Subject: House of Cards, CBO minimum-wage study, and emerging market threats (AEI Economics Ledger) If you have

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CBO report on the minimum wage

White House downplays CBO report on minimum wage. Stan Veuger: It is astonishing to me that Furman and Stevenson dedicate the second half of their blog post to attempts to downplay the number of workers that firms would choose to fire if faced with a $10.10 minimum wage. For if there is one thing we learned from the administrations response to the CBOs most recent report on the Affordable Care Act, its that choices are good, no matter what incentives the government has created. A $4 minimum wage to help the long-term unemployed. Michael Strain: Fundamentally, we are talking about risk. Because of the federal minimum wage, the company knows that it has to take at least a $7.25-an-hour chance on a worker. If we knocked the minimum wage down to, say, $4 an hour, we would significantly mitigate employers' risk from hiring a long-term unemployed worker. Allowing employers to pay this group of people 45 percent less than other minimum-wage workers provides a strong incentive for businesses to give the long-term unemployed a shot. Beyond the minimum wage. Jim Pethokoukis: Why continue the debate? In its report, the CBO notes that in contrast to a minimum wage hike, an increase in the [Earned Income Tax Credit] would go almost entirely to lower-income families. So there you go. More bank for the billions of bucks. Lets expand the EITC, especially to offer more support to childless workers.

A growing threat from emerging markets

Is the US in for a slowdown ? Desmond Lachman: Developments abroad are signaling that the international economy could constitute a major headwind to the U.S. economic recovery this year. After all, the emerging market economies presently account for more than half of the global economy. Yellen ignores threat from emerging markets. Desmond Lachman: Yellen is probably correct in her judgment that the underlying strength of the U.S. economy will allow her to continue with the tapering policies of her predecessor. However, she does not do us a service by underplaying the very real risks to U.S. economic growth from a major part of the world economy.

Economics of climate change

What an 80 percent reduction in emissions would get us. Ben Zycher: If we apply the MAGICC/SCENGEN climate simulator developed at the National Center for Atmospheric Research, and

used by both IPCC and the EPA, and assume an 80 percent reduction in GHG emissions by the OECD90 (North America, Western Europe, Australia, New Zealand, and Japan), the warming averted by 2100 would be about 0.3 C.

Bankruptcy and bailouts

Five years after the bank rescue. Phillip Swagel: Five years later, the United States financial sector is in much better condition. Banks have absorbed losses from loans made during the bubble and rebuilt their capital, and investor confidence has returned. Mr. Geithners proposals did not all work right away or in the scale initially envisioned. In the end, however, Secretary Geithner deserves credit for making good on what he promised. EVENT AUDIO The Detroit bankruptcy: Conflicts and Implications

In other news
A better growth agenda than immigration reform. Andrew Biggs: Raising Social Securitys early retirement age from 62 to 64 or increasing the full retirement age from 67 to 70 would each increase GDP by around 1%. This is five times larger than the economic boost from immigration reform. In fact, raising the early retirement age would increase federal revenues by more than immigration increases the entire economy. Dont buy the hype about lagging US broadband. Roslyn Layton: In the U.S., headlines often read that America is falling behind other nations, particularly the European Union (EU), and that to achieve next generation broadband availability, more government involvement is needed. But government-led broadband is truly a house of cards: The U.S. has far better, Internet service than the EU, and the EU says so. Blogging House of Cards, season 2. Stan Veuger: Where were we? Francis Underwood, a Democrat representing South Carolinas 5th Congressional District (yeah, were talking fiction here, though this particular district did take longer than most in the South to change hands after Democrats took control post-Reconstruction), is the House Majority Whip. At the start of Season 1, he was passed over for the post of Secretary of State in a new Democrat administration. That did not please him . . .

Mark your calendar

Today! AEI Event: The retirement crisis: A statistical mirage? 2.24 AEI Event: Minimum wage or earned income tax credit: Which helps the poor more? 2.27 Jobless claims released 2.28 GDP report

Keep up with AEIecon

Get up-to-the-minute updates on Twitter @AEIecon. Read more from the American Enterprise Institute economic policy team at www.aei.org/economics. Contact Abby at abby.mccloskey@aei.org if you have questions for the economics team. Sign up for a weekly copy of the LEDGER here. If you were forwarded this message, click here to subscribe to AEI newsletters. Click here to unsubscribe or manage your subscriptions. American Enterprise Institute for Public Policy Research | 1150 Seventeenth Street, NW, Washington, DC 20036 | 202.862.5800 | www.aei.org