Outside the Box
Tuesday, October 26, 2004
  Economy: Middle Class Losing Income An issue brief from the Economic Policy Institute finds that:
• Pre-tax incomes fell for middle-income families of every type between 2000 and 2003. Driven by a recession-induced fall-off in wage income, pre-tax incomes fell by $2,119, or 3.1%, for married-couple families with children; single mothers lost $686 in pre-tax income, or 3.0%; elderly couples lost $353, or 1.0%; and young singles lost $818, or 3.4%.

• After taking into account changes in both pre-tax income and taxes, the finding remains that most middle-income families lost ground between 2000 and 2003. Incomes declined slightly over this period (by 0.2%) for married couples with children and by 1.4% for elderly couples and young singles. Single-mother families saw after-tax income gains of 1.9% because of the greater refundability of child tax credits.

• Family spending on higher insurance co-pays, deductibles, and premiums has escalated in recent years. Middle-income families saw their incomes erode between 2000 and 2003, after changes in both taxes and health spending are taken into account. For married-couple families with children, health spending rose three times faster than income (not inflation-adjusted) between 2000 and 2003, absorbing half the growth of their income. The post-tax, post-health-spending income of married-couple families with children, for instance, fell $699, or 1.3%, between 2000 and 2003, while that of single-mother families fell $433, or 2.0%.

Sunday, October 17, 2004
  Iraq: "We didn't go in with a plan. We went in with a theory" Post war planning in Iraq, "to be provided." From Knight-Ridder:

WASHINGTON - In March 2003, days before the start of the U.S.-led invasion of Iraq, American war planners and intelligence officials met at Shaw Air Force Base in South Carolina to review the Bush administration's plans to oust Saddam Hussein and implant democracy in Iraq.

Near the end of his presentation, an Army lieutenant colonel who was giving a briefing showed a slide describing the Pentagon's plans for rebuilding Iraq after the war, known in the planners' parlance as Phase 4-C. He was uncomfortable with his material - and for good reason.

The slide said: "To Be Provided."

A Knight Ridder review of the administration's Iraq policy and decisions has found that it invaded Iraq without a comprehensive plan in place to secure and rebuild the country. The administration also failed to provide some 100,000 additional U.S. troops that American military commanders originally wanted to help restore order and reconstruct a country shattered by war, a brutal dictatorship and economic sanctions.

In fact, some senior Pentagon officials had thought they could bring most American soldiers home from Iraq by September 2003. Instead, more than a year later, 138,000 U.S. troops are still fighting terrorists who slip easily across Iraq's long borders, diehards from the old regime and Iraqis angered by their country's widespread crime and unemployment and America's sometimes heavy boots.

"We didn't go in with a plan. We went in with a theory," said a veteran State Department officer who was directly involved in Iraq policy.

  Oklahoma Academy Town Hall Meeting From the Oklahoman:

NORMAN - Oklahoma, a few people finally have agreed to talk about what's good for you, instead of what's good for them.

For three days last week, a broad assortment of Oklahomans put aside their personal interests to focus on your future at the Oklahoma Academy town hall meeting at the Norman Employee Development Center.

They didn't solve all your problems, but they made a commitment to search for ways to protect your future for generations to come.

In a state that built its future a quarter-section of land at a time, the need to look that far beyond the horizon may not make much sense to the masses, whose contentment also may have something to do with the state's abundance of land, clean air and water.

As much as it is a land of plenty, Oklahoma also is a land of convenience, where we can drive our own vehicles with ease and at a reasonable cost anywhere we want to go and where we can build a place to live anywhere we want it to be.

Compared with Arizona's water shortages or Chicago's sprawl, most Oklahomans could well say, "What's the problem?"

But Julie Knutson, president of the Oklahoma Academy, is afraid all that will change at the rate Oklahoma is depleting its natural resources and defacing its landscape.

"We are a young state with opportunities, but we have to start making some choices about the future if we want to affect how future generations live or whether they will even want to be here," she said.

The academy turned those long-range concerns into a topic -- Oklahoma's environment: pursuing a balance -- for this year's meeting. The 125 members in attendance then were challenged to determine how Oklahoma can maintain the advantage it has of being "fresher and healthier" than other states while pursuing other commercial and social interests.

Oklahoma Academy website

  Economy: The Largest Deficit in History As noted in the NYT the debt ceiling has been hit for the fourth time in four years:

Since Mr. Bush took office in January 2001, the federal debt has increased about 40 percent, or $2.1 trillion, to $7.4 trillion. Congress has raised the debt ceiling three times in three years, raising it most recently by $984 billion in May 2003.

