8/30/10 Post

BUZZ: States See Pickup in Tax Revenue

News
Bank of Japan Boosts Loan Program, Pledges More Steps If Needed
The Bank of Japan expanded a bank- loan program, stepping up its monetary stimulus for the first time since March after the yen surged to a 15-year high and the government pressured the central bank to safeguard the recovery.
Luxury booms while bargain retail suffers
Consumer spending in the US is diverging into two strands as strong growth at high-end stores such as Tiffany contrasts with continuing difficulties for mass-market retailers.
Record number in government anti-poverty programs
Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.
Investors braced for week of key data
Investors are braced for a week of crucial economic data that could decide the Federal Reserve’s next move after chairman Ben Bernanke said it would ease policy if the outlook deteriorated “significantly”.
Cash-Poor Governments Ditching Public Hospitals
Faced with mounting debt and looming costs from the new federal health-care law, many local governments are leaving the hospital business, shedding public facilities that can be the caregiver of last resort.
Among Democrats, Economic Pressures Are Changing Tax-Cut Dynamics
In light of the recent weakening of the economy, a growing number of Democrats want to extend tax breaks for the wealthy through 2011.
Charter schools finding niches
Specialization seen as the next wave of reform.
Economic Reports This Week
Data will include personal income and spending for July (Monday); S.& P./Case-Shiller home price index for June and second quarter, Chicago purchasing managers’ index for August and consumer confidence for August (Tuesday); North American car sales for August; construction spending for July, ADP employment for August and the ISM manufacturing index for August (Wednesday); retailers’ same-store sales for August, pending home sales for July, factory orders for July and weekly jobless claims (Thursday); and unemployment for August and the ISM service index for August (Friday).
Economists: I dunno, man. What do you think?
The air is quickly coming out of the recovery balloon, and economists have mixed views on how to pump it back up.
Made in USA - For now
Despite the odds, these businesses have managed to stay truly all-American. But for how long?
Consumer spending picks up
Personal spending rose by $44.1 billion last month, or 0.4%, after falling less than 0.1% in June. This came in above the 0.3% increase economists expected.
Obama Looks to Congress to Jump-Start Economy
It is largely up to Congress to take action to speed up the economic recovery at this point, but many lawmakers are more focused on “the silly season” of campaigning instead of passing crucial legislation, President Obama said Sunday.

Blogs
NABE Survey: Most Economists Favor Extending Bush Tax Cuts
At least 60% of economists surveyed by the National Association for Business Economics said lower tax rates on capital gains and dividends should not be allowed to expire as provided under current law.
How panhandlers use free credit cards
Some were unbelieving at first. All were grateful. Some declined the offer. Some who accepted didn’t come back, but those that did had stories to tell.
Trichet: Governments Must Make ‘Ambitious’ Plans To Cut Debt
The head of the European Central Bank said Friday that highly indebted governments will need to act forcefully to lower those burdens, as his central bank continues to work to keep inflation levels low.
Schedule for Week of August 29th
This will be another busy week - the August employment report on Friday is the key economic release this week.
After Crises, Slow Income Growth and High Unemployment
Economists Vincent and Carmen Reinhart offer a grim tour of the economic landscape after financial crises — one plagued by slow economic growth and high unemployment — in the kickoff paper up for discussion at the Federal Reserve Bank of Kansas City’s annual economic symposium in Jackson Hole.
Pray, Hear Me Out
...tax-exemption does not involve taking money from Y and giving it to X. That fact is vital.
Unofficial Problem Bank List increases to 840 institutions
"The Unofficial Problem Bank List grew by more than five percent this week as the FDIC released its enforcement actions for July 2010."
What Caused the State Budget Gaps?
The recession was the proximate cause: it sent revenues in a free fall at the same time that it put extra demands on the states’ welfare systems.
U.S. Births decline in 2009
The NCHS reports that U.S. births declined to 4.136 million in 2009, from 4.247 million in 2008. The birth rate declined to 13.5 from 13.9 in 2008 (births per 1000 total population).
How it sounds vs. how it really works
How does [the Recovery Act] sound? Great. Energy efficiency meets job creation. Green jobs helping the environment and saving people money...
The Decline in Civil Liberties
...Americans are no longer free to travel by commercial air without showing a government official a government-issued ID. So the freedom that [a U.S. foreign service officer in Moscow] sought in the United States no longer exists. In an important way, the United States has become Sovietized.
Why Does Louisiana Think This is Obama’s Katrina?
President Obama’s oil drilling ban is set to end on November 30, but hopefully the White House will begin to show some understanding of how the Gulf economy works by ending the ban before that.
Why is Obama Letting Non-Citizens Get Away with Voting?
We can now add one more general amnesty that the administration is apparently extending – no prosecution of illegal voting by noncitizens and a green light to becoming a citizen even if you have violated federal law.
Government Alters Stimulus Sign Policy, Raising More Propaganda Questions
In the 18 months following approval of President Obama’s stimulus package, the Department of Transportation required recipients of government funds to post placards touting the economic recovery. As a result, signs prominently featuring the recovery act logo appeared everywhere.
No Federal Bailouts for State and Local Government Pension Problems
There is bad news and worse news for state governments faced with underfunded pension promises.
Obama’s Economic Slide
What we are seeing is an economy that tried to recover last winter, slowed, and is now sliding steadily to stagnation. Not yet a recession, it is certainly the Obama slide.
Bernanke Pledge on Economy Gives Some Relief to Oil Prices
Ben Bernanke's comments at first sent markets down further, but stock, commodity prices rose once participants accepted the speech's takeaway: The Fed stands ready to act.
Bernanke on Monetary Policy
Ben Bernanke promised the Fed will do whatever it takes to aid the faltering U.S. recovery, and most of all to prevent deflation. The problem for the Fed Chairman is that the central bank is plainly running out of options.
The Laffer Curve Strikes Again
In the private sector, no business owner would be dumb enough to assume that higher prices automatically translate into proportionately higher revenues. In the public sector, however, there is very little understanding of how the real world works.
Is the Trade Gap to Blame for Slowing GDP Growth?
The trade gap should be the least of our worries.

