Depositing or De-Leveraging?

Said a banker named Old Ebenezer:
"Don't think me a miserly geezer;
Though to work is a gift,
I must still practice thrift,
As my paycheck is going to Visa."

The Wall Street Journal reports that US personal income was up for the month of December, but spending was down ("Rising Income Is Saved, Not Spent"). This fresh statistic, which reverses the previous three months' higher spending, is cited – perhaps hopefully – as a break in the long-term pattern of Americans' spend-thriftiness. Conspicuous by its absence is any mention of the level of consumer debt, which was ruinously high before the crisis and, though since reduced, remains high today. In any discussion of the trends of American income and spending, one must take care to distinguish between actual saving and de-leveraging. I suspect that our thrift is really debt repayment.
Infographic courtesy of The Wall Street Journal.

Progressively Taxing Debate

Overtaxed, an economist meant,
Are America's top ten percent,
But his figures, while true,
Don't progressively view
The top tent' o' da tent' o' da tent'.

The Tax Foundation, a Washington-based think tank, concluded based on figures  published by the OECD that "no country leans on upper-income households as much as the US."  They based this conclusion on the fact that the income tax share of the top-earning 10% of US households is 1.35 times its income share, compared to the OECD average of 1.11 times.  However... the OECD economist behind the Tax Foundation's figures points out that the overall level of taxes and social spending in such countries as Sweden is far higher than in the US, resulting in more income equality there than here.  Moreover, a UC Berkeley study showed that the average tax rate actually paid by the US' top-earning 0.1% (where wealth is really concentrated) has declined from 65% in 1970, to 45% in 1994, to less than 35% in 2004.  

Hat tip to Harvard's Professor Greg Mankiw, who linked to the Tax Foundation on his blog and became the lightning rod for progressive criticisms such as this one.

Employers Pay More, Workers Get Less

At the Labor Department they noted,
"Compensation expenses are bloated."
Replied Commerce to that,
"Workers' wages are flat."
...And Aetna declined to be quoted.

Thanks to Real Time Economics, for keeping it real.

US Spending Rises, US Incomes Don't

When the fear of depression engendered it,
We saved 'til we learned the extent of it,
But an outlook that's flat
Isn't bad as all that,
So we've loosened up lately and spent a bit.