The Federal Open Market Committee (FOMC), the body that establishes monetary policy at the Federal Reserve, announced on Wednesday that it is expecting the economy to grow more slowly than previously thought over the next several years.
In response to the deteriorating economic situation, the committee decided to do nothing.
At his press conference explaining the FOMC decision, Federal Reserve Chairman Ben Bernanke urged Congress to do something about jobs.
- Binyamin Appelbaum, The New York Times — Fed Lowers Its Forecast for Growth, but Takes No Steps:
'I think it would be helpful if we could get assistance from other parts of the government to help create more jobs,' Mr. Bernanke said.
Meanwhile, with unemployment high, federal assistance running out and the state cutting spending, local government finances are deeply in the red. Lackawanna County appears headed for layoffs and tax increases.
- David Singleton, Scranton Times-Tribune — Finance panel: Lackawanna County budget to require 'substantial' tax increase:
A bipartisan advisory panel recommended Wednesday that Lackawanna County increase real estate taxes to balance its 2012 budget, warning a steep hike will be required as county government contends with a financial crisis that will not be resolved quickly or painlessly.
The Philadelphia School District, also deeply in the red, has a plan to save up to $9 million by closing nine schools.
- Kristen A. Graham and Martha Woodall, The Philadelphia Inquirer — District plans to close 9 schools, make grade changes in 17 others
Turning to college kids, student loan debt rose by 5% in 2010. Public colleges, faced with significant cuts in state support, raised tuition nationally by 7.3% this year.
- Justin Pope, The Associated Press — Debt was up again for college class of 2010
While the Federal Reserve pleads with Congress to do something, likely voters in Pennsylvania plead with policy makers in Harrisburg to fix roads and bridges and to impose a natural gas drilling tax. Following the lead of policy makers in D.C., Harrisburg policy makers are likewise focused on less important things.
- Tom Murse, Lancaster Intelligencer Journal — Franklin & Marshall College Poll takes on state issues: Fix roads and bridges, residents tell governor:
Pennsylvanians want the roads and bridges repaired. And they want it done tout de suite. As in yesterday.
Most everything else on the agenda — school vouchers, changing the way electoral votes are awarded, selling off liquor stores — takes a back seat to transportation, a new Franklin & Marshall College survey found.
The poll of 525 state residents this week identifies a clear disparity between the Legislature's and governor's agenda and what regular folks say are the state's most pressing issues.
Fear not, policymakers may oppose doing more to create jobs through fiscal and monetary policy, but they're still on top of things. At the urging of the business lobby, policy makers in D.C. and Harrisburg are making the case for things like lowering the corporate income tax rate. The argument goes something like this: if corporate income taxes were lower or non-existant, it would unleash a tidal wave of confidence that would create jobs and raise wages! In fact, between 2008 and 2010, 30 large profitable corporations paid no income tax.
I know, unemployment is high, wages are falling and most economic forecasters are predicting more of the same for the next few years. But who are you going to believe, baby, your lying eyes or the business lobby?
- Kevin Drawbaugh, Reuters — Thirty companies paid no income tax 2008-2010
Here is the link to the full report, documenting that the 280 most profitable U.S. corporations shelter half their profits from taxes.
- Citizens for Tax Justice — Corporate Taxpayers & Corporate Tax Dodgers 2008-10:
'These 280 corporations received a total of nearly $224 billion in tax subsidies,' said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. 'This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.'
- 30 Companies average less than zero tax bill in the last three Years, 78 had at least one no-tax year.
- Financial services received the largest share of all federal tax subsidies over the last three years. More than half the tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.
- U.S. corporations with significant foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.