“According to the Bureau of Labor Statistics, inflation-adjusted median weekly earnings for American workers have increased by 17 percent since 1995, when the WTO was founded. Meanwhile, American manufacturing has never been more valuable than it is now, as the country’s industrial production last year was 48 percent higher than in 1995, according to the Federal Reserve.”
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“Withdrawing from the WTO would leave America cut off from the lower tariff rates that member nations grant to one another, effectively raising barriers to American exports and harming American manufacturing and farming. The global trade that’s possible because of America’s membership in the WTO boosts the U.S. economy by $2.1 trillion every year”
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“the WTO did not simply materialize in the mid-1990s nor can it be easily replaced. It was the result of a decadeslong experiment in expanding the economic co-dependence of the world’s largest economies. That experiment increased prosperity and reduce major wars across the planet.”
“The easiest way to win a trade war? Don’t be one of the countries involved.
When the United States slapped tariffs on steel, aluminum, and billions of dollars of Chinese imports in the summer of 2018, China and other U.S. trading partners retaliated by targeting American agricultural exports. By the time a series of tit for tat increases in tariffs by the U.S. and China came to a halt with a December 2019 partial trade agreement—one that left most of the higher tariffs in place on both sides—the average foreign tariff for American farm goods had jumped from 8.3 to 26.8 percent
As a result, U.S. farm exports suffered. Carter and Steinbach calculate that U.S. farmers lost more than $15.6 billion in trade with countries that hiked tariffs in response to the Trump administration’s trade war. Soybeans, pork products, and grains were the products most affected.
Some of those losses were offset by trade with other nations—for example, when China stopped purchasing U.S.-grown soybeans, growers had to find other buyers for their products. That was the goal of a July 2018 deal struck by President Donald Trump and European Commission President Jean-Claude Juncker that the White House touted as a vehicle for sending more American soybeans to Europe.
As Reason noted at the time, Europe’s annual consumption of soybeans was less than 25 percent of China’s (and it already had access to tariff-free imports of U.S. soybeans), so “unless Juncker and Trump plan to start jamming soybeans down European throats, foie gras-style, there’s simply no way that Europe can consume enough soybeans to make up for the loss of China as an American export market.”
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“Nearly two years later, Carter and Steinbach calculate that so-called “deflected trade” in agricultural goods boosted U.S. exports by about $1.2 billion during the trade war—leaving American farms only $14 billion in the red.”
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“countries that the two researchers identify as “non-retaliatory countries”—that is, places that did not hike tariffs in response to U.S. tariffs on steel, aluminum, and other goods—gained more than $13.5 billion by increasing trade to places, like China, that took steps to reduce imports of U.S. farm goods.”
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“soybean farmers are worried about how the trade war might permanently reshape the global soybean trade, to the detriment of American growers.”
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“In March 2018, after Trump announced his intention to hike tariffs on steel and aluminum, Peter Navarro, the director of the White House’s National Trade Council, was asked about the potential consequences of retaliation aimed at American farm exports.
“I don’t believe any country in the world is going to retaliate,” he said. “They know they’re cheating us, and we’re just trying to stand up for ourselves.”
Navarro and Trump were wrong. American farmers have lost $14 billion because of their mistake.”
“For years, states have been warned to stop making unrealistic promises about investment returns—a trick used to make shortfalls look smaller than they really are—and to fully fund their retirement systems instead of deferring payments to later years. Both strategies are widespread in state pension systems, and both have contributed to the mess that states now face. Policy makers have clung to the belief that reforms were unnecessary because future investment growth would close the funding gaps.
That idea should now be dispelled. Even a decade of growth wasn’t enough for many pensions to fully recover from the last recession—and that should have been a warning right there, if policy makers were paying attention.”
