7/20/10 Post

BUZZ: Senate Set to Extend Jobless Benefits

News
SEC needs to add jobs due to reform law
The Securities and Exchange Commission will need to hire about 800 new people to carry out the Wall Street reform legislation.
The wrong fix for small business lending
Something must be done to get small businesses up and running again. Small businesses employ roughly half of Americans and account for 60% of new jobs. But it's unclear whether foisting loans on them will solve the problem.
New home construction drops
New home construction fell to the lowest level of the year in June. Housing starts fell 5% from May to a seasonally adjusted annual rate of 549,000 last month.
Business versus Obama
Sitting on $2 trillion in cash, corporate chieftains appear to have decided that their inability to find suitable investments and create new jobs is not due to any lack of imagination on their part but solely to adverse policies of the Obama administration.
Unemployment rate falls in majority of states
A total of 39 states and the District of Columbia posted unemployment rate decreases in June. In May, 37 states and D.C. saw rates decline, six states suffered rate hikes and seven states reported no change.
Faith in Social Security tanking
Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.
Spain, Ireland, Greece Sell Debt as `Funding Pressure' Eases
The Counties sold almost 10 billion Euros ($13 billion) of debt, with demand rising for shorter-dated securities, on optimism the European Union’s aid programs will contain the region’s fiscal crisis.
Double dip looks doubly certain
Some think the worst is behind us, and that output and employment will slowly but steadily increase during the next few years. Others believe we are headed for another crash.
Many receive mortgage help from Obama plan
Some 51,205 troubled homeowners received long-term mortgage modifications under President Obama's foreclosure prevention program in June, bringing the total to 389,198 since the program began in the spring of 2009.
Fed workers to be urged to commute, travel less
In a statement, Obama noted that the government is the biggest energy user. "The government has a responsibility to use that energy wisely, to reduce consumption, improve efficiency, use renewable energy, like wind and solar, and cut costs," he said.
U.S. Approves Shallow-Water Well in Gulf
A de facto freeze on federal permits for new shallow-water oil and gas wells could be starting to thaw.
Longer-term risks remain despite the euro’s rally
The euro’s rebound from the four-year low it hit against the dollar in June has been impressive.
CEOs Get Ready to Spend Again
In what may signal an important shift, some chief executives say they are ready to start spending the mountains of cash they have stockpiled over the past year, despite lingering worries about the global economy.
Credit spreads predicted to widen
Credit spreads for a broad range of companies in both the US and Europe are expected to widen over the next three months amid concern about the global economic recovery and the possibility of a sovereign default, according to a survey of credit portfolio managers at financial institutions around the world.
IRS Erred in High-Stakes Tax Case
The Internal Revenue Service said it made a more than $325 million error in a high-stakes tax battle with Vi, an operator of upscale retirement communities.

