None!

None!

@wifey

None!

Sovereign bankruptcy.

When a sovereign nation defaults on its debt, its creditors have two basic choices:

Participate in the inevitable negotiations and accept restructured debt -- probably with a substantial haircut -- in exchange for their pre-default claims; or
Hold out from the negotiations and engage in years of of time- and labor-intensive unpleasantness to try to enforce their original pre-default claims against the country.
Most people usually go with option 1: Usually when a country defaults there's a good reason for it, and the creditors' best bet for a recovery is if the country can get its debt back to a manageable level. On the other hand, if you work doggedly and creatively on option 2, you can make quite a lot of money, though at the cost of sleepless nights, great risk, and being treated as a public enemy in the defaulting country. So usually most creditors negotiate, some hold out, and much of the action in sovereign debt these days is about structuring bonds to solve the collective action problem and let the negotiating creditors bind the holdouts.




But Venezuela maybe kind of defaulted on its debt last week -- who knows!? -- and it's in a different situation. For one thing, there seems to be a vague market consensus that eventually its debt will be renegotiated by a new, democratic, legitimate, and so far hypothetical government that succeeds the current government of Nicolás Maduro, and that anything done to prop up the Maduro regime might ultimately be repudiated, so it is a bit risky for anyone to renegotiate their bonds now. More immediately, U.S. sanctions forbid creditors from renegotiating with the current regime even if they wanted to chance it. So when Maduro announced earlier this month, "I decree a refinancing and restructuring of external debt and all Venezuelan payments," he was mostly speaking metaphorically. It's not like many people -- other than Russia -- were going to show up at those restructuring talks.

So that leaves option 2. (Or of course the ever-present option 3, do nothing and hope somehow it all works out.) Option 2, in the case of Venezuela, is both exceptionally unpleasant -- Venezuela's lead negotiator is an alleged drug kingpin who allegedly "brought in armed gangs to intimidate" opponents in student elections -- and unusually interesting. Most sovereign debtors don't have a lot of assets abroad that creditors can seize. (NML Capital famously seized an Argentine Navy tall ship once, but it's not like it was able to sell the ship at auction.) But Venezuela's state-owned oil company, Petróleos de Venezuela SA, sells lots of oil abroad, and owns Citgo Holding Inc., a U.S. refining company. If you don't worry too much about the formalities, you might just think, well, Venezuela owes me money, and Venezuela owns Citgo, so I can foreclose on Citgo to satisfy my judgment.

If you do worry about the formalities, you might still think that, but it's a lot more complicated: Venezuela and PDVSA (and Citgo) are different entities, each with their own debts, and it's not obvious that you can go after PDVSA for the debts of Venezuela. But it's worth a try. Crystallex International Corporation is a Canadian mining company whose assets in Venezuela were expropriated years ago. It won an international arbitration award against Venezuela, got a judgment on that award in New York, and is now trying to get its hands on some Citgo assets to satisfy that judgment.

It is not obvious that this will work. Mark Weidemaier is skeptical, writing that "the case for alter ego liability" -- holding PDVSA responsible for Venezuela's debts -- "seems thin." Here is more from Richard Cooper and Boaz Morag of Cleary Gottlieb Steen & Hamilton LLP, who are similarly cautious, but who conclude that "One thing is clear: Crystallex’s efforts to pursue its alter ego claims against PDVSA will be closely watched by Republic and PDVSA creditors alike." If Crystallex's effort works, then everyone to whom Venezuela owes money is going to pile in and try to seize everything worth seizing. If it doesn't work then ... then it's not clear what will?

None!

One effect of Congressional Republicans' tax plan is to cut taxes on corporations. If corporations have to pay lower taxes, then they will have higher profits. The math on this is fairly straightforward. (Pretax profits minus taxes equals net income, is the math.) Higher profits are good. But the accounting math is slightly more complicated. "Bank of America Corp. Chief Executive Officer Brian Moynihan said his firm would also take a hit, having to decrease the value of its deferred tax assets." The rule is that if you lost money in the past, that means you can pay lower taxes in the future, but if taxes go down in the future then the future value of your past losses to offset taxes also goes down. By lowering taxes, the bill will lower the value of Bank of America's past losses to offset future taxes. That is ... a bad thing, accounting-wise ... but it requires a certain amount of mental gymnastics to conclude that it is a bad thing economically. Accounting says your past losses are good and your future lower taxes are bad. Common sense might disagree.

