How should we fix the economy? -- Part 2

I suppose I'll replicate your style, and go through my positions one by one.Position 1: Raise the minimum wage to $15 per hourFirst, we know that the vast majority of minimum wage workers are not teenagers, but breadwinners. The CBO report placed teenagers at 12% of those who would be benefitting from a higher minimum wage of $10.10 (1). Using that same figure, $10.10, we now from the Economy Policy Institute that 85.5% of those 21.3 million workers -- 16.4% of the workforce -- are above age 20 (2)(3). Moreover, we know from the CBO that 60% of the benefits would go to workers earning less than three times the poverty level and would lift about a million people out of poverty.But you may be wondering: why $15 an hour? Here's the reason: $10.10 is simply adjusting for inflation, but is not nearly enough for these low-wage workers to sustain a living. While productivity has nearly doubled since 1980, median hourly wages have flatlined, and we've seen them fall amid the recession. At this point, they're rising at slower rates than they did prior to the crisis. Indeed, a higher minimum wage would mean some job losses: that's inevitable. However, not only do we know for a fact that workers have been much more productive than they've been given credit for -- and thus it would actually be a good investment on behalf of business owners -- but as even the CBO points out, this policy would generate a stimulus, as these workers consume with their new incomes. The net positive effect would, undoubtedly, offset any negative impact from raising the minimum wage.Position 2: Extend unemployment insurance. There is no evidence that, amid a demand crisis as we now find ourselves in, that unemployment insurance is a job killer. In fact, it has an extremely high multiplier effect -- that is, dollars tend to change hands and stimulate the economy. But why? Well, if you're out of work, this is virtually your only source of income, and you have to consume in order to survive. Make no mistake, I do not want people to live off unemployment insurance, and certainly there is a point in which we would want to draw a line as to how far these benefits extend. However, we are nowhere even close to the point at which people would have an incentive to collect benefits, rather than look for employment. Simply put, it gives people the time to look for a job that suits their skills, to perhaps seek training so that they can acquire a higher paying job -- which largely results from structural unemployment, when their skills are outdated -- and to survive in their interim. Moreover, failing to extend unemployment insurance, as the U.S. Congress has just done, leaves 1.6 million people in truly dire straits. Not only that, but how will they be able to participate in the economy without any source of llivelihood? Position 3: Eliminate the sequester Indeed, some of these cuts were rolled back in the Ryan-Murray budget, but the big winner of that deal was the Pentagon. The fact of the matter is, this is not a time for austerity, so with any cut we run the risk of destroying jobs. If you want to reduce the federal deficit, there are several other ways that we can do that -- eliminate deductions, cut the Pentagon (which is a bit different than cutting elsewhere, which I'll address later), address health care costs, improve the employment outlook, etc. -- that are far and away more efficient and less destructive than a $1.2 trillion, across-the-board nightmare that was designed to be a timebomb. Position 4: Cut the military budget This position is a tad difficult to explain as a stand-alone, but for now, I'll do myself the disservice of explaining it by itself. Indeed, austerity right now is a poor choice, largely because the economy is still depressed, wages and prices are sticky, and interest rates are in the zero lower bound. However, we must acknowledge where most of the gains over the recent years went. Who benefitted, for instance, from the U.S. Government funding the Iraq and Afghanistan wars on a credit card? Defense contractors. In fact, we spend more on national defense than the next twelve countries combined. We could easily remanuever funding for the Pentagon and direct it elsewhere. And, yes, that may mean some job losses in the short run. However, the multiplier effect for defense is much lower than, say, the multiplier effect for unemployment insurance and education. Therefore, so long as the funds are spent elsewhere, we'll experience a net economic gain which will more than offset the job losses. Position 5: Fund a stimulus If I were thinking ahead, I would have combined cutting the military budget, raising taxes, and funding a stimulus, but obviously I was not. So my apologies to the readers for this confusion. Ultimately, the chief problem that we face is lack of demand, propelled by an outgap resulted from a subprime spillover. Even business surveys attest to this fact, with the most common primary problem faced by businesses cited as lack of sales, not overregulation or overtaxation. To this end, espeically in light of what Krugman and others have written about the stimulus package being about three times smaller than it should ahve been, I believe we need a larger stimulus to offset the loss of consumption from the Great Recession, that will address the fact that state aid has been cut, putting teacher's out of work, that 1.6 million people lost their unemployment insurance, that the U.S. is lagging in terms of STEM jobs, science, technology, and early-childhood education, and infrastructure. Acknowledge that this stimulus will work toward both investment and consumption, directly employing people and putting money into the hands of people who will actually spend, ensuring both short-term and long-term economic health. Position 6: Enact a Carbon Tax on PollutersTo be candid, we know that the Exxons of the world -- significant recipients of government subsidies -- will not crash and burn from a carbon tax. In fact, most studies demosntrate that these companies could and would absorb it (4). At the same time, the gain from this tax would be negligible. It's simply a way of the government levelling the playing field, promoting a green economy that we'll ultimately need with the looming threat of anthropogenic climate change, and in the process, generating revenue to fund green technology et al. and work toward repairing the economy in its current state.Positions 7 and 8: Raise taxes, including deductions, and and eliminate oil subsidies We know from the data that tax rates are near historic lows, and exceptionally affluent individuals such as Mitt Romeny were able to pay 14% on millions of dollars in income, whereas a poor family would pay a sales tax on everything they earn, for they consume with the entirety of their income. This is largely because of a tax preference for capital gains, relative to ordinary income, which I find to be exceptionally unfair and to benefit people not who work exceptionally hard for their earnings, but who are affluent enough to invest billions of dollars with little effort. The same goes for unwarranted deductions such as the carried interest loophole, and billions of dollars in subsidies to the already well-off oil industry, many of whom are capable of lobbying politicians to maintain their breaks. These are the real welfare queens. Position 9: Re-regulationWe know that the financial crisis of 2008, along with the crisises of the 1800s, 1929, 2007 and 1986 were largely a function of deregulation. A significant move in this direction was Bill Clinton's Commodities Futures Modernization Act, which repealed the Glass-Steaggall Act, a 1933 law that separated commerical and investment banks and prevented bankers from taking on too much leverage, in the process becoming de facto casinos. Without skipping a beat, just that happened in the years leading up to the crisis of 2007: banks overleveraged into subprime mortgages, which culminated not only in huge losses for them and a giant taxpayer bailout, but a spillover effect into several other sectors of the economy. That's the reason we're having this debate, actually.Position 10: Public Option A key problem with the Affordable Care Act is that it doesn't do much to introduce competition into the health insurance market, which is needed if you want to maintain the private model. As a result, large insurance companies can operate as de-facto cartels and artificially raise their prices beyond what they ought to be (though they're declerating nevertheless). Adding a public option would improve quality and reduce health care costs, thus reducing future deficits and covering people unable to access health insurance after many GOP governors refused to expand their Medicaid systems.Position 11: Student Loan Debt and Universal Education $1.2 trillion in student loan debt is frankly unacceptable, and burdens an entire generation of students to indentured servitude. Private sector debt deflation is part and parcel of why the economy is so bad right now, actually. Private debt precludes participation in the economy, and weakens future prospects for consumption. Universal education is an initiative taken on by many European countries -- e.g., Norway -- many of whom have made great strides toward eliminating childhood poverty as a result. At a time when jobs in STEM and others fields are increasingly important, I find it critially important to ensure that education is acknowledged as a public good. That mentality, in my view, will pay dividends in the long term.1. http://www.cbo.gov...2. http://s3.epi.org...3. http://www.pewresearch.org...4. http://www.nytimes.com...