Capitol Hill Campus

Capitol Hill Campus: Dr. Yandle's Quarterly Economic Report: The Mid Year Economy

Keith Hall discusses Unemployment at Capitol Hill Campus

What does the unemployment rate really mean? Does it suggest our economy is slowly growing, stuck in neutral, or in fact slipping back into recession? Do the monthly numbers on total jobs created and the unemployment rate tell the full economic story? In order to examine the results of the economic policies pursued since the Great Recession of 2008 effectively, it is critical to understand what the employment numbers mean and what information lies behind them.

Successful Tax Reform: Dealing with the Near Term, Planning for the Long Term

In this Capitol Hill Campus event, Mercatus scholarnbsp;Patrick McLaughlin provided annbsp;overview on midnight regulations:What exactly is the “midnight regulations” phenomenon, and what evidence demonstrates that it is real?Why should policymakers be concerned about midnight regulations?Is there empirical evidence that midnight regulations are different from other regulations?What can be done to limit midnight regulations?

nbsp;The tax code is complicated, making it difficult for all but a few to understand the impact it has on our day-to-day lives. While most taxes are enacted for innocent reasons such as raising funds for a devastated community after a natural disaster, these taxes and others have unintended consequences that fool voters and create a more shrouded tax system. Furthermore, Congress constantly deals with phantom assumptions about the tax code, which lead it to pass taxes that do not achieve their desired goal. These issues will be addressed by Prof. Antony Davies, Associate Professor of Economics at Duquesne University, who will answer important questions such as:nbsp;Are temporary taxes truly temporary?How do withholdings in taxes affect voters’ thinking about their money?When figuring out who paid what, which are better; marginal or average tax rates?How accurate are CBO projections with the assumptions they are given by Congress?How much does the Federal revenue change in relation to GDP when taxes are high or low?What happens to tax revenue per capita as taxes rise and fall?Can the government control who pays taxes?nbsp;The tax code is complicated, making it difficult for all but a few to understand the impact it has on our day-to-day lives. While most taxes are enacted for innocent reasons such as raising funds for a devastated community after a natural disaster, these taxes and others have unintended consequences that fool voters and create a more shrouded tax system. Furthermore, Congress constantly deals with phantom assumptions about the tax code, which lead it to pass taxes that do not achieve their desired goal. These issues are addressed by Prof. Antony Davies, Associate Professor of Economics at Duquesne University.Are temporary taxes truly temporary?How do withholdings in taxes affect voters’ thinking about their money?When figuring out who paid what, which are better; marginal or average tax rates?How accurate are CBO projections with the assumptions they are given by Congress?How much does the Federal revenue change in relation to GDP when taxes are high or low?What happens to tax revenue per capita as taxes rise and fall?Can the government control who pays taxes?nbsp;

Several key debates this year will focus on the economic impact of federal regulations. The Mercatus Center at George Mason University is pleased to offer a series of courses designed to help congressional staff better understand the regulatory process. The first course uses examples from newly-minted financial markets regulations to review: The stages involved in developing and finalizing a regulationHow to find and use information about a regulationThe best tools to help policy makers make the case for or against a change in regulation

In this presentation, Mercatus Senior Scholar Garett Jones provides a useful framework for promoting economic growth. Professor Jones's presentation examines the state of the economy today, why short-term policies do not necessarily provide the biggest bang for the buck, and what Congress can do to get the economy going both in the short-term and long-term.

Any credible plan to significantly improve the nation’s fiscal outlook must address the greatest drivers of future debt: Medicare, Medicaid, and Social Security. But while the need for entitlement reform is no longer in question, policy makers are far from consensus on how, or even when, to begin. This event featured both public trustees for social security and medicare, Charles Blahous and Robert Reischauer. It also featured Alice M. Rivlin, the founding director of the CBO as well as Mercatus' own Jason Fichtner.Any credible plan to significantly improve the nation’s fiscal outlook must address the greatest drivers of future debt: Medicare, Medicaid, and Social Security. But while the need for entitlement reform is no longer in question, policy makers are far from consensus on how, or even when, to begin. This event featured both public trustees for social security and medicare, Charles Blahous and Robert Reischauer. It also featured Alice M. Rivlin, the founding director of the CBO as well as Mercatus' own Jason Fichtner.

