Friday, February 11, 2011

Budget News Feb. 7 - 11

House GOP Leaders Bow to Call for More Cuts
House Appropriations Committee Chairman Hal Rogers of Kentucky said that he would rewrite a government-wide spending bill to cut an additional $26 billion. The bill had already been drafted to roll back this year's spending by $35 billion below 2010 levels.
Obama's cuts: Real deal or dud?
What's unclear is how far his fiscal plan will go in taming U.S. debt.
Obama's Pentagon cuts not what they seem
In fact, Obama's expected 2012 request of $553 billion would be 5% higher than what the Defense Department plans to spend this year. In inflation-adjusted dollars, this figure is higher than at any time during the Bush years or during the Cold War.
Gulf Between House, Senate on CR Continues to Grow
The GOP-controlled House and Democratic-controlled Senate were already far apart when House appropriators last week proposed a plan to cut $73.6 billion compared to Obama’s fiscal 2011 request, including a $58 billion drop from Obama’s nonsecurity spending request and a $15.6 billion reduction in security spending.
States Plan for Decline in Federal Assistance
Both President Barack Obama and House Republicans are moving to rein in federal spending by reducing aid to states and cities, which would deepen their fiscal woes just as economic-stimulus funds from Washington are drying up.

Pentagon Seeks to Reduce Number of Contractors, Doesn't Know How Many It Has
Former Sen. Alan Simpson, co-chairman of President Obama's deficit reduction commission, said over the weekend that the Pentagon should be able to cut 250,000 contractors based on estimates that the Pentagon employs between 250,000 and 1 million contractors.
GOP leaders propose billions in cuts to Obama's budget request
Programs traditionally favored by Republicans would not escape unscathed. The list includes significant reductions in agriculture programs, which benefit many GOP districts.
EXCLUSIVE: White House to Cut Energy Assistance for the Poor
It's the biggest domestic spending cut disclosed so far, and one that will likely generate the most heat from the president's traditional political allies.
Obama Budget Will Include $10.7 Billion for Emergency Networks, Internet
President Barack Obama’s budget will include $10.7 billion to build a nationwide wireless network for emergency workers and $5 billion to help Americans get mobile access to high-speed Internet service.
Budget Becomes a Front Line in Fight Over Policy
The biggest and most immediate battle will be over funding for the Environmental Protection Agency’s new program to control the greenhouse gases that cause climate change.

National debt: A pop quiz
It's the interest on the national debt, according to the Congressional Budget Office.
House GOP Proposes Cuts to Scores of Sacred Cows
...the partial list details 70 proposed cuts as part of a House GOP proposal to fund the federal government through the rest of the fiscal year.
Texas Governor Offers Optimism on Budget Shortfall
To be sure, Texas fared better than many other states during the recent recession, but sales tax revenues were badly hurt as people curbed spending.
Congress May Resurrect ‘Tough Medicine’ Deficit Plan
Just how willing Congress and the administration are to slash spending during a halting economic recovery will become apparent in the next few months.
Obama budget promises cuts, more spending
He also has promised to review the corporate tax structure with an eye toward reducing the current rates, and is expected to ask for an additional $8 billion to expand the nation's high-speed rail service.

The federal budget's tortured path
Obama's proposal, however, is only the first step in a convoluted process that involves no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate.
Fla. governor proposes $5 billion in spending cuts
Plan would cut taxes while overhauling the state's Medicaid program and pension system.

House Republicans slash agencies, nick themselves
A new GOP proposal would reduce domestic agencies' spending by 9 percent on average through September, when the current budget year ends.
Governors Chop Spending
Politicians in Both Parties Aim to Balance State Budgets Through Cuts, Not Taxes.
For Bernanke, there's no escaping politics now
Comments on debt ceiling have now thrust central bank into the debate.
Capital Crunch
The capital city [of Pennsylvania] owes $288 million on a troubled municipal incinerator that was supposed to pay for itself but became a sinkhole of patronage and cost overruns instead.
Scores' of cuts in Obama budget
Obama is set to submit his fiscal 2012 budget proposal to Congress a week from Monday, kicking off a months-long debate and negotiation with Congress over how to tame federal deficits.
Entitlement Programs Eyed in Deficit-Reduction Effort
Alarmed by the prospect of a long-term government debt crisis, members of both parties are weighing the political risks of joining a new Senate-led deficit reduction effort that could involve changing entitlement programs.
Simpson: Leaving Entitlements on Auto Pilot Will Crush the U.S. Economy
Simpson has been a rare -- if not, distinctive -- voice in the effort to include entitlements and defense spending in talks on reducing the size of the annual budget and decreasing the nation's $14 trillion-plus debt.
House conservatives ready to cut
Republicans are planning a freewheeling, open-ended debate that promises to test the party’s limits on how far it’s willing to go on spending cuts, and it may divide Democrats between those who want to embrace modest cuts and those who want to protect domestic programs from the GOP ax.

Economist Comments
Cutting Spending to Revive Federalism
The GOP needs a larger vision to guide their reforms. Republicans need to communicate to the public how a smaller government would benefit America and what federal agencies and activities are damaging and counterproductive.
The Time for Spending Cuts Is Now
The White House argues that 'draconian' cuts will derail the economy. In fact, cuts are necessary to preserve tax rates that are compatible with economic growth.

Put the Federal Reserve on a budget
For a real-world example of reform, we can look to New Zealand, which in 1989 put its central bank on a fixed annual budget for five years.
MILLOY: Defund the EPA
Economic recovery depends on stopping greenhouse regs.
Jerry Brown, a Modern Sisyphus
So in truth, the state’s problems involve a larger “California philosophy” that is relatively new in its history, one that now curbs production but not consumption, and worries more about passing laws than about how to pay for them.
$382 Billion for a Slightly Better Fighter Plane?
The combined Air Force, Navy and Marine Joint Strike Fighter program, which is at least three years behind schedule and significantly over its original budget, is currently slated to cost $382 billion for 2,456 aircraft by 2035.

No Real Opposition to $26M Pension Program
The figure comes from Congressional Research Service data that tracked payments to 455 former members as of October 2009.
Republicans vs. Republicans: When are federal budget cuts too deep?
House Republican leadership wants to rein in the federal budget by $32 billion from current spending levels. But some of the rank-and-file want $100 billion in cuts – or more.
Rhode Island: A Fiscal Mess Few Care About
It has the third highest level of public employee unionization in the country, 64 percent, behind New York and Connecticut.
Republicans Are Weak on Farm Subsidies
Farm income for 2010 exceeded $92.5 billion. That's a 34 percent increase from 2009, and — even if you subtract payments from the government — 28.8 percent above the previous ten-year average.

How to Balance the Budget Without Raising Taxes or Cutting Essential Services
There's a 19 percent solution to our debt and deficit problems.
Obama’s Spending Cuts Use Scalpel Where Ax Is Needed
The debt monster will not be slain by pruning a fingernail here and an eyelash there but by aiming straight at its heart: excessive, immoral, unconstitutional spending.
Paying the Price for Government Spending
It's bad enough no one in Washington can seem to get on the same page about spending— Democrat or Republican—but the fact that they are hampering bold efforts of governors to make the tough choices with this Obamacare mandate is just unfair.
The First $58 Billion
Returning to 2008 can be “draconian” only if the past two years were extravagant.