On Thursday, Treasury Secretary John W. Snow said that the federal government was about to breach the limit again and would be able to keep operating only if it started tapping money intended for the civil service retirement fund, the pension system for federal workers.

"Given current projections, it is imperative that the Congress take action to increase the debt limit by mid-November,'' Mr. Snow warned in a statement, declaring that his arsenal of financial tools "will be exhausted'' at that point.

As the CBPP finds this is the first time since WWII that the deficit has grown four years in a row:

Fiscal Year 2004 ended on September 30, and today the Treasury Department reported that the deficit for 2004 was $413 billion, or 3.6 percent of Gross Domestic Product.

At 3.6 percent of GDP, the 2004 deficit marks the fourth consecutive year of fiscal deterioration, the first time this has happened since the U.S. entered World War II.

At 3.6 percent of GDP, the 2004 deficit is up from the 2003 level of 3.5 percent of GDP and is the highest level since 1993.

The deficit increased in 2004 even though the recession officially ended in November 2001. This is the first time since before the Depression of the 1930s that the deficit has continued to increase this far into a recovery.

At $413 billion, the 2004 deficit was $36 billion higher than the 2003 deficit, which stood at $377 billion. The growth of deficits has largely reflected stunning revenue declines.

Federal tax revenues this year are at their lowest level, measured as a share of the Gross Domestic Product, since 1959. In contrast, federal spending in 2004, measured as a share of GDP, is slightly below its average level of the last four decades.

Saturday, October 16, 2004
  Labor: Record Number Exhaust Unemployment Insurance The CBPP notes that:

Since late December, when the federal Temporary Extended Unemployment Compensation program stopped providing additional aid to individuals exhausting their regular unemployment benefits, a record number of jobless workers have exhausted their regular benefits, gone without federal aid, and received neither a paycheck nor an unemployment check. Based on actual figures through August and the author’s estimates through mid-October:

The three-million figure. From late December through the middle of October, an estimated 3,053,000 unemployed individuals will have exhausted their regular unemployment benefits. About 34,000 of them will have qualified for additional unemployment aid through the federal/state extended benefits program. The remaining three million individuals will not have qualified for any federal unemployment benefits.

The record that has been set. The three million jobless workers exhausting their regular benefits and going without federal aid from late December through mid October is higher than the number of such exhaustees in any other period of comparable length on record.

  Poverty: TANF Cases Close as Poverty Increases and Unemployment Insurance Offers Little Help According to a new issue brief by the Center on Budget and Policy Priorities:

Between 2000 and 2003, the number and percentage of single mothers living in poverty increased while the percentage of single mothers with jobs fell. At the same time, poverty among children rose, and the number of children living below half of the poverty line increased by nearly one million. In response to this increase in poverty and need, the number of families receiving food stamps and Medicaid rose. The number of poor families receiving TANF cash assistance, however, continued to fall. TANF provided assistance to 845,000 fewer people in 2003 than it did in 2000.

Administration officials have attempted to portray TANF’s lack of responsiveness to increased need as a positive development and have suggested that unemployment insurance is filling that need rather than TANF. Wade Horn, the Assistant Secretary for Children and Families at HHS, has said that welfare reform moved poor single parents into the “economic mainstream.” According to Horn, the safety net for people who are part of the economic mainstream is unemployment insurance, not TANF.

Unfortunately and contrary to Administration claims, for most poor families, unemployment insurance has not proved to be an effective substitute for the TANF safety net during this period of labor market weakness.

  Politics: Sociologist Finds Terror Warnings Increase Support for Bush A study by a Cornell sociologist found that:
When the federal government issues a terrorist warning, presidential approval ratings jump, a Cornell University sociologist finds. Interestingly, terrorist warnings also boost support for the president on issues that are largely irrelevant to terrorism, such as his handling of the economy.
Study abstract:
This study investigates the possibility that government-issued terror warnings could increase support for the president. This contention is supported anecdotally by the large increase in presidential approval immediately following the attacks on the United States of September 11, 2001. Additionally, social identity theory suggests that fear of external attacks leads to increasedsupport for standing leaders. To evaluate this proposition, I conducted several time-series analyses on the relationship between government-issued terror warnings reported in the Washington Post between February 2001 and May 2004, and Gallup poll data on Americans' opinions of President George W. Bush. Across several regression models, results showed a consistent, positive relationship between terror warnings and presidential approval. I also found that government-issued terror warnings increased support for President Bush's handling of the economy. Analyses intended to determine the duration of these effects were inconclusive.

full study (PDF)
Monday, October 11, 2004
  Economy: Earned Income Tax Credit for Corporations The Earned Income Tax Rate (EITC) is essentially a negative income tax designed to encourage work among poor and low-income Americans. According to the Economic Policy Institute (EPI):
The Earned Income Tax Credit (EITC) is a credit against federal personal income tax liability. Unlike most other tax credits, the EITC is refundable, that is, if the credit exceeds tax liability, the taxpayer receives the difference in cash from the Internal Revenue Service.