Economists’ research of other nations’ experiences provides insight on the most effective way to deal with unsustainable debt. There is also much to be learned from our own past attempts — successful or not — to meaningfully reform the budget.This discussion will focus on the following questions:Which fundamental spending, tax, and budget process reforms have proven most effective in reducing debt? nbsp;Is there an ideal combination of budgetary reforms for reducing debt? nbsp;What about the economy? Can we improve our fiscal situation without making our economic situation even worse?How can we avoid repeating our own past failures in addressing unsustainable debt?

The Internet has revolutionized the way we live, work, and play. It's evolved, with relatively little oversight, to be an enormously powerful tool and a major factor in the world economy. But it has a seedier side. Large companies collect an enormous amount of data about Internet and gadget users and recent news has been filled with high profile breeches of private information.

Dr. Arnold Klingnbsp;discusses two ways to look at GSE’s. One approach, the “devil you know” strategy, would restore the status quo ante, meaning that Freddie Mac and Fannie Mae would be returned to the investing public as private corporations with government backing, able to purchase loans for securities and able to hold securities in portfolio, subject to limits on loan amounts and subject to safety-and-soundness regulation. The other approach, the “Jimmy Stewart banker” strategy, would get the government out of the mortgage-guarantee business and let the mortgage market evolve in a decentralized way. In this system, mortgage lending would return to local banks, which would retain the loans that they originate.Dr. Anthony Sandersnbsp;asks “can the private sector offer a less costly alternative to Fannie and Freddie, with far less government involvement in the housing and mortgage market?” What is unique about Fannie/Freddie that the private sector could not provide? Both Fannie/Freddie and the private sector have loan-underwriting models; both can purchase loans and create mortgage-backed securities (MBS); both the private and public sector can offer mortgage insurance.The one thing that Fannie and Freddie have that the private sector does not is an explicit guarantee from the federal government. If the private sector can replicate Fannie and Freddie’s only defining “virtue”—a federal-government guarantee—then there is no justification for keeping Fannie and Freddie around either in conservatorship or in their pre-conservatorship forms. Is that possible? What are the potential consequences?

In December 2010, the Bureau of Labor Statistics reported there were 131 million working Americans. Some 14.5 million Americans were counted as unemployed. Of those, 6.4 million had been without work for 27 weeks or more. Job prospects were, and remain, bleak. There was a small silver lining in the dark announcement: the BLS noted that some 1.1 million private-sector jobs were added in 2010. Job availability, according to the Gallup organization, was the number one worry plaguing the U.S. population in January 2011. So where do jobs come from? Real jobs that can be sustained by normal economic activity? Is there a role for government in the process? How do government policies enhance or reduce the long-run pace of job creation? Dr. Bruce Yandle explores these questions, and gives an update on recent economic activity. He discusses his recent paper Jobs, Jobs, Jobs: Where do Jobs Come From? and examines the decision making process made by employers engaged in adding workers to their payrolls and incentives faced by employers and employees.

According to some polls, more than 70 percent of Americans believe the stimulus is not working. They worry that Washington isn’t offering effective solutions to our persistent economic malaise. Instead of the endless – and useless -- debate over whether stimulus theory works, are there concrete examples of how countries can escape a debt crisis?nbsp;Cutting spending is the recipe for economic growth. Several historical examples make this clear. How can we learn from the lessons of the past, and the example of our neighbors?After World War II, Keynesian economists predicted that 10 million service men suddenly joining the labor market, at the same time the government stopped spending money on war, would result in “the greatest period of unemployment… ever faced.”Fortunately, they were dead wrong. The economy’s ability to absorb 10 million new workers (as well as keeping half the “Rosies” in the workforce) as government slashed spending shows that people can shift quickly to productive private-sector employment, if investors have a high degree of certainty about property rights and the rules of the game.In Canada, a left-wing government turned a federal debt of 70 percent of GDP to 29 percent and a surplus of 1.8 percent GDP in 10 years – without raising individual income taxes or losing control of the parliament.nbsp;Reforms came more than 85 percent from spending cuts, the remainder in closing tax loopholes or limiting growth in spending.The architect of the budget reform, Paul Martin, issued a specific plan for how to make cuts both for the first year and then how to make other cutting decisions in the future, creating a standard to judge politicians’ performance.Martin was consistently re-elected for nearly 10 years and was later elevated to Prime Minister.Join the Mercatus Center and Professor David Henderson as he explains how these concrete examples of spending contraction helped the economy grow, and what lessons we can draw.This course is free and open to all full-time Congressional and Agency staff. Due to space constraints, please no interns without prior approval. For more information, please contact Aaron Merrill, Program Manager for Outreach, at 703.993.7729 or amerril2@gmu.edu.

