Friday, April 22, 2011

General Economics

Fox News | No break this spring at the gas pump
With gas prices above $4 in some states, Americans are canceling spring break plans and rethinking summer vacation, and some tourist destinations are offering gas vouchers of as much as $50 to talk people out of giving up and staying home.
Politico | Poll suggest deep economic pessimism
Americans are more pessimistic about the conomy than they have been in more than two years, as gas prices soar, unemployment remains high and Washington battles it out over federal spending.
Market Watch | Recession cost Uncle Sam $4.2 trillion
The federal government was spilling a lot of red ink even before the housing and credit bubbles burst in 2007, but the Great Recession turned the leak into a geyser.

Econ Comments                                                                                                            
CNN: Money | Where's the wealth effect?
Rising assets are supposed to create a feeling of confidence, which in turn leads to more spending. But neither higher stocks nor a rebound in home prices will likely have that effect this time.
Politico | Look to natural gas to revive economy
The US consumes 20 million barrels of oil per day, with only seven million of that produced domestically. In January, the US spent $32.6 billion on imported oil, at roughly $89 per barrel. At the current prices of $105, we could spend an additional $100 million per day. That means nearly $500 billion leaving American's economy in one year.

AEI: American | Economists in the Wild
Far from damaging brains and killing seals, applying basic economics to the environment preserves it.

WSJ: Real Time Economics | Middle Ground in the Public Pension Fight?
Pension experts at the Center for State and Local Government Excellence say there’s a middle ground between protecting traditional defined-benefit pensions for public-sector employees and eliminating them in favor of 401(k)-style defined-contribution plans that now dominate the private sector.
Reason Foundation | Home Prices Continue Their Downward Slide
The Federal Housing Finance Agency (FHFA) released its latest monthly house price index today, showing that national home prices declined 1.63% from January to February. Worse, housing prices dropped 5.74% from February 2010. And FHFA revised its January price decline down from a 0.3% decrease to a drop of 1%.
American: EnterpriseBlog | Public Pensions Fire Back on Investment Returns
Reuters and Pensions and Investments report on a new study released yesterday by the National Association of State Retirement Administrators (NASRA) that supposedly “slams” a 2010 paper by Northwestern’s Josh Rauh and Rochester’s Robert Novy Marx for concluding “that unfunded state pension liabilities total $3 trillion by using inaccurate liability and return assumptions.”

Health Care

Market Watch | Small-business medical-cost tax deductions
Before you complain to your tax pro about failing to deduct your business’s medical expenses, do your homework. Deducting these expenses is complex.

Econ Comments                                                                                                            
Washington Times | WHITE: Don’t let feds stifle next medical revolution
Bureaucrats aiming to save money could stop ‘personalized medicine’.

Cato@Liberty |How Russia Makes Universal Coverage Work
Free health protection for everyone is an impressive feat, considering Russia spends less than 4 percent of its meager GDP on health care.  The Washington Post reveals how Russia makes it work:
Heritage Foundation | Seniors and Taxpayers Can Gain from Medicare Reforms
The big three entitlement programs—Medicare, Medicaid, and Social Security—promise to increase federal spending to unprecedented and unaffordable levels in coming years.
Heritage Foundation | The False Choice Between Existing Medicare and Ryan’s Proposal
Yesterday, Washington Post columnist Ezra Klein used a recent poll to argue that Americans oppose House Budget Committee Chairman Paul Ryan’s (R–WI) proposal to transform Medicare into a defined-contribution system, where seniors choose the health plan that best suits their needs. But, as always, the devil is in the details.


WSJ | Japan Considers Tax Increase to Fund Rebuilding
Japan may levy a reconstruction tax as one way to help fund massive rebuilding efforts, the government's top spokesman said…
NY Times | California Is Owed Millions of Dollars by State Employees
In 2009, for example, an audit found that 11 agencies had more than $13 million in outstanding loans.
WSJ | OECD Urges Japan to Raise Sales Tax
Japan should raise its sales tax now to finance reconstruction after the March 11 earthquake, and the Bank of Japan should be ready to buy more bonds to check any rise in longer-term rates…

Econ Comments                                                                                                             
Washington Times | POWELL & BACON: Market, not politics, key to development rebound
Tax increment financing makes deals transparent and accountable.
WSJ | Obama's Tax Max
The President floats another payroll tax hike.

