QUOTE OF THE DAY
How Nations Succeed: What’s the Secret to Ending Poverty?
MarketWatch: Middle class is resigned to stagnation
No longer does being middle class mean getting ahead. It now means just not falling too far behind.
That’s according to the 16th quarterly Allstate-National Journal Heartland Monitor Poll released last week. Here, 54% of those surveyed defined the middle class as those who could still keep up with bills, not get too buried in debt, and not lose their jobs.
Once basic economic goals — such as paying for a child’s college education, retiring comfortably, or even just surviving a health care emergency — are only realistic for the upper class, according to 40% of those surveyed.
Annual vacations, regular pay increases, quality health care, and even just basic job security — these things are now only manageable for the upper class, about one-third of those surveyed reported.
“People are not really asking the Ronald Reagan question anymore — Are you better off than you were for years ago? — because they don’t expect to be,” said Ronald Brownstein, editorial director for National Journal, in a telephone interview. “Not falling through the floor is the new getting ahead.”
If you really want to know how the economy is doing, don’t ask an economist. Ask someone who still aspires to be in the middle class. “Over the last four years, Americans’ views in this poll have been consistently right about the economy,” said Allstate CEO Thomas J. Wilson in a press release “Today, they are sounding the alarm bell that the economy is not on track for sustainable growth.”
People surveyed may know more about the economy because they bear the brunt of it. Here’s what a few of them said:
“The middle class has become a treading-water position. …. Opportunities have been stifled in the past 20 or 30 years.” — Loren Cowdery, a graduate student who delivers pizzas in Bellingham, Wash.
Jim Pethokoukis: America’s missing 12 million private-sector jobs
The budget deficit isn’t the only gap that should worry US policymakers.
Consider: The U.S. lost 8.8 million private sector jobs during the Great Recession. Since the beginning of the jobs recovery, we have gained back 6.8 million, leaving a gap of about 2 million. As economist Michael Darda calculates, if average monthly job gains remain close to the 12-month average of 180,000 for the private sector, the level of private sector jobs will rise to an all-time high in just under one year.
But even then, private-sector jobs will still be way below the 1990-2007 trend. Currently the shortfall is nearly 12 million missing jobs. The “jobs gap” remains a frightening maw gobbling up the hopes and dreams of American workers.
CBS: Reid: Obamacare could be “train wreck” without more money
Senate Majority Leader Harry Reid, D-Nev., warned Thursday that Obamacare – the health care reform law that he played a key role in shepherding through Congress – risks becoming a “train wreck” because Republicans have resisted adequately funding several key provisions.
Reid’s comments echoed Sen. Max Baucus, D-Mont., who warned last month during a hearing with Health and Human Services Secretary Kathleen Sebelius that he sees a “huge train wreck coming down” as Congress works to set up the health insurance exchanges, a key pillar of the law’s expansion of health care coverage.
“Max said, ‘Unless we implement this properly, it’s going to be a train wreck.’ And I agree with him,” Reid said during an interview with conservative talk radio host Rusty Humphries.
Humphries clarified, “So we’re not spending enough money, and we’re not implementing it properly?”
“Yes,” replied Reid. “We have the menu but we don’t have any way to get to the menu.”
Baucus and Reid’s concern stems from an apparent lack of information provided to businesses and consumers about how to navigate the health insurance exchanges set up by Obamacare. Rather than funding public awareness efforts on their own, President Obama determined that he would shift money around within the health care bill to ensure that people purchasing insurance on an exchange are sufficiently informed of their options.
“I wish we had some money to do this on its own,” said Reid, “But [the president determined] he’s going to take money from some other things that he feels are less important in the health care bill and put it on letting you and others know what’s in the bill, and what they can do to either accept parts that would be helpful to them or not.”
LA Times: What state has the highest gasoline taxes? California, of course
California gasoline prices have fallen by 77.4 cents a gallon from the record of $4.671 set in October.
But the state’s prices remain among the highest in the nation, and today is no exception. California is running fourth behind Hawaii, Alaska and Illinois with an average of $3.897 a gallon, according to the AAA Fuel Gauge Report.
One reason is that California has the nation’s highest taxes on gasoline, at 38.2 cents a gallon, according to the Energy Department’s most recent survey.
The U.S. average for state gasoline taxes is 23.5 cents a gallon, but there are broad differences. At the bottom end are states like Alaska and Georgia, where the gasoline tax is just 8 cents a gallon.
Reason: Meet the New FDA Caffeine Crackdown
The FDA announced earlier this week that the agency will investigate “any and all products with added caffeine.”
FDA officials claim they were spurred to take action after the recent introduction of one product, Alert Energy Gum, a new caffeinated gum made by Wrigley.
