The rumored grand bargain would cost the economy about half a million jobs in 2013
Are you ready for a grand bargain? A deficit hawk party! Yes? No? Maybe? (Is this John Boehner?).
With the deadline for the fiscal cliff -- which is really more of a slope -- looming, President Obama and House Republicans have reportedly come close on an agreement that would kick most of the fiscal can. Well, they did for a few hours at least. It didn't take long for Boehner to walk back his support for the plan, but that hardly means it's dead. If there is a grand-ish bargain to be had, it will probably look something like this latest iteration of a deal.
As Ezra Klein reported, the deal comes in three parts: revenue, cuts, and stimulus. Let's break it down, and then break down what it means for jobs in the coming year.
REVENUE. Let the Bush tax cuts expire for households with adjusted gross incomes of $400,000 or more, and limit the value of itemized deductions to 28 percent. In other words, set tax rates for the top 1 percent back to where they were under President Clinton, and stop richer households from taking bigger deductions than middle-class households. All told, it raises a little more than $1 trillion in revenue over the next decade relative to a world where all of the Bush tax cuts continue. As Paul Krugman points out, it's unclear whether this includes the higher taxes on capital gains and dividends scheduled to kick in on January 1, 2013 -- on top of the 3.8 percent Obamacare surtax on capital gains.
Taxes would also go up from switching to chained CPI. As my colleague Derek Thompson explained, chained CPI is an alternative (and perhaps more accurate) measure of inflation that assumes consumers substitute to similar, lower-priced goods when other prices rise. In other words, it says inflation is lower. Tax brackets are indexed to inflation, so a lower measure of inflation means they will rise less -- and more people will creep into these higher brackets. It adds up to about $60-90 billion over ten years.
CUTS. Say hello to chained CPI again. It's not just a tax hike. It's a Social Security cut too. Remember, Social Security benefits are indexed to inflation as well, so the logic of a lower measure of inflation kicks in here too -- benefits will rise slower than they otherwise would have, with the compounded effect hitting older retirees the worst. It's about a $100-200 billion cut over a ten-year window. Congress is supposed to negotiate on another $1 trillion or so of cuts, and if they cannot agree on them there will be -- wait for it! -- a new sequester in the future. Because the last one worked so well.
STIMULUS. Extend unemployment insurance and the refundable tax credits from the stimulus, but not the payroll tax cut. There's also some new, albeit unspecified, infrastructure spending thrown in.
There are a lot of moving parts here, but only three of these moving parts will matter in 2013: the end of the Bush tax cuts for the rich, the end of the payroll tax cut, and new infrastructure spending. In other words, it's unlikely any of the cuts will hit the economy next year. The can known as the sequester would get kicked for another year or so -- unless, haha, Congress can agree to other, immediate cuts -- and chained CPI will be the same as CPI-W in 2013. That leaves the three aforementioned changes -- changes that add up to about a half million less jobs in 2013 than if there was no fiscal cliff at all, as you can see in the chart below. The payroll tax cut is a political orphan in need of a champion.
The Cliff Notes version of why this deal would cost us 500,000 jobs next year is it sucks more money out of the economy than it puts back in. Let's look at it piece-by-piece.
Bush tax cuts for the rich expire. Less money for the rich means less money for the rich to spend. But the rich are different from you and me -- they tend to have money left over after they buy the things they want. In other words, they spend less of their incomes, so a tax hike on them doesn't hurt demand as much as a tax hike on the middle-class would (as we shall see). The Congressional Budget Office (CBO) figures higher taxes on higher earners would subtract about 200,000 jobs next year.
Payroll tax cut ends. Less money for everybody means less money for everybody to spend. That's what the payroll tax, which, remember, hits the middle-class harder than it does the rich, does. But it gets worse. A higher payroll tax means a higher cost of hiring and that means less hiring. A lot less hiring. Working backwards from thesetwo CBO reports shows it means about half a million less jobs in 2013. As the left-leaning Center on Budget and Policy Priorities (CBPP) points out, it's almost twice as stimulative as the Bush tax cuts for the rich, at similar costs. Spending the $115 billion to extend it another year would be money well spent.
