'Tax Reform Is Hard. Keeping Tax Reform Is Harder': Highlights from the House Tax Cuts Hearing
The House Ways and Means Committee held a three-hour hearing Wednesday on the effects of the Republican tax overhaul. We tuned in so you wouldn’t have to.
As you might have expected, the hearing was mostly an opportunity for Republicans and Democrats to exercise their messaging on the benefits or dangers of the new law, and for the experts testifying to disagree whether the gains from the law would outweigh the costs. But there was also some consensus that it’s still very early to try to gauge the effects of the law that was signed into effect by President Trump less than five months ago.
“I would emphasize that, despite all the high-quality economic research that’s been done, never before has the best economy on the planet moved from a worldwide system of taxation to a territorial system of taxation. There is no precedent,” said Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office. “And in that way we do not really know the magnitude and the pace at which a lot of these [effects] will occur.”
Some key quotes from the hearing:
Rep. Richard Neal (D-MA), ranking Democrat on the committee: “This was not tax reform. This was a tax cut for people at the top. The problem that Republicans hope Americans overlook is the law’s devastating impact on your health care. In search of revenue to pay for corporate cuts, the GOP upended the health care system, causing 13 million Americans to lose their coverage. For others, health insurance premiums will spike by at least 10 percent, which translates to about $2,000 a year of extra costs per year for a family of four. … These new health expenses will dwarf any tax cuts promised to American families. … The fiscal irresponsibility of their law is stunning. Over the next 10 years they add $2.3 trillion to the nation’s debt to finance tax cuts for people at the top – all borrowed money. … When the bill comes due, Republicans intend to cut funding for programs like Medicare, Medicaid and Social Security.”
David Farr, chairman and CEO of Emerson, and chairman of the National Association of Manufacturers: “We recently polled the NAM members, and the responses heard back from them on the tax reform are very significant and extremely positive: 86 percent report that they’ve already planned to increase investments, 77 percent report that they’ve already planned to increase hiring, 72 percent report that they’ve already planned to increase wages or benefits.”
Holtz-Eakin: “No, tax cuts don’t pay for themselves. If they did there would be no additional debt from the Tax Cuts and Jobs Act, and there is. The question is, is it worth it? Will the growth and the incentives that come from it be worth the additional federal debt. My judgment on that was yes. Reasonable people can disagree. … When we went into this exercise, there was $10 trillion in debt in the federal baseline, before the Tax Cuts and Jobs Act. There was a dangerous rise in the debt-to-GDP ratio. It was my belief, and continues to be my belief, that those problems would not be addressed in a stagnant, slow-growth economy. Those are enormously important problems, and we needed to get growth going so we can also take them on.”
“Quite frankly, it’s not going to be possible to hold onto this beneficial tax reform if you don’t get the spending side under control. Tax reform is hard. Keeping tax reform is harder, and the growth consequences of not fixing the debt outlook are entirely negative and will overwhelm what you’ve done so far.”
Steven Rattner: "We would probably all agree that increases in our national debt of these kinds of orders of magnitude have a number of deleterious effects. First, they push interest rates up. … That not only increases the cost of borrowing for the federal government, it increases the cost of borrowing for private corporations whose debt is priced off of government paper. Secondly, it creates additional pressure on spending inside the budget to the extent anyone is actually trying to control the deficit. … And thirdly, and in my view perhaps most importantly, it’s a terrible intergenerational transfer. We are simply leaving for our children additional trillions of dollars of debt that at some point are going to have to be dealt with, or there are going to have to be very, very substantial cuts in benefits, including programs like Social Security and Medicare, in order to reckon with that.”
McDonald’s Aims for a Classier Crowd with Lobster Rolls
As sales continue to fall, McDonald’s is desperately trying to reinvent itself, and its latest efforts seem to be aimed at a slightly classier crowd.
New England-area McDonald’s are going to start selling lobster rolls again after a 10-year hiatus, according to a report on Fox CT. No word yet on whether the old name McLobster will be revived.
The new lobster roll is reportedly made from 100 percent North Atlantic lobster, and includes mayonnaise, a bed of lettuce, and a small, toasted roll.
The meal has 290 calories and sells for $7.99.
McDonald’s introduced lobster rolls nationwide for the first time in 1993. Although the launch was a commercial disappointment, the rolls were still available seasonably in New England until 2005. Select McDonald’s restaurants in Canada also offer them for a limited time each year.
There were several reasons for the 1993 McLobster’s failure. Not only were customers wary of a “quality” seafood item served at a fast food chain, but the roll cost $5.99 (about $7.50 in 2015 dollars), a high price relative to the rest of menu.
The new lobster roll will also be expensive and doubts about the quality of its fast food continue to haunt the house that Ronald built. Given those barriers and the company’s track record, it seems unlikely that this particular crustacean-based sandwich is going to be driving a meaningful revival for McDonald’s any time soon.
Most Americans Are Happy at Work, but Feeling Burnt Out
They’re working longer days and clocking weekend hours, but nearly nine in 10 employees are still happy at work and motivated to rise in their organizations, according to a new report from Staples Advantage, the business-to-business arm of Staples, Inc.
The study was not all positive, however. Twenty percent of all workers surveyed and 25 percent of millennials said they expected to change jobs in the next year. Many said they feel chained to their desks during the workday, and 53 percent say they are feeling burnt out.