Research, Reports & Studies
RCM: DEBT BE NOT PROUD
Bond investors are lenders. Why should we deliberately choose to lend more to those who are most deeply in debt?
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: New Day Yesterday.
RCM: Hudson Institute Economic Report
This week saw downward revisions in GDP, a slowing housing markets, and declining durable goods orders. The stock market fell below the psychological 10,000 mark, even though it tends to rise when Congress is out of session.
The Dodd-Frank Act: Creative Destruction, Destroyed
The dominant theme of the Dodd-Frank Wall Street Reform and Consumer Protection Act is fear of instability and change, which the act suppresses by subjecting the largest financial firms to banklike regulation. The competitiveness, innovativeness, and risk taking that have always characterized U.S. financial firms will, under this new structure, inevitably be subordinated to supervisory judgments about what these firms can safely be allowed to do.
Obama’s Iraq Speech Should Stress a Resolute U.S. Security Commitment
President Obama’s televised speech on Iraq will mark the “official” end of U.S. combat operations in Iraq and the transition to an “advise and assist” mission.

Economists’ Comments & Opinions
The Folly of Subsidizing Unemployment
My calculations suggest the jobless rate could be as low as 6.8%, instead of 9.5%, if jobless benefits hadn't been extended to 99 weeks.
Government Pay: Now For The Really Bad News
High federal pay means less capital formation, lower wages and reduced innovation.
Spreading Hayek, Spurning Keynes
Professor Leads an Austrian Revival.
The CBO Promotes a Stimulus Fantasy
The striking thing about the CBO analysis is that it is "reality proof". Rather than presenting evidence that "stimulus" works, the CBO employed economic models that assume that "stimulus" works. As a result, no matter what happened to 2Q2010 GDP and employment, the CBO's calculations would always show that "stimulus" worked exactly as intended.
Time to let home prices fall?
For government to stand in the way of a further price decline is unfair to the next generation of buyers...
Seeking An Honest Social Security Fix
Social Security is not an "insurance" program. Social Security is not a "pension" program. If it were either, everyone running it should go to jail. Quite simply, Social Security is an inter-generational tax and welfare scheme. Facing up to that truth is 90% of the battle as doing so would transform the debate into two separate problems that actually have rational solutions: How do we want to tax ourselves and who should we give welfare to?
Waiting for Mr. Obama
If President Obama has a big economic initiative up his sleeve, as he hinted recently, now would be a good time to let the rest of us in on it.
You Call This a 'Recovery'?
The administration promised from the beginning of last year that recovery would start soon after the stimulus was passed. The only thing that Obama has proved is that Keynesian economics is dead. But the huge debt that our children will inherit will ensure that they remember this experiment.
Disappointing Second Quarter Growth Numbers Bode Well For A..."Lost Decade"
"While growth was still positive, its rate is downright anemic in the wake of such a steep recession. Moreover, estimates of consumer spending were adjusted upward, showing just how weak the Keynesian concept of demand-led growth, boosted by government spending, really is.

Graph of the Day
Mercatus Center: Temporary Staffing Declines in 2010
See: Media Feeds America’s Skepticism about Trade
See: Federal Outlays by Category, Excluding Interest
See also: Surprise! Banks help more homeowners than Obama

Book Excerpts
"The problems involved are not of a praxeological character, and economics is not called upon to provide the best possible solution for them. They concern pathology and psychology. They refer to the biological fact that the fear of penury and of the degrading consequences of being supported by charity are important factors in the preservation of man's physiological equilibrium. They impel a man to keep fit, to avoid sickness and accidents, and to recover as soon as possible from injuries suffered. The experience of the social security system, especially that of the oldest and most complete scheme, the German, has clearly shown the undesirable effects resulting from the elimination of these incentives. No civilized community has callously allowed the incapacitated to perish. But the substitution of a legally enforceable claim to support or sustenance for charitable relief does not seem to agree with human nature as it is. Not metaphysical prepossessions, but considerations of practical expediency make it inadvisable to promulgate an actionable right to sustenance.

It is, moreover, an illusion to believe that the enactment of such laws could free the indigent from the degrading features inherent in receiving alms. The more openhanded these laws are, the more punctilious must their application become. The discretion of bureaucrats is substituted for the discretion of people whom an inner voice drives to acts of charity. Whether this change renders the lot of those incapacitated any easier, is hard to say." –Ludwig von Mises, Human Action (1949)

Did You Know
"As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in American taxpayer funds has been wasted — more than 10 percent of the some $50 billion the U.S. has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency. For example, a $40 million prison sits in the desert north of Baghdad, empty. A $165 million children's hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets"