student Debt Could Cost You Your Job (Jobs With Justice)

Chris Hicks points out the disconnect inherent in laws that revoke professional licenses from people who aren't able to pay their student debt. How will they make enough to pay it off without that license?

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The Obama Budget: Weak on Reproductive Health

Feb 9, 2015Andrea Flynn

Family planning is both vital for econoimc stability and a solid investment with strong returns, so why wasn't it better funded in the President's budget?

Family planning is both vital for econoimc stability and a solid investment with strong returns, so why wasn't it better funded in the President's budget?

Last week President Obama unveiled a 10-year budget that reflects the ambitious and progressive agenda he laid out in his State of the Union address. With investments in infrastructure, education, and economic supports for the middle class, the President’s funding plan aims to lift up low-income families and address the growing and historic U.S. class divide. But Obama has fallen short on one area that is critical to women and families: reproductive health.

There were hopes that the president would request a significant increase for Title X – the nation’s only program dedicated to providing quality, affordable reproductive health services – and also the repeal of the Hyde Amendment, a 1976 law that prohibits women from using federal health benefits such as Medicaid to pay for abortion, except in cases of rape, incest, or life endangerment. But Obama did neither.

Given conservative control of Congress, President Obama’s budget has little chance of being passed as is. But as John Cassidy pointed out in the New Yorker this week, the budget is as much a political document as it is an economic one. “The White House is using it to frame the political debate for this year and for the run-up to the 2016 Presidential election – an effort that began with the State of the Union address,” Cassidy wrote. Obama had an opportunity to show that reproductive health is a critical component of any agenda meant to lift up low-income families, and one the federal government must invest in if their other efforts are to bear fruit. But he missed that opportunity.

The president’s $300 million request was a modest increase from last year’s budget of $286.5 million – Title X’s first increase since 2010 – but still leaves the program woefully underfunded. Title X has still not recovered from the drastic cuts it endured between 2010 and 2013, when lawmakers cut the budget from $317 to $278 million, and as a result prevented 667,000 patients from receiving care. Family planning experts estimate that in order to completely fulfill the nation’s unmet need for reproductive health care, Title X would require somewhere in the ballpark of $800 million, a far cry from today’s budget.

Title X is like the little engine that could of public programs. It prevents more than one million unintended pregnancies annually, and thereby avoids nearly 600,000 unplanned births and more than 400,000 abortions. Without Title X, the U.S. unintended pregnancy and abortion rate would be 35 percent higher among adult women and 42 percent higher among teens. Not to mention that in 2010 every dollar invested in Title X saved $5.68. How’s that for a return on investment?

Not only is the program underfunded, but in states across the country conservative lawmakers have implemented restrictions that have prevented Title X funds from actually going to family providers, effectively chipping away at what was once a robust health safety net and exacerbating a pre-existing shortage of reproductive health providers. It is largely low-income women, women of color, immigrant women, and young women who are left without anywhere to turn for preventative care.

And what happens when those women find themselves needing to terminate a pregnancy? Between the restrictions set forth under the Hyde Amendment and the rapidly shrinking network of abortion providers, they have few options. In 1976 – just three years after the Supreme Court’s Roe v. Wade decision legalized abortion – Congress passed the Hyde Amendment and made abortion the only medical procedure ever banned from Medicaid. Ironically, Medicaid covers all the costs related to family planning and pregnancy.

By this point, you might be thinking this is all irrelevant, thanks to the Affordable Care Act (ACA). If only. While the ACA has extended care to scores of women who were previously uninsured, conservative opposition has diluted its potential impact and many people will remain without health coverage. Indeed, nearly four million women will be left without coverage this year thanks to conservative opposition to expanding Medicaid. In addition, federal restrictions ban many immigrants from Medicaid, the contraceptive mandate has been compromised and contraception is now your boss’s business, and this term the Supreme Court may very well take federal subsidies away from millions who need them in order to afford health insurance.

We need an increased investment in reproductive health now more than ever. If we are serious about improving the circumstances of low- and middle-income U.S. families, we must extend critical care and services to all of those who need and want them, and also shape the political debate in a way that will give all women and families all of the tools – not just a select few – that they need to thrive.

