Why $4 Gas Will Hurt Less This Time

It's starting to seem like a spring ritual: Something goes pop in the Middle East, oil and gasoline prices surge, consumers get nervous, and the economy backslides.

Last year, the "Arab Spring" uprisings in Egypt, Libya, and several other countries pushed oil prices up by more than $20 per barrel, to a peak of about $113 in April. Gas prices hit the unnerving $4 per gallon level in May, depressing confidence and spending and triggering fears of a double-dip recession.

Now, Iran is the boogey man. Oil prices fell back below $80 per barrel in the second half of last year, as the Middle East settled down. But they're heading back up as the ongoing confrontation over Iran's nuclear weapons program intensifies. The United States and Europe are imposing a modified boycott of Iranian oil, to pressure Iran to curtail its quest for nuclear weapons. Some analysts predict a pre-emptive U.S. or Israeli military attack on Iran this year. If that happens, Iran could retaliate by attempting to shut down the Strait of Hormuz, a key oil chokepoint, or taking other measures that cause turmoil throughout the Middle East.

Those worries have produced a new "fear premium" on oil prices, which are heading back toward $110 per barrel. If shooting breaks out in Iran, prices could spike to $150 or even $200 per barrel, at least for a while. Gas prices have already risen by about 30 cents this year, to an average of about $3.65 per gallon. Since seasonal factors usually push prices up by 25 cents or so in the spring and summer, pump prices seem headed for $4 once again—and possibly $5 or even $6, if bombs fly. Read more........

Why Raising Taxes on the Rich Is So Hard

Washington needs money. The wealthy are prospering. Much of the middle class, meanwhile, is falling behind. Normal patterns of elective politics would suggest that tax hikes on the rich are in the bag.

That's what has happened before. Taxes on the wealthy soared during the Great Depression. After World War II, the top marginal rate went as high as 91 percent, staying there for 14 years before beginning a gradual decline toward today's level of 35 percent. Recent polls show that a solid majority of Americans--between 60 and 70 percent--favor higher taxes on the wealthy to help pay down the national debt and finance other priorities. There's even a group of "patriotic millionaires" who have pleaded with Congress to raise taxes on them and their fellow 0.1 percenters.

But raising taxes, even on a small sliver of people who would barely notice the extra withholding, has landed squarely on Washington's lengthy too-hard-to-do list. Democrats, of course, want to raise taxes for the top income bracket to the Clinton-era rate of 39.6 percent, or higher. But most Republicans are dead-set against tax hikes, even on billionaires, regardless of polls suggesting that they're violating the will of the people. In theory, Republicans are risking payback on Election Day, since voters who feel they're prioritizing the privileged few over the neglected masses could send them packing. Read more.....

How Romney and Obama Differ on the Economy

To liberals, Mitt Romney is a laissez-faire corporate aristocrat. To conservatives, he's a "Massachusetts liberal" scarcely distinguishable from President Obama. So who's right?

The campaign rhetoric makes it hard to tell, of course, since attacks on Romney up till now have been intended to caricature his record, not illuminate it. But as Romney comes closer to winning the Republican nomination, the internecine warfare among Republicans will die down, and Romney vs. Obama will begin in earnest.

Romney is, in fact, less of a bomb-thrower than some of the Republicans he's been competing against for the GOP nomination. He doesn't want to throw out the whole tax code, shackle the Federal Reserve, or turn Washington into a ghost town. But Romney differs from Obama in many substantive ways, and if he ends up as the GOP nominee, voters will have a clear choice between two distinct philosophies on how to manage the economy.

To highlight their differences, I focused mostly on each candidate's policy proposals for the future, rather than their actions in the past, because the next president is likely to face momentous and perhaps unprecedented decisions on taxes, spending, job creation, and the entire role of government. Romney has outlined many of his ideas in a detailed plan that's available on his website, while filling in a few blanks in recent speeches and policy statements. Obama released his own set of economic proposals last September, and he, too, continues to refine his economic policies while stumping. Read more.......

Obama's 8 New Ideas For the Economy

Voters are going to hear a lot about fairness over the next several months.

President Obama has kicked off his re-election campaign with a new emphasis on the government's role in making sure middle-class workers get a "fair shot" and the wealthy do their "fair share." Some components of this new fairness regime are old standbys, such as Obama's call for more infrastructure spending, investments in green energy, and higher taxes on the wealthy.

But Obama also unveiled some new ideas in his State of the Union speech, which will soon be presented to Congress as formal legislative proposals. They'll also become key talking points on the campaign trail, as Obama explains his vision for a second term and differentiates himself from his Republican opponent. Here are eight new ideas that form the basis of Obama's plan to create jobs and restore prosperity:

1. A minimum tax for multinational corporations. This is Obama's response to the controversial news from last year that General Electric effectively paid no income tax, even though it earned $3.2 billion in profit in 2010. That revelation led to greater scrutiny of corporate tax practices and the ability of many companies to exploit loopholes that dramatically lower their tax burden. Read more.......

Homeless Fill America's Streets

The world is now seeing the economic uncertainty of the U.S. but for many Americans, it has been apparent for quite some time. Economic despair has been spreading across our nation and it can be seen by the rising number of middle class Americans losing their homes. In some cases, joblessness and inability to pay rent has forced people to live in their cars, shelters, or on the sidewalk. Read more....

International food crisis due to agribusinesses and speculation

The international development charity Oxfam issued a report this month highlighting the growing global food crisis.

The report, “Growing a Better Future: Food justice in a resource constrained world,” warns in direct terms, “We have entered an age of crisis: of food price spikes and oil price hikes; of scrambles for land and water; of creeping, insidious climate change”.

The report (available here) outlines a bleak future for billions of the world’s poor. Among the most important conclusions in the report is the warning that food prices will likely double in the next 20 years.

The 2008 food price spike pushed around 100 million extra people into poverty, while the current spike has pushed 44 million more into poverty so far this year. In 2009 the number of hungry people in the world reached a record one billion, a sixth of the world’s population. The recent spike means it is again above one billion.

The United Nations Food and Agricultural Organisation (FAO) also published a report last month, “The Food Price Rollercoaster”. It charts world food prices over the last four years. Read more......

Notes on the social crisis in America

Central Alabama hit again by tornados

At least ten tornados tore through central Alabama on Monday, killing two people and injuring at least 100 others. A report in the Birmingham News noted that the storms came nearly nine months after the April 27 tornado disaster prompted state and federal officials to promise devastated communities funding for hundreds of storm shelters that have yet to materialize.

DeKalb County had applied, and been approved, for Federal Emergency Management Agency funding to build shelters well before the 2011 disaster brought seven tornados through the county.

In many areas, shelters will not be installed by the spring. “It’s heartbreaking,” DeKalb County’s emergency management director, Anthony Clifton, commented. “Because of administrative issues, they were not in place in those communities on April 27. Now, to go through a second season without them in place is just unconscionable.” Read more......