• Naked Capitalism advises against trying to still live in 2004.
• The Huffington Post sheds some light on DC-style inbreeding.
• The New York Times reports on demographic change in America.
• Nouriel Roubini argues that “Greece must exit” the Eurozone.
• Simon Johnson calls for investigating JPMorgan Chase.

“Job growth in North Carolina has slowed steadily over the course of 2012,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Compared to last December, North Carolina has 25,900 more jobs, but 85 percent of that gain occurred in January. Over the last two months, North Carolina has essentially netted no new jobs.”

In April, North Carolina employers cut 1,300 more payroll jobs than they added (+/- 0 percent). Private sector payroll levels essentially held steady, (-1,200, +/- 0 percent), as was the case in the public sector (-100, +/- 0 percent). Within the private sector, manufacturing shed the most jobs, (-2,900, -0.7 percent), followed by information (-1,100, -1.6 percent) and other services (-900, -0.6 percent). Professional and business services netted the most jobs (+3,600, +0.7 percent), due mainly to hiring in the administrative and waste management subsector.

A positive revision to the March payroll data found that the state lost 500 fewer jobs than first reported (-800 versus -1,300). With that revision, North Carolina now has, on net, 218,600 fewer payroll positions (-5.2 percent) than it did in December 2007. Since bottoming out in February 2010, the state has netted an average of 4,142 payroll jobs per month, resulting in a cumulative gain of 107,700 positions (+2.8 percent).

“Over the past few years, North Carolina has managed to close some of the job gap caused by the recent recession,” noted Quinterno. “Since last July, the job gap has fallen by a full percentage point, yet compared to December 2007, North Carolina has fewer payroll jobs in every major private industry sector except for educational and health services and professional and business services. The improvements that have occurred have occurred very slowly.”

The household data for April also point to a labor market characterized by widespread joblessness. Last month saw a small increase in the number of employed individuals (+1,471, <0.1 percent) and a decline in the number of unemployed persons (-12,686, -2.8 percent). Yet the size of the labor force decreased by 11,215 individuals (-0.2 percent). It was this decline rather than an increase in employment that pushed the statewide unemployment rate down to 9.4 percent, the lowest level recorded in over three years.

To place the scale of unemployment in context, consider how there were almost twice as many unemployed North Carolinians in April 2012 as there were in December 2007. The statewide unemployment rate also was 4.4 percentage points greater than it was over four years ago. In fact, the monthly statewide unemployment rate has exceeded 10 percent in 35 of the last 40 months. Moreover, the share of the adult population with a job remains at a depressed level.

“While North Carolina’s job market began 2012 moving in a positive direction, it has failed to maintain that momentum,” observed Quinterno. “The state has experienced virtually no net job growth over the last two months. While the unemployment rate has fallen by half a percentage point since February, the decline is due largely to people leaving the labor force. Recovery remains a distant goal for jobless North Carolinians—a goal that still is being measured in terms of years.”

• Matt Taibbi peaks behind the curtain of Goldman Sachs.
• Economix looks at “how older workers weather layoffs.”
• Martin Wolf wonders about the future of the United States.
• The NC Budget & Tax Center analyzes rates of employment growth.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 10,667 initial claims were filed over the previous four weeks, along with an average of 101,717 continuing claims. Compared to the previous four-week period, the average number of initial claims was lower, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 11,698,  and the four-week average of continuing claims equaled 111,557.

In recent weeks covered employment has increased and now exceeds the level recorded a year ago (3.76 million versus 3.71 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were over four years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007. 

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

One interesting thing to note is that the number in between 8.7 percent and 8.5 percent, a threshold the country just crossed, was the average unemployment rate for African Americans going into the recession. The rate from 2006-2007 for African American men and women over 16 was 8.6 percent….
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Total African American unemployment is currently at 15.8 percent and has been hovering around 16 percent for three years now. All the other major employment health indicators are down as well. For instance, the employment-to-population ratio is down to 51 percent from 60 percent in 2001. Nearly half of all African Americans aren’t working.
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The economy is terrible for all Americans right now and we desperately need action to both expand the economy and repeal attempts to contract it. But it is worth remembering that the unemployment misery all Americans are experiencing right now is equal to what it was like during the best two years of the 21st century for African Americans.