When the president, who espoused his support for reproductive rights in his State of the Union address, doesn’t push for a significant expansion of reproductive health care while he is putting his political capital behind broader education, income, and work-family supports, it signals that reproductive health, perhaps, is not as critical as these other issues. It suggests that with other supports women can lead economically secure lives, even if they cannot control their fertility and determine the timing and size of their families. That is simply not the case.

An agenda without bold investments in reproductive health is not a comprehensive agenda for women and families. And if women cannot access quality and affordable health care, they will not be able to make the most of the other important initiatives the president has proposed.

Andrea Flynn is a Fellow at the Roosevelt Institute. Follow her on Twitter @dreaflynn.

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Daily Digest - February 9: Replacing Obamacare Without Real Care

Feb 9, 2015Rachel Goldfarb

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Under GOP Plan, Pay More for Junk Insurance, Leave More Uninsured (The Hill)

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Under GOP Plan, Pay More for Junk Insurance, Leave More Uninsured (The Hill)

Roosevelt Institute Senior Fellow Richard Kirsch breaks down the Republican plan for replacing the Affordable Care Act, which he says will allow barebones high-cost plans instead of real coverage.

A Needless Default (TAP)

David Dayen takes a deep dive into the failures of the Home Affordable Modification Program, which was supposed to help homeowners but actually created opportunities for banks to foreclose.

Much Stronger Job Growth is Needed If We’re Going to See a Healthy Economy Any Time Soon (Working Economics)

Elise Gould shows just how slowly the labor market is catching up to pre-recession levels at current rates. At 257,000 jobs per month, we'll be waiting until May 2017.

Rand Paul Has the Most Dangerous Economic Views of Any 2016 Candidate (TNR)

Danny Vinik says that Paul's Audit the Fed bill would give politicians the ability to interfere with monetary policy, a very scary idea since Paul so fundamentally misunderstands monetary policy.

Don’t Listen to Anyone Who Says the Unemployment Rate is a “Big Lie” (WaPo)

Matt O'Brien points out that while the unemployment rate, which only accounts for those actively looking for work, isn't perfect, we don't have better measures of unemployment.

Consumer Protection Agency Seeks Limits on Payday Lenders (NYT)

Jessica Silver-Greenberg says that since payday lenders continue to morph their practices to evade state regulation, federal regulation has the potential to create broader change.

New on Next New Deal

The Obama Budget: Weak on Reproductive Health

Roosevelt Institute Fellow Andrea Flynn argues that when the president chooses not to push for better funding for reproductive health programs, he's saying the issue isn't critical.

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Get Young People Involved to Reduce Chronic Disease

Feb 6, 2015Raymond Dong

A youth advisory committee for the Department of Health and Human Services has the potential to reduce the costs of chronic disease for generations to come.

A youth advisory committee for the Department of Health and Human Services has the potential to reduce the costs of chronic disease for generations to come.

In the United States, chronic diseases including heart disease, stroke, cancer, diabetes and obesity are among the most common, costly, and preventable of health problems. Half of all adults have one or more chronic health conditions, and seven out of the top ten causes of death in 2010 were chronic. As chronic disease is projected to increase to 171 million patients by 2030, the $2 trillion in healthcare spending in this arena is also projected to skyrocket. The CDC says that eliminating three risk factors (poor diet, inactivity, and smoking) would prevent 80 percent of heart disease and stroke, 80 percent of type II diabetes, and 40 percent of cancer. Recent research by University of Chicago Nobel laureate economist James Heckman shows that high-quality childhood development programs with health care and nutritional components can prevent or delay the onset of chronic disease.

The U.S. government has instituted policy and programs targeting lifestyle changes in youth, such as Let’s Move and the Health Hunger-Free Kids Act. The Let’s Move campaign strives to solve childhood obesity through healthier foods and more physical activity; the Health Hunger-Free Kids act let the Department of Agriculture set portions and nutrition standards for school lunches.

