By Rachel Goldfarb, originally published on Next New Deal
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Uncharted Interest Rate Territory (U.S. News & World Report)
Jason Gold points out that since interest rates have been declining for 33 years, none of today's lawmakers know quite what they're in for when the Fed begins to raise rates in 2015.
The Federal Reserve sent a clear signal about the strength of the U.S. economy on Wednesday, giving guidance suggesting it will “be patient in beginning to normalize the stance of monetary policy.” It is widely expected that the Fed will initiate an increase in historically low interest rates sometime in 2015, and in doing so will test a generation of lawmakers and policymakers who have never governed during a time of rising rates.
Many will refer to this rise as “interest rate normalization,” or rates settling in the 5 percent range. But that phrase gives people a false idea about the historic trends for interest rates: They've been declining for 33 years. So rising interest rates will be abnormal or new for most lawmakers. Interest rates did rise for 35 years from 1946 to 1981, but few of our current elected officials were in office then. For the handful that were, it was only for a very brief period before rates began falling.
In other words, this trend sends a message to nearly all lawmakers at the federal, state and local level: No matter how long you have served, you have never legislated or governed in an environment of sustained rising interest rates.
Roosevelt Take: Roosevelt Institute Fellow Mike Konczal says that raising interest rates is not the way to fight "financial instability."
Follow below the fold for more.
The Greatest Tax Story Ever Told (Bloomberg Businessweek)
Zachary R. Mider shares the story of the very first corporate tax inversion, in which a company incorporates abroad to avoid paying U.S. taxes. The idea was invented by a liberal tax lawyer in 1982.
A Big Safety Net and Strong Job Market Can Coexist. Just Ask Scandinavia. (NYT)
The strong safety net programs in Scandinavian countries, which include far more direct aid, might be more effective at getting people to work than the U.S. tax subsidy model, writes Neil Irwin.
How ALEC Helped Undermine Public Unions (WaPo)
Alex Hertel-Fernandez explains that ALEC's attacks on public sector unions aren't new: ALEC-backed anti-union laws were enacted in some states a decade before the Great Recession.
Pro-Warren Protesters Take Their Fight to Wall Street (MSNBC)
Zachary Roth reports on yesterday's protest at Citigroup's New York City headquarters, where protesters denounced the Citigroup-crafted measure weakening Dodd-Frank in the spending bill.
From the E.R. to the Courtroom: How Nonprofit Hospitals Are Seizing Patients’ Wages (ProPublica)
Paul Kiel and Chris Arnold profile the Missouri hospital that sues the most patients in the state. Nonprofit hospitals are required to offer low-cost charity care, but that isn't particularly regulated.