Budget News Dec. 20 - 23

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News
THURSDAY
Senate Approves $725 Billion Defense Spending Bill
As the busy lame duck session of Congress winds down, the Senate Wednesday approved a defense spending bill, authorizing the Pentagon to spend $725 billion in fiscal 2011, including nearly $160 billion to fight the wars in Iraq and Afghanistan.
Iowa lawmakers expect $700M budget shortfall
The fight over what to cut will begin almost as soon as the Legislature convenes on Jan. 10.

WEDNESDAY
U.S. Congress Passes Bill to Fund Government's Spending Through March 4
The U.S. Congress approved legislation that would keep the government funded through March 4, setting up a budget fight early next year between the administration and Republicans.

TUESDAY
Budget Cuts To Darken SoCal City Street Lights
To trim $9 million from their budget, Vista officials say they will shut off half of the city’s residential street lights in March unless property owners agree to pay higher lighting fees.
Put up or shut up' on debt - senator
Democrat Mark Warner and Republican Saxby Chambliss say they will introduce the Bowles-Simpson report as legislation.
Cameron Warns U.K. Faces Tough Times
With tax receipts lifting just 3.1% since last year—the lowest level since December 2009—the Office for National Statistics reported Tuesday that the public sector borrowed £23.3 billion ($36.14 billion) in November, compared with £17.4 billion a year earlier.
Stimulus price tag: $2.8 trillion
Since the recession began three years ago, Congress has poured a total of $2.8 trillion into the economy in an effort to spur hiring, get people spending again and prop up industries struggling to stay afloat.
Auditors question TSA's use of and spending on technology
Since it was founded in 2001, the TSA has spent roughly $14 billion in more than 20,900 transactions with dozens of contractors.

MONDAY
OECD Backs Spain's Deficit Cuts
In its annual report on the Spanish economy, the OECD forecast gross domestic product will fall 0.2% in 2010, rise 0.9% in 2011 and 1.8% in 2012.
Anticipating higher revenues, McDonnell outlines spending priorities
Following a lean 2010 session in which the state was forced to close a $4.2 billion shortfall in the current two-year budget, McDonnell expects state revenues, driven by stronger-than-expected income tax collections and sales tax activity, to total $283 million over fiscal years 2011 and 2012.

Economist Comments
THURSDAY
States Scramble to Repay Feds for Unemployment Insurance Loans -- Plus Interest
The federal government estimates the collective interest on the outstanding loans will total about $2 billion in 2011, while continued state borrowing is expected to stretch the outstanding loan amount to $65 billion by fiscal year 2013.

WEDNESDAY
Stop panicking over muni defaults!
...that is not to say that all projects will be economically viable – some munis will default. Municipalities in 24 states can file for Chapter 9 bankruptcy protection and defer bond payments.

MONDAY
The Wind Subsidy Bubble
Green pork should be a GOP budget target.
Hugh Hewitt: California's economic suicide now includes cap-and-trade
The absurdity of a single state attempting to tackle climate control via the imposition of regulations on 600 facilities is wildly amusing. No one can argue that all the effort and all the costs, all the bureaucrats and all the rules will have any impact whatsoever on the climate.
Europe's Single Bailout Zone
The moves toward a fiscal union mean German taxpayers have become the lenders of last resort.
Retiree Benefits Are Cheating Our Children
Except for those on Social Security and Medicare, government for most middle-class Americans consists mainly of schools, police, fire protection, roads and ambulance service. It's states and localities.
Drama needed to jolt Americans into tackling debt
Why has Britain managed to boldly go into fiscal territory which the US has hitherto ducked? That is the $800bn question...

Blogs
THURSDAY
Money Substitutes and Velocity
The issue is whether we should think of the Fed as offsetting velocity shocks or we should think of changes in velocity as offsetting monetary shocks.
What Works in the Deficit Reform Proposals?
If you've struggled to wade through the intricacies of the different budget reform plans making their way through Beltway wonkdom, you're probably not alone.

WEDNESDAY
The Failed State of Illinois
...as the Journal reports, investors seem to be increasingly differentiating between those states that are in bad fiscal shape and those that are in really bad fiscal shape.

TUESDAY
Senate Presents an Acceptable Continuing Resolution
Last week, a Heritage Foundation analysis stated that an acceptable continuing resolution should (a) spend no more than last year’s level, (b) not shift funds to new Democratic priorities, (c) exclude additional advanced appropriations that bind future Congresses to spend money, and (d) exclude unrelated government expansions and regulations.

MONDAY
Omnibusted
Instead, Congress will now pass a continuing resolution to fund the government at current levels until the new Congress is seated in January.
Worst of the Waste: The 100 Outrageous Government Spending Projects of 2010
When taxpayers aren’t shelling out money for music memorabilia, they’re busy paying for the other projects listed in Coburn’s report. Here are a few named in the report…
Build America Bonds: Eliminated or in Suspended Animation?
Who’s been issuing the bonds? The most cash-strapped and fiscally profligate states: California, New Jersey, Ohio and New York.

Reports
TUESDAY
Truth and Consequences
A Guide to Understanding the U.S. Government Debt and Deficits.

Employment News Dec. 20 - 23

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News
THURSDAY
Jobless Claims in U.S. Decreased to 420,000 Last Week
Initial U.S. jobless claims fell last week and the number of people on unemployment benefit rolls dropped to a two-year low, reinforcing evidence the labor market is improving.
How states fared on jobless benefits, at a glance
Here are the states with the largest changes in unemployment applications, and some of the reasons, at a glance:

TUESDAY
Unemployed get another jobless benefit _ free yoga
With national unemployment just below 10 percent, $20 yoga classes don't qualify as necessities for many out-of-work people who've pruned luxuries from their budgets. So in a gesture that's part send-good-vibes-to-the-universe and part community outreach, a handful of yoga studios have decided to cut the unemployed a break.
1 in 7 Americans rely on food stamps
The use of food stamps has increased dramatically in the U.S., as the federal government ramps up basic assistance to meet the demands of an increasingly desperate population.

MONDAY
Jobless benefits are extended - but hold the applause
Millions of jobless Americans are no doubt cheering the tax cut deal that President Obama signed into law Friday.
How many people get renewed jobless aid, by state
The tax-cut legislation President Barack Obama signed into law Friday restores emergency unemployment benefit programs for millions of Americans. The long-term unemployed can now receive a maximum of 60 to 99 weeks of benefits, depending on their state. But the new law doesn't lengthen anyone's unemployment benefits beyond the 60 to 99 weeks.

Economists Comments
THURSDAY
New Year's resolution: I quit!
Employers watch out: Your workers can't wait to quit. According to a recent survey by job-placement firm Manpower, 84% of employees plan to look for a new position in 2011. That's up from just 60% last year.

WEDNESDAY
Does population slowdown = unemployment slowdown?
Late last year, Goldman Sachs said in a note that ""it will probably take at least 100,000 jobs per month just to hold the unemployment rate constant. New census figures show a 9.7% growth rate, compared to the 13.2% mark reported ten years earlier. In fact, it's the slowest growth rate since 1940. This led me to wonder if that 100,000 per month figure will get revised downward. After all, overall population growth rates must have been a central part of the original calculation.
Are social media jobs here to stay?
The demand for social media jobs has exploded, even as overall unemployment heads in the opposite direction. But in a fledgling field surrounded by hype, some industry insiders are saying it may be too good to last.

Blogs
THURSDAY
Environmentalists New Plan Same as Old Plan: Higher Energy Costs, Fewer Jobs
Our national unemployment rate is 9.8% and the Sierra Club is investing their resources in blocking new power plan construction. The Sierra Club is blocking not only the jobs needed to build power plants, but they are also ensuring hiring energy costs for the entire economy.

