Friday, September 17, 2010

9/17/10 Post


News
Obama to tap Wall Street critic Elizabeth Warren for consumer post
President Obama will appoint Wall Street critic Elizabeth Warren as a special adviser to oversee the creation of a new consumer protection bureau, a Democratic official said Wednesday.
U.S. Consumer Prices Remain Steady
Consumer prices remained mostly flat in August, according a government report released Friday, continuing the trend of an extremely low and stable inflation rate.
Michigan's poverty rate hits 14%, highest level in 16 years
Michigan's poverty rate last year reached a 16-year high as the full effects of the recession continued to sweep across the country, according to a report issued Thursday by the U.S. Census Bureau.
Poverty Rise Stirs Debate Over Aid Programs
While the Census Bureau's report Thursday on the economic conditions of U.S. households found that 3.8 million more people lived in poverty last year than in 2008, the agency and advocates for the poor say millions of others were sustained with the help of government programs.
Pelosi hedges on tax cuts
House Speaker Nancy Pelosi Thursday renewed her pledge to pass an extension of the Bush tax cuts for the middle class, but now she’s leaving the door open to extending the tax cuts for upper-income Americans.
Stimulus funds failed to create enough jobs: LA City Controller
The Los Angeles City Controller said on Thursday the city's use of its share of the $800 billion federal stimulus find has been disappointing. The city received $111 million in stimulus under American Recovery and Reinvestment Act (ARRA) approved by the Congress more than year ago.
Are we there yet?
America’s recovery will be much slower than that from most recessions; but the government can help a bit.
Ohio Bank To Back Off Overdraft Charges
Huntington Bancshares Inc. said it will give its retail customers at least a business day without fees to restore any overdrawn accounts.
Someone will pay
But raising taxes on the rich alone simply won’t fix the deficit.
Geithner Says China Needs to Allow `Significant' Yuan Gains
Treasury Secretary Timothy F. Geithner said the U.S. will use every available tool to urge China to let its currency rise more quickly, including congressional pressure and a twice-yearly report on foreign- exchange markets.
Expiring Tax Cuts Hit Taxpayers at Every Level
Here's some pressure for lawmakers: If they don't reach agreement on extending soon-to-expire Bush-era tax cuts, nearly all their constituents back home will get big tax increases.
Construction projects, a ferry terminal, battery factories ... and maybe a cure for cancer
The White House is to issue a report Friday defending its $814 billion stimulus program by highlighting 100 projects it says are creating jobs and growing the economy.
Lifelines for the poor are disappearing
With more people than ever living in poverty, the government's unprecedented effort to strengthen the safety net for needy Americans is running out.
Economic Ride Turns Bumpier for the Rich
In the first year of the recession that began in 2007, the top 0.01% of earners in the U.S. saw their pretax income fall by an average of 12.7%, compared with 2.6% for all earners, according to an analysis of data from income-tax returns by economists Jonathan Parker and Annette Vissing-Jorgensen, in a paper presented Thursday at a Brookings Institution conference.
What happened to Europe's collapse?
The euro has been strengthening against the dollar. Europe's political commitment to the single currency remains as strong as ever. There has been remarkably little labor unrest in Greece since the spring, nor in Spain, where the government adopted a tough austerity package that included wage cuts for public servants.
A housing rebound? Yes, it's possible.
Despite continued discouraging data from the real estate sector, a few bullish arguments are beginning to emerge. One MIT economist even believes that demand for new homes exceeds residential construction.
White House defends $814 billion stimulus
In a report being released Friday by Vice President Joe Biden, the White House pushes back against criticism of its $814 billion stimulus program and highlights 100 projects that it says are creating jobs and growing the economy.
Recession Swells Number of Uninsured to 50.7 Million
The percentage of Americans covered by private insurance last year, 63.9%, was the lowest since 1987, while the percentage of people covered by government programs, 30.6%, was the highest.
Auction of warrants from insurance company Lincoln National brings government $213.7 million
The government says it has raised $213.7 million from the sale of warrants it held in Lincoln National Corp. It is the latest move to recoup costs for taxpayers from the $700 billion financial bailout.
A Risky-Loan Market Is Back in Gear
Leveraged Debt, Part of the Credit Bubble, Attracts Yield-Hunting Investors; Not as Frothy as '07.
United, Continental shareholders voting on deal to create world's biggest airline
Results of voting that started in late August will be announced Friday. If shareholders approve, the $3 billion stock deal could close in two weeks. Then the real work begins, including dealing with labor issues, combining reservations systems and even putting new paint jobs on the planes.
Examining our founding principles
We are a complex nation, with a diverse set of ethnicities, backgrounds and beliefs — but united in the idea that each American is created equal, entitled to the same privileges and protections as any other. A broad understanding of liberty is the centerpiece of this set of rights.
OMB’s Jack Lew Could be Obama’s Magic Bullet
During the 1990s, Lew held the same position as director of the Office of Management and Budget under Clinton and is widely credited with working closely with Republican and Democratic leaders to balance the budget.