Atlantic: McArdle | Large Tax Increases are Not A Semantic Question
In order to raise taxes to the 25% of GDP that Kevin wants, all taxes need to rise by at least a third, not just income taxes: excise taxes, corporate income taxes, payroll taxes.
Greg Mankiw's Blog | People Talking Past Each Other
...Steve argues that a rich person who wants to raise taxes on the rich should be voluntarily paying more right now. One example is the rich person who lives in very nice publicly-provided housing on Pennsylvania Avenue in Washington DC.


Market Watch | Questions, and answers, for Bernanke
It’s the countdown to the first Federal Reserve regularly scheduled press conference, and MarketWatch has invited economists and other close observers to ask their questions — and suggest answers — to Federal Reserve Chairman Ben Bernanke.
Bloomberg | Treasuries Advance Before Fed Meets on Bets Growth Will Suffer
Treasuries rose for a second week as investors speculated that efforts to cut the Federal budget deficit may damp economic growth and awaited a policy statement next week from the Federal Reserve.
Bloomberg | China Should Use Currency to Curb Inflation, Government Researchers Say
Two prominent Chinese state researchers added to calls for the government to use the yuan to help curb inflation that accelerated to a 32-month high in March.
WSJ | Dollar Tumbles to Precrisis Levels
Confidence in the dollar continued to erode Thursday, sending the currency to its lowest levels since before the financial crisis amid mounting concerns about U.S. monetary and fiscal policy.

Econ Comments                                                                                                            
CNN: Money | Forget patriotism. Dump the dollar, go long the loonie
Barring any major surprise concessions out of Washington, the U.S. dollar is set up to continue crashing throughout this year. Here's how to play it.
Minyanville | Voodoo Economics: The Subtle Side Effects of Quantitative Easing
Quantitative easing discourages savings, drives a rush to re-risk, encourages volatile capital flows into emerging markets and forces up commodity prices.
Market Watch | When will Bernanke take the punch bowl away
When Ben Bernanke goes before reporters in his first live press conference next week, there’s one question I guarantee he won’t answer: When will you start raising interest rates again?

Reason: Peter Suderman | Low Interest Rates Today Don’t Mean We’re Safe From a Fiscal Crisis Tomorrow
Essentially, the administration is arguing that we can safely use interest rates as a warning system.


CNN Money | Pentagon budget: Time to cut
Since 2001, defense spending has just about doubled, rising to almost $700 billion in 2010. That is more than half of the discretionary budget and about 20% of the entire federal budget.
WSJ | States to Business: Give Our Cash Back
The budget vise squeezing states and cities is changing the economic-development game. Governments are attaching more strings to their offers of tax breaks, cheap rents and bond deals designed to lure business, and are getting tougher on past recipients who didn't come through.

Econ Comments                                                                                                             
Washington Times | MCCAUGHEY: CBO declares war on Ryan budget plan
Premium support is not intended to give seniors less than they will get from Medicare under the Obama health law.
WSJ | Obama's Permanent Spending Binge
If government got by with 20% of GDP in 2007, why not in 2021, when GDP will be substantially higher?
Forbes | The Economics Of Substantial Budget Cuts
The growth effects of tax reduction make spending cuts more politically plausible.
RCM | To Work, Ryan's Reforms Need Process Constraints
With patients responsible for spending their funds, they are likely to be more cost conscious in deciding what type of health care or health insurance to buy.

WSJ: Real Time Economics | Canada’s Deficit Cutting Vs. South of the Border
Canada’s budget deficit for the last 11 months shrank by nearly a third, to 28.3 billion Canadian dollars, or $29.7 billion, from the year-ago period–boosted by strong economic growth and higher commodity prices, and providing a stark foil to the current budget and debt woes south of the border.

NBER | A Decade of Debt
This paper presents evidence that public debts in the advanced economies have surged in recent years to levels not recorded since the end of World War II, surpassing the heights reached during the First World War and the Great Depression.
CBO | The Effects of Automatic Stabilizers on the Federal Budget
CBO estimates that automatic stabilizers are adding significantly to the budget deficit now but that their contribution will steadily fade over the next few years.


Fox News | How states fared on unemployment aid, at a glance
The four-week average, a less volatile measure, rose for the second straight week to 399,000. No states reported decreases above 1,000.

Econ Comments                                                                                                             
WSJ | California Dreamin'—of Jobs in Texas
Hounded by taxes and regulations, employers in the once-Golden State are moving East.

WSJ: Real Time Economics | Unemployment Benefits Add to Deficit
Spending on unemployment benefits and other “automatic stabilizers” that increase during economic downswings have added “significantly” to current federal deficits…