Daniel Sutter: The economic performance of blue and red states
The Red vs. Blue state divide has driven national politics since the realignment of Southern states from Democratic to Republican. Because Republicans generally favor lower taxes and less regulation, the performance of Republican-dominated Red states offers evidence on whether smaller government is better for the economy. The results are surprising, but ultimately illuminating. To approach this, one first must classify states as Red or Blue. This is typically done based on voting in recent presidential elections. I like to use the average vote percentage of the Democratic candidate in the past four elections (back to 2000). This measure yields no real surprises: states like Alabama and Mississippi are Red, while California and New York are Blue. Possibly the best single economic performance measure is median household income, tabulated by the Census Bureau. When we compare states, the results are clear: Blue states outperform Red states. Income averaged across states was $62,000 in 2014 in the 13 “bluest” states, versus $53,000 in the 13 “reddest” states (including Alabama). Liberal bloggers claim such numbers prove low taxes do not grow the economy. These numbers clearly question the economic benefits of limited government which I often promote here. But I emphasize economic freedom, not party labels. Democrats and Republicans have made policy changes increasing (and decreasing) economic freedom. For example, President Carter deregulated trucking, railroads, and the airlines; while President Ronald Reagan lowered the top Federal income tax rate from 70 percent to 28 percent. Divided government under Presidents Bill Clinton and Barack Obama helped to hold federal spending in check. In addition, both current and past economic freedom — good and bad policies from 10, 20, or even 50 years ago — affect performance today. Businesses face significant costs to move their operations and will not move immediately if taxes rise. Many industries also cluster geographically, with financial institutions in New York, automobiles in Detroit, and high tech in Silicon Valley. Industry clusters often persist even if government policies become quite unfriendly for business, and do not spring up immediately upon adoption of better policies. Furthermore, economic freedom is not the only thing that people (and consequently firms) value. Economist Richard Florida, who has extensively studied regional economies, once noted the large number of four-star restaurants in California’s Napa Valley, in the heart of wine country. This concentration was driven by the desire of superstar chefs to live in northern California, not economics, since the competition hurts the profitability of each restaurant. People decide where to live and work based on things like climate, outdoor recreation (beaches and mountains), and the vitality and diversity of mega-cities, not just taxes and the ease of starting a business. So Blue states could readily have higher incomes today even if limited government is better for business. A more revealing analysis asks if Blue states with the most economic freedom are more prosperous, and similarly for Red states. The freest states among both groups, based on Economic Freedom of North America scores today and back to 1981, are indeed more prosperous. Median incomes are 15 percent higher in the most-free versus the least-free Blue states, and 6 percent higher in the freest Red states (25 percent if you don’t include Alaska). Indeed, I think politicians sometimes exploit local amenities to impose otherwise unacceptable tax and regulatory burdens. Lawmakers recognize people will pay high taxes to live in New York, Los Angeles, or San Francisco. But decades of poor policy — California and New York have the least economic freedom today — have taken their toll. Income in New York is only 10 percent above the national average. Economic freedom contributes to prosperity, but is not the only thing that matters in life. Freedom becomes more important because it is what policymakers can change today. We cannot undo bad policies of yesterday or duplicate California’s Pacific coast or the dynamism of New York City. We should focus on what we can control that matters, namely economic freedom. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s alone and do not necessarily reflect the views of Troy University.
Barack Obama signs short-term bill to fund government past election
President Barack Obama has signed a short-term funding bill to keep the government from shutting down at the end of the week. Lawmakers eager to leave town to campaign for re-election gave themselves breathing room by voting to continue existing spending levels for another 10 weeks, beyond the Nov. 8 election. Members of Congress will have to reach agreement on funding for the rest of the budget year when they meet in a lame-duck session after the election. The bill Obama signed Thursday also provides $1.1 billion to address the Zika crisis. And it has $500 million to help Louisiana flood victims. Republished with permission of the Associated Press.
