Is There Really a Growing Income Disparity?

I have noticed from numerous media sources that Washington is abuzz about tackling the “unfairness” of income disparity in the US, and how members of government are looking to reclaim the war on poverty first instituted by President Lyndon Johnson.

There is certainly the general notion that the rich are getting richer and that this is happening on the backs of a disappearing middle-class and and/or a growing poverty class. This of course got me to thinking whether this was true or not.

Starting the Year

It is very cold and gray over much of the country today, and that could have a dampening impact on the economic start to 2014. A cold snap can take some of the life out of housing and automobile sales as people stay in and/or they need more cash to pay for extra heating bills. It is easy to put off a trip to the dealership when you are concerned about freezing pipes. The weather is bound to improve and with it will come ongoing positive economic opportunities in the US.

A Promising Budget Deal from Washington

House Budget Chairman Paul Ryan (R-WI) and Senate Budget Chairwoman Patty Murray (D-WA) announced a budget deal which will need to be voted on by Congress.  The Deal replaces $63 billion in sequester cuts with other savings and non-tax revenues, and it includes an additional $22.5 billion in deficit reduction.  In addition, the bill does not extend federal unemployment benefits for the 1.3 million long-term unemployed Americans. 

Doctors Say “No” in California

The Washington Examiner reported that about 7 of every 10 physicians in California (a blue state) are not going to participate in the new healthcare law, aka Obamacare, according to California’s largest doctor association.  The reason is easy to understand - the reimbursements are tied to California’s lower-than-Medicare reimbursement rates and the doctors are not willing to work for those wages.

A Balanced Look at the Manufacturing Employment Numbers

The media reported good news today, stating that November manufacturing employment increased by 27,000 people. The increase was touted as great news and proof that things are getting stronger and stronger in the US economy. 

The Economics of the Employment Recovery and Quantitative Easing

“The weakest employment recovery in seven decades is proving a boon to equity markets”.

That is the lead-in to a news article today. The premise is that weak job growth means that corporations such as Disney, ConocoPhillips, and Northrup Grumman are more profitable because they are doing more with less people.

The Fed Could Do More?

Janet Yellen, the nominee to replace Dr. Bernanke as the chairperson at the Federal Reserve, recently told the Senate Banking Committee that she would “ensure that monetary stimulus is not removed too soon.”  She is committed to keeping interest rates low and the $85 billion/month bond buying program in place, and there is no evidence of an asset bubble at this time.  Fans of low interest rates should be encouraged.  Readers afraid of future inflation should take note – the fires are continuing to be stoked. 

Tax Increase Eyed by the Senate as ‘More Fair’

The chair of the Senate finance committee, Max Baucus (D, Montana) is putting forth a way to build momentum for a rewrite of the US tax code.  His idea is to put a 20 percent tax on the estimated $2 trillion held by American companies overseas.  Senator Baucus, and others, object to the fact that American companies use international law to the maximum advantage of shareholders.

A Democratic aide in the Senate said that this new tax would be ‘more fair’.

Canada Cuts and Wins

Canadian Finance Minister Jim Flaherty is leading the charge to do something amazing in Canada. Our neighbors to the north will be realizing a C$3.7 billion federal budget surplus starting in the year April 2015. That is larger than earlier estimates. This is happening even as the economy is sluggish and federal revenues are projected to ease lower over the next five years (by C$10.4 billion).

Hype and Profits Surround the Carbon Conversation

Al Gore and David Blood are principals at Generation Investment Management (GIM).  They warned in the Oct 30 WSJ of upcoming peril in carbon assets in part because of looming market-share losses to “already competitive” renewable technologies.  

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