Category Archives: Finance

Rising Economic Inequality and Campaign Contributions from Very Wealthy Americans

Source: Adam Bonica, Stanford University and Howard Rosenthal, Scholars Strategy Network, Key Findings, November 2016

From the introduction:
…..In our research, we explore the relationship between wealth disparities and campaign contributions, documenting the growing concentration of campaign contributions among a small sliver of very wealthy U.S. donors. Despite an explosion in the number of citizens donating to campaigns in recent decades, we find that in recent decades the total share of campaign contributions has risen sharply from the wealthiest donors, the top 1% of the 1% of the voting age population. Mass participation has failed to counterbalance this trend.

Although recent changes to the legal and regulatory environment have contributed to the trend, they are at best a partial explanation. Contributions were becoming more concentrated long before the 2010 Citizens United and the 2014 McCutcheon cases were decided by the Supreme Court. To fully make sense of the rise of big money, its causes and consequences, we must examine broader economic trends and understand how the political behavior of the super rich has changed over time. Our research examines donation patterns of the super-rich – and explores their broader implications…..

Pro-Trump Group Blew by Basic Campaign Finance Laws

Source: Robert Faturechi and Derek Willis ProPublica, December 9, 2016

The America Comes First PAC did not disclose its donors before Election Day. And its top funder is banned from the securities industry. ….

….As federal regulators continued to wait for the required disclosures, the group posted a photo two days after the election showing Trump meeting with America Comes First secretary David Schamens. It wasn’t until this week that the group finally began filing the disclosure forms. The filings show that the bulk of individual donations to the group came from Schamens. In the early 1990s, Schamens was accused by the Securities and Exchange Commission of securities fraud. In a settlement, he did not admit to the allegations but agreed to be barred from associating with investment companies or securities brokers. Schamens currently is director of a New Jersey technology company that caters to financial institutions and securities traders……

Dark Money

Source:, 2016

Dark Money Groups spend millions influencing our elections without reporting where the money came from. Learn more about their growing influence below. ….

From the blog post:
…. is excited to announce a major new expansion of to better help journalists, watchdogs and the public track the IRS forms of thousands of groups and see how what appears on those filings meshes with what actually happened in the 2016 election cycle. This new, vastly larger set of tools adds to the suite of functions and information already available on the site.

Beginning today, OpenSecrets is providing downloadable financial information for over 20,000 nonprofit organizations — up from less than 500 — in the largest, cleanest and most detailed free resource for people researching the activities and networks of non-charity nonprofits and dark money organizations. Getting the data previously had been a difficult, very 20th-century process: We had to manually collect the 990 reports directly from the groups themselves, or get them in costly, convoluted batches from the IRS. Now, thanks to a generous grant from the Knight Foundation and additional funding from the Carnegie Corporation of New York, we have integrated digitized data on organizations, provided by Guidestar, with the rest of OpenSecrets’ data resources.

For the first time, visitors to OpenSecrets can see all grants made by 501(c)4, 501(c)5 and 501(c)6 organizations. If a grant was made to another politically active nonprofit – transfers between groups are common – visitors can easily see that group’s financial information, too, as well as whether it spends money on political activity.

This information goes far beyond other data sets made public to this point. The IRS’s own e-file data, released over the summer, is messier and less comprehensive. The new data set uniquely does not depend on a group having electronically filed its tax returns with the IRS or having received approval as tax-exempt from the agency; all filings are there, with digitized, standardized data. Where applicable, the data has been matched with Federal Election Commission filings showing political activity, going back years further than the IRS e-file data. ….

Trends in College Pricing 2016

Source: The College Board, 2016

From the summary:
Trends in College Pricing provides information on changes over time in undergraduate tuition and fees, room and board, and other estimated expenses related to attending colleges and universities. The report, which includes data through 2016-17 from the College Board’s Annual Survey of Colleges, reveals the wide variation in prices charged by institutions of different types and in different parts of the country. Of particular importance is the focus on the net prices students actually pay after taking grant aid into consideration. Data on institutional revenues and expenditures and on changing enrollment patterns over time supplement the data on prices to provide a clearer picture of the circumstances of students and the institutions in which they study.
Download Excel Data
Download Presentation

Waiting for the Payoff: How Low Wages and Student Debt Keep Prosperity Out of Reach

Source: Allyson Fredericksen, People’s Action Institute, Job Gap Economic Prosperity series, People’s Action Institute, October 2016

From the summary:
Education is often lauded as the great equalizer and a solution to the growing income gap. But, as the cost of college breaks family budgets and requires students to take out thousands of dollars in educational loans, wages, even for those with a degree, have not kept pace, and have even declined in many occupations.

Though campaigns to increase the minimum wage have been won in cities and states across the country, current minimum wage rates do not provide a living wage for even a single adult. Research on living wage rates produced by People’s Action Institute shows that, nationally, a living wage for a single adult is $17.28 per hour. For those with student debt, that living wage rises to $18.67 per hour.

Increasing the minimum wage to a living wage and abolishing the tipped subminimum wage will help more workers make ends meet, but student debt forgiveness is also vital. And, because systemic barriers mean women and people of color are disproportionately impacted by low wages and student debt, more must be done to strengthen and enforce equal opportunity statutes.