Analysis: In debate, Hillary Clinton was prepared, Donald Trump was Trump
She was at her best. He was not at his worst. Weeks of Super Bowl-style hype aside, Monday night’s 90 minutes of heated clashes between Hillary Clinton and Donald Trump probably didn’t shove many undecided voters off the fence. If Clinton aimed to push her famously unpredictable opponent into a made-for-sharing disqualifying moment, she didn’t quite get there. If Trump set out to show America — particularly women — he’s completed the transformation from cartoonish pop culture staple to leader worthy of the Oval Office, he still has a way to go. But in a debate full of feisty exchanges and a personal scuffle or two, the candidates demonstrated clearly how they’ve gotten this far. Clinton was polished, prepared and proud of it —a Hermione Granger at a podium. She came with sharp and practiced answers, most notably a newly direct one for the questions about her private email server that has dogged her candidacy for months. She grinned broadly and calmly, even when under fire, and she mocked but only gently the man she called “Donald.” “I think Donald just criticized me for preparing for this debate. And, yes, I did,” Clinton said. “And you know what else I prepared for? I prepared to be president. And I think that’s a good thing.” Trump addressed his opponent as “Secretary Clinton” — even asking for her approval for the term — but by the end he called her “Hillary.” The care he took with her title was a reminder of the voters he was aiming to win over. Women, particularly college-educated white women, are the key to Trump turning his current burst of momentum into a sustained surge that lasts until Election Day. The 70-year-old businessman has struggled to persuade women, even those with doubts about the first woman president, to get behind his bid, thanks in part to his performances in past debates, which led to cringe-worthy challenges to moderator Megyn Kelly or opponent Carly Fiorina. Trump avoided another jaw-dropping, decorum-busting moment on Monday night, but it was hard to see that he did much to soften his image. He repeatedly and aggressively interrupted Clinton to rebut or deny her charges, at times talking over her or interrupting. When asked by moderator Lester Holt to explain a previous comment that Clinton doesn’t have a “presidential look,” Trump simply repeated the comment. “She doesn’t have the look. She doesn’t have the stamina,” he said. “To be president of this country, you need tremendous stamina.” Clinton came prepared to pounce: “Well, as soon as he travels to 112 countries and negotiates a peace deal, a cease-fire, a release of dissidents, an opening of new opportunities in nations around the world, or even spends 11 hours testifying in front of a congressional committee, he can talk to me about stamina.” As the debate went on, Clinton seemed to gain confidence and a better sense of timing. When Trump concluded a long and tangled defense of his years-long campaign to challenge President Barack Obama’s citizenship, she paused for a moment to let Trump’s words sink in. “Well, just listen to what you heard,” she said. Trump, too, had his moments. He delivered a searing indictment of Clinton as just another insider proposing the same-old solutions for an economy on the brink of “crashing down.” The riff was a potent reminder of why his candidacy has become a vehicle for the alienated white Americans feeling pinched by the economy and forces of globalization. “Typical politician. All talk, no action. Sounds good, doesn’t work. Never going to happen,” he said, encapsulating the core message of his campaign. He showed Clinton remains vulnerable on her support for trade deals, forcing Clinton in her clearest fib of the night when she denied having called the Trans-Pacific Partnership the “gold standard” of trade agreements and claimed she merely said she hoped it would be a good deal. But Trump missed opportunities to dive into Clinton’s other vulnerabilities. She was also able to make swift work of her email scandal, saying simply “It was a mistake and I take responsibility for that.” “That’s for sure,” Trump interjected, but left it there. The Republican didn’t raise Clinton’s description of half of his supporters as “deplorables” or the Clinton Foundation and its donor network. That left Clinton largely free to play the prepared grown up to Trump’s agitated upstart. Even Trump granted her that: “She’s got experience,” he said. “But it’s bad experience. And this country can’t afford to have another four years of that kind of experience.” Republished with permission of the Associated Press.