Most developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rise.Most developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rise.Randall G. Holcombe is DeVoe Moore Professor of Economics at Florida State University. He received his Ph.D. in economics from Virginia Tech and taught at Texas Aamp;M University and Auburn University prior to coming to Florida State in 1988. Dr. Holcombe is also senior fellow at the James Madison Institute, a Tallahassee-based think tank that specializes in issues facing state governments. He served on Florida Governor Jeb Bush’s Council of Economic Advisors from 2000 to 2006, was president of the Public Choice Society from 2006 to 2008, and was president of the Society for the Development of Austrian Economics in 2007.nbsp;Dr. Holcombe is the author of twelve books and more than 100 articles published in academic and professional journals. His books include The Economic Foundations of Government, Public Policy and the Quality of Life, From Liberty to Democracy: The Transformation of American Government, and Entrepreneurship and Economic Progress.nbsp;due to space constraints, please no interns without prior approvalost developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rMost developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rise.Why is a Value Added Tax (VAT) wrong for the United States? How much would it cost? What would the unseen or unanticipated effects likely be? Join the Mercatus Center and learn more about this controversial suggestion.Randall G. Holcombe is DeVoe Moore Professor of Economics at Florida State University. He received his Ph.D. in economics from Virginia Tech and taught at Texas Aamp;M University and Auburn University prior to coming to Florida State in 1988. Dr. Holcombe is also senior fellow at the James Madison Institute, a Tallahassee-based think tank that specializes in issues facing state governments. He served on Florida Governor Jeb Bush’s Council of Economic Advisors from 2000 to 2006, was president of the Public Choice Society from 2006 to 2008, and was president of the Society for the Development of Austrian Economics in 2007.Dr. Holcombe is the author of twelve books and more than 100 articles published in academic and professional journals. His books include The Economic Foundations of Government, Public Policy and the Quality of Life, From Liberty to Democracy: The Transformation of American Government, and Entrepreneurship and Economic Progress.This course is free and open to all full-time Congressional and Agency staff. Due to space constraints, please no interns without prior approval. For more information, please contact Aaron Merrill, Program Manager for Outreach, at 703.993.7729 or amerril2@gmu.edu.nbsp;Most developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rise.Randall G. Holcombe is DeVoe Moore Professor of Economics at Florida State University. He received his Ph.D. in economics from Virginia Tech and taught at Texas Aamp;M University and Auburn University prior to coming to Florida State in 1988. Dr. Holcombe is also senior fellow at the James Madison Institute, a Tallahassee-based think tank that specializes in issues facing state governments. He served on Florida Governor Jeb Bush’s Council of Economic Advisors from 2000 to 2006, was president of the Public Choice Society from 2006 to 2008, and was president of the Society for the Development of Austrian Economics in 2007.nbsp;Dr. Holcombe is the author of twelve books and more than 100 articles published in academic and professional journals. His books include The Economic Foundations of Government, Public Policy and the Quality of Life, From Liberty to Democracy: The Transformation of American Government, and Entrepreneurship and Economic Progress.nbsp;due to space constraints, please no interns without prior approvalost developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rMost developed economies rely on a value VAT nbsp;for a substantial share of their tax revenue, so it is natural for the United States to look at the possibility of implementing a VAT, especially while huge budget deficits are forecast as far out as the forecasts go. While one can debate the merits of a VAT in other countries, the tax is clearly not a good fit for the United States. It would tax a base that has traditionally belonged to state governments, its introduction would bring with it intergenerational inequities, its cumbersome structure would impose large compliance and administrative costs, and it would slow economic growth. Reduced economic growth would diminish tax revenue from all tax bases. This study projects that if the United States introduced a VAT in 2010, its net effect on tax revenue would be minimal by 2030 because VAT revenue would mostly be offset by declines in revenue from other tax bases. Meanwhile, slower gross domestic product (GDP) growth would also mean that government spending as a share of GDP would rise.