A Modest $500 Billion Proposal
My spending cuts would keep 85% of government funding and not touch Social Security or Medicare.
LAMBRO: Budget attention deficit disorder
President’s overspending portends permanent red ink.
The $100 Billion Question
For some Republicans, even Paul Ryan's cuts aren't enough.

Timeline of Tardiness
INFOGRAPHIC: Washington’s budget process revealed
The Backdoor Bailouts seems to me that the press secretary is glossing over the fact that the first part of the plan—suspension of interest payments—is a bailout.
Federal Budget Cheat Sheet
Here’s a budget cheat sheet, to put things in context and aggregate what we already know.
Dilma Announces Spending Cuts in Brazil
Despite good intentions, that is still a very timid effort in curbing the size of government in Brazil: Total government spending (including state and local levels) runs at almost 40% of GDP.
New Jersey’s debt downgraded – some thoughts
There is no disagreement in NJ as to whether there’s a problem. The disagreements are over size and approach.
Slashing Popular Programs Contest
Coming down the pike are dozens of stories about how policymakers are planning deep, vicious, and inhumane cuts that will undermine the foundations of the republic. A 5 percent cut to a program that has risen 50 percent in recent years will not be a simple “trim,” but a brutal, gouging “slash.”

Obama's "tough budget cuts" in pictures
Finally, the president has proposed "tough budget cuts" that total $775 million. No, that's not a joke.
State and Municipal Debt: The Coming Crisis?
The main area of agreement: Medicaid and health care costs are big costs drivers in budgets.
Q&A: Ken Rogoff Says Crises Are Like Heart Attacks, Predicting Timing Is Tough
The U.S., of course, is on an unsustainable path of its own. We have only, perhaps, five to ten years to make a significant correction in our fiscal policies. But the timing of crises is very difficult to call.
Entitlement Politics, Again
Whether entitlements stay on cruise control is not really the question in dispute, since they are going to do so regardless of what the House budget resolution says.

OMB Director Lew on the New Budget
Considering that the president proposed total spending of $3.8 trillion last year, $20 billion in gross cuts was an insignificant gesture to say the least.

Pro-Growth Rules That Won’t Grow The Deficit consumption rather than income. Consumption taxes lead to more favorable treatment of capital accumulation, they are more supportive of innovation, and unlike income taxation, they do not punish saving.
Spotlight on the States: New York
...Cuomo (D) recently proposed a budget meant to close much of that gap. His budget proposal – $132.9 billion in total – eliminates the 2011-2012 $10 billion deficit and reduces the 4 year budget gap from $64.6 billion to $9.2 billion.

The Debt Limit Debate
Notice Geithner's mixing of debt obligations and other expenditures. On car payments and student loan and credit card payments, Geithner is right. But on insurance premiums and utility payments, he's wrong.
If Debt Hits the Ceiling, Make Interest Top Priority
Very simply, once the debt limit is reached, spending is limited by revenues and would be guided by prioritization of the government’s obligations.

Setting Priorities for Transportation Spending in FY 2011 and FY 2012
Both programs will be reduced by 17 percent compared to FY 2010 levels, and to an average of 9 percent for all discretionary programs.
Debt reduction without default?
This paper proposes a two-step, market-based approach to debt reduction…

Responsible Approaches to Increasing the Debt Limit
The federal debt is currently $14.100 trillion, only $194 billion away from the current debt ceiling of $14.294 trillion.

Stimulus Facts
Data for First Quarter of Fiscal Year 2011.

Employment News Feb. 7 - 11

Dems Ask GOP: 'Where Are the Jobs?'
What's missing? Jobs, Democrats say, claiming the GOP is glossing over what should be America's No. 1 priority.
Poll: Unemployment Most Important Problem
More Gallup respondents cite joblessness as their biggest concern than in any year since 1983.
Higher Pay Gains Seen for 2011
U.S. workers have reason to hope for slightly better pay raises this year, a shift that could add momentum to the economic recovery.
Unemployment 101: Who pays for jobless benefits, anyway?
Employers pay state and federal taxes to cover all those unemployment checks. But with unemployment at 9 percent, those taxes aren't enough, leaving some states in dire straits.

Jobless claims fall to 2-1/2 year low
The number of Americans filing for first-time unemployment benefits fell to the lowest level in more than 2-1/2 years last week, easing some of the disappointment about a weak monthly jobs report.
New claims for unemployment benefits lowest since '08
The number of people applying for unemployment benefits fell last week to the lowest level in nearly three years.
Some jobless don't look for jobs. They start a business.
New business starts hit a 14-year high in 2009. But succeeding is a challenge.

Obama looks to help states with jobless aid
States and companies may get a little more help from Washington in dealing with high unemployment costs -- at least for the next two years.
Bernanke Says Unemployment to `Remain Elevated'
Federal Reserve Chairman Ben S. Bernanke said the unemployment rate is likely to remain high “for some time” even after the biggest two-month drop in the jobless rate since 1958.

After years on sidelines, work feels good to them
Long-term unemployed re-enter workforce with relief, resolve.
Obama Plans Jobless Aid Help for States
The Obama administration is proposing short-term relief to states saddled with unemployment insurance debt, coupled with a delayed increase in the income level used to tax employers for the aid to the jobless.
Job Openings in U.S. Decrease to Three-Month Low
Job openings in the U.S. decreased in December to the lowest level in three months, signaling a sustained labor-market recovery will take time to develop.

Obama's jobs plan: On a collision course with GOP budget cuts?
The Obama administration outlined an 'innovation strategy' Friday. But GOP plans for budget cuts would fall in some of the same general categories that Obama hopes to target for investment.
The job market is getting better. Really.
Unemployment has tumbled by nearly a full percentage point in the last two months, even though employers didn't hire many people.
Unemployment rate dives, but few new jobs created. How can that be?
Unemployment rate dropped from 9.4% to 9.0% last month, according new Labor Department statistics. But only 36,000 new jobs were created. Where did the rest of the unemployed go?
No Rush to Hire Even as Profits Soar
Corporate profits are humming, dividend increases are up sharply and the Dow Jones Industrial Average is back above 12000. It makes job growth the missing link as the U.S. economy mounts a rebound.
How to find the perfect startup job
Discussions about startups often focus on founders or investors, but most people in the startup game are regular employees. So how do you find a startup job?
Layoffs become rarer even with unemployment high
The U.S. labor force has been split into two groups: the relieved and the desperate.

Economist Comments
Reaganomics: What We Learned
From December 1982 to June 1990, Reaganomics created over 21 million jobs. The right policies can do it again.

Bernanke: Inflation, Job Creation Too Low
U.S. unemployment remains too high for policymakers' comfort despite signs of strength in the economic recovery, Federal Reserve Chairman Ben Bernanke said on Wednesday.
Doing the Math on a Jobless Recovery
President Obama has urged us to be patient, but must we wait until 2018 to get back to full employment?

Issa’s List: 'Five Biggest Job Killing Regulations'
So what are these regulations that are snuffing out economic growth and job creation just when we need it most? House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., invited nearly 150 corporations and trade associations to identify current or proposed regulations that have had a negative effect on job growth.
Why the January Jobs Report Is Alarming
The January nonfarm payroll number was 130.27 million, but what does that actually mean for the economy?