The agency argues that such a novel product necessitates a longer look at all foods and beverages that contain added caffeine.
While the FDA’s interest in caffeine is hardly new, neither is caffeinated gum. The idea has been around at least since 1980.
Coincidentally, it was during that same period that the FDA helped foment a minor hysteria around the presence of added caffeine in foods.
FDA rules consider a food additive to be generally recognized as safe, or GRAS, when it’s “adequately shown to be safe under the conditions of its intended use.” FDA regulations had explicitly recognized the GRAS status of caffeine added to “cola-type beverages” since 1961.
But in October 1980, the FDA launched proceedings that could have imposed severe restrictions on the presence of caffeine in all foods.
When the agency didn’t move quickly to revoke caffeine’s GRAS status, it was sued by the Federation of Homemakers, a 1950s-sounding consumer group dedicated to “protecting the integrity of food products.”
News reports from the time give a broader picture of the anti-caffeine climate of the early 1980s.
Washington Examiner: Charter school waitlists hit 22,000
The District’s public charter schools saw a nearly 50 percent increase in the number of children on schools’ waitlists this year, with roughly 22,000 students vying for seats, the Public Charter School Board announced Thursday.
By comparison, the same waitlists had roughly 15,000 names last year.
“This is a depressingly high number that testifies to the continued strong demand for quality schools among D.C. families and the ongoing shortage of enough quality seats to meet parent demand,” charter board Executive Director Scott Pearson said of the latest charter school hopefuls.
The city’s 57 charter schools enroll 34,673 students — 43 percent of the District’s public school students — on 102 campuses.
The majority of wait-listed students are waiting for seats at top-performing — “tier 1” — charters. Though there are 1,000 seats available at schools, according to Pearson, most students are waiting for seats at schools where no seats are available. The charter board plans to release more specific information about which schools still have seats and how many applicants each school had next week.
The most competitive seats are in the earlier grades, with roughly 14,000 students vying for seats in the four grades from prekindergarten-age 3 through first grade, according to Pearson.
The chances of gaining entrance are more difficult for those without a sibling already enrolled. At Elsie Whitlow Stokes Community Freedom Public Charter School, a top-tier school in Ward 5, every prekindergarten seat went to a sibling of a current student this year, forcing every other applicant onto the waitlist.
The list of applicants includes some who have applied at more than one school, inflating the numbers, Pearson noted.
At the same time, schools also continue to accept applicants after their lotteries are over. At schools like E.L. Haynes Public Charter School, a top-performing school in Ward 1 offering prekindergarten through 10th grade, that means the nearly 2,000-person waitlist is still growing, said Richard Pohlman, the school’s chief of operations and policy.
Waitlists like E.L. Haynes’ or KIPP DC Public Charter School’s 2,500-person list can make the charter school admission process daunting for parents, even causing some to turn away from charters.
WSJ: How Many Audits Are Coming to the Net?
The story of this spring’s corporate earnings season is disappointing revenues. So of course the U.S. Senate is expected to vote next week on a plan to unleash a wave of new tax audits on American business. And if the cost turns out to be much larger than advertised, well, the author of this legislation wants you to know he never intended that.
Backers of Senator Mike Enzi’s Marketplace Fairness Act say that it will simply compel the collection of online sales taxes that are already owed by consumers. It is currently up to the online shopper to pay his local tax if he buys an item from an out-of-state merchant. States and localities aren’t enforcing this tax on instate residents, but they want the federal government to foist the collection burden on online sellers outside their borders.
Since the country has more than 9,600 state and local tax collectors, Congress and the Supreme Court have until now recognized what a bureaucratic nightmare this would be. Online merchants could face auditors from sea to shining sea.
Not to worry, say supporters of the Enzi bill. They say the auditing authority would be centralized in each state, so that each year a Web seller could be subject to a maximum of one audit per state, not 9,600. This central state tax collector is supposed to act on behalf of all the cities and towns in its jurisdiction, sparing a business the horrors of dealing with thousands of local governments.
Or would it? We’ve been trying for weeks to get a straight answer from Mr. Enzi’s office to this question: Since Web merchants would supposedly have to deal with one bureaucracy per state, does this mean they would be free to ignore letters from other bureaucracies?
Instead of a yes or no answer, here’s how Mr. Enzi’s spokesman responds: “The drafters of the bill have explicitly stated that in order for a state to be authorized to collect it must establish a single entity within a state to administer remote sales tax collection which would eliminate the need for letters from local jurisdictions.”
We can all agree there’s no need to bury small businesses in paperwork demands from 9,600 governments. But the fact that the bill’s chief author cannot offer a direct assurance that it won’t happen is one of many reasons why the Senate should be skeptical about this Internet sales tax expansion. What matters is not what the bill’s supporters “have explicitly stated,” but what’s in the bill.