These two programs have not had tremendous success. Many schools have complained about the food portions being too small and the food tasting bad, to the extent that many students are refusing to eat these meals and go hungry. Wealthier schools are even backing out of the national program to self-fund food students prefer. When students do not eat the revised federal school lunches, schools also lose money, which may lead to budget cuts in other programs. Meanwhile, a 2012 CDC survey showed that merely one in four U.S. kids aged 12-15 met the criteria for physical activity recommended by Let’s Move.

Although youth are in a powerful position to understand the rationale behind lifestyle decisions of their peers, there is currently very little youth representation in the Department of Health and Human Services. Youth have the potential to help create innovative projects and policy to address these childhood lifestyle issues, but lack the voice to do so.

It would be extremely beneficial for the HHS to create a youth advisory board to the U.S. Department of Health and Human services to increase youth engagement in preventing chronic diseases. In order to guarantee a diverse board, HHS would operate a national competition and a rigorous interview process to select a ten-member advisory board. A staff member from HHS would be designated the task of constructing this board and advising it. This proposal stems from the impact the U.S. National Commission for UNESCO’s youth advisory board has had in areas in which older adults have been unable to serve. The youth board utilized technology and social media to connect over 1,500 youth from 120+ countries in conversation on culture, science, and education.

The proposed HHS youth advisory board would be largely unfunded, as they would implement inexpensive projects. They would engage youth with policy and programs centered on improving lifestyles harmful to long-term health. The first project could be a social media campaign (Twitter chats, Google Hangouts, Facebook groups) to spread awareness and to promote conversation on the importance of exercise, nutrition, and banning tobacco in order to prevent chronic disease. After hearing conversations from youth across the country, the board could then work with the HHS to implement specific programming at their local schools. This could include giving schools recommendations on adding healthier food options or incorporating more nutrition education into classes.

The board could also spend time simplifying WHO, CDC, and World Bank reports on health and chronic disease to make them directly pertinent to youth. The committee could also host a nation-wide competition (in conjunction with private and public partners) to encourage youth to submit innovative ways to improve health practices. Similar competitions have been hosted by the U.S. Federation of UNESCO Clubs to engage hundreds of youth around the world on pressing social issues.

There are certainly a few potential obstacles that could hinder the creation of an HHS youth advisory board. One possible concern is that youth do not have the experience or capability to contribute to HHS projects on a national scale. This can be addressed by looking at the impact that many other youth advisory committees have had. When Dell wanted to enhance technological environments in the classroom, they called upon a youth advisory board to launch a national competition to help achieve the goal. The U.S. National Commission for UNESCO wanted more youth engagement in culture, science, and education; they called upon 10 young people to spearhead a global project connecting teens to UNESCO’s ideals.

A second concern would likely be that the youth advisory board requires a member of the HHS to advise them. This will require a significant time and commitment for that staff member during the initial formation of the group, but afterwards the advisory role would be much lighter. The current advisor to the UNESCO board sits in on one conference call every 2-3 months and is copied on emails to keep up with the board’s projects. Of course, the advisor would have to approve new appointments to the board every year as older members transition out of the board. Asking for time from a staff member is justified because the advisory board has the potential to increase information dissemination and penetration into an increasingly important youth audience.

A last concern would be how to fund the committee. Most of the projects and initiatives can come at a low cost since spreading awareness and information dissemination can largely be done over social media. In the case that money is needed to execute a program in a school, the federal government should allocate funds to such ideas to promote youth innovation and awareness in these healthcare issues.

It is important for the department of HHS to listen to such a proposal asking for an increased youth presence. Youth represent 14 percent of the total U.S. population and have a very large stake in total healthcare costs and outcomes nationwide. If youth become motivated to live healthy lifestyles, the cost savings over their lifetimes will be incredible.

Raymond Dong is a senior at the University of Chicago studying Economics and Biology

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Daily Digest - February 6: If Government Cares About the Next Generation, Where Are Their Ideas?

Feb 6, 2015Rachel Goldfarb

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Youth Agenda a Glaring Omission in Rauner's State of the State (State Journal-Register)

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Youth Agenda a Glaring Omission in Rauner's State of the State (State Journal-Register)

Campus Network members Rachel Riemenschneider and Samuel Wylde point to the NextGen Illinois youth policy agenda as a collection of young people's concerns that are being overlooked.

