Friday, November 19, 2010

Budget News Nov. 15-19



News
FRIDAY
McConnell Shoots Down Spending Bill
Senate Minority Leader Mitch McConnell (R., Ky.) said Thursday that Republicans won't support a large spending bill to fund the federal government through fiscal 2011.
Senate confirms new White House budget chief
The U.S. Senate confirmed Jacob J. Lew as director of the White House's Office of Management and Budget by a voice vote Thursday night.
Greek Hopes for Loan Extension Fade
Greece's government is losing hope of getting additional time to pay back a €110 billion ($149.91 billion) loan after its European partners pressured Athens for tough new measures to meet its deficit targets, two senior government officials said Friday.
Is bipartisan debt-reduction for real?
The Republicans' midterm surge has given the federal debt-reduction commission -- whose recommendations are due Dec. 1 -- a chance to stand up and be counted.
Irish Grasp at EU, IMF Lifeline
Dublin Admits It Needs a Rescue; Moment of Truth for 16-Nation Euro Zone.
Budget fight sets up 2011 showdown
Republicans moved Thursday to kill a year-end spending compromise, hoping to gain leverage in what could be a quick strike against President Barack Obama in the next Congress over budget priorities — and quite possibly funding for health care reform.
California Bond Woe Bodes Ill for States
America's strapped states and cities took another hit Wednesday, with California seeing tepid demand for its latest bond sale and other governments pulling about $700 million worth of borrowing deals this week as investors continued stepping away from the municipal bond market.
Spain and Portugal rule out rescue packages
Spain and Portugal have hurried to disassociate themselves from Ireland’s debt crisis...
Raise the national debt limit?
Congress is months from a vote on whether to raise the national debt limit. But House Republicans are already bracing for what could be the toughest vote tea party freshmen face.
GOP Governors Plan Budget Cuts
Newly elected Republican governors are preparing to wrestle with huge budget gaps in states already struggling with foreclosures and high joblessness.
Ireland faces corporation tax showdown
French and German officials are pressing Ireland to increase its low corporate tax rate in return for an aid package...
Debt Panel Convenes, Still Lacks Consensus
The bipartisan commission examining how to cut the federal debt ended three days of closed-door meetings Thursday without a firm agreement among its 18 members, with several saying the panel was still at odds over how to contain the ballooning costs of health care.
Additional $1.2B hole in state revenue projected — expect more budget cuts
Officials were stunned to learn Thursday that the state is expected to take in $1.2 billion less in tax revenue than previously thought between now and June 2013, the latest grim result of an economy creeping toward recovery.

THURSDAY
Key Question For Duck: Pass Omnibus or CR?
Democratic leaders are attempting to get on the same page on how to fund the government, but the mixed signals among Senate and House Democrats and the White House is casting some doubt on the only must do business in the lame duck: funding the government.
Deficit Proposal Draws Mixed Review
A new Wall Street Journal/NBC News poll shows Americans skeptical of deficit-cutting proposals laid out by the chairmen of a commission appointed by the White House.
A User's Guide to the Deficit-Reduction Plans
It seems everyone in Washington these days has a plan to balance the federal budget and wipe out the nation’s long-term structural deficit, and frankly, it’s getting tough to keep them all straight.
Greece Sticks to Deficit Target in 2011 Budget
The Greek socialist government Thursday unveiled its final 2011 budget reaffirming its fiscal commitment to international lenders by vowing to cut is budget deficit to 7.4%.
US fiscal panel at odds over deficit cut plans
The US fiscal commission’s ability to forge a consensus on measures to shrink the budget deficit has been complicated this week...
Questions on Muni Ratings Are Raised by Stale Data
States, cities and other municipalities are notorious laggards when it comes to financial disclosure; ratings firms and investors are accustomed to the wait.

WEDNESDAY
US fiscal panel members seek deficit vote
Several members of the US fiscal commission are asking for a commitment from Harry Reid, the Democratic Senate majority leader...
Prospect of Ireland bailout drives dollar up, Dow down
Worries about the European debt crisis boiled over in world markets Tuesday, this time triggered by the prospect of debt-strapped Ireland becoming the second country to need a bailout.
Jobless benefits cost so far: $319 billion
Unemployed Americans have collected $319 billion in jobless benefits over the past three years due to the federal government's unprecedented response to the Great Recession, according to a CNNMoney analysis of federal records.
Britain Signals Intention to Help Ireland in Debt Crisis
The British offer came after finance ministers from the 16 countries using the euro decided to “intensify” talks with Ireland on possible aid to shore up the country’s troubled economy and banking sector.

TUESDAY
Greece, Germany Grapple Over Debt
...the deficit is likely to be 9.4% this year, and that government debt would total 144% of GDP at the end of 2010.
Estimated state budget deficit reaches $25.4 billion
The economy, new restrictions approved by voters, phantom savings in the budget and the end of temporary taxes add to gloomy forecast by Legislative Analyst's Office for the next 18 months.
New York State's Budget Gap May Reach $1 Billion, Deputy Comptroller Says
This year’s projected gap will be followed by a $9 billion deficit in the year beginning April 1, according to budget documents. Next year’s imbalance may reach $9.3 billion if lawmakers don’t close the current deficit with spending cuts, according to Robert Megna, the state budget director.
Texas leaders to ask for more spending cuts
Straus and Dewhurst said they'll send agencies a letter by the end of the month asking for additional cuts of 2-3 percent in their current year spending.

MONDAY
Irish Officials: We Don't Need a Bailout
Debt-burdened Ireland is talking with other European Union governments about how to handle its troubled finances, but denied they needed a bailout from an EU rescue fund as the continent's debt crisis continued to challenge policymakers for a response that would calm market turmoil.
Deficit Panel Co-Chair 'Hopeful' of Plan Approval
The recommendations would seek $4 trillion in deficit reduction over the next decade by cutting discretionary spending and eliminating tax breaks, while also raising the Social Security retirement age and imposing other changes on entitlement benefits.
Peter Orszag defends deficit commission
Orszag, former director of the Office of Management and Budget for President Barack Obama, writes in a New York Times column Monday that the commission's leaders have “bravely” proposed putting Social Security “on sounder financial footing.
Debt Commissioners: Baby Boomers Will Crush Social Security, Medicare
The U.S. government currently borrows 40 cents of every dollar it spends and is expected this fiscal year to draw a deficit more than $1.3 trillion. At the rate of current spending, interest on the debt alone will cost the U.S. $1 trillion by 2020.
Greek Budget Deficit Tops 15% of GDP
Under the terms of the loan, Greece must cut its budget deficit to 8.1% of GDP this year—from a previously estimated 13.8% gap in 2009—and to 7.6% of GDP in 2011.

Economist Comments
FRIDAY
Fixing The US Budget – Straightforward Or The Hardest Problem On Earth?
The conventional wisdom is that we face a serious budget problem, ballooning debt and political deadlock that prevents any semblance of progress either in the short term or over the next 20 years.
Fixing the Deficit: Our Biggest Test
Yet while the problem seems insurmountable, it really is not — at least not at this point. The greatest service the co-chairs of the deficit-reduction commission have done in their draft proposal is to make that plain.
Saving the euro
Ireland’s woes are largely of its own making but German bungling has made matters worse.

THURSDAY
Cutting the Deficit by Cultivating Growth
It is the reduction in the capital-gains tax that should get some of the credit for the economic boom and the surplus that followed.
Deficit Commission Runs Up against Unreality
...it changes the dialogue at least a bit away from the unreality that otherwise has dominated the campaign and Congress on fiscal issues for months, indeed years, and that threatens to get even worse.
The Rivlin-Domenici Alternative to the Deficit Commission Report
The Rivlin-Domenici plan wouldn’t cut spending; it freezes some small portion of the budget at 2011 levels but that’s pretty much it.

WEDNESDAY
This Is The Horrifying Budget Report That Caused Everyone To Freak Out About California
Well, there are a few reasons, but one culprit is the state's Legislative Analysis Office, which on November 10 came out with some very ugly revenue projections for the coming year, and the years after that... The nut is that the state has a $25 billion imminent budget problem.
Cities Face a Deepening Fiscal Crisis
A recent study of the 77 largest municipal pension systems by finance professors Joshua Rauh of Northwestern University's Kellogg School and Robert Novy-Marx of the University of Rochester estimates that total unfunded liabilities of America's municipal pension systems is well north of half a trillion dollars.
Payroll tax holiday and other measures to reduce the debt
This morning, a bipartisan task force that we co-chair unveils a bold, comprehensive plan to dramatically reduce America's deficits and debt and strengthen our economy, enabling the nation to reclaim its future.
States Offer Washington Lesson in Belt Tightening
The U.S. government is now borrowing $5 billion every business day and has done nothing more than talk about a plan to reduce its debt. State governments don't have that luxury.
BACON: Serious proposal for restoring fiscal sanity
Bowles-Simpson plan puts everything on the chopping block
Debt crisis gets human face
As Ireland’s debt crisis occupied centre stage in Brussels on Tuesday, back in Dublin hundreds of cash-strapped small businesses struggled...
BLANKLEY: Race against time to balance the budget
Failure to act quickly could trigger a double-dip recession.

