Friday, January 7, 2011

Budget News Jan. 3 - 7

Congress unlikely to extend hand to ailing states
States will continue to face substantial deficits over the next few years, but they will have to get by with the end of stimulus spending and less financial help from the federal government.
Pentagon seeks $120B in war funds
The Pentagon is expected to seek in the range of $120 billion for overseas war costs next year, a significant drop from 2011 but still a stubborn strain on deficit-reduction efforts.
House GOP Challenges Obama on Debt Limit
In power scarcely a day, House Republicans bluntly told the White House on Thursday its request to raise the nation's $14.3 trillion debt limit will require federal spending cuts to win their approval, laying down an early marker in a new era of divided government.
States see biggest revenue drop in 60 years
In a sign of the sluggish economy’s devastating impact, state government revenue across the country dropped by nearly one third in 2009 - the sharpest decline in 60 years, the Census Bureau said in a new report.
House Budget Chief Ryan Says Republicans Won't Bail Out States in Default
Congressman Paul Ryan, the Budget Committee chairman in the U.S. House of Representatives, said Republicans don’t intend to save states from debt defaults.

Irish Government Reports Budget Deficit Fall In 2010
The department of finance said the budget deficit at the end of 2010 of EUR18.7 billion, compared with EUR24.6 billion at the end of December 2009, was in line with previous government forecasts.
US Gov't Seen Hitting Debt Limit in March or April
Hitting the limit could force shutdowns of federal offices, as happened in 1995, threaten payments for Social Security and other federal benefits, or even cause a default on federal debt payments.
N.Y. governor unveils emergency debt plan
The Conference of State Legislatures says the 50 states face a combined $82 billion in deficits in their 2012 fiscal years, as high unemployment continues to undermine a weakening tax base across the country.

GOP's first spending targets: Bottled water on the line
The Republicans about to take over the House have big plans to try to cut federal spending. First on the chopping block: Congressional travel, postage, staff salaries and other office expenses.
House Democrats Attack GOP Budget Rules
The new “cut-as-you-go” rules would also allow for exceptions until a budget resolution is enacted, and some Democrats, including Rep. Chris Van Hollen, D-Md., worry it would be used to aid Republican plans to repeal the health care law.
House Budget Chief Wants Concessions Over Debt
The incoming budget chief in the House of Representatives on Wednesday said he will demand spending concessions from the Obama administration in exchange for any increase in the national debt ceiling.

GOP sets up huge target for budget ax
The promise to cut $100 billion this fiscal year — in effect, taking government operations to 2008 levels — would mean cuts of more than 20 percent across the board from the $477 billion that Congress allocated for such programs in the 2010 fiscal year, which ended Sept. 30.
States in fiscal mess: N.Y. governor cuts his pay
New York's new governor, one of several greeted by billions of dollars in budget gaps, acted to cut his salary Monday amid reports he will freeze the pay of most other state workers.
Pentagon to Detail Savings, Cuts
US Defense Secretary Robert Gates is expected to announce as early as Thursday about $100 billion in savings for the Pentagon and cuts to some weapons programmes, sources said on Monday.
Strained States Turning to Laws to Curb Labor Unions
Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.
Illinois Has Days to Plug $13 Billion Deficit That Took Years to Produce
The legislative session that began today as the House convened will take aim at a budget deficit of at least $13 billion, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions.
Cost of Food Safety Bill is Challenged by Republicans
The administration's new food safety inspection system is meeting Republican resistance over the costs of the $1.4 billion bill over 5 years.

White House Warns Failure to Raise Debt Ceiling Would Mean Economic 'Crisis'
The $13.9 trillion national debt is creeping closer to its $14.3 trillion ceiling, and a vote to increase that limit is expected in the spring.
Congress Targets Spending
Republicans, Poised to Take Control of the House, Put Budget in Cross Hairs.
Debt ceiling a major test for GOP
Days before Republicans take control of the House, the debate over whether to raise the debt ceiling continues to loom over the nation’s capital.
The war over spending
The fight over spending is likely to come to a head by March. That's when temporary funding for the government expires and when the country's debt load will be very close to surpassing the legal debt limit.

Economist Comments
DORFMAN: $100 billin in cuts easy for Republicans
Surely, Republicans in Congress can find $100 billion to cut out of the $1.25 trillion of new spending that has existed for less than 10 years.
EDITORIAL: Only $279,950,956,705.59 left to spend
The Congressional Budget Office estimates that America already is on track to quadruple interest payments to $778 billion within 10 years. Unfunded liabilities in Social Security and Medicare amount to a staggering $47 trillion, according to the latest reports by trustees. Combined with the public debt, this amounts to $660,000 in liability for each individual who paid taxes to the federal government last year.

A Challenge for the New Congress
By ceasing to authorize expenditures from the Highway Trust Fund, and ending the 18-cent federal gasoline tax, Congress could let the trust fund expire and turn highway spending authority back to the states-along with the ability to levy the fuel tax for their own coffers.
Momentum Builds for Corporate-Tax Overhaul
To be sure, many companies don't pay that top rate. The panel recommends a federal rate of 20%.
Two Cheers for Rivlin-Ryan
How a modest plan shows progress in Washington is possible.
The Deficit's Stubborn Facts
Every additional $100 billion borrowed this year adds $43 billion in interest over the next decade, and much of it will go to foreigners.
Where is the Deficit Czar?
It is remarkably foolish for anyone to play down the bond market’s reaction to the ballooning deficit and out of control government spending. Historically that reaction has been sudden, violent and severe.

Hubbard: Fiscal Reform Must Come from Spending Cuts
Economist Glenn Hubbard expects gridlock in Washington when the new Congress convenes, argues for tax reform including a scaling back the home-mortgage interest deduction and other popular tax breaks…
We're About to Go Crashing Through the Debt Ceiling
It took just seven months to go from $13 trillion to $14!
Cut spending to restore certainty
...spending is due to double — from 20 percent to 40 percent. So taxes would need to more than double just to stay even.
Examiner Editorial: Using the debt ceiling for a powerful message
So long as the federal government continues to spend far beyond its means, the nation's economy will remain mired in a recessionary stasis.
Municipal Debt Threatens US Economy
Local and state debts are large enough to derail the economic recovery.

Rules for Smaller Government
In their new rules, Republicans are giving paygo the heave-ho and substituting a rule called "cut as you go." From now on, increases in mandatory spending—for new or existing entitlements—will require that spending be cut by an equal or greater amount elsewhere in the budget.

The Illogic of America's Debt Ceiling
"One of the peculiar embarrassments of the American political process is the fact that Congress votes separately on the deficit and debt, as if they were two different decisions."
Thoughts on the Debt Limit Debate
Congress has voted to increase the limit numerous times over the decades, including 10 times since 2001.
Paul and Paul: The Government Is Bankrupt
Rand noted that they are working on a bill to cut $500 billion from the budget. Rand Paul notes that four years ago Senator Obama refused to extend the debt ceiling because of Bush’s financial recklessness.
Republican $100 Billion Spending Cut
The important thing is that Congress needs to start cutting all types of spending right away.

