7/22/10 Post

BUZZ: The Tax Tsunami On The Horizon

News
Jobless Claims Increase
In its weekly report Thursday, the Labor Department said the number of U.S. workers filing initial claims for jobless benefits increased by 37,000 to 464,000 in the week ended July 17. Economists surveyed by Dow Jones Newswires had expected claims would rise by 21,000.
Obama's words sting CEOs
In the eyes of corporate America, President Barack Obama relied on a healthy dose of industry-bashing to sway votes in Congress for health reform and the new Wall Street regulations signed into law Wednesday.
Financial Overhaul: An Easy Guide to Complex Reforms
All of that means the real-world impact of the law will depend on how it's interpreted by regulators — the same regulators who were blamed for failing to head off the financial crisis. Still, the bill is now law. And regulators must enact rules consistent with Congress' blueprint.
Alaska Wells Halted
A unit of Royal Dutch Shell PLC had hoped to drill three exploratory wells this summer. Those plans were halted when President Obama decided to delay offshore oil drilling in the Arctic until at least 2011.
Gold Coin Sellers Angered by New Tax Law
Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions.
Conflicted GOP provides key votes to pass popular trade bill
The House on Wednesday passed a tariff reduction bill that Democrats and business groups said would support tens of thousands of jobs after Republican opposition to the measure wilted.
Politicking clouds economic decision-making, with economists more optimistic than public
64% of economists surveyed in a Wall Street Journal poll said the economy would get better over the next 12 months compared with just 33% among the general public who said they believed that.
Gold Coin Sellers Angered by New Tax Law
Deep financial worries make economy a personal hardship for many Hispanics
57% worry a lot about being unable to pay bills, well above the 34 percent of the entire population who said that in the May. 48% of Hispanics said they worry greatly about becoming unemployed, double the overall population's concern.
20% of Americans hit by major economic loss
A new study released Wednesday estimates that 20% of Americans suffered a significant economic loss last year - the highest level in the past 25 years.
Job seekers' latest hurdle: Credit checks
An increasing number of employers are using credit checks to screen potential job applicants. So missed payments on your mortgage, car or credit card could keep you from getting hired.
New wave credit card abuses
A 2009 federal crackdown on abusive credit card practices has exposed a litany of other ways consumers are being hosed.
Existing-home sales fall as tax credit ends
Resales of U.S. homes fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million as a federal subsidy for home buyers ends.
June leading indicators fall; slower growth seen
The index of leading economic indicators declined 0.2% in June, slower economic growth is expected through the fall.

Blogs
The History and Future of Private Space Exploration
"For the majority of its history, space exploration in America has been funded privately. The trend of wealthy individuals, such as Paul Allen, Jeff Bezos, Robert Bigelow, and Elon Musk, devoting some of their resources to the exploration of space is not an emerging one, it is the long-run, dominant trend which is now re-emerging."
Secondary Sources: Inflation Expectations, Out of Touch, Krugman v. Rogoff
A roundup of economic news from around the Web.
Office Vacancy, Lease Rates and New Investment
Historically the billings index will turn up 6 to 9 months before an increase in non-residential structure investment - there is a long way to go!
Congress Created Them All
Is the power to command people to purchase health insurance, or the power to prohibit consenting adults from buying and selling certain kinds of financial instruments, really so mild and beneficial that we should calmly welcome the exercise of these powers while we simultaneously quake with fear at the exercise of “intelligence” powers?
Summer Reading III
Banking crises are not only frequent , but often accompanied by other kind of crises. These include exchange rate crises, domestic and foreign debt crises and inflation crises. The current financial crisis is still unfolding, but we have already seen the clustering of crises.
Apparently not obvious: neutrality neuters innovation
I wonder why it’s seemingly so easy to see the negative unintended consequences of regulating search, yet most people are blind to similar consequences from government regulation of other stuff. I think one reason is because proponents of regulation can yell about fairness and “leveling the playing field,” which sounds intuitive and appealing, so most people never realize that there’s potential for unintended consequences. Let alone what the costs and benefits of those consequences might be.
Testimony Highlights: Bernanke on the Hill
In his prepared testimony, he didn’t offer any new steps to support the economy but said that with an uncertain economic outlook, Fed officials “remain prepared to take further policy actions as needed.”
The FCC Won’t Be Let Be (Apologies to Eminem)
"The Freedom for Consumer Choice Act would require the FCC to prove consumers are being substantially harmed by a lack of marketplace choice before it can impose new regulations, as well as weigh the potential cost of action against any benefits to consumers or competition."
Crony Capitalism
It’s the pretense of knowledge. How can Obama be so sure that his brief introduction to these companies outweighs the private sector’s accumulated knowledge and conscious disregard for them?
And It Said “Let There Be Higher Wages.” And There Were.
Writing in today’s Baltimore Sun, Marta Mossberg correctly argues that a proposed “living-wage” bill for Baltimore will hurt the poor. This unintended effect is the inevitable result of prohibiting workers from accepting any wage lower than $10.57 per hour – a wage well above the hourly value that many unskilled workers are capable of producing for employers.
Existing Home Sales decline in June
Months of supply increased to 8.9 months in June from 8.3 months in May. A normal market has under 6 months of supply, so this is already high - and probably excludes some substantial shadow inventory.
Co-opting the Anti-Spenders
Voters who recognize the need to make major cuts to federal spending and think returning Republicans to power will accomplish this feat could be in for a big disappointment.
Morning Bell: The Obama Tax Tsunami is Here
$862 billion economic stimulus has completely failed to keep unemployment below 8% as promised; still-expanding health care law which the Congressional Budget Office now admits will cost more than $1 trillion; and a budget that increases government spending by $12,000 per household.
Dem Plan to Cut Deficit Will Pay for Failed Stimulus … by 2130
Reps. Gary Peters (D-MI), John Adler (D-NJ), Peter Welch (D-VT) and Jim Himes (D-CT), should be commended for forming their new Spending Cuts and Deficit Reduction Working Group.
Dodd-Frank Lets Fannie and Freddie Deadbeats Slide
As President Obama today signed into law the Dodd-Frank financial regulation bill, two words were left unspoken: Fannie and Freddie.