The Employment Number's Understatement
Studies going back to the 1970s have shown that the official unemployment rate is significantly understated in periods of high unemployment, like now.
What's So Bad About a Drop in the Labor Force?
Yes, a sizable chunk of it is probably folks who are so frustrated with dim job prospects that they've stopped looking. But maybe they're using that time for more fulfilling activities.
Scaling up innovation creates jobs
The reorganization of President Barack Obama’s economic team is exactly what’s needed now.
Employment in Pictures (Since BLS Numbers Are Misleading)
Total nonfarm payrolls fell by 2.9 million in January from December. These are the actual numbers, not those of the BLS, which dropped 1,000 words from the labor force.

'Green' Spontaneous Order
Government has no place in the energy business. If we stop subsidizing all forms of energy, then a spontaneous order will emerge that will allow the best form of energy to out-compete the rest. If green energy truly works, people will invest in it, and jobs will be created. That is the free market at work. We don’t need the central planners to pick winners. In the end, that just makes us all losers.
What Happens When Economists Skip Econ 101
Suppose the government forces a company to take all the money it would have paid person A and use it to hire person B instead. How many jobs have been created? If you said, “One direct job, one indirect job, and a number of uncounted induced jobs,” call the University of Massachusetts, because you qualify to do economic analysis at their Political Economy Research Institute (PERI).

On the Reported Unemployment Rate
I certainly do not mean to suggest that the official reported unemployment rate is perfect or unable to be improved. But it strikes me as too ‘iffy’ – and sometimes even too politically convenient – to conclude that the ‘true’ rate of unemployment is ever anything other than the official reported rate. That official rate, for all of its faults, is the one we’ve used in the U.S. for years and we either ditch it for a new and better method of measurement or we accept the reported rate as is – again, despite its known imperfections.
Abolish Federal Job Training Programs
A report from the Government Accountability Office finds that the federal government administers 47 different employment and job training programs at a cost to taxpayers of about $18 billion.

Strikes, Lockouts Remained Near Record Lows in 2010
Last year represented the second-least-active period for strikes and lockouts on record, in a sign of just how troubled the labor market has been, a U.S. government report Tuesday said.
Excellent Sentences
Economic activity consists of people specializing and doing things for one another. This is more productive than doing things for yourself. That is why economic activity is a good thing. That is why jobs are a good thing.
Why Aren’t Employers Hiring?
There’s a growing contrast between how much employers say they want to hire and how much they’re actually hiring.
BLS: Job Openings decline in December, Labor Turnover still Low
From the BLS: Job Openings and Labor Turnover Summary
Why The January Jobs Report Is Alarming
The January nonfarm payroll number was 130.27 million — a figure first reached in October 1999. That’s right! The fabled American job machine has come to resemble nothing so much as Cisco’s stock price. For the last 12 years, the nonfarm job count has been revisiting the same point over and over again, and each time it crosses from below Wall Street economists put on their best John T. Chambers imitation and whoop it up for job growth.
The Unseen Consequences of "Green Jobs"
Will investing in clean energy harm the economy?

US Chamber of Commerce: Obama makes a bargain
In Obama's speech to the US Chamber of Commerce, the president said his administration will help businesses if they hire more Americans.
Are Jobless Claims Overstating Labor Pain?
A closely watched measure of unemployment likely overstated labor market pain last year. Even so, the discovery didn’t mean finding a job was any easier in 2010.
Unemployment and labor shortages—at the same time?
Even at 7.4 percent unemployment, Germany says it is short on workers in some sectors.

Canada Labor Market Mocks America’s
The Canadian and U.S. labor markets are currently mirror images of each other, and that’s fostering a straightforward strategy for currency traders: Buy the dollar of the north, sell the dollar of the south.
Full-time unemployment drops 1 percent from November
The latest unemployment report from the Bureau of Labor Statistics shows that full-time jobless workers account for 88.5 percent of all unemployed workers.
Daily Color: Two Employment Surveys, Different Results
How can the unemployment rate fall sharply if the economy is adding so few jobs, especially since the population is growing?
Blast From the Past: Lessons From 1996 Jobs Report
Stormy weather was a big culprit in January’s startling 201,000-job plunge in payrolls and a rise in the unemployment rate to 5.8%. Still, mounds of snow couldn’t hide the weakness in employment, particularly at factories.
Economists React: ‘Ton of Noise’ in Jobs Report
Economists and others weigh in on the January employment report.

Help Wanted: How Federal Job Training Programs are Failing Workers
For the 13.9 million Americans out of work and the millions more
underemployed, no issue weighs more heavily than income security and
learning new skills to better compete in a challenging job market.4
Lawmakers should focus on putting Americans to work through the
execution of policies that support meaningful, long-term job growth.
Instead, the government has taken on a role for which it was never
intended, pouring billions of taxpayer dollars into a broken web of job
training and employment programs that are rife with waste, fraud and
abuse and lacking demonstrable effectiveness.

Heritage Employment Report: January Report Shows Some Thawing
The January report continues to show a divergence in the two surveys, with the household survey reporting fabulous news and the payroll survey painting a more worrying picture. Usually, the household survey is considered less precise than the payroll survey. However, the payroll survey could be significantly revised if the inclement weather proves to be a large negative factor in this month’s report.

Monetary News Feb. 7 - 11

Pact of uncompetitiveness
Dangers lurk in Franco-German plans for a more tightly integrated euro zone.
IMF calls for dollar alternative
The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.
Fed’s Warsh Quits; Bernanke Adviser Questioned QE2
Federal Reserve Governor Kevin Warsh, who was one of Chairman Ben S. Bernanke’s closest financial-crisis advisers before becoming the only governor to question the expansion of record monetary stimulus in November, resigned after five years at the central bank
Hopes raised, punches pulled
European leaders look set to fudge the latest test of their resolve.

Inflation concerns push bond rates higher
Treasury yields continued their general trek higher this week, with the benchmark 10-year hitting its highest level since last April on Tuesday.
Fed chief says inflation not a threat to U.S.
Republican lawmaker disagrees, saying Fed won't see it until it's too late.
Our dollar, China's $2 trillion problem
Could the United States and China be even more co-dependent than we thought?
Weber Says ECB Will Act If Inflation Expectations Increase
While rates are “appropriate” for now and the ECB still expects the inflation rate to fall below 2 percent, “we will very closely monitor any potential deviation” to consumer price expectations “and act appropriately,” Weber said in a speech in Vienna today.
Bank of England Maintains Aid as Inflation Accelerates
The Bank of England kept up emergency stimulus as officials tolerated the prospect of inflation accelerating to a two-year high to nurture Britain’s economic recovery.
Bernanke Making Sure Fed Governors Remind Congress Deficit Bigger Than QE2
Federal Reserve Chairman Ben S. Bernanke is trying to make sure the U.S. central bank doesn’t become a scapegoat for fiscal profligacy.

Bernanke to face sharp questions from Republicans
Federal Reserve Chairman Ben Bernanke's first appearance before the House since Republicans took control last month is likely to be a tough one. And much of the grilling will probably come from members of his own party.
Fed's Fisher vows to oppose QE3
Rising commodity prices have brought the hawks at the Federal Reserve out in full throat.
The Miles Higher club
The Bank of England houses some of the most trenchant critics of Britain’s big banks. In most countries policymakers are broadly satisfied with the new Basel 3 accords, which govern the size of firms’ capital buffers. But top officials at the bank, including its governor, Mervyn King, and Andrew Haldane, have criticized the rules as being far too puny.