MONDAY
Temporary employment
This year, 26.2 percent of all jobs added by private sector employers were temporary positions. In the comparable period after the recession of the early 1990s, only 10.9 percent of the private sector jobs added were temporary, and after the downturn earlier this decade, just 7.1 percent were temporary.

Reports
None

Monetary News Dec. 20 - 23

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News
THURSDAY
Dollar recovers after U.S. data
The U.S. dollar gained ground against the euro but remained lower versus the Japanese yen Thursday, as reports showed U.S. jobless claims and durable-goods orders fell while consumer spending and incomes rose.
Is the Fed Printing Money?
Is the Federal Reserve printing money to finance its bond buying? Or isn’t it? Ben Bernanke has given inconsistent answers, at times saying it is and at times saying it isn’t.

WEDNESDAY
Dollar recovers as euro hits two-week low
The euro fell to a two-week low against the dollar on Tuesday, after briefly recovering following supportive comments from a top Chinese official.

TUESDAY
Fed Extends Program to Ease Europe Debt Crisis
The Federal Reserve is extending a program set up earlier this year to ease strains from the European debt crisis. The program, which was set to expire in January, will now run through August 1.

MONDAY
Paul says he won't subpoena Fed, immediately
Longtime critic takes over watchdog role saying he's interested in transparency.

Economists Comments
THURSDAY
Economists: Fed won't raise rates until 2012
Economists are evenly split on whether the Federal Reserve's current policies are helping the economy. But they're in agreement on one point -- the Fed won't be raising interest rates anytime soon.

WEDNESDAY
Fed Rate Hike Could Come in 2012
In our view, Fed policy will remain stimulative, but less intensely so, through 2012. If the unemployment rate continues trending lower through mid-year 2012, as we anticipate, the initial Fed rate hike may come later that year. Our forecast features a 50 basis-point hike in interest on reserves to 0.75% by year-end 2012 and an accompanying fed-funds rate target range of 0.50%-0.75%.
Fed throws euro banks a lifeline
For an outfit whose policies supposedly are plunging the world into unspeakable conflict, the Federal Reserve is doing an awful lot to avoid another meltdown.
Do We Need Google To Measure Inflation?
Economists are creating new methods for tracking prices.

TUESDAY
Fed Up, Again
With the onset of the financial crisis and the collapse of aggregate demand in the United States, the Federal Reserve reached for the standard textbook solution to stimulate demand. Indeed, the Fed pushed shortterm interest rates toward zero — a zone in which they have been trapped ever since.
It's Europe's Crisis
The most profound and widespread challenge is the growing sense that the EU's common currency, the euro, may not survive in its present form, if at all.

MONDAY
How to solve European debt crisis? Create a European treasury to back EU bonds
To prevent Europe's debt crisis from spiraling further out of control, EU nations must act now to create a European treasury with centralized power to issue European-backed bonds and tax at a federal level. Doing so is in the best interests of all member nations – not just those mired in debt.
Economic Slack and Inflation
One of the measures commonly followed by the Fed, and others of the slack-restrains-inflation school, is the measure of capacity utilization rate.

Blogs
TUESDAY
Inflation fears? Not in November
The November 2010 CPI has been released. The verdict? Nothing doing on the inflation front.

MONDAY
The Euro Suffers an Identity Crisis
Pity the poor euro. It’s a currency, but it’s asked to be so much more. More, indeed, than any currency can possibly be.

Reports
None

Tax News Dec. 20 - 23

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News
THURSDAY
States taxing themselves to death
High taxes kill states. There can be no better evidence than the 2010 Census. The states that lost House seats -- because they're shrinking, relative to the nation -- had taxes 27 percent higher than the ones that gained seats.

WEDNESDAY
Census: Fast growth in states with no income tax
...the 2010 reapportionment gives Texas four additional House seats. In contrast, California gets no new House seats, for the first time since it was admitted to the Union in 1850.
Faulty Tax Break May Leave Millions With Surprise Bill
IRS officials knew which taxpayers were affected but didn't alert them directly, Treasury inspector general says.
Economists: Reform the tax code
Nearly half of economists surveyed by CNNMoney.com think overhauling the current system would be the best tax policy going forward. Reform would mean lower tax rates but an end to many of the deductions and special treatment enjoyed by certain taxpayers.

MONDAY
Biden: Obama tax deal 'morally troubling'
Vice president says pledge to middle class couldn't be kept.

Economist Comments
THURSDAY
Tax Cutters Set Up Tomorrow's Fiscal Crisis: Simon Johnson
The truth is, the tax deal moved us closer to a fiscal crisis, just as the euro zone now is experiencing.
Taxes and the Top Percentile Myth
A 2008 OECD study of leading economies found that 'taxation is most progressively distributed in the United States.' More so than Sweden or France.
Will the Tax Bill Stimulus Create Economic Growth?
Unless the government cuts spending, the result of tax cuts will be a higher budget deficit; this will divert more capital away from productive uses to service the debt.

WEDNESDAY
Spare us the death tax - for now
The new law won't make a dent in how much the rich can leave their heirs, but don't think the battle is anywhere near over.

TUESDAY
Ducking Higher Taxes
Oregon raised its income tax on the richest 2% of its residents last year to fix its budget hole, but now the state treasury admits it collected nearly one-third less revenue than the bean counters projected.

MONDAY
Estate Tax Not Justifiable
The real reason for the tax is class enmity. It's an ancient view of wealth that equates entrepreneurial success with theft.
Public vs. private retirements
Government workers get better deals -- paid for by taxpayers.

Blogs
THURSDAY
Oregon’s Millionaire’s Tax Doesn’t Pan Out
To close its $3.8 billion FY 2010- FY 2011 projected budget gap, Oregon has relied on an evaporating stimulus, budget cuts of roughly 9 percent and tax increases. The state’s income tax was raised with a new top rate of 11 percent. However the tax on the richest two percent of residents hasn’t performed as expected.

WEDNESDAY
Secondary Sources: Fallen Heroes, Economics of al Qaeda in Iraq, Tax Calculator
The Tax Policy Center has updated its tax calculator.
Oregon’s Millionaire’s Tax Doesn’t Pan Out
The tax applies to stocks and capital which means Oregon has “virtually the highest capital gains tax in North America.”

TUESDAY
‘Meanwhile, de Rugy Goes All Laffer Curve’
The primary reason for the increase in the share paid by the rich after the tax cuts isn’t that they made more money than before, a thought unbearable to Chait. Rather, it is that the Bush-era tax cuts reduced the taxes paid by middle- and lower-income families across the board and even kicked a lot of people at the bottom of the income distribution off the tax rolls altogether...
You Say 'Tax,' I say 'Penalty'
...a tax subsidy is a subsidy: you are enticing people to do something by offering them money. But because this adds the possibility of not getting the money if you don't do whatever they're subsidizing, [Tim]'s calling this coercion.
Why We Need a Tax AND Spending Cut
Under either scenario, a reduction in lump-sum taxes—unaccompanied by a reduction in spending—fails to jump-start the economy the way politicians hope that it might.

MONDAY
How middle-income taxpayers will benefit from new tax law
If you're a middle-income wage-earner, the only major change you'll notice from the bill passed by Congress yesterday—and expected to be signed shortly by President Obama—is in your paycheck.

Reports
WEDNESDAY
The Value-Added Tax Is Wrong for the United States
While a VAT has some advantages to the current U.S. tax code, adding the VAT to current federal taxes—as proponents propose—would realize none of these benefits and would instead depress the economy.

