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An economic impact analysis released today finds that the benefits provided by state and local government pension plans have a sizable impact that ripples through every state and industry across the nation. The new report, “Pensionomics: Measuring the Economic Impact of State and Local Pension Plans,” finds that expenditures made from state & local pension benefits for fiscal year 2005-2006:
- Had a total economic impact of more than $358 billion.
- Supported more than 2.5 million American jobs that paid more than $92 billion in total compensation to American workers.
- Supported more than $57 billion in annual federal, state, local tax revenue.
- Paid $151.7 billion in pension benefits to 7.3 million retirees and beneficiaries.
- Had large multiplier effects. Each taxpayer dollar invested in state and local pensions supported $11.45 in total economic activity, while each dollar paid out in benefits supported $2.36 in economic activity.
- Had the largest impact on the manufacturing, health care, finance, retail trade, and accommodation and food service sectors.
From the press release:
Overall, expanding and upgrading Medicare to cover all Americans (single-payer) would create 2.6 million new jobs, infuse $317 billion in new business and public revenues, and inject another $100 billion in wages into the U.S. economy, according to the study by the Institute for Health and Socio-Economic Policy (IHSP).
From the abstract:
In 2009, the federal deficit will be larger as a share of the economy than at any time since the 1940s. After 2009, we project an average deficit of $1 trillion per year for the next 10 years, under optimistic assumptions. The longer-run picture is even bleaker, with a fiscal gap of 7-9 percent of GDP — between $1 trillion and $1.3 trillion annually in current dollars. Recent trends in credit default swap markets suggest that although fiscal policy problems are usually described as medium- and long-term issues, these problems may be upon us much sooner than previously expected.
The current financial crisis began in August 2007, when financial stability replaced inflation as the Federal Reserve’s chief concern. The roots of the crisis go back much further, and there are various views on the fundamental causes.
It is generally accepted that credit standards in U.S. mortgage lending were relaxed in the early 2000s, and that rising rates of delinquency and foreclosures delivered a sharp shock to a range of U.S. financial institutions. Beyond that point of agreement, however, there are many questions that will be debated by policymakers and academics for decades.
Why did the financial shock from the housing market downturn prove so difficult to contain? Why did the tools the Fed used successfully to limit damage to the financial system from previous shocks (the Asian crises of 1997-1998, the stock market crashes of 1987 and 2000-2001, the junk bond debacle in 1989, the savings and loan crisis, 9/11, and so on) fail to work this time? If we accept that the origins are in the United States, why were so many financial systems around the world swept up in the panic?
To what extent were long-term developments in financial markets to blame for the instability? Derivatives markets, for example, were long described as a way to spread financial risk more efficiently, so that market participants could bear only those risks they understood. Did derivatives, and other risk management techniques, actually increase risk and instability under crisis conditions? Was there too much reliance on computer models of market performance? Did those models reflect only the post-WWII period, which may now come to be viewed not as a typical 60-year period, suitable for use as a baseline for financial forecasts, but rather as an unusually favorable period that may not recur?
Did government actions inadvertently create the conditions for crisis? Did regulators fail to use their authority to prevent excessive risk-taking, or was their jurisdiction too limited and/or compartmentalized?
While some may insist that there is a single cause, and thus a simple remedy, the sheer number of causal factors that have been identified tends to suggest that the current financial situation is not yet fully understood in its full complexity. This report consists of a table that summarizes very briefly some of the arguments for particular causes, presents equally brief rejoinders, and includes a reference or two for further reading. It will be updated as required by market developments.
This paper will examine the jobs, income and poverty legacy wrought by supply-side ideology over the course of the Bush presidency. This review is important not least because conservatives continue to pitch supply-side remedies as valid alternatives to the Obama recovery package amid a worsening recession. And beyond the economic recovery, the upcoming fiscal 2010 and 2011 federal budget debates will prominently feature questions about whether to extend some or all of the Bush tax cuts. The evidence in this paper demonstrates that conservative rhetoric about the job creation potential of supply-side tax cuts does not match up to the anemic Bush-era record.
A few governors and legislative leaders have suggested that their states might not accept the full amount of fiscal relief in the new recovery legislation or might use the funds to finance tax cuts or build up reserves, rather than spend them as Congress intended. Such actions could weaken the new law’s impact, and possibly even prolong the recession, by reducing the amount of stimulus injected into the economy.
Source: Robert Chernomas and Ian Hudson, International Journal of Health Services, Volume 39, Number 1, 2009
From the abstract:
In this article, the authors take inspiration from Engels’s 1845 account of the social murder committed by British capitalists to assess the contemporary impact of conservative economic policy, which they define as policies designed to maximize the accumulation of profit while socializing the associated risks and costs. Conservative economists argue that if their policy prescription is followed, it will produce broad-based economic benefits including more rapid growth, higher incomes, less illness, and, even, more democracy. The authors contrast the myth of conservative economic policy with the reality. What conservative economic policy has actually accomplished is a redistribution of wealth and power away from the vast majority of the population to firms and their owners. The effects of these policies on citizens and workers have been socially determined economic instability, unemployment, poverty, inequality, dangerous products, and infectious and chronic disease.
Although its collapse has dominated recent media coverage, the financial sector is not the only segment of the U.S. economy running into serious trouble. The institutions that govern the labor market have also failed, producing the unusual and unhealthy situation in which hourly compensation for American workers has stagnated even as their productivity soared.
Indeed, from 2000 to 2007, the income of the median working-age household fell by $2,000- an unprecedented decline. In that time, virtually all of the nation’s economic growth went to a small number of wealthy Americans. An important reason for the shift from broadly-shared prosperity to growing inequality is the erosion of workers’ ability to form unions and bargain collectively.
This paper discusses the impact of recent tumultuous economic events and policy interventions on the Federal fiscal picture for the immediate future and for the longer run.
In 2009, the federal deficit will be larger as a share of the economy than at any time since World War II. The current deficit is due in part to economic weakness and the stimulus, and in part to policy choices made in the past. What is more troubling is that, under what we view as optimistic assumptions, the deficit is projected to average at least $1 trillion per year for the 10 years after 2009, even if the economy returns to full employment and the stimulus package is allowed to expire in two years.
The longer-run picture is even bleaker. We estimate a fiscal gap – the immediate and permanent increase in taxes or reduction in spending that would keep the long-term debt/GDP ratio at its current level -about 7-9 percent of GDP, or between $1 trillion and $1.3 trillion per year in current dollars.
Recent trends in credit default swap markets show a clearly discernable uptick in the perceived likelihood of default on 5-year U.S. senior Treasury debt, a notion that was virtually unthinkable in the past. While it is difficult to know exactly how to interpret these results, it is clear that – although fiscal policy problems are usually described as medium- and long-term issues – the future may be upon us much sooner than previously expected.