Infrastructure. This is where things get admittedly speculative. We don't even know how much infrastructure spending both sides have talked about, let alone what kind of projects, but we can make some informed guesses. President Obama has asked for $50 billion of new infrastructure spending before, which he probably wouldn't get, but we'll use here as a best-case. If we take former Vice Presidential economic adviser and current CBPP fellow Jared Bernstein's rule of thumb that every $1 billion of construction or repair spending adds roughly 9,000-10,000 jobs, and then assume that this new spending would come in over two years, that gives us about 250,000 new jobs in 2013. Again, this is a pretty generous estimate.
As far as can-kicking goes, this ain't too shabby. The CBO figures that the fiscal cliff will cost us 3.4 million jobs next year if Congress does nothing; suddenly, half a million less sounds okay. But Washington can do better. It just needs to go over the fiscal cliff first.
Right now, Obama is offering lower revenues than he originally asked for and entitlement cuts for more stimulus -- and he's not even getting all of the stimulus! It's all because of the baseline illusion. As long as the Bush tax cuts are around, Boehner can claim he's the one offering concessions on revenues by saying he'll raise them at all. It's a silly argument, but it's a silly argument that goes away after January 1, when tax rates automatically go up. Then, Democrats can push a bill that cuts middle-class taxes and cuts deductions for the rich -- the $1.6 trillion from Obama's first offer -- and tell Republicans they have a choice. They can either get less revenue or less entitlement spending, but not both, and in return they have to sign off on all of the stimulus -- extended unemployment insurance, the payroll tax cut, and infrastructure spending. They could even set up a commission -- or a supercommittee, if they're feeling bold -- to cut spending in a year's time, with a new sequester to incentivize them to find cuts.
It's a deal that would bring our medium-term budget closer to balance, without costing the economy in the short-term. Now that would be grand.
For those who didn't go to prestigious schools, don't come from money, and aren't interested in sports and booze—it's near impossible to gain access to the best paying jobs.
As income inequality in the U.S. strikes historic highs, many people are starting to feel that the American dream is either dead or out of reach. Only 64 percent of Americans still believe that it’s possible to go from rags to riches, and, in another poll, 63 percent said they did not believe their children would be better off than they were. These days, the idea that anyone who works hard can become wealthy is at best a tough sell.
Along with the Nancy Drew series, almost all of the thrillers in the popular teenage franchise were produced by ghostwriters, thanks to a business model that proved to be prescient.
In the opening pages of a recent installment of the children’s book series The Hardy Boys, black smoke drifts though the ruined suburb of Bayport. The town's residents, dressed in tatters and smeared with ash, stumble past the local pharmacy and diner. Shards of glass litter the sidewalk. “Unreal,” says the mystery-solving teenager Joe Hardy—and he's right. Joe and his brother Frank are on a film set, and the people staggering through the scene are actors dressed as zombies. But as is always the case with Hardy Boysbooks, something still isn’t quite right: This time, malfunctioning sets nearly kill several actors, and the brothers find themselves in the middle of yet another mystery.
There are two types of people in the world: those with hundreds of unread messages, and those who can’t relax until their inboxes are cleared out.
For some, it’s a spider. For others, it’s an unexpected run-in with an ex. But for me, discomfort is a dot with a number in it: 1,328 unread-message notifications? I just can’t fathom how anyone lives like that.
How is it that some people remain calm as unread messages trickle into their inboxes and then roost there unattended, while others can’t sit still knowing that there are bolded-black emails and red-dotted Slack messages? I may operate toward the extreme end of compulsive notification-eliminators, but surveys suggest I’m not alone: One 2012 study found that 70 percent of work emails were attended to within six seconds of their arrival.
This has led me to a theory that there are two types of emailers in the world: Those who can comfortably ignore unread notifications, and those who feel the need to take action immediately.
