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When John F. Kennedy was elected president he surprised both Democrats and Republicans with a bold tax-cutting plan to solve the problem of a moribund economy. He had campaigned on “getting the country moving again,” and had set a 5 percent economic-growth target, but he never specified how he was going to do it. Then he opened everyone’s eyes with a plan to lower marginal tax rates across-the-board.
JFK’s advisors proposed a traditional Democratic approach: temporary targeted tax cuts. But Kennedy insisted on lower tax rates that would create much higher rewards for work, saving, and…

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You have to hand it to the Europeans, as when they go big they do so in style. Most attention was focused on the young lady who decided to rush Mario Draghi as he sat trying to explain why cash isn’t really acceptable in the securities lending business. While she provided the flair, it was Draghi’s strange notions of QE’s primary importance that should have set the agenda. There can be no doubt, however, that the absurdity of the whole spectacle was as much a poignant reminder of the times we inhabit.
Far too often the idea of QE remains one about the “money supply”, as indeed the first…

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Chris Christie is taking some heat for having the guts to say Social Security should be means tested and the retirement age increased. He also suggested reforming Medicaid and increasing the age for Medicare eligibility to 67. In asking his New Hampshire audience to embrace entitlement reform, Christie has taken on the elephant in the room.His comments, while bold politically, rest on solid economic ground: Economists of every stripe agree that U.S. entitlement reform is long overdue. And, the problem truly is elephant size: unfunded liabilities are estimated to be around trillion, or…

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In 1971, Intel’s first microprocessor, the 4004, contained 2,300 transistors, the tiny digital switches that are the chief building blocks of the information age. Between 1971 and 1986, Intel sold around one million 4004 chips. Today, an Apple A8 chip, the brains of the iPhone 6 and iPad, contains two billion transistors. In just the last three months of 2014, Apple sold 96 million iPhones and iPads and put around 30 quintillion (30,000,000,000,000,000,000) transistors into the hands of people around the world.
This is the fruit of Moore’s law, which turns 50 years old this week. In the early…

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Although China’s economy has been leading the world in annualized growth since the days that mobile phones had retractable antennas, there have always been some aspects of the country’s commercial and financial system that loudly broadcast the underlying illogic of a Communist Party’s firm control of burgeoning capitalism. China’s stock markets were one such venue where things just didn’t add up…literally.
In recent days, the stock market in Hong Kong has rocketed upward, notching the kinds of gains that have inspired many market observers to warn of a dangerous bubble forming. But as we…

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It’s mid-April, and Karlyn Bowman - the astute public opinion analyst at the American Enterprise Institute - has noticed something significant. Tax Day “comes and goes without a ripple,” she recently wrote. There’s not much fuss.
Discontent with the income tax has ebbed. To buttress the point, Bowman cited intriguing survey data. A recent Gallup Poll found that only 1 percent of Americans rated taxes the nation’s top problem. In a Pew poll, respondents ranked “reforming” the tax system 16th out of 24 problems. Indeed, Gallup reports that roughly half of Americans think their income-tax burden…

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The New York Times recently wrote about Amazon’s recent expansion into the realm of services by creating various local marketplaces for its customers to find plumbers or handymen to do a variety of services that the retailer will standardize in some way. The retail monolith, the Times concluded, will succeed at dominating the local service markets as thoroughly as it does the book and toy market.
Color me doubtful. While expanding into services may seem like the next logical move for the retail monolith, Amazon’s core strengths that have allowed it to dominate the internet retail market…

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The economic and environmental cases for a carbon tax are very strong. A carbon tax could help to raise productivity in key sectors, as well as helping to reduce emissions, as William Gale has pointed out on these pages and Adele Morris has argued in a series of papers.
Carbon taxes attract proponents from commentators on the political left and political right, but few expect to see a national carbon tax anytime soon (indeed, the best hope may now be at the state or metro level). This is because the short-term politics are difficult. Climate change is an example of a myopic policy area,…

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On any given day, you can expect news of major corporate mergers. Last week, we had decisions from FedEx to buy the Dutch delivery company TNT for $4.8 billion and from Royal Dutch Shell to acquire the BG Group, a British natural gas company, for $70 billion. Mergers and acquisitions have become a staple of modern capitalism. In 2014, worldwide M&A totaled $3.5 trillion, up 47 percent from the year before, reports Thomson Reuters.
Now, there are many motives for mergers: to minimize competition; to reduce costs by eliminating overlapping operations; to acquire a hot product or…

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Policy makers are desperately searching for the best methods of measuring the health and strength of the labor market because different data points, and even the same ones from month to month are flashing confusing signals at the moment. With the Federal Reserve preparing to raise interest rates as soon as they believe the labor market is strong enough, deciding on how to determine that state is important. One fact everyone should be able to agree on is that the official unemployment rate does not even attempt to measure the strength or health of the labor market. For example, it is open…

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If recent news accounts are to be believed, the framework of agreement between the U.S. and Iran is on the rocks. Iran’s top officials, Supreme Leader Ali Khamenei and President Hassan Rouhani, are saying economic sanctions must end immediately and that UN inspectors will not be granted unfettered access to military installations and nuclear construction sites.
But this may be nothing more than Iranian domestic political spin. And as long as there’s a potential deal, a critical point needs to be made: There is no provision for, or even discussion of, putting political restraints on Iran. That…

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Monetary Policy: From Asia to Europe, major developed nations are moving rapidly to a once-inconceivable policy: negative interest rates. Switzerland has just became the latest. Is this a good thing or bad?
The move toward negative rates is driven mostly by fears of another financial crunch like the one that decimated the world economy seven years ago. Consider these events just this week:
• Switzerland announced a 10-year bond that carries a negative interest rate - that is, you will have to pay them to keep your money.
• Mexico, looking at what’s going on in Europe, is issuing a…

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Most people would rather skip right to the end because it is easiest to comprehend in what comes out. In the current emergency about a shortage, in what seems to be a never-ending line of them, we are left wondering if California will be as dry as Arizona, or even Nevada in shrinking Lake Mead. The funny thing about western water supply is that, even the possibility of the super-drought considered, there is plenty of water out west and the “shortage” only applies when trying to satisfy every possible and existing use.
That starts with agriculture, which has become hugely inefficient in…

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The March jobs report released last week showed both limited wage and employment growth among workers. As the job market continues to tighten we should eventually observe more substantial wage growth above inflation, though earnings improvement will likely remain quite modest for most workers.
Why is this the case? Some economists argue that labor market forces like technology and globalization shift demand away from middle-wage jobs (or even some higher-paying ones). Worker skills often remain too low for remaining middle- and high-wage jobs in health care, advanced manufacturing or various…

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April: the month that bureaucrats laud and taxpayers lament. In California - the second worst state to be a taxpayer - April 15th is more burdensome than most. But while Sacramento is abuzz this time of year - policy bills need to be out of committee by May 1st (for fiscal bills) or May 15th (for non-fiscal bills) - major tax policy fights are currently, largely, absent from the Golden Dome.
While some may argue that Governor Brown is holding his progressive Democratic colleagues at bay, there are three structural reasons for this unusually tax-less legislative session.
1) Tax increases…

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