About half of employees polled said that they feel they can’t get up for a break at all, and just under half eat lunch at their desk.
Related: The One Quick Way to Boost Worker Productivity
“While many are still happy at work, we have to ask whether it’s because they’re truly inspired and motivated, or simply conditioned to the new reality?” Dan Schwabel, founder of WorkplaceTrends.com said in a statement. “Either way, employers need to adjust to win the war for talent and optimize productivity, engagement, and loyalty with employees.”
A quarter of employees say they are working after the standard workday has ended, and about 40 percent work at least one weekend per month. More than a third of workers say they put in those extra hours in order to finish work they didn’t have time to get to, and 22 percent say it’s because they want to get ahead for the next day.
The survey also looked at factors that erode employee productivity, with workers citing email overload and inefficient meetings as top factors. One if five workers said that they spend more than two hours per day in meetings.
Navy Paying Microsoft Millions to Maintain Obsolete Windows XP
Microsoft first introduced Windows XP in 2001. Last April Microsoft discontinued official support for the software. However, one major customer just signed a $9.1 million contract with the company in exchange for ongoing support of the system. The customer? The U.S. Navy.
Although the Navy has begun transitioning away from XP, it has about 100,000 workstations still using the software, including computers on ships, submarines, and other vessels. The entire contract could wind up costing the Navy nearly $31 million if it lasts until the June 8, 2017 deadline, according to CNN Money.
The Navy didn’t acknowledge the termination of the software until Vice Admiral Ted Branch, deputy chief information officer for the Navy, issued a memo in July 2014 requiring all PCs to transition to Windows 7 by April 30, 2015.
While Windows XP no longer receives regular security updates, Microsoft will supply the United States Navy’s Space and Naval Warfare Systems Command (SPAWAR) with custom security fixes for its products. Without the updates, the Navy would be susceptible to security threats.
The Navy still operates numerous applications and programs that rely on older versions of Windows, according to Steven Davis, a spokesman for the Space and Naval Warfare Systems Command in San Diego.
The Navy isn’t the only Microsoft customer that’s a little behind on the times. The Army signed a support agreement with Microsoft in April, and the IRS is also paying for custom support. In the corporate world, a staggering 44 percent of corporations still have the software installed on at least one PC.
This Match Is Going Public
An IPO for Those Who Think Love and Money Is a Match
The Match Group, home of the hugely popular dating apps and sites Tinder, Match, Chemistry, OurTime, and OkCupid, will issue an IPO in the fourth quarter. Mashable is calling it “the world’s flirtiest IPO.” Barry Diller’s InterActive Corp. (IAC), which owns the Match Group and a slew of other Internet brands, also appointed Joey Levin, formerly the CEO of IAC’s Search & Applications, CEO of IAC.
Back in 1995 when Match.com first debuted, people were skeptical of online dating, but today, dating apps and sites are big business. According to IBISWorld, dating sites are expected to bring in $1.17 billion in revenue this year, with apps totaling another $628.8 million. Online dating accounts for 48.7 percent of the revenue from U.S. dating services, but mobile dating apps such as Tinder are on the rise with 26.2 percent of the market.
Related: The Startup That Turned Down $30 Million from Mark Cuban
The largest dating service companies are the Match Group, eHarmony, Zoosk, Plenty of Fish, and Spark Networks. The Match Group leads the category, with nearly 22 percent share of the market. The Wall Street Journal reported the Match Group accounted for nearly one-third, or 29 percent, of IAC’s overall revenue in 2014. In the most recent quarter, the Match Group’s revenue was $239.2 million, or 30 percent of IAC’s revenue of $772.5 million.
With their portfolio of dating sites in more than 200 countries the Match Group is well positioned to market to the large generation of millennials worldwide. More than 7 million people sign up for their products every month.
Related: Love at First Byte: The Magic of Online Dating
As for what the Match Group’s ticker symbol might be on the stock exchange, the company’s lips are sealed. Many of the good ones are already taken. LOV belongs to rival Spark Networks, owner of JDate.com, ChristianMingle.com, and BlackSingles.com. DATE is the ticker symbol for Jiayuan, China’s largest dating site. LUV is taken by Southwest Airlines. Arrythmia Research Technology has HRT.
Apparently KISS is still available—if the Match Group gets lucky.
Why U.S. Productivity May Be Worse Than We Think
The new economy may be making it easier for people to work from home and in other non-office settings, but it isn’t necessarily making us more productive.
This week, the Bureau of Labor statistics released new data, which showed that Americans spent more time working last year than at any time in the survey’s 12-year history. However, employers aren’t paying workers for those additional hours worked, according to a new research note from Michael Feroli, Chief Economist at J.P. Morgan
That’s bad news for workers, who are doing additional work without earning any additional compensation, but it’s also bad news for the economy. The BLS measures productivity growth (output divided by hours worked) based on the number of hours reported by the employer.
Related: The Do’s and Don’t’s of Boosting Your Productivity
Even by that measure, productivity expanded just 0.6 percent per year from 2010 to 2014, compared to 2.1 percent per year from 2003 to 2009. But when looking at productivity growth based on hours worked from an employees’ perspective, productivity has remained totally flat since 2010, according to Feroli.
What’s behind the discrepancy? Feroli writes that it may have to do with the way we work in today’s economy. “Technology can tether one to the office every minute of the day and in every place, regardless of whether the employer pays for that degree of connectedness.”