Health Care News Dec. 20 - 23

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News
THURSDAY
Congress passes revised 9/11 first-responders health benefits bill
A compromise bill to provide free medical treatment and compensation to first responders of the September 11, 2001, terrorist attack won final approval Wednesday from the House and Senate, sending it to President Barack Obama to be signed into law.
Law Prompts Some Health Plans To Cut Mental-Health Benefits
Members of the Screen Actors Guild recently read in their health plan's newsletter that, beginning in January, almost 12,000 of its participants will lose access to treatment for mental-health and substance-abuse issues.
Insurer Rate Hikes Face Fresh Federal Scrutiny
Health insurers that raise premiums 10% or more next year will face new regulatory scrutiny, the Obama administration said Tuesday, in its latest effort to show its health overhaul is helping tame rapidly rising rates.

WEDNESDAY
Medicaid Demands Push States Toward `Cliff' Even as Governors Cut Benefits
Governors nationwide are taking a scalpel to Medicaid, the jointly run state and federal health-care program for 48 million poor Americans, half of whom are children. The single biggest expense for states, Medicaid consumes about 22 percent of their total $1.6 trillion in expenditures.
9/11 First-Responders Bill Goes to the Wire
The House will stay in one more day to consider a bill Wednesday to fund medical care for first responders sickened after the September 11 terrorist attacks.

TUESDAY
Funding Deal Snags Health Law
Democrats last week sought $1 billion to expand federal agencies to cope with health-care demands as part of a proposed $1.1 trillion spending bill. That measure died after Senate Republicans closed ranks against it under pressure from conservative activists.

Economist Comments
WEDNESDAY
Obamacare Reaches Its First Appellate Court
What Congress is attempting to do here is quite literally unprecedented. “The government has never required people to buy any good or service as a condition of lawful residence in the United States.”
Invested in Health Care
Judges presiding over health care lawsuits have stakes in the industry.
Sebelius's Price Controls
States must order more health benefits but also lower rates.
A Double Edged Sword for U.S. Healthcare
The challenge for health systems, industry, and regulators right now is to find a way to overcome existing supply challenges without dampening incentives to innovate, even for older generic products. Creating better market incentives, improving communications between stakeholders, and bolstering the FDA's ability to conduct risk-based inspections are the best ways to prevent the next shortage before it happens.

TUESDAY
The real threat to health care reform
Passing legislation was only one part of the battle for supporters of the health care law. Now comes an equally contentious stage -- the struggle over implementing the law. In many respects, the looming court battles over health care are the least of Obama's problems. The fight over implementation is where real challenge will lie for the program.

Blogs
THURSDAY
We need more supply-side health policy
...in a fierce turf battle rooted in the growing pressures on the medical profession and academia, New York State’s 16 medical schools are attacking their foreign competitors. They have begun an aggressive campaign to persuade the State Board of Regents to make it harder, if not impossible, for foreign schools to use New York hospitals as extensions of their own campuses.

TUESDAY
How Obamacare is Hastening the Day of Reckoning
As bad as government union contracts and pensions are, they are not the real driver of state insolvency. Medicaid is already the second largest item on the average state budget at 21%.
Will Health Care Reform Reduce Medical Bankruptcies?
Excluding the bubble/crash, if the ObamaCare enthusiasts were even mostly correct about medical bankruptcies, overall bankruptcies in Massachusetts should eventually fall pretty significantly from their 2004 levels.
To Reform Health Care and Restore Fiscal Responsibility, Don’t Forget Medicaid
Obamacare did little to solve the issues afflicting current Medicaid beneficiaries or put the program on a fiscally sustainable path. It will actually put Medicaid in worse shape by adding nearly 18 million Americans to this poorly performing program.
Why Did the Feds Need to Do Health Care?
The chances of a Supreme Court ruling overturning one key provision in our new health care law--the mandate--are looking stronger.  Not good, mind you--libertarians I know are saying it's a perhaps 40% chance, while obviously everyone else is considerably more pessimistic.

MONDAY
Obamacare's mandate to buy insurance: Is it an eat-your-broccoli sort of thing?
Federal Judge Roger Vinson adds some color to the debate over the individual mandate in the health-care law. He likens it to Uncle Sam telling everyone to eat their vegetables -- under penalty of law.
Why Is This Tax Different From All Other Taxes?
So why not just give everyone $750 if they buy health insurance?  Well, in fact, you probably could do this.  You might even pay for it with higher income tax rates, though they would not be distributed evenly.  But there are problems with this approach, starting with the fact that well, this isn't what they did.

Reports
THURSDAY
Selected CBO Publications Related to Health Care Legislation, 2009-2010
In the course of the deliberations over health care legislation, the Congressional Budget Office (CBO) provided a wide variety of estimates and other analyses regarding the impact of proposals on the federal budget and on aspects of health care and health insurance that were of interest to policymakers. In many cases, those estimates and analyses were produced in collaboration with the staff of the Joint Committee on Taxation (JCT). That process began in early 2009 and continued past the enactment of the legislation in March of this year.

General Economic News Dec. 20 - 23

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News
THURSDAY
December consumer sentiment rises to 74.5: reports
Despite the gain in December, the gauge is below pre-recession levels of more than 80. While there have been some signs of improvement in the economy, consumers remain concerned about jobs.
Demand for U.S. Capital Goods Rebounds as Spending Holds Up
Orders for U.S. capital equipment rebounded in November, signaling a slowdown in business investment may be less pronounced than some economists projected.
Ireland to inject $4.9 billion into AIB
The Irish government on Thursday effectively nationalized Allied Irish Banks PLC after the nation’s High Court approved the finance ministry’s request to allow it to inject an additional 3.7 billion euros ($4.9 billion) of capital into the troubled lender.
Consumer Spending in U.S. Climbs for Fifth Straight Month as Incomes Grow
Household purchases rose 0.4 percent after a 0.7 percent increase in October that was almost twice as large as previously estimated.
Mortgage Rates in U.S. Fall for First Time in Six Weeks, Freddie Mac Says
The average rates for a 30-year fixed loan fell to 4.81 percent in the week ended today from 4.83 percent, Freddie Mac said in a statement. The average 15-year rate decreased to 4.15 percent from 4.17 percent, the mortgage-finance company said.
New home sales climb - but recovery is sluggish
Sales of new homes rose 5.5% to an annual rate of 290,000 in November, the Commerce Department reported Friday. And while that shows improvement, sales are still off 21.2% from a year ago.

WEDNESDAY
U.S. third-quarter growth revised up to 2.6%
The U.S. economy expanded at a 2.6% pace in the third quarter, slightly faster than previously reported, mainly because of a higher inventory buildup, according to the latest government data.
Nov. existing-home sales up 5.6% to 4.68 million
Even so, sales were still 27.9% below prior-year levels and below the 5.26 million in June when a homebuyer tax credit existed.
U.K. Economy Slows More Than Estimated as BOE Splits
Gross domestic product rose 0.7 percent from the previous three months, the Office for National Statistics said today in London. That compares with an initial estimate of 0.8 percent.
Congress freezes federal pay
It's official: Federal workers won't be getting a pay increase for the next two years, despite the best efforts of the unions that represent them.
A Nation in Motion
The Census reveals a people who are moving to pro-market red states.
Airlines post fattest profits in 10 years
This year is shaping up to be the most profitable year for the airline industry in at least a decade. The bad news is that it costs a lot more to visit Mom.
$305 on gas this month - Bah! Humbug!
Holiday shoppers will need to bump up their budget for one purchase this year. The price of fuel is up 13.6% from last December and 76% higher from December 2008, according to a new study from the Oil Price Information Service.