Another effect of the tax plan is to immediately tax multinational companies on certain income that they previously earned overseas. If corporations have to pay a big tax next year, then they will have less money next year, even if in the future they will have higher profits. Here, again, the accounting is not quite the same as the naive math. Apple Inc., for instance, "would immediately have to pay an estimated $31.4bn on its past overseas earnings, according to Richard Harvey, a tax professor at Villanova University who has testified before the Senate on Apple’s tax affairs." On the other hand, Apple "estimates that it would have to pay $78.6bn in taxes if it brought the money back under the current regime." ("However, with Apple choosing to defer the tax indefinitely, that bill is unlikely ever to come due in full."):

The difference between the two numbers is at least $47bn, a figure that exceeds the annual profits of any other US company.

Unlike most other US multinationals, Apple has already taken billions of dollars of charges in past years to reflect its potential taxes. It has set aside $36.4bn for those bills — more than the tax charge it is now likely to face — and would likely record the difference as a one-off profit.

The cash-flow impact is: Next year Apple will have to pay $31.4 billion that it wouldn't have had to pay under the current regime. That is a huge new one-time expense, which seems bad.

The impact under U.S. generally accepted accounting principles is: Next year Apple will have to pay $31.4 billion, but it had already reserved $36.4 billion for that expense, and will be able to release the reserve. That is a $5 billion one-time profit, which seems good.

The economic impact is: Next year Apple will have to pay $31.4 billion, which is $47 billion less than the $78.6 billion that it sort of expected to have to pay, but the $31.4 billion is now and the $78.6 billion was indefinitely deferrable, so the actual economic goodness or badness is a somewhat subjective and debatable matter. The GAAP approach -- using Apple's reserve as its best guess about the expected present value of that $78.6 billion -- is as good as any I guess.

None!

i would short it so much.

None!

i have to say that i've had 2 conversations about moving functions back to the U.S. after VPs of tax realized the rate would go to 20%. foreign low taxed structures are hard to maintain to keep a low rate. and yeah, the U.S. would be flooded with new foreign capital investment, guy isn't wrong there. we will see where this goes.

None!

he's 62.

None!

When you’re reporting on regulations, a simple question can turn existential pretty quick.

One minute you’re trying to figure out what’s in your bread, the next minute you’re asking questions like: What is bread? If I call something “bread,” does that make it bread?

Typically, there are just four ingredients defining breadiness: flour, water, salt and yeast. But breadmakers have long added another ingredient to even the simplest loaves. Wood. Sawdust. Wood fiber. In fact, there’s been some kind of wood in all kinds of food, from at least the dawn of the industrial era, up to today.

The story of edible — or less-than-edible — wood is the story of food regulation in a nutshell. Or maybe in a lumber yard.

The story starts in the 1700s, along the banks of Europe’s rivers, among mills and breadmakers who were trying to solve a problem: How do you feed the poor, cheaply?

“At some point some clever miller was like, ‘Hey, what if we combine the flour with sawdust?’” said Penn State food historian Bryan McDonald. “‘We're selling stuff by weight, and people don't really have a good way of knowing what’s flour and what’s sawdust.”

Wheat was scarce in Britain, but there was sawdust all over. Sometimes sawmills and gristmills even shared space.

Advocates for the poor weren’t as excited about this so-called “tree flour.” It started effecting customers’ health and the bread market, McDonald said. Mills and bakers that used sawdust, chalk and other fillers could undercut those that didn’t, and put them out of business.

Eventually, increasing government inspections and consumer demand gave rise to companies that promoted unadulterated food, like Nabisco and Quaker Oats in the 19th and early 20th centuries. Quaker sold its oats in cardboard boxes, which were novel for the time, featuring a kindly old man and scroll reading “pure.” It had a huge influence on America’s nascent packaged food industry, writes Andrew F. Smith in his book “Eating History.”

