Dr. J.D. Foster is the former senior vice president, Economic Policy Division, and former chief economist at the U.S. Chamber of Commerce. He explores and explains developments in the U.S. and global economies.
Author
Policymakers should fix the foundation first, before pondering additional risky reforms.
The U.S. economy faces one real policy threat in 2018, and that’s a trade war.
We're reminded again that while some in Congress have the power to cause a budget crisis, but they don't have enough to win one.
The 2017 Tax Cuts and Jobs Act is an accomplishment befitting American families. It represents a triumph of ideas.
Here's the evidence that tax reform results in job growth, higher wages, and an opportunity for workers to grow.
Comprehensive tax reform, current edition, resembles the successful 1986 effort in many ways.
The U.S. labor market is turning the page to the last chapter of recovery from the recession ending over eight years prior.
Reviewing and respecting the lessons from the last major tax reform over thirty years ago illuminates the road ahead.
American labor markets are finally turning the page on the Great Global Recession.
No rest for the weary. Congress has finished, for now, with health care reform, bloodied and battered. Next stop is tax reform.
Pro-growth tax reform can do more to strengthen the U.S. economy than anything else.
What causes trade deficits? Whether bilateral, aggregate, short-term or long, understanding their causes is essential – whether they are harmful or not, whether they are the product of bad domestic policies or unfair foreign trade practices, or whether they are just a feature of a global economy much like temperature is a feature of the climate.
When a nation erects a trade barrier, this is fundamentally a regulatory act.
Perhaps China’s Ming Dynasty provides the greatest historical example of isolationism’s effects
As protectionist voices are again rising, a little perspective may help put America’s trade profile in context.
Why should young people struggling to pay their own bills pay more taxes so non-low-income retirees get their full benefits?
Before we start streaming old versions of “Happy Days are Here Again,” let’s look closer at the recent Census report.
Just as President Obama's "Fairness Economy" doctrine hasn't made a dent in inequality, neither will Clinton's proposed policies.
Central bankers and monetary theorists have long known the ability to influence economic activity was sometimes powerful, sometimes limited.
Unfortunately, that is one thing Washington is good at pursuing – and the economy suffers.
The next administration and the next Congress need to do significantly better.
Why are businesses holding back? Excess capacity, excess regulation, and excess political uncertainty.
Much of what passes for regulation today in the financial sector cannot be described as good by any reasonable measure.
The range of ordinary course business transactions affected by the proposed regulations is truly staggering.
Could we build such a tunnel today? Probably not.
What is this argument supporters make that is so damning to their own policy?
Congress should consider a handful of questions as it contemplates reforms.
The current administration has paid lip service to the importance of growth only to pursue policies with other purposes.
Regardless the name of the next person in the White House, the U.S. economy needs substantial repair.
The presidential candidates seem to agree on only two points: First, the economy’s overall poor performance; second, a distrust of free trade’s benefits. They then err in blaming the economy’s poor performance on international trade, concluding the solution is to “fight back” with trade barriers. This strategy is shortsighted, fear based, and self-defeating. The smart strategy is to fix U.S. policies weakening the economy, such as tax and regulatory policies; negotiate strong trade agreements leveling playing fields while opening up new avenues of competition; and then compete to win.
The new regulations obviously were intended to stop one transaction.
In this election season, Americans can insist candidates take seriously the dismal fiscal future bestowed by the current administration.
The answer has changed over time and remains rather complicated.
Why is the global economy struggling so?
Pro-growth policies and spending restraint are the order of the day, but the order apparently won’t be filled this year.
The proposal is anti-growth and regressive, as well as regionally divisive.
The questions to ask: Why is the economy performing so poorly, and what can we do about it?
Obama is set to release his final budget submission next week.
For accuracy, the forecast should make explicit and up-front reference to the issue of likely recessions.
Policymakers should focus on remedying causes, not effects.
The U.S. economy racked up another middling performance in 2015.
The federal government ran a budget deficit of $439 billion in 2015, and that’s supposed to be good news according to the president and his cheerleaders. In his recent State of the Union address, President Barack Obama said the deficit had been cut by “almost three-quarters” (the actual figure is 69 percent, but let’s not quibble).
The many actors are preparing for the next installment of debt drama.
Let's put the recent action in perspective.
Debates over income and wealth inequality are intense, and they are also highly data dependent.
Another alternative: Reform Social Security so it works properly for future generations.