Sen.-Elect Rand Paul: $50 Billion in Spending Cuts Not Good Enough
...responding to the New York Times report that Republicans are backing off their 2010 campaign pledge to reducing spending by $100 billion in the first year.
Is It Insane to Want to Stop the Government from Borrowing More Money?
The statutory debt limit was instituted in 1939 as a way to limit congressional spending (as a way to affirm its constitutional mandate to control spending). The idea was to signal to lawmakers that they couldn’t spend and borrow above a certain point. Unfortunately, lawmakers didn’t understand this signal and, since legally the debt limit does not alter the spending and revenue policies that determine debt and deficits, they continued to spend more as the debt limit grew.
Eileen on Maryland’s Budget
Maryland has struggled to balance its budget for much of the last decade. 2015 the structural deficit is projected to grow to $1.65 billion.

No more sacred cows, Congress: Put everything on the budget-cuts table
Republicans, it's time to put defense spending on the table. Democrats, take down the walls around Social Security and Medicare.

House GOP cuts $35 million from congressional budget
House Republicans say the $35 million that will be saved by slashing office budgets is $10 million more than they expected.

When Do Public Sector Pensions Run Dry?
...Business Insider generated an interactive map of when state pension plans run dry.


Employment News Jan. 3 - 7

103K new jobs in Dec. point to slow, steady growth
The nation's economy added 103,000 jobs in December and the unemployment rate dropped to 9.4 percent last month, its lowest level in 19 months.
Poland's jobless rate jumps to 12.3 percent
Poland's Labor Ministry says that unemployment jumped to 12.3 percent in December from the 11.7 percent the previous month.
U.S. Adds 103,000 Jobs in December, Unemployment at 9.4%
Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it will take years for the labor market to heal.
Bernanke: Recovery on Track But Not Enough to Create Jobs
The U.S. economy may be finally hitting its stride, even if growth remains too weak to put a real dent in the nation's jobless rate, Federal Reserve Chairman Ben Bernanke said Friday.
Dollar Fluctuates as Employers Added Fewer Jobs Last Month Than Forecast
The dollar fluctuated against major counterparts as the U.S. payrolls report showed employers added fewer jobs last month than economists forecast while the unemployment rate dropped.

Jobless claims rise, but positive trend intact
More Americans applied for unemployment benefits last week, but not enough to reverse a downward trend that suggests employers will accelerate hiring in the coming months.
2011: Happy New Job!
"Hire more workers" appears to be a popular New Year's resolution for employers this year.
Jobless claims rise above 400,000 again
The number of Americans filing for their first week of unemployment benefits rose 18,000 to 409,000 last week.
More people apply for unemployment aid last week
More people applied last week for unemployment benefits, one week after applications fell to the lowest level in more than two years.
Where the Jobs Aren't: Grappling with Structural Unemployment
You've read the good news. The official unemployment rate has leveled off. But that is like saying of a patient on life support that at least he isn't losing any more blood. Job creation still isn't what it should be, and the time it takes seekers to get a new job still hovers around a record 35 weeks.

Strong signs of life for the job market
Private sector payrolls soared in December while downsizing sank, two separate reports showed Wednesday in a strong indication of a brightening U.S. jobs picture.
Planned Layoffs Down in 2010
The number of planned layoffs at U.S. firms fell in December to the lowest level since 2000, while the combined yearly total was the lowest since 2007, a report said on Wednesday.

U.S. changes how it measures long-term unemployment
So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.
Initial Jobless Claims Fall Steeply But Could Be Seasonal Fluke
Drop continues downward trend, but could reflect temporary seasonal factors.
2011: A hiring boom, even at 9% unemployment
After three years of economic pain, a growing number of economists think 2011 will finally bring what everyone's been hoping for: More jobs and a self-sustaining recovery.
Dollar General to hire 6,000
Dollar General plans to create 6,000 new jobs in the next year, the discount retailer said Monday

Economist Comments
How to Create Jobs – Without Increasing the Deficit
If Congress and the White House do embark on major tax reform, as appears increasingly likely, they may finally get around to one of the most promising and yet least talked-about actions to promote private-sector job creation. Lost amid all the controversy about extending the Bush tax cuts is the fact that slashing the corporate income-tax rate could be one of the greatest elixirs for long-term job growth, and it is one that would not require any additional government spending and need not add a cent to the budget deficit.
Unemployment Claims Update
While this year's end-of-year rise in claims is better than the past two years, the numbers are still a lot worse than during good economic times.
Help Wanted? Why Obama Doesn't Need a Jobs Czar
Ultimately, bureaucratic shuffles affect the bureaucracy, not the economy. A jobs czar might change the power dynamics among people working at the White House, but not the power of the White House. Because the guy with the most power lives there, too.

Labor's Coming Class War
Private-sector union workers begin to notice that their job prospects are at risk from public-employee union contracts.

Where Are All the Jobs?
The figure of 15 million unemployed reported by the government and reiterated by the corporate media is one of the biggest distortions ever.

Unemployment: Why Don't Employers Fish More?
I am trying to sort out my thinking on unemployment in the Recalculation Story. I think that a basic question is this: when workers lose jobs because a sector needs to shrink, this creates a pool of unemployed workers. Why don't firms fish in that pool? More thoughts below.
Unemployment Rate Drop Discussion
The deeper data suggest this might be a continuation of falling labor force participation rates and discouraged workers. This is the bad news view.
Why Did the Unemployment Rate Drop?
The U.S. jobless rate dropped substantially to 9.4% in December, but the government’s broader measure of unemployment dropped at a more modest pace to 16.7%, highlighting the problem of the long-term unemployed.
Americans Are Fleeing Obama’s Crony Capitalist Economy
Today the Bureau of Labor and Statistics released its monthly jobs report showing that the U.S. economy added only 103,000 jobs this December. With the unemployment rate now at 9.4%, this marks the 20th month in a row that the unemployment has been over 9 percent, a post–World War II record. You are going to hear a lot of noise from the White House about how this drop from a 9.8% unemployment rate to 9.4% means the economy is in a strong recovery. This is false.

Private Sector Employment Growth Triples in December?
As noted at CalcRisk, the official Labor Dept. employment numbers are expected to be more modest, with a net increase of 140,000 payroll jobs in December. That is still heartening news, and would also be several times larger than previous months.
Record-breaking job creation in December, reports ADP
Employment added more jobs in December 2010 than in any month of the past decade, as private employers – mostly smaller service-providing firms – added almost 300,000 new jobs.