China Raises Key Interest Rates to Counter Inflation
China raised interest rates for the third time since mid-October ahead of a report forecast to show inflation accelerated to the fastest pace in 30 months.
Lacker Says FOMC Should `Seriously' Re-evaluate Stimulus Plan
Federal Reserve Bank of Richmond President Jeffrey Lacker said the quickening U.S. recovery means policy makers need to take “quite seriously” their commitment to review a $600 billion monetary-stimulus program.

Euro Buys Merkel Time as Bund-Treasury Spread Widens
The highest yields on German short- term bonds in two years relative to Treasuries are boosting the euro, easing pressure on Chancellor Angela Merkel as Europe’s leaders consider expanding a rescue program to end the region’s debt crisis.
Bernanke Bets Commodities Won’t Fan Inflation Concern
Investors are betting with Ben S. Bernanke that surging food and energy prices won’t accelerate U.S. inflation, allowing him to maintain easy money.
Geithner Says Brazil Draws Funds as Other Nations' Currencies Undervalued
Treasury Secretary Timothy F. Geithner said Brazil is getting a disproportionate share of capital inflows because other countries keep their currencies undervalued.
U.S. faces $70 billion inflation hit
Rising food and energy prices could deal a $70 billion blow to the economy, but the recovery is likely to limp along anyway.

Economist Comments
Monetary Inflation, Supply Concerns Drive Commodities More So Than Demand
Monetary inflation creates artificial demand, which triggers higher prices; lack of production also eventually leads to much higher prices.

Dual Mandates, the Price of Gold, and Competing Theories on Fed Policy
The only thing the Fed can directly control is short-term interest rates or money supply. Dual and triple mandates are bunk.
China's New Years Resolution: Don't Fight Inflation With Interest Rates
Soft interest rate movement is proving ineffective in controlling China's rampant inflation.

The "Matrix" Market: Effects of Quantitative Easing, High Frequency Trading
The Federal Reserve and big banks are creating the illusion of healthy equity markets despite massive retail equity withdrawals in the years following the financial crisis.
The Bernanke-bashing bubble
If the Fed is out of ammunition, can Ben Bernanke really riddle the globe with inflationary slugs?
Inflation Always Steals the Benefits of Devaluation
Though it's very incorrect, the prevailing view inside the political, media and economic establishment is that a weak dollar is helpful to commerce for it boosting the exporting capabilities of U.S. manufacturers.
Get Ready for Rising Rates, Falling Bonds
The financial markets are voting for higher rates on long-term Treasuries. And don't be surprised if the Fed ups short-term rates later this year.
On the Down Grade
The question then becomes, how high must U.S. debt climb in order to make a downgrade inevitable?
US CPI Inflation: Expect 2.5% Jump in March
January's ISM PMI price indices for both manufacturing and non-manufacturing have risen to their highest levels since August 2008.

Fed, QE2 Cannot Be Blamed for Egypt Protests
The displeasure over the Hosni Mubarak government has been linked to the rising price of wheat, and that in turn has been linked to our money printing in general and to Ben Bernanke's August warning of QE2.

The Economist commodity-price index
Quick look at commodity-price index changes in February.
Rogoff and Rajan Discuss Risks of Currency War
Speaking at a seminar sponsored by the Council on Foreign Relations, Rogoff said that despite all the talk of “currency wars,” the world has so far kept trade relatively free since the economic crisis of 2008-2009.
Indonesia's bank shot tightening strategy
A recent increase in inflation expectations is being caused by supply constraints and an increase in incomes. The central bank can counteract some of that increase in demand by raising interest rates or letting the rupiah rise
How the Fed is bribing its way to your heart
With bailouts for banks and handouts for the poor, is the government just trying to buy the affection of Americans?
Don't forget about Europe
Over the past week, bond yields are up again, and yesterday yields on Portugal's debt hit a new high.

Secondary Sources: Inflation, Foreclosures, Ron Paul
A roundup of economic news from around the Web.
Paul Ryan's Republicanomics
In his opening statement, Mr Ryan acknowledged that "these cost pressures have not yet been passed along to consumers"—emphasis on "yet"—before worrying aloud that Mr Bernanke and his Fed minions threaten to wreck the economy.

Fed’s Lockhart Plays Down Inflation Pressures
Noting “inflation anxiety is rising,” a key Federal Reserve policy maker sought to calm nerves and said broadly speaking price pressures remain low, in remarks that explained the limitations the central bank faces when trying to achieve price stability.
How big a threat are rising prices?
In 2007 and 2008, before the world was swept by financial panic, the biggest global economic threat appeared to be a sharp and sustained rise in commodity prices. Soaring oil costs rattled rich world consumers while a spike in food prices battered the world's poor. Prices tumbled during the crisis but have crept up again in recovery.
How big a threat is inflation?
Is inflation, and commodity price inflation especially, currently a threat to economic growth or political stability? How should central banks, in the rich world and in emerging markets, handle the rise in commodity costs?


Tax News Feb. 7 - 11

Certainty on Tax, but Just for Two Years
The law set a $5 million-per-person exemption from the federal estate tax and raised the maximum amount that could be passed tax-free to heirs before death to $5 million from $1 million.

Raise taxes or cut cops? Camden, N.J., to decide
Last month, Camden laid off 160 police officers, nearly half the force, as well as 60 of its 215 firefighters. The proposed tax increase would be used to fund the rehiring of 47 of those police officers and 13 firefighters.
Obama tries to woo business, slams 'burdensome' tax
In speech, president aims to mend relationship with Chamber of Commerce.
Companies that pay a lower tax rate than you
According to figures from the Internal Revenue Service, all active corporations had an effective tax rate of 27.3% in 2006, the most recent information available.
Energy Tax Credits Remain in Limbo
Supporters say uncertainty about extending the credits discourages businesses from making decisions about long-term investments.
10 Big Corporate Tax Breaks, and Who Benefits
Those ‘expenditures’ will cost the U.S. government $628.6 billion over the next five years, according to a 2010 report from the Tax Foundation.

By one measure, federal taxes lowest since 1950
Actually, as a share of the nation's economy, Uncle Sam's take this year will be the lowest since 1950, when the Korean War was just getting under way.
Tax Overhaul Complicated by Difficulty of Defining Fairness
The president’s bipartisan debt-fighting commission suggested eliminating many of those tax expenditures, including provisions like the mortgage interest deduction, which reduced annual tax revenue by more than $92 billion in 2010.

Economist Comments
Obama's Big Lie On Taxes
Indeed, in 2009 one of the first things Obama did after entering office was to slap a 156% increase in the federal tax on tobacco - about 62 cents a pack - to pay for the children's health insurance program.
When one man's 'loophole' is another man's stimulus
This perverts the free market, allocating resources not where there's demand, but where there's the best tax treatment.

Job Tax Plan Lands With a Thud
Hill GOP Leader Says Obama Proposal 'Isn't Going Anywhere,' but Some State Officials React Positively.

I Didn't Raise Taxes Once'
In his historic health-care bill, for example, there is the new $27 billion "fee" on drug companies that is already in effect. Next year, device manufacturers will get hit to the tune of $20 billion, and heath insurers will pay $60 billion starting in 2014—all of which are de facto tax increases because these collections will be passed on to consumers as higher costs.

Tax code can be made less taxing
More than 6.3 million new jobs were created in just the two years that followed the ’86 reform. That is more than double the number of jobs created during the full eight years that followed the Bush tax cuts of 2001.

