Friday, August 6, 2010

8/6/10 Post


News
State aid bill a gamble for Dems
Even though party leaders expect that approval will be a slam-dunk, some early responses from rank-and-file Democrats have raised red flags about the optics of returning to a special session to vote on more spending.
New Medicare Report: Is It Based on a Rosy Scenario?
New report also confirms Medicare and Social Security headed for insolvency in the long term.
Senate passes $4.5B nutrition bill
The Senate voted to approve a $4.5 billion childhood nutrition bill on Thursday, which funds food programs in public schools.
US healthcare reform faces fresh challenge
One month before the first benefits of the Obama administration’s healthcare reforms start to kick in, nearly half of all US states are challenging key parts of the new law, with many seeking to have it ruled unconstitutional.
Senate Democrats' small-business deal
Senate Democrats set in motion a new plan Thursday night to free up their small business relief bill: guarantee votes first next month on small businesses relief from tax reporting rules in the Democrats’ own healthcare reform law.
Homeowner Bailout: States with High Unemployment Get Help
In order to avoid more foreclosures, states with the highest unemployment will receive $600 million in government aid.
Senators Break for August Recess
Senate Democrats ran for the exits armed with a few legislative victories and a handful of defeats going into the five-week summer recess.
Fannie Mae asks for less money from gov't and says it can cover most mortgage losses
The government-controlled mortgage buyer said Thursday it has now set aside enough money to cover the majority of losses stemming from bad loans made from 2005 through 2008.
U.S. Ends Private Talks on Web Rules
U.S. officials called off closed-door talks with lobbyists aimed at reaching a compromise on ways to regulate Internet traffic, saying they couldn't reach a solution.
China looks to US, others for more corn to feed livestock; food prices could rise worldwide
China could be about to increase its corn imports, offering American farmers a chance for greater profits but making it likely U.S. meat producers who use the grain for feed would have to raise their prices.
Romer resigns as chief of Obama's economic council
Christina Romer, head of President Barack Obama's Council of Economic Advisers, will step down and return to her teaching post at the University of California, White House officials said on Thursday. The resignation will take effect on September 3.
Dollar, Euro Weaken on Yen After Weak Jobs Report
The dollar broke below 86 yen to as low as 85.72 yen in the wake of the disappointing jobs report.
Wheat prices soar. Are bread prices next?
The price of wheat has surged more than 80% from its seven-month low in June. Prices continued to rally Thursday, surging to their highest level since August 2008.
Healthy profits, few jobs: How long can corporate America’s profit rebound continue?
The quarterly results show that American profits are already back to 11% of GDP.
Defying gravity and history: Despite dire predictions of a repeat of the 1930s, trade is bouncing back
There is even some evidence that activity has rebalanced from the lopsided trade pattern that existed just before the crisis.
U.S. Stocks Tumble After Weaker-Than-Estimated Jobs Report
U.S. stocks tumbled, paring a weekly advance for the Standard & Poor’s 500 Index, after weaker-than- forecast growth in company payrolls added to evidence the economic recovery is slowing.
Treasurys gain on payrolls; Fed action seen as more likely
Treasury prices rose Friday, pushing yields on 2-year notes to a record low, after a weak report on the labor market raised expectations that the Federal Reserve may take steps next week toward using monetary policy to support the faltering U.S. economy.
2 Top Economists Differ Sharply on Risk of Deflation
The split between the chief economists, whose work helps inform trading strategies recommended to investors by their firms, echoes a broader and sometimes fiercer debate among academic economists and commentators about the threat posed by deflation and what the government’s response should be.
Industrial production slip unlikely to dent German growth: Italian second-quarter GDP grows 0.4%; Spanish GDP growth seen at 0.2%
Industrial production in Germany fell in June, but the unexpected decline isn't likely to have put a major dent in second-quarter growth for Europe's largest economy, economists said Friday.

Blogs
Private Enterprise Does It Better
Why freedom and responsibility triumph over regulation and central planning.
Romer Steps Down from Council of Economic Advisors
While working for Obama, she was a chief architect of the stimulus program, a strong advocate for more government spending, and a believer that government should be in the driver's seat of the economy.
We Aren’t Exaggerating When We Rail Against Threats to Economic Liberty
Oregon officials told a 7-year-old with a lemonade stand that she needed to obtain a temporary restaurant license or incur a fine.
Rethinking Birthright Citizenship
Washington has apparently rediscovered a legitimate part of the immigration debate, one often treated as the untouchable third rail of the issue—birthright citizenship for children of illegal aliens and foreign visitors.
Energy Subsidies Prove Unsustainable
When faced with a need for drastic budget cuts and job creation, countries such as Spain, the United Kingdom, Germany, France, and the Czech Republic have all made the decision to reduce subsidies for green energy programs such as wind and solar energy.
It’s Official: Medicare’s Finances Shadowed by Uncertainty
The 2010 report shows that Medicare has a $30.8 trillion shortfall. Last year it was $38 trillion. Big improvement, right? Not so fast.
The Obama Tax Hikes, Another Step Toward a European Welfare State
The message to the U.S. economy’s job creators from this Administration and Congress is clear: You can expect higher spending, higher taxes and higher deficits for years to come.
What Recovery Summer?
The Obama Administration announced “Recovery Summer” in June to highlight the expected gains in jobs and economic strength resulting from Obama’s stimulus. Well, maybe next summer.
Summertime Blues for the Taxpayer
Sens. Tom Coburn (R-OK) and John McCain (R-AZ) have put out an excellent report on the 100 most wasteful projects funded in President Obama’s $862 Stimulus plan.
The High Cost of Over regulating Food
Intelligent food safety regulation is necessary. But unnecessary food safety regulation hurts everyone.
Payroll Data and a Deeper Dive into Checking Out
The weekly finale of the world’s wildest reality show is upon us and the plot thickens as our pulse quickens. The top story is the jobs report.
Economists React: ‘The Great Stall’ Takes Hold
Economists and others weigh in on the decline in U.S. jobs.
Maybe We Should Prohibit the Wheel, Too
Never mind that until the current downturn U.S. manufacturing output was at an all-time high and still growing. Even now it remains the largest in the world. The lie of U.S. manufacturing decline – repeated ad nauseam – conveniently paves the path for greater government control over the economy.
State/Local Job Cuts Accelerate
State and local governments shed 48,000 jobs in July, the biggest drop in a year and almost double last month’s drop, according to today’s employment report.
President Obama's Pro-Union Stance
"The real threat to a robust recovery on the labor side has come from employer and entrepreneurial fears that once the economic environment improves, a Democratic Congress and administration will pass pro-union and other pro-worker legislation that will raise the cost of doing business and cut profits. In this way the obvious pro-union-pro-worker bias of the present government has contributed to a slower recovery, especially in labor markets."
Broader U-6 Jobless Rate at 16.5%: May Be Headed Higher
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department, accounts for people who have stopped looking for work or who can’t find full-time jobs.
Housing Insanity
It's true that this particular program is small--I don't think the economy is going to be brought to its knees by several hundred houses. The important thing, however, is that this is how the government thinks about housing.

