Media

While tax hikes on the affluent have gotten most of the attention in the fiscal cliff deal, an equally important story is how proposals for further stimulus spending died a quiet death in Washington over recent weeks.

Though technology and innovation have squeezed trading costs, the industry's profits are accounting for a bigger share of U.S. GDP, a former Goldman banker says, needlessly diverting some $635 bln from the broader economy. It lends credence to ideas like a transaction tax.

Political scientists who study Congress, like the scholar Douglas Arnold, have long argued that while money matters in politics, legislators ultimately tend to be responsive to their constituents. 

Dylan Matthews posted a fascinating interview with law professor Barak Orbach yesterday, which goes a long way toward explaining the current withered state of antitrust law.

All of Washington seems to agree that tax loopholes should be closed. Yet, as a practical matter, closing some of the biggest loopholes is no easy thing because of their importance to individuals and the economy as a whole. Take a meat cleaver to the home mortgage interest deduction and you hurt a fragile housing sector. Whack the exclusion of employer health insurance and you upend our system of work-based coverage.

Once upon a time, a few decades ago, members of the U.S. Senate spent a fair amount of time together and got to know each other personally. They were more likely to stick around Washington on the weekends, and during breaks, and socialized together more often with their families. 

Once upon a time, too, the party lines in the Senate were pretty fuzzy. Republican Senators from the north were often more liberal than Democratic Senators from the south. Alliances and friendship across party lines were common.

What would you do if you were laid off from a job? While you looked for a new position, you’d likely cut expenses as much as possible and begin drawing on any savings you have to pay the bills you can’t avoid. As time went on, you might turn to family, friends, and community institutions for assistance. With luck, you’d qualify for federal unemployment insurance benefits, and the $300 a week on average that they provide would be a critical support. At the same time, you might wind up putting groceries or gas on your credit card -- and then having trouble paying that bill.

Last year, in the midst of the holiday season, I pointed out that 90 percent of households have at least one unused item lying around and 70 percent have unused electronic items. It makes more fiscal and environmental sense to just not buy something, rather than buy it and not use it. Beyond that, reducing our consumption could help put pressure on decision-makers to start adopting alternative metrics that can better track our progress as a society and not just economic growth.

There is a brand new housing crisis looming on the horizon and none of the financial or foreclosure reforms being considered get anywhere close to solving it.