Normative Narratives


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Economic Outlook: The Relationship Between Wages, Productivity, and Economic Inequality In America

Source: The Employment Policy Network (Huffington Post)

Note: Hourly compensation is of production/nonsupervisory workers in the private sector and productivity is for the total economy.

Source: Author’s analysis of unpublished total economy data from Bureau of Labor Statistics, Labor Productivity and Costs program and Bureau of Economic Analysis, National Income and Product Accounts public data series

THE BOTTOM (high school graduates):

This graph highlights the growing disparity between wages paid and productivity for different educational levels (which we will use as proxies for societal classes). There are a number of explanations for this decoupling. One explanation is the decline of labor union participation due to regulatory changes and pressure from globalization. Another explanation is that as technology has advanced, it has become and increasingly important factor of production; businesses are opting to spend a larger portion of their revenues on machinery as opposed to workers.

This Monday I observed a roundtable at the U.N.– “The Threat of Growing Inequalities”–where one of the speakers raised this point. Taking home a “smaller piece of the pie”, those at the bottom are able to buy less political influence, which leads to weakened labor rights and neglected falling real minimum wages. Economic forces enable those at the top to rig to laws in their favor, further exacerbating inequality–this is the political economy explanation of rising inequality. This explanation hits on another divisive element of contemporary American society, the different legal system experienced based on ones wealth.

Whatever the reason (or as is often the case in real-world economic analysis, combination of reasons), this phenomenon obviously contributes to increasing inequality. How bad is inequality today? The Stanford Center for the Study of Poverty and Inequality has 20 graphs which tell much of the story, while Politifact has compiled a number of inequality related “fact-checks”.

It is heartening to see grassroots minimum-wage movements emerge, spanning many industries (and worldwide, many countries), led by people who are willing to take a stand through collective action. These people are willing to risk the wrath of vengeful corporate executives for economic justice. However, it will take a concerted effort by well intended politicians, independent media outlets (I try to do my part), and progressive judges / competent public defenders to capitalize on this grassroots activism if meaningful progress is to be made on the inequality front.

THE TOP (“the .1%” is not represented in the graph above):

What is going on at the bottom of the economic pyramid is only part of the inequality story. The meteoric rise of top earners incomes increases inequality; economic growth is important, but how evenly it is distributed also matters. Again here we see a decoupling of wages and productivity in the other direction  (much greater compensation than productivity; in fact, one could argue short-sighted investments result in negative productivity for the economy as a whole, while at the sane time lead to huge rewards for those carrying them out). A micro-example of this adverse relationship, described by former derivatives trader Sam Polk, as “wealth addiction”, is highlighted in a recent NYT opinion piece:

IN my last year on Wall Street my bonus was $3.6 million — and I was angry because it wasn’t big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind. I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted.

I’d always looked enviously at the people who earned more than I did; now, for the first time, I was embarrassed for them, and for me. I made in a single year more than my mom made her whole life. I knew that wasn’t fair; that wasn’t right. Yes, I was sharp, good with numbers. I had marketable talents. But in the end I didn’t really do anything. I was a derivatives trader, and it occurred to me the world would hardly change at all if credit derivatives ceased to exist. Not so nurse practitioners. What had seemed normal now seemed deeply distorted.

DESPITE my realizations, it was incredibly difficult to leave. I was terrified of running out of money and of forgoing future bonuses. More than anything, I was afraid that five or 10 years down the road, I’d feel like an idiot for walking away from my one chance to be really important. What made it harder was that people thought I was crazy for thinking about leaving. In 2010, in a final paroxysm of my withering addiction, I demanded $8 million instead of $3.6 million. My bosses said they’d raise my bonus if I agreed to stay several more years. Instead, I walked away.

The first year was really hard. I went through what I can only describe as withdrawal — waking up at nights panicked about running out of money, scouring the headlines to see which of my old co-workers had gotten promoted. Over time it got easier — I started to realize that I had enough money, and if I needed to make more, I could. But my wealth addiction still hasn’t gone completely away. Sometimes I still buy lottery tickets.