Blogs
Economists React: What Are Risks of Deflation?
Economists and others weigh in on the increase in consumer prices.
Consumer Sentiment declines in September, lowest level in a year
"The UMich index declined to 66.6 in September - the lowest level since August 2009 -- from 68.9 in August."
Secondary Sources: Rajan and Krugman, Payroll Tax Cut, Traffic and Tolls
A roundup of economic news from around the Web.
A chronicle of Krugmania
[Raghuram Rajan's] response will be familiar to Cafe Hayek readers but it is convenient to have all of Krugman’s mistakes about the housing bubble assembled in one place.
Why the Federal Government Shouldn’t Use the States to Implement Fiscal Stimulus
"Projected fiscal deficits did lead to more assistance, but ARRA covered at most $0.25 of each dollar of projected state budgetary shortfalls."
In Pursuit of Empirical Macroeconomics
...firms generate patterns of specialization and trade. Profitability is what makes those patterns sustainable.
As a Rule, Protectionism Masks Itself as Competition
The real irony is that, for its entire 120-year history of being used to stymie competition and the forces of creative destruction, antitrust regulation continues to be portrayed as pro-competitive.
Regulating the shadow banking system
I liked this paper very much. It has excellent detail on how the shadow banking system works, excellent conceptual analysis comparing shadow banking to America's earlier "free banking era," and the central point that we don't have enough safe collateral for repo (should the Fed issue a special form of such collateral?).
End the Penny
For more than twenty years, the Department of Defense (DOD) has eliminated the use of pennies in its facilities at its overseas bases. Since these bases are located in areas such as Japan and Germany, remote from normal circulation of U.S. money, the transportation of currency proved to be costly.
What Small Business Wants
it's important to worry about things like the regulatory burden, which falls heaviest on businesses that can't afford a small fleet of full-time staff to ensure that they are in compliance. ...it's important to worry about whether taxation is choking off their growth--which doesn't mean that we should grant them tax subsidies, but only that this is one of the costs that must be counted when we're considering tax hikes.
Principled Economic Policy
Let us once and for all be done with endless discussions of temporary policies with transient effects. They don’t work and they distract us from the business at hand. Low marginal tax rates, transparent and not burdensome law and regulation, and non-inflationary monetary policy promote economic growth. The opposite leads to recession and anemic recovery.
The “Things Would Have Been Worse” Excuse
This spring, the Census hired a bunch of new workers, providing a fresh opportunity to test the fiscal stimulus hypothesis. At the same time that the Census went on its hiring binge, non-Census worker employment seems not to have budged much at all.
Massive Medicare Advantage Cuts
President Barack Obama has repeatedly said, “If you like your health plan, you can keep it.” But is that true?
Constitution Day and the Perilous Future
This is the day we commemorate the birth of the United States as a nation, based on the rule of law and dedicated to the preservation of personal liberty, political freedom, economic opportunity, and the natural rights with which we are all endowed by our Creator.
Max Baucus Clears Way for Death Tax Repeal
There have been sporadic efforts in the Senate this year to address this impending massive tax hike that will threaten the existence of family-owned businesses if it takes effect. None have succeeded.
Side Effects: Fuzzy Math Won’t Bend the Health Care Cost Curve
Obamacare will force health care spending to rise faster and higher over the next decade than if Congress had just left the nation’s health system unchanged. That’s according to a recent report from the Office of the Actuary at the Center for Medicare and Medicaid Services.
Playing Politics with the “Troops”
The White House has discovered a new tactic for pushing legislation that most Americans don’t want through Congress: implying the legislation in question is either all for the troops or could hurt the troops if not passed.
The Uninsured Numbers Are Bad, but Obamacare Can Make Them Worse
Given today’s high rates of unemployment and the fact that most Americans get health insurance through their employers, the increased number of uninsureds comes as no surprise. The exodus from job-based insurance will only escalate under Obamacare.
Marriage, Happiness, and a Prayer of a Chance at Escaping Poverty
At a time when unwed childbearing is at an all-time high, there is a ray of hope.
Spending Cuts Are Good for the Economy
Reducing budget deficits by cutting government spending has a stronger record of economic stimulus than either reducing the deficit with tax increases or increasing government spending.
Is allowing tax cuts to expire "raising taxes"?
Many economists and most voters don't like the idea of "raising taxes during a recession". But many other economists and many voters think that in a time of fiscal dire straits, "tax cuts" (especially on the richest earners) are morally unjustifiable and economically reckless.
More Evidence of the Failed Stimulus
Not that we need more evidence, but a report from Los Angeles reveals that the city only created 55 jobs with $111 million of stimulus funds.
ObamaCare & Health Insurance Premiums: Out of the Frying Pan, into the Fire
During the (initial) congressional debate over ObamaCare, President Obama vilified Anthem Blue Cross of California for a 39 percent rate increase. Now it seems that ObamaCare might be doing the exact same thing.

