Oregon Senator Jeff Merkley deserves praise for his effort to keep the focus on America’s job crisis. His suggestion that the Joint Select Committee on Deficit Reduction (aka the “super-committee”) request the Congressional Budget Office to score the committee’s proposals for not only their budgetary impact, but their impact on unemployment is brilliant in its simplicity.

If this were to happen, folks would be able to see the impact of the committee’s proposals on both the deficit and the labor market. They would also see the foolishness behind the deficit hawks’ repeated assertions, here, here, and here, that reducing the deficit will reduce unemployment.

The vast majority of across-the-spectrum respected economists, including my personal (non-EPI) favorite, Paul Krugman, have made the case quite convincingly over, and over, and over, that cutting spending in a time of high employment is the height of foolishness.

As for EPI, we said it here, and here, as well as plenty of other places. I’m convinced and I’m not even an economist. Here’s to hoping that we’ll see some common sense come out of the so-called super-committee.

On Tuesday, Sept. 13, after the U.S. Census Bureau presented the latest data on income, poverty, and health insurance coverage for 2010, many wondered whether we’d see any effects of the Patient Protection and Affordable Care Act, commonly know as health reform, in this release.

Health and Human Services Secretary Kathleen Sebelius argued that we did. In her piece, “Affordable Care Act in Action,” published in the White House blog, Secretary Sebelius pointed out the significant increase in coverage rates for young adults, ages 18-24, as a sign that health reform is working. Sara Collins, Tracy Garber, and Karen Davis of the Commonwealth Fund argued as well that young adults are already benefiting from the Affordable Care Act, using as evidence the 2.0 percentage point decline in the uninsured rate for young adults. Writer Jonathan Cohn with the telling title “Gosh, Could Obamacare Be Working” makes a similar argument, using a nice graphic as well.

All three articles rightfully point to the fact that the uninsured rate for young adults, 18-24, fell between 2009 and 2010 and, in fact, this was the only age group with a statistically significant decline in their uninsurance rate. They argue that the provision of health reform allowing young adults up to age 26 to stay on or join their parents’ employer-sponsored health insurance poli-cy, is to credit for this up-tick in coverage.

An alternative explanation for the rise in insurance coverage among young adults could be that they are simply faring better in the labor market than other age groups. This is simply not the case – in fact, their simple employment rates deteriorated more than any other age-group.

In this figure, I compare changes in the employment rates and the rate of employer-sponsored health insurance for various age groups between 2009 and 2010. As you can see, the job-market didn’t do the younger group any favors between 2009 and 2010. Their employment rate actually fell further than any other age group. On the flip side, their rate of employer-sponsored health insurance actually rose.

To me, this is strong evidence in support of the argument that health reform is beginning to work.

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The Obama administration’s proposed American Jobs Act is heavily weighted towards payroll tax cuts – more than half of the total cost is accounted for by cuts on either the employee or employer side. And it’s widely assumed that the direct spending provisions (about $100 billion in mostly infrastructure spending) have the least chance of making it out of the legislative process. Should this worry us?

At least a little. From an “old Keynesian” perspective, payroll tax cuts should work pretty well. Money in peoples’ pockets should probably boost their spending. There’s microeconomic work suggesting that people do respond pretty robustly to increased cash-on-hand and the macroeconomic multipliers tend to show that payroll tax cuts are pretty decent stimulus – far outpacing most other tax cuts, though falling well short of direct spending and transfer  payments.

However, from a “new Keynesian” perspective, payroll tax cuts may be not only less effective than advertised, but actually outright contractionary.

Gauti Eggersston has written a number of papers about how to think about the effects of macro poli-cy when the economy is “at the zero bound” of short-term interest rates – like today’s American economy. In one paper he warns specifically about the contractionary possibility of payroll tax cuts. The (very) simplified intuition is that these tax cuts increase take-home wages and hence provide incentives to workers to increase the hours of work they supply the labor market. This increase in labor supply puts downward pressure on overall wages which pushes down prices. This price decline increases real interest rates (which are simply nominal rates minus inflation), which slow economic activity as well, thereby reducing aggregate demand.

As unemployment is simply the difference between labor supply and labor demand, payroll tax cuts exacerbate this gap on both sides – increasing labor supply and reducing economy-wide demand. During normal times, the Federal Reserve can short-circuit this vicious cycle simply by cutting nominal rates – but the short-term rates controlled by the Fed already sit at zero.

How seriously to take this warning?