• The News & Record reports on the gender pay gap in North Carolina.
• Economix points out the lack of a clear definition of “the welfare state.”
• Paul Krugman explains “why we regulate.”
• Andrew Leonard of Salon argues why “tuition is too damn high.”

• Dean Baker and Kevin Hassett worry about “the human disaster of unemployment.”
• Suzy Khimm looks into the debate over the American Community Survey.
• Off the Charts rounds about data about Social Security’s finances.
• Rortybomb debunks the latest crop of structural unemployment arguments.

Southerners interested in sharing their thoughts about the topic should complete a brief survey that is available here.

• The Charlotte Observer reports on Bank of America’s weakening ties to the city.
• The Center for American Progress highlights five facts about poor single mothers.
• Barry Eichengreen wonders if  “the Euro doomsayers” are right.
• Felix Salmon’s blog rounds up the latest in the JPMorgan Chase debacle.
• Richard Thaler isn’t buying “slippery-slope logic” regarding health care.

One of the distressing threads in the article was elected officials and even students arguing that it was completely reasonable to expect students to carry most of the freight of their education. I wonder if any of the ones over, say, 35 giving that view would be anywhere near as comfortable as they are now if that had been required of them. You can see the open, casual rendering of one of the obligations of society, that of educating the young.
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I’ve never understood when (once in a while) someone (clearly young) shows up in comments and rails against Social Security and Medicare because of the burden it imposes on him. Now I get it. The student debt issue is deepening social fractures. If young people are asked to stand on their own, and given only unpalatable choices (forego a college degree, the entrance ticket to middle class life, or accept debt slavery at a tender age), no wonder they adopt a “devil take the hindmost” attitude. I hope some of these people who so cavalierly argue for loading up the next generation with debt realize that the young may not want to take care of them either, and they are far more at risk. The outcome of cutting social safety nets to the elderly ultimately means that old people will die faster.

The roots of the borrowing binge date to the 1980s, when tuition for four-year colleges began to rise faster than family incomes. In the 1990s, for-profit colleges boomed by spending heavily on marketing and recruiting. Despite some ethical lapses and fraud, enrollment more than doubled in the last decade and Wall Street swooned over the stocks. Roughly 11 percent of college students now attend for-profit colleges, and they receive about a quarter of federal student loans and grants.
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In the last decade, even as enrollment at state colleges and universities has grown, some states have cut spending for higher education and many others have not allocated enough money to keep pace with the growing student body. That trend has accelerated as state budgets have shrunk because of the recent financial crisis and the unpopularity of tax increases.
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Nationally, state and local spending per college student, adjusted for inflation, reached a 25-year low this year, jeopardizing the long-held conviction that state-subsidized higher education is an affordable steppingstone for the lower and middle classes. All the while, the cost of tuition and fees has continued to increase faster than the rate of inflation, faster even than medical spending. If the trends continue through 2016, the average cost of a public college will have more than doubled in just 15 years, according to the Department of Education.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 10,720 initial claims were filed over the previous four weeks, along with an average of 103,232 continuing claims. Compared to the previous four-week period, the average number of initial claims was lower, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 12,596,  and the four-week average of continuing claims equaled 114,339.

In recent weeks covered employment has increased and now exceeds the level recorded a year ago (3.76 million versus 3.71 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were over four years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007. 

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

• The News & Record reports on the growth in manufacturing employment.
• National Public Radio reports on the employment prospects of college graduates.
• Simon Johnson call for “breaking up four big banks.”
• Robert Reich says the election should be about what happens in America’s boardrooms.

… Though there has been steady improvement in the last two-and-a-half years in the odds of finding a job, the odds are still stacked against job seekers. Furthermore, there is no major sector in which the odds for job seekers are strong. The number of unemployed workers outnumbers job openings across the board, underscoring that the main issue in the labor market is a broad-based lack of demand for workers, not workers being in the wrong sectors or having the wrong skills.
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The increased job openings did not translate into increased hires in March, as hires dropped slightly by 88,000 as compared with the previous month. Looking at the data over time, however, hires nevertheless are on a slow upward climb, up 18.4 percent since the official start of the recovery in June 2009. But hiring still has a long way to go before it is back to healthy levels. For example, hiring is still 16.1 percent below its 2007 average.