The U.S. didn’t have near the same problems with sawdust in bread as Europe because wheat was so abundant, McDonald said. Still, there’s evidence the “Poison Squad,” a sort of proto-Food and Drug Administration that tested food at the turn of the century, found their fair share of the stuff. Atlas Obscura dug up a poem by Harvey Wiley, a government food chemist who ran the experiments:

We sit at a table delightfully spread,

And teeming with good things to eat,

And daintily finger the cream-tinted bread,

Just needing to make it complete

A film of the butter so yellow and sweet,


Well suited to make every minute

A dread of delight.

And yet while we eat

We cannot help asking “What's in it?

Oh, maybe this bread contains alum and chalk,


Or sawdust chopped up very fine,


Or gypsum in powder about which they talk,


Terra alba just out of the mine.


And our faith in the butter is apt to be weak,

For we haven't a good place to pin it

Annato's so yellow and beef fat so sleek,

Oh, I wish I could know what is in it?”

Yum.

By the 1950s, the federal government had established regulations and specific definitions for all kinds of food, including what it considered bread: “prepared by baking a kneaded yeast-leavened dough made my moistening flour with water … with the addition of salt, and usually with the addition of certain other ingredients.”

That last bit is where it gets tricky. In its history, the FDA notes that enriched bread represented an early example of how complicated it can be to regulate food additives.



One of those additives the FDA had to regulate? Cellulose, a plant fiber often taken from wood. Cellulose was “Generally Recognized As Safe” by the FDA in 1973, and it’s in a lot of food. You can tell because every few years one publication or another publishes a story along the lines of “Did you know there’s wood pulp in … ?” Burgers, tacos, cheese, ice cream! And, of course, bread.

The counterculture movement of the ‘60s and ‘70s shunned postwar convenience foods, McDonald said, but by the ‘80s consumers were looking for health food and marketers knew how to pitch cellulose.

“What you start to see is people marketing breads that say things like ‘Twice the fiber of the leading competitor [and] 30 percent less calories than store-brand white bread.’” McDonald said.

Cellulose makes that possible. Sawdust usually contains about 40 percent cellulose, McDonald said. The stuff added to today’s food is purified and safe to eat, but it doesn’t have any lasting health benefits. It just passes through the body, maybe makes you more regular but that’s it.

By the mid-'80s, consumer groups and the FTC were starting to push back against some bread companies who were making big claims about high-fiber, low-calorie white bread even though not all fiber is “dietary fiber.”

Cellulose has other uses too. Ice cream manufacturers use it to make products taste creamier without using cream. Cheese companies use it to keep pre-shredded cheese from sticking together. Those types of packaged foods can even keep their “organic” and “non-GMO” labels, because the wood used to create cellulose is often both.

Some companies have also found cellulose to be a useful filler, allowing them to cut costs and sometimes run afoul of regulations. Parmesan cheese is a particularly common offender. It’s more expensive to produce than other common cheeses, and Bloomberg found some brands promising “pure” parm are actually hawking products with up to 8.8 percent cellulose. Some didn’t even contain Parmesan.

In general, though, food companies will tell you there’s nothing nefarious happening here. They’re just trying to meet consumer demands and keep prices low with an ingredient that’s not harmful and labelled correctly.

To help clarify things for consumers, the FDA began rolling out new rules covering added fibers just this year. The process can take decades, McDonald said. That’s partially because the agency prioritizes health hazards, and added fibers can be difficult and expensive to test for.

But it’s also tough because when a bunch of bureaucrats are trying to quantify all the ways that bread is bread, things get kind of philosophical.

“You might find a huge segment of consumers that would be really excited to eat a piece of bread and find out that it had zero calories because it's entirely cellulose,” McDonald said. “How much cellulose can be in a loaf of bread before it's not bread anymore?”

None!

pop quiz

None!