Every new ineffectual initiative reinforces the impression the administration is not serious about comprehensive tax reform.
Taxes influence human behavior. On the surface this would seem one of the few statements on which universal agreement prevails among economists and quasi-economists alike. But for some, the agreement is occasional. One might even say it’s a matter of convenience.
In any sport, when a team plays as a team it performs better than when discord rules and the players go their own way.
It is always easy to nitpick a compromise, but, in this case, something needs to be done.
The budget resolution adopted by the U.S. Congress in May of this year on largely party-line votes included specific reconciliation instructions for future actions. The reconciliation process is a powerful tool for accomplishing difficult fiscal policy tasks, but it also has its limitations. Many members of Congress appear to be highly enthusiastic regarding reconciliation’s possibilities in 2015. They are likely to be disappointed.
Reconciliation in theory
During his recent visit to the United States, Pope Francis touched on many issues, none more so than poverty.
Costly regulations play an expensive role.
The United States Federal Reserve will at some point begin to normalize United States monetary policy, first by initiating a series of increases in the Federal Funds rate. The timing of the first such increase is highly uncertain but has been widely anticipated to occur this month. Numerous voices have been raised within the United States for and against such a move.
The recent story of manufacturing in America is a curious one, but oddest of all is that even six years and counting after the recovery began manufacturing has yet to recover its previous level of activity.
The administration rolled out its the annual update to the president’s budget as required by law. As usual, it provided the typical rhetorical spin expected from any administration -- and included a mix of good news and bad.
The U.S. economy contracted in the first quarter according to the latest government data, sadly reinforcing once again the weakness of the recovery under this administration.
Only people and businesses can grow an economy, and they can’t do it buried in tax.
Greece affirms: Something that can’t go on forever … won’t.
The opponents of renewing TPA are having a real “Casablanca” moment.
Labor productivity declined at a 3.1 percent annual rate in the first quarter. Translation – it plummeted.
They are part of the foundation of a civil society and a prosperous economy.
I would like you to pay my mortgage. No, really. In fact, being all powerful, I’m going to pass a law requiring you to pay my mortgage. If you don’t think that’s fair, if the prospect of you being forced to pay my mortgage makes you a little hot under the collar, then you can appreciate how U.S. multinational corporations feel.
The economy is creating jobs at a steady pace and the cumulative totals sound impressive until you remember how deep the hole was out of which we are climbing and how long we have been climbing.
With every passing year, the need for comprehensive reform grows, and the price we all pay for delay rises.
Fantasy? Delusion? A wry if misplaced sense of humor? Hard to say, but what the facts prove is that, unfortunately, the critics were indeed right.
Washington rumors suggest enduring if not growing interest in an odd couple proposal to link a new tax on corporate repatriations and funding the federal highways and transit program.
Wouldn’t it be a pleasant surprise to hear the President argue for more spending in one area, and for less in another?
What do you do when everything you’ve tried fails? When you run out of alternatives, you double down on what failed, right? At least, that’s the most sensible interpretation of a tax proposal announced recently by Congressman Chris Van Hollen, the ranking Democrat on the House Budget Committee.
Is the recent drop in crude oil prices a boon for the economy? One might think so from the way some commentators are responding to the halving of crude oil prices in recent months. But that's only part of the story.
The Joint Committee on Taxation released its annual “Description of Certain Revenue Provisions Contained in the President’s Fiscal Year 2015 Budget Proposal” on December 17, one day after Congress declared sine die, which is Congress speak for “we’re out of here!” Why the nine-month delay?
Somehow, someway, someday Washington will fix the nation’s tax code. Sooner would be a lot better. Next year would be none too soon.
For most of the last decade interest rates globally remained extraordinarily low.
Why do we need comprehensive tax reform? Because we live in global economy with global capital markets and capital has many opportunities for use in diverse places.
Allowing tax extenders to expire is a tax hike. That’s not to argue one way or the other for any particular provision. Rather, it is a simple statement of fiscal reality.
The real economic power of Keystone is as a symbol to the job creators and risk takers of America that maybe there is hope Washington policymakers may finally “get it” if just a little.
Aside from White House Press Secretary Josh Earnest, just about everybody understands the Democratic Party suffered an historic defeat in this past election. President Obama and friends are surely looking for a silver lining. He can find one of sorts across the pond.
President Obama gave yet another speech on the economy in which he again tried to put lipstick on a pig. Its lipstick, and it’s still a pig.