• Econbrowser decries “the war on data collection.”
• Joseph Sitglitz wonders what comes “after austerity.”
• Working Economics rounds up data on the long-term unemployed.
• Martin Wolf imagines what France should tell Germany.

The basic elements of Ryan’s plan are this: The tax code would be collapsed into two rates, with the top rate dropping to 25 percent, but eliminating unspecified tax deductions would keep tax revenues at the current level, as set by the Bush tax cuts. Medicare would remain untouched for those 55 years old and older, but those under would be given vouchers at a capped rate. Given that the Medicare savings would not begin to take effect for more than a decade, that taxes would stay level (at best), and that military spending would increase, Ryan would achieve his short-term deficit reduction by focusing overwhelmingly on programs targeted to the poor (which account for about a fifth of the federal budget, but absorb 62 percent of Ryan’s cuts over the next decade). The budget repeals Obamacare, thereby uninsuring some 30 million Americans about to become insured. It would then take insurance away from another 14 to 27 million people, by cutting Medicaid and children’s health-insurance funding.
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This is not a moderate plan. As Robert Greenstein, a liberal budget analyst, summed up the proposal, “It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history.” And yet, Ryan has managed to sell it as something admirable, and something else entirely: a deficit-reduction plan….

Ninety-five percent of the net job losses during the recession were in middle-skill occupations such as office workers, bank tellers, and machine operators, according to research by economists Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia. That’s what we all assume happens in recessions: The middle class is hit hardest, then eventually climbs back. Only, that comeback isn’t happening. Job growth since the end of the recession has been clustered in high-skill fields inaccessible to workers without advanced degrees or in low-paying industries, the economists found.
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In March the U.S. had 2 million more managers and professionals working than five years earlier. Lower-paying service-sector jobs were up 1.5 million. It’s the middle-income jobs that have been slow to return. Over the same period, there were 3.2 million fewer Americans working in sales and office jobs and 1.2 million fewer employed in transportation and production—a broad category that includes factory and assembly-line workers, printers, welders, tailors, and poultry and meat plant workers. Another worrisome measurement: Median annual household income in March was $2,900 lower after inflation than at the start of the recovery in June 2009, according to Sentier Research, an economic consulting firm.

• Working Economics analyzes underemployment among recent college graduates.
• Rortybomb delves into secondary measures of national labor market performance.
• Naked Capitalism casts a skeptical eye on President Obama’s economic agenda.
• Paul Krugman looks at the European turn from austerity.
• John Cassidy mulls the consequences of the French elections for the US.

The truth is that recovery would be almost ridiculously easy to achieve: all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending. Never mind all the talk of how we have a long-run problem that can’t have a short-run solution—this may sound sophisticated, but it isn’t. With a boost in spending, we could be back to more or less full employment faster than anyone imagines.
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But don’t we have to worry about long-run budget deficits? Keynes wrote that “the boom, not the slump, is the time for austerity.” Now, as I argue in my forthcoming book—and show later in the data discussed in this article—is the time for the government to spend more until the private sector is ready to carry the economy forward again. At that point, the US would be in a far better position to deal with deficits, entitlements, and the costs of financing them.
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Meanwhile, the strong measures that would all go a long way toward lifting us out of this depression should include, among other policies, increased federal aid to state and local governments, which would restore the jobs of many public employees; a more aggressive approach by the Federal Reserve to quantitative easing (that is, purchasing bonds in an attempt to reduce long-term interest rates); and less timid efforts by the Obama administration to reduce homeowner debt.

• TaxVox mulls the idea of tax fairness.
• Gary Bartless analyzes the April employment report.
• The New York Times reports on unpaid internships for college graduates.
• Brad DeLong rounds up the data on the decline in labor force participation.
• Jonathan Cohn argues that the health care reform expands individual liberty.

Watch For College Grads, Jobs Outlook Better but Far From Great on PBS. See more from PBS NewsHour.