We’ve been talking about capitalism on Make Me Smart. How to make capitalism bearable, how to change capitalism, how to exist within capitalist society with dignity. If we know that capitalism doesn’t care if you live or die, as Kai said, is there a way to live and work and still feel like a human?

This reminded one listener of an anecdote his sister told from her days teaching English in Japan. His sister’s host mother would track the stock price for her husband’s company every morning, because in Japan, they have lifetime employment (shūshin koyō in Japanese.) If the company fails, so does the whole family and everyone in the company. And people are invested in these companies because employees have been there a long time and they’ve worked in many sectors of the company — not just the division where they have expertise.

The way this family rooted for the companies that their family members worked at reminded this listener of American professional sports teams, where if the star player succeeds, everyone gets a championship ring. And to him, it brought up a question: “Rather than having a system in which individuals compete, why not have one in which teams compete so that if the teams wins, everybody wins?”

In 2009, Hiroko Tabuchi wrote about lifetime employment in the New York Times: “The lifetime employment system, cemented in Japan’s postwar economic boom, bound dutiful workers and paternalistic employers together, producing a mutual loyalty (and labor harmony) rarely seen in the West.”

It’s true, careers are all but a part of the distant American past, let alone careers with one company. But let’s get into how lifetime employment works, because despite Japan's growing economy, the system that has secured employment for so many has weaknesses, including neglect for younger workers and a steep wage gap between irregular workers and regular full-time corporate employees.

The lifetime employment system is cultural — it isn’t exactly mandated, but upheld by companies’ policies, like the seniority-based wage system (nenkō joretsu in Japanese.) Here’s a description of the seniority-based wage system from Cross Currents, the website of the US-Japan Conference on Cultural and Educational Interchange:

Companies maintain very broad employment categories or ranks, rather than paying employees for the particular jobs they perform. Employees begin with a standard basic wage, and receive an increase in pay for each year of service. An employee who leaves to join another company would start from a lower end of that company’s wage scale and his or her income could be lower than other employees' of the same age in the same company. The seniority-based wage system keeps workers from changing jobs, since after a few years of employment they enjoy a wage level that they could not match if they moved to another company. The seniority-based wage system underpays young workers, but rewards them well in later years, even if their productivity declines. It offers workers a strong incentive to remain with their first employer.

By 2009, right after the global financial crisis of 2007-2008, a far smaller portion of workers had lost their jobs in Japan than in either the U.S. or the EU, according to the New York Times. But this came at a cost.

“Companies slash wages, which reduces consumer spending. Businesses become more reluctant to take on new recruits, shutting young people out of the labor force. And productivity plummets, hurting Japan’s competitiveness in an increasingly aggressive international market," Tabuchi wrote.

There’s also the issue of keeping alive businesses that are no longer competitive in order to keep people employed. And there are other problems of inequality for those who aren't able to access the security this system provides, which Prime Minister Shinzo Abe has said he's working on (many times, since 2013) by "reforming people's work style."

But the policy has by no means snuffed the life out of Japan's economy, where output has grown for six straight quarters, the stock market is at a 21-year high and unemployment is as just 2.8 percent.

As another listener illustrated in the last episode of Make Me Smart with a description of the horse statues outside the Federal Trade Commission in Washington, D.C., that represent the ferocious and sometimes untenable forces of capitalism: It's the laws, institutions and norms we put in place to harness the beast of capitalism that make it friendlier for humans and workers. Japan's lifetime employment policies are one way of doing that.

None!

Americans overseas pay income taxes both in the U.S. and in the countries where they work. Now lawmakers could lighten the burden for individuals. As the tax overhaul is drafted in Washington, a range of complaints about expat taxes will be considered.

None!

couple billion but really this is what got my attention:

$150,000
That's how much a New Jersey man drove off with after two ATM workers left a bag of cash unattended. After replenishing machines in Mahwah, NJ, the workers accidentally left a white bag of cash on a nearby lawn and drove away. As the AP writes, a passenger in a white van was filmed picking up the stash later on, as evidenced by surveillance footage.

None!

yeah but this bill won't be the final bill.