TUESDAY
Irish woes should speed Europe’s default plan
...it has finally dawned on the EU that a rolling process that places private bank losses on to public balance sheets could leave its governments insolvent too.
Earmark ban: No effect on spending
For the earmark ban to reduce spending, "you have to lower the spending authorizations by the same amount," said Maya MacGuineas, fiscal policy director at the New America Foundation.
Reach for the Low-Hanging Fruit
According to the Congressional Budget Office's alternative scenario (the one that makes realistic assumptions about future policies), by 2050 the national debt will reach 344 percent of the economy with entitlements consuming two-thirds of non-interest spending.
Premature Rejection: Pelosi, Unions Nix Deficit Plan
The Bowles-Simpson deficit reduction plan could save Social Security. But Nancy Pelosi and some of the largest unions in the country have dismissed it out of hand. Have the Democrats become the “party of no?”
Cal Thomas: Debt Commission needs a history lesson
Every government agency and program should be periodically re-authorized. All spending should be justified before congressional committees responsible for oversight, and reduced -- or ended -- if the spending fails to fulfill its purpose.
California's Destructive Green Jobs Lobby
Silicon Valley, once synonymous with productivity-enhancing innovation, is now looking to make money on feel-good government handouts.
LEWIS: Key steps to balanced budgets
The Appropriations Committee - which will be ground zero for spending cuts - must begin strengthening the budget process with common-sense reforms to better control spending and make it more transparent and accountable to taxpayers who are footing the bill.

MONDAY
The Accidental Statist
Obama says the crisis made him do it.
FRASER: Good ideas, bad ideas
The report tackles all elements of the budget - cutting discretionary spending, cutting entitlement and other mandatory spending and tax policy. The results would bring spending down to 20.5 percent of gross domestic product (GDP) by 2040. This is good. However, taxes would increase to 21 percent of GDP. This massive tax increase is one of the key flaws of the co-chairmen's plan. The notion that you must raise taxes to solve a spending problem is simply wrong.
The GOP's Spending Tests
Republicans can demonstrate their fiscal sincerity by banning earmarks and appointing reformers to the House and Senate Appropriations Committees.

Blogs
FRIDAY
Soaking the Rich Would Not Solve the Long-Term Deficit Crisis
...selecting all of the options to increase taxes—including the crippling carbon and national sales taxes, which would hit all Americans—would still leave a deficit in 2030.

THURSDAY
How I Balanced the Budget
Overall: After 2015 my budget cuts will yield a $14 billion surplus; after 2030 there will be a $473 billion surplus. Spending cuts account for 85% of these gains, and tax increases account for 15% of additional gains.
For California, a New Month, a New Deficit
Five weeks after the Legislature passed a budget that promised to close a $19 billion budget shortfall, California has sunk back into yet another fiscal crisis, this time facing a $26 billion gap that is posing a major new challenge for the incoming governor, Jerry Brown, and seems almost certain to force deep cuts in a state already reeling from three years of financial turmoil.
The Deficit Dilemma and Obama's Budget
Much of the projected doubling of the national debt between now and 2020 reflects the spending and tax proposals in the president's fiscal plan this year.
Stimulus: Still Not Working!
Stimulus spending is like morphine. It might feel good in the short term for the beneficiaries of the money, but it doesn’t help repair the economy. And it causes more damage if it gets in the way of a proper recovery.
GAO: Public Debt Will Surpass WWII Highs Within 10 Years
The Government Accountability Office (GAO) has released yet another dire warning about the nation’s long-term fiscal condition.

WEDNESDAY
Mean Street: Not Enough Shock in America’s Deficit Shock Therapy
These ideas have been circulating for years. The only shocking thing is that we have done so little with them.
Obamacare, Save Money? Not Likely.
Orszag claims that Obamacare will reduce the federal deficit and Medicare spending. What isn’t mentioned is that, though it’s true that spending on Medicare will be reduced by $575 billion over the next decade, savings are used to offset spending on new programs. So really, there are no savings at all.

TUESDAY
Caulk the Leaks in Weatherization Spending
Money for nothing and overspending combined to 8.8 percent of total spending. Even more disturbing is that $69,000 (11.2 percent) of the audited spending couldn’t even be verified.
GAO: Unchecked Debt Could Prove ‘Disruptive and Destabilizing’
As if Washington hasn’t had enough reminders, the U.S. Governmental Accountability Office became the latest group in recent weeks to issue a stark warning that the levels of federal debt – if left unchecked – could prove disastrous.
How Would You Reduce the Deficit?
...reducing long-term deficits should focus on spending in Medicare, Medicaid, and Social Security. The co-chairs’ recommendations take a step in the right direction, but do not go far enough.
Fiscal Commission Compared to Clinton
...let’s remember that spending was just 18.2% in President Clinton’s last two fiscal years, 2000 and 2001.
Why Ireland fears a bailout
Note that casting your financial lot with the EU is especially problematic if you don't expect the EU to be so influential five or ten years down the road. Obviously the Irish are betting against the idea of a major step toward EU fiscal union and correctly so.
Four budget calculators, one story
In the Times' calculator, the single biggest thing you can do is add a "magic asterisk" to the health-care system. We don't know how exactly we're going to hold Medicare's spending growth to GDP+1%, but if we manage it, we'll save $560 billion by 2030.

MONDAY
Can a reduction in government spending stimulate the economy?
Critically, the IMF agrees that “tax increases are much worse for the economy than spending cuts.” Moreover, the IMF agrees that “after a few years, even large (but spending based) fiscal adjustments create growth for the economy.”
I Agree: Budget Cutting is Easy
Here's a prediction: if the New York Times keeps this game up on its site, a whole lot of people are going to be more sympathetic to cutting government and more optimistic that it can be done.
It’s Not About Ireland Anymore
Like it or not, it’s time for the Europeans to decide: Who gets unlimited liquidity support because they are essentially solvent, and who has to restructure their debt – with bridge financing and help from the outside?

Reports
WEDNESDAY
Restoring America's Future
...developed by a bipartisan task force that is chaired by former Senate Budget Committee Chairman Pete Domenici and former White House Budget Director and Federal Reserve Vice Chair Alice Rivlin, and includes 19 former White House and Cabinet officials, former Senate and House members, former governors and mayors, and business, labor, and other leaders.

Employment News Nov.15-19



News
FRIDAY
House fails to extend unemployment benefits
The House failed Thursday to pass a bill that would have given the unemployed three more months to file for extended jobless benefits.
WH report: Stimulus law boosted economy, jobs
President Barack Obama's Council of Economic Advisers issued a report Thursday concluding that the contentious law that targeted the recession has been a significant factor in the recovery.
Few Businesses Sprout, With Even Fewer Jobs
Fewer new businesses are getting off the ground in the U.S., available data suggest, a development that could cloud the prospects for job growth and innovation.
Wanted: More Than 2,000, in Google Hiring Spree
The world's largest Internet search engine, whose finance chief told investors in September that the Internet industry was waging a "war for talent," has job openings listed for 2,076 positions on its website, according to a Reuters tally Thursday.
Jobless Claims Tick up; But Near Two Year Low
The number of people applying for unemployment benefits rose slightly last week, offering some hope that the job market may be improving. But claims need to fall further to bring down the 9.6 percent unemployment rate.

THURSDAY
Jobless claims climb 2,000 to 439,000
The number of workers who filed new claims for unemployment benefits rose 2,000 last week to 439,000, reflecting little change in nationwide hiring, according to the latest government data.
Oregon gets 7,600 more jobs, biggest one-month gain in years
The numbers released today show strong hiring by universities, to handle increased enrollment, and by schools, retailers, hospitals and providers of nursing and residential care.
Unemployment benefits extension introduced in House
The unemployed would have three more months to file for extended jobless benefits under a bill introduced in the House Wednesday. The legislation would extend the deadline to file for federal unemployment benefits to Feb. 28, sparing 4 million people from falling off the rolls. The deadline is now Nov. 30.

TUESDAY
What it really takes to get unemployment down
The harsh reality is that it will take tremendous growth in the GDP even to make a small dent in the unemployment rate.
Spending Worries Put Jobless Benefits at Risk
Congress is unlikely to agree to extend jobless benefits for two million unemployed workers by the time the program begins to lapse in two weeks, as lawmakers struggle with a packed lame-duck session and voter antipathy toward government spending.

Economists Comments
FRIDAY
Biden: Unemployment Benefits Vote Was a 'Gigantic Mistake'
In a live interview on MSNBC’s Morning Joe today, Vice President Joe Biden called Congress’ failure to extend unemployment insurance a “gigantic mistake,” reviewed the administration’s plans for Afghanistan, and expressed confidence that the stalled New START treaty would win Senate approval.
Strangling innovation and job creation with red tape
The next two years will be a critical time to see whether all the promises of a more transparent America are realized. If not, maybe it is time to create an entrepreneurs party, where wealth and value creation are prized above rule manipulation and influence peddling.