“April marked the 19th consecutive month of job growth in the United States,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the past four months, the economy has netted an average of 132,000 jobs per month, a pace that, while positive, is simply not enough to drive unemployment down to normal levels anytime soon.”

In April, the nation’s employers added 115,000 more payroll positions than they cut. Gains occurred entirely in the private sector (+130,000), while government payrolls fell by 15,000 positions due primarily to cuts by local governments. Additionally, the payroll employment numbers for February and March underwent revisions; with the updates, the economy gained 413,000 jobs over those two months, not the 360,000 positions previously reported.

Employment levels in most major private-sector industry groups grew or held essentially steady in April. Professional and business services netted the most positions (+62,000, with 52.1 percent of the growth occurring in the administrative and waste services subsector), followed by education and health services (+23,000, with the health care subsector responsible for 82.6 percent of the net gain), and trade, transportation, and utilities (+22,000, due overwhelmingly to gains in the retail trade subsector). Meanwhile, the construction, information, and other services sectors shed the most positions (all -2,000).

“The American economy has added jobs steadily for a little more than 1.5 years and has netted 528,000 positions so far in 2012,” noted Quinterno. “The current pace of job growth is nevertheless modest relative to the size of the overall jobs gap, and, alarmingly, growth has slowed over the course of the year. A return to normal labor market conditions remains a distant goal, absent more attention and support from policymakers.”

Weak employment conditions were evident in the April household survey. Last month, 12.5 million Americans (8.1 percent of the labor force) were jobless and seeking work. The number of unemployed Americans and the unemployment rate basically held steady last month, while the size of the labor force fell (-342,000), as did the share of the population participating in the labor force (to 63.6 percent). Moreover, the share of the adult population with a job (58.4 percent) remained at a depressed level.

Last month, the unemployment rate was higher among adult male workers than female ones (7.5 percent versus 7.4 percent). Unemployment rates were higher among Black (13 percent) and Hispanic workers (10.3 percent) than among White ones (7.4 percent). The unemployment rate among teenagers was 24.9 percent. Moreover, 7.1 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 9.2 percent.

Jobs remained difficult to find in April. Last month, the underemployment rate equaled 14.5 percent. Among unemployed workers, 41.3 percent had been jobless for at least six months with the average spell of unemployment lasting for 39.1 weeks.

“The April employment report shows that the American economy is continuing to add jobs, though not as rapidly as is needed or was the case earlier in the year,” observed Quinterno. “The April employment report illustrates both how far the national labor market has come since the depths of the recession and just how far it still must go before reaching healthy levels of economic activity.”

Yeah, it was a libertarian paradise all right — with a top marginal tax rate of 91 percent, a third of the work force in unions, and a minimum wage much higher relative to the average wage than it is today.
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Propose a return to those conditions now, and everyone on the right would predict utter disaster. What we actually had was unprecedented prosperity.

• Diane Ravitch explains the privatization agenda for public education.
• Fed Watch analyzes the latest personal spending data.
• Simon Johnson worries about Mitt Romney’s extreme fiscal policy ideas.
• Daron Acemoglu and James Robinson asks just “who are the extractive elites.”

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 10,806 initial claims were filed over the previous four weeks, along with an average of 105,331 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 12,282,  and the four-week average of continuing claims equaled 115,863.

In recent weeks covered employment has increased and now exceeds the level recorded a year ago (3.75 million versus 3.71 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were over four years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007. 

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

Many such voters are also drawn to a particular austerity strategy my fellow Economix blogger Casey B. Mulligan laid out last week: cutting taxes for high earners and cutting subsidies for low earners. This strategy makes perfect sense if you believe that most people who are struggling to pay their bills aren’t trying hard enough.
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This argument appeals for several reasons. It absolves believers of any responsibility for other people’s hardships. It lends credence to the assertion that the labor market would work just fine if it weren’t jammed up by a social safety net. It lays the blame for persistent unemployment squarely on President Obama, who has urged extensions of unemployment benefits and other forms of public assistance.
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And this argument holds a partial truth: some people probably do shirk, letting access to unemployment benefits, food stamps or disability insurance reduce their job search efforts.
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But the number who fall into this category is small, and so are the overall effects, especially compared with the loss of output, effort, motivation, and well-being that results when people who need a job can’t find one.