Research, Reports & Studies
Need for Moratorium Mitigated by New Oil Spill Response Capacities
In the wake of the Deepwater Horizon disaster, the Obama Administration initiated a moratorium on deepwater oil exploration that impacted approximately 33 ongoing operations.
2010 Social Security Trustees Report Continues to Show the Urgency of Reform
The debate about whether Social Security faces a problem and needs to be fixed is over. The 2010 Trustees Report shows that the program faces massive permanent annual deficits starting in just five years.
Transitional Dynamics of Dividend and Capital Gains Tax Cuts
… studies the impact of the 2003 dividend and capital gains tax cuts.
Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers
This paper reports the results of a survey of top economics bloggers. The survey was conducted in mid-July 2010 by soliciting input from among the top 200 economics bloggers as ranked by Palgrave’s Econolog.net.

Economists’ Comments & Opinions
When Labor Is Capital: The Limits of Keynesian Policy
The economic mystery of 2010 is the persistence of high unemployment, in spite of stimulus that follows the prescription of the prevailing Keynesian orthodoxy. Here’s an alternative to that orthodoxy.
Education jobs bill is motivated by politics
As of last school year, the money for 5.5 percent of the 6 million K-12 jobs nationwide came from Washington through the 2009 stimulus; the new money reinforces this dangerous dependency.
Washington Wages War On Investment
Will higher tax penalties on investment really spur jobs and faster economic growth? Most commentators would say no. It's really a matter of economic common sense. But Tim Geithner says, Yes!
Rewriting The History Of The '30s To Justify More Spending In 2010
Liberal economist Paul Krugman is beating the debt drum to ward off recession relapse. Little wonder. He finds himself trapped between the economics and politics of a still-struggling economy. To extricate himself, he is rewriting the history of the 1930s. The problem is that what he is not telling us is far more important than what he is.
McCollum v. ObamaCare
The federal Medicaid program, he notes, could soon be eating up 36% of Florida's budget—and that's before ObamaCare's new costs. Federal health, education, environmental and labor mandates are chipping away at the states' ability to keep their taxes low, to grow jobs, and to devote money to their own priorities.
Not So Golden
Massive debts, bickering politicians, a confusing and inept legislative process: Welcome to California.
SALTSMAN: Refresher course in personal finance
Congress is spending us toward national default.

July 2010 Employment Situation Hearing



"Unfortunately, today we received more bad news for American workers and their families. The unemployment rate remained elevated at 9.5 percent. Total non-farm payroll employment decreased by 131,000. After excluding the layoffs of 143,000 temporary Census workers, private sector payroll job growth remains anemic at 71,000. At this slow pace it will take much of the decade to return to normal employment levels.

The University of Michigan's July Index of Consumer Sentiment fell dramatically by 10.8 percent to 67.8, the lowest level in a year. The index of Consumer Expectations fell even further to 62.3, the lowest level since March of last year.

Along with the failure of the massive Democratic stimulus to put people back to work, families and businesses fear the dangerous levels of debt incurred by this Congress and a host of job-killing, anti-growth policies coming out of Washington including higher taxes, higher energy prices, burdensome regulations, and constant bailouts of special interests." - Congressman Kevin Brady, Ranking Republican House Member, Joint Economic Committee

Congressman Brady's opening statement to Dr. Hall, in reference to the Employment Situation Report for July 2010

See the full Employment Situation Summary Report ---July 2010


Graph of the Day
The Obama Tax Hikes: Killing Job Creation
See: Retailers Suffer Lazy Days of Summer
GALLUP: U.S. Underemployment Steady at 18.4% in July

Book Excerpts
"For the unemployed to be granted support by the government or by the unions only serves to enlarge the evil. If what is involved is a case of unemployment springing from dynamic changes in the economy, then the unemployment benefits only result in postponing the adjustment of the workers to the new conditions." –Ludwig von Mises, Liberalism: the classical tradition (1927, c2005)

Did You Know
For the last six years Mississippi has been the fattest state in the nation., The Centers for Disease Control and Prevention reported this week that 34.4% of Mississippi adults are obese.