THURSDAY
'Fair Pay,' Fewer Jobs
Democrats in Congress seem to have misconstrued the lame-duck session as one last chance to do tangible economic harm, so we should thank Senate Republicans for their public service yesterday in killing the White House priority of the "paycheck fairness" bill.

WEDNESDAY
Industrialization and Its Discontents
After a couple of decades of urging the Americans to overlook their anti-trade biases, the Chinese are going to have to adjust to the same discomforts.

Blogs
FRIDAY
Will it ever get better?
The downside of a poorly designed stimulus is that it creates more distortions in the market, does nothing to address structural unemployment and delays a market adjustment. Policymakers must pick their poison.
When Labor Is Capital, Why Push Labor Away?
In an era when, as Arnold Kling puts it, labor is capital, government policies are pushing capital away from our shores. Here’s an area ripe for reform. If either political party is serious about economic growth, it will take the lead on high-skill immigration reform.
Q3: Quarterly Housing Starts and Unemployment
This week the Census Bureau released the "Quarterly Starts and Completions by Purpose and Design" report for Q3 2010. Although this data is Not Seasonally Adjusted (NSA), it shows the trends for several key housing categories.

WEDNESDAY
Despite Stimulus, 6 Million Benefit-Paying Jobs Vanish in One Year
Based on population growth, and even factoring in the number of retirees, the US should have gained about 1 million jobs.

TUESDAY
Obamacare Accelerates Hospital Job Losses
Repeatedly, reports have shown that Obamacare will increase job loss.  But what happens when those who are laid off are the workers meant to enable the health care law’s expanded access of care: namely, hospital employees?
Philly Fed Survey of Economists Sees Unemployment Rate Still Near 8% in 2013
Economists in a long-running survey from the Federal Reserve Bank of Philadelphia have cut their estimates of growth and see high rates of unemployment enduring for years to come.

MONDAY
Drilling Permitorium Continues
Although Congress lifted the ban on deepwater drilling in October and drillers are eager to return to work, the government still has not issued any permits. And the news is unlikely to improve much next year.
Number of the Week: More Entrepreneurs, Fewer Jobs
More Americans are going into business for themselves, but that doesn’t necessarily mean they’ll be creating jobs for others.
The Skyrocketing Compensation of Federal Employees
USA Today reports on the growing disconnect between the compensation of federal government employees and everyone else:
Labor Force Participation Trends, Over 55 Age Groups
On Thursday I asked: What will happen to the Labor Force Participation Rate? The graphs tell all.

Reports
None

Monetary News Nov. 15-19



News
FRIDAY
Bernanke: Fed's right on stimulus, China
Federal Reserve Chairman Ben Bernanke on Friday defended the central bank's plans to spur U.S. economic growth, saying they could help reduce unemployment, and -- in a message aimed at China -- urged developing nations to let their currencies gain in value.
WRAPUP 2-China raises RRR again as inflation fight intensifies
China ordered lenders on Friday to lock up more of their money with the central bank for the second time in two weeks, stepping up its battle to pull excess cash out of the economy before inflation has a chance to take off.
WTO chief warns against currency wars
Pascal Lamy, WTO director general, said the fight over currency values -- in a reference to the United States and China -- could upset global financial stability.
What's Really Behind Bernanke's Easing?
My guess is that the Fed chairman knows that we still have too many banks overstuffed with toxic real estate loans and derivatives.
European Bank Revolt Over Regulation Grows
European bankers are growing increasingly vocal in their opposition to what they view as regulatory overkill in response to the fiscal crisis. Banks in Europe say too much red tape will prevent them from providing much-needed financing to companies, thereby killing off a nascent economic recovery.

THURSDAY
Bernanke Defends Fed Policy as Republicans Step Up Criticism
Federal Reserve Chairman Ben S. Bernanke defended his expansion of record monetary stimulus in a meeting with Senators as top Republican lawmakers stepped up their criticism of the central bank chief’s policies.
QE2: 3 signs to watch for progress
Many economists and market commentators are convinced that the Fed's move to pump $600 billion into the economy by buying up long-term bonds will do more harm than good for America's economic recovery.
China imposes price controls to stave off inflation
China moved Wednesday to put price controls in place to deal with rising inflation pressures. The government announced price control guidelines and said it would put state reserves of grains, edible oils and sugar on the market when necessary in order to guarantee supplies.

WEDNESDAY
Fed's Lockhart: Fed Will Likely Complete Entire QE2 Program
The Federal Reserve will likely need to complete its $600 billion bond-buying program, Atlanta Federal Reserve Bank President Dennis Lockhart said Tuesday. "The working assumption should be we will in all probability complete the program in the eight months it was designed for," the central banker said.
Stung by Criticism, Fed Officials Reply
Federal Reserve officials, taken aback by sharp criticism of their decision to print money and buy $600 billion in Treasury bonds, are counterpunching to defend themselves and, in some cases, to reinforce their commitment to the policy.
U.S. Inflation Remains Muted
U.S. consumer prices continued to rise modestly in October as gasoline prices surged, but underlying inflation hit its lowest level in more than 50 years, supporting the Federal Reserve's recent move to try to boost the economy.
Bond Market Defies Fed
Interest Rates Rise Despite Launch of Treasury Buying as Investors Take Profits.
China manipulates currency, U.S. panel says
China continues to manipulate its currency and the nation's "exclusionary" trade policies have contributed to a massive deficit with the United States, a special commission said Wednesday.
Senate panel OKs Diamond as Fed member
A Senate panel on Tuesday approved the nomination of Nobel pricze winner Peter Diamon to be a member of the Federal Reserve, marking the second attempt to push through Republican roadblocks.

TUESDAY
Ben Bernanke, politician?
The Federal Reserve was already making a high-stakes economic bet with QE2. Now it's also a political bet, and that doesn't bode well for Bernanke or the Fed.
Bond Market Defies Fed
Interest Rates Rise Despite Launch of Treasury Buying as Investors Take Profits.

MONDAY
Fresh Attack on Fed Move
GOP Economists, Lawmakers Call for Abandoning $600 Billion Bond Purchase.
The Fed vs. Brazil's Reformers
Brazil's President-elect Dilma Rousseff may be pressured to respond to U.S. monetary easing with more protectionism and higher taxes.

Economists Comments
FRIDAY
Lowest Inflation Since 1957 – Are You Kidding Me?
The Fed thinks prices are too low. The Fed wants more inflation — maybe $12-$13 for a chicken dinner at KFC. Fifty bucks for a family of four.
The Euro Debt Crisis Rolls On: "There Is No Way This Thing Ends Well"
The EU was supposed to be about stability. Countries weren't supposed to have deficits more than 3 percent of GDP. Greece's budget deficit is 15 percent in 2009. So the budget isn't healthy, and they're having to tighten more. That'll lead to political instability. There's no way this thing ends well.
Shughart: Fed takes wrong course
Quantitative easing leads away from the path to economic recovery.
Brazil Watch: Will Brazil Raise Interest Rates?
Despite the pressures of an inflating economy, finance minister Mantega believes he can reduce rates.
Bernanke: stop calling it QE!
There's something about quantitative easing that bothers just about everyone - including, believe it or not, Fed chief Ben Bernanke.

THURSDAY
The trap of the Federal Reserve's dual mandate
Fed Chairman Ben Bernanke has wistfully imagined a day when economists might get "themselves thought of as humble, competent people on a level with dentists." But that day will not dawn as long as the dual mandate makes it almost mandatory for him to vow that the Fed "can assist keeping employment close to its maximum level through adroit policies."
Failed Models and the Real Costs of QE2
It has been three years since the crisis began, and Washington, from White House to Congress, has done everything possible to prevent recognition of losses from troubled assets being held at inflated values on bank balance sheets. The Fed, whose independence is necessary to its authority, has increasingly become a policy tool in bidding for many of these bad assets.
The Coming End of the Global Monetary System as We Know It
The White House and Congress must function better together to help save the economy.

WEDNESDAY
Bernanke's Easter Island moment
Even a mere 10 days after its passage, and before significant implementation, it's clear that Bernanke's move, in terms of adverse effect compared to the size of the policy move, is well up there. The Fed's buying program will be concentrated on medium-term Treasury bonds, for two reasons.
Ron Paul's Golden Opportunity
Who better to host the debate over sound money in Congress than the Fed's most persistent critic?
Facts Prove Federal Reserve Has Accomplished Its Mission
The Fed has managed to boost inflation expectations and asset prices, and ensure that economic growth will be spurred higher.
US Economy Heading for Stagflation
A combination of stagnation and inflation is considered to be the worst of all of the potential outcomes for an economy.

TUESDAY
What Caused the Financial Crisis
Was the great financial crisis caused by greedy and reckless bankers and Wall Street players or by a broad range of individuals, financial institutions and governments who became less risk-averse and prudent or by government housing policies that brought on the housing bubble and mismanaged the risks?
Is the Mexican Peso Too Strong?
Mexico is forming its own immigration policy, only dollars moving south -- and not people moving north -- are the objects of concern.
A Double Hex
Inflation in China and a slowdown in Germany may be twin omens of hard times. Plus, a chilly G-20 greeting for President Obama.