TUESDAY
Prisons get education funds
The biggest recipient of Alabama’s federal stimulus dollars for education isn’t a school system or college. It’s the state prison system.
'Net Neutrality' Rules Set to Pass

MONDAY
In tough economy, Santas are also suffering
For freelance Santas, this holiday season has been more "no, no, no," than "ho, ho, ho."
Senate Passes Food Safety Bill for Second Time, Sends to House
The Senate on Sunday passed a sweeping bill to make food safer, sending it to the House in the waning days of Congress. 
Congressional Salaries on the Rise Even as Obama Freezes Federal Wages
For a guy who insists that federal bureaucrats make too much money, incoming House Majority Leader Eric Cantor sure doesn't mind handing out handsome government raises of his own.
New Census May Complicate Obama 2012 Bid
The 2010 census report coming out Tuesday will include lots of good political news for Republicans and grim data for Democrats hoping to re-elect President Barack Obama and rebound from last month's devastating elections.
Economic Reports for This Week
Data will include the final gross domestic product for the third quarter and existing home sales for November (Wednesday); and weekly jobless claims, personal income and spending for November, durable goods for November, the Thomson Reuters/University of Michigan consumer confidence index for December, and new home sales for November (Thursday).

Economist Comments
THURSDAY
Who'll Really Benefit from Net Neutrality Regulation?
Will consumers really benefit from expanded FCC regulation of the Net and digital networks?
The Need for a National Mortgage Modification Program
This plan will stabilize the housing market and put money in the pockets of homeowners.

WEDNESDAY
Empowering the Free Energy Markets
For America to thrive, we need energy policy that favors the development of abundant and affordable energy .
The Net Neutrality Coup
The campaign to regulate the Internet was funded by a who's who of left-liberal foundations.
The Decentralization of America
As changes are made to the number of Congressional seats allotted to each state and the Tea Party movement attempts to "take back the government," how the country operates is going to change.
Government Gobbles the Web
The FCC makes a naked lunge to collect political power unto itself.
Taking On Public Unions Isn't Just a Jersey Thing
Some of the reforms on the table in the Midwest would produce big savings in the first year -- for example, increasing employee shares of pension and health care costs.

TUESDAY
No trust for Social Security
The trust fund is nothing more than a trap and a fantasy for those who think it's a solid foundation for Social Security.
How Spain Can Avoid the Irish Error
Now is the time for Spain to take its destiny into its own hands, and in doing so, restore the viability of at least a large part of the euro zone economy.
A Defense of the Market Speculators
Amid ongoing economic and financial uncertainty, including an oil price that is inching back up, the role of speculators in the economy has and will continue to be called into question. If their detractors are to be believed, they're a destabilizing force in the economy.
The great bank heist of 2010
Wall Street wins, Main Street pays — again
A hand up, not a handout
Human compassion can heal hearts in ways government checks can't

MONDAY
Could You Retire Without Social Security?
This week's landmark tax deal sharply changes the financial outlook for Social Security. That has huge implications for your retirement. And most people don't have a clue what's coming.
They Just Hate Rich People
If the debate over the tax deal between President Obama and congressional Republicans has shown anything, it is that the American Left really hates the rich. But, why?
The Seven-Year Switch
The year 2004 has served as a useful, if imperfect, touchstone for investors. Some parallels are eerie, some mere coincidence. What it means for 2011.
Signs of Strength in the Economy
In case you needed something to brighten your Friday even a little bit, there's been a smattering of good economic news this month (courtesy of the invaluable CalculatedRisk).
Insolvency Stalks China's Banks
Are China's banks threatened with insolvency? Yes, warns a seasoned global-market watcher.
The FCC's Threat to Internet Freedom
Net neutrality' sounds nice, but the Web is working fine now. The new rules will inhibit investment, deter innovation and create a billable-hours bonanza for lawyers.
Opposing View on Energy: Subsidies? Just Say No
The problem with electric vehicles can be summed up with one word: subsidies. Subsidies are prima facie evidence that consumers would not buy the product at its market price.
EPA's Costly Rules Will Cost Jobs and Set Back Nation's Economic Recovery
Our nation is in a high stakes race with China to develop clean energy technologies but we are falling behind. It may be hard to remember now, but we surprised the world years ago by overtaking Russia in the space race, and we can surpass China now if we make some small but important changes in government energy policy.

Blogs
THURSDAY
CBO on GSE Reform
I am currently drafting something on the same general topic, so I will add comments based on my current thinking. The folks at CBO discuss three options--purely public, purely private, and a hybrid. They find drawbacks to every option. They explain the hybrid option:
Protective Tariffs, Revenue Tariffs, and American Economic Growth
Did protectionist tariffs contribute to, or obstruct, America’s economic growth during the 19th century?
What Are Ratings Agencies For?
There's no question that the credibility of the ratings agencies has been called into question by the performance of the enormous amount of toxic sludge that they rated AAA during the housing bubble.  So I do understand the complaints that they're still around, influencing markets by what they say, without having ever really explained very well how they got it so monstrously wrong in the first place.
How effective will Basel be?
The Basel committee adopted a 3 percent leverage rule in July, meaning that for every $3 of capital, a bank can borrow no more than $97. While the percentage is tentative and subject to review before it goes into effect, it has since come under attack by banks in Europe and Asia, which say it will restrict their borrowing capacity and inhibit lending.
Growth is good
When we're talking about slower population growth, we're talking about slower growth in aggregate demand. That's not the sort of thing that places upward pressure on incomes. Meanwhile, we could see rising real incomes as slower population growth leads to slower growth in consumer prices, but that's obviously not inflationary.
New Home Sales weak in November
The 290 thousand annual sales rate for November is just above the all time record low in August (274 thousand). This was the weakest November on record and below the consensus forecast of 300 thousand.

WEDNESDAY
How Government Failure Caused the Great Recession
The interaction of six government policies explains the timing, severity, and global impact of the financial crisis.
Freedom is What Keeps Cities Alive
Cities can’t be managed, and that’s what keeps them so vibrant. They’re just these insane masses of people, bumping into each other and maybe sharing an idea or two. It’s the freedom of the city that keeps it alive.
Incentives Matter: Bank Regulatory Edition
One reason that bailouts are so politically popular is that they make financial crises less common but, when they come, more severe because more leverage has built up. That change in the structure of returns is usually a political winner, call it "Ticking Time Bomb."
Why Something Good May Come of the FCC’s Net Neutrality Move
There is good reason to think bipartisan regulatory reform is possible in the next Congress. Thanks to the FCC’s action, the odds just increased that Congress will act.
Brad Delong’s analysis of the housing crisis
When the housing bubble took off–and when mortgage loans and MBSs became really risky–that’s when Fannie Mae and Freddie Mac pulled back. The GSEs were dominant players in the market up through the end of 2002: most of the loans made through the end of 2002 are still good. The GSEs were small players by the start of 2004–which is when the mortgages that have turned out to be toxic assets started to come through.

TUESDAY
Cigarette Taxes and Smuggling
The Mackinac Center’s Michael LaFaive and Todd Nesbit have released a new study on the ill-effects of raising cigarette taxes at the state and local level. Cigarette tax hikes have become a popular choice for spend-happy state policymakers looking for money in these tough economic times.
Moody's Warns it may downgrade Portugal's Credit Rating
Moody’s ... put Portugal on review for a possible downgrade, almost a week after doing the same to Spain, and having cut Ireland by five notches last week.
Can vigilant creditors limit excess bank risk-taking?
Ideally, enforceable bond covenants should limit bank risk-taking, and ensure major bank solvency, but is that feasible?  I see a few problems with the idea:
One-in-Three Working Families Considered ‘Low Income’
Nearly one in three working families earned less than 200% of poverty line last year, as a bad economy pushed 250,000 families below that threshold, according to a new analysis of Census Bureau data.
Will The Housing Market Continue To Decline?
It is clear that housing prices will continue their slide for at least another year in the softer markets. Bottom fishers should be ready.
Number of the Week: Cash for Shares
$92 billion: How much companies spent on their own shares in the third quarter of 2010.
Small Business Confidence Index Jumps
It could be a temporary phenomenon related to the seasonality of the holidays. But the data matches other positives as well. I would bet that we are seeing a trend, but I’m not going to call it that yet. It is still my belief is that a recovery will be characterized by stagnant growth and price inflation.
Bankruptcies Falling Again
Now that they're filing again, it may be time to revisit.  of course, it's not a big fall--but as I say, the economy is considerably worse now.  If it falls further, I think we'll eventually have to say that the bankruptcy reform did produce a measurable, if not enormous, reduction in bankruptcies.
The Baby Bummer Generation
Pew Research came out with a study on the Baby Boomer generation That is kind of fascinating. It is something that we need to follow because they represent 26% of the population (79 milli0n) and they are set to retire.

