Friday, July 23, 2010

7/23/10 Post

Geithner: Taxes on Wealthiest to Rise
Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year.
Pentagon Faces Growing Pressures to Trim Budget
At the moment, the administration projects that the Pentagon’s base budget and the extra war spending will peak at $708 billion in the coming fiscal year, though analysts say it is likely that the Pentagon will need at least $30 billion more in supplemental war financing.
Geithner bored by complaints from business about Obama policies
“Businesses always want their taxes lower and always want to live with low regulation,” Geithner said. “There is nothing remarkable, or particularly interesting frankly, that we’re in the midst of another debate, which you hear in almost any administration, with people looking for ways to help affect the outcome on the basic path of regulation and taxes.”
Home Sales Dip as Unsold Inventory Persists
Glut of Properties on Market Hints at Falling Prices Through Rest of Year as Sector Adjusts to End of Buyers' Tax Credit.
Less Money for Dead People: Obama Signs Waste Law
President Barack Obama on Thursday signed legislation intended to slash by $50 billion the taxpayer money improperly paid to dead people, fugitives and those in jail who shouldn't be getting benefits.
SEC Breaks Impasse With Rating Firms
Late Thursday the agency said it would temporarily allow bond sales to go ahead without credit ratings in bond offering documents, a move that would end an effective stalemate between ratings agencies and issuers.
Biden: 'The heavy lifting is over'
The "heavy lifting is over" when it comes to the Obama administration's legislative priorities this year, Vice President Joe Biden said Thursday evening... “Barack and I are realists," the vice president added.
Measure creating $30B lending fund for small businesses clears GOP filibuster in Senate
Democrats in Congress said the banks should be able to use the money to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. GOP opponents called it another unwise bank bailout.
Jobless benefits restored for millions
Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.
Senate shelves global warming bill
Democrat leaders in the Senate decided Thursday to sideline a contentious plan to limit greenhouses gases. Instead, they will push for a much more modest energy measure which focuses on conservation and issues related to offshore drilling.
Newark mayor: No toilet paper for city offices
In a desperate attempt to fill a $70 million budget hole, Newark's mayor is taking a chainsaw to the town's budget.
Fed prepared to ease if economy weakens: Bernanke
"We are ready and we will act if the economy does not continue to improve -- if we don't see the kind of improvements in the labor market that we are hoping for and expecting,"

The Origins of Moral Sentiments
Just as workable economic arrangements are not, and cannot be, designed and imposed by a higher power, so too, Smith explained, workable morality itself is the product not of any grand design but of the everyday actions, reactions, and observations of ordinary people going about their daily business.
Hungary debt may be downgraded by S&P and Moody's
"Moody's placed Hungary's Baa1 local and foreign currency government bond ratings on review, citing increased fiscal risks after the International Monetary Fund and the European Union suspended talks over their 20 billion euro ($25 billion) financing deal at the weekend."
What's the critical debt-gdp ratio?
I don't agree with Jim Buchanan on either a balanced budget amendment (I am against it, preferring deficits in recessions), or on the intergenerational incidence of domestic debt. Nonetheless his writings are an undervalued resource in this debate. Very often he focuses on what debt does to a country, drawing upon the Founding Fathers, the classical economists, and the Italian public finance theorists, among others.
Cowen on Monetary Misperception
The difference is that when central banks create excess supplies of money and push interest rates below their natural level, there really are resources available to borrowers.
Prufrockian Political Economy
When I talk about risk and safety, I always like to point out that it’s easy to make sure that no one ever dies in an airplane crash: ban air travel. The fact that we don’t suggests that we really don’t want perfectly safe air travel... Similarly, we don’t want ratings agencies to be perfect seers.
Unemployment Insurance, Take II
So: low income people are more likely to be unemployed; and according to the Sahm, Shapiro, and Slemrod study, low-income workers seem not to have high marginal propensity to consume. Putting these two facts together, I would be surprised if unemployment insurance were particularly stimulative.
Conservative Scare Tactics to Blame for Loss of Faith in Social Security? Or Reality?
Gallup recently released new polling on Social Security that found confidence in the system at an all-time low. Some bloggers on the left take this to be a product of conservative scare tactics against the program. But a closer look at the poll shows that’s probably not the case.
How Long Might It Take You To Get A New Job?
By and large, the answer to these questions depends specifically upon what kind of work you can do, but surprisingly, it also depends upon where you might work.
Side Effects: Obamacare Encouraging Insurers to Cut Corners
Americans could end up with plans that restrict their access to care due to provisions that raise premiums.
Gulf Spill Update: Obama Deepwater Ban Becoming Total Drilling Ban
The Obama administration’s recently re-imposed deepwater drilling moratorium is now reportedly stopping shallow-water drilling as well.
New START, New Slogan … Trust But Don’t Verify
Only in the bizarro world of the Obama administration is this country made any safer by signing treaty that the counter party has no intention of following. And that is just the beginning of New START’s many fatal flaws.
The ‘Public Option’ Is Back
The Congressional Budget Office scores the bill as reducing federal deficits by $53 billion by 2019. How? Paying doctors and hospitals less!
Obamanomics 101: Failure Explained
According to President Obama, “every economist who’s looked at it says that the Recovery Act has done its job.”