Wealth addiction was described by the late sociologist and playwright Philip Slater in a 1980 book, but addiction researchers have paid the concept little attention. Like alcoholics driving drunk, wealth addiction imperils everyone. Wealth addicts are, more than anybody, specifically responsible for the ever widening rift that is tearing apart our once great country. Wealth addicts are responsible for the vast and toxic disparity between the rich and the poor and the annihilation of the middle class. Only a wealth addict would feel justified in receiving $14 million in compensation — including an $8.5 million bonus — as the McDonald’s C.E.O., Don Thompson, did in 2012, while his company then published a brochure for its work force on how to survive on their low wages. Only a wealth addict would earn hundreds of millions as a hedge-fund manager, and then lobby to maintain a tax loophole that gave him a lower tax rate than his secretary.

I see Wall Street’s mantra — “We’re smarter and work harder than everyone else, so we deserve all this money” — for what it is: the rationalization of addicts. From a distance I can see what I couldn’t see then — that Wall Street is a toxic culture that encourages the grandiosity of people who are desperately trying to feel powerful.

I was lucky. My experience with drugs and alcohol allowed me to recognize my pursuit of wealth as an addiction. The years of work I did with my counselor helped me heal the parts of myself that felt damaged and inadequate, so that I had enough of a core sense of self to walk away.

Dozens of different types of 12-step support groups — including Clutterers Anonymous and On-Line Gamers Anonymous — exist to help addicts of various types, yet there is no Wealth Addicts Anonymous. Why not? Because our culture supports and even lauds the addiction. Look at the magazine covers in any newsstand, plastered with the faces of celebrities and C.E.O.’s; the super-rich are our cultural gods. I hope we all confront our part in enabling wealth addicts to exert so much influence over our country.

This is a powerful piece, an inside voice admitting that derivatives traders “don’t really do anything”, and that an insatiable “wealth addiction” (and the political clout it buys) drives a widening income gap in this country. The idea that much investment “doesn’t really do anything”, that it is speculative rather than true investment, is not a new concept. In fact, the concept was laid out eloquently by John Maynard Keynes in “The General Theory of Employment, Interest, and Money“:

It happens, however, that the energies and skill of the professional investor and speculator are mainly occupied otherwise. For most of these persons are, in fact, largely concerned, not with making superior long-term forecasts of the probable yield of an investment over its whole life, but with foreseeing changes in the conventional basis of valuation a short time ahead of the general public. They are concerned, not with what an investment is really worth to a man who buys it “for keeps”, but with what the market will value it at, under the influence of mass psychology, three months or a year hence.

Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of investment institutions to concentrate their resources upon the holding of “liquid” securities. It forgets that there is no such thing as liquidity of investment for the community as a whole. The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is “to beat the gun”, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half-crown to the other fellow.” 

This was written in 1936 in the context of post-Great Depression financial regulation, long before technological changes such as the internet and mass-deregulation created a risk-seeking “too-big-to-fail” financial sector which nearly destroyed the global economy in 2008. One can imagine what Keynes would have to say about the financial sector–and the inadequate regulatory response to the Great Recession–we experience today!

The top his risen due with the help of financial deregulation, enabling a “wealth addiction” by canonizing those selfish (or at best ignorant) enough to pursue such ends. This, coupled with the bottoming out of the lower end of the economic pyramid, leads to gross inequality. Inequality distorts our legal and political system, which leads to self-perpetuating social immobility; those at the top stay at the top (and continue rising), while those at the bottom stay at the bottom (an inter-generational poverty trap).

But how could we let this happen to America, once a “beacon of hope”? Wouldn’t our democratic system have stopped this from happening?

THE MIDDLE (bachelors and graduate degree earners):

It is indeed perplexing how we got into this mess, given America’s democratic system. Part of the explanation is that we canonize the rich–we want to be them, we don’t want to regulate them. We also vilify the poor–they are lazy, undeserving, and are responsible for the majority of anti-social behavior (crime, drug use, etc.). “We” here is the middle class, the last faction of American society where social mobility and meritocracy exists (to a certain extent).

Middle class families can afford the necessities needed for “equality of opportunity”, even if they cannot afford great luxuries. They earn college degrees and go on to make living wages. These workers still see a connection between productivity and compensation. An income of $50,000/yr is probably related to the amount you produce. Perform well and there is a promotion in it for you; you may even “make it to the top”!