MONDAY
New Congress should rein in the Fed
The first order of business for the new Congress is two-fold: move on deficit and debt reduction and rein in the Federal Reserve.
Obamanomics Leaving World Nervous
The president's failed stimulus didn't keep the unemployment rate below 8 percent, as the White House promised: It's stuck above 9 percent, and far higher if we include those too discouraged to seek work. But the stimulus added several more big straws of debt to the camel's back.
Gold Mocks World Spooked By Fed's $600 Billion: William Pesek
There’s plenty of blame to go around for this, and the U.S., Europe and Japan must own their share of it before expecting big gestures from poorer nations. Countries like China are wondering why they are being asked for greater reforms than counterparts such as the U.S., and rightfully so.
What Amount of QE2 Separates a Healthy Economy From Hyperinflation?
Somewhere between $10 and $10 trillion of quantitative easing, the Fed becomes a board of ill repute.
Why the Fed Cannot Regulate ‘Systemic Risk’
A systemic risk advisor might help ameliorate bubbles and busts, though not avoid financial cycles.

Blogs
FRIDAY
Going Broke by Fractions of a Percent
Ben Bernanke should stop paying interest on reserves.
Fed's Priority Must Be Fixing Securitization Process
It's critical to economic recovery and yet the Dodd Frank Act has put it on the back burner.
Fed’s Plosser: QE2 Benefits May Not Outweigh Costs
The benefits of the Federal Reserve’s plan to buy $600 billion in government bonds in an effort to lift the economy may not be enough to outweigh the costs.

THURSDAY
Taylor, Krugman and Quantitative Easing
The main problem with this explanation is that there is actually no evidence for a global saving glut. On the contrary, … there seems to be a saving shortage. … the global saving rate – world saving as a fraction of world GDP – was very low in the 2002-2004 period especially when compared with the 1970s and 1980s.”
QE2
 By lowering long-term real interest rates below where they otherwise would be, QE2 should help expand aggregate demand.  I include the modifier "modestly" because I don't expect these actions to have a very large effect.
Inflated Reputation
George Will doubts the Fed’s ability to carry out its “dual mandate”, This mandate, as described in 2007 by Federal Reserve governor Frederic Mishkin, is for the Fed “to promote the two coequal objectives of maximum employment and price stability.”
What is the case for the Fed?
I view 1929-1932 as a better illustration of the workings of "a world without a Fed" than "a world with a Fed," even though of course we had a Fed then.  If you take the relevant division to be "before and after WWII," the Fed looks pretty good.
Where Quantitative Easing Meets Sustainability (or Bennie and Clyde)
The federal government can perpetually spend more than it takes in from tax and other “revenues.” It can perpetually issue bonds to cover the difference and in case you are worried that no one in their right mind would ever buy them after a long period of this, the Fed can simply buy them up.

WEDNESDAY
The Uncertainty Certainty
Whether the Fed is right or wrong, the fact remains the future of inflation and interest rates, and the Fed’s impact, are extremely uncertain, making it especially difficult for businesses to make decisions.
Corker Calls for Dropping Fed Mandate on Jobs
Sen. Bob Corker (R., Tenn.) called Tuesday for a narrowing of the Federal Reserve’s focus to price stability, the latest attempt by a Republican to alter the central bank’s mandate.
Open Letter To The Fed
This letter to the Fed Chairman Ben Bernanke, signed by prominent conservative economists and writers, asks the Fed to discontinue quantitative easing (QE2). The significance of the letter are the signers.
Has the Fed Been a Failure?
2013 will mark the 100th anniversary of the Fed.  What have we got for our money? Surprisingly little.  Inflation is clearly higher in the post-Fed era as is price variability.
Quantitative Easing, Here and There
I've been surprised to find that there's a considerable amount of outrage among the people I talk to about our quantitative easing program.  I knew China was upset, but I had not appreciated how much this would filter down to ordinary people who do not, say, work for the trade ministry or the central bank.

TUESDAY
Fall of the Mighty Dollar: Looking Back at the Credit Crunch
At the very start of the financial crisis, it was already clear to many that the dollar's hegemony would be questioned.
Yes, gold is at a record high...against the dollar. Just what does that mean?
On Tuesday, a NYT column pointed out that gold is only at a record high if you don't adjust for inflation. Just what are gold – and the dollar – worth?
Fed's QE2 draws the ire of Virginia Tea Party Patriots
The Virginia Tea Party Patriots have sent a letter to the members of the state’s congressional delegation that castigates the Federal Reserve’s second round of quantitative easing (QE) and calls for Congress to audit the Fed.
What will printing money and creating debt lead to?
Ben Bernanke believes that making people feel richer is the key to generating actual wealth. Is he right? We're about to find out.

MONDAY
Conservatives vs. the Fed
The monetary stimulus will do no more good--and could do more harm--than the fiscal stimulus.
The Saga of QE and The Ben Bernank
Since it is difficult to know what prices really are, I believe the trend is more important than the actual level for purposes of assessing the impact of money supply.
Diamond Not Qualified for Fed Board
Tuesday the Senate Banking Committee meets for the second time to consider the nomination of Peter Diamond to a seat on the Federal Reserve’s Board of Governors. Since Professor Diamond was first nominated, he has been awarded the Nobel prize in economics.
Of inhuman bond spreads
Sovereign bond spreads for Portugal, Ireland and Greece point towards trouble.
What if we reform the whole monetary system?
We could try to solve problems within the current monetary framework, or could discuss alternative monetary regimes.
Reform the Monetary System?
Most economists agree that the latest crisis was caused by risk-taking incentives along with financial innovations that allowed banks to lend excessively. While monetary policy prevented, a collapse of the financial system, an increasing number of economists also agree that it is not possible to safeguard the financial system over and over again. There are limits to intervention. Therefore we have to find a way to deal with the very causes of the crisis.
Taleb Shreds Bernanke
Nassim Taleb is out promoting his new book, The Bed of Procrustes, a collection of aphorisms about economics. He is as close to Austrian theory as you can get and he spouts the party line on boom-bust and the role of government in the economy, as well as Austrian theory epistemology.
Open Letter to Ben Bernanke
We believe the Federal Reserve’s large-scale asset purchase plan should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

Reports
None

Tax News Nov. 15-19



News
FRIDAY
Weekend Votes Unlikely for Senate; Tax Cuts Still Up in the Air
Senate Democrats seemed likely to ward off working into the weekend with a vote on food safety legislation Thursday night, but they still had no clear path forward on extending Bush-era tax cuts.
Euro Zone: Careful What You Wish for on Irish Taxes
European politicians tempted to take aim at Ireland's ultralow 12.5% corporate-tax rate might want to think again, and not only because their Irish counterparts seem willing to defend it to the death.
Once Routine, Tax Breaks Pose Test
Senate Democrats plan to push a bill next month that would cut at least $60 billion in taxes by extending breaks for an array of individuals and businesses, setting up an early test of Republicans' deficit-cutting resolve.

THURSDAY
South Korea’s Bond Tax May Spur Other Nations to Raise Barriers
South Korea’s revival of a tax on foreigners investing in its bonds may prompt more emerging markets to act to curb fund inflows driving up their currencies.
Corporate tax threat to Irish industrial policy
Geographically on Europe’s edge, and generally labelled “peripheral” in analyses of the eurozone...

WEDNESDAY
Another Deficit Plan Targets Taxes
The report, co-authored by Democratic budget veteran Alice Rivlin and former Sen. Pete Domenici (R., N.M.), follows a separate proposal last week by the two chairmen of President Barack Obama's deficit commission. The many similarities between the two offer a window into the types of proposals that might win backing as Washington launches into what is likely to be a protracted debate on deficit cutting.
Efforts to Extend Bush-Era Tax Cuts Falter as Talks Are Delayed
President Barack Obama and congressional leaders postponed until Nov. 30 a White House meeting, previously scheduled for tomorrow, to negotiate whether to extend lower tax rates for all taxpayers or just those with incomes of $250,000 or less.
Geithner Expects a Deal on Tax Cuts
Treasury Secretary Says Reaching an Accord Is 'Not Rocket Science'; Temporary Extension of All Bush-Era Rates Seen as Likely

TUESDAY
Bush tax cuts: Cutting through the noise
If the tax cuts do expire and tax rates go up, you may notice the difference in your wallet as early as January, when your employer starts to withhold more taxes from your paycheck.
New Yorkers Favor Higher Taxes Over Spending Cuts, Poll Shows
More than half of New York state voters oppose spending cuts in education or health care, “even if it means raising taxes,” according to a Siena Research Institute poll.

MONDAY
White House, GOP look for middle ground on taxes
The White House and Republican lawmakers set the terms of a looming tax debate Sunday, coalescing around a possible temporary extension of existing income tax rates that would protect middle-class and wealthy Americans from sharp tax increases next year.
Bush tax cuts: What nobody is talking about
Many tax policy watchers are nevertheless convinced that ultimately lawmakers will opt for a temporary one- or two-year extension for everyone.