City Unemployment: Little Progress
Most cities made little progress on the jobs front in the twelve months ended November 2010, according to new data from the Labor Department.
Worst. Recession. Jobs. Recovery. Ever.
We're more optimistic that 2011 will see a much stronger recovery in jobs than did 2010, but then, it would be hard for it not to do so, wouldn't it?

Labor Market Commentary
Two pointers from the indispensable Mark Thoma.

Weekly Initial Unemployment Claims below 400,000, Lowest since July 2008
In the week ending Dec. 25, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 34,000 from the previous week's revised figure of 422,000. The 4-week moving average was 414,000, a decrease of 12,500 from the previous week's revised average of 426,500.
Has Government Grown Since the Recession Started?
Many conservatives and small-government advocates have made the case that the number of government employees has increased or, at least, that they are in a better situation than private sector employees during this recession. Paul Krugman of the New York Times wants them to admit that it is not true.


Monetary News Jan. 3 - 7

Ryan Will Push to Limit Fed Oversight to Inflation Only
A top Republican on Thursday said he will push for legislation paring back the Federal Reserve's mandate to focus solely on controlling inflation, not ensuring full employment.
Busch: Fed to Stay Course, Markets to Correct Course
On February 7th, Bernanke will address the National Press Club. It will be the first time since the financial crisis two years ago that he’s taken questions from the press. This will provide another opportunity for the Chairman to explain the central bank’s position directly to the voters and face questions over monetary policy.
China Will Back Europe, Euro With Currency Reserves, Official Yi Pledges
Europe and the euro will remain among the most important areas of investment for China’s world-record $2.65 trillion of foreign-exchange reserves, a central bank official said in the nation’s latest show of support.
Bernanke urges Congress to adopt sweeping deficit plan
Federal Reserve Chairman Ben S. Bernanke on Friday urged Congress to act to bring down trillion-dollar deficits that he warned threaten the nation's economic future. He said that sweeping plans offered last month by President Obama's deficit commission and other bipartisan groups offered "useful starting points for a much-needed national conversation about our medium- and long-term fiscal situation."

Economic Recovery Not Strong Enough to Alter Stimulus: Fed
Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn't improving fast enough to make a noticeable dent in unemployment, minutes of the December meeting show.
World Bank issues its 1st yuan bonds in Hong Kong
The World Bank said buyers of its 500 million yuan ($76 million), two-year bond were mainly Hong Kong-based financial institutions, companies and wealthy individuals. It said the money will go into its general fund, rather than being raised for a specific purpose.
Fed members split over economic outlook
Policymakers at the Federal Reserve were divided in their outlooks for the economy, suggesting that the central bank is unlikely to change direction any time soon.

Biggest Financial Decision in 2011 Is European:
What’s the biggest financial decision facing Europe in 2011? Easy. The choice of a new president at the European Central Bank.

US dollar seen rising in 2011 after rough 2010
Never mind the lackluster economy, the huge trade deficit or the government's piles of debt: The U.S. dollar is still expected to outperform most of the world's major currencies next year.
China again hikes interest rate in inflation fight
The People's Bank of China said on its website that it is raising the benchmark interest rate by a quarter of a percentage point beginning Sunday. The move increased the one-year lending rate to 5.81% and one-year deposit rate to 2.75%.

Economist Comments
Fed Holds the Reins Over the Stock Market, Economy
While many economists say the stock market is a discounting mechanism that leads the economy, both the market and the economy are actually mechanisms that respond to changes in macro liquidity.
Is the Fed to Blame for Soaring Global Oil Prices?
The current spike in oil futures, say Birol and Jakob, is a product of excess supply — of speculative dollars, billions of which are flowing into U.S. commodities markets.

Is the Market Ready for a 10% Rally in the Dollar?
And if, at a minimum, a 10% rally in the dollar played out, would that translate into a long overdue 10% correction in the indices?

Do Inflation Expectations Drive Consumption?
After proponents of the Federal Reserve’s second round of quantitative easing (QE2) abandoned the argument that QE2 would spur growth by bringing down interest rates, the new defense became “we intended for rates to go up all along, as a result of increased inflation expectations.”

Five Things You Need to Know: Inflation vs. Deflation... Still
That there still exists an ongoing debate about inflation or deflation pains me. Clearly, I have failed you.

Why is the euro so expensive?
Last year, the euro was just about the worst-performing of the thirty-odd “major” currencies tracked by Bloomberg. So why isn’t the euro much cheaper? Perhaps foreign exchange market believe that the worst of the euro-zone crisis is over, that the troubles can be contained, or that Europe will somehow muddle through as it did last year.

Show me (the effect of) the money
It is clear that QE has had a much greater impact on the monetary base (doubling it in the autumn of 2008) than on other measures such as credit growth.

U.K. Think Tank Sees 20% Chance Of Euro’s Survival
Europe’s common currency, battered for more than a year by a sovereign debt crisis, is unlikely to survive the next decade in its current form, the Center for Economics and Business Research warned Friday.

Was the Euro doomed from the start?
In a recent interview I was asked, 'will the Euro survive?'  I responded, 'I hope not.'
Estonia embraces euros
On Jan. 1, 2011, Estonia becomes the 17th euro country. What does this mean for the former Soviet republic – and for the euro?


Tax News Jan. 3 - 7

Proposed Tax Increase Bigger Than Expected
Top Illinois Democrats have agreed to push a plan that would temporarily boost income taxes by 75 percent and double cigarette taxes, Senate President John Cullerton said Thursday.
The Coming Talk on Tax-Reform: What's at Stake
Calendar-wise, we're overdue for a code clean up; they've typically arrived every 10 or 15 years but there hasn't been big tax reform legislation since 1986...
Tax reform jumps the line in Senate
Tax reform zoomed up the list of Senate priorities on Thursday, with both Senate leaders on board with examining the code.

D.C.'s nickel-a-bag fee nets city $2 million so far
City officials had guessed the fee would raise $3.5 million to clean up the city's Anacostia River before the end of 2010.
Tax Code Overhaul Likely to Wait for 2012
Major surgery of the tax code is one of the ideas to trim the $1.3 trillion budget deficit that both Republicans and Democrats agree is needed.
I.R.S. Watchdog Calls for Tax Code Overhaul
...Americans spent 6.1 billion hours preparing their returns each year — the equivalent of 3 million employees working full time.

Brace for Higher State Taxes
So at the end of last year we told you the good news: Your federal income taxes are not going to go up. But here's the bad news: your state taxes most likely will, if they haven't already.

What to Expect for Finances in 2011
Happy New Year! Your Tax Refund May Be Delayed.

