7/21/10 Post

BUZZ: Total US govt financial system support seen at $3.7 trln

News
Slowing Economy Could Exacerbate Federal Debt Woes
The White House's Office of Management and Budget sees 4% average real GDP growth from 2011 to 2014. But if growth is 3%, OMB says deficits would be $2 trillion higher through 2020 than the $8.5 trillion under its baseline scenario.
TARP Lending Programs Curtailed
Treasury officials say they plan to end a long-delayed, never-utilized $30 billion program designed to boost small-business lending and cut the amount of money available for a Federal Reserve lending program.
Housing Market Stumbles
Construction Slows, Inventories Build Amid Weak Job Growth, Tax-Credit End.
Facing Pension Woes, Maine Looks to Social Security
With pension costs ballooning and taxpayers lashing out, many workers in states with deeply underfunded plans fear their benefits will be cut. Those being asked to put more into their pension funds complain they feel caught up in Ponzi schemes.
Bond Sale? Don't Quote Us, Request Credit Firms
The odd plea is emerging as the first consequence of the financial overhaul that is to be signed into law by President Obama on Wednesday. And it already is creating havoc in the bond markets, parts of which are shutting down in response to the request.
Social Security Loses $50 Million a Year in Benefit Overpayment
The overpayments go to retirees who have held state jobs and also worked in the private sector — teachers who worked on their summer breaks, for instance, or police officers who retired young enough to form their own companies.
Quinnipiac: Obama Approval Hits New Low
Just 36 percent of voters said they'd vote for Obama over an unnamed Republican candidate in 2012, compared with 39 percent who would vote for the Republican.
Fed in Hot Seat Again on Economic Stimulus
...for now the Fed is very much in the role of the anxious doctor, waiting to see if the patient can recover on his own without an additional dose of untested medicine.
Oil Spill: 90 Days Out, A Bold Look at the Big Numbers
Exactly 90 days after the Deepwater Horizon rig accident occurred in the Gulf of Mexico, The Fiscal Times takes a look at key numbers connected to the disastrous oil spill in the Gulf of Mexico
Wall Street wants to see sales growth, not just fatter profits
After five straight quarters of bigger profits for Big name companies, investors are showing they want more evidence the recovery is on the right path.
Jobless benefits extension passes Senate test
More than 2.5 million unemployed Americans are one step closer to having their unemployment benefits restored.
Economy still on government life support
All-in government support for financial institutions and the still-distressed housing market is up 23% this year, at around $3.7 trillion from $3 trillion last year.
U.S. debt: When is it safe to start cutting?
It's a refrain for those who think the government should do more to help the economy: The recovery is still fragile, so policymakers should wait before reining in U.S. debt. How strong does the economy have to be exactly? And when will it get there?
Wall Street reform law's starting line
As soon as President Obama's name shows up on the Dodd-Frank Wall Street reform law Wednesday, there will be some changes.
The Fed's toughest foe: Deflation
Prices have been slowing for three months. And members of the Federal Reserve openly voiced concerns about deflation.
The Fed's near-death and rebirth experience
At risk of losing all oversight powers, Fed fights to regulate another day.
Bernanke may seek to dispel double-dip fears
Bernanke faces no easy task to slay the double-dip dragon. Bernanke may benefit from the Fed's recent victory in the turf battle over reform of Wall Street oversight.