Economist Comments
FRIDAY
Soda Tax, Will it Actually Help Lower Obesity Rates?
...overall diet and exercise are hugely important and some lucky souls (good genes!) can ingest extra calories with impunity, anyway.
There Ain’t No Such Thing as a Tax Subsidy, Either
Until someone comes up with something pithier than “tax revenue forgone due to targeted tax preferences,” I’ll stick with that.

THURSDAY
Allyson Schwartz: Extend cuts up to $500,000
Schwartz’s proposal is less generous than others circulating on Capitol Hill, including ideas to extend the tax cuts for earnings up to $1 million.
The Done-Nothing 111th and Taxes
Congress could have created tax certainty for 2010 and the years ahead, but it has failed to do so, so far.

WEDNESDAY
Wrong on Taxes
[Hubbard] does regret that the plan isn’t more radical in moving toward a consumption-based tax rather than an income-based one, and he regrets that it proposes to treat capital gains and dividends as ordinary income, since this move continues the tradition of favoring consumption over saving and investment.
Tax Hikes and the Small Business Job Machine
The president says only the rich will be hit with the highest rates. Nonsense.
Lifting the Payroll Tax Cap Will Only Increase Spending
There is roughly $2.5 trillion in the Social Security Trust Fund, made of the extra payroll tax collected from taxpayers since 1983. However, the Social Security Trust Fund is required by law to purchase Treasury securities with its tax income, which means that the fund contains $2.5 trillion worth of IOUs. Treasury has long spent this $2.5 trillion as part of the general fund — so, in other words, since 1983, Social Security taxes have been subsidizing other parts of the federal government. More importantly, it means that if we put more money into the trust funds, it will just increase the federal government’s spending power.

TUESDAY
Taxpayers Taking a Hit in Struggles of Fannie Mae, Freddie Mac, and It Could Get Worse
"It's probably likely to be closer to $500 billion by the time all of this is finished," David Johns of the Heritage Foundation said. "And you and I get to pay that."
Left, Right and Wrong on Taxes
As Messrs. Bowles and Simpson aptly demonstrate, we are in a difficult situation in large part because we have designed entitlements for a welfare state we cannot afford. And, perhaps less obviously, they show how we have used the tax code as a vehicle for special-purpose spending that weakens both the efficiency and fairness of our tax system.
Getting 'Tax Cuts For Rich' Backward
The Obama administration's problem is it's so focused on the distribution of the golden eggs, it's neglected the health of the goose.

MONDAY
What will the lame duck Congress do with the Bush tax cuts?
The returning Congress has only two must-do jobs. It needs to pass a stopgap spending bill to keep the government functioning into next year, and it must address a slew of expiring tax cuts.
Obama: “I Want to Make Sure That Taxes Don’t Go Up”
Of course, the problem is that President Obama does want taxes to go up for business owners, corporate executives, and investors on January 1, the very people whose decisions have the most immediate impact on economic growth and job creation.
New governors: Budget cuts not tax hikes
These newly elected officials, along with the incumbents, are staring at budget gaps totaling least $72 billion for fiscal 2012, which starts in July in most states, according to the state legislatures group.
Reduce out-of-control spending now
Under the Democrats’ one-party reign the last two years, the size of government has exploded and the United States has added an unprecedented $2.7 trillion to the national debt, amounting to nearly $5 billion dollars a day.

Blogs
FRIDAY
Tariffs of Obama-Nation
Maybe this wouldn’t be such a horror story if there was any economic evidence that tariffs were good for an economy.
A Solution to the Tax Mess
Scoreboard has the answer to the tax mess. Put off any tax increase for at least three years, making it a referendum for the 2012 elections.

THURSDAY
Soda Taxes Are Still Not a Substitute for Real Tax Reform
It is ironic then that BPC would suggest pop taxes which have been repeatedly shown to be unfair, unfavorable to economic growth, and impose different tax burden on people with the same income.
Film Tax Credits Aren’t Big Job Generators
In Massachusetts, each job created by the tax credit and filled by a state resident cost $88,000 in tax revenue. In Michigan, $44,561 in revenue is lost for every local job created in connection with the tax credit.
Vero on Tyler on the capital gains tax
"...the incidence of capital gains taxes on new capital is largely, through incidence, bounced onto consumers and labor."

WEDNESDAY
GM Benefits from Tax Law Ruling
A WSJ article of November 3, 2010, by Randall Smith and Sharon Terlep, points to a little-noticed IRS ruling on GM’s tax-loss carryforwards from years prior to the bailout. The amount at issue is potentially $45 billion.
Bowles-Simpson plan raises everybody's taxes
In 2015, the lowest earners would face an average cut in their after-tax income of 3.4 percent or about $400. Middle-income households (those earning an average of about $60,000) would see their after-tax incomes fall by 4 percent or about $1,900. On the other end of the economic food chain, the top one percent of earners (who earn an average of about $2 million) would lose about $77,000 (5.3 percent) while the top 0.1 percent would see their after-tax incomes cut by nearly 8 percent, or close to $500,000.

TUESDAY
Agony Over the Property Tax Cap
At the New Jersey League of Municipalities convention to be held in Atlantic City tomorrow officials will be focused on a central problem, “How are we going to run our towns while keeping property tax growth below 2 percent?”
The Deficit Commission's Plan for Personal Income Taxes
While the Bowles-Simpson zero plan tax proposal lists the tax rates they believe should apply, they didn't specify at what income levels they would apply.

MONDAY
More Money Matters: The Debt Commission Budget Cuts You Haven’t Heard
The United States government is the largest property owner in the country, with 1.2 million buildings, structures, and plots of land totaling 650 million acres. The Debt Commission says 64 thousand of those buildings and structures are either excessive, underutilized, or vacant, and should be sold to the highest bidder.

Reports
WEDNESDAY
Staff Commentary: The Rationale for Low Capital Gains Tax Rates
A number of dynamic analyses have found that the negative economic feedback effects of higher capital gains tax rates mean that the scheduled tax hikes will bring in little to no additional revenue, and could even increase budget deficits.

MONDAY
Punitive Damages and the Tax Code: Punishing Business and the Economy
...eliminating the deductibility of punitive damages will encourage plaintiffs’ lawyers to file even more lawsuits, further clogging dockets across the country and increasing the cost of litigation.
Obama’s Tax Hikes on High-Income Earners Will Hurt the Poor—and Everyone Else
Senior citizens are hurt the most by the imminent tax increases because retired people rely disproportionately on dividend pay­ments for their income.

Health Care News Nov. 15-19



News
FRIDAY
Senators Agree on One-Month Extension of ‘Doc Fix’
The Senate on Thursday evening passed a one-month extension of the current Medicare physician payment rates in an effort to avert a 23 percent cut scheduled to take effect Dec. 1. Doctors have threatened to stop taking new Medicare patients if the cuts go through, and experts warned that the situation would undermine the health care program for 46 million elderly and disabled individuals.
Dems Lean on Republicans to Forgo Coverage
With repealing the health care overhaul law a priority for Republicans, some House Democrats want GOP congressional leaders to identify which of their members are willing to opt out of their congressional health insurance benefits, which are subsidized by taxpayers.
Private Medicare Plans Are Retrenching
Seniors enrolling in private Medicare policies starting this week are finding fewer options, as health insurers close down certain types of plans due to legislative changes and looming cuts to federal funding.

WEDNESDAY
GOP Waits on Obamacare Repeal
Congressional Republicans will hold off on trying to repeal the health care reform law until January when their hand will be strenghtened with a Hosue majority and greater numbers in the Senate.
Doctors: Congress should act fast on Medicare pay
Just back from recess, Congress is staring at a deadline that will result in a dramatic cut in Medicare payments to doctors if no action is taken.

TUESDAY
Health-care reform in GOP cross hairs
Republicans plan an all-out assault on the new health-care reform law, which they see as the biggest symbol of over-reach by Democrats. President Obama's veto pen is the first defense.

MONDAY
Approved Applications for Waiver of the Annual Limits Requirements of the PHS Act
Obama White House Hands Out 111 Obamacare Waivers.
Doctors brace for possible big Medicare pay cuts
Doctors have muddled through with temporary reprieves for years. This time, medical groups estimate that as many as two-thirds of doctors would stop taking new Medicare patients, throwing the health program for 46 million older and disabled people into turmoil just when the first baby boomers will become eligible.
Medicare in Hot Seat During Lame Duck
Lawmakers must address an expiring Medicare payment formula and will question the government program's administrator during the lame duck.
Navigating Through Medicare's Alphabet Soup
The so-called open enrollment period for Medicare starts Nov. 15, which means folks have the option of changing the type of plan they have. It can be daunting, particularly understanding the differences among plans A, B, C and D. But don’t let it stop you from investigating. Even if you feel comfortable with the plan you’re in, it is important to keep an open mind.