50 million taxpayers must delay filing - IRS
The IRS said that it needs until mid- to late-February to reprogram its processing systems because Congress acted so late this year cleaning up the tax code.
State tax gains and losses
State tax collections rose in the first nine months of 2010.
Obama Likely to Pursue Corporate-Tax Cut, Way to Pay for It
All signs point to President Barack Obama pursuing far-reaching changes to the corporate income tax, seeking to lower one of the highest statutory corporate-tax rates in the world by eliminating deductions, credits and loopholes.
Your Medicare taxes won't cover what you'll cost
...a newly updated financial analysis shows that what people paid into the system doesn't come close to covering the full value of the medical care they can expect to receive as retirees.

Economist Comments
Why the Bush tax cuts overpromised and underdelivered
For many of the people whom President Obama calls "rich," the Bush tax cuts didn't make much difference. That's largely because of the Alternative Minimum Tax.
Toward A New Economic Consensus
Studies by professors from Harvard, Columbia, University of Chicago, University of Maryland, Stanford, University of California, UC Berkeley, the University of London and the London School of Economics now provide a growing body of empirical evidence in favor of the primacy of reducing tax rates combined with spending constraint to stimulate economic activity and increase employment.
Stimulus Now but Slowdown Later
What can we expect from such a $100-billion-plus payroll tax stimulus? A small and short-lived, miragelike economic recovery.
DAVIES: Payroll tax-cut cacophony
Social Security's claimed safety comes from the fact that Social Security surpluses are invested in Treasury bonds. However, the only guarantee you have is that Social Security surpluses will be invested in Treasury bonds. There is no guarantee that Social Security will pay you the money it invests.

Biggest problem facing taxpayers? The tax code
The time to reform the tax code was long before now. But that’s no reason why President Obama and Congress shouldn’t get started.
New Plastic Bag Tax Coming to a Store Near You
According to, Virginia House of Delegates member Joseph Morrissey will introduce legislation next week to tax residents 20 cents for every plastic bag they receive at a grocery store or retailer.

Why the Payroll Tax Cut May Not Be Such an Effective Stimulus
A typical worker will receive around an extra $800 this year.
Secondary Sources: Tax Collection, Taxes and Soccer, Fed Watch
David S. Hilzenrath reports on research criticizing the IRS’s collection tactics.

A tax-rise to start the Brits' new year
...UK value-added tax—or VAT as this form of sales tax is commonly called—rises from 17.5% to 20%.

Assorted Links
Worried about revenue, local government fights ABC privatization in North Carolina…
Will The Tax Bill Stimulus Create Economic Growth?
When you net it all out, the total new tax relief for taxpayers is $229.7 billion. Compare that to a $13.3 trillion economy.
Social Security Funds and the Payroll Tax Cuts
Allan Sloan, editor-at-large of Fortune magazine, had a good piece in the Washington Post on Monday about how the cut in payroll taxes exposed the Social Security trust funds for what they are: accounts with IOUs, some of them even made of thin air.

Beware of a VAT Attack on the American Economy
A widely anticipated federal budget crisis could provide an opportunity for big government proponents to slip the nation a tax-hike mickey in the form of a new VAT layered on top of the existing tax system.

Health Care News Jan. 3 - 7

White House: Health Care Repeal Won’t Happen
In case it wasn’t already clear, the White House announced Thursday that President Barack Obama would veto legislation aimed at repealing his signature health care overhaul.

Recession slowed health care spending
Americans spent $2.5 trillion on health care in 2009, or $8,086 per person.
Health-care reform in cross hairs: Could it survive without individual mandate?
Both Republicans and some judges say the health-care reform individual mandate – that all Americans must buy health insurance – is unconstitutional. If they are right, is President Obama's signature achievement doomed?
CBO: Health repeal will increase deficit
Congress's official scorekeeper said Thursday that the House Republicans' first major bill — repealing last year's health care law — would actually increase deficits by about $145 billion over the next eight years.
Obamacare Goes Under the Knife
In the nearly 10 months since the Democrats' health care bill became law, bureaucrats have been feverishly writing new regulations, and the first wave of reform has arrived.
Cantor Holds Onto Hope Senate Will Act on Repeal
Any attempt to repeal health care reform -- the Democrats’ signature policy achievement -- is expected to sputter fast in the Senate where they’re still in charge. But House Majority Leader Eric Cantor is holding out hope.
Reform law costs insurance brokers
Pay for health insurance brokers will be slashed by more than 50 percent in some cases because of new health reform rules, according to documents obtained exclusively by POLITICO.
Health Spending Rose in ’09, but at Low Rate
Total national health spending grew by 4 percent in 2009, the slowest rate of increase in 50 years, as people lost their jobs, lost health insurance and deferred medical care, the federal government reported on Wednesday.

Hospitals Settle With DOJ in False Medicare Claims Case
Seven hospitals in six states have agreed to repay more than $6.3 million to settle allegations the facilities filed false claims to Medicare.
States grapple with health care
All states — including those led by Republican governors who campaigned against reform — have implemented at least some of the new law’s provisions. And every state has now received federal funding from the Patient Protection and Affordable Care Act. The action in the states is a sharp contrast to the scene on the Hill Tuesday, where familiar foes rehashed old rhetoric.
Health care reform pays big dividends
Health care reform was a big job in 2009, and it paid very well for some executives: Nine of 12 CEOs of health care trade associations made $1 million or more.

US House Republicans move to repeal Obama healthcare
Republicans in the U.S. House of Representatives plan to pass a bill next week to repeal President Barack Obama's overhaul of the U.S. healthcare system, a senior party aide said on Monday, but the effort is widely expected to fail in the Senate.
House GOP Health Care Repeal Could Pick Up a Few Dem Votes
Only a few moderate or conservative Democrats remain left in the House of Representatives come opening day on Wednesday, but expect at least a chunk of them to vote in favor of the Republican plan to repeal the health care law.
Wisconsin to Challenge Health Care Overhaul
One more state is expected to file suit challenging the constitutionality of the health care overhaul law.

6 states to watch on health reform
Health reform repeal efforts will generate a lot of noise in the opening weeks of the 112th Congress – but the real action on health reform is going to ramp up outside the Beltway in state capitals
Health care reform 101: What will kick in Jan. 1?
Some parts of health care reform are already phasing in. Here nine key provisions that take effect Jan. 1.
Health care in the hot seat again
Republicans on Sunday demonstrated a united front against health care reform passed by the Obama administration, an issue that is sure to fan the flames on the left and right when a divided Congress returns Wednesday.

Economist Comments
Obamacare: An Unacquired Taste
Throughout the debate over health-care reform, Democrats constantly told us (and themselves) that if only they could explain the bill better, Americans would come to understand how good it was for them.
ObamaCare Rewards Friends, Punishes Enemies
The administration waives allies through the health law's onerous restrictions.

The aspirin tax
Forty million Americans started paying higher taxes last weekend because of Obamacare. That's enough to make anyone feel ill, but it's only a start.

