Monday, September 13, 2010

9/13/10 Post


News
Aid plan helps Pa. capital avoid default
State gives Harrisburg $4.3 million in loans and payments ahead of a Wednesday deadline to pay bondholders.
Three signs it's truly a jobless recovery
Average work week is still short, unemployment claims and the magic number and corporate cash balances remain high.
New year, no federal budget
With just a few weeks to go before kissing fiscal year 2010 goodbye, Congress won't be able to welcome the new year with any fiscal clarity because there is no budget.
Waning Economic Recovery Fuels Global Uncertainty
In recent weeks, data from around the world reveal a growth downshift. Companies that had been rushing to restock their inventories are now ordering only what they need to meet existing demand, affecting the entire global supply chain.
Big business and Wall St. bet on GOP
This election, more financial firms and business groups are giving to Republican campaigns than Democratic ones.
Obama’s New Econ Guru Holds the Line on Tax Cuts
In his television debut on the Sunday morning political shows, the newly appointed head of the White House Council of Economic Advisors, Austan Goolsbee, is making a clear case for ending the Bush tax cuts on high income earners.
New bank rules to curb risk
Global officials meeting in Switzerland Sunday announced new guidelines to strengthen the financial system by forcing banks to set aside more capital.
U.S. Poverty Set for Record Gains as Elections Loom
Economists are predicting the latest census figures coming out this week will show an almost 2 percent poverty rate increase.
China's inflation battle intensifies
Inflation in China accelerated last month, as rising food prices pushed overall prices higher. The consumer price index increased to 3.5% in August, compared to a 3.3% annual rate in July
A year later, tea party marches on
Thousands of tea party activists huddled in front of the U.S. Capitol on Sunday afternoon, eager to celebrate recent victories against the Republican establishment and rally together...
Fed Actions Seen, But Not Endorsed
Three in five economists surveyed by The Wall Street Journal expect the U.S. Federal Reserve to resume large-scale purchases of securities in the face of a deteriorating economic outlook—but, by a 3-to-2 margin, most of them also think that would be a mistake.

Blogs
Holding Economic Recovery Hostage
The last thing you want to do is raise taxes in the middle of a recession because that would just suck up, take more demand out of the economy and put businesses in a further hole.
Goolsbee on Tax Incentives
Here’s to hoping that Goolsbee doesn’t suffer the fate of his predecessor by abandoning everything he’s previously written in the interest of political expediency.
Goolsbee Appointment Good News for Global Trade
This appointment is good news for advocates of expanded international trade. One of the world’s leading trade economists, Jagdish Bhagwati, described Goolsbee as a valuable source of free-trade advice over almost a decade.
Slouching Towards a New Supreme Court Term
We’re now three weeks away from the new Supreme Court term and after a summer that included big opinions from The Nine, more confirmation hearings, and front-page district court decisions, we roll into a fall full of even more legal intrigue.
Obamacare and the Medicare Bureaucracy: A Dangerous Duo
In recent Heritage research, Clete DiGiovanni, MD, and Robert Moffit, Ph.D., lay out some of the other important changes to Medicare which could, depending on the direction taken in pending regulation, challenge the doctor-patient relationship and undercut physician autonomy.
Winner take-all economics
In a winner-take all economy, however, small differences in skills can mean large differences in returns and we have moved towards a winner take-all economy because technology has increased the size of the market that can be served by a single person or firm.
Back to Constitutional Basics in Education
In the mid 1960s, education policy took a wrong turn, away from America’s founding principles.
Austerity for Liberty
Instead of pushing for "constructive" free market reforms, libertarians should doggedly focus on austerity: opposing spending increases, and pushing spending cuts.
The First Part of ObamaCare to Go?
The provision is supposed to generate a substantial revenue — an estimated $17 billion over ten years — which could make repeal difficult, but it is interesting how many Democrats, including some who voted for the health care bill, now want repeal of this measure.
Schedule for Week of Sept 12th
The key releases this week will be retail sales (on Tues for August), Industrial Production (Weds for August) and the Empire state and Philly Fed surveys (Weds and Thurs for Sept).
A Dastardly Clever Scheme
In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.
Why does a rise in imports lower gdp?
The rationale is a) that is simply how the number is calculated, and b) a nation's capacity to produce goods and services determines its long-run standard of living. On b), you might argue that the world's capacity to produce goods and services is what matters in a globalized setting...
Against the Research and Development Tax Credit
...the economy would be better off if there no corporate income tax altogether. Instead, the combination of high rates and lots of holes yields relatively little revenue. It does, however, maximize the value of K street lobbyists.
Unofficial Problem Bank List increases to 849 institutions
"After six additions and one removal, the Unofficial Problem Bank List includes 849 institutions with aggregate assets of $415.3 billion, up from 844 institutions with assets of $412 billion last week."