Amherst College's Roosevelt Institute to share in $750,000 MacArthur Award (MassLive)

Diane Lederman reports on the Campus Network's MacArthur Award, quoting two students from the Amherst College chapter, Joshua Ferrer and Pierre Joseph.

Fast Food Companies are Invoking ‘Main Street’ to Fight Unions (WaPo)

Lydia DePillis explains how McDonalds is putting its small franchisees front and center to push back against unionization efforts. However, these franchises don't have much independence at all.

The Democrats in Opposition (TAP)

Harold Meyerson argues that if Democrats choose to function as an opposition party against not just the Republicans, but also Wall Street, they will have far more success at the ballot box in the future.

Jobs-Day Guide: January Surprise, U.S. Wages, Participation Rate (Bloomberg Business)

Victoria Stilwell predicts that the latest jobs numbers will fall below projections, as they often do at the beginning of the year. The annual payroll revision numbers will also be worthy of attention.

How the American Family Was Affected by the Great Recession (Pacific Standard)

The most noticeable differences, writes Philip N. Cohen, are in birth rate and divorce rate, which both saw sharp drops at the beginning of the recession and have since rebounded.

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Daily Digest - February 5: Congratulations, Campus Network!

Feb 5, 2015Rachel Goldfarb

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Winners of 2015 MacArthur Awards for Nonprofit Organizations (AP)

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

Winners of 2015 MacArthur Awards for Nonprofit Organizations (AP)

The Roosevelt Institute | Campus Network is among this year's recipients of the 2015 MacArthur Award for Creative and Effective Institutions.

The Internet Is Back to Solid Regulatory Ground (NYT)

Roosevelt Institute Fellow Susan Crawford says that by regulating Internet infrastructure as a utility, the Federal Communications Commission is going back to its roots of solid legal authority.

A Greek Morality Tale (Project Syndicate)

Roosevelt Institute Chief Economist Joseph Stiglitz says that the treatment of Greece's debt shows the need for reform in the eurozone to encourage growth-centered economic policy.

Rand Paul is Dead Wrong About Vaccines. But He Has a Point About the Federal Reserve. (The Week)

Jeff Spross says that Rand Paul is right that the Fed could use greater accountability – but the answer isn't an auditor. Roosevelt Institute Fellow Mike Konczal suggests better targeted goals as an alternative.

A Fair Day’s Wage (New Yorker)

In addition to raising wages for his lowest-paid workers, Aetna's CEO is reviving old labor relations rhetoric of fair pay and shared success, writes James Surowiecki.

America’s Recipe for Disaster: How New Corporate “Amnesty” Plan Could Doom the Economy (Salon)

Allowing corporations to pay a reduced tax rate on profits they've held overseas only encourages them to continue this pattern, writes David Dayen, which impacts tax revenues for years.

We're Jailing the Wrong People. We Need to Jail More of the Right Ones: Corporate Criminals (TAP)

Robert Kuttner says that misclassifying workers as contractors – or rather, payroll fraud – should be punished with jail time, just like other forms of deliberate fraud.

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Daily Digest - February 4: Looking to History to Understand Today's Civil Rights Movement

Feb 4, 2015Rachel Goldfarb

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How Radical Change Occurs: An Interview With Historian Eric Foner (The Nation)

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How Radical Change Occurs: An Interview With Historian Eric Foner (The Nation)

Roosevelt Institute Fellow Mike Konczal interviews Eric Foner about teaching the Civil War online and the relevance of the Civil War and Reconstruction eras to our current political moment.

Would FCC Plan Harm Telecom Investment? Even Industry Opinion Is Mixed (NPR)

Joel Rose speaks to Roosevelt Institute Fellow Susan Crawford, who says the telecommunications industry changes its tune based on audience: only regulators are told regulation will kill investment.

Is Ending Segregation the Key to Ending Poverty? (The Atlantic)

Alana Semuels takes a close look at programs that have helped families move to less segregated and wealthier neighborhoods, moves which have generally positive outcomes for children.