Time to Play Dr. No
Medicaid is bleeding taxpayers and wrecking New York's health-care sector.
Schumer: Health care foes should forego coverage
New York Senator Chuck Schumer is pushing Republican members of Congress who oppose last year's health care legislation to decline health coverage for themselves and their families.
Medicare isn't mandatory
Federal power to order coverage is challenged.

Upton Predicts House Health Care Repeal Bill in January
The incoming chairman of the House Energy and Commerce Committee said Sunday that House Republicans will probably move to repeal President Obama's health care reform law in January.
A New Year and a New Direction for Health Care Reform
The Patient Protection and Affordable Care Act became the law of the land in 2010, but debate over its existence and implementation will rage on in the New Year. The law’s serious policy flaws are already impacting health insurance and costs, but these are part of a deeper and broader issue: the proper role for the federal government in Americans’ health care.

CBO’s Preliminary Analysis of H.R. 2, the Repealing the Job-Killing Health Care Law Act
Because CBO and JCT estimated that the March 2010 health care legislation would reduce budget deficits over the 2010–2019 period and in subsequent years, we expect that repealing that legislation would increase budget deficits. The resulting increase in deficits projected for fiscal years 2012 through 2019 is likely to be similar in size to—but not exactly the same as—the reduction in deficits that was originally estimated to result from the enacted legislation.
Take CBO Report With a Grain of Salt: Obamacare Repeal Would Not Increase Deficits
Next week, the House of Representatives will vote on H.R. 2, a measure to repeal Obamacare in its entirety. The Congressional Budget Office (CBO) today released a report stating that repealing the health care law would increase the deficit by $145 billion between 2012 and 2019.
Recession Accelerates Shift Towards Greater Control of Washington in Health Care
While overall health care spending slowed in 2009, it is the underlying trend that is more troubling: the continuing decline in private coverage and the steady increase in government health care. These trends will only accelerate under Obamacare.

Reality Check: Repeal of Obamacare Would Not Increase the Deficit
Though the Congressional Budget Office (CBO) projected that the health law would create $124 billion in savings, the CBO is required to make unlikely assumptions and disregard budget gimmicks included in the legislation. Taking this into account causes the cost of Obamacare to skyrocket.
Is the Administration Cooking the Books on Govt’s Share of Health Spending?
Today, the federal agency that runs Medicare and Medicaid released its estimates of national health expenditures in 2009.
Paul Ryan: Obamacare Is a ‘Fiscal Train Wreck’
House Budget Committee chairman Paul Ryan (R., Wis.) issued the following statement with respect to House Republicans’ continued efforts to repeal and replace the Democrats’ costly government takeover of health care:
John Goodman on Magnitude of Health Problem
"We now know how many people have the problem most often cited as the reason for last years' health overhaul legislation. Out of 310 million Americans, only 8,000 people have the problem given as the principal reason for spending almost $1 trillion, creating more than 150 regulatory agencies and causing perhaps 150 million or more people to change the coverage they now have.
One way to cut health care spending
Total national health spending grew by 4 percent in 2009, the slowest rate of increase in 50 years, however “Federal Medicaid spending increased 22 percent in 2009, the highest rate of growth since 1991.”

Word Games as a Mask for Compulsory Healthcare Equality
The recent decision by the Food and Drug Administration (FDA) to revoke approval of the drug Avastin for late stage breast cancer is an action with considerable significance for the future of government financed or subsidized healthcare.
New Congress Begins Fight to Repeal Obamacare and Get Health Care Reform Right
As the 112th Congress begins, the new majority in the House of Representatives has already unveiled plans to repeal Obamacare and start over with health care reform. Obamacare moves the United States health care system in the wrong direction, and to get reform right, Congress should start by repealing this onerous piece of legislation.

Health Care: Costs, Spending, and Choices
Even if medical costs did not rise faster than the prices of other goods, as retirees aged, their medical spending would still tend to increase as a share of income; that is, each cohort of retirees would still see a decline in the real income left over for non-medical spending.

Ball Drop Brings Bad News for Consumer-Driven Health Plan Users
This year, as the clock strikes twelve on New Year’s Eve, Americans who depend on health savings accounts (HSAs) to make medical expenditures more affordable will experience first-hand yet another adverse side effect of Obamacare.
Top Ten Side Effects of 2010
Within days of Obamacare’s passage, The Heritage Foundation began documenting all of the ill Side Effects the new law was inflicting on our country.

Medicare Variation Revisited: Is Something Wrong with McAllen, Texas, or Is Something Wrong with Medicare?
Health policy analysts have long known that Medicare spends much more per patient in some parts of the country than in others, even after accounting for regional differences in prices and other health measures.

General Economic News Jan. 3 - 7

Portugal's debt worries worsen as bond yield rises
Portugal's bond yields rose to euro-era record highs on Friday, driven by market fears about the debt-laden country's economic health and wider concerns about the eurozone's financial stability.
Obama to name Sperling to top economic post
President Obama will name Gene Sperling as director of the National Economic Council on Friday, a move that will place a veteran policy and political player in the White House to work with a divided Congress.
European Economy Expanded Less Than Initially Estimated in Third Quarter
Europe’s economy expanded less than initially estimated in the third quarter as companies trimmed spending to weather the region’s worsening debt crisis.
China's Economy Expanded at About 10% Pace in 2010, Vice Premier Li Says
China’s economy expanded at about 10 percent in 2010, according to an estimate by Vice Premier Li Keqiang reported by the official Xinhua news agency, a pace forecast to slow as policy makers seek to stem inflation
Trichet Says ECB No Substitute for Government Irresponsibility
European Central Bank President Jean- Claude Trichet warned governments not to rely on the ECB to get Europe out of its debt crisis and urged them to step up efforts to tighten fiscal rules.
Gold Set for the Longest Losing Run Since 2009 on U.S. Recovery
Gold dropped for a fourth day in New York, falling to a five-week low, as signs the U.S. economy is recovering and a stronger dollar curbed investment demand. Other precious metals declined.

2010 Online Holiday Shopping Season Was Biggest Ever
The 2010 U.S. online holiday shopping season fared remarkably well. Black Friday online retail sales soared and Cyber Monday made history when consumer spending exceeded $1 billion for the first time in a single day. When all was said and done, the November to December holiday season brought in $32.6 billion in retail e-commerce spending.
Census: Number of poor may be millions higher
The number of poor people in the U.S. is millions higher than previously known, with 1 in 6 Americans — many of them 65 and older — struggling in poverty due to rising medical care and other costs, according to preliminary census figures released Wednesday.
Holiday store sales chilled
Holiday sales lost speed in December after a strong surge in the prior month, with many store chains reporting softer-than-expected monthly results Thursday.
Rate on 30-year fixed mortgage dips to 4.77 pct.
Rates on fixed mortgages dipped this week after rising steadily over the last two months.
11 New Airline Fees We Might See in 2011
Airlines Make More than $700 Million a Month in Fees
$33 Million in Unclaimed Money for Veterans Dating Back to World War I
Veterans' Advocacy Groups Urge Families to Check Government Records
Congress unlikely to extend hand to ailing states
Cut spending, raise taxes and fees, and accept billions of dollars from Congress. That's been the formula for states trying to survive the worst economy since the 1930s.
Dogfight Erupts in Plane Ticket Sales
A battle to reshape the way airline tickets are sold escalated Wednesday, in what could become an industry-wide showdown between carriers and middlemen.

