Wednesday, September 8, 2010

9/8/10 Post


News
Obama's economic plan: Too little, too late
This week, the Obama administration began outlining additional measures to jumpstart the economy and create jobs. But even if passed, Obama's proposals are too little and too late to reverse the downward trend of economic activity, according to some economists.
State Budget Crises Mount as Medicaid Rolls Soar
Florida and other states faced with soaring Medicaid rolls amid a stubborn recession are struggling to balance their budgets.
Why carmakers aren't coming back anytime soon
With the home stretch in sight, 2010 is shaping up to be a weaker U.S. auto market than predicted, probably closer to 11.5 million new-vehicle deliveries, rather than the 12 million that automakers and forecasters had figured - and hoped - would be sold.
Tax Havens: Offshore Operations Cost U.S. Billions
Companies can save big bucks by shifting operations to offshore locations, a loophole in the U.S. tax code that some lawmakers are seeking to close.
Taxes: What people forget about Reagan
Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government.
Obama's jobs pitch fails to dazzle Washington
President Obama's latest round of job-bolstering proposals boasts something for everyone: corporate tax breaks for conservatives and spending on roads and railways for liberals. Yet he's having a hard time getting everyone on board.
Midterm debacle: The blame game begins
Come Nov. 2, one of two big things will happen: Democrats will blow the most complete dominion a party has held over government since the advent of the Reagan revolution. Or Republicans will blow the biggest advantages an out-of-power party has enjoyed since Watergate.
Republicans Slip From Unprecedented Lead to a Tie in Gallup Survey
Democrats and Republicans are now tied in Gallup’s weekly tracking of voter preferences just a week after Republicans took an unprecedented 10-point lead.
Obama Is Against a Compromise on Bush Tax Cuts
President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
Boehner Calls for 2-Year Freeze on All Tax Rates
U.S. House of Representatives Republican leader John Boehner called Wednesday for a two-year freeze on all current U.S. tax rates, including Bush-era tax cuts for the rich set to expire at the end of this year.
Harry Reid: "I had nothing to do with" bad economy
Senate Majority Leader Harry Reid, facing a tough re-election bid in one of the states hardest hit by the recession, said today that the economic downturn was not his fault.
BP: Multiple companies, teams contributed to spill
Oil giant BP PLC laid much of the blame for the rig explosion and the massive Gulf of Mexico spill on workers at sea, other companies and a complex series of failures in an internal report released Wednesday before a key piece of evidence has been analyzed.
China Will Be Working On a Railroad For Iran
China is about to sign a $2 billion deal to build a railway line for Iran. This is the first step of a broader railway plan that will connect the Middle East and Central Asia to Beijing.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers: Professional fields with higher pay. Think lawyers, research scientists and software engineers and lower-skill and lower-paying jobs, like home health care aides and store clerks.

Blogs
BLS: Job Openings increases in July, Low Labor Turnover
"There were 3.0 million job openings on the last business day of July 2010, the U.S. Bureau of Labor Statistics reported today."
Prices Must Be Free To Tell The Truth
The Keynesian habit of ignoring the causes of depressions and dealing only with the analytically-secondary phenomena of aggregate expenditure is or should be unacceptable among intelligent economists.
Should we let housing prices fall?
Arguably many banks would once again be "under water." Enthusiasm for another set of bailouts is weak, to say the least. Our government would end up nationalizing these banks and it still would be on the hook for their debts. ...Housing prices must fall, yet...housing prices must not fall.
There is Nothing So Permanent as Temporary Stimulus
...CBO has issued another report. This one shows spending as a share of GDP remaining will above its 40-year average for the foreseeable future. Note, however, that they still show spending as a share of GDP declining somewhat in the coming years.
Educational “reform”
...the rest of the problem is the top-down design of curricula, textbooks, and the motivation of teachers in a system that does not reward teaching excellence and does not punish teacher mediocrity.
Secondary Sources: Back to School, State Role, Inequality
A roundup of economic news from around the Web.
Whose fault was it?
Krugman never gives an iota or quark of blame for the crisis on government policies. I guess this comforts the faithful. It does not help his reputation as a truth-seeker.
Visualizing the U.S. Higher Education Bubble
Ultimately, like a housing bubble or a bubble in the stock market, we strongly suspect that today's highly inflated tuition is not something that can be sustained indefinitely.
Crumbling Infrastructure?
Here’s some evidence that America’s transportation infrastructure isn’t “crumbling.”
Some Good News!
Monday’s NY Times actually got some things right.
First, the front page carried A STORY that said it might be good to let the free market prevail in housing!
MBA: Mortgage Purchase Activity increases slightly
"The Refinance Index decreased 3.1 percent from the previous week. The seasonally adjusted Purchase Index increased 6.3 percent from one week earlier."
Paying Third-Graders for Better Test Scores
Efforts to improve education in the U.S. has included financial incentives for high-performing teachers and programs have targeted middle- and high-school students, but a recent study found success in giving money to kids as young as third grade who scored well on standardized tests.
China (Australia) fact of the day
...the Australian dollar [is] the fifth-most-traded currency in the world -- after the U.S. dollar, the yen, the pound, and the euro -- even though Australia is the 18th largest economy.
Kansas City, Dallas Feds Called for Rate Increase
Prior to the Fed’s latest policy-setting meeting Aug. 10, directors of the Federal Reserve Bank of Kansas City and from the Dallas Fed voted to increase the discount rate by a quarter percentage point to 1%.
Very good sentences
“I’m all for reducing the number of public-sector employees,” an I.M.F. investigator had said to me. “But how do you do that if you don’t know how many there are to start with?”
One in Six Americans Receives Government Assistance
Fifty million are on Medicaid, ten million Americans receive unemployment benefits, and 4.4 million get direct cash assistance.
The Founders, Free Markets, and Sound Money
Founders saw little or no role for government in the economy—that they embraced a purely laissez faire economic theory.
Debunking Orszag’s Tax Hike Myths
We have paired some of Orszag’s op-ed statement “myths” with “facts” from JD Foster’s new paper: Obama Tax Hikes Defended by Myths and Straw Man Arguments.
Neglecting Allies and Appeasing Foes
“Since taking office, President Obama has reached out to the Muslim world as a whole, to China, to Turkey and to Iran, but has devoted scant serious diplomatic energy to Europe.”
Why Deflation Never Had a Chance
What the deflationists fail to acknowledge is that in a purely fiat monetary system, deflation is a choice, not an inevitability.
To End Obesity, Start by Dismantling Sugar Quotas
During National Childhood Obesity Awareness Month the White House has the opportunity to change the antiquated, unhealthy sugar quotas and tariffs that foster production of high fructose corn syrup.
America's weirdest government monopoly
One of the more interesting, though perhaps less significant, fault lines between social conservatism and economic conservatism is the peculiar issue of state liquor monopolies. There are nine states in the union where the government maintains a direct monopoly on the sale of hard liquor.