MONDAY
Unofficial Problem Bank list increases to 920 Institutions
Here is the unofficial problem bank list for Dec 17, 2010.
Small businesses still hunkering down
Some business owners retain a glimmer of hope that the worst of the recession has passed, but most are braced against another downturn, with little debt and minimal investment.
Ten Economic Questions for 2011
Just some questions looking forward to next year:
Schedule for Week of December 19th: Happy Holidays!
This is a holiday week (Merry Christmas!), but there will still be plenty of economic releases. There are two key housing reports: November existing home sales on Wednesday, and New home sales on Thursday.

Reports
THURSDAY
Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market
This study looks at how Fannie Mae and Freddie Mac evolved into the institutions they are today. As context for discussing future options, the study also examines both the rationales that are often cited for federal involvement in the secondary mortgage market and the problems with Fannie Mae and Freddie Mac that existed before the recent financial crisis.
The Effects of Government-Sponsored Venture Capital: International Evidence
This paper examines the impact of government-sponsored venture capitalists (GVCs) on the success of enterprises. Using international enterprise-level data, we identify a surprising non-monotonicity in the effect of GVC on the likelihood of exit via initial public offerings (IPOs) or third party acquisitions.


WEDNESDAY
WORKER ABSENCE AND PRODUCTIVITY: EVIDENCE FROM TEACHING
Our analysis indicates that worker
absences have large negative impacts: the expected loss in daily productivity from employing a temporary substitute is on par with replacing a regular worker of Average productivity with one at the 10th–20th percentile of productivity.

MONDAY
Economics Group
Weekly Economic & Financial Commentary

Budget News Dec. 13 - 17

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News
FRIDAY
Senate Democrats give up bid to pass $1.1 trillion spending bill
In a dramatic twist played out on the floor of the Senate, Majority Leader Harry Reid conceded Thursday night he lacked the votes to bring up a $1.1 trillion spending bill designed to fund the federal government for the rest of the current fiscal year.
TARP cost will be a 'fraction' of original price tag
Geithner told the Congressional Oversight Panel that the cost of TARP, the Troubled Asset Relief Program, will be no more than the amount spent on the program's housing initiatives.

THURSDAY
Medicaid Budget Challenges Continue To Plague States, Threaten Safety Net
States across the country continue to face challenges related to their Medicaid budgets and their abilities to provide care to a growing population of poor and disabled people.
Congress faces imminent deadline to pass a spending plan
With time running out on the government's authority to spend money, the Senate is expected to vote this week on a $1.1 trillion bill that would settle the issue for the rest of the fiscal year.

WEDNESDAY
Democrats' budget bill: $1.1 trillion; 1,900 pages
Included is an $840 million increase for Head Start and $550 million for Obama’s signature Race to the Top education initiative.
Reid threatens to keep Congress into next year
New spending bill totals $575.13 million per page.
Federal spending clash looms
Once again, Congress is facing intense deadline pressure to pass a spending bill to fund the federal government.
Omnibus Looks Strong in Senate
Congress is facing some pressure: The current stopgap measure expires Dec. 18.

TUESDAY
INFOGRAPHIC: Is Obama a Secret Tax Cutter?
President Obama's net spending increase totals to $1.1 trillion, while his net tax cuts total to $505.2 billion.

Economist Comments
FRIDAY
Closer Fiscal Union: A Collective Guarantee
Debt restructuring could be one part of the longer-term resolution of the crisis, together with a move toward deeper European integration to harness the region's collective strength.
Euro Defaults Need to Be Carried Out Quickly: Elena Carletti
Far from being irrational, markets are quite right this time to be concerned about the current crisis in the euro area.

THURSDAY
Examiner Editorial: Lame-duck Dems jam spending bill with 6,600 earmarks
The 2,000-page omnibus bill contains 6,600 earmarks worth $8.3 billion, including funds for such national priorities as termite research...
The 111th Congress's Final Insult
Bluto Blutarsky must have been an Appropriator.

WEDNESDAY
Public-Sector Pains Put Strain on Recovery
It turns out government really is part of the problem.
BILLINGSLEY: Education payouts lack payoff
Canada has no federal education ministry or department and no federal Cabinet official for K-12 education. At the federal level, Canada spends virtually nothing on K-12 education and on a per-student basis, spends about 20 percent less than the United States. Yet Canada is outperforming the United States.
States Slow to Face New Fiscal Reality
...yet now, with only about $40 billion in stimulus money still in their bank accounts, states face as much as another $100 billion in deficits next year.
RIEDL: Deficit commission wants too much tax, too little reform
Measured against a current-policy base line (which assumes todays tax rates and spending policies continue), the report proposed $3.3 trillion in tax increases, $3.5 trillion in spending reductions and $1.3 trillion in net interest savings through 2020. This would leave the highest federal tax burden in American history (21 percent of the economy), and still not balance the budget until 2035.

TUESDAY
How to Control State Spending
Balanced-budget rules work better than tax-and-expenditure limitations.
The Municipal Debt Bubble
As cities and states boost their debts by 800 percent, a housing-like crisis looms.
The US Treasury Debt Trap
Interest paid on national debt for the fiscal year 2010, which ended in September, was $414 billion or about 20% of tax revenues. That interest was against debt that was averaging about $13 trillion.

Blogs
FRIDAY
New Ways And Means Chair: Spending Cuts, Not Tax Increases
He said he's for making the tax code simpler, something he and President Obama can agree on.
The Averting-Disaster Syndrome
While defaults are not good news for a country, it is important to remember that they are the symptom and not the disease itself. Sometimes default, rather than systematic bailouts, can be the opportunity for a country to get in better shape. It’s not painless, but there isn’t another way.

THURSDAY
Secondary Sources: National Debt, EU Crisis, Broadway Economics
The Congressional Budget Office looks at the cost of servicing the national debt.
McCain Details Omnibus Pork on Senate Floor
According to the Constitution, the public's money should be spent only on those things that benefit everyone (i.e., the "general welfare," a clause that has sadly been repeatedly ignored or conveniently misinterpreted), and should not be taken from taxpayers for the purpose of giving it to particular groups or narrow interests.

WEDNESDAY
Bailouts or Bankruptcy for State and Local Government Pension Problems?
Congress should provide a mechanism to make the process more direct, giving the states the flexibility to address their fiscal problems consistent with federalism and the principles of limited constitutional government.

TUESDAY
Visualizing the U.S. National Debt: 1791-2010
It's time to update our U.S. national debt history visualization project, bringing it fully up to date through Fiscal Year 2010.
Setting a Regulatory Budget
Congress is far too prone to pass legislation forcing private companies to pay for something that would never be undertaken if the voter had to pay for it. But the voter does pay for it--indirectly, through lower growth and lost opportunities.
Tim Pawlenty on Public-Sector Unions
Giving public employees control of their own savings is essential for any kind of fair relationship between governments, their employees, and the taxpayers. An accurate accounting system is crucial to any fiscally responsible discussion.

MONDAY
Encouraging Polling Data on Spending Restraint vs. Deficit Reduction
By a 57-34 margin, they say that reducing federal spending should be the number-one goal of fiscal policy rather than deficit reduction. And since red ink is just a symptom of the real problem of too much spending, this data is very encouraging.
Remember the deficit-shrinking plans?
Three budget proposals all found ways to shrink the deficit. Where did they find common ground?

Reports
TUESDAY
Getting an Accurate Picture of State Pension Liabilities
Recognizing the unsustainable future of current public pension plans, many state legislatures are considering pension reform. Unfortunately, most proposed reforms are insufficient to fill the funding gap because government accounting standards continue to underestimate the true debt.
The Political Advantage of Restraining Spending
A number of studies over the past 20 years seem to suggest that, all things being equal, there is no systematic relationship between spending cuts and adverse political outcomes. In fact, the opposite may be true: there may instead be a political advantage to restraining spending.

Employment News Dec. 13 - 17

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News
FRIDAY
Nevada jobless rate rises to 14.3 percent
Nevada's jobless rate increased in November, even as new statistics show improvements in important wage indicators.
China's labor market: Valuable asset or economic albatross?
Even as pundits sharply debate China's economic future, most agree that much of it is riding on the stability of its working population. And depending on who you talk to, the Chinese labor market is either Beijing's biggest asset or its ultimate albatross.

THURSDAY
Jobless Claims in U.S. Unexpectedly Fell to 420,000 Last Week
Fewer workers than forecast filed claims for unemployment benefits last week, pointing to a drop in firings that signals the U.S. job market is improving.
How states fared on jobless claims, at a glance
Applications for unemployment benefits dipped by 3,000 to 420,000 in the week ending Dec. 11. That's the third drop in the past four weeks and evidence that layoffs are declining. Here are states with the biggest increases and declines in claims, with some reasons for the changes. The state data is for the week ending Dec. 4, one week behind the nationwide data.
Obama Pushes CEOs on Job Creation
At Blair House Meeting, President Continues Charm Offensive to Repair Frayed Relations With Corporate America

WEDNESDAY
Yahoo layoffs: 600 jobs cut in long-rumored move
Yahoo cut about 600 jobs Tuesday, the company confirmed, finally swinging the ax on layoffs that had been widely rumored for weeks.

MONDAY
What happens when the jobless give up?
Whatever the right mix of reasons, the fallout is crippling. Economically, long-term joblessness means fewer dollars for consumption. For deficit control, it means fewer taxpayers contributing to government revenues and tens of billions more spent on unemployment insurance. Then there is the psychological toll on individuals and families -- and on the nation.

Economists Comments
THURSDAY
Why Unemployment Will Remain High for Years, Part 2
Most of the increase in money supply is coming from quantitative easing. This suggests that real capital is weak, economic growth will be hindered, and new jobs won't be created.

Blogs
FRIDAY
Why Unemployment Will Remain High For Years (Part II)
Why aren’t jobs being created?
99ers and the continual decline
What will happen to Americans whose unemployment benefits have totally run out?
Unemployment Extension Won’t Help 99ers
The extension for unemployment benefits that is part of the compromise tax deal is good news for many of the unemployed, but it won’t provide aid to anyone who’s been out of a job over 99 weeks.

WEDNESDAY
Why Unemployment Will Remain High For Years – Part I
There are 15.1 million workers unemployed in America (U-1). Another 9 million are working temp for economic reasons, and another 2.5 million are marginally attached or discouraged from the work force (U-6). That is about 26.6 million people in trouble. We can argue about the “true” number of unemployed but for the purpose of this article, the fact that it is high under any measure is sufficient.
Unemployment Benefits, Inequality and Finance, Larry Summers
A roundup of economic news from around the Web.

TUESDAY
Secondary Sources: Struggling Men, QE2, Fiscal Follies
A roundup of economic news from around the Web.
Charting America's Transformation To A Part-Time Worker Society, Following 6 Straight Months Of Full Time Job Declines
It is surprising that over the past several years very little has been said in the popular media about the fact that America is slowly (but surely) transforming from a full-time to part-time employed society. And while much has been said about the temporary and now past impact of census hiring, and government jobs on the workforce, there are still few mentions in mainstream media that since the depression started in December 2007, America has lost 10.5 million full time jobs, offset by a 2.8 million increase in part time jobs.

MONDAY
Here come the '99ers
As I mentioned last week, the proposed tax legislation provides no additional help for the so-called "99ers". The "extension of the unemployment benefits" is an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits.
Are Jobs Growing Or Stagnant?
Recent reports on the employment in America have generally been disappointing. The numbers are all over the board depending on who you wish to believe. The BLS is negative, Gallup is positive.

Reports
WEDNESDAY
A Free Enterprise Prescription: Unleashing Entrepreneurs to Create Jobs
The Obama Administration’s $862 billion stimulus bill was an expensive failure that increased the federal deficit, contributed to America’s deteriorating fiscal health, and failed to reduce unemployment. Instead of repeating this mistake, Congress should alleviate business fears and economic uncertainty by maintaining the current tax policy (extending the 2001 and 2003 tax rates) and freezing costly new regulations. Then, Congress should rescind unspent stimulus funds, suspend federal regulations that unnecessarily suppress economic activity, conclude pending free trade agreements, and adopt other pro–free market steps. By enacting these reforms, Congress can unleash substantial economic growth, reduce unemployment, and reduce the deficit without spending a dollar of taxpayer money.

Monetary News Dec. 13 - 17

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News
FRIDAY
IMF chief worried about Europe domino effect
The head of the International Monetary Fund said on Thursday he was worried that EU leaders' piecemeal approach to Europe's debt crisis was encouraging markets to pick off weak countries one by one.
Fed Proposes Lower Store Fees on Debit Purchases
The Federal Reserve proposed on Thursday lowering the fees that merchants must pay when shoppers use debit cards, a move that could reduce retail prices but result in higher banking fees for consumers.
Fed Proposal on Debit Card 'Swipe Fees' Could Cost Banks Billions
Taking a whack at one of the banking industry's biggest cash cows, the Federal Reserve Board proposed today to slash the "swipe fees" that debit card companies charge retailers for every transaction they process, a move that could cost Mastercard, Visa, and banks billions of dollars.
Vending machine spits out gold bars and coins
"If you're a shopper looking for something sparkly to put under the Christmas tree, you could skip the jewelry and just go for the gold. Thomas Geissler, CEO of Ex Oriente Lux and inventor of the Gold To Go machines, expects the majority of buyers will be walk-ups taken by the novelty. But he says the machines are also convenient for more serious investors looking to bypass the hassle of buying gold at pawn shops and over the Internet.

THURSDAY
European Central Bank will raise capital to fight debt crisis
The European Central Bank said Thursday that it will almost double its capital base to euro10.76 billion ($14.3 billion) — money that will buttress its efforts to contain the continent's government debt crisis.
Dollar gains as euro falls, pushing stocks lower
The euro fell 1% against the dollar after Moody's said that it may lower Spain's credit rating. The stronger dollar hurts U.S. companies that do a lot of business overseas. The Standard & Poor's 500 index, the broadest measure of large U.S. companies, fell 0.3%.

WEDNESDAY
Prices edge up, inflation still at bay
The Consumer Price Index, a key measure of inflation, increased 1.1% over the past 12 months ending in November, the Bureau of Labor Statistics said. And the more closely watched core CPI, which strips out volatile food and energy prices, rose just 0.8% over the year.
Read the Fed statement
This is the statement of the minutes of the Federal Open Market Committee meeting released Dec. 14, 2010.
Fed Sticks to Bond-Buying Policy
Central Bank Keeps Rates Low, Says Economy Recovering but Not Fast Enough to Cut Jobless Rate.
New Fed lineup next year could mean more dissents
Federal Reserve Chairman Ben Bernanke will likely face more pressure from some his own colleagues next year to scale back the Fed's $600 billion bond-buying program to rev up the economy.

TUESDAY
Bernanke Options May Be Limited Amid Republican Scrutiny
Federal Reserve Chairman Ben S. Bernanke may find his options for reducing unemployment near a 26-year high are constrained after Republicans take control of the House of Representatives next month.
The Dollar Gains
The dollar gained against the euro and yen before the outcome of the Federal Reserve’s meeting to review its policy of debt purchases to bolster the U.S. economy.