Mr. Enzi is proposing a fundamental change in the taxation of interstate commerce. His supporters say this is necessary to collect what even backers of the bill concede would only amount to about 1% of state and local government revenues. Does anyone in the Senate have an idea for growing the economy?
Real Clear Markets: Jobless Report Aside, We’re Falling Behind
The really good news from April’s employment report is that all the pessimistic, end-of-the-world, spring-swoon forecasters were wrong. It wasn’t a fabulous report. But it handily beat Wall Street expectations. Stock markets soared on the news.
The bad news, however, is that the U.S. continues to fall further behind its own long-term trends for jobs and economic growth. And lately, hours worked — a key labor measure — have begun to fall.
First the good: Nonfarm payrolls rose by 165,000 last month, with private payrolls up 176,000. And the prior two months were revised higher by a net 114,000. The unemployment rate fell slightly from 7.6 to 7.5 percent.
And with all the hysteria over the economic evils of the spending-cut sequester, government jobs have fallen only by an average 5,000 over the past three months — dwarfed by private job gains. Keynesians should weep. So might President Obama. The sequester doom and gloom has not come to pass. In fact, 4 percent real growth in the private economy in the first quarter far outstrips the slippage in government spending.
The ten-year, $1 trillion spending cut launched in 2011 and the ten-year, $1 trillion sequester spending cut that began this year are bright spots in economic policy. As a share of GDP, federal spending is now less than 23 percent, down from a peak of 25 percent. That helps take the government’s boot off the neck of the free-enterprise economy. It leaves more resources in the private sector, letting business — the real hero behind the modest growth we have — breathe a little easier.
But as good as it is that more Americans are working, they may be working fewer hours. Not a good trend.
Total private hours worked are declining. They fell 0.4 percent in April, with manufacturing hours dropping 0.2 percent. And aggregate hours worked for all employees fell four-tenths of 1 percent. These are worrisome trends for the future. This may be a harbinger of the ill effects of the job-killing Obamacare program, where rising tax, mandate, and regulatory costs penalize the fiftieth worker hired and the thirtieth hour worked in small business.
Fearing Obamacare, profitable business is reluctant to invest in the kind of capital projects that create jobs. This is one reason job growth is falling short by at least 100,000 per month.
Nonfarm payrolls remain 2.6 million short of the prior peak reached in January 2008. What’s more, roughly 22 million people are effectively unemployed because they’re actually not working, underemployed, or forced to work only part time.
Reason: Giving Teachers Freedom
Last year there was a major change at the private Waldorf elementary school my son attends. His second-grade class had only about 10 kids, and the third-grade class above him had a similarly small number. The teachers were concerned that so few kids in the class would hurt learning; in a tiny class, they felt, kids would have fewer opportunities to form friendships and fewer opportunities to learn from and teach each other. So the teachers consulted with the board, and they eventually decided to combine the two classes into a 15- to 20-student third/fourth-grade class. The change seems to have worked out well.
In some sense, the way this decision was made seems natural. Teachers know what’s going on in the classroom; teachers, therefore, should be the main people making major decisions about their classes. And yet in most public schools, this local knowledge is ignored. Teachers are rarely consulted about administrative changes. And this is not an accident. Subjecting teachers to outside control has been the major goal of school reform policies for the past century, as Jal Mehta, an assistant professor of education at Harvard, explains in The Allure of Order.
Most people think of the current wave of school reform—the push for centrally defined standards, testing, and “accountability”—as something that began in the 1990s. Mehta suggests that the blueprint was set in the Progressive Era. It was tried again in the 1960s and ’70s before finally culminating in George W. Bush’s No Child Left Behind Act and our current rage for standardized tests.
All of these movements, Mehta explains, were based on the idea of rationalizing schools. The Progressives worked to systematize and control (mostly female) teachers under the control of (mostly male) superintendents and administrators. The reformers of the ’60s and ’70s worked, with sporadic success, to establish standards and increase state control over district schooling. And Bill Clinton, George W. Bush, and Barack Obama have overseen a nationalization of education policy, demanding testing and “accountability” nationwide. The effort to control schools from afar through a stern bureaucracy, and to impose excellence by fiat—this is not a new solution. It’s the same old problem.
For Mehta, the issue is so much teachers themselves as the teaching profession. That profession—in part because it was early on dominated by women, and so was considered low-status—never fully professionalized. Unlike medicine or law or higher education, teaching never staked out a rigorous body of knowledge which practitioners had to master; it never established self-imposed criteria for proficiency; it never created self-administered barriers to entrance.
CARTOON OF THE DAY