Secretly Happy Colleges Should Mean Overtly Angry Taxpayers
Yesterday, House Republicans introduced their preliminary list of spending cuts, cuts that were, they declared, "to go deep." Unfortunately, coming in at just $74 billion, they were about as deep as onion skin.

The 1993 Clinton Tax Increase Did Not Lead to the Budget Surpluses of the Late 1990s
...all that really matters is that the burden of federal spending grew very slowly. Not only was there spending restraint, but Congress and the White House agreed on a fairly substantial tax cut in 1997.
High Speed Funding in President’s Budget Means More Waste of Taxpayer Dollars
According to The Washington Post, the total price tag of the scheme would weigh in at $600 billion over 20 years.

Corporate tax: only a piece of tax revenue pie
Indeed, even though the U.S. corporate rate is the second highest in the world, corporate tax revenues amounted to only about 1.3 percent of Gross Domestic Product last year–less than half the average among major industrialized countries.
Currently Low Tax Receipts No Excuse to Raise Taxes
The recent “Great Recession” caused incomes to plummet at a historic rate. Hence tax revenues dropped to historic lows as a share of the economy as well.

Double Tax Rates, Quadruple the Economic Harm
This is a big deal when you design a tax system for the entire economy. To avoid needless economic harm, you should aim for low tax rates and the broadest possible tax base.
Rep. Hanna’s Corporate Tax Cut
...corporate tax reform could be the 2011 version of the Clinton-GOP welfare reforms of 1996.
Q&A: How Do Unemployment Taxes Work?
That rate has been 6.2% on the first $7,000 of each worker’s wages since the 1980s. In most cases employers receive a credit that offsets much of that tax rate, lowering it to 0.8%, or $56 a year per employee.
Even PolitiFact Admits: President Obama Raised Taxes
Politifact fails to total up all of Obamacare’s tax hikes, but The Heritage Foundation did. All told Obamacare contains 18 separate tax increases that will cost taxpayers $503 billion between 2010 and 2019.

Number of the Week: Businesses’ Unemployment Taxes Rise
37%: The rise in businesses’ unemployment-insurance payments in 2010.
The Transformation of Student Loans Into Taxes
This factor provides the motivation for both individuals to pursue higher education and for the government to support their doing so, because at a minimum, people who are likely to earn higher incomes will also be likely to pay higher taxes.
Sugar Taxes Would Hit Poor, Minorities
Bottom line: A sugar tax might help reduce obesity and the health hazards that come with it, but it’s a highly regressive approach.

Corporate Tax Reform Should Focus on Rate Reduction
The U.S. ended up higher than its international competitors largely by standing still. In the 1980s, the U.S. led the world in reducing its tax rates, first in 1981 as part of the Reagan tax cuts and then again in the 1986 tax reform. Other countries soon followed suit.

Health Care News Feb. 7 - 11

Medicare Chief Dodges Republican Health Law Questions in House Testimony
Dr. Donald Berwick, the man in charge of Medicare and at the heart of implementing President Obama’s health care law, faced a barrage of questions from House Republicans over concerns about the plan and on his own controversial past positions.
Hutchison Introduces Bill to Repeal Spending-Account Restrictions
The senator introduced a bill today that would repeal the new regulations to the spending accounts. Beginning in January, a provision of the health care law took effect prohibiting spending accounts to be used to purchase over-the-counter medication without a prescription. By 2013, the accounts will be capped at $2,500 annually.

Virginia seeks quick review of health care reform challenge
Virginia officials have asked the Supreme Court for an expedited review of the sweeping health care reform law, saying the issue is too important to delay consideration of the legislation's constitutionality.
Medical-Liability Bill Caught in Legislative Slog
House Republicans held their first markup of health legislation this morning, as the Judiciary Committee took up a bill to establish new federal regulations on medical-liability cases. The bill would establish caps on noneconomic damages from medical liability cases at $250,000.
Should Supreme Court Justices Clarence Thomas, Elena Kagan Sit Out Health Care Case?
Seventy-Four Democrats Say Justice Thomas Should Recuse Himself Because of Wife's Lobbying.
HHS Proposes Rule to Extend Health Law to Student Health
Under the proposed rule, the 4.5 million students enrolled in student health plans would have access to free preventive care. Benefits of no lifetime limits, no rescissions, and no exclusion on preexisting conditions would also be extended to students.

House seen blocking healthcare funds
The U.S. House of Representatives is likely to vote to block funding for President Barack Obama's signature healthcare overhaul when it takes up a budget plan next week, House Republican Leader Eric Cantor said on Tuesday.
Republicans Plan to Choke Off Funding for Health Care Law
In other words, Congress has to approve a new bill to pay for government operations past March 4. Some House Republicans are eyeing this legislation as a way to strip the health care law of any dollars, thus depriving health care operations of any money.
Governors Asking for Flexibility, Not Cash, for Medicaid
Cash-strapped governors have started to take a different tack with federal lawmakers as Capitol Hill has turned more conservative. Instead of financial assistance, they’re asking for flexibility, and in place of a bailout, they’re pitching a vision of self-reliance.

GOP hedges on health care funds
House Republicans say they're all on the same page about wanting to choke off funding for President Barack Obama's health care law, but in their first real spending bill of 2011, it looks like they're leaving that priority on the cutting room floor.
Officials Might Tweak Health-Law Program
The Obama administration is looking at modifying a workers' long-term-care insurance program included in last year's health-care overhaul, responding to criticism that the plan is fiscally unsustainable.
Sebelius Outlines Ideas for Long-Term-Care Program
Health and Human Services Secretary Kathleen Sebelius today outlined several significant changes needed to a long-term-care insurance program authorized in the health care law, but said that her office has the flexibility to ensure the program's success.
A new Dem threat to health care law
A handful of moderate Senate Democrats are looking for ways to roll back the highly contentious indiviual mandate - the pillar of President Barack Obama's health care law - a sign that red-state senators are prepared to assert their independence ahead of the 2012 elections.

The Justice Will See You Now
The fate of Obama’s health-care law may rest with one man.
GOP govs push for health changes
Republican governors are petitioning HHS Secretary Kathleen Sebelius to make specific changes to the new health exchanges, threatening to pull back on running the exchanges themselves if their demands are not met.

Economist Comments
Health Reform Waiver Controversy Heats Up
The number of companies and labor unions winning temporary waivers from health reform has spiked to 733, more than triple the 222 granted in November 2010, and up dramatically from 30 in October.
The Next Repeal Target
No one should expect much real health-care progress for the next two years, but at least President Obama is now making concessions to the political mood, however minor. The White House is suddenly trying to pacify the critics it used to claim were partisans, or industry shills, or arguing in bad faith.
Obama, Ryan, and Medicare Costs
Ryan and Rivlin have a better chance of bending the cost curve.

Is inbound marketing coming to healthcare?
Imagine a future in which new medicines and treatment options come to you, instead of you or your doctor needing to go to them.
Who Was Denied Health Reform Waivers?
The Dept. of Health and Human Services has given a grand total of 733 waivers for the annual benefit limits established under the Patient Protection and Accountability Act.
Health-Care Investment—The Hidden Crisis
When the stock market values companies that make cosmetics and beer far above pharmaceutical companies, you know that incentives are out of whack.
Upton: More Dems Would Support Repeal of Individual Mandate
In a conversation with National Journal Group Editorial Director Ronald Brownstein, House Energy and Commerce Chairman Fred Upton of Michigan argues for repealing the individual mandate for health insurance converage.