Updates from the 1st presidential debate
The Latest on the first of three presidential debates between Democrat Hillary Clinton and Republican Donald Trump (all times EDT): 10:45 p.m. Both candidates concluded the first presidential debate by saying they will accept the outcome if the other wins. Hillary Clinton spoke directly to viewers and said, “It’s not about us, it’s about you.” Donald Trump initially dodged the same question, saying he would make a “seriously troubled” America “great again.” He added: “I’m going to be able to do it. I don’t believe Hillary Clinton will.” But Trump finished his answer by saying that if Clinton wins, “I will absolutely support her.” ___ 10:43 p.m. Hillary Clinton is punching back at Donald Trump’s assertions that she doesn’t have the “stamina” to be president. Trump has questioned whether Clinton has the physical fitness to be president and he repeated the criticism to her directly during the debate. Clinton’s response? Trump shouldn’t talk about stamina until he’s tried out the busy schedule she kept up as secretary of state. Trump didn’t answer moderator Lester Holt’s original question about his past comments that Clinton doesn’t have the “presidential look.” Clinton suggested the remarks were about gender, and she reminded the crowd of Trump’s past comments calling women “pigs” and other derogatory names. ___ 10:42 p.m. Donald Trump says NATO needs to “go into the Middle East with us” to combat the Islamic State group. And he is taking credit for NATO focusing resources on combating terrorism. In fact, the alliance agreed in July to contribute aircraft and conduct training in Iraq and has increased intelligence coordination there. And NATO set up an anti-terrorism program in 2004 — years before Trump criticized them as a presidential candidate. Earlier this year, Trump criticized NATO for not focusing on terrorism. He said that afterward, he saw an article reporting that NATO was opening a new, major anti-terrorism division. He said Tuesday that NATO’s action was “largely because of what I was saying, and my criticism of NATO.” ___ 10:40 p.m. Donald Trump is avoiding a specific declaration on how he would use nuclear weapons if he’s elected president. The Republican nominee said during the first presidential debate that he “would not do first strike” because “once the nuclear alternative happens, it’s over.” That statement suggests he would not authorize a nuclear attack unless the U.S. was struck first. But in the same answer Trump said he “can’t take anything off the table.” He mentioned adversary nations such as North Korea and Iran. President Barack Obama has considered changing existing policy to state clearly that the United States would not deploy nuclear weapons without first being attacked by nuclear weapons. But he met resistance and has elected not to make such a shift. ___ 10:38 p.m. Hillary Clinton is accusing Donald Trump of being too easily provoked to keep the United States from going to war — perhaps even one involving nuclear weapons. Trump says: “I have much better judgment than she does. I have much better temperament.” That drew laughs from some in the debate crowd, and prompted Clinton to exclaim: “Woo! OK!” Clinton then pivoted to policy, defending the U.S.-led war in Afghanistan. Clinton said Iran was “weeks away” from a nuclear bomb when she became secretary of state — and says the Obama administration thwarted that progress. She continued that Trump didn’t have “good judgment or the right temperament” because he could take the country to war over small issues, like being mocked on Twitter. ___ 10:35 p.m. Donald Trump is continuing to insist he opposed the Iraq War before the U.S. invasion despite evidence to the contrary. Trump says during the debate that he “did not support the war in Iraq,” calling that charge “mainstream media nonsense.” But there is no evidence Trump expressed public opposition to the war before the U.S. invaded. Trump was asked in September 2002 whether he supported a potential Iraq invasion in an interview with Howard Stern. Trump briefly hesitated, then responded: “Yeah, I guess so.” Presented with the comment during the debate, Trump responds: “I said very lightly, I don’t know, maybe, who knows.” He’s also telling reporters to call Fox News host Sean Hannity to confirm private conversations he said they had about the war. Hannity is a top Trump supporter. Clinton voted in favor of the invasion in 2002 while she was a New York senator. She has since said it was a mistake. ___ 10:27 p.m. Donald Trump is interrupting the moderator of the first presidential debate to insist he has the best temperament for the office. Trump repeatedly made the assertion after clashing with moderator Lester Holt over his early support for the Iraq War. Then he segued to his temperament. “I think my strongest asset by far is my temperament,” Trump said. “I know how to win.” Clinton and her allies have repeatedly hit Trump over his temper and inability to take criticism. ___ 10:23 p.m. Hillary Clinton says one key to fighting terrorism in the United States is working closely with Muslims living here. Clinton says Donald Trump has “consistently insulted Muslims abroad, Muslims at home.” She says Muslim people can provide information that law enforcement may not be able to obtain anyplace else. Both candidates were asked to explain how they would combat terrorism in the U.S. Clinton says her plan includes an intelligence surge to obtain “every scrap of information” and to “do everything we can to vacuum up intelligence from Europe, from the Middle East.” ___ 10:20 p.m. Hillary Clinton says defeating the Islamic State group and taking out its leaders would be a top priority as president. Clinton says she’s hopeful the Islamic State group would be pushed out of Iraq by the end of the year. She says the U.S. could then help its allies “squeeze” the terrorist group in Syria. Clinton says she would do everything possible to take out the group’s leaders, and make that one of her administration’s organizing principles