The credit is available only to the employed, with benefits varying with the number of dependent children in a household. The credit amount rises with earnings according to a fixed percentage for an initial range of income called the phase-in range. The effect is the same as a wage subsidy - for every dollar earned, the credit adds 8, 34, or 40 cents depending on whether the family has zero, one, or two children.

Once a taxpayer's wages push the benefit up to the legal maximum, the benefit stays constant for an additional range of income. We call this range the 'plateau' of the credit. Finally, at a certain point, the credit begins to decrease with additional income. This is called the "phase-out" range, with phase-out rates varying depending on the number of children.

According to a new report by the Institute on Taxation and Economic Policy, in the last three years 82 of the top Fortune 500 companies have experienced zero or negative tax rates. In addition, 28 corporations received tax rebates all three years 2001-2003.
Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies’ “negative tax rates” meant that they made more after taxes than before taxes in those no-tax years.

Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-03 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (–59.6% tax rate), Prudential Financial (–46.2%), ITT Industries (–22.3%), Boeing (–18.8%), Unisys (–16.0%), Fluor (–9.2%) and CSX (–7.5%), the company previously headed by our current Secretary of the Treasury.

full report (PDF)
  Criminal Justice: Capital Punishment and Juvenile Offenders The U.S. Supreme Court is set to examine the issue of the death penalty for children that are between the ages of 16 and 18 when they commit their crimes. America and Iran are the only countries known to use the death penalty for teenage offenders. In America only three states have executed juvenile offenders in the last ten years, Oklahoma, Texas, and Virginia.

US Supreme Court to examine death penalty for juveniles
ACLU: Juveniles and the Death Penalty
American Bar Association: Juvenile Death Penalty

Friday, October 08, 2004
  North Korea: A Little History Lesson Fred Kaplan goes into depth on how we got into the current mess with North Korea:

On Oct. 4, 2002, officials from the U.S. State Department flew to Pyongyang, the capital of North Korea, and confronted Kim Jong-il's foreign ministry with evidence that Kim had acquired centrifuges for processing highly enriched uranium, which could be used for building nuclear weapons. To the Americans' surprise, the North Koreans conceded. It was an unsettling revelation, coming just as the Bush administration was gearing up for a confrontation with Iraq. This new threat wasn't imminent; processing uranium is a tedious task; Kim Jong-il was almost certainly years away from grinding enough of the stuff to make an atomic bomb.

But the North Koreans had another route to nuclear weapons--a stash of radioactive fuel rods, taken a decade earlier from its nuclear power plant in Yongbyon. These rods could be processed into plutonium--and, from that, into A-bombs--not in years but in months. Thanks to an agreement brokered by the Clinton administration, the rods were locked in a storage facility under the monitoring of international weapons-inspectors. Common sense dictated that--whatever it did about the centrifuges--the Bush administration should do everything possible to keep the fuel rods locked up.

Unfortunately, common sense was in short supply. After a few shrill diplomatic exchanges over the uranium, Pyongyang upped the ante. The North Koreans expelled the international inspectors, broke the locks on the fuel rods, loaded them onto a truck, and drove them to a nearby reprocessing facility, to be converted into bomb-grade plutonium. The White House stood by and did nothing. Why did George W. Bush--his foreign policy avowedly devoted to stopping "rogue regimes" from acquiring weapons of mass destruction--allow one of the world's most dangerous regimes to acquire the makings of the deadliest WMDs? Given the current mayhem and bloodshed in Iraq, it's hard to imagine a decision more ill-conceived than invading that country unilaterally without a plan for the "post-war" era. But the Bush administration's inept diplomacy toward North Korea might well have graver consequences. President Bush made the case for war in Iraq on the premise that Saddam Hussein might soon have nuclear weapons--which turned out not to be true. Kim Jong-il may have nuclear weapons now; he certainly has enough plutonium to build some, and the reactors to breed more.

Yet Bush has neither threatened war nor pursued diplomacy. He has recently, and halfheartedly, agreed to hold talks; the next round is set for June. But any deal that the United States might cut now to dismantle North Korea's nuclear-weapons program will be harder and costlier than a deal that Bush could have cut 18 months ago, when he first had the chance, before Kim Jong-il got his hands on bomb-grade material and the leverage that goes with it.