World Food Prices Rise to Record on Sugar, Meat Costs
World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.
December auto sales raise hopes for 2011
Most automakers ended a challenging 2010 with a strong sales month, raising hopes that the industry could be carrying some momentum into the new year.
Portugal pays steep price to borrow
It is so ugly that Portugal drew polite applause Wednesday for completing the euro zone's first sale of government debt in the New Year – even though it had to pay six times the going rate at this time last year.
Want a new car in Beijing? Sorry, there's just too much traffic.
China banned all car sales in Beijing from Dec. 24 until its new lottery system comes up with the names of the 20,000 applicants who will have the right to buy license plates this month.
China lends a hand as Spain climbs from economic doldrums
Chinese Vice Premier Li Keqiang arrived in Spain today for a visit that could add an economic boost as the country sees unemployment fall and appears on target to reduce its deficit.
Food Prices Hit Record High in December
Global food prices rose in December, with the FAO Food Price Index at a record high, the U.N Food and Agriculture Organization said on Wednesday, past 2008 highs when rising food prices sparked riots in a number of countries.
Non-Manufacturing Sector Expands
The U.S. non-manufacturing sector grew in December at its fastest pace in more than 4 years, according to an industry report released Wednesday.
The House Republican majority has said it will require members to cite the specific authority for any bill they introduce.
The House Republican majority has said it will require members to cite the specific authority for any bill they introduce.
Growth in bankruptcies slows in 2010
Some states report a decline in filings for haven.

Detroit Public Schools: 40,000 kids to get laptops from stimulus funds
Detroit Public Schools will spend $49 million in federal money to push technology in the dstrict, including distributing 40,000 new laptop computers to students in grades 6-12 for use in class, as well as more than 5,000 new desktop computers.
Bankruptcies top 1.5 million in 2010
The number of Americans filing for bankruptcy in 2010 ticked up 9% over the previous year to more than 1.53 million, industry groups said Monday.
BofA settlement with Fannie, Freddie "clears air"
Bank of America Corp. reached a $2.8 billion settlement with Fannie Mae and Freddie Mac over claims that one of its businesses sold bad mortgages. The payment is far lower than analysts expected and removes some uncertainty that has hovered over the bank.
Factory Orders Rebound in November
New orders received by U.S. factories unexpectedly rose in November, and orders excluding transportation recorded their largest gain in eight months, according to a government report on Tuesday that pointed to underlying strength in manufacturing.
Sales at U.S. Retailers Increased 3.6% Last Week
Sales at U.S. retailers rose 3.6 percent last week from a year earlier, as some shoppers returned to stores to take advantage of post-Christmas discounts, dodging a snowstorm that assailed the East Coast.
Companies stash more cash as profits increase
Companies are doing everything they can do to get rid of cash — short of hiring people — but the moola just keeps mounting.

China backs Spain to emerge from crisis: Beijing
China is confident Spain will recover from its economic crisis and Beijing will buy Spanish public debt despite market fears of an Irish-style bailout, a top Chinese official said Monday.
Big Firms Poised to Spend Again
Big U.S. companies have cleaned up their balance sheets and, flush with cash, appear open to using it in 2011 on factories, stores and even hiring.
Looking Ahead to Economic Reports This Week
Data will include the Institute for Supply Management manufacturing index for December and construction spending for November (Monday); factory orders for November (Tuesday); the Institute for Supply Management service index for December and ADP’s employment figures for December (Wednesday); weekly jobless claims (Thursday); and unemployment for December and consumer credit for November (Friday).
For U.S. Economy, Slow and Steady Will Do
The Year of the Rabbit, which technically kicks off in February, looks set for a brisk start. The trick will be keeping up the pace.
Housing Prices Continue Decline in October
'No good news' in latest S&P/Case-Shiller Home Price report.
Manufacturing activity rises to 7-month high
Manufacturing activity expanded for a 17th month in a row in December, rising to the highest level in seven months, a purchasing managers' group said Monday.
Home price is down, so why not insurance?
The cost of your home, and the cost to rebuild it, are two different things

Economist Comments
Republicans And Democrats Both Offer Promising Ideas For Economy
Good economic policy isn't necessarily an ''R'' or ''D'' concept.
America, it's time to start taking risks again
After bidding farewell to 2010, many Americans are suffering from a hangover -- but it isn't from excessive partying. Quite the opposite: The unemployment rate in November climbed to 9.8%, and public confidence about the nation's future has fallen to historic lows.
Bernanke: Recovery finally taking hold
The U.S. economic recovery is finally getting stronger, Federal Reserve Chairman Ben Bernanke said Friday morning.
Republicans and Democrats Both Offer Promising Ideas for Economy
Recessions are nasty things, but they have their uses. Downturns force companies to make tough decisions they otherwise wouldn't, which in turn help them get leaner and improve efficiency. Recessions can also force policymakers to think hard about what can unlock economic potential. So it is today. If you look in the right places, something good is percolating in Washington that might actually help the economy.

Constitutional Power Hour
Congress will need to cite a higher authority.
Supply-side Obama? Trust but verify
Last year's biggest winner was the Tea Party, which shellacked President Obama in the election. Obama becomes the biggest loser. And the economy and stock market will be the beneficiaries. The elections were the first major step toward restoring free-market capitalism and rolling back big-government controls, planning and spending. This is a money-politics issue.
Future Is Brighter in 2011, but Problems Linger
After years of gloom, the clouds could lift a little for small businesses in 2011.

Economic Literacy Goes Global
It is hard to make sense of the world without adequate information and the words to explain fundamental concepts. Some good news for the new decade is that the level of economic literacy is rising, thanks in part to tools being developed at free-market think tanks around the world.
A Golden Decade Of Government Failure
The real question, pertinent to American freedom and prosperity, is not whether policies are Republican or Democratic, but whether they are pro-capitalist or not. Sadly, American political leadership today, Republican and Democrat alike, remains mired in an anti-capitalist mode.
Go north, young man, go north
Canada is quietly surpassing the U.S. as the land of opportunity

Celebrating superwealth
Ten Reasons to Ignore “The Gap” and be thankful for America’s rich. 
The Inequality That Matters
Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.
Dodd-Frank and the Return of the Loan Shark
In the name of consumer protection, Congress has pushed more Americans outside the traditional banking system.
US Economy in Its Own Catch-22
For example, the economy needs to improve in order to generate jobs, but the economy can only improve if people have jobs.