Blogs
Killing Jobs
A “safety net” is supposed to catch someone when he is falling, not two years after he falls. By 99 weeks -- the current length of unemployment benefits -- it is time for him to him to stand up.
Secondary Sources: Bernanke Questions, Housing Slump, Free Trade
A roundup of economic news from around the Web.
Government Spending by Another Name
If tax expenditures are not cut, taxes on households and businesses will have to rise to prevent an explosion of the national debt, which is now projected to increase to 90% of GDP by 2020 from today's 63%.
Survey: Americans Remain Wary of Stock Market
About 45% of people think the stock market will drop by more than 30% in the next year, according to a survey by economists at the University of Chicago and Northwestern University. That’s even worse than the 42% a year ago who thought such a sharp decline in stocks was likely.
In Search of Effective Stimulus
Dylan Matthews at the Washington Post has asked what we might be able to do for the economy if we repealed the Bush tax cuts for the wealthy and spent the money on something else.
Unemployment Extension Fight Is Just Beginning
In past recessions, unemployment extensions continued until the unemployment rate dropped below 7.5%. That’s a long way from the 9.5% rate recorded in June.
The Forgotten Employer
What’s lost in these arguments about jobs, especially by those on the left, are the voices of the jobs’ creators themselves. Those would be the employers.
Wages Fail to Keep Pace With Inflation
Median weekly earnings increased slightly to $740 in the second quarter from $734 a year ago, a 0.8% increase. The consumer price index, meanwhile, rose 1.8% in the same period.
Obamacare Is Not Entitlement Reform
The United States faces financial collapse due to out-of-control government spending, and entitlement programs have a lot to do with it.
Veto Bait for President Obama?
The President is scheduled to sign the financial overhaul bill today, yet he might want to consider not signing this bill because of the potentially unconstitutional racial and gender preference provisions buried in the massive bill.
Odd Pick for Immigration Enforcement
As the new state and local coordination director, Harold Hurtt will be responsible for the 287g program, which allows local law enforcement to “act in the stead of ICE agents by processing illegal aliens for removal.”
The Miscellaneous Tariff Bill: No Trivial Matter
Without passing judgment on the specific bill, the miscellaneous tariff bill (MTB) process has been a quiet trade policy success for almost 30 years.
The Economic Case Against the Death Tax
The death tax is a scourge for family-owned businesses, it also destroy jobs, lowers wages, and stifles entrepreneurship.

Research, Reports & Studies
Federal Trust Funds and the Budget
The Treasury securities in the trust fund are claims on the government and the government will to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.
The Boundless Beneficence of Big Brother
Comparing government to a wealthy brother or sister is simply a category error. Can you get a gift or loan from your relatives by shouting, "Give me my money!"?
Game of Chicken over Bush Tax Cuts Is Near
Either way, there will be a shock to an economy still reeling and teetering at the abyss of deflation and deeper downturn.
The Inefficiency of Clearing Mandates
This paper lays out the advantages and risks to a mandated clearing requirement, showing how, in some instances, such a mandate can actually increase systemic risk and result in more financial bailouts.
Cap-and-Trade Bill Would Make Housing Less Affordable
Just as there is ample evidence to suggest that smart growth and New Urbanist housing policies would do little or nothing to curb Green House Gas emissions, there is plenty of evidence to suggest that they would disrupt the already wobbly housing market.
Creating a Crisis: Unions Stifle Education Reform
Union influence and power has continued to prevent meaningful education reform, and another public education bailout from Washington will further empower unions.

Economists’ Comments & Opinions
Atlas Shrugged's Timeless Moral: Profit-Making Is Virtue, Not Vice
It's remarkably similar to the state of the world in Ayn Rand's "Atlas Shrugged," a mystery story about a future America whose economy is disintegrating and whose government is accumulating power faster than anyone thought possible. This parallel is a big reason a record 500,000 people bought "Atlas Shrugged" last year.
Obama's Economic Fish Stories
On unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.
Setting the Table for Fiscal Restraint
A Federal Reserve program of buying longer-term securities is the right policy for now and makes the right policy more likely in the future.
Washington's Tax Oracles
How to think about revenue estimates.
Professor Blinder Shows a Blindness to the Entrepreneurial Spirit
One mustn't reduce the sphere of economic activity from which entrepreneurs can draw sustenance.
Stimulating Unemployment
If you can't create any jobs, pay people not to work.
Making a Bad System Worse
Imposing national standards does nothing to change the basic political reality that has created this dismal situation: Public schooling is a government monopoly.

Graph of the Day
The extended unemployment benefits will have an impact on jobless workers all across the country
See: Flying high in the east
See also: Animation of Unemployment from 2007-2009

Book Excerpts
"'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded -- and once they are suspended it is not difficult for anyone who has assumed such emergency powers to see to it that the emergency will persist." -F.A. Hayek, Law, Legislation, and Liberty (1982)

Did You Know
"The ranks of U.S. restaurants are thinning. The number of establishments fell 1% between the spring of 2009 and the spring of 2010, a loss of 5,204 eateries. The decline was driven by closures of mom-and-pop outfits, while the number of chain restaurants was flat from a year earlier. There are fewer restaurants now than in 2007, with the drop coming in lock step with waning customer traffic."