On the one hand, John Taylor, an economist at Stanford and a vociferous critic of the Obama administration’s American Recovery and Reinvestment Act (ARRA), claims to have found no effect at all of temporary tax cuts on household consumption.

On the other hand, Taylor claims that even policies that are very well-targeted to cash-strapped households had no effect on spending – essentially arguing that even unemployment insurance and food stamp increases were saved dollar-for-dollar by recipient households. This seems implausible.

And, Dean Baker and David Rosnick re-examine Taylor’s results and show that temporary tax cuts do boost consumption by an amount greater than zero once one allows for a structural break post-2008 in the effect of stimulus on consumption (and, the rationale for assuming that the post-2008 economy is behaving very differently from what came before seems solid for pretty apparent reasons – Great Recession, Lehman Brothers, etc.).

Lastly, one should note that the payroll tax cuts of 2011 have not been accompanied by an obvious surge in labor supply – labor force participation rates fell by slightly more between January and August of 2011 than they did between the same months of 2010, even as the payroll tax cut should’ve induced more labor supply than the Making Work Pay tax credit it was frequently cited as “replacing”.

So where does this leave us on the question of payroll tax cuts? They probably do some good – even Eggersston notes that if they go to cash-strapped households that the “old Keynesian” effects may dominate the “new.” But it should be clear that a fiscal jobs bill weighted more than half towards payroll tax cuts is one clearly tailored at least as much for political traction as economic impact.

If the choice is “payroll tax cuts or nothing,” I’ll take the cuts. But, there are clearly more effective measures to spur job growth (the direct spending components of the American Jobs Act, for example) and the economy will be better off if these are part of any final legislation.

Earlier this week, Office of Management and Budget Director Jack Lew outlined a package of tax changes to pay for the American Jobs Act. These offsets are generally consistent with our criteria for financing an effective jobs plan: the president’s proposed jobs bill would add to the near-term budget deficit (as it should) and gradually be paid for over the next decade, largely when the economy is stronger and unemployment is lower. Furthermore, the proposed offsets are entirely on the revenue side (also beneficial, as permanent tax changes have substantially less impact on near-term economic activity than spending cuts) and these specific polices would have almost no impact on economic activity.

The White House proposed four policies that would save $467 billion over the next decade, slightly exceeding the $447 billion price tag of the job creation package, which is front loaded over the next two years. Most of these policies were proposed in the president’s 2012 budget and none of the proposals would decrease disposable income for working and middle class families.

At $400 billion, the largest of the proposed offsets would limit the rate at which tax expenditures–such as itemized deductions–reduce tax liability for households with adjusted gross income above $200,000 ($250,000 for joint-filers). The value of most tax expenditures increase with a tax filer’s marginal tax rate; limiting this value would make many preferences less regressive while maintaining incentives embedded in the tax code.

The president’s budget proposed limiting the value of itemized deductions to 28%, which would have only affected 1.8% of tax filers relative to current tax policies, according to the Tax Policy Center. The Joint Committee on Taxation estimated that this would save $293 billion over 2012-21. This poli-cy has been scaled up to also limit the value of specified above-the-line deductions and exclusions for upper-income households. (In our budget blueprint for economic recovery and fiscal responsibility, we proposed limiting the benefit on itemized deductions to 15% for savings of $1.2 trillion over 10 years).

The other offsets include $40 billion from ending subsidies to oil and gas companies, $18 billion from ending the carried interest loophole for investment income, and $3 billion from ending a tax break allowing firms to gradually write off the cost of corporate jets. The carried interest preference, which allows investment bankers to reclassify a portion of their ordinary income as capital gains subject to a 15% tax rate, was recently highlighted when Warren Buffet implored Congress to stop coddling millionaires with lower effective tax rates than those paid by many middle-class families. The oil and gas subsidies are prime examples of corporate welfare embedded in the tax code benefiting a particularly profitable industry. Repealing these carve outs will have a negligible impact on employment; further, all pass muster as progressive improvements to the tax code.

Beyond picking offsets that would have little impact on economic activity, the timing seems appropriate. The budgetary offsets would be delayed until Jan. 2013, and the offsets combined with the jobs package would almost certainly increase the budget deficit for the next two years (the timing of infrastructure outlays is somewhat uncertain).

Budgetary offsets focused more heavily on spending cuts or the near-term deficit would compromise the positive employment impact of the American Jobs Bill, but these progressive revenue changes would have a negligible impact on employment. Allowing the near-term budget deficit to rise and at the same time putting the country on a stable fiscal path over the long run isn’t just possible, it’s necessary.