Last year, when Hollywood released a big-budget thriller starring Ben Affleck as an accountant turned ruthless killer, Kim Dula was all over it.

"I actually watched it twice," she said. First she watched with her husband, then she made her kids watch it. "And I said, 'See — your mom really isn't just a dorky CPA.'"

Dula loves danger and suspense on screen, but she could do without it in her accounting practice. And, she said, the suspense and uncertainty around the new tax bill are killing her clients. Dula said they're in a frenzy about the fate of their cherished deductions. They're asking: "Is it going to expire and isn't going to come back and are they going to make it retroactive?" she said.

Keeping clients' blood pressure under control comes with the territory. "That's sort of our job," she explained. "And that's what we're here for."

But the uncertainty is hard on accountants. They need that tax law signed, sealed and delivered so they can get to the real work at hand — discovering new loopholes to exploit. Brian Thompson is an accountant in Little Rock, Arkansas. He said you start with the big stuff. "You always look for things that weren't there before that could benefit your clients, as well as harm them," he said.

Things like reconfigured tax brackets. Or lower taxes on income from business partnerships. Or changes to sections of the tax code on write-offs.

"So certainly you're looking for those special items like increases in Section 179," he said, drifting into accountant-speak.

Section 179 is the section of the tax code on write-offs. Once he's identified the new stuff coming in, Thompson said he looks for what's going to go away, like the deductions for state and local income taxes and what fancy footwork can be used to make up for the loss. But not all accountants are created equal. So, what separates the really successful loophole hunters from everybody else?

"It's being able to play chess rather than checkers," said Michael Graetz, a professor of tax law at Columbia Law School. "You've got to see several moves ahead rather than just one or two." Like identifying a novel way to create a loss that can offset taxable gains. It helps to have an opponent who's not quite as skilled, Graetz said.

"You often have world champion chess players playing against — if not amateurs — much lower paid and busier professionals," he said.

Those would be the professionals at the IRS. But at the moment, there's not much for anyone to work with. The Republicans' tax outline is only nine pages long. The last time there was tax reform, the Reagan administration released nearly 500 pages of detailed proposals way in advance.

When Republicans introduce their actual tax bill later this week, "the accountants and lawyers will start pouring over it to see where the gaps are, where the possible advantages are," Graetz said.

And when they find them, the hunt for loopholes will give way to a lobbying free-for-all to influence things before the bill becomes law. But it won't stop there. Back in 1986, not long after President Reagan signed tax reform legislation, lobbyists began going after what they couldn't change earlier, like tighter taxation of corporations' foreign earnings. Now? That's just a distant memory.

None!

The rock band Weezer has been around since the early '90s but front man Rivers Cuomo said when it comes to doing business not much has changed from the band's early days. Cuomo's business is writing songs, he said, "in fact, it's very similar to how it was when I started in ninth grade in 1984." Their new album, "Pacific Daydream," just dropped so we asked Cuomo and band member, Brian Bell, to sit down with us to take our money and career inspired personality questionnaire.

Below is an edited transcript of the conversation.

Brian Bell: Money can't buy you happiness but it can buy you ________.

Rivers Cuomo: It can pay for the private plane to your gig so you don't have to do a bus tour or van tour. I just saw that SpaceX is going to make this rocket, or they have the rocket but they're going to set it up so that you can get from LA to Tokyo in 24 minutes or something. So ...

Bell: We're going to be the first band to tour in the SpaceX rocket. That's our goal.

Cuomo: The touring is going to be crazy.

Bell: First band on Mars: Weezer. You heard it here first.

Cuomo: In the next life, what would your career be?

Bell: I think an architect.

Cuomo: Yeah. Well you have a great house, great furniture. You're kind of an amateur interior designer, great personal style.

Bell: It's all connected. You know, I guess I first got interested in house architecture by delivering food in Laurel Canyon, way back in the early '90s. I got to go into some of these houses and I had no idea that a house could cause, you know, a feeling of creative space. It was a good job delivering food — you were on your own and you think a lot.

Cuomo: I delivered pizza for Domino's and on New Year's Eve I got a $20 tip. I've never forgotten that, it's just made my life.