'Fair Trade'? Free Trade Is Fair Trade
It's always American producers and their unions who do the complaining. That ought to tell us something.
How to Break Bread With the Republicans
In a matter of days, Republicans will control the House of Representatives and have a larger voting bloc in the Senate. If economic policy is to make any progress over the next two years, you really will have to be bipartisan. To do so, you’ll need to get inside the heads of the opposition.
How Videogames Are Changing the Economy
From Silicon Valley to China to media, they are leading the next productivity revolution. So hug a geek today.
How I Missed the `Housing Recovery' of 2010: Caroline Baum
When I saw the headline last week, “Housing Recovery Stalls,” my first reaction was to kick myself for having missed yet another milestone in the U.S. economy’s long rehabilitation process.
Economics By Cartoon
The best commentary on Fed policy currently out there is a do-it-yourself animated short called Quantitative Easing Explained.

Businesses Don’t Like Competition
Here is a good Reason TV video that illustrates perfectly this unhealthy union. The LAPD has been hassling food carts recently. Why? Because they are competition to restaurants and those guys don’t like it.
Alternate Measure Says Poverty Didn’t Rise in 2009
An alternate measure of poverty that takes into account several of the government’s most effective antipoverty programs shows the 2009 poverty rate was lower than the government’s official measure, underscoring the breadth of the government’s antipoverty efforts during the recession but also adding fuel to the long-running debate about how best to gauge who is poor and if their lives have gotten better or worse.
Hope and Dismay about Haiti’s Future
Nicholas Kristof provides “a useful reminder of the limitations of charity and foreign aid” in his New York Times op-ed about Haiti today. “Nearly a year after the earthquake in Haiti,” he notes, “more than one million people are still living in tents and reconstruction has barely begun.”
Africa's impressive growth
Africa is now one of the world’s fastest-growing regions
Is the Vampire Squid Wrapped Around Facebook?
Goldman Sachs has been trying to wrestle free of its reputation for sucking money out of every market it can. The new Facebook deal won't help.

Five Lessons from Ireland
The news is going from bad to worse for Ireland. The Irish Independent is reporting that the Swiss Central Bank no longer will accept Irish government bonds as collateral. The story also notes that one of the world’s largest bond firms, PIMCO, is no longer purchasing debt issued by the Irish government.
Falkenstein vs. Sumner
As the economy becomes more complex, the process of organizing production and distribution becomes more challenging.
Do Inflation Expectations Drive Consumption?
After proponents of the Federal Reserve’s second round of quantitative easing (QE2) abandoned the argument that QE2 would spur growth by bringing down interest rates (only after rates increased), the new defense became “we intended for rates to go up all along, as a result of increased inflation expectations.”  Since few would argue for increased inflation, or expectations of such, as an end in itself, the claim was that increases in inflation expectations would drive households to consume more, which would in turn causes businesses to hire more, bringing down the unemployment rate.  But does this chain of reasoning withstand empirical scrutiny?
Africa's impressive growth
Africa is now one of the world’s fastest-growing regions.
The Decline of the Appropriators?
More signs the incoming House Republican leadership gets it. Even before the new Congress took power today, the power of congressional appropriators had been circumscribed, as Republicans forced the committee to surrender its power to place special interest earmarks into the 12 annual spending bills under its purview.
So Long, Cheap Money
Globalism — the free flow of money, people and goods — has made the world a heck of a lot richer over the past several decades. But it's always been subject to some threat or other.
Horse Sense: Dept. of Unintended Consequences Alert
Less than four years after the last equine slaughterhouses in the U.S. closed down, an unlikely coalition of ranchers, horse owners and animal-welfare groups is trying to bring them back.
What is economics good for?
Just because economics isn’t like physics doesn’t mean it’s useless.
Be Very Afraid
It’s an auction conducted at the airport terminal.  In this auction you are a seller and you are bidding to sell your ticket back to the airline.
Bankruptcy Update
The sunbelt states: California, Florida, Arizona, Nevada with their housing boom are easy to understand. Even the mountain states which attracted a lot of people: Colorado, Idaho, and Utah. Oregon had its own boomlet (mainly around Portland). One place you don’t see: New England. Hmmm.

European nations begin seizing private pensions
Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.
How much do immigrants cost?
Anti-immigrant rhetoric talks about the costs of legal and illegal immigrants, but what does that really add up to?
Secondary Sources: 2011 Optimism, Crisis and Reform, Fed Mandate
A roundup of economic news from around the Web.
A Year of Regulatory Abuse: The 10 Worst New Rules of 2010
The year 2010 will stand as a watershed in regulation. In all likelihood, government at every level imposed more dictates on more facets of citizens’ lives than ever before, from the timing of stock trades to the proper size of showerheads. Lawmakers and regulators construct complex cost–benefit calculations to justify the rules, but they never account for the erosion of liberty inherent in each and every one. Some regulations are far worse than others, of course, exacting disproportionate costs—fiscal and otherwise.

Personal Bankruptcies in 2010, by State
Personal bankruptcies rose 9% to 1,530,078 in 2010 from a year earlier, reaching their highest level since a revamp of the bankruptcy law took effect in 2005, according to the American Bankruptcy Institute, an association of attorneys and other bankruptcy professionals, and the National Bankruptcy Research Center.
The Test
Suppose the economy does well this year–growth is robust and unemployment falls. What is the reason for the improvement?
Bank Deregulation and Income Inequality
Since the financial crisis, “deregulation” has become a catch-all phrase for everything that went wrong in our financial markets.  Unfortunately said deregulation is rarely ever explained, but is rather asserted.
World-Wide Factory Activity, by Country
Global manufacturing ended the year on a strong note, according a global purchasing managers’ index released by J.P. Morgan Chase and Markit.
Imperfect, but true
A few years ago, a journalist I respected asked me if NAFTA had been good for the United States, on net. I told him the question could not be answered empirically.
Five Possible Dark Clouds Over Brightening Skies
As 2011 kicks off, the U.S. economy looks the healthiest it has in years, but that doesn’t mean the recovery won’t face strong headwinds.
Three Things We Should Worry about in 2011
Here are three possible bad policies for 2011, most of which the Obama White House can implement by using executive power.
Secondary Sources: Krugman on 2011, U.S. Default, Bank Reform, Debtris
A roundup of economic news from around the Web.
The New Year and Financial Crises
The New Year is likely to bring renewal of financial problems in the European Union. In Greece, the crisis was fiscal in origin and spread to Greek banks and banks in other countries that had lent to Greek banks and the Greek government. In Ireland, the crisis began with problem real-estate loans at Irish banks. That spread to European banks, mainly British, that had lent to Irish banks.
Countries with the fastest and slowest growth forecasts
According to the Economist Intelligence Unit, a sister company of The Economist, Ireland’s and Greece’s GDP will decline by 0.9% and 3.6% respectively. The PIIGS (Portugal, Ireland, Italy, Greece and Spain), find themselves among the slowest growers this year.
Consumer Bankruptcy Filings increase 9% in 2010
From the American Bankruptcy Institute: Consumer Bankruptcy Filings increase 9 percent in 2010
Is A Strong Central Government Necessary for Economic Growth?
As the U.S. economy fell into the so-called Great Recession, U.S. policy policymakers and many economists argued that a strong central government response was essential to bolster economic growth. We've discussed the merits of industrial policy and the stimulus numerous times on this blog, but the idea of adopting a strong national industrial policy remains strong.
Free Trade Increases Living Standards, Creates and “Spreads the Wealth” Better Than Government Can
Michael Barone has an interesting piece today highlighting a recent article by George Mason University economist Tyler Cowen in The American Interest that explains how rising U.S. living standards across the board have “spread the wealth” far more efficiently than any statist program the Obama Administration can dream up.
There’s a great (if somewhat geeky) dissection of the overpopulation myth on the Simply Shrug blog. Showing all his calculations, the editor demonstrates that the entire world population could live in the state of Texas, at the population density of New York, fulfill all freshwater needs with half the flow of the Columbia River, and feed the entire world population with America’s farmland alone
Public Sector Union Reform in the States
The late 20th century rise of the public sector union is one of the most profound and until recently, largely overlooked, changes that occured in American government. As Rutgers economist Leo Troy has noted the rise of public sector unionism represented a “structural break” from the Old (private sector and industrial) Unionism. However, many labor economists continued to treat the two as similar a major misstep in understanding the nature, goals, and implications of government unions.

Why Have Economists Been So Bad at Predicting the Impact of the Stimulus?
Almost two years after the adoption of the stimulus bill, the data shows that the funds didn’t stimulate GDP much, and didn’t stimulate employment either. One reason is that the package failed to prop up government purchases, or consumption purchases in general. For instance, as  was the case with previous stimulus bills, it looks like most of the loan, grant, and contract money in the bill went to pay down state and local governments’ debt rather than buy stuff.
What will 2011 bring?
The year that was 2010 was a shaky one for the global economy, but it was also clearly the best of the last three. Growth returned or strengthened across most of the world, employment rose, and markets had a good year—the Dow was up around 10% for 2010. There were downsides, of course. Europe's crisis threw a shadow over much of the year, and threatened to tip several major economies back into recession over the summer. Unemployment remains very high in much of the developed world, including America. And doubts about the sustainability of emerging market recoveries have risen in recent months.
Your Paycheck in 2011
Compared to how January 2011 might have played out, where every taxpayer in the United States would have received a smaller paycheck if the 111th U.S. Congress hadn't acted to extend the 2001 and 2003 tax cuts, the Congress' late action to extend those tax rates for another two years, while also throwing in a 2.0% payroll tax cut, might seem like a great deal.
Unofficial Problem Bank list increases to 935 Institutions
Here is the unofficial problem bank list for Dec 31, 2010.
The FCC Net Neutrality Order
The regulations break down into 4 categories: transparency, no blocking, no unreasonable discrimination, and reasonable network management. Transparency is what it sounds like: providers are required to maintain and make available data on how they are managing their networks. The blocking and discrimination rules are the most important and the ones I will focus on.
Schedule for Week of January 2, 2011
The key report for this week will be the December employment report to be released on Friday, Jan 7th. Other key reports include the ISM manufacturing index on Monday, vehicle sales on Tuesday, and the ISM non-manufacturing (service) index on Wednesday.
The Problem of Measurement
After a lot of years of fighting, we're finally seeing some fledgling efforts to measure teacher performance using tests scores and other metrics.
Summary for Week ending January 1st
Below is a summary of the previous week, mostly in graphs.
Incentives vs. the TSA
Some of the nation's biggest airports are responding to recent public outrage over security screening by weighing whether they should hire private firms such as Covenant to replace the Transportation Security Administration. Sixteen airports, including San Francisco and Kansas City International Airport, have made the switch since 2002.
Problem Banks: Stress by State
With the banking crisis ending its third year, it may prove useful to identify which states have experienced the most stress.
Holiday Spending Was Up–So What
The Christmas holiday shopping reports through December 25 were up for the season as compared to last year. So what. Does that mean economic recovery? I think not.
Over 4.3 million loans 90+ days or in foreclosure
LPS Applied Analytics released their November Mortgage Performance data. According to LPS:
EPA’s Texas Takeover
As Gabriel Nelson of Greenwire reports, the Environmental Protection Agency (EPA) has taken one step closer to stripping the state of Texas of the right to determine how it wants to control air pollution. The EPA has given Texas final warning that if they do not implement new requirements for the regulation of greenhouse gases (which several states have challenged in court), the EPA will take over the authority to grant operating permits to industry in Texas itself.
In the long run, it's all microeconomics
Macroeconomics failed Japan. It's microeconomics – the supply side – that can revive developed economies.
Obama’s Offshore Ban Already Cutting Domestic Energy Supply
Americans should demand an energy policy that is rooted in the free market, builds on private property rights, and relies on the initiative and entrepreneurial spirit of the private sector. This will not only promote economic growth, but also help Americans to achieve their environmental objectives.

Obama’s Foreign Aid Strategy: Hire More Federal Workers, Spend More Taxpayer Money
The Obama Administration’s long-awaited and inaugural Quadrennial Diplomacy and Development Review (QDDR), subtitled “Leading Through Civilian Power,” was finally released on December 15, almost a year after it was initially promised. The goal of the QDDR is to provide the same kind of robust justification to back up President Barack Obama’s pledge to double the U.S. development assistance budget by bringing a new level of “granularity” to USAID’s budget presentations to Congress. However, the QDDR before us fails at achieving this goal.

ISM Non-Manufacturing: Highest Reading in Over Four Years
The ISM non-manufacturing survey rose sharply in December to 57.1, the highest reading since May 2006. The increase was driven by improvement in business activity and new orders. Price pressures persist.

“Educate to Innovate”: How the Obama Plan for STEM Education Falls Short
The United States must not allow itself to continue to be outcompeted in science, technology, engineering, and mathematics. While the Administration’s Educate to Innovate initiative is intended to raise the U.S. “from the middle to the top of the pack in science and math,” this one-size-fits-all, federal approach fails to remedy the underlying problems of academic performance and does not plug the leaky pipeline in the American education system.

The Wage Effects of Immigration and Emigration
In this paper, we simulate the long-run effects of migrant flows on wages of high-skilled and low-skilled non-migrants in a set of countries using an aggregate model of national economies.