To paraphrase John Steinbeck: “Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires”

Those at the top receive more than they produce, so why complain (however they do get defensive anytime someone proposes a common sense regulation)? Those in the middle earn roughly what they produce, and have a reasonable belief they will make it to the top; you don’t want to regulate what you one day aspire to be! Those at the bottom–well fuck em’ they’re lazy drug users!

How have those at the top succeeded at winning the PR war on income inequality? The best explanation I have heard comes from Matt Taibbi’s book “Griftopia”. In this book, he tells a story of local level governance which is overrun by regulations (he uses an example of a bureaucracy ramming affordable housing down a communities throat). Knowing that middle-class people experience over-regulation at the local level, those at the top seize on this “big-government” narrative to drum up support for financial deregulation; they create a narrative of “the poor banker trying to earn a buck”.

This narrative resonates with the middle-class worker who experiences the aforementioned local government over-regulation. It is reinforced by media commentary, which is often a pawn of those at the top (another tool, like political clout, enabled by surplus wealth).  Furthermore, this narrative also vilifies financial regulation as a something which stifles economic growth / cost jobs / lead to higher consumer finance costs (and in this economy, we simply cant afford it!), even though economic theory and common sense suggest that inequality stifles consumption, job creation, and economic growth.

Of course this is a false equality; federal (and international) financial sector regulation and local / state government regulation are unrelated (local governance may well be over-regulated in some instances, but the financial sector is undeniably under-regulated). But unless you have studied the way the government works (which most people haven’t), you have no idea you are being fed horseshit; you hear the word “regulation” and cry bloody murder. Because local governance is often intervening on behalf of lower class citizens, this creates a rift between the middle and lower class, while the real culprits are laughing all the way to the bank (quite literally–they tend to work at banks).

If this sounds like class warfare, that’s because America is experiencing class warfare.

This post relied heavily on generalizations, there are undoubtedly people in each class of society who do not fit into these generalizations. But in general these descriptions hold (that’s why they’re called generalizations).

This post focused on America; globally the inequality problem is much worse. According to a just-released Oxfam report, the richest 85 people in the world control the same amount of wealth as the bottom 3.5 billion (that’s nearly half the global population!). Recently, UNDP chief Helen Clark spoke about the link between inequality, poverty, and standard of living. Least developed countries experience different problems (extreme poverty, authoritarian / incompetent governance, lack of access to credit, armed conflict, etc.), but these problems manifest themselves in similar ways (poverty, inequality, power imbalances).

The whole world must confront and stop enabling “wealth addiction”, if we hope to realize sustainable human development in the 21st century. We must try, through regulation, taxation, and incentives, to restore the productivity-to-earnings relationship. As inequality becomes more of a “mainstream” issue (it has recently been emphasized by, among others, Barack Obama and Pope John Francis), we can expect to see a larger portion of society begin to champion pro-poor causes.

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Economic Outlook: U.S. Senate Fails to Pass a Bill Preventing the Doubling of Student Loan Rates

The U.S. Senate on Thursday thwarted two rival bills aimed at stopping interest rates on millions of federal student loans doubling in less than a month.”

Student loan debt in America now surpasses $1 trillion, according to the U.S. Consumer Financial Protection Bureau, and is already hindering young people from making important economic decisions such as purchasing new homes or cars.

Last year lawmakers agreed to extend a previous rate-increase freeze on student loans for another year. Unless Congress comes to an alternative agreement, interest rates will double to 6.8 percent on July 1, adding an extra $1,000 to borrowers’ payments every year.”

“The Comprehensive Student Loan Protection Act, a bill introduced by Republican Senators Tom Coburn of Oklahoma, Richard Burr of North Carolina and Lamar Alexander of Tennessee, would have pegged the interest rates to the U.S. Treasury 10-year rate, plus 3 percentage points.

Democrats say that plan would only hurt borrowers by causing them to pay higher rates in the future as the economy recovers and interest rates climb.”

“The Democrat bill introduced by Tom Harkin of Iowa, Jack Reed of Rhode Island, and Majority Leader Harry Reid of Nevada would have frozen interest rates on subsidized Stafford student loans at their current 3.4 percent for two more years.

Democrats said their plan would protect borrowers and give lawmakers time to work on a more comprehensive, long-term solution. Republicans, such as Senate Republican leader Mitch McConnell of Kentucky say any solution should be a permanent one, rather than a “short-term political patch.”

