Thursday, May 5, 2011

General Economics

News                                                                                                                             
CNN: Money | Your monthly gasoline bill: $368
Round-trip airfare from New York to Los Angeles. More than a dozen dinners for two at Applebee's. Two 16 GB iPod nanos. These are just a few of the things you could have bought if you weren't spending $368.09 a month on gasoline.That's the average amount American households spent on gas in April, according to an exclusive analysis of data by the Oil Price Information Service for CNNMoney.
Market Watch | China’s investment wave heads to U.S. shores
The state of Michigan’s Economic Development Corp. moved its Asia office to Shanghai from Hong Kong in 2005. A few years later, the state of South Carolina beefed up its Shanghai development staff and closed a Tokyo office.
Bloomberg | U.K. House Prices May Drop as Much as 20% Over Next Five Years, Niesr Says
While the property market recovered last year from its slump, recent housing data have signal led weakness as government spending cuts undermine consumer confidence and banks continue to rebuild balance sheets.
National Journal | Grassley, Conrad Want Lower Ethanol Credit
Sens. Chuck Grassley, R-Iowa, and Kent Conrad, D-N.D., introduced legislation on Wednesday that would transition the current 45-cent ethanol tax credit to a variable credit that would adjust based on the price of oil. According to an interest group supportive of the plan, Grassley’s proposal would significantly reduce the overall cost of the federal subsidy.

Econ Comments                                                                                                             
Washington Times | BLUEY & BURNETT: More oil would mean smaller deficit
By blocking drilling, Obama turns down billions in needed revenue.
Washington Times | EDITORIAL: Welfare nation
Culture of dependency threatens economic recovery.
WSJ | If Supermarkets Were Like Public Schools
What if groceries were paid for by taxes, and you were assigned a store based on where you live?
Politico | Reform still lets banks play roulette
The financial crisis of 2007-2008 is receiding in the public mind. Other than the giant hole in federal budget, its legacies are obscure. But one key legacy of the crisis is its enduring lesson about the power of big U.S. bnaks and the elusiveness of meaningful refomr of the financial system.
CNN: Money | http://finance.fortune.cnn.com/2011/05/04/betting-on-fannie-and-freddie-and-winning/
Investors who had the stomach to stick with Fannie and Freddie have reaped rewards. But with the future of these lenders still uncertain, the risks are too great for most investors.

Blogs                                                                                                                             
Heritage Foundation | Obama’s Anti-Energy Policies Are Bankrupting America
Randall Stilley has witnessed firsthand the Obama administration’s job-killing agenda. As the president and chief executive of Seahawk Drilling, he had to lay off 632 employees before filing for bankruptcy — a direct result of President Barack Obama’s anti-energy policies.
NRO: The Corner | CBO Endorses Market Valuation of Pension Liabilities
States usually report unfunded liabilities on their pension plans of roughly $500 billion. However, many economists, joined by a growing number of actuaries, have been very vocal about the fact that this is a gross underestimation of the problem.
Heritage Foundation | Deep water Drilling Permitting Rate Still Way Below Average
As gas prices continue to climb — reaching as high as $5.75 to $6.03 a gallon in some places — the Department of the Interior remains stingy with deep water drilling permits.
Café Hayek | Rising inequality
Planet Money reports on a new OECD study that finds that income inequality is rising worldwide within most countries:

Taxes

News                                                                                                                             
CNN Money | Tax hikes on the way for Connecticut residents
Governor Dannel Malloy on Wednesday signed a $40.1 billion budget that raises taxes on sales, income, cigarettes and corporations.

Econ Comments                                                                                                             
NY Times | Raise Taxes, but Not Tax Rates
At their worst, such tax expenditures create incentives for wasteful borrowing and spending; they have been factors in the mortgage crisis and the rising cost of health care.

Blogs                                                                                                                             
NRO: The Corner | How Punishing Is the Corporate Income Tax?
As it turns out, the U.S. not only imposes high rates, it also taxes corporations on a worldwide basis: Profits made by an American-owned computer plant are subject to U.S. taxes whether the plant is located in Texas or Ireland. Most major countries don’t tax foreign business income.
The Hill | Obama administration floats draft plan to tax cars by the mile
Among other things, CBO suggested that a vehicle miles traveled (VMT) tax could be tracked by installing electronic equipment on each car to determine how many miles were driven; payment could take place electronically at filling stations.

Health Care

News                                                                                                                             
National Journal | Senate Finance Dems Vow to Block Altering Medicaid
On Tuesday, House and Senate Republicans introduced legislation to free states from a federal provision that forbids them from tightening Medicaid enrollment so that benefits are harder to get or beneficiaries are dropped altogether. The measure has support from Republicans and some Democratic governors, who say they welcome the additional flexibility in the face of severe budget shortfalls.
Politico | Eric Cantor: I’m still with Paul Ryan on Medicare
House Majority Leader Eric Cantor is denying a published account claiming Republicans are preparing to ditch Rep. Paul Ryan's ambitious plan to revamp Medicare in pursuit of a debt ceiling compromise with Democrats - but both sides have begun seeking common ground on oil subsidies, sources say.

Econ Comments                                                                                                             
Cato Institute | Paul Ryan's Medicaid Block Grants: Good for Maryland
What they mean is that they want to preserve the open-ended, perennial bailout that Medicaid has always offered.

