US Economy // Current TV

Geithner Slammed in Scathing Bailout Report

A brutal study issued last week by a government watchdog holds Timothy Geithner --... more

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Nearly One in Six Americans Went Hungry in 2008

The U.S. Department of Agriculture has revealed that nearly one in six U.S. households... more

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The Nantucket Off-Season

What did the recession do to the island's economy? What happens when the tourists... more

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U.N. Investigator Blasts U.S. For Neglecting Homeless

A United Nations special investigator has accused the US government of pouring... more

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Swiss Banks to divulge details of US tax cheats

US clients of UBS with more than 250,000 Swiss francs (165,641 euros, 248,040 dollars)... more

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Mexicans are sending money to relatives in the US

Unemployment has hit migrant communities in the United States so hard that a startling... more

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BIG BUDGET-relative expenditures

The Billion Dollar Gram | Information Is Beautiful

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Study: Half of U.S. Children Will Get Food Stamps

Nearly half of all U.S. children and 90 percent of African-American kids will be on... more

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2 years ago
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Warren Buffett Buys Railroad for $34 Billion in Support of US Economy

Full Story - http://www.msnbc.msn.com/id/33599744/ns/business-us_business NEW YORK... more

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Protesters Picket Goldman Sachs, Wells Fargo

Hundreds of union members and organizers hit the streets of downtown Chicago this past... more

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The tax breaks that ate America

Oct. 26, 2009 | Here's the latest bold new idea for reconciling the costs of national defense with the need to avoid adding to federal deficits or raising taxes. A bipartisan coalition of "New Democrats" and moderate Republicans has proposed buying weapons for the U.S. military through the IRS rather than the Pentagon. Here's how it would work. Instead of being paid to deliver planes, missiles and tanks, defense contractors would receive "weapon supply tax credits" (WSTC). The defense contractors would be able to reduce the taxes they owed the federal government by the prices of the weapons they delivered. Because the tax credit would be refundable, if the prices exceeded a firm's annual tax liability, the IRS would send a check to the firm in the amount of the difference. In this way, the federal government could finance a massive military buildup -- and because tax credits aren't counted as part of the federal budget, for official purposes the cost of the buildup would be zero!

I had you going there for a minute, didn't I? The "weapons supply tax credit" is a joke. It was proposed some years ago by the late David Bradford, a Princeton economist who worked in the Ford and George H.W. Bush administrations. Bradford's purpose was to ridicule the growing reliance of Congresses and presidents on tax credits and other so-called tax expenditures as an alternative to ordinary spending programs funded by ordinary taxes.

The weapons supply tax credit is no crazier than the major tax expenditures that shape -- no, make that disfigure -- the political economy of early 21st century America. Instead of raising taxes to pay for universal healthcare, as many other nations do, the federal government grants a $250 billion a year tax break to employers to give them an incentive to buy healthcare for their employees. Hey, that approach really worked out well, didn't it?

And then there's America's biggest antipoverty program, the Earned Income Tax Credit (EITC). By means of the EITC, the federal government "tops up" the wages of full-time workers who are trapped in poverty. Needless to say, this is also a massive subsidy to employers who pay poverty wages to their workers, and to consumers who buy goods and services produced by poverty-wage workers. You'd think the more straightforward approach would be to ensure that anybody who works 40 hours a week doesn't need to rely on welfare, with entry-level public employment mopping up most remaining unemployment. You'd think.Oct. 26, 2009 | Here's the latest bold new idea for reconciling the costs of... more

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How did Americans end up with a system in which employers pay for our health insurance?

Accidents Of History Created U.S. Health System

If you want to understand how to fix today's health insurance system, you'd be smart to look first at how it was born. How did Americans end up with a system in which employers pay for our health insurance? After all, they don't pay for our groceries or our gas.

It turns out there never was any central logic at work. The evolution of the American health care system began in the 1920s, when choices boiled down to which crazy cure you preferred.

Dr. John Brinkley, for instance, was a huge hit in American radio with his health advice shows. For whatever problem folks had, Brinkley had one fabulous solution: transplant a goat gland into your body. He pitched it as being perfect for everything from dementia to impotence to flatulence. But if, somehow, a goat gland didn't cure your ills, you could always use Bonnore's Electro Magnetic Bathing Fluid or Clark Stanley's Snake Oil Liniment.

Before the birth of modern medicine, hospitals were poorhouses where the indigent went to die. Then came the advent of effective medicines, especially antibiotics, along with a revolution in medical schools.

Suddenly, says economic historian Melissa Thomasson, "hospitals are marketing themselves as places to have babies." The professor at the Miami University in Ohio says that in the early part of the 20th century, hospitals were able to focus on happy outcomes.

Health care became much more effective, and much more expensive. Clean hospitals, educated doctors and real pharmacological research cost money. People proved willing to pay for care when they were really sick, but it wasn't yet common to go for checkups or survivable illnesses.

By the late 1920s, hospitals noticed most of their beds were going empty every night. They wanted to get people who weren't deathly ill to start coming in.

"The war economy is an entirely different ballgame," Thomasson says. The government rationed goods even as factories ramped up production and needed to attract workers. Factory owners needed a way to lure employees. She explains that the owners turned to fringe benefits, offering more and more generous health plans.

The next big step in the evolution of health care was also an accident. In 1943, the Internal Revenue Service ruled that employer-based health care should be tax free. A second law, in 1954, made the tax advantages even more attractive.

Thomasson cites the huge impact of those measures on plan participation. "You start from 9 percent of the population in 1940 to 63 percent in 1953," she says. "Everybody starts getting in on it. It just grows by gangbusters. By the 1960s, 70 percent [of the population] is covered by some kind of private, voluntary health insurance plan."

Thus employer-based insurance, which started with Blue Cross selling coverage to Texas teachers and spread because of government price controls and tax breaks, became our system. By the mid-1960s, Thomasson says, Americans started to see that system — in which people with good jobs get health care through work and almost everyone else looks to government — as if it were the natural order of things.

But to Thomasson and other economic historians, there's nothing natural or inevitable about it. Instead, they see it as the profound result of historical accidents.Accidents Of History Created U.S. Health System If you want to understand how to... more

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Wall Street 40% Bonus Rise

Oct. 20 (Bloomberg) -- A 40 percent jump in Wall Street bonuses this year may bring... more

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One in six Americans in poverty, new study finds

The level of poverty in America is even worse than first believed. A revised... more

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2 years ago
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Wall Street On Track To Award Record Pay

Major U.S. banks and securities firms are on pace to pay their employees about $140... more

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2 years ago
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Saudis want to charge US for reducing oil usage

If you thought the executives at Goldman Sachs were the kings of backroom finance,... more

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2 years ago
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US facing massive economic ‘power shift’ with dollar’s downward spiral

The dollar's position as the world's leading reserve currency faces... more

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2 years ago
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Simon Johnson and US Rep. Marcy Kaptur and review of the financial crisis.

October 9, 2009 Just over a year after economic calamity brought promises of reform... more

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2 years ago
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As Job Loss Rises, Obama Aides Act to Fix Safety Net

WASHINGTON — With unemployment expected to rise well into next year even as the... more

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2 years ago
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The Recession and its affect on Religion

NEW YORK – Organized religion was already in trouble before the fall of 2008.... more

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2 years ago
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