“[Richard] Burr (Senator-R-NC) said Republicans want to provide a predictable mechanism to set interest rates for students, rather than returning to the table every year.’ Congress shouldn’t be sitting in Washington deciding with a dartboard what student loan interest rates should be,’ he said.

“President Barack Obama has also proposed a market-based plan. Under his proposal the borrowing rates would remain fixed for the life of the loan.”

Wait a minute, haven’t we seen this before? Congress creating a short-term fix and putting an “unthinkable” consequence for not passing a longer term plan within a certain time-frame? Why yes, yes we have. It is essentially the same progression as the “debt-ceiling”, the “fiscal cliff”, and the “sequester”. If we have learned one thing from recently political gridlock it’s that this tactic is ineffective—in Washington today politicians on both sides of the political spectrum are willing to let “unthinkable” events pass in order to avoid compromising (although not evenly distributed between both sides, I’ll let you guess which side I think is more reasonable).

While it is true that another month remains before rates are set to double, anyone banking on a compromise within that time is either incredibly optimistic or has not been following politics for the past half decade.

Recent statements by Senator Bob Dole on “Fox News Sunday”, highlighted in a NYT article, show that not only liberals think Tea Party Politics are hurting America:

“It seems to be almost unreal that we can’t get together on a budget or legislation,” said Mr. Dole, the former Senate majority leader and presidential candidate. “I mean, we weren’t perfect by a long shot, but at least we got our work done.”

The current Congress can’t even do that, thanks to a furiously oppositional Republican Party, and that’s what has left mainstream conservatives like Mr. Dole and Senator John McCain shaking their heads in disgust.

The difference between the current crop of Tea Party lawmakers and Mr. Dole’s generation is not simply one of ideology. While the Tea Partiers are undoubtedly more extreme, Mr. Dole spent years pushing big tax cuts, railing at regulations and blocking international treaties. His party actively courted the religious right in the 1980s and relied on racial innuendo to win elections. But when the time came to actually govern, Republicans used to set aside their grandstanding, recognize that a two-party system requires compromise and make deals to keep the government working on the people’s behalf. “

Barbara Bush, first lady to President George H W Bush, had similar thoughts in the issue of partisan divide:

“’They are going to have to compromise,’ said Barbara, the wife of former President George H.W. Bush. ‘It’s not a dirty word.’”

This position is unsurprising considering her husbands political history. “To reach agreement with Democrats who controlled both the House and the Senate, [H W] Bush accepted a deficit-reduction plan that raised income-tax rates—breaking his “read my lips” tax pledge from the 1988 presidential campaign. In protest, Newt Gingrich, then the House minority whip, quit the talks and led a rebellion that ultimately persuaded nearly half of Republicans in the chamber to abandon Bush and oppose the deal.

Bush’s budget package established the foundation for further deficit reduction under President Clinton in 1993 and 1997. Those agreements fueled the 1990s economic boom and produced three consecutive balanced budgets in Clinton’s second term. But it was Gingrich’s revolt in the name of inviolate principle, not the elder Bush’s flexibility in the face of divided government, that left a lasting imprint on the GOP.”

Economic advisor to Presidents H W Bush and Reagan, Bruce Bartlett, is an Economix blogger for the NYT, and a prominent example of a conservative turned liberal due to the G.O.P’s philosophy on political economy.

Tea Bagger’s cannot claim core Republican values from some “Golden Age” in the 1980s and 90s, because the very people who were running the G.O.P. back then have renounced the Tea Bag movement:

“I’m not all that interested in the way things have always been done around here,” Senator Marco Rubio of Florida told The Times last week.

I hate to beat a dead horse (elephant?), but if you look at congressional approval ratings over time, perhaps it would make more sense to defer to the more experienced and knowledgeable politicians who once ran your party.

A primary function of the legislative branch, known as “vertical accountability”, is to represent citizen’s voice in government agenda-setting and policy making processes. With only 16% satisfaction, can there be any question that partisan politics have prevented legislators from doing their jobs?

Many countries have mechanism for a disillusion of parliament, based on differing criteria. Perhaps the time has come to consider a Constitutional amendment stipulating instances in which either the House and / or Senate can be dissolved due to incompetence.