Venturing to Mexico, Donald Trump defends right to build huge wall
On Mexican soil for the first time as the Republican presidential nominee, a firm but measured Donald Trump defended the right of the United States to build a massive border wall along its southern flank, standing up for the centerpiece of his immigration plan in a country where he is widely despised. Trump, who previously derided Mexico as a source of rapists and criminals, praised Mexicans Wednesday as “amazing people” following a closed-door meeting at the official residence of the country’s president, Enrique Pena Nieto. Trump and the Mexican president, who has compared the New York billionaire to Adolf Hitler, addressed reporters from adjacent lecterns before a Mexican flag. The trip, 10 weeks before America’s presidential Election Day, came just hours before Trump was to deliver a highly anticipated speech in Arizona about illegal immigration. That has been a defining issue of his presidential campaign, but also one on which he’s appeared to waver in recent days With political risks high for both men, Trump stayed on script, declining to repeat his promise to force Mexico to pay for a wall along the border between the two countries when pressed by reporters. While he and Pena Nieto talked about the wall, Trump said they didn’t discuss who would pay for a cost of construction pegged in the billions. “Having a secure border is a sovereign right and mutually beneficial,” Trump said, reading from prepared remarks. “We recognize and respect the right of any country to build a physical barrier or wall on any of its borders to stop the illegal movement of people, drugs and weapons. Cooperation toward achieving this shared objective — and it will be shared — of safety for all citizens is paramount to both the United States and to Mexico.” Trump’s presence on Wednesday, his first meeting with a head of state abroad as a presidential candidate, sparked anger and protests across Mexico’s capital city. Former Mexican President Vicente Fox bluntly told the celebrity businessman that, despite Pena Nieto’s hospitality, he was not welcome. “We don’t like him. We don’t want him. We reject his visit,” Fox said on CNN, calling the trip a “political stunt.” Pena Nieto was less combative as he addressed reporters alongside Trump. He acknowledged the two men had differences and defended the contribution of Mexicans working in the United States, but he described the conversation as “open and constructive.” He and Trump shook hands as the session ended. Pena Nieto’s performance came in for immediate condemnation from his many critics in Mexico. “Pena ended up forgiving Trump when he didn’t even ask for an apology,” said Esteban Illades, the editor of Nexos magazine. “The lowest point of the most painful day in the history of the Mexican presidency.” After saying during his Republican primary campaign he would use a “deportation force” to expel all of the estimated 11 million people living in the United States illegally, Trump suggested last week he could soften that stance. But he still says he plans to build a huge wall — paid for by Mexico — along the two nations’ border. He is under pressure to clarify just where he stands in the Wednesday night speech, which had been rescheduled several times. Trump’s running mate, Indiana Gov. Mike Pence, told CBS earlier in the day that Trump would make clear “that there will be no path to legalization, no path to citizenship. People will need to leave the country to be able to obtain legal status or obtain citizenship.” The buildup to the speech was abruptly interrupted Tuesday night by the news that Trump would visit Mexico, accepting on short notice an invitation offered last week by Pena Nieto. The newspaper El Universal wrote in an editorial that Trump “caught Mexican diplomats off guard.” Campaigning in Ohio earlier in the day, Democrat Hillary Clinton jabbed at Trump’s Mexican appearance as she promoted her own experience working with foreign leaders as the nation’s chief diplomat. “People have to get to know that they can count on you, that you won’t say one thing one day and something totally different the next,” she told the American Legion in Cincinnati. “And it certainly takes more than trying to make up for a year of insults and insinuations by dropping in on our neighbors for a few hours and then flying home again.” Trump has promised, if elected, to deport millions of immigrants who are in the United States illegally, force Mexico to pay for the construction of a wall to secure the nearly 2,000-mile border and renegotiate the NAFTA trade agreement to make it more favorable to the United States. Pena Nieto suggested there was room to improve the trade deal, which Trump described as unfair to American workers. The New York businessman promised to promote trade deals that would keep jobs in the Western Hemisphere. Pena Nieto made his invitation to both Trump and Clinton, who met with him in Mexico in 2014. The inclusion of Trump puzzled many in Mexico, who said it wasn’t clear why their own unpopular president would agree to meet with someone so widely disliked in his country. Pena Nieto has been sharply critical of Trump’s immigration policies, particularly the Republican’s plans to build a wall and have Mexico pay for it. In a March interview, he said that “there is no scenario” under which Mexico would do so and compared Trump’s language to that of dictators Hitler and Benito Mussolini. Pena Nieto did not repeat such criticism on Wednesday, but acknowledged Trump’s comments had “hurt and affected Mexicans.” “The Mexicans deserve everyone’s respect,” he said. Republished with permission of The Associated Press.