Research, Reports & Studies
The Business of Government Shouldn’t be Business
Arguing that small businesses create the most jobs, lawmakers are instituting several programs that focus on helping small businesses. The effectiveness of these policies, though, is dubious.
RCM: Wells Fargo Economics Group: Gasoline Drives Wholesale Prices Higher in August
Lifted on the strength of energy, total finished goods prices increased by a stronger than expected 0.4 percent in August. Rising commodity prices have reignited price pressures further back in the pipeline.
Marriage: America’s Greatest Weapon Against Child Poverty
Child poverty is an ongoing national concern, but few are aware that its principal cause is the absence of married fathers in the home.
Collapse of Marriage Spurs Explosion in Poverty
If Americans are serious about reducing poverty and getting control of federal welfare spending, we must strengthen marriage. We can do this in several ways, beginning with reducing anti-marriage penalties currently in welfare programs and providing factual information to low-income communities about the benefits of marriage.
Adding DREAM Act to Defense Bill Is Another Form of Amnesty
The Development, Relief, and Education for Alien Minors (DREAM) Act would essentially repeal part of prior federal law, “that prohibits any state from offering in-state tuition rates to illegal aliens unless the state also offers in-state tuition rates to all U.S. citizens.”

Graph of the Day
Health Care Plan: Favor/Oppose
See: What is Washington's spending costing you?
See also: Inflation rate flat amid price confusion
VIDEO: Honoring Constitution Day

Book Excerpt
"The assertion that wealth on the one hand and poverty on the other are ever increasing was maintained at first without any conscious connection with an economic theory. Its supporters think they have derived it from an observation of social relations. But the observer's judgment is influenced by the idea that the sum of wealth in any society is a given quantity, so that if some possess more others must possess less. As, however, in every society the growth of new riches and the coming into existence of new poverty are always to be found in a conspicuous manner whilst the slow decline of ancient fortunes and the slow enrichment of less propertied classes easily escape the eye of the inattentive student, it is easy to arrive at the premature conclusion summed up in the socialist catchword 'the rich richer, the poor poorer.'" –Ludwig von Mises, Socialism: An Economic and Sociological Analysis (1936)

Did You Know
"It wasn't until January 1791 that the Constitution became ratified completely by all the States, concluding with Vermont."