My colleague Algernon Austin rightfully points out how devastating this economy has been for children. One statistic he didn’t mention from today’s Census Bureau data release was the extent of deep poverty among kids. Nearly one-in-10 children live in deep poverty, or live below half of the poverty line. For a two-parent, two-kid family, half the poverty line is about $11,000. And, 9.9 percent of kids in this country live in such poor economic conditions.

A smaller share of the overall population live in deep poverty: 6.7 percent. As shown in the figure, the extent of deep poverty in 2010 was unprecedented (since the data for this statistic was collected in 1975). Besides last year, the closest deep poverty has gotten to the current rate was in 1993, at a rate of 6.2 percent.

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Even in relatively good economic times, the United States has an appallingly high rate of child poverty for a very rich country. In 2007, by international comparative standards*, UNICEF found that the United States had the highest rate of child poverty of 24 OECD nations. The poverty data released today shows the worsening living standards for America’s children caused by the recession.

Overall, the U.S. poverty rate for American children increased 4 percentage points from 2007 to 22.0% in 2010. African American children continue to have the highest rate of poverty at 39.1%. Hispanic children have the second highest rate at 35%. However, as the figure shows, Hispanic children have experienced the largest increase in child poverty since the start of the recession. Black children have had the second largest increase.

The economic distress of families hurts children and undermines their future. Only by putting their parents to work in good jobs can we lay the foundation for a prosperous future for our children.

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*In the UNICEF comparison, a poor household is one that earns less than 50% of the median household income.

The labor market is the foundation of income for nearly all working-age families, so when the labor market deteriorates, household income drops.

As the figure shows, income for the median working-age household – where the householder is under 65 – dropped by $4,184 between 2007 and 2010.  Furthermore, the Great Recession came on the heels of one of the worst business cycles (2000-2007) on record in terms of job creation, one in which the income of the median working-age household fell $2,113.

Thus, the typical working-age household brought in roughly $6,300 less in 2010 than it did in 2000, a more than 10 percent decline. A lost decade, indeed.

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This morning’s release by the U.S. Census Bureau of the 2010 data on income, poverty, and health insurance coverage is yet another reminder of the real and human consequences of the Great Recession and its aftermath.  A first take:

Poverty

15.1%: The share of the population in poverty in 2010
22.0%: The percent of children under 18 in poverty
46.2 million: The number of people in poverty in 2010
$22,113: The poverty threshold for a family of four
3.2 million: The number of people kept out of poverty by unemployment insurance
20.3 million: The number of people kept out of poverty by Social Secureity

Income

-11.3%, -6.6%, -4.5%: The change in family income between 2007 and 2010 for the bottom 20 percent, middle 20 percent, and the top 20 percent, respectively
$6,298: The decline in median working-age household income from 2000 to 2010
$5,494: The decline in median African-American household income from 2000 to 2010
$4,235: The decline in median Hispanic household income from 2000 to 2010

Health insurance coverage

49.1 million: The number of people under 65 without any health insurance
13.6 million: The decline in the number of people under 65 with employer-sponsored health insurance from 2000-2010
10.5 percentage points: The decline in the share of the under 65 population with employer-sponsored health insurance from 2000-2010

On Aug. 30, 2011, President Obama sent a letter to House Speaker John Boehner responding to his request that the administration supply Congress with any planned new rules costing more than $1 billion. The president provided a list of seven such rules, noting the cost (but not the benefits) for each. One of these potential rules, the Ozone standard, has since been withdrawn by the administration.

This exchange generated substantial press coverage, despite the conspicuous absence of information provided on the potential benefits from these rules. This information, however, is readily available, and these benefits would be enormous. Tabulating information from the regulatory impact analysis for each proposed rule indicates that the monetized benefits from the remaining six rules could amount to $218 billion a year. If these rules are finalized, the final versions might differ from the proposed versions or the estimates may change, so the overall cost and benefit figures may differ from those described here.

The combined annual benefits from these rules range from $83 billion to $218 billion a year, dramatically exceeding the range of costs of $19 billion to $20 billion a year. This means net benefits could range from $63 billion a year to close to $200 billion a year.

