Economy

You Told Us: Here's What Raising the Wage Means to You

The Cost of Doing This Kind of Business: What Corporate Inversions Mean for America’s Future

9/26/14

A good way to build a stronger economy is to create a fairer and more efficient tax code -- one that promotes business investment and job creation in the United States. That is why the President has proposed business tax reform that will simplify the tax code by lowering the corporate tax rate and closing wasteful loopholes.

Congress has yet to act on the President’s proposal, and in the meantime, some companies continue to exploit unfair tax loopholes. One such loophole allows U.S. corporations to undertake an "inversion," whereby a company relocates their tax residence overseas, while changing very little else about its operations or business, in order to avoid paying taxes. With a simple change of paperwork, these companies can dramatically reduce their taxes, leaving other businesses and middle-class taxpayers to pick up the tab.

Dozens of U.S. corporations have taken advantage of the inversions loophole in recent years, and more are looking to follow suit. By renouncing their U.S. citizenship, these companies will cost our country nearly $20 billion over the next decade -- critical dollars that could be used to grow and expand the middle class.

The Treasury Department is using its authority to take initial, targeted steps to discourage American companies from inverting by limiting the benefits they would receive from such action. You don’t get to pick your tax rate, and neither should corporations.

Take a look at why the President has called on Congress to close the inversion tax loophole:

 

Third Estimate of GDP for the Second Quarter of 2014

9/26/14

Today’s revision confirms that economic growth in the second quarter was strong, and other recent data suggest that this momentum has continued into the subsequent months. While these indicators demonstrate that the economy has come a long way in recovering from the Great Recession, there is more work to do to both boost growth and ensure that growth translates into greater financial security for working families. The President will continue to do everything in his power to support investments in job creation and encourage higher incomes for workers.

FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS

1. Real gross domestic product (GDP) increased 4.6 percent at an annual rate in the second quarter of 2014, the fastest pace since the fourth quarter of 2011, according to the third estimate from the Bureau of Economic Analysis. The strong second-quarter growth represents a rebound from a first-quarter decline in GDP that largely reflected transitory factors like unusually severe winter weather and a sharp slowdown in inventory investment. Growth in consumer spending and business investment picked up in the second quarter, and residential investment increased following two straight quarters of decline. Additionally, State and local government spending grew at the fastest quarterly rate in five years. However, net exports subtracted from overall GDP growth, as imports grew slightly faster than exports. Real gross domestic income (GDI), an alternative measure of the overall size of the economy, was up 5.2 percent at an annual rate in the second quarter. 

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In Support of Paid Leave: 25 Million Stories

9/24/14

Ed. note: This is cross-posted on the U.S. Department of Labor blog. See the original post here.

Today, more than 30 million of America’s working families have young children, and more than 25 million workers provide unpaid care for elderly relatives and loved ones every year. The needs that they tend to aren’t always the kind that can be addressed in a day here or there.

While caregiving roles in the U.S. are changing, with more fathers and sons taking up primary caregiving responsibilities, the majority of family caregivers are women. In 2011, BLS data documented more than 5 million working women with children under three years old, translating into more than 5 million births or adoptions in the preceding three-year period – major life events that require absences from work.

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The President's Statement on Today's Treasury Department Action on Inversions

9/22/14

Today, the Treasury Department announced that it's taking action to reduce the tax benefits of -- and, where possible, stop -- corporate tax inversions from happening.

What's an inversion again? In short, it's a type of corporate tax deal wherein a U.S.-based multinational with operations in other countries moves the tax residence of the parent company overseas -- moving into a low-tax jurisdiction to avoid paying U.S. taxes. (Want more details? We break it down pretty thoroughly in this post.)

The President issued the following statement today about the Treasury's action.

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Promise Zones: Creating Opportunities

9/22/14

Ed. note: This is cross-posted on the U.S. Department of Housing and Urban Development's blog. See the original post here.

As the former Mayor of an urban Promise Zone community, I have a unique appreciation for the passion and dedication local leaders have when working to turn around their communities.

I saw San Antonio’s Promise Zone create new pathways allowing our citizens the chance to reach higher, dream bigger, and reach goals they never thought imaginable. They are about giving folks who have been under served for far too long the opportunity to build stronger neighborhoods and more prosperous lives. I am honored to share this opportunity with other communities across the country as they work to transform their futures.

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What’s a Continuing Resolution and Why Does It Matter?

9/19/14

This week, Congress passed and President Obama signed something called a Continuing Resolution, an important measure that ensures our government has the resources necessary to address key domestic and national security goals in the months ahead, including our strategy to degrade and destroy ISIL, and to continue normal government operations without disruption.

The President thanked Congress for their quick action in supporting our efforts: “I believe that we’re strongest as a nation when the President and Congress work together.  And I thank leaders in Congress for the speed and seriousness with which they approached this urgent issue -- in keeping with the bipartisanship that is the hallmark of American foreign policy at its best.”

But what exactly is a Continuing Resolution and what does this one include? Here’s a few answers to some key questions that many Americans may be asking: 

Q: So what is a Continuing Resolution?

In our government, the legislative branch holds the power of the purse, which means Congress is responsible for passing legislation to fund the government.  From funding our national defense to investing in job training and public infrastructure to maintaining government operations, Congress decides how to appropriate taxpayer dollars each fiscal year.  

However, if Congress fails to pass legislation to fund the government before a new fiscal year begins, they can pass legislation to keep federal operations going at the current spending levels. That legislation is called a Continuing Resolution (CR).

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World remains glum about economic prospects

9/17/14

By Bruce Stokes, Special to CNN

Editor's note: Bruce Stokes is the director of the Pew Research Center’s Global Economic Attitudes. The views expressed are solely those of the author.

Six years since the beginning of the Great Recession and publics around the world remain glum about the state of their economy and prospects for an economic recovery. In most nations, people say their country is heading in the wrong direction and most voice the view that economic conditions are bad, according to a new 44 country survey by the Pew Research Center conducted among 48,643 respondents from March 17 to June 5, 2014.

A global median of 60 percent see their country’s economy performing poorly, largely unchanged from last year. People in advanced economies, such as the United States and France, are slightly more negative than those in emerging markets. Only in developing economies is there some semblance of satisfaction with current national economic performance: 51 percent voice the view that their economy is doing well.

Those who see their economy in the most negative light are the Greeks (97 percent say economic conditions are bad), Italians (96 percent), Spanish (93 percent) and Ukrainians (93 percent). In the U.S., 58 percent are of the opinion that the American economy is not doing well; only 40 percent say its performance is good. Those most positive about their national economic conditions are the Chinese, Vietnamese and Germans, where more than 80 percent are upbeat.

In a half dozen countries, economic attitudes have soured in the last year. In 2013, a majority of Brazilians (59 percent) said their economy was doing well. Today only one third hold this view, a 27 percentage point drop in economic confidence. With a presidential election coming up in October, this cannot be good for the incumbent government. There has also been a 15 point decline in positive views of the economy in Venezuela and 13 point drop-offs in Argentina and Malaysia.

But, over the last year, the economic mood has brightened in a number of nations. In 2013 in the United Kingdom and Pakistan, only 15 percent and 17 percent of the public, respectively, thought the economy was doing well. In 2014, British assessments of their economic conditions are now up 28 points. Pakistanis’ economic frame of mind has improved by 20 points. Double digit improvements in economic mood are also found in Uganda, Israel, Indonesia, South Korea, Russia, Chile and Germany.

Expectations for the future of national economies are a bit more positive overall. A global median of 46 percent sees their economy picking up over the next year.

Regionally, people in Africa and Latin America are the most hopeful about the coming year, while nearly half of Asians agree. But only a quarter of Europeans expect economic conditions to improve.

The most optimistic nation is China (80 percent). But there are also high expectations in the Latin American nations of Peru and Colombia. The greatest rise in economic optimism has been in the U.K., where 45 percent are optimistic – a 23 point rise in a hopeful view of the future since 2013. A majority of Indonesians and Ugandans also expect their economy to perform better over the next year, with such confidence up 18 points and 15 points, respectively, since last year.