Economist Comments
FRIDAY
Rivlin-Domenici Put Medicare on a Weight Loss Diet
The latest entry in the deficit reduction sweepstakes from the Bipartisan Policy Center calls for a major overhaul of Medicare financing that would turn most of the program over to the private insurance industry and cap government support.

THURSDAY
Retirees Seeking Help With Medicare
Now 45 years old, Medicare has become too much of a good thing-;too big, too costly and far too complicated. In the past few years, we've seen the introduction of prescription drug coverage, the indexing of premiums for doctors' services and, this summer, a shake-up in supplemental insurance plans, known as Medigap.

WEDNESDAY
GOP ideas can fix health care reform
Americans made it clear in the midterm elections that they oppose a new policy that puts Washington largely in control of their health care. Almost 60 percent of voters, according to Rasmussen exit polling, support efforts to repeal and replace President Barack Obama’s new health care law.

TUESDAY
Debunking Richard Cohen: How Does the U.S. Health Care System Stack Up?
The U.S.'s focus on subsidizing health care for the elderly, for whom medical interventions are more frequent, costly, intensive, and arguably more beneficial, and to whose future health non-medical factors matter less on the margin.
Feulner: The only sure cure for Obamacare
Americans should fight for a full repeal of the unpopular reform law.

MONDAY
Reforming Health Care Online Chat
There is a lot that needs to be done but with the right education we can hold congress accountable and make sure they do what they were elected to do.

Blogs
FRIDAY
A Health Care Fix Bernie Sanders and Tim Pawlenty Can Both Love?
When the Affordable Care Act was but a glimmer in President Obama's eye, Wyden and Republican Sen. Bob Bennett, of Utah, introduced the Healthy Americans Act. This health care reform bill was widely praised by health policy experts and economists and had support from some key Republicans and Democrats.
Time to Clean Up the Medicare Doctor Payment Mess
Congress should fix the Medicare payment system—but not add one dime to the deficit in doing it. It could do this by sequestering a portion of the projected $575 billion in Medicare savings they just enacted in the Patient Protection and Affordable Care Act to offset the additional costs—well over $200 billion in 10 years. Congress should also extend the fix for longer than one month and require that Congress enact a permanent fix to this problem during this temporary fix.

THURSDAY
Breaking Health Care Research: Repealing Obamacare and Getting Health Care Right
As newly elected lawmakers prepare for the hard work to be done in the next Congress, the future of the hugely unpopular Patient Protection and Affordable Care Act hangs in the balance.
In Health Care, No Free Lunch
The closer we get towards 2014, the more I am skeptical of the idea that this program is going to get more popular as it goes forward.  Would people like to be able to buy cheap insurance that offers them a lot of coverage and choices?  Of course.  But pooling only gets you so far in reducing costs. And it comes with a major downside:  in order to get the benefits, you have to force everyone to buy insurance.

WEDNESDAY
Who Should Control Your Health Care, You Or The Government?
We can have a bottom-up, not top-down, health care system where individuals have much greater personal choice because they would control their health care dollar. But that system can never come about under Obamacare. If the American people want to be the ones making their own health care decisions, then priority number one is the full repeal of Obamacare.
The Berwick Hearing’s Best Focus: Obamacare’s Effects on Doctors and Patients
The Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Donald Berwick this morning is expected to testify before Congress in his first appearance since a controversial recess appointment in June. He will talk before the Senate Finance Committee.
AARP Employees Face Premium Hikes As Result of New Law
Health care reform was supposed to “bend the cost curve” in health care and reduce the amount that American families pay in health care premiums.  This was the message the nation received from proponents of the new law, which included organizations such as AARP.

TUESDAY
Provenge Controversy Argues for Medicare Vouchers
If the government stayed out of health care, or just subsidized Medicare enrollees with a voucher, then both cancer survivors would get their wish.  Cancer Survivor #1 could purchase coverage for expensive cancer treatments.  Cancer Survivor #2, and millions like her, could buy lower-cost insurance and donate the savings to scholarships.

MONDAY
Texas Considers Opting out of Medicaid
With an increase in Medicaid enrollments due to health care reform on the horizon and an estimated $21 billion budget shortfall, Texas is considering opting out of Medicaid.
Health Care and Socialist Calculation
Pricing a medical service can be thought of as two problems. First, come up with the measurable unit of output. Second, set a price for that service.

Reports
THURSDAY
Preliminary Analysis of the Rivlin-Ryan Health Care Proposal
Congressman Ryan and his staff recently provided specifications for a proposal that would substantially change federal payments under the Medicare and Medicaid programs. Although an extensive analysis of that proposal is not feasible in the time available, CBO has conducted a preliminary analysis of its major provisions—the results of which are summarized here.

WEDNESDAY
State Medicaid Reform After Obamacare
States should not remain silent or complacent about the Patient Protection and Affordable Care Act (PPACA), especially the law’s new Medicaid provisions. States should push back and forge ahead with transformative reforms that would fix the broken Medicaid program.

General Economic News Nov. 15-19



News
FRIDAY
A far from random walk from Wall Street
Now, as in the wake of the Great Depression, a generation of investors may have become alienated from the stock market.
Wind energy, solar power face cloudy future
After years of rapid growth and darling status among many in Washington, the future of the American renewable energy industry is uncertain.
Hunting down the hoarders
To rein in prices, the Chinese government turns to unconventional measures
Mortgage Delinquencies Decline
Number Reflects Stronger Economy, But Stubborn Jobless Rate Likely to Keep Foreclosure Rate High
Flying for the holidays won't be cheap
Air fares are up dramatically this holiday season -- so there's no point in waiting for last-minute deals because they're not going to happen, experts say.

THURSDAY
Leading Indicators Index in U.S. Climbs 0.5% for Second Month
The index of U.S. leading indicators rose in October for a fourth consecutive month on signs the Federal Reserve was preparing to take additional action to spur the world’s biggest economy.
U.K. Had Larger-Than-Expected Budget Deficit in October Amid Modest Growth
Britain had a larger budget deficit in October than economists forecast, underlining the challenge facing Prime Minister David Cameron as he tries to cut record levels of borrowing.
Greece Pledges to Cut 2011 Deficit to 7.4% of GDP With Economy Shrinking 3%
Greece’s government plans to cut the budget gap by 5 billion euros ($6.8 billion) in 2011 by reducing spending, including wages at state companies, and increasing sales taxes to meet targets under a European Union-led rescue.
Home Ownership Gets Tougher as Lenders Restrict FHA Mortgages
Home ownership may be falling out of reach for more Americans as lenders toughen their standards for Federal Housing Administration-insured loans beyond what the agency itself requires.
Massachusetts gets the new economy best
Massachusetts is well-positioned because of its many software, hardware and biotech firms, and highly competitive universities such as Harvard and MIT that churn out talented grads who can support their growth.
Fewer homeowners behind on mortgage payments
Mortgage delinquency rates dropped in the last three months -- but only because more borrowers had their homes repossessed. You can't be late on your mortgage payment if you've already lost your home.
Make Money in 2011: The Economy
Here's the happy news: Despite fears of a dreaded double dip, the economy isn't likely to slip back into recession in 2011. Unfortunately, the more probable scenario is no great shakes, either: lackluster growth and persistently high unemployment.
Goodbye, checks: States benefits move to direct deposit, debit cards
Following the federal government's lead, state governments are migrating more payments -- for everything from unemployment to child support -- away from paper checks.
Millionaire Lawmakers: Members of Congress Get Richer
Even a dismal economy didn’t prevent rich lawmakers on Capitol Hill from becoming richer. Congressional members’ personal wealth collectively increased by more than 16 percent between 2008 and 2009, according to a new study by the Center for Responsive Politics, a DC-based non-partisan think tank.
OECD Sees Uneven Euro-Zone Recovery
Recovery in the euro zone will be modest and uneven in the next two years, as deficit-reduction plans in the area weigh on growth and large imbalances in peripheral countries with high debt levels are wound down.

WEDNESDAY
Wholesale Prices Climb Only Slightly
Wholesale prices were mostly tame in October, suggesting inflation would remain subdued for the time being.
Housing starts hit lowest level in 18 months
New home construction fell to an 18-month low in October, the government said Wednesday.
GM's IPO May Raise Record Amount
General Motors Co. said Wednesday that it will increase the size of its initial public offering by about 30% to 478 million shares, which could make it the largest global IPO in history.
Inflation at lowest level since 1957
The Consumer Price Index, a key measure of inflation, increased 1.2% over the past 12 months ending in October, the Bureau of Labor Statistics said.
Ethanol subsidy under fire
For years, American taxpayers have subsidized ethanol production in a bid to boost the nation's energy independence.