Bell: Rivers, how have you seen the business of your music change ... from when we started?

Cuomo: I don't know I'm not really focused on the business. My business is writing songs and playing shows and it's pretty much the same as it was when you started in 1992. In fact it's very similar to how it was when I started in ninth grade in 1984. I never would've guessed that I'd spend so much time sitting at a computer all day, as a musician.

Bell: I don't think anybody thought that.

Cuomo: Yeah, but you know I guess when I was a kid I thought computers were cool so I'd probably be happy about it.

Bell: Rivers, this is a good question I think: What advice do you wish someone gave you before you started your career?

Cuomo: Well I don't know if I could have heard it but I wish I could have heard it if somebody told me "look, you don't have to be so miserable and depressed and feel so hopeless. You're going to make it. You're going to be fine. You're doing great, put one foot in front of the other and things are going to work out." There's just so much self-doubt and pain in the early days and it was all for nothing.

Bell: Yeah. It would be nice to have some sage come say "yeah you guys are going to make it. Everything's going to be just fine." But you know it's part of the struggle and life in general, right?

None!

nice.

None!

The series of recent incidents involve troublesome conduct by American Airlines and they suggest a corporate culture of racial insensitivity and possible racial bias on the part of American Airlines. Among these incidents:

An African-American man was required to relinquish his purchased seats aboard a flight from Washington, D.C. to Raleigh-Durham, merely because he responded to disrespectful and discriminatory comments directed toward him by two unruly white passengers;
Despite having previously booked first-class tickets for herself and a traveling companion, an African-American woman’s seating assignment was switched to the coach section at the ticket counter, while her white companion remained assigned to a first-class seat;
On a flight bound for New York from Miami, the pilot directed that an African-American woman be removed from the flight when she complained to the gate agent about having her seating assignment changed without her consent; and
An African-American woman and her infant child were removed from a flight from Atlanta to New York City when the woman (incidentally a Harvard Law School student) asked that her stroller be retrieved from checked baggage before she would disembark.

The NAACP is advising African-American travelers to watch out for American Airlines.

The civil rights organization has compiled accounts of "disturbing incidents," including a case involving two traveling companions who showed up with first-class tickets. The white passenger was allowed in first, while the black passenger got bumped down to coach.

Derrick Johnson, the president and chief executive of the NAACP, has a meeting in the works with the company. He stopped by to talk with us about what he hopes to get out of this interaction and the NAACP's goal of ensuring African-American consumers are treated fairly.

David Brancaccio: So you're going to get that meeting with American Airlines?

Derrick Johnson: Yes. So as a result of the advisory, we received several calls from American Airlines. Our general counsel has already spoken with one of the VPs, and we want to move forward to sit down with the CEO and make sure that American Airlines understands our concerns, that as consumers, we want to make sure that we are treated with a level of respect. And that incidents that could be considered racialized, to be minimized through an approach where American Airlines could provide sensitivity training to their employees. But we also found that in many cases, these incidents happen with large companies when the leadership, or employee diversity, is not at a level where their decisions are made with the necessary sensitivity. So when they address particular problems, it is not in a manner which is unequal.

RELATED
How African-Americans were "shut out" of the American dream
United will now give passengers up to $10,000 to give up their seat
Brancaccio: Should other businesses — and I don't mean just other airlines, but other businesses in general — maybe expect warning notices from the NAACP as you move forward?

Johnson: One of my goals is to make sure that we have good corporate partners, and that African-American consumers are able to navigate through the reality of all their business dealings and their personal agenda in a way in which they can receive equal treatment. It is incumbent upon the NAACP as an advocacy organization to use the tools at our disposal to make sure all of our communities are afforded a fair, quality life.

Brancaccio: Now you've called on people of color to practice, I think the term is dollar discipline. That's what? About rewarding companies with your money if they get it right? And keeping the dollars away from companies that get it wrong?

Johnson: Right. I mean, many people in our community, they really want to support businesses that support their quality of life. And that is what I term dollar discipline. That if we want our return on our investment in corporations, we will have an expectation of fair treatment. And that's not too much to ask.