Fix Or Repeal? Obama's Health Care Trap
There is almost no individual provision of Obamacare that most Republicans would vote against repealing.

WOLF: USS Obamacare takes on more water
Titanic failures for the health care law proponents.
An ObamaCare Appeal From the States
Twenty-one governors representing more than 115 million Americans have written to Kathleen Sebelius asking for more flexibility on health-care reform.

An Opportunity to Defund Obamacare
Rescinding the billions appropriated to Obamacare would help reach the GOP’s well-publicized pledge to cut spending by $100 billion in their first year as a majority.
CBO Director Says Obamacare Would Reduce Employment
Testifying today before the House Budget Committee, Congressional Budget Office (CBO) Director Doug Elmendorf confirmed that Obamacare is expected to reduce the number of jobs in the labor market by an estimated 800,000. Here are excerpts from the exchange:
Why Ryan-Rivlin Beats ObamaCare on Costs — and Spending
There are two reasons why the Medicare spending restraints in the Ryan-Rivlin proposal are more likely to hold than those in ObamaCare.

The Contradictions of ObamaCare
Why does Health and Human Services want to exempt millions of consumers from an ObamaCare regulation it just implemented to protect consumers?

Side Effects: Children Face Reduced Access to Coverage Under Obamacare
While the Senate failed last week to pass a full repeal of Obamacare, the negative effects of the health care overhaul continue to build the case for scrapping it and starting over.

If Health Mandate Is Unconstitutional, Are Social Security Accounts Too?
Back in the 1930s, it was taken for granted by the Roosevelt administration that the Supreme Court wouldn’t approve a quasi-insurance program like Social Security, in which individuals paid taxes today in exchange for benefits at a later date. To help get around that problem, Social Security was structured as, in effect, two separate programs: first, a tax on individual earnings, and second, a benefit based upon individual earnings.
Responding to Akhil Amar on Obamacare
There is nothing improper in the means that Obamacare deploys. Laws may properly regulate both actions and inactions, and in any event, Obamacare does not regulate pure inaction. It regulates freeloading. Breathing is an action, and so is going to an emergency room on taxpayers' nickel when you have trouble breathing.
Sentences to ponder, the progress of health
Even in health care the big explosion was 1900 to the 1960's when life expectancy rose from 47 to about 70.
After Florida, What’s to Be Done about ObamaCare?
Uncertainty over the practical effect of Judge Roger Vinson’s decision on Monday that ObamaCare is unconstitutional in its entirety continues to swirl all across the country. The day after the decision came down, as I noted here on Wednesday, Wisconsin Attorney General J.B. Van Hollen, one of the parties to the suit, issued a statement saying: “This means that, for Wisconsin, the federal health care law is dead," and his state "was relieved of any obligations or duties" to carry out the statute.
Senate Judiciary Committee Hearing: Arguments for Individual Mandate’s Constitutionality Don’t Hold Up
If Congress can force Americans to purchase health insurance, they can force them to purchase just about any commodity, and the limited and enumerated powers of Congress would become limitless.

How Obamacare Undercuts Existing Health Insurance
In response to public opposition to enactment of the Patient Protection and Affordable Care Act (PPACA), President Obama assured Americans that if they were happy with their current health insurance, nothing in the PPACA would force them to change their coverage. This promise has been broken.

General Economic News Feb. 7 - 11

Postal Service warns of default as losses mount
The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.
Feds Propose New Non-Bank Regulations
U.S. Regulators edged closer on Tuesday to defining which companies, other than banks require more government scrutiny under the Dodd-Frank financial reform law.
Rise in Rates Is Headwind for Housing
U.S. 30-year mortgage rates have jumped above 5% for the first time since last spring, in a rapid rise that could present a challenge to the still-troubled housing market.
Treasury plan would end Fannie, Freddie
The Obama administration on Friday laid out initial recommendations for reforming the U.S. housing market, including by dramatically scaling back the government’s future role and eliminating Fannie Mae and Freddie Mac, the federally supported companies that nearly collapsed under the weight of soured subprime mortgages in 2008 and required a $150 billion taxpayer bailout.
New York Stock Exchange poised to become German-owned
A potential merger would make a German company majority owners of the New York Stock Exchange, the symbolic headquarters of American capitalism.
Consumer Sentiment in U.S. Increases to Eight-Month High
Confidence among U.S. consumers increased in February to the highest level in eight months, a sign falling unemployment and rising stock prices may be comforting households.
Buffett Tells FCIC It's Powerless to Stop `Too Big to Fail'
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., told the Financial Crisis Inquiry Commission that taxpayers will always be on the hook for collapses at the biggest U.S. companies.
Grim reaping
A lack of rain in China threatens to send wheat prices even higher.
Spread the wealth
The impressive growth figures of resource-rich African countries are not all good news.

How Fannie and Freddie let the banks off easy
Imagine depositing your paycheck at the local bank each week only to have the bank lose your money, but never face any consequences.
GOP critic calls Joe Biden's $53 billion high-speed rail plan 'insanity'
Vice President Joe Biden Tuesday proposed that the US government infuse $53 billion into a national high-speed rail network. The announcement was met immediately by deep skepticism from two House Republicans that could be crucial to the plan's success, raising questions about whether it can clear Capitol Hill.
Foreclosures are falling - but it's a fake out
Foreclosure filings plunged in January, but don't shake those pom-poms yet. It's strictly a fake out.
House rejects Republican effort on UN funds
Vote marks 3rd straight embarrassment for new House GOP leadership.
Avoiding foreclosures: More states give help to homeowners
A $7.6 billion federal effort to help unemployed homeowners avoid foreclosure will soon be running in all 18 states sharing the funds.
Ethanol pumping up food prices
Get ready for higher food prices, which appear to be just around the corner for U.S. consumers and potentially a crippling burden for the world's poor.
With Fannie & Freddie on the Chopping Block, Lobbyists and Tea Party at Odds
Congressional Republicans face a collision of interests between free-market purists and Big Business.
Deutsche Boerse Deal With NYSE Signals New Wave of Mergers
The biggest day ever for mergers of securities exchanges triggered rallies in shares of operators from New York to Sydney and Sao Paulo as derivatives overtake stock trading as the drivers of growth.
Home sales grow, aided by stabler prices
Home sales volume rose sharply in the final three months of 2010, aided by more stable prices on a year-over-year basis, a real estate industry group said Thursday.

Fannie and Freddie phase-out plan due
The Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday.
Obama's Big, Bold Bet on High-Speed Rail
Six weeks ago, I warned that President Obama's much maligned high-speed-rail program was becoming a " high-stakes gamble." Well, the President just went all in.
30% of mortgages are underwater
Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.
Food inflation isn't in every grocery aisle
It's getting more expensive to eat around the world. But there are bright spots -- a few food staples have remained relatively steady in price even as inflation sweeps the globe.
Home heating assistance seen at record high
8.9 million households are expected to qualify for financial help this winter.
Geithner Says U.S. Economy Getting `Stronger,' More Confident
Treasury Secretary Timothy F. Geithner said today that the U.S. economy is “getting stronger” and companies are starting to hire again.
House Panel Plans Scrutiny of `Excessive Burdens' in Swaps Rules
The House Agriculture Committee will work to ensure Dodd-Frank Act rules for derivatives trading “do not impose undue or excessive burdens” on financial markets, according to a draft of the panel’s oversight plan.

