8/19/10 Post

BUZZ: 2010 budget deficit at $1.342 trillion

News
Weekly Jobless Claims Jump to Nine-Month High
The number of U.S. workers making new claims for jobless benefits unexpectedly rose last week to the highest level in nine months, a distressing sign for an already weak labor market.
Government Figures Show a Cooling Chinese Economy
In the latest signs that the Chinese economy is beginning to cool after setting a torrid pace in the first half of this year, several government indicators slowed slightly last month, Beijing announced Wednesday morning.
Japan Rises on Hopes of Stimulus
Japanese shares fronted a rally across Asia on Thursday as expectations of further monetary easing measures weakened the yen and bolstered electronics and automobile exporters.
US Homeowner Confidence Drops in Second Quarter
U.S. homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom.
Data Point to a Strengthening Recovery in Britain
Britain’s budget deficit shrank at a faster pace than expected in July and retail sales rose the most in five months, according to data announced Thursday — signs that the country’s economic recovery could be strengthening.
Leery of Washington, Alaska Feasts on Its Dollars
More and more Alaskans, particularly of the Republican stripe, identify the federal government and pork-barrel spending as the enemy, although Alaska was built by both.
Five job-killing stimulus projects
Republican Sens. Tom Coburn of Oklahoma and John McCain of Arizona issued a report in early August highlighting about 100 examples of wasteful spending in the $862 billion — the cost as tallied in the senators’ Summertime Blues report — 2009 American Recovery and Reinvestment Act.
Tea Party coalition forming to push for balanced budget amendment
A new Tea Party coalition, the Balance Budget Amendment Now, has begun to push for an amendment to the constitution requiring that the federal budget be balanced every year.
GM files to sell shares to the public
General Motors filed registration documents Wednesday to sell shares to the public again, setting the stage for the U.S. government to reduce its ownership of the automaker.
Common sense saves Illinois $140 million in health care costs
Several states have started "medical home" programs, which centralize patient information around one home base, and one primary care provider. So far, these programs have saved states hundreds of millions of dollars in medical costs.
SEC sues New Jersey for fraud
The SEC alleged that New Jersey misled investors in municipal bond sales totaling $26 billion over a six year period ending in April 2007.
Long-term debt: The real problem
Lawmakers have yet to seriously address how to rein in the country's long-term debt. That broader debate will involve significant policy changes: A likely overhaul of the federal tax code and a reduction in spending across the board.
Taxpayers on the hook for $3 trillion in pensions
Under the current system, unfunded benefit liabilities -- the amount states owe in promised retirement benefits beyond what they've collected -- exceed $3 trillion.
Crude prices resume slide after gov't report shows more oil in storage than expected
Oil prices settled lower on Wednesday as the government said crude supplies shrank less than analysts expected and stock markets showed only modest gains after Tuesday's rally.
Big business in middle of brawl
It seems that no matter what direction business leaders turn, the hyper-partisan atmosphere on Capitol Hill puts them in the unenviable position of either angering the Democrats they need to enact their priorities or the Republicans they want to block anti-business legislation.
GOP Majority Equals Return to Past, Obama Warns
Obama says that the GOP plan for cutting the deficit is a return to “the exact same agenda” of the Bush Administration.
State and Local Debt: $2.4 Trillion
The bottom line: If this debt in the states should be added to the federal debt — and especially if this debt has to be repaid back with higher taxes — there is one very large bill coming our way.