Blogs
Morning Bell: White House Admits Obama-care’s Individual Mandate is a Tax
Throughout his presidential campaign, Barack Obama promised the American people: “If you’re a family that’s making $250,000 a year or less, you will see no increase in your taxes.”
START the Debate, Stop the Name-Calling
Chiefly, experts are troubled that New START will lock America into all the wrong commitments at a time when the threat of nuclear and missile proliferation is actually growing.
Send Trade Critics Back to School
By selectively misusing bits and pieces of international trade data, trade critics distort the big picture. It’s time to send them back to school for a lesson in how to honestly add and subtract.
Back in the Black — But Not Out of the Woods
As states tally up spending and revenues for fiscal year 2010, which ended June 30 in most states, some are finding that they ended their year with their budgets in the black.
Maywood, California Outsources the Government; Life Goes On
Anarchy did not follow. Public safety duties were handed over to the Los Angeles County Sheriff’s Department. The Mayor’s husband got a parking ticket from enforcement officials contracted by the city a few hours after the municipal employees were let go.
E-Books: The Future Is Here
...it not only means that e-books are entering the mass adoption phase, but also that the price-discrimination model that publishers have used for decades may be on its way out.
It’s Broken
Many years ago, the pollster Frank Luntz asked young people if they believed they would ever see a UFO. He then asked them whether they believed they would ever see a Social Security check. Surprise, surprise: More of them believed they would see a UFO than a Social Security check.
Parking Perspectives
...if municipalities broadened the role of the private sector in parking garage provisions, they could unleash incentives for entrepreneurs to improve the mix of uses of existing garages.
Tax Cuts and Aggregate Demand
...the chief argument for tax cuts is not that they increase aggregate demand but, rather, that they increase the return to productive effort and risk-taking.
Response: The important thing is Chinese productivity is rising
If it is somehow the case that the wealthy economies need labour which is cheaper than that currently offered by the Chinese, there are plenty of other countries on the rise, including large parts of a highly populous Africa.
Another Stimulus Boondoggle
Dr. Romer was not very long ago a widely respected student of economic history. Now, as Nobel laureate Joseph Stiglitz before her, she seems to have caught “Potomac Fever” and to have succumbed to the flawed Keynesian idea that deficit public spending can “create” jobs.
June Unemployment Rates, by State: Most Regions Show Improvement
Follow the change in unemployment from the beginning of the current recession. Below, the state-by-state unemployment rate from the Bureau of Labor Statistics, seasonally adjusted.
“Of Constitutional Decapitation and Healthcare”
In brief, the argument is: The tax is not an excise tax, and it could not be a constitutional excise tax because it is not uniform. The tax is not an income tax, and it could not be a constitutional income tax, because it is not a tax on derived income. Accordingly, the tax must be a capitation or direct tax. Article I, section 9 provides: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” The tax is not apportioned, and therefore is contrary to Article I, section 9.
What went wrong–a narrative is born
So how will the Keynesians explain the failure of the Obama stimulus spending?
Is Unemployment Insurance Stimulative?
Now there may very well be humanitarian reasons for unemployment insurance (I’ll leave it to others to debate those). But is seems to me that the data are making it increasingly more difficult to argue that redistribution through unemployment benefits is both humanitarian and stimulative.
Krugman on Cowen and Germany
the simpler historical-explanatory point that, no matter how you slice and dice the data, the poor outcome in absolute terms explains why the Germans are not so impressed by ideas of debt, spending and aggregate demand. And if stimulus proponents keep on losing heart at the critical moments, the citizenry is still right to be skeptical.
Life in Post-America America
The article [on the world of intelligence post-9/11] does not describe sensible steps to augment our intelligence capacity to meet a new threat, but mindless overreaction by bureaucrats given vast budgets and manpower, acting beyond the reach of any meaningful public assessment or oversight, doing things that have profound long-term implications for the immunization of the government to the wishes of the people.
Secondary Sources: Fannie and Freddie, Panic, Social Security
A roundup of economic news from around the Web.

Research, Reports & Studies
Rethinking Our Defense Budget
“Indeed, in what I admit is a most challenging environment given the fiscal health of this country, I will argue that instead of spending too much on America’s defenses, we are spending too little.”
The GOP's Counterinsurgency by Spenders
In the current environment, even GOP moderates are tacking to the right on fiscal issues.
David Cameron and Barack Obama Must Advance Economic Freedom—Not More Foreign Aid
Cameron and Obama should use the summit as a critical first step toward bringing real changes to the less developed world by shifting their commitment to the principles of economic freedom rather than the false promise of foreign aid.
Everyman’s Deficit
Spending Beyond Our Means.
Uncertainty and Economic Activity: Evidence from Business Survey Data
We argue that high uncertainty events are a mere epiphenomenon of bad economic times: recessions breed uncertainty.

Economists’ Comments & Opinions
The ObamaCare Lies Are Still Coming
The law will add significantly to the already crushing burden of government spending, taxes and debt.
Today’s Keynesians have learnt nothing
In some ways, of course, this is not an argument about economics at all. It is an argument about history.
The Deficit is Bad for America
Deficit "stimulus" is not the road to economic recovery.
Abolish state income taxes
Statistics show they retard economic growth.
Worry Over the Wealth Gap Is Wasted
In considering how wealth is created, it should be said that the economic interest or greed of the entrepreneur must logically coincide with the needs of the consumer.
Regulation Reform
The Consequences of Dodd-Frank Part II

Graph of the Day
U.S. spends more on monthly interest payments to the debt than it spends on some federal departments in a year
See: Abortion, Third-Party Payer, and the Cost of Health Care

Book Excerpts
"In public administration there is no connection between revenue and expenditure." -Ludwig von Mises, Bureaucracy (1944)

Did You Know
Half of all state and local spending in 2008 went toward employee wages and benefits. Those states whose government workers are less than 40 percent unionized have median per capita state debt of $2,238, while those states where unionization rates are over 60 percent have a median per capita state debt of $6,380.