- 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.
On April 10, 2013, President Obama introduced his budget proposal for Fiscal Year 2014, which includes a controversial change in how the Social Security program determines benefits for seniors. In short, the President wants the program to determine cost of living adjustments based on a "chained" Consumer Price Index (CPI), rather than a traditional CPI.
The chained CPI assumes that people can easily substitute cheaper goods for households necessities. However, SCEPA Director and retirement expert Teresa Ghilarducci joins the PBS Newshour blog, "Does Obama Have it Right or Wrong on Social Security?," to argue that seniors face the opposite as they age, as more and more of their income is taken up by expensive healthcare services and other products that do not have cheaper substitutes. It is also increasingly difficult for the elderly, especially those with health problems or disabilities, to buy in bulk or go from store to store bargain shopping. This fact is well-documented and led the U.S. Department of Labor's Bureau of Labor Statistics (BLS) to develop a measure of inflation that reflects the true costs of aging: the Current Price Index for the Elderly (CPI-E).
On April 13, 2013, Ghilarducci was also interviewed on the Real News by Paul Jay, where she called the chained CPI proposal "heartless," stating that it ignores research on seniors' rising living expenses. She notes that the chained CPI would disproportionately affect elderly women who live longer than men and earn less over their lifetime.
The differences between the chained CPI and the traditional CPI are only .03% lower per year. However, these small cuts year after year would mean that the average retiree would lose $1,147 a year by age 85. The cumulative cuts to people on Social Security reach $28,000 by the time a retiree is 95 according to Social Security advocates. In contrast, linking Social Security benefits to CPI-E would raise benefits by 6% for a 95-year-old rather than cut them by tens of thousands of dollars.
On Tuesday, April 23, 2013, the PBS program Frontline aired "The Retirement Gamble," a news investigation into how the financialization of retirement savings via 401(k)-type accounts has eroded individuals' ability to retire. SCEPA Director Teresa Ghilarducci and Robert Hiltonsmith, a policy analyst at Demos, were interviewed on their work documenting the structural failure and high fees of the 401(k).
Frontline's investigation reveals:
- On any given street, one household may be paying 10 times as much to invest in a 401(k) as the household next door;
- Over the course of a lifetime, a seemingly low annual fee of 2 percent can reduce what your balance would have been by more than 60 percent—potentially adding years to your working life;
- Popular 401(k) providers often charge a plethora of hidden fees, burying them under opaque names like "Expense Ratio";
- Many financial advisers are not required to provide advice that is in their clients' best interest; they are only obligated to give advice that is "suitable"; and
- The best way to maximize your return might be to cut Wall Street out of the equation and invest in low-cost, unmanaged index funds.
On April 15, 2012, researchers at the Political Economy Research Institute published a paper that found that the Reinhart and Rogoff's influential paper Growth in the Time of Debt contained faulty research methods, including coding errors. Despite initial concerns about causation in their research - high public debt could be the consequence and not the cause of slow growth - this paper has informed austerity measures in the United States and Europe.
Before the knowledge of coding errors came to light, SCEPA research revealed that cutting government spending in a crisis comes with serious risks. SCEPA research found empirical evidence that reducing deficits will inhibit economic activity in the short-run, and may lead to higher debt-to-GDP ratios in the medium-run. SCEPA has also hosted a number of events on austerity politics and economics held in late 2011, "Do Budget Cuts Lead to Growth" SCEPA also held a second panel discussion on this theme "What the US Should Learn From Austerity's Fallout in Europe and Latin America" (April 17, 2012). The continued crisis in Europe demonstrates the realization of these risks.
In addition, SCEPA research also reminds us that the increase in U.S. fiscal deficits and U.S. government debt after the recession was not only the result of the fiscal stimulus program. Due to the operation of automatic stabilizers, the severe downturn in economic activity substantially reduced government revenues and increased spending, contributing to a higher fiscal deficit