Going to sleep early and waking up early caused me to look at news on my phone. Two articles caught my attention.
1.The US GDP is growing faster than the rest of the world US economy grows 5.2% in third quarter; higher interest rates eroding momentum (The link is not to the actual article I read on my phone but has similar information.)
2. An interview by the Financial Times with Claudia Sahm in which she says
The other piece is getting into the weeds of what the federal debt is: social security and Medicare. If you do not do something to pull in those expenses, you’re done. That’s a very difficult, delicate conversation. The stakes are higher to spend money well. The stakes are very high to make those entitlement programs cost-effective and well-designed. You can almost cut the whole rest of the budget and you still would have questions about debt sustainability and higher interest rates. I don’t know that Olivier would disagree with me that entitlement programmes need to be addressed. But as macroeconomists, we’re not setting up a framework that really pushes policymakers to think in those terms. We just say, “It’s too big!” (Additional comments about Sahm on MarketWatch)
One thing that people seem to forget is that since Reagan (1981) or perhaps earlier (Kennedy??), the US economy has been tilted in favor of the rich, in terms of income tax rates, inheritance taxes, tax avoidance (Roth accounts became available in 1998), court rulings, etc. This structural bias has caused the top 10% (and especially top 1%) to gain significant wealth and the bottom 90% to lose wealth in relative terms and probably in real (inflation adjusted) terms. One example is (the affordability of) housing. This Federal Reserve Bank of St. Louis article The State of U.S. Wealth Inequality is interesting.
One structural element (slightly) opposing this trend are federal retirement benefits (social security, medicare, etc.). Item 1. above suggests that the US can afford to fund these benefits at their current levels. Item 2. above suggests that "the system" (economists, the Fed, Congress, etc.) does not understand that income adjustments (e.g. FICA taxes on all earned income without caps and on untaxed Roth distributions) and the growth of the economy can safely pay for these benefit programs AND that "the system" does not understand how devastating to the economy would be the elimination or reduction of these programs (not to mention devastating to the seniors involved).
1.The US GDP is growing faster than the rest of the world US economy grows 5.2% in third quarter; higher interest rates eroding momentum (The link is not to the actual article I read on my phone but has similar information.)
2. An interview by the Financial Times with Claudia Sahm in which she says
The other piece is getting into the weeds of what the federal debt is: social security and Medicare. If you do not do something to pull in those expenses, you’re done. That’s a very difficult, delicate conversation. The stakes are higher to spend money well. The stakes are very high to make those entitlement programs cost-effective and well-designed. You can almost cut the whole rest of the budget and you still would have questions about debt sustainability and higher interest rates. I don’t know that Olivier would disagree with me that entitlement programmes need to be addressed. But as macroeconomists, we’re not setting up a framework that really pushes policymakers to think in those terms. We just say, “It’s too big!” (Additional comments about Sahm on MarketWatch)
One thing that people seem to forget is that since Reagan (1981) or perhaps earlier (Kennedy??), the US economy has been tilted in favor of the rich, in terms of income tax rates, inheritance taxes, tax avoidance (Roth accounts became available in 1998), court rulings, etc. This structural bias has caused the top 10% (and especially top 1%) to gain significant wealth and the bottom 90% to lose wealth in relative terms and probably in real (inflation adjusted) terms. One example is (the affordability of) housing. This Federal Reserve Bank of St. Louis article The State of U.S. Wealth Inequality is interesting.
One structural element (slightly) opposing this trend are federal retirement benefits (social security, medicare, etc.). Item 1. above suggests that the US can afford to fund these benefits at their current levels. Item 2. above suggests that "the system" (economists, the Fed, Congress, etc.) does not understand that income adjustments (e.g. FICA taxes on all earned income without caps and on untaxed Roth distributions) and the growth of the economy can safely pay for these benefit programs AND that "the system" does not understand how devastating to the economy would be the elimination or reduction of these programs (not to mention devastating to the seniors involved).