TUESDAY
U.S. Factory Production Rises by Most in Three Months
American industry churned out more automobiles, computers and appliances in October, keeping manufacturing at the head of the economic recovery that began more than year ago.
Federal report: U.S. hunger remains at highest levels in 15 years
The number of Americans fighting off hunger stayed level last year, though food insecurity rates remain the highest they have been since the federal government began keeping track 15 years ago, a Department of Agriculture report released Monday found.
Foreclosure mess could threaten banks, report
Congressional watchdog warns of the consequences to housing market
Deflation at Our Doorstep?
U.S. core producer prices unexpectedly fell in October to post their largest decline in more than four years, according to a government report on Tuesday that underscored the Federal Reserve's concerns about the low inflation environment.
Make Money in 2011: Your Savings
Savers, steel yourselves for another low-yield year. Interest rates on savings accounts, CDs, and money markets have been barely there for a while -- bank savings accounts are paying a paltry 0.2% on average, while money-market funds offer a dismal 0.04%.
Banks face $52 billion mortgage hit
The big banks could fork over $52 billion to make good on souring mortgages sold to investors, a government watchdog said.
The overshoot continues
It’s getting to be a habit, and an embarrassing one at that. For the fourth time this year, Mervyn King has had to write to the chancellor of the exchequer explaining why inflation is uncomfortably high. Making matters worse, the governor of the Bank of England will be busy with his pen for some time to come. According to the bank’s own forecast published in its Inflation Report on November 10th Mr King is likely to be writing yet more letters next year to George Osborne at the Treasury. 
Jail Saves $111K By Cutting Kool-Aid, Coffee
Just by removing Kool-Aid from the menu, the county saved about $26,000 a year.
Don't Underestimate Foreclosure Crisis, Watchdog to Warn
A congressional oversight panel is set to warn on Tuesday that a widespread problem of flawed and fraudulent foreclosure paperwork could upend the housing market and undermine the nation's financial stability, just as the issue is coming under greater scrutiny this week in Washington.
In India, the World's Second Largest School Lunch Program
A global hunger index released this month by the International Food Policy Research Institute ranked India 67th out of 84 countries on indicators like child malnourishment, child mortality and calorie deficiency.
One in Four Americans Is Enrolled in a Government Food Program
More Than 17 million Households Reported Having Difficulty Buying Food in 2009.

MONDAY
Retail sales jump 1.2% in October
Retail sales rose for a fourth straight month in October, the government reported Monday, signaling that consumers are keeping their wallets open as the holiday shopping period approaches.
Secret Walmart Survey Shows Inflation Already Here
There might not have been a second round of quantative easing if Bernanke shopped at Walmart. Here is why…
Budget cuts are putting your pets at greater risk if they are lost in New York City.
Greece admits breach of bailout terms as audit begins
Greece acknowledged Monday it would breach conditions for a new installment of a 110-billion-euro bailout as the IMF and European Union began an audit of the country's austerity measures.
Cotton Prices Surge; Will You Pay?
Cotton Costs Surge on Commodities Exchanges; Consumers Warned to Brace Themselves
Farm Economy Heading for Record Driving Surge in U.S. Cropland
The best second-half for commodities in a generation is pushing U.S. farm incomes and agricultural land prices toward record highs.
Democrats to push for $250 Social Security payment
When House Democrats return to Washington on Monday, a top priority will be putting a $250 dollar check in the mail to 58 million Social Security recipients.
APEC countries agree to launch massive new free-trade zone
The 21 members of the Asia-Pacific Economic Cooperation (APEC) agreed Sunday to 'take concrete steps toward realizing a Free Trade Area of the Asia-Pacific' in coming years.
The Washington Punch List
With the economy front and center, we're keeping a close eye on Congress and Obama. Stay tuned for updates on what they get done – and what gets punted.
Make Money in 2011: Your Home
Location, location, location. In the latter half of 2011 that adage should come back into vogue. But first, more declines.
New York state manufacturing plunges: NY Fed
New York state manufacturing unexpectedly plunged in November, the first contraction since July 2009 when the US economy exited recession, official data showed Monday.
Few Americans Would Use Cash Windfall to Start a Business
Chinese more likely than Americans, Europeans to invest in business
Economic Reports This Week
Data this week will include retail sales for October and business inventories for September (Monday); the Producer Price Index for October and industrial production and capacity utilization for October (Tuesday); the Consumer Price Index for October and housing starts for October (Wednesday); weekly jobless claims, the Philadelphia Fed manufacturing index, and leading economic indicators for October (Thursday).
Downturn Bites This Time for Beer, Tobacco
In past recessions smokers and beer drinkers kept puffing and quaffing. This time it could be different.

Economist Comments
FRIDAY
Obama's Economic Policies Unpopular Abroad, Too
Mr. Obama has chosen to serve the narrow interests of two domestic automakers and their union rather than the overall economic and strategic interests of the American people.
Europe Confronts Stein’s Law
If something cannot go on forever, it will stop. This aphorism appears particularly apt for the current Eurozone.
Washington is making the housing crisis even worse
Bad policy and a bad economy make it a terrible time to buy. Instead of pushing cheap credit, Uncle Sam must let the market lower prices.
GM IPO Continues Trend of Rewarding Those Who Failed
What do the General Motors and the nation's big banks have in common? They've both been bailed out by the federal government and, were it not for government largess, neither would be here today celebrating the automaker's largely successful stock offering.
Oh, Did We Ever Get Stuck-o
Groucho was right. And housing will remain depressed despite what government tries to do.
An IPO for Uncle
The government partnership with GM is a long way from over.
The Central Importance of Statistics
The Chinese government is extremely enthusiastic about managing their economy, and they put a lot of thought into it.  But the lack of good statistics on economic performance makes an already near-impossible challenge even more daunting

THURSDAY
U.S. Taxpayers Recover Billions in Sale of G.M. Stock
American taxpayers’ ownership of General Motors was halved on Wednesday, and billions of dollars in bailout money was returned to the federal government, as a result of the nation’s largest initial stock offering ever.

WEDNESDAY
Stimulus: Still Not Working!
Unbelievably, the administration and its allies keep insisting that a failed policy was a success.
U.S. Sets 50 Bank Probes
FDIC Steps Up Investigations at Failed Lenders; 'These Numbers Will Increase'
Body Scanners: The Naked Truth
The body scanners coming to your local airport provide marginal benefits — if any — in detecting weapons and explosives hidden on travelers. They aren't worth the cost in money — let alone in civil liberties.
You and Your Neighbor's Pork
The unspoken rule on Capitol Hill is, "Don't criticize my pork; I won't criticize yours." But regardless of how one feels about earmarks, lawmakers should pay closer attention to their colleagues' projects — because this pork isn't getting distributed equally. Vast regions of the nation are getting the short end of the stick.

TUESDAY
Why the 2011 outlook is dismal
Many of the tailwinds that helped the economy during the past 18 months will turn into headwinds, leaving us little hope but for 0%-2% GDP growth.
Data Suggest Economy Is Finally Improving
While there are still possible wrenches, recent reports show that the economy is at the very least flattening out.
Washington's Equal Pay Obsession
There's no epidemic of gender discrimination. So why is Congress proposing another law?
What caused the financial crisis
Expert points to government policy, not greedy bankers
The GOP Earmark Victory
The party takes a big first step toward public trust.

MONDAY
Economic Success Reliant On Private Firms
It's hard to remember now that in the 1980s Japan had the world's most-admired economy. It would, people widely believed, achieve the highest living standards and pioneer the niftiest technologies. Nowadays, all we hear are warnings not to repeat Japan's mistakes that resulted in a "lost decade" of economic growth.
Maybe It's Not Different This Time
Seen historically, and not just in the context of the last 20 years, valuation levels of the S&P 500 index may still be very elevated.

Blogs
FRIDAY
Raining on GM’s Parade
It’s General Motors’ big day. With a large and successful initial initial public offering, GM reduces the U.S. government’s ownership share and tempts bailout backers to declare victory. While GM has certainly done far better than we might have feared, questions remain about the company’s future and the verdict on the bailout.
Don’t Blame Ireland’s Mess on Low Corporate Tax Rates
Is there any reason to think Ireland’s competitive corporate tax regime is responsible for the nation’s economic crisis? The answer, not surprisingly, is no.
Our Economy Can’t Afford More GM “Success” Stories
Celebrating the company’s Wednesday initial public offering, President Barack Obama last night called his government takeover of General Motors a “success story.” “American taxpayers are now positioned to recover more than my administration invested in GM,” he said. Left unsaid is the fact that if the Obama Administration keeps selling their GM stock at the IPO price, the U.S. taxpayer will lose $10 billion on the deal, and that does not include the loans GM still owes, cash for clunkers, the Chevy Volt subsidies, or the millions of unseen costs the unprecedented intervention has inflicted on our economy.
NATO Countries Meet in Lisbon
NATO has become an end in itself, rather than a means to an end — security — that could command support on both sides of the Atlantic, and unpopular one, at that.
What to Expect From Holiday Sales
Data show that most consumers will be cutting back this season, but upper-income shoppers will actually be kicking it up a notch.