Research, Reports & Studies
Fiscal Evasion in State Budgeting
This paper establishes a basic definitional framework that can be used to assess long-running fiscal practices in the states against a standard of fiscal prudence. The aim is to further refine this framework to capture the drivers of the states’ long-running fiscal problems and to offer recommendations for reform.
Economic Recovery: Sustaining U.S. Economic Growth in a Post-Crisis Economy
There is concern that this time the U.S. economy will either not return to its pre-recession growth path but perhaps remain permanently below it, or return to the pre-crisis path but at a slower than normal pace. Problems on the supply side and the demand side of the economy may lead to a weaker than normal recovery.
The Drawbacks of Dutch-Style Health Care Rules: Lessons for Americans
In 2006, the Dutch government implemented a universal insurance mandate. After just three years, the Dutch insurance market is a clear-cut oligopoly. America appears to be on a similar path.
The CLASS Act: Repeal Now, or Face Permanent Taxpayer Bailout Later
Proponents of Obamacare claim that it will simultaneously provide millions of Americans with health insurance and reduce the budget deficit by hundreds of billions of dollars. Yet Obamacare’s proclaimed budgetary discipline rests on unlikely assumptions and budget gimmicks.

Economists’ Comments & Opinions
Rebooting America
The interest rate elevator doesn't have a button for going lower than the subbasement.
Liberal Tax Revolt
Some Democrats decide they prefer lower rates. Obama isn't one of them.
No Answers, New Lows
Bernanke offers no silver bullets, which means depressed yields and P/Es amid more dreary, deflation.
It's a Fiscal Problem, Not a Fed Problem
Think of all the economic obstacles of spending, taxing, and regulating coming out of Washington. What should be done to spur growth? Keep tax rates down. And stop passing massive regulatory bills, like the bank reform Obama just signed into law.
Jobless Numbers Are Worse Than You Think
The situation is much more dire now than it was during the 1980s.
Why Is the Euro Rising and the US Dollar Falling?
An analysis of Fundamental Equilibrium Exchange Rates might provide some clues.
The U.N. Threat to Internet Freedom
The FCC's move to treat broadband providers like phone company monopolies could spur international efforts to regulate the Web.
Unnecessary evils
The next big task of financial reform: dismantling Fannie and Freddie.

Graph of the Day
Seeking Alpha: The One Economic Chart That Really Matters
See: Facebook has become the third-largest nation

Book Excerpts
"If the energy industries were simply freed from their regulatory bondage and are allowed to function sanely, they will pay for their own expansion out of their own profits. That is free enterprise, and in the entire history of mankind, nothing has ever served better as a “catalyst and stimulant” to invention and innovation than the profit system." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Improper payments totaled nearly $110 billion in 2009, according to the White House. They included payments made in error or because of fraudulent claims by contractors, and benefits sent to deceased or jailed people. Obama has set a goal to cut wasteful, improper payments by $50 billion.