MONDAY
Fed remains in the hot seat
The Federal Reserve has been in the hot seat since its last meeting. Economists and other Fed watchers expect the central bank's statement to be somewhat more upbeat than a month ago, acknowledging some signs of improvement in the economy.
Chinese inflation spikes on food costs
Higher food prices continue to be the main driver of inflation in China, raising the likelihood of an imminent interest rate hike as the country tries to reel in its red-hot economy.

Economists Comments
FRIDAY
Rising Interest Rates Signal a Bullish Recovery
There has been much hand-wringing in the business press lately about the recent rise in interest rates. The fear is often expressed that this will choke off the economic recovery and decimate further the still-weak housing industry. But in fact, rising interest rates are an extremely bullish sign; tangible evidence that the economy may have finally turned the corner and is poised for a sharp rise in growth.

THURSDAY
Bernanke's bold QE2 finally explained
Federal Reserve Chairman Ben Bernanke is using further quantitative easing to lift the US economy. But there's a big difference between creating more money and creating more value.
The Unintended Consequences of Monetary Policy
QE2 is not helping consumers or the housing market, but it is helping banks with a steeper yield curve. Was that the plan all along?
The Future of Our Asymmetric Recovery
The inflation versus deflation debates are interconnected with the nature of the economy's recovery because the key to the former debate is held in the answers to the discussion of the latter.

WEDNESDAY
Three ways to stabilize the euro
The European debt crisis has weakened the euro considerably, but there are opportunities to help put it back on even ground before it's too late.
China's 'death grip' on the dollar
Will China's addiction to dollars lead the global economy into a bruising showdown with inflation?
How Fed's policymakers hold power over your purse
The Federal Reserve's chief policymaking group has vast power over the finances of ordinary people, businesses and investors. The consequences of its interest rate decisions range wide: from people's ability to get affordable lonas to the price of cereal at the grocery store or gasoline at the corner station.
FOMC Discusses QE2 Progress, Unemployment
The future of quantitative easing and whether or not it should have the dual mandate of price stability and full employment are primary topics in this last meeting of 2010.
QE2 Is a Failure: Higher Yields Will Hurt Overbought Stocks
The Fed shouldn't have taken the federal funds rate below 3%, because 0%-1% rates for Wall Street simply ignite commodity speculation and create bubbles.
Five Ways Inflation in China Can Affect the US
The era of goldilocks in China is over; the era of trade-offs and tough choices for the Chinese has begun.

TUESDAY
Federal Reserve Lending Programs
The Federal Reserve recently released detailed data on its financial rescue activities as required under the new Dodd-Frank Act. The information covers nine special lending and related facilities and the programs related to the acquisition of Bear Stearns and assistance given to AIG during the financial crisis. The data covers more than 21 thousand transactions and trillions in loans and assets purchases. However, comparable information was not provided on its discount window lending.
Stress Testing the Fed
The Federal Reserve has recently announced its intention to purchase an additional $600 billion of securities as part of a second round of quantitative easing. Security sales and other methods of generating increased interest rates entail significant interest rate risk for the Federal Reserve and could result in either economic or book value insolvency long before interest rates rise and return to normal.

MONDAY
Can the euro survive its 'hair shirt'?
It's not looking good, says longtime euroskeptic Desmond Lachman.
Why Inflation in China Could Get Out of Control
Price controls, subsidies will serve as temporary palliatives at best; the only way to control inflation in China is through methods that substantially slow the economic growth rate.
Fed Has Only Temporarily Beat Deflation
John Williams calls for the "Hyperinflationary Great Depression," but it's easy to see that the US will hop in and out of deflation for the foreseeable future.

Blogs
FRIDAY
Keep calm and carry on?
Having learned that inflation ticked up to 3.3% in November, making yet another month in which price increases ran ahead of target, Britons may be wondering when the Bank of England will begin hitting its monetary brakes.
National Currency With State Implications
The Obama administration hopes to double exports within five years, and a weaker U.S. dollar would help lift foreign demand.
Happy on the sidelines
In October David Cameron, the British prime minister, collected the support of 12 other countries to limit next year’s European Union budget to a rise of 2.9%. After an ill-tempered fight with the European Parliament, Britain (and the other net-contributors) got its way.
Regional Fed Surveys Flag Seeds of Future Inflation
Economists looking at the November consumer price index released Wednesday couldn’t reach agreement on whether inflation is about to rise or ebb even further toward deflationary levels.

THURSDAY
Nominal GDP Targeting
For the Fed, a target represents a justification for taking action. Some people may be upset with what your action does to the exchange rate or the interest rate. Having a target allows you to justify your action.

WEDNESDAY
Parsing the Fed: How the Statement Changed
The Fed’s statement following the December meeting was little changed from the previous month when the central bank announced a new round of bond buying.
The Lone Dissenter: Kansas City’s Hoenig Goes Out With A Record
It’s eight for eight — a perfect dissent streak — for Thomas Hoenig. The Federal Reserve Bank of Kansas City President concluded his final meeting as a voting member of the Federal Open Market Committee as expected, dissenting against his colleagues’ stance on monetary policy

MONDAY
Is Ron Paul Good for Monetary Policy?
Paul will ultimately be good for monetary policy because he will actually bring some oversight to the Fed, which has been sorely lacking.
Fed independence is the worst solution except for all the others
How to best achieve the Fed mandate remains up for debate.

Reports
None

Tax News Dec. 13 - 17

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News
FRIDAY
13M get unexpected tax bill from Obama tax credit
About 13.4 million taxpayers may be getting unexpected tax bills because they were awarded too much money under President Barack Obama's Making Work Pay tax credit, a government audit said Thursday.
Accountants on Edge Waiting for Tax-Cut Changes
The tax-cut bill that gained final approval in Congress late Thursday, coming so late in the year, has whipped up a mild panic for accountants, payroll staffs and anyone else who handles taxes.
Congress Sends $801 Billion Tax Cut Bill to Obama
The vote sealed the first major deal between President Obama and Congressional Republicans as Democrats put aside their objections and bowed to the realignment of power brought about by their crushing election losses.

THURSDAY
Tax cut deal: How it affects you
With the Senate's passage Wednesday of Tax Hike Prevention Act of 2010, it now goes to the House for consideration and a vote.
Japan Adopts Tax-Overhaul Plan
...for the beleaguered government of Prime Minister Naoto Kan, the next part will be the hardest: gaining the necessary backing from increasingly hostile opposition parties.
Tax Deal Steams Closer to Approval
ongress moved toward final approval of President Barack Obama's tax plan on Wednesday, as the Senate approved it by a wide bipartisan margin and House leaders worked to keep liberal critics from derailing its passage.
Tax revenues fall across industrialised world
Tax receipts across the industrialised world have fallen to their lowest level since the early 1990s…

WEDNESDAY
Sweeteners' in tax cut bill called 'politics as usual'
The nonpartisan Congressional Budget Office estimates the tax bill will cost $893 billion, and Taxpayers for Common Sense recently unveiled its list of "hobo provisions trying to catch a ride" inside it.
Democrats' Opposition Fades as Tax Vote Nears
The final obstacle to President Barack Obama's tax deal—the opposition of House Democrats—appeared to be melting away Tuesday as strong Senate support for the legislation turned up pressure on liberal critics to concede.
Tea Party groups divided on tax cut deal
Before all the details were known, Tea Party Express initially supported the package. Russell said last week he thought the compromise was not ideal, but the group was willing to accept "small victories."
Democrats resist estate-tax provisions
President Obama's first postelection effort to strike a deal with Republicans is on the line in the tax-cut debate, where he finds himself fighting House Democrats who say he conceded too much to the GOP on an estate-tax cut.
Save the Children Breaks With Soda Tax Effort
In October, Save the Children surprised activists around the country with an e-mail message announcing that it would no longer support efforts to tax soft drinks.
Tax Deal Paves Way for Reform
This week's great debate over the fate of the Bush-era tax cuts is doing something more important than determining tax levels for a couple of years: It's helping set the table for a fundamental reform of the tax system.
Tax Deal Possibly Endangered by Error in Legislation
...a program to extend low income housing tax credits for people who lost homes during Hurricanes Katrina and Rita was left out of the bill even though it was a deal that all sides approved.