Research, Reports & Studies
Do Intergovernmental Grants Create Ratchets in State and Local Taxes?
Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
Workers who suffered a spell of unemployment during Great Recession are, on average, less satisfied with their new jobs than workers who didn't. They are more likely to consider themselves over-qualified for their current position.
India: Fast Growth Does Not Mean a Strong Economy
Indian growth, driven for more than a decade by market reform initiated in 1991, is now being achieved the old fashioned, unsustainable way: through intense fiscal and monetary stimulus. Growth thus stems in part from New Delhi deliberately choosing to risk high inflation.

Economists’ Comments & Opinions
Are rising imports a boon or bane to the economy?
It has become conventional wisdom in reporting on the economy that rising imports and a growing trade deficit are bad signs for growth.
Economic Malpractice
If a medical doctor prescribed a treatment for a patient that only worked in theory, and the patient did not get better, the doctor could rightly be sued for medical malpractice if tried-and-true cures were known. When members of Congress and a president engage in economic malpractice, the patient's (i.e., the American public's) only recourse is to vote them out of office.
In November, it's Democrats vs. Obamacare
When Obamacare finally passed the House, 34 Democrats voted no. Thirty-one of those Democrats are now running for reelection, and, not surprisingly, many of them are highlighting their opposition to the bill.
I, Market Economy
Any healthy civilization, never mind any healthy economy, involves unfathomably vast amounts of harmonious cooperation. According to Hayek, no central planner or bureaucrat could ever have enough knowledge to consistently and successfully guide all of those economic actions in a more efficient manner.
How You, Mr. President, Can Speed the Recovery
Details of the government's failures thus far and innovative suggestions for getting the economy back on track.
The Rules of Economics, Part 1
A look at some of the more important rules, and the consequences for individuals, companies, and countries that break them.
The Rules of Economics, Part 2
There are two ways you can grow your economy: You can either increase your (working-age) population or increase your productivity. That's it.
Obama's New Stimulus Won't Stimulate
Piling on more spending now isn't just unwise policy, it's a form of fiscal insanity.
Time for Emergency Economic Reform
How about a payroll tax holiday, funded by a federal spending, hiring and pay freeze?
Don't dismiss the market economy
We shouldn't forget that the modern market economy is the greatest communal enterprise ever undertaken.
RAHN: Economic malpractice
President's policy has a long history of failure.
The German Miracle: Another Look
Germany has cut government spending and its economy is growing smartly. It's not the first time that market-friendly policies have led the nation out of crisis.
Payroll Tax Doubles in This Republican Dream Plan: Amity Shlaes
Impossible Idea No. 1: Double the payroll tax... Impossible Idea No. 2: Cut the capital-gains rate and the tax on dividends to 5 percent, permanently... Idea No. 3: Make all tax cuts permanent.

Graph of the Day
American Thinker: Unemployment Rate With and Without the Recovery Plan UPDATE
See: Charting jobs & unemployment
See also: Union Members, by Industry
See also: Favorability Ratings of Labor Unions Fall Sharply

Book Excerpts
"The cornerstone of trade unionism is compulsory membership. The workers refuse to work with men who belong to an organization not recognized by themselves. They exclude the non-union men by threatening to strike or, ultimately, by striking. Those who refuse to join the union are sometimes compelled to do so by rough handling. It is not necessary to dilate upon the drastic violation of the liberty of the individual which this implies... No one has seriously contested the destructionist function of trade unionism. There has never yet been a wage-theory from which one could deduce that association by means of trade unions led to a permanent increase in the real income of the workers." –Ludwig von Mises, Socialism: An Economic and Sociological Analysis (1922)

Did You Know
According to a recent survey 75% of likely voters nationwide want Congress to cut its own pay, and 54% believe that most federal workers are overpaid just 24% disagreed and 22% were not sure. The survey results come on the heels of a USA Today analysis of Bureau of Economic Analysis data that revealed that federal workers earned average pay and benefits of $123,049 in 2009, more than twice as much as the $61,051 earned by private workers.