Who regulates whom?

In a recent paper, the Congressional Research Service (CRS) gives an overview of U.S. financial supervision. It notes: "Historically, major changes in financial regulation in the United States have often come in response to crisis. Thus, one could have predicted that the turmoil beginning in 2007 would lead to calls for reform." CRS did this report to provide a basis for evaluating such legislative proposals. It focuses on H.R.4173, the Wall Street Reform and Consumer Protection Act of 2009, which "would overhaul the financial regulatory structure." The paper includes discussions of capital requirements, federal financial regulators, and unregulated markets and institutions.

Who Regulates Whom? An Overview of U.S. Financial Supervision, R40249 (40pp/404kB), from Open CRS, Dec. 14, 2009

Public retiree health liabilities

Today the Government Accountability Office (GAO) released a study on state and local governments' retiree health liabilities, specifically: (1) what has been reported in their annual comprehensive annual financial reports (CAFR), (2) actions they have taken to address retiree health liabilities, and (3) the overall fiscal pressures they face.

Under accounting standards issued by the Governmental Accounting Standards Board (GASB) in 2004, governments are required to account for costs of other postemployment benefits (OPEB) when they are earned (during employment) and not when they are paid (during retirement). The largest component of OPEB is retiree health benefits. Historically, governments have not funded these benefits when they were earned, therefore much of their liability may be unfunded. According to GAO, the total unfunded OPEB liability in state and the largest local governments exceeds $530 billion.

For this study, GAO selected 10 governments and reviewed their actions in more detail: four states--Alaska, Nevada, New Jersey, and South Carolina; three counties--Montgomery County, MD; Harris County, TX; and Oakland County, MI; and three cities--Gainesville, FL, New York, NY; and Thousand Oaks, CA.

GAO found that some governments have addressed retiree health liabilities through prefunding using irrevocable trusts, and making benefit changes such as: (1) changing the type of health benefit plan, (2) changing the level of government contributions, and (3) changing eligibility requirements.

State and Local Government Retiree Health Benefits: Liabilities Are Largely Unfunded, but Some Governments Are Taking Action, GAO-10-61 (pdf, 49pp/772kB), Nov. 30, 2009

Restoring value to the minimum wage

In a paper issued today, Heidi Shierholz of the Economic Policy Institute (EPI) finds that the current minimum wage of $7.25 is 20% lower than its real value 40 years ago. To restore its value, she proposes setting the minimum wage at 50% of the previous year's average wage and indexing it annually thereafter. According to her formula, the minimum wage would be $9.80 in 2012, with incremental increases over the next two years.

The paper divides workers who would benefit from the new minimum wage into two groups: those directly affected because they earn less than the new minimum wage, and those who would be indirectly affected because they earn a little above it but "would likely see a wage increase as employers preserve internal wage ladders." In Hawaii, of its total workforce of 557,415 (from EPI analysis of 2008 Current Population Survey data), 55,932 would be directly affected by the new minimum wage and 22,219 would be indirectly affected. Among the paper's conclusions:

(Indexing the minimum wage) will help to reverse the trends toward increasing inequality and to restore income growth for millions of working families. These new steps for the minimum wage are a crucial component in the effort to ensure that the benefits of economic growth are shared broadly across the workforce.

FIX IT AND FORGET IT, Index the Minimum Wage to Growth in Average Wages, Dec. 17, 2009
      Briefing Paper #251 (pdf, 24pp/408kB)
      Press Release

Jobs in the recession

Bruce Katz, Director of the Metropolitan Policy Program at Brookings, testified yesterday before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on Economic Policy. "Creating Jobs in the Recession" presents highlights from his written testimony. Katz states three main points that would build on President Obama's Dec. 8 speech at Brookings and "try to connect Macro Economy Policy to Metro Economic Realities."

Katz's 3 points:

1. The American economy is a network of metropolitan economies. As a Metro nation, we need smart policies and targeted investments to enhance our competitiveness globally.
2. The Great Recession has affected different metro economies in radically different ways. There is no single American economy. Even with talk about a national recovery, many metro economies are mired in recession.
3. Federal efforts to bolster job creation need to connect "The Macro to the Metro." Metros need two kinds of federal responses:
   1. Quick intervention to prevent further job losses, e.g., direct fiscal assistance to local governments which employ 10% of the nation's workforce
   2. Creating jobs to build the next economy--low carbon, innovation fueled, and export oriented.

Creating Jobs in the Recession, Dec. 10, 2009

Backyard city hall

Local governments are releasing data in the hopes (and fears) that citizens will make it meaningful and "perhaps think differently about their city and its government." New York Times published a story today on city governments' release of formerly hard-to-get data sets which might change the way local governments "deliver programs, services and promises."

Advocates of these open-data efforts say they can help citizens figure out what is going on in their backyards and judge how their government is performing...

By releasing data in easy-to-use formats, cities and states hope that people will create sites or applications that use it in ways City Hall never would have considered.

9 1/2

In the United States, every 9½ minutes, someone is infected with HIV.

World AIDS Day