THURSDAY
The Obama Administration’s Self-Destructive Trade Policy
If U.S. trade negotiators want to maintain their ability to negotiate bilateral agreements, they should quit demanding one-sided concessions from South Korea.
What I Learned From the Crisis
I still think that technocratic economists select better monetary policies than elected politicians would.  But after 2008, that's not saying much.
Does The FDA Really Need More Power?
The reality is that there is little known medical evidence that caffeinated malt beverages are less safe than other alcoholic drinks. But that fact is no defense against current FDA power to ban products it deems unsafe for the American people.

WEDNESDAY
Paycheck Fairness Act Will Fatten Paychecks for Trial Lawyers, Not Women
The most recent economic research suggests that paycheck fairness is already a reality, and therefore women’s pay won’t change much if the “Paycheck Fairness Act” passes. There is, however, one group whose paychecks might get a lot fatter if new legislation goes into effect: trial lawyers, an important point made by June O’Neill in the Wall Street Journal (“this new legislation would simply provide a feast for lawyers”), AEI’s Christina Hoff Sommers recently in the New York Times, and last week by the Chicago Tribune.
Let Markets Civilize Airport Security
Privatization is the solution to such conflicts.
Lame-Duck Menace: The Paycheck Fairness Act
Let’s assume that John and Jane have identical characteristics (education, work experience, etc.) except for gender. ABC Company makes offers of employment to John and Jane on the same day, for the same position, for the same starting salary: $45,000. Jane accepts the offer, but John negotiates the salary, and ends up with $50,000. Under the current equal pay laws, there’s no problem; John is earning more because he negotiated and Jane did not. Makes sense, right? Under the Paycheck Fairness Act, ABC Company would be guilty of gender discrimination.
Free-Market Poverty Solutions: A Better Poverty Measurement Is A Good Step
Missing in news reports on the recent release of the United Nations 2010 Human Development Report is any mention of a significant addition to the report.  For the first time, the HDR includes the Multidimensional Poverty Index, which measures poverty based on components other than income and GDP.  The Index rates countries’ poverty levels based on health, education, and living standards, including elements such as nutrition, child mortality, years of schooling, access to water, electricity, and more
Reid’s Lame Duck Energy Bill: More Money for Special Interests, Higher Costs for the Rest of Us
It’s highly unlikely that we’re going to see any large energy bills like a cap and trade or renewable electricity standard passed during the lame duck session, but that isn’t stopping Senator Harry Reid (D–NV) from moving forward with bad energy policy.

TUESDAY
GDP comparisons: Numbers don't lie
The numbers are clear: some nations have a Gross Domestic Product (GDP) equal to that of nations with 10 or 100 times as many people. Why?
Seeing Like a Central Planner
The main part of my argument is that government workers are not underpaid. I would like to make 2 points to suport this.
New survey reveals soaring rates for some store credit cards
Signing up for a store credit card can seem like a good way to survive the holidays. But these cards often come with significant gotchas, as a study released this week by Representative Anthony Weiner (D-Queens and Brooklyn) again proves. Surveying credit card offers from 35 major retailers in New York City, the inquiry found rates as high as 29 percent, or nearly double that of average credit cards. Radio Shack, Best Buy, Staples, Home Depot, and Sears were the five worst offenders.
Abolish the TSA
Art Carden has an excellent article on Forbes.com in which he advocates abolishing the TSA. I give a segment on this in my econ class when I discuss, at length, Hayek's "The Use of Knowledge in Society." How does Hayek's article apply?
A Subsidized Spokesman
This CNBC interview of a subsidized farmer, along with my friend Sallie James of Cato, is interesting for a number of reasons.  The one I wish to flag here is the farmer’s insinuation that Sallie’s (and Cato’s) opposition to farm subsidies and tariffs is questionable because that opposition allegedly reflects nothing more that Cato’s funding.
The economics of natural disasters
A new report from the World Bank asks how much suffering is due to natural hazards, and how much due to human decisions.
An Iffy Outlook For Holiday Sales
Most consumers are of two minds--they want to see the economy improve and they also want to see rock bottom prices (50% OFF) on the things they will be buying for the holidays. The contradiction is one most of us live with, and it's one reason why retailers can't seem to get traction.

MONDAY
Why Does American Exceptionalism Matter?
The reality of American exceptionalism was a theme on the campaign trail, especially among conservatives. Americans agree that the United States is a great nation, but why is America exceptional and why does it matter?
Productivity Changes May Boost Labor-Market Prospects
U.S. companies are getting better at boosting their productivity in tough economic times. That could mean recessions will be harder on millions of American workers, but also that the jobs outlook in the current recovery is better than it seems, according to a new paper.
White Gold
My and Russ’s colleague Larry White – who knows as much about the history and theory of money and banking as anyone alive – would like to see a debate over the gold standard that features at least one strong proponent of that means of mooring money.
A Failing Agenda Fails
President Barack Obama returned from Asia yesterday, and the headlines greeting him home are not kind. “Obama’s economic view is rejected on world stage,” reads The New York Times; “Obama, weakened after midterms, reveals limited leverage in failed S. Korea deal,” says The Washington Post; and ABC News declares, “President Obama Falls Short on G-20 Goals: Failure to Deliver on Key Trade Goals Reveals Limits of American Influence.” These headlines are only half-right: Yes, President Obama did fail to deliver on his agenda in Asia, but the culprit is not declining American influence. The problem is a losing agenda set by the President himself.
Robert Frank on Inequality
The latest EconTalk is Robert Frank talking about inequality.
Unofficial Problem Bank list increases to 898 Institutions
Here is the unofficial problem bank list for Nov 12, 2010.
Schedule for Week of November 14th
Two key housing reports will be released this week: October housing starts (Wednesday) and November homebuilder confidence (Tuesday). Also October retail sales will be released on Monday, and the Fed will release the October industrial production and capacity utilization report (Tuesday).
Half the world’s population lives in 6 countries
A new series looking at Fun Facts! about US and World economies. I am starting with something simple: In 2009, 50% of the world’s 6.8 billion people lived in just 6 countries: China, India, United States, Indonesia, Brazil and Pakistan.
Crushing Entrepreneurs
Clueless regulators continue to pass new rules, despite the damage done by mindless enforcement of the old ones.

Reports
FRIDAY
A Short United Nations To-Do List for the New Congress
As stewards of U.S. taxpayer dollars, Members of Congress should be vigilant in scrutinizing the U.N. budget to guard against impropriety and waste and insist that U.S. interests are being advanced through U.S. contributions to the U.N. system.

THURSDAY
Effects of the Financial Crisis and Great Recession on American Households
We find that the effects of the recession are widespread: between November 2008 and April 2010 about 39 percent of households had either been unemployed, had negative equity in their house or had been in arrears in their house payments. Reductions in spending were common especially following unemployment. On average expectations about stock market prices and housing prices are pessimistic, particularly long-run expectations.
Unemployment Insurance Benefits and Family Income of the Unemployed
The Congressional Budget Office (CBO) examined the role of UI benefits in supporting the income of families in which at least one person was unemployed at some point in 2009. The analysis addressed how that role varied with the amount of family income and the number of weeks of unemployment for all family members. CBO also examined how the poverty rate and related indicators of financial hardship would have differed in the absence of the UI program.
A New Role for the FDA in Food Safety
If the FDA is to survive and stay effective, it must move to reinvent itself as a modern organization, perhaps a new kind of bureaucracy. It must go back to its original focus on science and integrate itself into new market organizations and food safety challenges in a much more innovative way.

WEDNESDAY
Pell Grant Increase Would Not Solve the College Cost Problem
During the 2010–2011 school year, 8.3 million college students received an average of $3,865 in Pell grant funding at a cost of more than $32 billion, the maximum award being $4,860. The Obama Administration and some Members of Congress argue that another $5.7 billion is needed in order to avoid a funding shortfall and a reduction in the maximum grant award of 15 percent.
Congressional Oversight Panel Examines "Robo-Signed" Foreclosures and Other Mortgage Irregularities
The Congressional Oversight Panel today released its November oversight report, "Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation." The Panel reviewed allegations that companies servicing $6.4 trillion in American mortgages may in some cases have bypassed legally required steps to foreclose on a home. The implications of these irregularities remain unclear, but it is possible that "robo-signing" may have concealed deeper problems in the mortgage market that could potentially threaten financial stability and undermine foreclosure prevention efforts.

TUESDAY
The U.S. Generalized System of Preferences: Helping the Poor, But at What Price?
The preferential market access given by the United States to most developing countries through the Generalized System of Preferences yields real benefits for the covered countries and for U.S. consumers and firms importing the goods. Americans save hundreds of millions of dollars a year from duty-free imports, and many poor people abroad have benefited from preferential access to a rich market. Against these benefits, Congress must consider the significant costs of unilateral preference programs — to the preference recipients themselves, to excluded developing countries, and to the world trading system in general — when the program expires at the end of this year.
October Retail Sales Jumped on Strength in Auto Sales
Retail sales increased 1.2 percent in October, buoyed by a 5.0 percent surge in auto sales. While core spending was more modest, today’s report is another positive sign hinting at a strong holiday shopping season.

MONDAY
Economic Group
Weekly Economic & Financial Commentary