Blogs
The Age of Entitlements Must End
The latest Democracy Corps poll, shows that by a 64% – 29% margin, the American people believe that things in this country “have gotten pretty seriously off on the wrong track.”
Obamacare: A Parent’s Worst Nightmare
At the heart of Obamacare is more government regulation. While it’s true that more families will be covered under the law, the new entitlement comes with strings attached.
Why the Issue of Overpaid Government Workers Matters
Federal workers receive both wages and benefits above market levels. State and local workers receive sub-market wages, but they make up for it with excessive benefits.
Americans to Obama: Don’t Cut Defense
A solid 57 percent of adults say it would be “unacceptable” to reduce spending on national security and defense weapons systems.
What Fed's Decision on Buying Treasuries Means for Economy Fed's objective isn't to move Treasury market or reduce balance sheet, but to tighten credit/collateral.
Are Right and Left Changing Where They Stand on Standing?
Democrats are once again competitive in presidential politics. And the rise of conservative and libertarian public interest law groups combined with a more conservative Supreme Court, ensure that the right can play offense as well as defense in constitutional litigation.
Unions, Peaceful Picketing, And Coercion
….. all picketing in numbers should be prohibited, since it is not only the chief and regular cause of violence but even in its most peaceful forms is a means of coercion.
You're not a Frequent Trader? We'll Take Your Stuff
In other words, I had to take action to prevent E*Trade from turning over my property to a government--I think the California state government.
The Horwitz Challenge
The next time you're engaged in a political discussion with someone who has very strong views different from your own, ask them if they can name two famous thinkers or politicians whose politics are opposed to theirs who they also think are very smart and genuinely concerned with making the world a better place.
Economic Development Agencies Come Under More Fire
Yesterday’s Greater New York section details a scathing report about New York’s economic development efforts, which charges that some of the state’s economic development bodies spend too much money for too few jobs and that “spotty reporting has it made it difficult to analyze the cost and benefits of their projects.”
Fed Officials All Over the Map in Explaining Policy Shift
In the days since the Federal Reserve unveiled a notable shift in its portfolio strategy, policy makers have offered discordant explanations about what’s going on.
Summer spikes
Last week, Casey Mulligan noted that teenage employment continues to rise in the summer as students are let out of school, despite the recession—a sure sign, in his view, that labour supply is a crucial factor in determining the unemployment rate, even in recessions.
The wrong direction
Last week, initial claims touched 500,000. As you can see, this isn't simply an outlying data point. Initial claims have been moving slowly upward for much of the year, with a substantial and almost uninterrupted climb in the last two months.
Democratic Misgivings on a Size Cap for Banks
The Brown-Kaufman amendment to the recently enacted financial regulatory overhaul proposed a size cap on our largest banks, limiting their assets to a very small fraction of the size of our economy. But this proposal to modify Dodd-Frank, as the financial reform legislation is known, failed in the Senate in early May, with 33 votes in favor and 61 — including 27 Democrats — opposed.
The Stealth Debt Restructuring: Inflation
Europe’s sovereign debt crisis seems to have gone on holiday along with most of the rest of the Continent during August. But many economists warn that the underlying debt problem is merely in remission and could recur at any moment, once again upsetting world markets.
Rep. Paul Ryan’s Roadmap in Charts
If you haven’t read the plan, you should — it’s only 87 pages long — but if you don’t read it, Paul Krugman summarizes it well when he says that the plan “calls for steep cuts in both spending and taxes.”

Research, Reports & Studies
The Economic Freedom Act: Economic and Fiscal Effects
The Economic Freedom Act, proposed by Representative Jim Jordan, would terminate the ineffective Troubled Assets Relief Program (TARP), and substitute a proven way to stimulate the economy:
Overcriminalization
Federal criminal law has exploded in size and scope—and deteriorated in quality. Honest, hard-working Americans doing their best to be respectable, law-abiding citizens can no longer be assured that they are safe from federal prosecutors.
The Role of the Courts
The Founders envisioned the judiciary to be the “least dangerous branch,” but activist judges have transformed the courts into policymaking bodies that wield wide-ranging power over virtually all aspects of American life.
Ensure that Congress Follows the Constitution
Congress does not just ignore the constitutional limitations on its powers. Members have repeatedly failed to read the bills upon which they were voting, and some have even declared that they have to pass gargantuan bills first so that they can find out what is in them.
Long-Term Case for Stocks and Commodities Stronger than Case for Bonds
In their understandably concerned state of mind in the present day, investors may have lost sight of the longer-term drivers of asset prices. Bonds, especially U.S. Treasuries, have merit presently as high levels of debt have sparked concerns about deflation. However, in the long-run, the case for stocks, commodities, commodity-related currencies, and precious metals looks quite a bit stronger than the case for bonds.
The Risk of Out-of-Pocket Health Care Expenditure at End of Life
Health Care spending in the last year of life is estimated to be $11,618 on average, with the 90th percentile equal to $29,335, the 95th percentile $49,907, and the 99th equal to $94,310. These spending measures represent a substantial fraction of liquid wealth for decedents. Total out-of-pocket expenditures are strongly positively related to wealth and weakly related to income.

Economists’ Comments & Opinions
At 75, Social Security Isn't Aging Well
The Social Security program turned 75 on Aug. 14, and it's not aging well.
Big investors pulling the exit chute
It's just that no one knew when or how it would manifest itself. Same thing is happening right now with the bond bubble.
Free Cities
Free Cities would exemplify free-market globalization, rather than the economic exploitation of protectionist colonialism.
Why Small Banks Are the Key to Recovery, Part 1
Banks need to start lending, but the process by which they do this -- and create real, organic economic growth -- requires two things to happen.
Unserious Cost Cutters Only
The bottom line is that policymakers of all stripes say they want taxpayer money spent more efficiently and effectively. Therefore, if taxpayers want structural changes that will limit the burden of government, they’re going to have to demand that policymakers offer more than just platitudes.

Graph of the Day
A Conservative Foreign Policy
See: Small Firms Lagging, With Bulk of Job Losses
See: Weekly unemployment claims

Book Excerpts
“Stop asking the government for free goods and services however desirable and necessary they may seem to be. They are not free. They are simply extracted from the hide of your neighbors and can be extracted only by force. If you would not confront your neighbor and demand his money at the point of a gun to solve every new problem that may appear in your life you should not allow the government to do it for you. This one insight understood this one discipline acted upon and taught by millions of Americans to others could do more to further freedom in American life than any other.” –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Authorities in southern Sudan have unveiled a $10bn (£6.4bn) plan to rebuild the region's cities in the shapes of animals and fruit. Elaborate blueprints for the new cities have already been drawn up.