Reforms were slow to take hold in Cincinnati, but when they did, they drove down crime while also reducing arrests.
CINCINNATI—Citizens were throwing stones and beer bottles at police officers in front of City Hall, and Maris Herold didn’t understand what they wanted.
She was a police officer herself, and knew that her department had made some missteps. Most recently, an officer gunned down a 19-year-old unarmed black man, Timothy Thomas—the fifteenth black man to die at the hands of police in five years.
But, Herold knew, the police were investigating the incident. They were listening to the community. They were working 12-hour shifts to protect the city from looting and fires, though the disturbance would soon turn into the worst riots in the U.S. in a decade.
“I was like, ‘We’re doing everything right, obviously the police officers made mistakes and we’re trying to get to the bottom of it,’” she told me recently. Herold, who joined the police force after a career in social work, couldn’t understand what more the police could do to make amends with the community.
The plight of non-tenured professors is widely known, but what about the impact they have on the students they’re hired to instruct?
Imagine meeting your English professor by the trunk of her car for office hours, where she doles out information like a taco vendor in a food truck. Or getting an e-mail error message when you write your former biology professor asking for a recommendation because she is no longer employed at the same college. Or attending an afternoon lecture in which your anthropology professor seems a little distracted because he doesn’t have enough money for bus fare. This is an increasingly widespread reality of college education.
Many students—and parents who foot the bills—may assume that all college professors are adequately compensated professionals with a distinct arrangement in which they have a job for life. In actuality those are just tenured professors, who represent less than a quarter of all college faculty. Odds are that students will be taught by professors with less job security and lower pay than those tenured employees, which research shows results in diminished services for students.
New research confirms what they say about nice guys.
Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.
Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.
Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?
Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team?—it’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?
Getting experienced educators to work in the highest-need schools requires more than bonus pay.
Standing in front of my eighth-grade class, my heart palpitated to near-panic-attack speed as I watched second hand of the clock. Please bell—ring early, I prayed. It was my second day of teaching, and some of my middle-school male students were putting me to the test.
In a span of three minutes, the group in room 204 had morphed from contained to out of control. Two boys were shooting dice in the back of the room, and as I instructed them to put their crumpled dollar bills away, several others took off their shoes and began tossing them around like footballs. Before I could react, one boy broke into my supply closet. He snatched handfuls of No. 2 pencils and highlighters and sprinted out of the room, slamming the door behind him.
We're all going to die and we all know it. This can be both a burden and a blessing.
In the heart of every parent lives the tightly coiled nightmare that his child will die. It might spring at logical times—when a toddler runs into the street, say—or it might sneak up in quieter moments. The fear is a helpful evolutionary motivation for parents to protect their children, but it's haunting nonetheless.
The ancient Stoic philosopher Epictetus advised parents to indulge that fear. “What harm is it, just when you are kissing your little child, to say: Tomorrow you will die?”he wrote in his Discourses.
Some might say Epictetus was an asshole. William Irvine thinks he was on to something.
“The Stoics had the insight that the prospect of death can actually make our lives much happier than they would otherwise be,” he says. “You’re supposed to allow yourself to have a flickering thought that someday you’re going to die, and someday the people you love are going to die. I’ve tried it, and it’s incredibly powerful. Well, I am a 21st-century practicing Stoic.”
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
What it’s like to watch a komodo dragon get dissected
Try to imagine how hard it would be to skin a Komodo dragon.
It is harder than that.
The problem is that the giant lizard’s hide is not just tough and leathery, but also reinforced. Many of the scales contain a small nugget of bone, called an osteoderm, which together form a kind of pointillist body armor. Sawing through these is tough on both arms and blades.
I’m at the Royal Veterinary College, about 20 kilometers outside of central London, watching four biologists put their shoulders into the task. A Komodo dragon, which recently died in London Zoo for unexplained reasons, lies on a steel gurney in front of them. Their task, over the next three days, is to dissect it and measure all of its muscles. So, first, the skin must come off.