Bradley Byrne: Why tourism matters
It is that time of the year again. Families and students are flocking down Interstate 65 or across Interstate 10 to our Alabama beaches for spring break. Those of us who have lived here our entire lives know what it means: crowded roads, packed restaurants, and full hotels. What you may not have realized, is just how important tourism is to our area’s economy. In Baldwin County alone, 5.7 million tourists visited the beaches last year. About 46,000 people in Baldwin County are employed in the tourism and hospitality industry. Even more, the economic impact in just Baldwin County is over $3.5 billion dollars, and the number of visitors to our beaches continues to grow each year. Tourism isn’t just limited to the beaches. Many people travel to Mobile for Mardi Gras or to visit the historic city. In fact, the USS Alabama saw over 400,000 visitors last year and is one of the top five most visited tourist attractions in Alabama. Mobile also continues to grow and expand their tourist appeal. Just last week, I toured the new GulfQuest maritime museum in downtown Mobile, a great asset to our city that will boost tourism. In Escambia County, there is the Wind Creek Casino and Hotel, which helps support the local community and serves as a stopping point for many groups visiting our beaches. Finally, each year thousands of people travel to Monroeville for the annual performances of “To Kill A Mockingbird.” As the people in Monroeville know, hotels and restaurants are packed during play season. All told, the lodging tax revenue for just Baldwin and Mobile counties in 2015 totaled over $62 million dollars. That is money that can be used to support our communities and improve the quality of life for local residents. In Congress, I have made it a top priority to do everything I can to support tourism. I am a member of the Travel and Tourism Caucus and a co-chair of the Coastal Communities Caucus. Here are two specific areas where Congress can act to support Alabama’s tourism economy. First, Alabama’s visitors are primarily vehicle travelers, so it is critical we have a safe and reliable Interstate and highway system to help transport people to our destinations. For example, a new I-10 bridge over the Mobile River would go a long way toward boosting tourism, especially when it comes to people traveling from one of our neighboring states like Florida, Mississippi, or Louisiana. The bridge will also be an important hurricane evacuation route for moving people off our beaches in the unfortunate event of severe weather. Last year, Congress passed a long-term highway bill to make it easier to fund important highway projects. Now we need to cut through some of the bureaucratic delays and speed up these important projects. Second, we need to pass important reforms to get a longer Red Snapper season. Many visitors to our coastal communities want to go fishing, and a longer Red Snapper season would mean increased tourism. I was able to help get a bill through the House last year with three important reforms that would lead to a longer Snapper season. Now we just need to get that bill passed through the Senate and signed into law. Those are just two straightforward ways Congress can help support tourism, and in turn the economy, right here in Southwest Alabama. Ultimately, our area’s greatest asset will always be our people and our outstanding southern hospitality. I have no doubt visitors will continue flocking to Southwest Alabama for decades to come. • • • Bradley Byrne is a member of U.S. Congress representing Alabama’s 1st Congressional District.
Sonia Melendez Reyes: The middle class is no longer America’s economic majority
The middle class is no longer America’s economic majority. It’s the first time that’s been true in 40 years. There are now more low-income and high-income Americans combined than there are people in the middle class, a study released Wednesday found. According to a Pew Research Center report, there were 120.8 million adults living in middle-income households and 121.3 million in lower- and upper-income households combined in early 2015, marking the first time in the center’s four decades of tracking this data that the size of the latter groups has transcended that of the first. The study defines middle income as adults earning two-thirds to double the national median, which translates today to somewhere between $42,000 and $126,000 a year for a three-person household. Since 1971, the percentage of adults living in the low income bracket has increased from 25 percent to 29 percent, and the percentage of adults living in the highest income bracket has shot up from 14 percent to 21 percent. The middle class, meanwhile, has shrunk from 61 percent to about 50. That’s not entirely bad news. The shrinking of the middle class is due more to the rising number of high-income Americans, which increased 7 percentage points, than it is to the increasing number of low-income Americans, which increased by just 4 points. “In at least one sense, the shift represents economic progress,” the study notes. On the other hand, the rich are getting richer at a pace much faster than the middle and lower classes. According to the study, the median income of people in the high-income bracket shot up 47 percent between 1970 and 2014; meanwhile, the income of the middle class jumped 34 percent, and that of the low-income bracket increased by 28 percent. The widening wealth gap remains a hot topic on the presidential campaign trail. Vermont Sen. Bernie Sanders has made reducing income inequality a pillar of his bid for the Democratic nomination, while candidates from both parties have acknowledged the problem of the middle class’s decline. Sonia Melendez Reyes is the Deputy Communications Director at American Women
Alabama unemployment rate drops to 6%
Alabama’s unemployment rate has dropped to 6 percent. The governor’s office said Friday the seasonally adjusted jobless rate for September was 6 percent, down from the August rate of 6.2 percent. The number is a slight improvement from the same time last year, when Alabama’s unemployment rate was 6.3 percent. However, Alabama is still well above the U.S. unemployment rate of 5.1 percent. Unemployment is lowest in Shelby County, which had a September jobless rate of 4.1 percent. Wilcox County has the highest unemployment rate of 15 percent. Republished with permission of The Associated Press.