Small Business Confidence Hits 3-Year High in January
Confidence among small U.S. business owners rose to a three year high in January, but concerns about sales saw owners remain cautious about hiring and spending plans, a survey showed on Tuesday.
Homeowners face 'new normal' in housing bust
Life has changed in ways big and small in this central California county, which is still trapped in the wreckage of a housing boom that went bust five years ago.
Business leaders list the red tape they want cut
Asked last year by a key Republican lawmaker to weigh in on the regulatory barriers businesses face, more than 100 companies and industry groups have returned a litany of complaints about federal red tape.
Cash Buyers Lift Housing
Bargain Hunting Boosts Prices in Depressed Cities; Broader Asset Rebound Spreads
Let's make a deal! Mergers are back.
Merger activity is off to a frenzied start in 2011. Thomson Reuters said this morning that the value of takeovers worldwide was $351.6 billion in the first few weeks of the year, up 78% from the beginning of 2010.
Starving Charters
A new study shows the funding bias against non-traditional schools.
Foreclosures Raise U.S. Economic Stress
The nation's economic stress inched up in December because higher foreclosures outweighed lower unemployment, according to The Associated Press' monthly analysis.
FDIC seeks delay in bonuses for top bank execs
Federal regulators have proposed making top executives at large financial firms wait at least three years to be paid half of their annual bonuses, a move designed to cut down on risky financial transactions.
Obama’s anti-loophole call gets clean-energy exception
One week after he called on lawmakers to close tax-code loopholes that benefit specific industries, President Obama proposed one of his own — a tax break aimed at spurring the development of energy-efficient commercial buildings.
Study: Card Issuers Face $25 Billion Revenue Hit
New card regulations could cost U.S. card issuers up to $25 billion a year in lost revenue, according to a study from Boston Consulting Group that is one of the first to add up the total cost of various regulatory changes.

Obama to address business lobby
After months of trying to pin down a time that works for both parties, President Obama will march out of the White House on Monday morning and make his way across H Street to the headquarters of the U.S. Chamber of Commerce.
Egypt feels the cost of protest
A report released Friday estimates that Egypt is losing $310 million daily from the protests. On Cairo streets, concerns range from tomato prices to the future of tourism and jobs.
Super Bowl ad message: Recession's over, start spending!
The recession is officially over -- or at least, that's the message from Super Bowl advertisers this year.
Mortgage modifications part of Countrywide settlement
Mortgage modifications, restitution, and relocation aid part of $6.5 million settlement to help Countrywide's foreclosed homeowners.
Economic Reports for the Week
Scheduled for this week are consumer credit data for December (Monday); weekly jobless claims and wholesale trade inventories for December (Thursday); trade deficit for December and the Thomson Reuters/University of Michigan consumer sentiment index (Friday).
America's wealthy turn less charitable
For charities hoping to land a big gift from one of America's wealthiest individuals, 2010 was a very bad year.
Big Banks Could Get Pinched With Deposit Insurance Costs
Mega-banks will have to pay more for U.S. deposit insurance under a new regulation set for final approval on Monday as the government advances a boatload of financial oversight changes.

Economist Comments
Republican says government shutdown possible, as House GOP work to bridge divisions
A top Republican on the House Appropriations Committee says that the fight to cut spending could lead to a government shut down.
Meaningful patent reform a must
The strength of our economy relies on our ability to protect new inventions and build on innovation. Whether it’s a mousetrap in your home, an iPad in your hand or a pacemaker in your heart, intellectual property plays a critical role in our daily lives and the global economy.
In a State of Sticker Shock, Stores Try to Sell Public on a Radical Idea
Michigan May Abolish Price-Tag Rule; 'It's a Real Pain in the You-Know-What'

The Range Fuels Fiasco
A case study in the folly of politically directed investment.
Homes more affordable, but don't expect a rebound
Despite a flurry of positive data on the housing sector, it's still too early to bank on a comeback.
Cutting Spending to Revive Federalism
Republicans can start a national debate about the proper role of the federal government.

BACON: Leeches of the world, unite!
Failure to stop bloodsucking now will endanger constituents later.
Cost of Driving: How Much Taxpayers Are Actually Paying
Not only are gas prices rising, but every year consumers pay big for medical and insurance costs, they lose hours -- and sometimes days -- stuck in traffic, and on average pay more than $100 in fuel taxes.

RAHN: Destructive economic myths
Supposed ‘truths’ are toppling America’s financial success
Obama’s Keynesian failures must never be repeated
Mr Obama’s Keynesian experiment amounted to little more than an exercise in the redistribution of wealth from our grandchildren, to today’s special interest groups. Those responsible owe them some answers.
FEULNER: Dodd-Frank: A costly way to help
Government’s intervention is more bad than good.
Destructive Economic Myths
Wildly inaccurate statements from news commentators, financial analysts, politicians and even administration officials have most people believing that if Congress does not increase the debt limit in March, the U.S. government will default on its debt obligations, thus ending the government's ability to borrow. Nonsense.
Yes, They're Overpaid
Taxpayers should recognize that bureaucratic inefficiencies like excessive pay are part and parcel of large government. Reform of the pay system is important and necessary, but ultimately the best means of reducing excessive federal paychecks is to reduce the size of the federal government.
Fannie, Freddie Debate: What to Expect
Congress is about to begin addressing the long-overdue issue of housing-finance reform this week, but don't get too excited: It's probably going to take several years before anything meaningful gets done about the two giant gorillas in the housing-finance debate - Fannie Mae and Freddie Mac.

Made in the USA
US manufacturing still tops China’s by nearly 46 percent.
NUGENT: Social Security: Anti-social and insecure
Sinking it now is best for America in the long run
Giving Hamp the Hook
Treasury's mortgage foreclosure relief program is a bust.
Egypt Needs Free Enterprise More Than Democracy
As Egyptians struggle to throw off the yoke of dictatorship the world watches and wonders, what comes next?
It’s time to end welfare for farmers
All of the Capitol Hill chest-thumping about spending cuts masks a fundamental paradox: how will Republicans make serious cuts in the entitlements their constituents love — and their local economies depend upon? Specifically, will Congressional Republicans (many of whom come from rural states and districts) make substantial cuts to farm subsidies?

Housing Seizures Rise
Any discussion about house prices ends up dwelling on the "shadow inventory"--the backlogs of houses that really need to be sold, but nonetheless aren't on the market.  There are the owners who want or need to move, the banks who are too overwhelmed to foreclose on everyone who's behind, and the bank-owned houses that haven't been put on the market yet because what's the point when there are four other foreclosures for sale on the same block?  As prices tick up, those houses will be put on the market--which will, of course, depress prices again.
Thinking about the micro of macro like this may help us understand the jobless recoveries of recent recessions. Could it be that it is not the recovery that is so different but the boom and bust that preceded it?
Lists: Ranking Economic Data
Here is a first cut at ranking economic data. These lists are not exhaustive (I'm sure I left a few off), and the rankings are not static.
State Department Circumvents Congress on $100 Million UN Upgrade
George Russell at Fox News recently reported on the State Department’s decision to let the United Nations keep $100 million in overpaid U.S. contributions to use for “security enhancements” rather than return it to the U.S. taxpayer
Hidden costs of light rail
Are there additional energy costs of running a light rail that don't get measured?
Even in Canada, rise in home prices is slowing
Canada home prices are rising about 5 percent a year, while home prices are falling in the US.