Research, Reports & Studies
Individual Mandate and Related Information Requirements under PPACA
Most individuals will be required to maintain minimum essential coverage, which includes eligible employer coverage, individual coverage, grandfathered plans, and federal programs such as Medicare and Medicaid, among others. Those who do not maintain minimum essential coverage, and who are not exempt from the mandate, will be required to pay a penalty for noncompliance.
The Economic Case Against the Death Tax
The death tax slows economic growth, destroys jobs, and suppresses wages because it is a tax on capital and on entrepreneurship.
Five Ways to Tackle Spending and Deficits
America's fate is not yet sealed. This bleak future of rising spending, painful tax increases and unsustainable deficits can be avoided if lawmakers quickly take the following five steps.
Overspending on Multisource Drugs in Medicaid
This report assesses wasteful spending in Medicaid by examining specific brand drugs and quantifying the potential savings that could have been achieved had these drugs been replaced with lower-cost, generics that were available but not used.

Economists’ Comments & Opinions
No need for a panicked fiscal surge
Unfortunately, much of the world is going to be facing huge macroeconomic uncertainty for years to come. There is uncertainty about regulation, sovereign debt, the state of our banking and healthcare systems as well as about political fallout from the financial crisis. In this environment, measures to gradually stabilise debt burdens – to restore normality – surely make sense.
Son of Cap and Tax
The destructive fine print in Harry Reid's energy bill.
U.S. Workers Aren't Better Off
Until the president and Congress abandon this costly interventionism, the economy won't produce the jobs needed to reduce unemployment significantly. In other words, more aggregate demand alone may be unnecessary and surely is not sufficient.
Economists vs. Economics
Everybody knows that economists are terrible at predicting the future. If the price of pencils goes up, people buy less of them. If the price goes down, more. Economists can predict that much. But they can't say by how much. That would require a depth of knowledge known only to the divine. They would have to know to the shape and the slope of hundreds of millions of ever-changing individual demand curves for pencils at any given moment. The elasticity of demand for the same. They need the same information for competing products, like pens. Nobody has that kind of information. Nobody can predict the future.
Why the ObamaCare Tax Penalty Is Unconstitutional
The federal power to tax is not unlimited, as the Supreme Court recognized when it struck down the first national income tax.
Obama's Jobs Errors
The actual unemployment rate is 9.5 percent, a statistic that doesn't include the millions who've given up looking for work or can only find part-time jobs. What were President Obama's biggest mistakes?

Graph of the Day
Entitlement programs must be reformed to improve the long term budget
See: Where are the billionaires?
See also: Congress Ranks Last in Confidence in Institutions

Book Excerpts
"When it is a question of taxes, gentlemen, prove their usefulness by reasons with some foundation, but not with that lamentable assertion: ‘Public spending keeps the working class alive.’ It makes the mistake of covering up a fact that it is essential to know: namely, that public spending is always a substitute for private spending, and that consequently it may well support one worker in place of another but adds nothing to the lot of the working class taken as a whole. Your argument is fashionable, but it is quite absurd, for the reasoning is not correct." –Frédéric Bastiat, What is seen and what is not seen: or Political economy in one lesson (1850)

Did You Know
"Number of birds killed by the BP oil spill: at least 2,188 and counting.

Number of birds killed by wind farms: 10,000-40,000 annually.

Number of birds killed by cars: 80 million annually.

Number of birds killed by cats: Hundreds of millions to 1 billion annually."