Research, Reports & Studies
The Miscellaneous Tariff Bill: A Blueprint for Future Trade Expansion
For the past three decades a number of MTBs have been enacted that grant temporary relief, typically for three years, to U.S. manufacturers and other producers forced to pay duties that drive up the cost of imported inputs, such as chemicals and specialty parts. The bills have been relatively noncontroversial because the tariffs usually involve products no longer made in the United States, so there are no protected domestic competitors to oppose their suspension.
Obama Tax Hikes: Dividend Tax Increase Hurts Seniors and the Economy
A higher tax rate on dividend income will affect more than just decisions of companies. Senior citizens disproportionately hold dividend-paying stocks, with almost half of all tax filers ages 65 or older reporting dividend income. These seniors will have lower incomes and consume less due to lower payouts.
Implementing Obamacare: A New Exercise in Old-Fashioned Central Planning
Americans are confronted with the largest expan¬sion of government in almost half a century. President Barack Obama and the congressional Democratic leadership passed massive health care overhaul legis¬lation in March 2010 by the narrowest of margins. Despite the Administration’s ongoing efforts to per¬suade Americans that the medicine is good for them, well over half the country refuses to swallow it
Nine Years Since 9/11: When Will Congress Wake Up on Homeland Security?
This failure of leadership puts all Americans at risk. Congress must develop a homeland security agenda that will maintain security while keeping Americans free and prosperous. Such an agenda must include key reforms in oversight, grants and disaster declarations, terrorist detention policies, and immigration enforcement.
Over One-Third of New Tax Revenue Would Come from Business Income If High-Income Personal Tax Cuts Expire
Assuming that business income is the last dollar of income a taxpayer earns, Tax Foundation economists estimate that 39 per cent of the $629 billion tax increase on high-income taxpayers proposed in the Obama 2011 budget would be extracted from business income. Over ten years then, an extra $246 billion would be taken out of business income.
RCM: Wells Fargo Economics Group: U.S. Review
More Signs the Economic Recovery Is Still Intact.

Economists’ Comments & Opinions
POWELL: Jump-starting the economy
Because pumping trillions into the economy hasn't worked this time, maybe we ought to reflect on the last time government spending was under control - back in the 1920s.
Why the Bush Tax Cuts Worked
The Bush cuts provided lower taxes on ordinary income, especially for taxpayers at the high end of the income distribution. These are some of the most energetic and productive people in society; raising tax rates would discourage their effort and entrepreneurship. High-income taxpayers also have multiple ways of avoiding high tax rates, so any revenue gain from raising rates would be modest.
Financial Lifeguards Still on Duty
From Ireland to Germany to Pennsylvania, when the seas get rough, those drowning continue look to policymakers for help.
A Millionaire’s Bracket is a Bad Idea, Particularly for the Left
If the top 1 percent is responsible for 40.4 percent of revenue from federal individual income taxes, a new top rate will presumably increase revenue volatility, as income at the top of the distribution tends to fluctuate with the business cycle.
Why It's More Than Just the Deficit, Part 1
Increasing government debt crowds out the necessary savings for private investment -- the real factor in increasing productivity. But there's another part of that equation.
The Size of Government and the Choice This Fall
In polls, Americans overwhelmingly prefer small government and low taxes to the alternative. Yet they've been given big government, one program at a time.
How Obama Thinks
The President isn't exactly a socialist. So what's driving his hostility to private enterprise? Look to his roots.
GAO Finds Sebelius Misleading Taxpayers on Health Reform
The Government Accountability Office says a Medicare mailer sent out by Kathleen Sebelius, secretary of Health and Human Services, to Medicare recipients on the new health-care law isn’t accurate.

Graph of the Day
American Thinker: National Healthcare Expenditure Projections
See: Cuban Stagnation vs Chilean Growth

Book Excerpts
"Even the striving for equality by means of a directed economy can result only in an officially enforced inequality - an authoritarian determination of the status of each individual in the new hierarchical order." –F.A. Hayek, The Road to Serfdom (1944)

Did You Know
Thirty percent of those in the "overweight" class believed they were actually normal size, while 70% of those classified as obese felt they were simply overweight. Among the heaviest group, the morbidly obese, almost 60% pegged themselves as obese, while another 39% considered themselves merely overweight. According to the U.S. Centers for Disease Control and Prevention, 34% of adults aged 20 and older are obese, and 34% are overweight. Among children, 18% of teens aged 12 to 19 are obese, 20% of children aged 6 to 11 are obese, as are 10% of kids aged 2 to 5.