Should the NYSE Be Allowed to Merge?
Call it the World Stock Exchange. And be afraid.
Enduring Problems of Foreign Aid
As Americans begin to question the wisdom of interfering politically (via aid) in Egypt, recent unrest in Pakistan highlights other troublesome dynamics that emerge with the dispersal of U.S. foreign aid.
Government workers don't need unions
Pushback against public-sector unions would simply make the always-unfair fight over the fiscal commons slightly less unfair, and make fiscally prudent policy slightly less unlikely.
Secretary Sebelius Will Not Find the Right Formula to Fix CLASS
According to Health and Human Services (HHS) Secretary Kathy Sebelius, the design of the Community Living Assistance Services and Supports (CLASS) program has basic flaws, but the bureaucracy will fix those flaws with hard work and deep thinking. Sebelius spoke on the CLASS program on Monday at a Kaiser Family Foundation briefing, and she outlined the Obama Administration’s updated technocratic thinking on this new government-run, long-term care entitlement created under Obamacare.
Fast Train to Nowhere
Who’s policing ‘Amtrak Joe’ Biden’s rail boondoggles?

The Wallison Dissent
If the housing and mortgage crisis drags on past 2013 or so, I would view that as a strong indication that Wallison and Pinto have uncovered something very important. In any case, his dissent is a significant document. I am not saying that it is the final word on the subject. But no one should dismiss his views without first reading his paper.
Small businesses hunker down for economic winter
Small business optimism is slightly up, but owners are still waiting to see more significant signs of growth.

President Delivers Same Zero-Sum Message on Jobs to U.S. Chamber
In his speech at the U.S. Chamber of Commerce yesterday, President Obama tried to make nice with U.S. business. While the speech contained some positive elements about promoting trade and a lower corporate tax rate, the president also pounded the tired theme that we are locked in a battle with other countries over a fixed number of jobs.
Credit-Card Debt Up for First Time Since 2008
Americans’ credit-card debt rose for the first time since 2008, a possible sign they are growing more confident about the economy and opening their wallets wider.
Cost Overruns at the National Archives
A new report from the Government Accountability Office finds that the National Archives and Records Administration’s Electronic Records Archive project is headed for major cost overruns. Initiated in 2001, the project was originally projected to cost $745 million but could end up costing $1.4 billion. The project’s development phase was supposed to be completed by September, but the GAO estimates that it won’t be completed until 2017.
Which Parts of Stimulus Worked Best?
Economists trying to figure out how stimulative the stimulus package that Congress approved in early 2009 was have got bogged down in the sort of problem economists are always getting bogged down in: There’s no way to know what the world would have looked like sans stimulus.
Four Reasons Why Big Government Is Bad Government
A new video from the Center for Freedom and Prosperity gives four reasons why big government is bad fiscal policy.
Paper, it doesn't look so good on paper.
The commercial paper market has historically been affected by financial crises, and this one is no exception.
Small Business Confidence Up to Pre-Recession Levels
In another sign of steady, if modest, improvement in the economy, the National Federation of Independent Business announced that their small business optimism index increased by 1.5 points to 94.1 last month. Though this is still way below trend levels, it's the highest level the index has seen since December 2007, the official beginning of the recession.

National debt: Whom does the US owe?
The US is indebted mainly to ... Americans. Still, foreigners hold about 47 percent of the national debt, with China and Japan owning the biggest chunks.
Today's great businesses will die off like the dinosaurs
Governments don't like it, but capitalism creates and destroys businesses.
SEC's Own Books are A Mess
This is not an issue of malfeasance; it's an issue of competence. But give that the competence at issue is supposed to be, um, the core competence of the SEC, this is a mite worrisome.
Unofficial Problem Bank list at 946 Institutions
Here is the unofficial problem bank list for Feb 4, 2011.
Cataloging Improvements in Americans’ Living Standards
Reprise here two posts from January 2006 in which I compare Sears-catalog offerings from 1975 to products available in 2006.
New Paper on ‘The Effects of Fiscal Stimulus’ Looks at Cash for Clunkers
Did Cash for Clunkers work?
Why Wal-Mart Is the Embodiment of Economic Stimulus
To transact with Wal-Mart or any other business entity is ultimately a voluntary act, and as such, Wal-Mart should be allowed the opportunity to set up shop wherever it desires. That its continued growth will expand the range of goods within our reach in concert with a more efficient deployment of capital makes plain that its continued good fortune will be economically stimulative too.

Time to End Obama’s Costly High-Speed Rail Program
President Barack Obama’s high-speed rail program promises to spend hundreds of billions of dollars in federal and state funds to provide mediocre passenger rail service to an extremely small fraction of travelers. In this time of tight budgets, neither the federal government nor the states can afford such extravagance. Instead of creating a heavily subsidized, underutilized passenger rail system, Congress and the Administration should promptly end the program and use the recovered funds to reduce the federal budget deficit.
End Fannie Mae and Freddie Mac to Build Tomorrow's Housing Finance System
The era of Fannie Mae and Freddie Mac is over, and it is time to formally close them down.

Economics Group
The Lost Cause: The Failure of the Financial Crisis Inquiry Commission
It should not have been difficult for the Financial Crisis Inquiry Commission to identify the causes of the
financial crisis. Everyone on the commission, and everyone interviewed, believed that the crisis was caused largely by the losses to financial institutions arising from the high rates of delinquency and failure among subprime and other low-quality mortgages in the 1997–2007 housing bubble. Where the commission lost its way was in its refusal to inquire why so many subprime and other weak mortgages were created in the first place—why, in other words, there was such a significant deterioration in mortgage underwriting standards in the years before the bubble’s collapse. Without an answer to this question, the commission could only produce a narrative about the financial crisis, not a coherent description of what caused the financial crisis.
Did the Stimulus Stimulate? Real Time Estimates of the Effects of the American Readjustment and Recovery Act
We use state and county level variation to examine the impact of the American Readjustment and Recovery Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending.

Best Practices For Public Pension Transparency
The underfunding of public pensions, and the threat this poses to the fiscal solvency of cities and states, has emerged as an urgent policy concern. But pension accounting rules are so convoluted that many lawmakers are themselves in the dark about the true costs of the unsustainable pension promises they’ve made. This report recommends five steps that public pension plans could take that would disclose their finances more fully. This would clarify the magnitude of states’ total accrued liabilities and their annual impact on budgets. Making this information available is the first step in helping states adopt policies that would save taxpayers money in the long run.

Economics Group
Weekly Economic & Financial Commentary
Urban Transportation Policy Requires Factual Foundations
The 2010 Heritage Foundation report “Wash­ington’s War on Cars and the Suburbs” disputed Transpor­tation Secretary Ray LaHood’s claims that public transit produces substantial economic benefits, consumes only one-fifth the energy of cars, and saves billions in other costs. The author of the 2004 American Public Transportation Associ­ation report, Todd Litman, has taken issue with “Washing­ton’s War.” The following paper is a response to Litman’s recent claims—and finds that new rail transit systems have not attracted drivers from their cars for commutes; transit funding increases are far out of proportion to any increase in ridership; transit attracts few drivers because of its lim­ited competitiveness with the car; and the purported cost benefits have been exaggerated. Wendell Cox explains how outdated numbers and ambiguous definitions form the basis of today’s urban transportation policy.