Policy Basics: Federal Tax Expenditures 11 18 2019. Center on Budget and Policy Priorities. https://www.cbpp.org/research/federal-tax/policy-basics-federal-tax-expenditures The biggest U.S. tax breaks Drew Desilver. 4 6 2016. Pew Research Center Estimates of Federal Tax Expenditures for Fiscal Years 2019-2023. 12 18 2019. The Joint
“Landlords may start to feel the fallout, too, specifically those who rely on that rental income to pay mortgages or utility bills. Landlords may have more resources — they own a valuable asset in real estate, after all. And the CARES Act, the $2 trillion coronavirus stimulus package passed by Congress late last month, offers landlords forbearance on federally backed mortgages during the crisis.
But forbearance is also just a postponement of payment, and many can’t kick the can down the road too far, Cunningham said. “So with landlords being unable to pay their mortgages, then you have lenders essentially not being able to pay out their investors in mortgage-backed securities, so the whole entire housing system is connected.”
That could have broader implications for the economy, as anyone who lived through the 2008 financial crisis might remember. And while many advocates say this shows exactly why the US for-profit housing system is so broken, that system also likely isn’t going to change before the next rent payment is due.
Which is why, at least for the short term, policy experts say governments need to provide more robust assistance to keep people economically stable and in their homes in the first place. Some experts suggested that housing subsidies or really just more cash would ease the financial burden, so renters don’t have to choose between paying rent and buying food.
The $2 trillion stimulus package helps, including by increasing unemployment benefits and by offering many American households one-time cash assistance, which for households making $75,000 or less per year comes out to $1,200, with additional money for kids.
But that might not be enough now, and definitely not enough a few months from now, given the unprecedented economic crisis. Cunningham said she thought Congress missed an opportunity to fully give people what they need to get through the crisis. “A $1,200 stimulus check, particularly in high-cost areas where the pandemic is most concentrated like New York City, San Francisco, Seattle, is not enough to pay the rent,” she said.”
“It’s not like the brick-and-mortar retail business was booming before the coronavirus pandemic, either. For the past decade, Americans’ shopping habits have drastically shifted, thanks to the advent of online shopping, same-day delivery, and direct-to-consumer startups. While many stores have invested in turning their locations into “experiences,” corporate behemoths like Sears, Family Dollar, Toys R Us, Claire’s, Forever 21, and Payless have struggled to adapt to customers’ expectations.
What’s been called the “retail apocalypse” over the last 10 years is rapidly accelerating due to coronavirus. Analysis from retail industry tracker Coresight Research suggests that more than 15,000 stores in the US could permanently shutter, up from the 9,500 that closed their doors last year.
If the great American department store was already in decline, coronavirus may be what finishes the job. It’s almost certain that Neiman Marcus is just the beginning.”
“The high proportion of people who get their health insurance through their jobs is one of the most distinctive features of the U.S. health care system. According to the Census Bureau, 56 percent of the population had employer-sponsored health insurance (ESHI) as of 2017. ESHI accounts for 83 percent of all of those with private insurance of any kind. People whose health insurance is tied to their jobs far outnumber the 38 percent of the population served by government insurance of all kinds.”
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“most people on ESHI appear to be satisfied with the coverage they get. A survey by America’s Health Insurance Plans (AHIP), an insurance industry group, found that 71 percent of respondents were satisfied with their ESHI plans, compared with just 19 percent who were not satisfied. An independent survey by Gallup came up with similar results, finding 69 percent of people on employer-sponsored plans to be satisfied. A study by the Employee Benefit Research Institute found that 50 percent of workers were extremely or very satisfied with their own ESHI plans, with another 39 percent somewhat satisfied.”
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“Despite its popularity, though, serious health economists tell us that ESHI is “broke,” after all. No comprehensive reform can succeed unless it is phased out. This commentary examines three of ESHI’s biggest problems: job lock, which reduces labor mobility for ESHI beneficiaries; the fundamental inequity of the way the benefits of ESHI largely accrue to the highest -paid workers; and the increased fragmentation of health care finance inherent in a system administered by thousands of separate employers.”
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“The term job lock refers to the tendency of employer-sponsored health insurance to discourage people from changing jobs; from starting a business of their own; or from reducing their hours to care for family members or move gradually toward retirement. Job lock undermines labor market mobility, makes it harder to match workers to the most suitable jobs, and cuts labor productivity.”