It is not too far ahead to look forward to the 2014 midterm elections. These elections represent a major turning point in U.S. political history. An absolute majority for the democrats will further embolden the mandate Obama believes his re-election signified—a more progressive, meritocratic, and egalitarian vision of America. If democrats fail to seize this opportunity, we can expect two more years or relative government inaction leading up to the 2016 elections.

Back on subject, I believe that Obama’s plan is a reasonable compromise between the two sides. I agree with Senate Republican leader Mitch McConnell that short-term patchwork policies are no way to treat any legislation, particularly one with such long-term implications as student loan repayment. But I also agree with general democratic opposition to tie rates to market values, as the volatility in U.S. bond markets does not offer much security to potential student-loan candidates.

The Obama plan is good because while the current market sets the rate, there is the stability of having that rate locked in place. When the economy is doing well, and there is low unemployment, rates will be higher; signaling that a prospective student may be better served joining the labor force. When there is a lack of jobs, and the opportunity cost of attending college is lower, this will be reinforced by lower borrowing rates (as we see now).

Of course the ultimate factor of how much student debt one accumulates is the cost of their institution. Public state, city, and community colleges offer an affordable alternative that leaves students with much less debt, which mitigates the effect of changes in student loan rates in general (as opposed to someone who takes on more debt at a private college).

Needs-based grants are often available to students who show academic promise but cannot afford to attend schools. Changing affirmative action to a more needs-based socio-economic program, instead of a race-based program, could make the program work as it was originally intended, which was to help disenfranchised Americans realize the “American Dream” of social mobility.

One criticism of this policy is that it is somewhat deterministic, in that at times when T-bill rates are high, many students who would benefit from going to college may decide they cannot afford it.

The opposition to the Obama plan is that by fixing rates at a certain level for the life of the loan, the U.S. government may be on the hook for a large subsidy when T-bill rates go up. Let’s say I lock in a loan at 2%, and the government now has to pay 8% interest to borrow money, the government is taking a large loss there.

But that is the government’s job, to provide financing for important programs. Schooling should be subsidized for all the benefits it produces. Senator Burr is correct, the U.S. government should not unilaterally set rates. It should, however, provide Students with the security of knowing at what rate they will have to pay back student loans, given the long-term benefits that education gives and the financial uncertainty facing 99.99% of Americans (basically anyone who cannot fall back on family wealthy).

Subsidizing student loans, changing affirmative action to a needs based program, and making available cheaper public education alternatives, is three-sided approach that can drastically increase social mobility in America.


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Economic Outlook: Ryan’s “Path to Prosperity”, But For Who?

Yesterday, Paul Ryan unveiled his budget proposal for 2014, titled “The Path to Prosperity”. Instead of taking his Vice Presidential defeat as a sign that America rejects his fiscal doctrine, Ryan has doubled down on his ideas.

A common criticism of Ryan’s plan during the Presidential campaign was that he never specified how he would achieve a balanced budget, but merely said that cuts will equal this amount, and without raising taxes we will have a balanced budget in 10 years.

The plan is now public domain, and it is safe to say “the devil is in the details”. Here are some highlights of the Ryan proposal:

  • Repeal the Affordable Care Act
  • Cut spending on Education, R & D, cap Pell Grants
  • Cut funding for a trans-American high speed rail and other infrastructure improvements
  • Turn Medicare into a voucher program (ensuring it is underfunded for those with serious chronic conditions)
  • Re-instate the work requirement for Welfare
  • Reduce spending on welfare programs, such as SNAP (food stamp programs)
  • Maintain current high levels of defense spending
  • Does not address the issue of Social Security spending
  • Create a two-bracket tax-system: Reduce top tax rates to 25% (from 39.6), make the lower rate 10% (no more people with 0 or negative tax rates).
  • Reduce the corporate tax rate to 25%, presumably lower capital gains taxes, repeal the Alternative Minimum Tax
  • No additional revenue through closing tax loopholes

The only thing I agree with is Ryan’s assertion that welfare should have its work requirement reinstated. However, this can only occur once unemployment reaches a certain level; you cannot tell people they need to work to receive welfare payments if that work does not exist. By cutting discretionary spending, there will be less government jobs, and the private sector does not seem to feel any need to increase hiring anytime soon despite record profits, so this is really a squeeze on those “takers” that the G.O.P. loves to hate. (Also, this provision was only intended to be temporary as the economy recovers, so the one provision I agree with in Ryan’s budget is not exclusive to Ryan’s budget).

