In the trade we call them “tax expenditures:” money not collected because of a special provision in the tax code. What are among the most pricey tax expenditures? Answer: those for mortgage interest and property taxes, 401(k)'s and IRA's, and employer-sponsored health care. Because the top earners are more likely to have pensions, employer health care, and home mortgages and they have higher tax rates, the tax breaks are skewed to the top: 79.6 percent of tax breaks for 401(k) and IRA's go to the top 20 percent; 70.9 percent of the tax breaks for home ownership go to the top 20 percent; and 41.9 percent of tax breaks for employer health care go to the top 20 percent. See the Urban Institute report.

Tax breaks are enjoyed by many, but not most. Though lovely for the beneficiaries -- I and most of the readers of this blog get tax breaks and we like 'em -- they are dubious features of good...

One of my students once interned for Senator Moynihan. He handed her an econometrics report she tried to beg off reviewing, “Senator, I am a Poli-Sci major, not a math major.” He said, “Allison, politics is math.”

There is no more sublime math problem than counting, and counting everyone so everyone is counted is a major politics problem, and the job of the decennial Census mandated by the US Constitution, occurring next in 2010. 

We may not be ready by 2010 and that's bad. Who lives where determines the distribution of government power and money: The Census apportions Congressional and state legislative seats and billions of dollars in federal and state monies. If you are living near the kinds of people who don’t get counted when the usual census takers come knocking at the door -- immigrants, workers with erratic schedules and lives, landlords who illegally subdivide property,...

According to a new European study from the OECD, the college pay premium -- the gap between the lifetime earnings of high school grads compared to college grads -- is higher in the U.S. than in any developed nation. A U.S. male graduate will earn over $360,000 in a lifetime compared to a high school graduate: a female much lower, $229,000. (The premium is also caused by high school graduates in the U.S. being less unionized.)

The OECD authors draw the conclusion that more people should invest in college education.  But as Harvard economist Richard Freeman argued in The Overeducated American decades ago, such reasoning is a dog chasing it's tale.

As soon as the value of high-school degrees degrade, and people can't get another kind of skill certificate (see my previous post on what community colleges should be doing), more people will be wasting money on expensive college degrees just...

Another first Friday and another dismal jobs report. Sure, you might see headlines that say that the rate of job loss has declined – “only” 217,000 jobs were lost last month (compared to over 600,000 in recent months). But more people are looking for work and the time it takes to find a job (“duration of unemployment”) is the highest it has been in this recession, with over 50% of the unemployed out of work for more than 15 weeks.

The only bright spot is that the weakening labor market has not dragged down wages. Not only would that have made families’ despair worse, lower wages would make the recovery longer and deeper. We can pinpoint the cause for a less-than-awful-wage report: the July boost in the minimum wage.

However, like the morning sun, negative comments from conservative think tanks about the minimum wage are predictable. Marvin Kosters from the American Enterprise Institute...

My economist’s eye caught a familiar (false) debate over Catholic social teaching while reading New York Times columunist Ross Douthat, who compared Eunice Shriver favorably to Teddy Kennedy because she was a pro-life Catholic and Teddy was a Catholic for Choice. Unfortunately, Douthat advances a distorted version of Catholic social teaching: making us believe abortion is front and center.

Dignity for the human person includes opposition to the death penalty and promoting the right of workers to organize. On advancing the Church’s agenda on social issues both Kennedys deserve recognition. To be sure, Ted Kennedy had the platform and the power to effectively advance social justice, which is very much an economic agenda: See the Catholic Bishops' letter on the economy.

Did Ted Kennedy advance a policy giving the preferential option for the poor —the marginalized must have privileged...

Ted Kennedy was one of the most influential Senators to ever serve. His death is a major historic turning point for social justice in the nation.

His accomplishments in higher education alone would distinguish him in the history of the Senate. Kennedy championed access to higher education by supporting Pell Grants and federal student loans and by directing federal research money through national institutes to colleges and universities.

His early fights were over civil rights; he championed affirmative action and equal economic opportunity for minorities and women; he led the fight for Title IX and for voting rights.

Much of the media will emphasize Kennedy's early and consistent fight for fairer and universal health care, Medicare and Medicaid, and universal health care for low-income children. His death now is doubly sad since he couldn't fight for health reform.

Immigration? Kennedy...

A new poll of employers, mostly large ones, shows that they are worried their employees won’t be able to retire because workers are not saving enough and financial markets are unstable. I don’t want to be impolite to these employers -- they cared enough to respond to a survey -- or to the excellent organization that did the survey -- The Society of Human Resource Professionals -- but my response is, “Duh.”

Only 50% of employees have a pension plan at work and most of these plans are the Do–It -Yourself, 401(k)-type plans in which people decide how much to save, when to save, and what to invest in. Even if workers do save enough and invest well enough, many people withdraw money before they retire.

In fact, The New York Times's editorial page admitted yesterday that 401(k)s don’t work. And I agree with the editorial.

What is good pension reform? The New York Times calls for the government to...

Hendrik Hertzberg in the August 24 issue of The New Yorker (how can print media survive giving articles away for free? Some economist should answer that!) captures one troublesome barrier to economic recovery--states! States and localities balance their budgets even in recessions. To counter the depressive effect of cutting services, raising taxes, etc. the federal government stimulus plan in February gave out $140 billion to states. For example, $39.5 billion, administered by the federal Department of Education, is to be used for ongoing operating support to public schools, colleges, and universities, mostly replacing state aid that otherwise would likely be cut due to insufficient revenues.

I wanted a concrete understanding of how the stimulus is affecting where I live; I sought to answer how many jobs the stimulus package created in my state, New Jersey.

The White House...

France, Germany, and most European nations are pulling out of the global recession faster than the U.S. Euro-zone GDP is down 0.4 percent: French and German GDP measures are up 1.3 percent and 1.4 percent, respectively. Sadly, it looks as if the U.S. economy is flagging: U.S. GDP is down a full one percent and leading indicators -- like consumer confidence -- are showing weakness.

What does Europe have that we don’t have? Aggregate demand.

The first reason Europe is doing better: Unemployed Europeans have more buying power.

Although unemployment rates are still high in Europe (like in the U.S., they have the highest levels in decades), their unemployment insurance -- and other forms of social support -- are more generous and help boost consumer spending when consumer spending needs the most boosting.

It's shocking that only about a third of people unemployed in the United States are ...

Quick, what’s the biggest education problem facing the American economy? Lousy performance of K-12 systems? Unaffordable four-year colleges? Not enough science Ph.D.'s? Sure -- all big problems -- but not as big as 60 million adult American workers having no education or formal training beyond high school.

People think that training is for disconnected youth, welfare recipients, and ex-offenders, these are all important, but 60 million workers is about 44 percent of the work force (see ftp://ftp.bls.gov/pub/suppl/empsit.cpseea16.txt), which is more than the share of workers with bachelor’s degrees.

Employers want to know who has what skills -- or who can learn them. Workers need to acquire those skills and then to signal employers they have them. Without meaningful credentials 60 million people may not get the income or produce the goods and services they otherwise could. Everyone...