North Carolina’s reliance on the personal income tax as its primary source of state revenues provides multiple important benefits to state residents. It ensures that state revenues are better able to keep pace with growth in the state’s economy and demand for public investments, and it better aligns North Carolinians’ state and local tax contributions with families’ ability to pay.
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Reforms to the personal income tax are certainly needed, but they should be done in a way that supports the consensus principles of comprehensive revenue modernization and, in so doing, ensure that North Carolina is positioned to invest in economic opportunity for all.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 10,511 initial claims were filed over the previous four weeks, along with an average of 106,736 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, and the average number of continuing claims was lower.

One year ago, the four-week average for initial claims stood at 12,698,  and the four-week average of continuing claims equaled 118,693.

In recent weeks covered employment has increased and now exceeds the level recorded a year ago (3.75 million versus 3.71 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were over four years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007. 

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

• Eduardo Porter looks at Social Security Disability payments.
• Mark Thoma points out that the US is a relatively low-wage country.
• The Center for American Progress weighs the link between federal taxes and inequality.
• The New York Times reports on Apple’s efforts at tax avoidance.

Watch Pew Report: Mexican Migration Into U.S. Has Slowed on PBS. See more from PBS NewsHour.

Understanding the core mission of the Post Office — as part of a communications infrastructure for political debate and civic participation — should lead us to reframe the questions we ask about the future of the USPS. Making changes to the USPS’s structure are clearly necessary in order to ensure its ability to meet its obligations. But the historical context should lead us to ask much larger questions about government’s role in protecting the free circulation of information.
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In the 18th century, the government committed itself to guaranteeing the free flow of information throughout the nation as part of a project to ensure mass participation in civic life, linking the Post Office with the protection of a free press. The decline in mail volume points to a certain inevitability about the commercial success of the USPS. But more broadly we must carefully consider the value of publicly owned, freely available channels of communication. Should the Post Office cease to exist, we will lose the last public guarantor of free communication in the United States.

• The NY Times provides more proof of the need for health insurance reform.
• TaxVox finds the GOP’s proposed small business ta cut to be very un-GOP.
• The News & Observer notes the end of  some long-term unemployment benefits.
• The NC Budget & Tax Center points out the extent of wage stagnation.

Activity in the service sector flattened overall, according to the latest survey by the Federal Reserve Bank of Richmond. Retail sales fell and revenues slowed at non-retail services providers, compared to last month. Big-ticket sales dropped sharply and shopper traffic diminished. Retailers reduced inventories. Looking ahead six months, non-retail survey respondents remained upbeat about future sales, while retailers looked for continued slowing.
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In service sector labor markets, retail merchants trimmed their payrolls and hiring at non-retail firms was little changed from a month earlier. Average wage gains were less widespread.
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The pace of this month’s price change in the broad service sector also moderated, while survey participants looked for somewhat quicker increases during the next six months.

• Jared Bernstein rounds up evidence on raising taxes on high income households.
• The New Yorker asks if there should be more walls between Stanford and Silicon Valley.
• Working Economics mulls the economic impacts of a federal budget sequestration.
• Paul Krugman checks in on the (lack of) progress in internal devaluation.
• Martin Wolf looks at the dangerous state of European banks.

Manufacturing activity in the central Atlantic region advanced somewhat faster in April following slightly slower growth in March, according to the Richmond Fed’s latest survey. A significant increase in the shipments component pushed the overall index higher, while employment grew at a rate above March’s pace and growth in new orders held nearly steady. Most other indicators also suggested solid activity. District contacts reported capacity utilization grew more quickly, while backlogs grew more slowly. In addition, manufacturers reported that delivery times lessened, while inventories grew at a somewhat higher rate.
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Looking ahead, manufacturers’ optimism remained in place in April. Contacts at more firms anticipated that shipments, new orders, backlogs, capacity utilization, and capital expenditures would continue to grow at a solid pace in the months ahead.