None!

Many working environments fail to provide adequate resources for breast-feeding mothers to pump breast milk at their jobs, according to a new study from the University of Minnesota.

The study showed that 60 percent of the more than 1,000 working mothers it surveyed didn’t have enough breaks or “secluded spaces” to pump. Lower-income women are also less likely to have these breaks and spaces, a study from the journal Women’s Health Issues said.

“It’s a shame when the reason that women decide they can’t is because it’s too hard at work,” Katy Kozhimannil, the lead researcher of the study, told the Star Tribune.

The American Academy of Pediatrics recommends a minimum of six months of breast-feeding exclusively, which working women are more likely to do if they have the time and space.

Otherwise, many women end up quitting and feeding formula to their babies, said Emily Whebbe, a Twin Cities lactation consultant, to the Star Tribune.

Minnesota has striven to rectify the issue: Beginning last year, the state Department of Labor and Industry has “to investigate [employees’] complaints within 10 days.” One mother was rehired after initially being fired for taking a pumping break that was 30 minutes long (breaks are supposed to last 15).

None!

ah, a gold ol' scroll down surprise.

None!

First, there were trial balloons about Republicans paying for a tax cut in part by scaling down the 401(k), tax-free retirement savings system, where you save on taxes now but pay them later at retirement when you may be in a lower tax bracket. (The proposed annual contribution limit: $2,400.)

Then, President Donald Trump tweeted he doesn't want Congress to target 401(k)s. Subsequently, the powerful chair of the House Ways and Means Committee suggested the president's tweet does not change whatever his tax committee might be considering.

Let's get practical here about the alternatives if Congress were to lower the limit on 401(k) contributions. Joseph Cordes, an economics and public policy professor at George Washington University, stopped by to chat with us about the ongoing controversy and the different retirement options that are available to Americans. Below is an edited transcript of the conversation.

David Brancaccio: So the president doesn't want to curtail the 401(k) system, but as a proposal, it's not completely dead. Let's talk about this. A company that offers a 401(k) retirement savings plan, I suppose, could convert to the other system, right? Is that an option available now under U.S. law?

Joseph Cordes: I believe it is to the extent that you want it to still provide some incentive for people to save for retirement. If Congress were to decide to curtail the current deductible 401(k)s, I would expect them to provide a Roth option as an alternative.

Brancaccio: Now the Roth, of course, is where you pay the taxes now. But when it presumably goes up over the years when you show up at retirement, you don't have to pay on the capital gain. You don't pay taxes again.

Cordes: Yeah, you pay taxes up front and then you don't pay them again.

Brancaccio: What do we know about this system as an incentive to save? You know, you're at tax time. A good way to lower that year's tax bill is to kick a little bit more money, if you can, into the 401(k) system. That wouldn't work if they shifted to "We'll tax you now and not later."

Cordes: From a formal economic perspective, if, for example, the individual's tax rates did not change over their lifetime, one can demonstrate that the deductible 401(k) and a Roth 401(k) would, under some fairly plausible assumptions, actually give you the same overall lifetime result. However, if we bring in some of the insights from behavioral economics, one might conclude that people would prefer to get the goodies now rather than later.

Brancaccio: Now one benefit companies offer is matching your tax-free retirement contribution. If there were a conversion to the tax-me-now-not-later system, I guess we'd need some creative thinking to engineer an equivalent fringe benefit.

Cordes: Well, I think that's exactly right. And I'm sure there are ways to do it, and I would assume that the Treasury would facilitate the ability to do that. Because once again, playing out in all of this in the background is, of course, a considerable amount of concern that middle-income Americans are not saving enough for their retirement.

None!

reddit is blocked at work. im back, if you'll have me.

None!

this seems to have gone active again?

None!

As agreed upon, I am back.

None!

wtf

None!

forgot my headphones today. its going to be a long day.

None!

https://vimeo.com/29794098

None!

phil she can help you put on your helmet

None!

oh hey. yes sorry i didnt know this was a business meeting until i scrolled down.