Last week, Federal Reserve Chairman Ben Bernanke announced his institution would launch a third round of quantitative easing — the monetary stimulus the Fed has used intermittently to boost the economy since 2008 — in an effort to finally fulfill the “reduce unemployment” half of the Fed’s dual mandate. In response, Vice Presidential Candidate Paul Ryan denounced the move as “sugar high economics” and repeated to the Christian Broadcasting Network his assertion that “the costs outweigh the benefits” of QE:

I’m not a fan of QE3. I wasn’t a fan of QE2 either. I think in the long run it will do more harm than good. But what this is is it’s the Federal Reserve and the monetary policy trying to bail out the fact that we have terrible leadership on fiscal policy from President Obama…

I fear that it undermines the ultimate credibility of our currency, of our money and you need to have sound money. It’s a necessary pre-condition for economic growth. We have loose money already so it’s not a question of having too tight of a monetary policy. We have exceptionally loose monetary policy… This kind of easing hurts savers, questions the credibility of our currency, and I think ultimately the costs outweigh the benefits.

Watch it:

ThinkProgress already reported on the problems in Paul Ryan’s cost/benefit analysis: Inflation remains at a near-historic low of 2 percent — far below the 12 percent inflation of the 1970s — while unemployment is still at 8 percent. The Fed’s interest rates have nowhere to go but up, meaning inflation could be easily reined in if it began to dangerously rise.

Bernanke himself has already estimated the initial rounds of QE created as many as 2 million jobs. And the “savers” that Ryan says could be hurt are in fact a very narrow group, according to Dean Baker of the Center for Economic and Policy Research: “Realistically there are not a lot of people who both have substantial savings (enough that the interest makes up a big share of their income) and who kept it exclusively in short-term assets… The winners from a policy to boost growth through lower interest rates vastly outnumber the losers.”

Ryan’s claim that monetary policy is already “exceptionally loose” is also questionable. Milton Friedman, the 20th century economist beloved by many conservatives, argued that interest rates are actually poor indicators of monetary policy. Better indicators are inflation and nominal GDP growth, a view with which Bernanke has concurred. Both the inflation and NGDP growth trends suggest monetary policy is actually too tight.

Ryan is certainly right that monetary stimulus is a second-best option for boosting the economy after better fiscal policy. But the international and domestic evidence shows that Ryan’s preferred fiscal policy would drive the economy further into the ground. Meanwhile, the Republicans’ control of the House and their filibuster in the Senate have enabled them to torpedo fiscal policy that would actually help.

In another attack on the boogeyman of “big government,” Gov. Scott Walker (R-WI) is moving forward with a new measure to remove the requirement for electrical safety measures in state building codes. The proposal, which was approved by the governor in late June, is now subject to more in-depth study by state officials and testimony from experts.

The safeguards are designed to detect unsafe conditions and prevent electrical fires. And Walker is moving ahead with his plan to remove them, even though his own proposal finds they add barely anything to the cost of construction:

Mandatory requirements designed to detect fire-causing conditions, stop electric shocks and keep children from sticking foreign objects into electrical outlets have been targeted for removal from the state code, according to a governor-approved plan to rewrite the rules to administer the code. [...]

Joe Jameson [President of the South Western Wisconsin Electrical Inspectors Association] called the proposal “bizarre,” saying the safety requirements add about $200 to a typical $200,000 home, and even the proposal notes the “economic impact is minimal.”

This isn’t the first time that Governor Walker’s numbers haven’t made sense. After all, he plowed ahead with his attempt to dismantle unions in his state, in spite of the fact that such a radical policy change saved Wisconsin essentially no money.

In a response to concerns raised by electrical inspectors, the governor’s office offered little comfort, saying just that “the change to this rule simply reflects concerns that were raised to DSPS [Department of Safety and Professional Services] by individuals who construct homes. Instead of mandating the use of these products, this rule change would make it optional.”

– Nathaniel Niemann

Today, protesters took to the streets of New York City to mark the one year anniversary of Occupy Wall Street. Already, more than 100 activists have been arrested. Here are some photos from the demonstrations today and over the weekend:

Credit: Associated Press

Credit: Flick user Scott Lynch

Credit: Reuters

Credit: Associated Press

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According to a new report by the Congressional Research Service, cutting taxes for the wealthiest does not cause economic growth, despite constant conservative claims that it will. Instead, tax cuts for the rich merely exacerbate income inequality, CRS found:

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

As this chart shows, per capita GDP growth rates and the top tax rate have essentially no relationship:

This jibes with other recent studies that show little relationship between the top tax rate and economic growth. A new analysis by Owen M. Zidar, a former staff economist on President Obama’s Council of Economic Advisers and a graduate student at California-Berkeley, found that “a one percent of GDP tax cut for the bottom 90% results in 2.7 percentage points of GDP growth over a two-year period. The corresponding estimate for the top 10% is 0.13 percentage points and is insignificant statistically.” GDP growth, business investment, and a host of other economic indicators were all stronger during the 1990s, after taxes were raised on the rich, than during the supply-side eras of Presidents George W. Bush and Reagan.

Today marks the one year anniversary of the Occupy Wall Street protests, and activists intend to mark the milestone by holding a new round of demonstrations. Dozens have already been arrested, even before the main protests began.

Occupy Wall Street managed to turn the attention of America’s politicians, at least for a moment, to income inequality, economic mobility, and the dismal state of both in the U.S. Here are some key facts and figures to know as Occupy once again takes to the streets:

1) Income inequality grew in 2011. According to data released last week by the Census Bureau, the gap between the wealthiest Americans and those in the middle grew last year, as all but the richest 20 percent of the country saw their income drop.

2) America’s 1 percent have 288 times as much wealth as the median household. This constitutes a huge increase from 1962, when the ratio was 125-1.