Everything else amounts to class warfare. Cutting spending on education will hurt those who rely on public education (and make Obama’s pre-school / child care programs more difficult to fund, making it harder for lower income workers who cannot readily afford personal child-care). Repealing the Affordable Care Act, reducing Pell grants, and reducing Welfare payments will all disproportionately affect the poorest Americans.

The only discretionary programs that Ryan does not think needs to be cut are defense. This is an odd position, as defense spending accounts for whopping 24% of the 2013 Federal budget (for comparison sake, education (4%) and welfare (11%), do not even combine to come close to defense spending). Yes we have a spending problem, a military spending problem (and social security and medicare need to be overhauled in the long run, but that has nothing to do with getting the American economy producing at potential in the short run), yet somehow the fiscal conservative Ryan found cuts in every other program other than defense.

https://chart.googleapis.com/chart?cht=p3&chs=600x200&chf=bg,s,e8e8ff&chd=t:23,24,4,24,11,2,3,1,3,7&chl=Pensions%2023%|Health%20Care%2024%|Education%204%|Defense%2024%|Welfare%2011%|Protection%202%|Transportation%203%|General%20Government%201%|Other%20Spending%203%|Interest%207%&chtt=Budgeted%20Federal%20Spending%20for%20%20-%20FY%202013

 

On the other hand, Ryan wants to make the wealthy even wealthier. Reducing the tax rates for the wealthiest to 25% (their lowest level in decades), corporate and capital gains taxes (which all go almost exclusively to the richest Americans), will make the rich richer. By levying a minimum 10% tax rate on even the poorest Americans, those who will be squeezed by Ryan’s proposed cuts in discretionary spending will also see their tax bill rise. In effect, Ryan has financed lower taxes for the wealthy with higher taxes for the poor. He has replaced an Alternative Minimum tax for the wealthy with a minimum tax for many people who currently do not pay any taxes (due to being below a certain income threshold and having standard deductions erase their tax bill).

The Democratic plan is, as expected, much more in touch with what America needs:

“The Senate Democratic budget proposal, which began leaking out just as Ryan announced his proposal, would shrink budget deficits by $1.85 trillion over 10 years but not balance the budget. It is largely the work of Democratic Senator Patty Murray of Washington, who heads the Senate Budget Committee.

It would rely on an equal mix of spending cuts and tax hikes on the wealthy. At the same time, it would create a $100 billion fund for rebuilding crumbling roads and bridges, creating construction jobs.”

This budget relies on short term stimulus to reduce unemployment and get the economy working closer to potential output. It realizes the need to put idle labor to work, while reducing the deficit gradually through a combination of closing tax loopholes and spending reductions. It would keep hard fought victories such as the Affordable Care Act and higher taxes on the wealthy in place, while keeping the deficit at a sustainable level.

Paul Krugman recently wrote an interesting piece on cyclically adjusted deficits:

First, fluctuations in the deficit tend to be driven by the business cycle; when the economy slumps, revenues fall and some kinds of expenditure, like unemployment benefits, rise. You want to take out these “automatic stabilizers” when assessing the underlying state of the budget.”

Second, we don’t have to balance the budget to have a sustainable fiscal position; all we need is to ensure that debt grows more slowly than GDP”

The piece basically highlights that once you account for entitlement spending dropping and GDP increasing as the economy recovers, we already have a sustainable fiscal outlook. The “need” to balance the budget in 10 years is made up, and the benefits of doing so questionable at best (and non-existent at worst). But the social and economic costs, both in the short run and long run of Ryan’s proposal, are real, and they are high.

So when you hear about Ryan’s “Path to Prosperity”, ask yourself who is it really a path to prosperity for? Is it a path to prosperity for those who need help getting there, or those who are already prosperous? Will it increase of decrease inequality and social immobility that has come to define this country?

I will let you draw your own conclusions, as the two plans are essentially the same as they have been since the election.  Obama has recently conceded that a deal may not be able to be reached, that the sides may be too ideologically opposed. This would be unfortunate, but it also is starting to seem like a more and more realistic outcome. “The Sequester” looks mild compared to Ryan’s alternative, and unless the GOP is willing to move considerably from this proposal, it is unlikely a deal will be done until after 2014 congressional elections.

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