According to an online presentation posted at whitehouse.gov, “When corporations invert and pay less in taxes, other working Americans have to pay more to help fund the services we all rely on." This is simply not true, and it is only one of two such misleading statements in the presentation.
Today’s labor market presents economists and policymakers with two great questions. The first is whether, and why, the unemployment rate is now something of a misleading indicator. The second, and far more important, is which combination of poor policies are most at fault for the economy’s laggard performance back to full employment and what can we do better.
If you own tax-exempt municipal bonds, then according to Washington’s prevailing wisdom you’re unpatriotic. If this all sounds Alice-in-Wonderland absurd, well, welcome to Washington, D.C., August, 2014.
These transactions will continue, and U.S. corporate headquarters will continue to emigrate, as long as the U.S. corporate tax rate remains so far above that of our major competitors, and especially so as long as the U.S. imposes the most punitive tax system on companies’ foreign earnings.
It may be inconsistent in how it treats different expiring revenue provisions, but sometimes it gets it right.
With the Fed Board once again fully stocked, it is a good time to observe that the Senate is called upon to confirm Fed nominees with worrisome regularity.
If the ECB’s new policies are not substantially and quickly effective in nudging inflation upward, then those who whisper the eurozone currency crisis is over may yet be in for quite a surprise.
The Federal Reserve Board is still missing some members, the U.S. Senate is still fumbling toward confirming the president’s uncontroversial nominees, and now the problem is less Republican senators’ principled obstructionism than Senate Majority Leader Harry Reid playing his little Senate games.
The United States has a growing problem – well, it actually has many, from out-of-control entitlement spending to equally out-of-control regulatory burdens. But most of these problems don’t make the headlines. One such growing problem has made the headlines lately – increasingly the United States’ biggest companies are choosing to become economic emigres.
The Federal Reserve is short-handed, and that could be dangerous to the economy.
Last Sunday, President George H.W. Bush was given an award for courage by the John F. Kennedy Presidential Library and Museum. The award, presented in recognition of the 1991 Bush tax hike was presented to Bush’s granddaughter, Lauren Bush.
According to the initial read, the economy as measured by Gross Domestic Product (GDP) grew at a measly 0.1% annual rate in the first quarter of 2014. This exemplifies the recovery’s weakness and as much as anything probably explains the Obama Administration’s strategic pivot to the issue of income inequality.
According to reports, a tide of frustration with House Speaker John Boehner is rising among House Republican conservatives, and revolt it brewing. So, what’s the “big idea” coming out of the conservative ranks?
In the administration’s magic land where raising the minimum wage is regarded as economic stimulus, making millions of additional workers eligible for overtime seems a good way to raise incomes and perhaps even stimulate the economy, too -- were it only so easy
The nation is and should also be concerned whether incomes are rising and whether individuals in poverty have ample opportunity to raise themselves up to enjoy materially higher standards of living.
Nearly 3 million American workers left the workforce last year. President Obama’s response? Raise the minimum wage.
President Obama has announced his intention to raise the minimum wage paid to employees working under federal government contractors from $7.25 an hour to $10.10 an hour. Unlike the President’s proposal to raise the federal minimum wage for private sector workers, this policy at least has the benefit of not destroying jobs directly as long as it is applied narrowly. After all, a higher minimum wage for workers on federal contracts just gets passed on to the federal government, e.g. the taxpayers, in higher costs. But is it good policy?
In his State of the Union address this evening President Obama is expected to call, once again, for raising the minimum wage. Proponents of this policy argue that it would materially help address poverty and income inequality, or that it’s simply a matter of fairness. Each of these arguments is highly debatable, and hotly debated.
After too many years of anemic growth, it appears that the recovery may be gaining a little better traction. Overall growth last year probably hit 2.0% or so, even slower than the average of 2.3% since the end of the recession in 2009. We expect considerably better growth this year, accelerating to near 3.0%. This month we look at reasons for our more optimistic forecast.
Sources of Strength
In a classic case of odd timing the Obama Administration has launched a push for a higher federal minimum wage. The timing appears odd because even after four years the economic recovery remains disturbingly weak. Consequently, the unemployment rate remains high, declining over the past year primarily because workers have simply given up and left the workforce. Raising the minimum wage can only make these matters worse.
From shipping to staffing, the Chamber and its partners have the tools to save your business money and the solutions to help you run it more efficiently. Join the U.S. Chamber of Commerce today to start saving.