The greatest pessimists can be found in Greece, France, Lebanon and the Palestinian territories.

Americans are almost evenly divided about the economy’s trajectory: 35 percent are hopeful of improvement, 33 percent expect more of the same and 30 percent see conditions worsening. But there is a partisan divide in these views: 54 percent of Democrats expect economic conditions to improve, while just under half of Republicans anticipate that they will worsen.

But the greatest nosedive in optimism about the economy over the next 12 months has been in Japan, where just 15 percent foresee their economy improving, down from 40 percent who were hopeful a year ago, hardly an endorsement of Abenomics.

The public mood about the economy reflects recent economic conditions. Global growth slowed in the first quarter of 2014, immediately prior to the survey. At 2.75 percent, it was down a full percentage point from the growth experienced in the second half of 2013, according to the International Monetary Fund. Some nations, especially advanced economies, such as Japan, Germany, Spain, and the U.K., performed better than expected. But their success was outweighed by disappointing growth in China and the U.S. And weak demand in those economies sapped economic growth in emerging markets, where success is often driven by exports to the U.S. and China.

So, until economies pick up across the board, it may be difficult to see the global economic mood improve much. But therein lies much of the problem. As long as people are glum about the economy, they may be reluctant to spend and invest. And such reluctance may make it harder for the economy to attain lift off speed.


A Look Back at Lehman Brothers and Where We Stand Six Years After the Financial Crisis

9/15/14

September 15, 2008 -- a day that rocked the American economy to its core after Lehman Brothers, then one of the nation’s largest investment banks, filed for bankruptcy. The largest filing in history, Lehman Brothers’ bankruptcy sent shockwaves through the global markets and left families and businesses reeling.

In the months before the President took office, Americans watched as the private-sector cut 800,000 jobs a month, the housing market cratered, and the American auto industry threatened to collapse. That economic turmoil -- the severity of the challenges we faced in 2008 -- stand in stark contrast to where we are now, six years after the Great Recession.  Now, thanks to American workers and businessmen and women, our economy has added 10 million jobs and is growing stronger by almost every economic measure.

While there is more work to do to keep our economy moving forward, take a look back with White House Administration officials who shared the critical moment and key decisions the President made in three different areas of the economy to get us to where we are today. Then slide across the charts to see how far we’ve come in the last six years.

"The Epicenter of That Crisis": The Housing Market

The collapse of the housing market sparked the Great Recession, driving down home prices, halting construction on new homes, and forcing millions of families into foreclosure.

Listen as Shaun Donovan, former Secretary of Housing and Urban Development, describe how they created “most comprehensive, aggressive housing strategy that the country has ever seen” within the first few weeks of the Obama administration. There’s much more work to do but now, home prices are rising at a fast pace and homebuilders are breaking ground on 50,000 more homes each month than they were in 2009.

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Growing Our Economy and Strengthening Our Financial System

9/15/14

Six years ago today, Wall Street was rocked by a financial crisis that culminated in the bankruptcy filing of Lehman Brothers, the largest in U.S. history. The financial crisis resulted in the longest and deepest recession the American economy had experienced in 60 years. While more work remains to continue digging out of the deep hole that was left by the crisis, this week offers a chance to reflect on the significant progress that has been made since then in strengthening the economy and reforming the financial sector.

To understand how far we have come, it is important to remember the dark days that marked the beginning of the financial crisis. In the span of a few weeks in 2008, many of our nation's largest financial institutions failed or were acquired to avoid insolvency. Capital markets froze, and the availability of credit for mortgages, student, auto, and small business loans was drastically reduced. The recession ultimately eliminated nearly 9 million jobs, threatened the American auto industry, and shrank the economy by hundreds of billions of dollars. The crisis was the result of many factors, including an overvalued housing market, predatory lending practices, thinly capitalized financial institutions that took big risks, and a regulatory system that was outdated and unequipped to meet modern challenges.

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