Posts Tagged ‘University of Chicago’

It’s the Economy!

Friday, January 29th, 2010

We’re going to have an interesting discussion Monday on Kentucky Tonight on tax reform. There’s a lot going on in Frankfort regarding the issue. At this time, some of it is going on quietly in what’s been dubbed the Tax Reform Work Group.

This is a committee of House members including former Appropriations and Revenue Chair Harry Moberly of Richmond. Moberly and Representative Jim Wayne are meeting with other members and until last Monday, the group included Lexington Republican Bill Farmer. Farmer left the group this week in a dispute over tax increases and, so far, has not returned to the conversation. Speaker of the House Greg Stumbo has asked the Representatives to come up with some ideas which might be presented as a way to solve the state’s budget deficit or, at least, modernize the tax system in the state.

A number of people who are also interested in reforming the state’s tax code have said the issue is too big to tackle during this session of the General Assembly. They are suggesting that to do it comprehensively it will take a special session, either this summer or next January.

Our guests on Monday will include:

  • State Rep. Jim Wayne, D-Louisville
  • State Rep. Bill Farmer, R-Lexington
  • State Rep. Jim DeCesare, R-Bowling Green

To stimulate your thinking about tax reform and the economy, I’m posting a piece I found from Al Tompkins’ blog. Tompkins, who worked in Bowling Green for a time, writes for the Poynter Institute, a journalism training center in Florida.

7 Emerging Economic Stories That Journalists Should Alert People to

Posted by Al Tompkins

Dan Froomkin at Nieman Watchdog said journalists should alert people to seven emerging stories that should worry us, including:

1: The middle class may never be the same again.
For most members of the middle class, their sense of financial well-being was largely based on the size of their 401(k)s and their equity as homeowners. After the collapse of stock prices and with the steep drop in home prices, many may never feel the same way again, or spend their money as confidently.

While 401(k)s have somewhat bounced back, about one in four homeowners now actually have negative equity — are ‘underwater’. A recent study by Barry P. Bosworth and Rosanna Smart for Brookings finds that American households lost $13 trillion in wealth between mid-2007 and March 2009, or about 15 percent in all. That decline badly hit baby boomers just as they’re headed into retirement. And middle-income families whose head is age 50 or younger actually have smaller net incomes today than in 1983.

Meanwhile, many American families spent much of the last decade (or two) living beyond their means, piling up debt on their credit cards, or ‘bubble borrowing.’ Two University of Chicago researchers have found that the housing bubble hugely increased household consumption as homeowners borrowed on average $0.25 to $0.30 for every $1 increase on their home equity.

Rounding out the list are:

2: The recovery could take a really long time.
3: The recovery could only be temporary.
4: Then what? This time, we don’t have the tools to get out of a recession.
5: The ‘very serious’ people in Washington are still obsessed about the deficit.
6: Whatever is making the stock market go up could go away.
7: The hugely irresponsible financial sector remains unchastened.

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