Obama’s Budget Puts Historic Focus on Child Care and Working Families (AJAM)

E. Tammy Kim and Joanna S. Kao suggest that the president's proposals around child care and other programs supporting working parents have the most bipartisan potential this year.

Walmart Cut My Hours, I Protested, and They Fired Me (MoJo)

Kiana Howard explains how Walmart illegally retaliated against her for union organizing, something she got involved in when they cut her hours for requesting a public transit-friendly schedule.

Americans Overestimate Class Mobility (Pacific Standard)

Tom Jacobs reports that in four new studies, Americans overestimate the extent to which working more or going to school can increase wealth by about 23 percent.

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Daily Digest - February 3: A New Kind of Budget

Feb 3, 2015Rachel Goldfarb

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Budget Day Feels a Lot Like Groundhog Day (Marketplace)

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Budget Day Feels a Lot Like Groundhog Day (Marketplace)

Roosevelt Institute Fellow Mike Konczal says that year after year, the president's budget tried to compromise with Republicans from the start, but this year's has broken off that routine.

Obamacare is Costing Way Less Than Expected (Vox)

Ezra Klein reports that the Congressional Budget Office's adjusted predictions show the government will spend $600 billion less than estimated on healthcare - and the original estimate was pre-Obamacare.

In Net Neutrality Push, F.C.C. Is Expected to Propose Regulating Internet Service as a Utility (NYT)

The Federal Communications Commission's new proposal will give it authority to enforce true net neutrality, including ending paid "fast lanes" on the Internet, writes Steve Lohr.

  • Roosevelt Take: Roosevelt Institute Fellow Susan Crawford argues against the GOP's recent embrace of open Internet, which she says is a bait and switch.

Labor Pains (TNR)

Rebecca Traister, currently on maternity leave at The New Republic, explains the impossible career situations created for women who want children under U.S. laws.

Banks See Stable Lending Landscape, But Some Auto Loans Signal Trouble (WSJ)

Kate Davidson looks at the results of a Federal Reserve survey of banks, which shows concern about the sub-prime auto loans that have become a larger and larger part of the market.

The City That Outlawed Free Food (The Nation)

Michelle Chen takes a close look at Fort Lauderdale, Florida's new policy restricting the distribution of free food. City officials claimed free food enabled homelessness.

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Daily Digest - February 2: Trade Shouldn't Mean Higher Drug Prices

Feb 2, 2015Rachel Goldfarb

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Don't Trade Away Our Health (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the Trans-Pacific Partnership's intellectual property agreements will raise drug prices unnecessarily and slow innovation.

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Don't Trade Away Our Health (NYT)

Roosevelt Institute Chief Economist Joseph Stiglitz argues that the Trans-Pacific Partnership's intellectual property agreements will raise drug prices unnecessarily and slow innovation.

Obama Veers Left (Politico)

Ben White speaks to Roosevelt Institute Fellow Mike Konczal about the president's budget. Konczal says this budget takes the focus off the deficit as a be-all,-end-all problem.

Obama's New Budget Proves the Grand Bargain is Finally Dead (Vox)

Matt Yglesias explains why the Obama administration has, in this budget, stopped playing to potential compromises and showdowns and focused on what the president actually wants to achieve.

A Simple Guide to Obama’s New Proposals for Spending and Taxes (WaPo)

Max Ehrenfreund breaks down the main points in the Obama budget and explains how taxes would change in order to pay for programs like funded preschool and investment in infrastructure.

U.S. Growth Rate Slips to 2.6% Raising Doubts About Strength of Economy (The Guardian)

Rupert Neate reports on the final numbers for the fourth quarter of 2014, which showed slower growth than economists had expected. Still, overall GDP growth for the year was higher than 2013.

How Tipping Helped Make Sexual Harassment the Norm for Female Servers (In These Times)

Jenny Brown says that workers who rely on tips often have no choice but to put up with harassment, as discussed in a new report from Restaurant Opportunities Centers United.

Uber and Lyft Drivers May Have Employee Status, Judge Says (Bloomberg)

In two different lawsuits, judges have indicated that they are unconvinced that drivers for these services are merely consumers of a software platform, reports Karen Gullo.

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