Daniel Sutter: Innovation and new football jobs
With football season in full swing, we should recognize some new ways that people can earn a living from football. The new jobs are made possible by the tens of millions of Americans who enjoy college and pro football, and the jobs do not require the athletic ability to play the game. Passionate college football fans like to follow their favorite teams year-round. Recruiting high school players is integral to the success of college teams, and highly ranked recruiting classes often predict future victories. Consequently hard core fans will want news about top high school players, their campus visits, and where they might go. Several national services have emerged to supply this news, both directly to fans and through partnerships with sports networks. The best known services are Rivals.com and Scout.com, which each operate networks of around 300 recruiting experts across the country. Rivals was established in 1998 and sold to Yahoo in 2007 for an estimated $100 million, indicating the profitability of recruiting news. Fantasy football allows NFL fans to enjoy the game even more. Over forty million Americans play, most in leagues with friends or coworkers. Many take the competition seriously enough to pay for analysis and advice. The Fantasy Sports Trade Association estimates that fantasy football products had $1.67 billion in sales in 2012. This allows fantasy experts to sell their services, either directly to players, or by providing content for websites hosting leagues. One day leagues offered by websites like FanDuel and DraftKings provide a new dimension. These tournaments involve play for cash among players who do not know each other. Scaling up participation allows for top prizes of $1 million or more each week. The Unlawful Internet Gambling Enforcement Act of 2006 classified fantasy sports as games of skill and thus legal, allowing this business to take off. Cash play further increases demand for experts’ knowledge and allows use of this expertise for large pay days. FanDuel and DraftKings have been caught up in “insider trading” allegations in the past several weeks, which may or may not slow their rapid growth. Technology and economics have enabled these new opportunities. The most significant has been the internet. College football magazines pre-date the internet, but today we have access to more information, more quickly, and at a lower cost. Experts’ websites allow them to aggregate modest amounts of money and attention (which translates into advertising revenue) from hundreds of people to earn a living. Websites able to host leagues have tremendously reduced the cost to friends of organizing a league, which previously involved recording statistics and making calculations by hand. The emergence of hundreds of TV channels with cable and satellite has led to narrowcasting and specialty networks. The first and most famous sports network is ESPN, but college conferences like the SEC and Big Ten now have their own networks. Specialized networks increase the audience for detailed recruiting news. NFL Sunday Ticket allows fantasy players to watch their NFL players in action. Sports radio allows experts to showcase their knowledge and direct listeners to their websites. Podcasts and YouTube allow experts to broadcast content to potential customers. A rising standard of living helps fans and fantasy players, many of whom are upper middle class, pay for specialized information. They will pay a $50 annual subscription fee to dominate their league or be the first to know that their alma mater just landed a star recruit. A prosperous economy also helps stake the experts in business. Providing information about a game might strike some people as frivolous and economically insignificant. Yet all goods and services have value because people are willing to exchange their money for them. Most value in our economy comes from activities which enrich and not just sustain our lives, so the value creation here is real. Jobs like college football recruiting guru or fantasy football advisor allowing die-hard fans to earn a living from their obsession might seem too good to be true. Americans have been enjoying football for decades, with top players earning millions. Innovation continues to grow this enjoyment, and now people who could not even play in high school can earn a living from football. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision.
Donald Trump unveils tax plan that would lower taxes for millions
Republican presidential front-runner Donald Trump on Monday proposed eliminating income taxes for millions of Americans, and lower rates for the highest-income earners, as part of a plan he said would grow the U.S. economy at a pace not seen in years. Trump’s plan for an overhaul of the U.S. tax code would eliminate federal income taxes on individuals earning less than $25,000 and married couples earning less than $50,000. He said those individuals would receive “a new one page form to send the IRS saying, ‘I win.’” Trump’s plan would also disproportionally benefit wealthy earners by lowering the highest income tax rate from 39.6 percent to 25 percent, and businesses by cutting their tax rate — from major corporations to mom-and-pop shops — to no more than 15 percent. “There will be a major tax reduction,” Trump said at a news conference at his Trump Tower skyscraper in Manhattan. “It’ll simplify the tax code. It’ll grow the American economy at a level that it hasn’t seen for decades.” Trump said he wants to eliminate the so-called “carried interest loophole” that allows managers of hedge funds and private equity firms to pay a lower tax rate than most individuals, and would reduce or eliminating most deductions and loopholes for both individuals and corporations. “In other words, it’s going to cost me a fortune,” he said. The billionaire real estate mogul said those changes would pay for the tax cuts, along with an increase in tax revenue generated by economic growth. Trump estimated that his plan would lead the economy to grow at least 3 percent a year, and as much as 5 or 6 percent — a rate of growth that most economists say is unrealistic. Trump said his plan would also bring in new sources of revenue to the Treasury by allowing corporations to bring money held in overseas accounts back to the United States after paying a one-time tax of 10 percent. He would also prevent companies from deferring taxes paid on income earned abroad. In sum, he says, the changes he wants to enact would not add to the annual federal budget deficit or the national debt. “We have an amazing code,” Trump said of his tax system. “It will be simple. It will be easy. It will be fair.” Trump said the plan had been crafted with the help of leading economists, but refused to say who they are during his news conference. He also said his plan didn’t suit any particular political agenda, describing it as a “common sense approach.” The tax plan is the third major policy proposal from Trump, who has also outlined plans for immigration and guns. He has been criticized for failing to unveil specific policy proposals as he’s risen in early preference polling. Republished with permission of the Associated Press.
Martha Roby: Don’t forget the economy
I’m glad the Congressional calendar allows me time in the month of August to travel around the 2nd District and visit with constituents. Listening to the cares and concerns of those I represent is a critical part of my job because it allows me to be a better voice for you in Washington. With all that is going on in the world, there is no shortage of issues to discuss. One important issue I don’t want Americans to lose sight of is the economic challenges that we still face. I’ve talked a lot about the “squeeze” that hits hardworking taxpayers when incomes remain stagnant while the costs of goods and services rise. That’s why I’ve spent time over the last week meeting with those who are sometimes affected the most by economic uncertainty: those who operate or work at small businesses, including the construction industry. I’ve visited with the Alabama Associated General Contractors in Dothan and Montgomery, met the Greater Montgomery Area Homebuilders in Millbrook, and held roundtable discussions wth gatherings of small business operators in Headland and Prattville organized by the National Federation for Independent Businesses. These groups each have unique issues. However, at every meeting and in each conversation, one common theme emerges: the burden unecessary federal regulations place on their ability to operate, grow and create jobs. Many times homebuilders are the “canaries in the coal mine” for economic conditions. General contractors and their employees face a great deal of uncertainty due to Washington’s inability to enact a comprehensive infrastructure plan. Small business owners bear the brunt of the “regulatory state,” with red tape from Washington tying them up at every turn. I can’t tell you how valuable it is for me to listen directly to those who sign the front of the paycheck about how they are affected by federal policies. It allows me to bring real stories back to Washington and push for common sense solutions. What are those solutions? For one, Congress has to aggressively push back on the “regulatory state” by exposing unnecessary regulations and limiting the Obama Administration’s ability to implement them. Also, it’s time to pass a comprehensive infrastructure plan that provides certainty for how our roads and bridges are going to be funded over the long term. And, we need to restore welfare-to-work policies that encourage citizens to join the workforce and then connect them with quality job training programs when they get there. Homegrown Alabama businesses are the backbone of our economy. Sometimes it is an uphill battle, but I’m proud to advocate on behalf of those who operate or are employed at small businesses in Congress. Martha Roby represents Alabama’s 2nd Congressional District. She is currently serving her third term.