Blogs                                                                                                                             
Heritage Foundation | The State Flexibility Act: Moving Closer to Successful Medicaid Reform
Spending on the two big health entitlement programs—Medicare and Medicaid—poses the threat of a fiscal meltdown if Washington does not act to contain their costs. Medicaid, the federal-state partnership to provide health care for the poor and disabled, is also a main driver of growing state budget shortfalls.
Cato@Liberty | Obamacare on Appeal
As advocates gear up for the first appellate argument in the ongoing Obamacare lawsuits — Tuesday in Richmond — today marks an important milestone: the filing of two eloquent briefs responding to the government’s appeal of Judge Roger Vinson’s January ruling that found the individual mandate unconstitutional and non-severable, thereby striking the entire legislation.
Heritage Foundation | Doctors Need a Permanent Fix to the Medicare Payment Mess
Type the sentence(s) summarizing the link here.
Cato@Liberty | How Not to Criticize Medicare Vouchers
Over at The Incidental Economist, Austin Frakt challenges a couple of claims I made on NPR about Medicare reform. My claims are pretty simple.

Monetary

News                                                                                                                             
Bloomberg | Euro Slides as Trichet Signals Rate Rise Won’t Come in June; Yen Climbs
The euro dropped the most against the dollar in two weeks and slid versus the yen after European Central Bank President Jean-Claude Trichet signaled the ECB may wait until after June to raise interest rates again.

Econ Comments                                                                                                             
Bloomberg | Federal Reserve Presidents Signal Record Stimulus Won’t Be Removed Soon
Eric Rosengren, president of the Federal Reserve Bank of Boston, and San Francisco’s John C. Williams followed the lead taken by Fed Chairman Ben S. Bernanke, who signaled last week that policy makers will keep stimulus in place after ending large-scale bond purchases in June.
Market Watch | Geithner: No monetary-system changes this decade
Treasury Secretary Timothy Geithner said Wednesday he doesn’t think there is any realistic prospect of truly dramatic changes to the global monetary system in the next decade or two.
Market Watch | Inflation will ease later this year: SF Fed chief
The economy is not at risk of runaway inflation, according to the new president of the San Francisco Federal Reserve on Wednesday.
Minyanville | Inflation Causing Economic Boom, Then Bust
Recent data suggests the inflationary boom is starting to lose momentum; we could see a full-scale inflationary bust, bear market led by all the old boom favorites.

Blogs                                                                                                                             
The Economist: Free exchange | Who's afraid of a sinking greenback?
Long-term weakening of the dollar is also likely to accompany efforts to diversify global reserve holdings away from the greenback. Other countries don't like the fact that when it comes to global reserve currencies, the dollar is the biggest game in town.
The Economist: Free exchange | The commodity-price speed limit, cont.
I don't think it's impossible to imagine a world in which four times as many people enjoy rich-world living standards as is currently the case. But for it to be possible, humanity must either start discovering and exploiting new earth like planets, or come up with revolutionary new ways to increase terrestrial supplies of critical resources, or dramatically decrease the resource-intensity of wealth.

Budget

News                                                                                                                             
MarketWatch | Debt limit debate turns to size of increase
Both the Obama administration and House Republicans say they support an increase in the nation’s borrowing limit, but so far neither are saying how much of a hike they’ll support as the government creeps closer to hitting its debt ceiling.
National Journal | Senate Finance Committee Talks Budget Enforcement
Tax triggers and emergency spending consume discussion.
Politico | Old problems dog new debt debate
Gramm’s testimony came on the eve of Blair House talks beginning Thursday in which Vice President Joe Biden will host a six-member House-Senate panel on how to approach the coming debt vote.
National Journal | White House Gets Down to Cases on Selling Excess Properties
...many of the properties -- which range from warehouses to office complexes -- have little commercial value.
Fox Business | CFOs Say Cut Spending, Don't Raise Taxes to Reduce Deficit
...even the smartest calculators in the room say cutting spending, and not raising taxes to, is the way to go to pare back the U.S. federal deficit.

Econ Comments                                                                                                             
Cato Institute | GOP Shouldn't Be Afraid to Challenge Reckless Spending
Ultimately, the last-second agreement that averted a government shutdown was probably a draw.

Blogs                                                                                                                             
Calculated Risk | Update on Debt Ceiling Charade
...the current CBO projection shows the deficit at 3% of GDP in 2015 - so this is a big yawn, plus a future congress can change the rules.

Reports                                                                                                                         
CBO | The Underfunding of State & Local Pension Plans
...assets covered less than 80 percent of liabilities, and unfunded liabilities (the amount by which liabilities exceed assets) amounted to roughly $0.7 trillion.
Mercatus Center | Performance Based Budgeting
The good news is that transparent government spending is an achievable reality. In fact, some state and national governments are taking the lead.

Employment

News                                                                                                                             
MarketWatch | Applications for U.S. jobless benefits surge
eekly applications for unemployment compensation jumped to their highest level since August, largely because of special factors, but a recent upward trend suggests more slack in the U.S. labor market.
Bloomberg Businessweek | States Use Tax Breaks in War for Jobs
Tax incentives have become a competitive weapon as states try to lure employers or keep them happy.

Blogs                                                                                                                             
WSJ: Real Time Economics | Big Jobs Report Friday: Curb Your Enthusiasm
Amid general softness in last month’s economic data, it’s unlikely that April job growth will surprise on the upside.
Political Calculations | A Clearly Broken Trend in U.S. Layoff Activity
The positive downward trend in new unemployment insurance claim filings that has existed since 18 September 2010 is now officially over.