- On Capitol Hill
- On Wall Street
- In the Press
- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
The Urban Institute recently published a Retirement Security Data Brief that shows Americans are contributing more to defined contribution (DC) plans of the 401(k) variety than to defined benefit (DC) pension plans as less employers offer DB plans to their employees. This supports SCEPA research, which has documented the effect of this structural shift in the labor market (INCLUDE LINK) - a downward trend in individual’s ability to retire at their current standard of living due to high fees and market losses.
In their documentation of this trend, The Urban Institute’s analysis can be misleading. It shows that when adjusted for inflation, DC assets have increased by 5 percent from 2007 to 2012, suggesting that DC accounts have recovered from the recession and that these accounts can recover from market vulnerability. However, this calculation includes yearly workers’ contributions, which is the same problem faced by the Beardstown Ladies, the savvy group of older women who pooled their knowledge to invest their money. Their fantastical returns reported in their best selling book were audited when it was discovered they included their contributions as earnings.
When yearly contributions are subtracted, the increase is only 1 percent - hardly enough to be considered a recovery and certainly not enough to adequately prepare for retirement.
American workers retirement plans are not working as hard for them as they should. If these funds had been contributed to a Guaranteed Retirement Account,it would have created a more stable and significant source of retirement funding. The GRA shields workers' hard-earned savings from stock market crashes by pooling investments and guaranteeing a rate of return. GRA plans would provide 3 percent returns above inflation, plus the 5 percent of combined employee-employer annual contributions. This 8 percent increase over 4 years would mean an increase of 32 percent, including their own contributions.
In principle, the social cost of carbon emissions measures the overall impact of greenhouse gas emissions on societal well-being. The U.S. government uses estimates of the social costs of carbon (SCC) to perform cost-benefit analyses of proposed emission-control legislation, giving this number a significant role in the economic analysis – and subsequent decision-making – regarding climate change policy.
“The Social Cost of Carbon Emissions,” is a joint Policy Note by SCEPA and the Institute of New Economic Thinking (INET) that reviews the welfare economics theory fundamental to the estimation of the SCC.
Several key points are raised:
- The SCC concept is meaningless unless the economy is presumed to be at full microeconomic equilibrium. In that case, society’s willingness to pay for mitigating the adverse effects of greenhouse gas emission must be equal to the marginal cost of mitigation. Many estimates of the SCC are inconsistent, based either on willingness to pay or marginal costs. A discrepancy between the two estimates signals that reducing current consumption to pay for more mitigation is unnecessary.
- Most calculations of the SCC are based on the assumption that the social rate of discount is constant. In full dynamic micro equilibrium, however, the discount rate will change over time, meaning that such estimates make no sense.
- Numerical estimates of the SCC along a fully optimal path suggest that the marginal cost and benefit of mitigation would be around $200 per ton of carbon. The total annual cost would be around 2% of world GDP, roughly the same amount as spending on defense. As consumption growth slows over time, the discount rate would decline. At the same time, there should be relatively high mitigation spending in the near future to reduce the base level of atmospheric carbon concentration in anticipation of years to come.
A new SCEPA report, "Are Maryland Workers Ready for Retirement?" is raising awareness about the retirement crisis in Maryland. On March 31, 2013, The Baltimore Sun ran the article, "40% of Older Households in Maryland Ill-Prepared for Retirement, Study Finds" citing the report. SCEPA director Teresa Ghilarducci is quoted saying that the fact that Maryland is a relatively high-income state, "puts an exclamation mark on the end of the sentence that all of America has a coming retirement crisis." On April 5, 2013, Plan Sponsor ran "Nearly Half of Marylanders Not Plan Participants", citing the study.
The report finds that four out of ten households headed by someone aged 55-64 in Maryland will receive the majority of their retirement income from Social Security or won't be able to afford retirement. The study also finds that more than 1 million workers in Maryland aged 25 to 64 do not participate in an employer-sponsored retirement plan. Many of these workers lack access to employer-sponsored retirement savings accounts due to a decrease in the number of jobs that offer traditional pensions or employer-sponsored plans. SCEPA has conducted similar research on New York City residents' preparedness for retirement and is currently conducting studies for Connecticut, Washington, and Illinois.