Alabama business roundup: Headlines from across the state
Here’s a roundup of some of the top business headlines from across the state this week: AL.com: Japanese auto investment climbs in the U.S., including Alabama Total investments by Japanese automakers in their U.S. operations reached nearly $43 billion last year, according to new data from the Japan Automobile Manufacturers Association. That’s up from $40.6 billion in 2013. Direct employment at the automakers also grew to 91,122, up from 82,816 the previous year. “These figures demonstrate the ongoing commitment of Japanese automakers to the U.S. auto market and they signal a new day in Japanese brand auto manufacturing in America,” Ron Bookbinder, General Director of JAMA USA, said in a prepared statement. In Alabama, Japan’s Honda and Toyota each have a major manufacturing presence, and they have been part of the growth. Honda’s $2 billion, 4,000-worker auto assembly plant in Talladega County recentlykicked off production of the redesigned 2016 Pilot SUV and officially opened a $71 million, highly-automated engine assembly line. During the past three years, the plant has announced new investments of more than $508 million for projects to improve flexibility, enhance quality and increase production. It also has added more than 450 jobs. As for Toyota, the automaker’s Huntsville engine plant last year marked an $80 million expansion project and the production of its 3 millionth engine. It is the only Toyota plant worldwide to produce four-cylinder, V-6 and V-8 engines under one roof. Alabama Newscenter: Alabama Commerce Department adding new division, revising state economic development plan Alabama Commerce Secretary Greg Canfield told economic developers in the state today the Alabama Department of Commerce will add a new workforce division and is preparing to present the revised state economic development plan to Gov. Robert Bentley. Speaking to members of the Economic Development Association of Alabama (EDAA), Canfield said the most recent legislative session not only armed economic developers with better incentives to help recruit and expand industry and be more competitive with other states, but it also revamped the organization of the Department of Commerce. The new Workforce Development Division of the commerce department will be led by Ed Castille, the longtime leader of the state’s AIDT worker training initiative. Castille will become a deputy secretary of commerce and will retain his job as the head of AIDT. “This is not about meeting institutional needs. This is about meeting the needs of business and industry,” Canfield said. In addition to AIDT, the Workforce Investment Division and the Workforce Development Division of the Alabama Department of Economic and Community Affairs will move from ADECA to the new Department of Commerce division. The state’s 10 workforce development councils will realign from the Alabama Community College System to the new division. “Workforce readiness is a key issue facing every advanced manufacturer in the U.S.,” Canfield told EDAA members. “We want to make sure the state is properly aligned to address this need.” More change ahead The realignment is one of many proposals the state is adopting from the governor-initiated Alabama Workforce Council, which is made up of leaders from the private sector and chaired by Zeke Smith of Alabama Power. The Alabama Department of Commerce’s Business Development Division will continue to focus on recruitment and retention of industry, international trade, the state’s film office and other traditional functions of the department. In addition to the new organization, Canfield said the Department of Commerce is in the process of updating Accelerate Alabama, an economic development plan adopted three years ago. The plan identified the key industries the state is targeting in its recruitment initiatives, recognized areas for helping retain industry in the state and added a new focus on growing innovative companies from within while attracting research and development jobs to the state. Forecast for economic growth Since Accelerate Alabama was adopted, Canfield said the state has announced 55,736 new or future jobs and $13.2 billion in capital investment. Canfield said Accelerate Alabama 2.0 will build on that by better aligning the state’s workforce training initiatives with those targeted industries. It will also seek to improve on AdvantageSite, the state’s site certification program led by the Economic Development Partnership of Alabama, by certifying those sites for specific industries. Canfield said the plan will include ways for the state to work more closely with local communities to work with existing industry and will include ways to expand biomedical and life science industries in the state. “We’re going to make our commitment to that field a little more robust going forward,” Canfield said. In an interview after his remarks, Canfield echoed Gov. Bentley’s claim earlier this week that the new incentives are spurring increased interest in the state from prospective companies. “The response from the private sector and from site consultants indicate to us we’re in the right place to be in terms of how we’re going to be able to incentivize projects going forward,” he said. Alabama Newscenter: Alabama poised to grow in the distribution center industry A leading site consultant said Alabama is well-positioned to add a number of new distribution centers. Andy Mace, consulting managing director with Cushman & Wakefield, said all of the key variables needed for distribution exist in Alabama and cities like Birmingham compare favorably to Atlanta and other distribution hubs. Mace is familiar with Alabama, having worked with Thyssenkrupp’s location to Mobile County and other projects in the state. But he said even he was surprised to learn how well the state stacks up to competitors for distribution center projects. “The rest of the country doesn’t see Alabama as a distribution center state,” Mace told members of the Economic Development Association of Alabama at its conference this week. But maybe they should, Mace said, when you consider: A trucker can reach 33 percent of the U.S. population within a one-day truck drive from Alabama. Within a two-day truck drive, a truck from Alabama can reach 78 percent of the U.S. population. Alabama ranks 11th lowest in the nation in total cost to reach the entire U.S. population (based on costs for one truckload). In