TUESDAY
Tax-cut deal clears Senate hurdle
An agreement between President Barack Obama and Republicans on extending Bush-era tax cuts cleared a key procedural hurdle in the Senate on Monday, setting up a vote on final Senate passage this week.
Soda Tax Would Boost Government Revenue, Not Solve Fat Problem, Study Says
Imposing a 40 percent tax on soda and non-carbonated drinks would raise $2.5 billion a year and translate to an average annual weight loss of 1.3 pounds per person, researchers wrote in the Archives of Internal Medicine yesterday.
Moody's Warns It May Cut US Rating if Tax-Cut Deal Becomes Law
Moody's warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Barack Obama's tax and unemployment benefit package becomes law.

MONDAY
Senate set to debate tax plan compromise
Senators are expected to open debate on the tax compromise reached by President Barack Obama and Republicans Monday, but House Democrats will likely try to change the deal, one of their leaders said.
The State of the Estate Tax
At Long Last, It Appears That Washington Has Agreed on New Estate-Tax Rules. Here's What You Need to Know
Cost of the Senate Tax Bill
The tax cut measure scheduled for a Senate vote Monday would cost $857.8 billion over 10 years, according to an estimate from the Joint Committee on Taxation.
Payroll tax cut worries Social Security advocates
President Barack Obama's plan to cut payroll taxes for a year would provide big savings for many workers, but makes Social Security advocates nervous that it could jeopardize the retirement program's finances.
Democrats Signal Tax Deal Will Pass House
Van Hollen says Democrats won't stand in the way of passage.
Bill Clinton: Tax deal the best we can reach
Former President Bill Clinton took to the White House podium Friday and delivered a ringing endorsement of the tax compromise struck earlier this week by President Obama and Republican lawmakers.

Economist Comments
FRIDAY
Do Estate Taxes Matter?
Estate taxes have long generated political heat. Would other kinds of taxes work just as well?

THURSDAY
Romney: Tax deal, bad deal
Of course, delay now is better than an immediate tax hike. But because the extension is only temporary, a large portion of the investment and job growth that characteristically accompanies low taxes will be lost.
Van Hollen: Deal Will Pass Even Without Estate Tax Revision
The bill passed by the Senate pegs the rate at 35 percent, with a $5 million exemption.
What Are Taxes For?
Should the primary purpose of taxation be to support the government or maximize economic growth?
Opposing view on inheritances: 'Death tax' is unfair
The economic question is simple: Does the estate tax help create jobs, grow the economy or improve our country. In every case, the answer is no.
For Family-Run Small Businesses, Estate-Tax Uncertainty Adds Costs
What's unavoidable to many family businesses, however, is the cost of lawyers, accountants, family business advisers and business appraisers—and all that, owners say, has increased in the past decade as the estate-tax rate has continually changed.
MILLOY: Tax on coal in nation's stocking
New greenhouse rules do nothing but unravel red tape.

WEDNESDAY
Tax deal makes everyone unhappy -- except most Americans
What most economists agree on is that raising taxes in January, which will happen if this deal isn't passed, will cause further economic damage.
The 'Tax The Rich' Con, Part III
It's a classic bait-and-switch that eventually leads to higher taxes for everyone.
Cracking the tax code
The countless exemptions, credits and deductions cost the government more than $1 trillion annually in foregone revenue. It's time for an overhaul.
Billionaires On the Warpath'?
Thus the heart of the tea party's objections to the Beltway status quo is fundamentally a moral one: that Washington is arrogant about how it takes and spends our money.

TUESDAY
RAHN: Tax facts and fantasies
The rich already pay more than their fair share.
Temporary' Tax Code Puts Nation in a Lasting Bind
In the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so… Today there are 141.
FEULNER: A misdeal on tax cuts
As tax-cut deals go, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 was never a winner.
Democrats Are Right to Attack Obama's Tax Deal: Amity Shlaes
The payroll tax break of 2011 encapsulates what’s wrong with our entire tax system. This one piece of the compromise plan also explains why growth after next year is likely to be weaker, not higher, than the current optimistic predictions.
The Tax The Rich Con Part II
The middle class will foot the bill for higher taxes on the rich.
Welcome to tax reform redux
Barack Obama is not the first president to use sweeping reform of the income tax as a way of distracting attention from more urgent, if not more important, issues. But early signs are that he is going about it all wrong.

MONDAY
Government Unions vs. Taxpayers
The moral case for unions—protecting working families from exploitation—does not apply to public employment.
Obama May Tackle the 800 Pound Gorilla—Tax Reform
By embracing tax reform, President Obama opened the door to a long and contentious debate over the cumbersome and loophole-ridden U.S. tax code.

Blogs
FRIDAY
The Reality of the Tax Deal
It is an interesting topic because it showcases the enormous gulf between what makes good political sense and what policies are economically beneficial.

THURSDAY
In Support of the Tax Compromise
The main reason why is that I don’t necessarily see an extension of the Bush tax laws as a tax cut. American individuals and businesses have been living with the current rates for nearly a decade. And its not that there will be a cut into the current state of revenues.
U.S. to have Highest Corporate Tax Rate in the World
Japan’s reduction will leave the U.S. in the uncomfortable position of having the highest corporate income tax rate in the industrialized world.
Why Democrats Should Support the Extension of the Bush-Era Tax Rates
The attitude switch won’t be so hard once they actually look at the data, since it shows that the main impact the rate reduction had in the first place was to make the rich pay an even bigger share of taxes that they paid before.

WEDNESDAY
Would a Permanent Extension of Tax Rates Really Create Certainty?
Even if the Congress were to make current tax provisions permanent, there would still be an enormous amount of uncertainty in current tax policy. This is because, over the long run, government expenditures are on an unsustainable path and by the simple arithmetic of budgeting, taxes will eventually have to go (way) up or spending will have to go down.
Tax Compromise Makes Reform More Urgent, Not Less
...a temporary extension of tax rates not only kicks the can down the road on comprehensive tax reform, but itself inserts uncertainty into the marketplace.
How to Fix the Tax Code: Five Pro-Growth Policies for Congress
Among the many undue burdens that the current tax code places on American taxpayers and the economy, five stand out as particularly detrimental to job creation, investment, and economic recovery.

MONDAY
Killing Obama’s ‘Build America Bonds’ Is a Big Reason to Like the Tax Deal
The tax deal ends the “Build America Bonds” tax preference, which was one of the most destructive provisions of Obama’s so-called stimulus. Here’s an excerpt from a Bloomberg report.
Rep. Paul Ryan: Tax Deal Not a Stimulus Package
Speaking with WSJ’s Jerry Seib, Congressman Paul Ryan (R, WI) insisted that the deal between Republicans and the White House on the Bush Tax Cuts was not a second stimulus and that the agreement would promote growth despite adding to the deficit.
Mayor Bloomberg Imposes a Victim Tax on New Yorkers
Firefighters will begin charging accident victims for their emergency services to the tune of hundreds of dollars, even if the victim was not at fault.

Reports
TUESDAY
Uncertainty and Taxes
As this paper will show, tax reform is necessary. However, given our current tax structure, any increase in marginal income-tax rates will actually retard economic growth and stall recovery further.