• Off the Charts analyzes the impact of federal recovery aid to state budgets.
• An op-ed in Politico wonders about the “missing” federal mortgage task force.
• Jeffrey Sachs sees “a world adrift.”
• Nancy Folbre argues for “valuing family work.”
• Ed Glaeser considers the future of HUD.

What about the other promised benefit of a general free market approach to managing the economy, a better ability to withstand and respond to shocks? Has the U.S. fared better than European countries during the Great Recession?
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The U.S. did better than some European countries during the crisis, but worse than others. For example, harmonized unemployment rates from either the Bureau of Labor Statistics or from Eurostat show that the U.S. unemployment rate increased more than most European rates at the onset of the crisis, and that right now the U.S. unemployment rate is higher than in Germany, the Netherlands, Austria, Belgium, Denmark, Finland, and Sweden. But at the same time, the U.S. unemployment rate is quite a bit lower than in Greece, Spain, Ireland, and Portugal, a bit lower than in Italy, and very similar to the U.K.
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With such a mixed outcome, it’s difficult to support the claim that the free market approach that began in the 1970s has lived up to the promise of a more dynamic, flexible, faster growing economy. And the case is even harder to make when the fact that the deregulation of the economy that helped to produce the housing bubble is factored in.

Even states such as North Carolina, long recognized for their generous investments in higher education, have begun to follow the national trend of disinvestment.  A brief by the North Carolina Justice Center found that public postsecondary institutions in North Carolina sustained a $917.2 million cut in the 2011-13 state budget, reducing appropriations for post-secondary education as a share of the North Carolina economy to a 40-year low.
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Yet last week a Congresswoman from this state could not understand why students are going into debt.
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U.S. Representative Virginia Foxx (R-NC) said she has “very little tolerance for people” with a lot of student debt. Congresswoman Foxx believes that because she put herself through college without debt in the 1960s, others must be able to do the same today. She fails to understand, however, that when she graduated from the University of North Carolina at Chapel Hill in 1968,tuition and fees were 228 percent lower than they are today ($2,221 per year in 1968-69 vs.$7,313 in 2012-13, adjusted for inflation).

• Robin Wells asks what Eurozone developments mean for the US.
• Peter Diamond & Emmanuel Saez argue that “high tax rates won’t slow growth.”
• Paul Krugman call Mitt Romney “the amnesia candidate.”
• Economist’s View points out that “fairness matters.”
• Calculated Risk previews this week’s FOMC meeting.

If nothing is done to shore up the system’s finances, the trust fund will be exhausted in 2033, three years earlier than projected in last year’s report (p.3). When the trust fund is exhausted, current revenues will still be sufficient to pay 75 percent of promised benefits (p. 11). Even in this worst-case scenario, future benefits will be higher than current benefits in inflation-adjusted terms, but because wages are projected to rise over time, these benefit levels will replace a shrinking share of pre-retirement income.
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The projected shortfall over the next 75 years is 2.67 percent of taxable payroll (0.96 percent of GDP). This is 0.44 percentage points larger than in last year’s report (p. 4 and Table VI.F4 on p. 197). Slightly more than one-tenth of the deterioration (0.5 percentage points) is due to the changing valuation period, and the rest is due to updated data and near-term projections and changes in longer-term assumptions.
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The single biggest factor is the weak economic recovery, which has a significant impact on the short-term outlook (slower growth in average earnings, low interest rates, and high unemployment)….

You’d think that Congress and the Federal Reserve would be straining every sinew to avoid such a fate. It isn’t as if they’re out of tools. A more aggressive monetary or fiscal policy, or both, would help put lots of Americans back to work. We could also follow Germany’s example and subsidize job-sharing programs, which have helped Germany bring down its long-term unemployment rate despite the recession. Sadly, there’s little sign that policymakers have much interest in using these tools. The inertia can be chalked up, in part, to ideological hostility from those who are opposed to more government spending or to anything that might increase inflation. But the bigger obstacle may be psychological: the longer unemployment stays high, the likelier people are to get used to it. Five years ago, an unemployment rate of seven and a half per cent would have seemed outrageous, but it’s possible that five years from now it will seem not so bad. A long-term crisis, after a certain point, no longer seems like a crisis. It seems like the way things are.