At a minimum, working full-time should ensure financial stability, including the ability to pay off student loan debt. It’s time for elected officials to take action to make that a reality.
Table 1: Single Adult Living Wage vs Minimum Wage by State
Table 2: Median Student Debt and Monthly Payment for Graduates by State
Table 3: Traditional Single Adult Living Wage vs Student Debt Living Wage by State
Executive summary

Student Debt May Be Contributing to Racial Inequality

Source: Shahien Nasiripour, Bloomberg, October 24, 2016

Black college grads owe more on their student loans while being paid less than their white counterparts.
Black-white disparity in student loan debt more than triples after graduation
Source: Judith Scott-Clayton and Jing Li, Brookings Institution, Evidence Speaks Reports, Vol 2 #3, October 20, 2016

The moment they earn their bachelor’s degrees, black college graduates owe $7,400 more on average than their white peers ($23,400 versus $16,000, including non-borrowers in the averages). But over the next few years, the black-white debt gap more than triples to a whopping $25,000. Differences in interest accrual and graduate school borrowing lead to black graduates holding nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts. While previous work has documented racial disparities in student borrowing, delinquencies, and defaults, in this report we provide new evidence that racial gaps in total debt are far larger than even recent reports have recognized, far larger now than in the past, and correlated with troubling trends in the economy and in the for-profit sector. We conclude with a discussion of policy implications. Black-white disparity in student loan debt more than triples after graduation.

Project on Student Debt – State by State Data

Source: Institute for College Access & Success (TICAS), 2016

Seven in 10 seniors (68%) who graduated from public and nonprofit colleges in 2015 had student loan debt, with an average of $30,100 per borrower. This represents a 4% increase from the average debt of 2014 graduates.

National, state, and college data on student debt from federal and private loans can be found in the full report. For more details, click on the map and other links on this page…..

Political Lending

Source: Ahmed Tahoun, Florin P. Vasvari, Institute for New Economic Thinking Working Paper Series No. 47, August 23, 2016

From the abstract:
Using a unique dataset provided by the Center for Responsive Politics (CRP), we document a direct channel through which financial institutions contribute to the net worth of members of the U.S. Congress, particularly those sitting on the finance committees in the Senate and the House of Representatives. These individuals report greater levels of leverage and new liabilities as a proportion of their total net worth, relative to when they are not part of the finance committee or relative to other congressional members. Politicians increase new liabilities by over 30% of their net worth in the first year of their finance committee membership. We do not find similar patterns for members of non-finance powerful committees. We find no evidence that finance committee members arrange new personal liabilities ahead of their appointments to the committees. Finance committee members also report liabilities with lower interest rates and longer maturities. Finally, focusing on banks that lend to U.S. Congress members, we find that the weaker performing financial institutions lend to more finance committee members and provide more new debt to these politicians. Our findings suggest that lenders may create political connections with finance committee members in an attempt to obtain regulatory benefits.

How Money Drives US Congressional Elections

Source: Thomas Ferguson, Paul D. Jorgensen, Jie Chen, Institute for New Economic Thinking Working Paper Series No. 48, August 1, 2016

From the abstract:
This paper analyzes whether money influences election outcomes. Using a new and more comprehensive dataset built from government sources, the paper begins by showing that the relations between money and major party votes in all elections for the U.S. Senate and House of Representatives from 1980 to 2014 are well approximated by straight lines. It then considers possible challenges to this “linear model” of money and elections on statistical grounds, resting on possible endogeneity arising from reciprocal causation between, for example, popularity and votes. Extending the analysis of latent instrumental variables pioneered by Peter Ebbes and recently analyzed by Irene Hueter, the paper tackles this much discussed problem by developing a spatial Bayesian latent instrumental variable model. Taking a leaf from discussions of event analysis in economics and finance, the paper also examines the light thrown on the model’s usefulness by studying changes in the gambling odds on a Republican takeover of the House in 1994. Both approaches suggest that reciprocal causation may happen to some degree, but that money’s independent influence on elections remains powerful. A concluding section of the paper considers the alleged “centerist” leanings of American large corporations by comparison with members of the Forbes 400 and evidence that the effect of money in House elections has dropped slightly over time, though it remains extremely strong.

How Donald Trump Cashed in on 9/11

Source: Tessa Stuart, Rolling Stone, September 9, 2016

Some have raised objections to Trump applying for federal recovery funds, lobbied for by then Sen. Hillary Clinton….

……A not-insignificant chunk of that federal funding, $2 billion, was earmarked for distribution by the Lower Manhattan Development Corporation and the Empire State Development Corporation. About a quarter of that – some $500 million – was explicitly set aside for helping small businesses in the area recover. Among the 8,214 early recipients was 40 Wall Street LLC, the most valuable building in Donald Trump’s portfolio of properties, a skyscraper that sits less than a mile from Ground Zero. (An additional $350 million was later allocated to the same cause, bringing the total number of businesses impacted to more than 14,000.)

Trump applied for and accepted the money, despite the fact that – as he acknowledged in an interview with a German news show immediately after the attacks – the property “wasn’t, fortunately, affected by what happened to the World Trade Center.”

Technically, 40 Wall Street LLC (if not its parent company, the Trump Organization) did meet the criteria for the funds: It had fewer than 500 employees, and was located south of 14th Street. And, as the agency that administered the funds said, eligibility wasn’t necessarily determined based on damage incurred; rather, the goal was “to keep businesses and jobs from deserting the city and moving to other States or overseas.”

Still, Trump’s decision to take in recovery funds left some with a bad taste in their mouths. The New York Daily News ran an exposé on the subject in 2006, and earlier this year Rep. Jerrold Nadler, whose district includes Ground Zero, wrote an open letter to Trump demanding he return the money……