The pattern of decision making that led to this debacle--as described to me in recent interviews with key former administration officials who participated in the events--will sound familiar to anyone who has watched Bush and his cabinet in action. It is a pattern of wishful thinking, blinding moral outrage, willful ignorance of foreign cultures, a naive faith in American triumphalism, a contempt for the messy compromises of diplomacy, and a knee-jerk refusal to do anything the way the Clinton administration did it.

Read full article

  Education: New Study Finds Inequality in Education Funding A new report from the Education Trust finds:

Most states continue to shortchange poor and minority students by failing to fairly fund the schools they attend, according to a new report released today by The Education Trust.

In 36 states, the highest-poverty school districts receive less money than the lowest-poverty districts when we account for what school funding experts say is the extra cost of educating low-income students. Nationwide, the disparity exceeds $1,300 per student.

“While some states rightfully have focused their attention on equitably funding their school districts, others have done little to close their funding gaps, and some gaps have grown even larger,” said Kevin Carey, senior policy analyst and author of the report. “Once again, we see that the students who need the most get the least.”

The Education Trust report also points out that money alone won’t close gaps in student achievement.

“Closing these gaps demands that state policymakers give poor and minority students more of everything that we know students need: challenging curriculum, qualified teachers, high expectations, regular assessments to ensure all children are learning – and yes, money,” said Kati Haycock, director of The Education Trust.

“We have set ambitious goals, and we need to support those goals by making sure that the schools serving poor and minority students get their fare share,” she said. “But we can’t lose sight of the fact that many educators are moving ahead and working to raise achievement for all students with the resources they have.

“They are proving every day that all children can be taught to high levels.”

The study examines K-12 funding provided by state and local governments. Those jurisdictions, rather than the federal government, control more than 90 percent of the money that schools receive.

Full report in PDF

  Economy: Government Borrows 1.1 Billion Dollars a Day According to the WP:

When Bush took office in January 2001, the government was forecasting a $5.6 trillion budget surplus between then and 2011. Instead, it is now expecting to accumulate an extra $3 trillion in debt -- including a record $415 billion in the fiscal year that ended Sept. 30. The government has to borrow an average of more than $1.1 billion a day to pay its bills, and it spends more on interest payments on the federal debt each year -- about $159 billion -- than it does on education, homeland security, justice and law enforcement, veterans, international aid, and space exploration combined.

Without doubt, the fiscal turnaround started with the bursting of the stock market bubble and was pushed forward by recession, terrorist attacks and corporate scandals not of the president's making. But conservative and liberal budget analysts agree that deficits were increased by the administration's policy choices: tax cuts amid swelling red ink and the costly invasion of Iraq.

  Healthcare: Tobacco Companies Could Have Made Safer Cigarettes From the Philadelphia Inquirer:

The U.S. tobacco industry resisted developing safer cigarettes because doing so would have been seen as a tacit admission that smoking is dangerous, a former Philip Morris Inc. scientist testified yesterday.

William A. Farone, a chemist who directed applied research at Philip Morris from 1976 to 1984, said the absence of commercially successful, low-risk cigarettes from the market is the result of the industry's decades-long refusal to acknowledge that smoking causes disease, rather than technical limitations.

"We know enough about the toxins in cigarettes to reduce at least some of them," Farone told a federal judge. Farone appeared as an expert witness for the U.S. Justice Department in its $280 billion racketeering suit against his former company and other U.S. cigarette makers.

Wednesday, October 06, 2004
  Iraq:Final Report on Iraq and WMD As if we don't know already, apparently Iraq didn't have weapons of mass destruction and those sanctions were working and there was not adequate planning before the war. According to the WP:
One by one, official reports by government investigators, statements by
former administration officials and internal CIA analyses have combined to
undermine many of the central rationales of the administration's case for
war with Iraq -- and its handling of the post-invasion occupation.

The release of yesterday's definitive account on Iraq's weapons -- and its
conclusion that Iraq no longer had weapons of mass destruction years before the
U.S.-led invasion -- is only the latest in a series of damaging blows to the
White House's strategy of portraying the war in Iraq as being on the cusp of

Monday, October 04, 2004
  Environment: States Taking Over the Fight Against Global Warming An article from Governing finds:
Minneapolis Mayor R.T. Rybak and officials from the states of New York, Massachusetts and Washington expressed frustration with the lack of federal legislation to combat global warning and described ways in which local and state governments are taking pollution restrictions affecting climate change into their own hands.

Welcome to Outside the Box, the blog of the Oklahoma Institute for Progressive Policy. This blog offers news, commentary, and analysis from a progressive perspective that seeks to advance policy discourse.
Location: Oklahoma

The Policy Shop is the blog of the Oklahoma Institute for Social Policy. This blog provides timely news and information and provides a forum for the free and open exchange of ideas about social and policy issues in Oklahoma.

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