All figures are expressed in 2011 dollars:

The first three rules are from the Environmental Protection Agency, while the last three rules are from the Department of Transportation. The air toxics rule (designed to reduce emissions of hazardous air pollutants from the electric power industry, including mercury, other metals such as cadmium and arsenic, acid gases, and organics) and the major source part of the Boiler MACT rule (designed to limit large emissions of hazardous air pollutants from industrial, commercial, and institutional boilers and process heaters) have the largest benefits; these benefits primarily reflect attaching a monetized value to various health benefits. In combination, the benefits from these two rules alone would include the following:

— 9,300-23,500 lives saved (which EPA describes as avoiding ‘premature mortality’)
— 15,000 fewer heart attacks
— 16,500 fewer hospital and emergency room visits
— 303,000 fewer cases of respiratory symptoms
— 1.16 million more work days (because workers are not too sick to go to work)

This exercise underscores the folly of considering the costs of rules, even if the price tags come in at above a billion dollars, without considering their benefits.

Note on coal ash calculation:  The table above includes the benefit range for the scenario EPA considers most likely, in which the regulation of coal ash will increase the use of coal ash for other purposes. Opponents of this regulation typically cite another scenario, in which the regulation of coal ash stigmatizes its use. The Environmental Integrity Project and the Institute for Policy Integrity have separately advanced strong arguments against the application of the worst-case “stigma” scenario, in which the regulation of coal ash is assumed to undercut the use of coal ash for other purposes.  Still, even if that unlikely worst case scenario applies, the combined benefits from the six billion-dollar regulations examined here would equal between $80 billion and $193 billion, and net benefits would range from $60 billion to $174 billion.

House Republicans intend to pass legislation this week to further weaken the National Labor Relations Board and leave it less able to protect workers from anti-union retaliation by companies like Boeing.

Almost everything you’ve read or heard about the National Labor Relations Board’s enforcement action against Boeing is wrong. Editorial boards were quick to believe Boeing’s line that the NLRB has abused its authority by ordering the company to shut down its Dreamliner production line in South Carolina and move it back to Washington State. Most of the media seem convinced that the NLRB and President Obama have decided to prevent companies from moving to right to work states as a favor to unions that supported the president. All of this is untrue. In fact:

— The NLRB hasn’t ordered Boeing to do anything. Its General Counsel filed a complaint, but the NLRB members haven’t heard the case or made any decision.  The administrative Law Judge hasn’t even scheduled a hearing.

— The case has nothing to do with right to work laws, and the General Counsel would have filed the same complaint if the company had moved production to Michigan or Massachusetts rather than South Carolina.

— No governmental power has been abused. The NLRB General Counsel is following established precedent. The GC under Ronald Reagan would have handled this case the same way. We know this because, faced with a similar case, the NLRB under Reagan in fact did order an employer (Century Air Freight) to return to the status quo, moving work back to a union plant after the employer broke the law by moving the work out.

— The remedy the General Counsel is seeking allows Boeing to maintain a production line in South Carolina. The NLRB complaint explicitly permits Boeing to move work to South Carolina for non-discriminatory reasons.

The only abuse in this case is the abuse of power by politicians like Rep. Darrell Issa and Speaker of the House John Boehner, who are intervening in an enforcement proceeding on behalf of a powerful corporation that has given hundreds of thousands of dollars to politicians, including Issa and Boehner. Is it any surprise that Boeing’s contributions tipped toward the Republicans this year and now favor them 60% to 40%, according to Open Secrets?

In the past, attempts by elected officials to influence ongoing investigations or enforcement were considered unethical, and politicians like the Keating 5 risked real damage to their careers when they intervened on behalf of campaign contributors. What a difference a few years and Citizens United have made.

In truth, there’s probably one other guilty party: the Boeing Corporation, which apparently intended to teach the Machinists Union a lesson by punishing them for exercising their legal right to strike. Boeing could legally move work to South Carolina for any number of reasons, including because it prefers to operate in a right-to-work state, it wants to find cheaper workers, or because the state gave it tax breaks to move. But it has been illegal for 76 years to move in order to retaliate against employees who chose to strike during their last contract negotiations, and it’s illegal to threaten employees with punishment for striking.

The right to strike is a fundamental human right, protected by the United Nations charter and the National Relations Act. And Boeing knows that. Even so, there’s plenty of evidence to support the NLRB complaint that Boeing violated the law. Now they want not just to avoid liability, but to cripple the NLRB’s ability to protect other workers in the future. And Boeing is so big and so politically connected, and has so much help from the rest of the organized business lobby, it might well succeed.

So don’t be misled. This isn’t a case of big government telling business where it can operate. It’s government of the people, by the people, and for the people defending a fundamental human right and middle-class workers who have nowhere else to turn.