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“Eichenwald suffers from a severe form of epilepsy for which medication alone costs $50,000 a year. His op-ed vividly details 40 years of struggles to secure and keep health insurance: small employers who refused to hire him because he would send the company premium through the roof; frightening gaps in coverage when he had to appeal to his parents to cover costly ER visits; a humiliating incident in which he had to beg for an entry-level job far below his qualifications just to maintain coverage.
Eichenwald’s experience is by no means exceptional. In the AHIP survey cited above, 46 percent of respondents listed health benefits as an important factor in deciding to work for their current employer. That included 9 percent who said health coverage was the decisive factor in taking the job. An even greater number, 56 percent, reported that health insurance had an impact on their decision to stay in their current job.
There is a large academic literature on the extent of job lock, well summarized in a 2015 literature survey by Dean Baker, published by the AARP Public Policy Institute. Baker notes that there is wide agreement that people with ESHI are less likely to change jobs, become self-employed, retire early, or reduce hours of work. At the same time, there are many other factors that influence labor mobility. Still, Baker concludes that even when those complicating factors are accounted for, the preponderance of evidence shows that job lock is a reality.”
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“Suppose you are a head of household earning $60,000 a year, putting you in a 25 percent federal tax bracket. In that case, having your employer pay $14,000 of your insurance premium, rather than getting that much extra in cash and paying the premium yourself, saves you $3,500 in taxes. If you are a top executive in a 40 percent tax bracket, the tax deductibility of the insurance is worth $5,600.
However, according to the Tax Policy Center, some 44 percent of Americans will pay no income tax at all in 2018. Sixty percent of the nonpayers work. Even if they get ESHI, it gives them no tax benefit at all. They would be no worse off if health benefits were not deductible and if employers added the cost of their insurance to their cash pay instead.
A second factor adding to the inequity of ESHI is that low-wage workers, by and large, are not even offered the option of health benefits. The following chart, provided by the Social Security Administration, shows that only about a third of workers in the lowest fifth of the wage distribution are offered health benefits and that fewer than 20 percent accept those offers. In contrast, more than 80 percent of those in the top fifth of the wage distribution are offered health benefits and accept them.”
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“Robert Kaestner and Darren Lubotsky, economists at the University of Illinois, Chicago, provide an estimate of the overall inequality of ESHI based on the combined effects of differences in tax rates and differences in offer and acceptance rates. As shown in the next chart, taken from their study, workers in the bottom fifth of the family income distribution get annual benefits of less than $500 from ESHI, while those in the top fifth get benefits averaging $4,500. What is more, the value of health benefits to well-paid workers grew substantially over the period shown in the chart, while the value for the lowest paid workers decreased slightly.”
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“Fragmentation is a problem for small employers, who have little bargaining power in purchasing group policies from insurers, but also for larger employers. Many larger employers try to save on health benefit costs by self-insuring. According to Collective Health, a company that advises employers on their ESHI programs, 79 percent of companies with 200 or more employees self-insured as of 2017, up from 60 percent in 1999.
The problem is, companies that self-insure don’t always do a good job of it.”
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“When it comes down to hard bargaining, health care providers, including big insurers, hospitals, and drug companies, are less fragmented than employers. Furthermore, health care is what they know best. For employers, whose main expertise lies in manufacturing, customer service, finance or other areas, health care is only a sideline. Given the structure of the system, providers will always come out ahead, driving up costs for workers and their families, who are the ultimate health care consumers.”
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“people who have tried to trace its origins, like Indiana University’s Aaron Carroll, portray ESHI as an accident of history. Job-linked health benefits first became widespread during World War II when American firms faced both a labor shortage and a wage freeze. Desperate to attract employees, the story goes, they started giving out benefits like health insurance instead of cash raises. The IRS boosted the popularity of ESHI by declaring such benefits to be nontaxable. When President Truman’s attempts to establish a national health care system failed after the war, ESHI became a central element of a complex health care system whose many disparate parts have never fit together well.