Wednesday, May 18, 2011

General Economics

WSJ | As Firms Rev Up, the Slack Tightens
With demand rebounding, many U.S. companies are putting the production capacity they idled during the recession back to work. Some have reached the point where they need to invest in new plants and equipment, and hire workers, helping to boost the economy and the labor market.
WSJ | Economic Gains Fail to Revive Housing
Construction of homes and apartments dropped 10.6% in April to a seasonally adjusted annual rate of 523,000, compared with a month earlier, the Commerce Department said Tuesday. Home starts are down 23.9% from the same month a year ago, reflecting a market that has struggled as foreclosures drive down prices and builders face financing difficulties.
WSJ | With $4 Gas, More Folks Skip the Trip
Wal-Mart and Lowe's Say Rise in Pump Prices Gives Some Consumers Pause About Shopping—and Sales Receipts Suffer.
Politico | The gas price blame game
More Americans actually believe in UFO's and ghosts than blame President Barack Obama for causing their pain at the pump.

Econ Comments                                                                                                             
Washington Times | MILLER: Reid: No cheap gas for you
Families pay at pump while Senate Democrats play political games.
Financial Times | America: Dallas and destiny
Crane counting is an economic indicator that works anywhere. At the height of the 2005-06 boom you could see 11 of them from the windows of the Federal Reserve Bank of Dallas. In the recession that followed, they all vanished.
CNN: Money | How foreigners will buy the U.S.
Think we're in hock up to our eyeballs now? Wait till 2025.
Washington Post | Welfare-queen states
Okay. Just for the hell of it, let’s go after the debt and the deficit the Republican way. No new taxes. All through cutbacks. And I’ll confine my quibbles to a few parenthetical asides

Daily Capitalist | What To Tell A 22 Year Old About Social Security
This is an interesting video from Learn Liberty (Institute for Humane Studies at George Mason University).
Café Hayek | Trade Adjustment Assistance?
Pres. Obama here seeks to subsidize certain workers against the downside of being part of an open, competitive, and dynamic market economy.  Preventing consumers from dealing more freely with foreigners until and unless Congress authorizes such subsidies, however, is economically unjustified because there’s nothing unique about international trade in ‘destroying’ jobs.
Cato@Liberty | One-third of College Degrees Wasted?
The most recent, comprehensive Pew higher education survey has gotten a lot of coverage for its findings on how important the public thinks college is, its financial payoff for grads, etc.

CRS | Low-Income Assistance Programs: Trends in Federal Spending
In total and in inflation-adjusted terms, federal outlays for major need-tested programs increased in each decade examined in this report, from the 1960s to the present.
CBO | The Highway Trust Fund and Paying for Highways
The United States spends about $160 billion annually on highways, with about one-fourth of that total, or roughly $40 billion, coming from the federal government. Federal highway spending is funded mainly through taxes on gasoline and other motor fuels that accrue to the Highway Trust Fund. In recent years, the Congress has spent more on highways than the revenues accruing to the fund for that purpose, and it has supplemented the trust fund’s balance with money from the general fund of the Treasury.

Health Care

National Journal | States Advance in Reform Waivers
As the Department of Health and Human Services presses forward with a federal vision of health care reform, some states are advancing in their efforts to implement their own versions.

Econ Comments                                                                                                             
AEI | Two-Way Truce Can Improve Health Care
Last week, 42 freshman House Members sent a letter to President Barack Obama urging him to stop Democrats from employing "Mediscare" tactics on them and their colleagues for their votes in support of Rep. Paul Ryan's (R-Wis.) Medicare proposal and other health care policy changes.

Heritage Foundatoin | How about a National Obamacare Waiver?
If you knew a dangerous virus was about to hit America and that you could beg the government for a vaccine, you’d probably do it, wouldn’t you? That’s just what states and businesses alike are doing right now in preparation for Obamacare. But rather than seeking a vaccine, they’re asking for waivers from the law’s onerous requirements.


Bloomberg | Free Money Claim Roils Clash on One-Time Offshore Tax Break
Backers, including such companies as Adobe Systems Inc. (ADBE), Cisco Systems Inc. (CSCO) and Pfizer Inc. (PFE), say bringing home more than $1 trillion in profits that companies have parked outside the U.S. would yield a windfall for the federal government.
CNN: Money | Forget the gas tax - a driving tax may be next
A driving tax could either replace the current 18.4 cent a gallon federal gas tax or, possibly, add to it.

Econ Comments                                                                                                             
WSJ | The Incentive to Save Act
If states don't spend, taxpayers should benefit.
Daily Caller | Taxes and government overreach are strangling American small businesses
A quick look at the over regulation and stifling tax complexities imposed on small firms suggest we should take more than one week to focus on the state of our nation's small businesses.

Political Calculations | A Striking Thought….;
We were taking a closer look at our chart showing the relationship between total federal government tax collections and median household income in the U.S. since 1967 and were suddenly struck by a thought about the formula we presented in the charts.
Cato@Liberty | Michigan State Policymakers Push to Keep Federal Gas Taxes
Last week I discussed the Obama administration’s decision to redistribute federal high-speed rail money rejected by Florida Gov. Rick Scott. I noted that “Florida taxpayers were spared their state’s share of maintaining the line, but they’re still going to be forced to help foot the bill for passenger-rail projects in other states.” My underlying point was that the states should be allowed to make their own transportation decisions with their own money.

Cato Institute | Crony Capitalism and Social Engineering: The Case against Tax-Increment Financing
Tax-increment financing (TIF) is an increasingly popular way for cities to promote economic development. TIF works by allowing cities to use the property, sales, and other taxes collected from new developments — taxes that would otherwise go to schools, libraries, fire departments, and other urban services — to subsidize those same developments.


Econ Comments                                                                                                             
Bloomberg | Treasury 10-Year Yields Rise From 2011 Low as Fed Considers Exit Strategy
The difference between the yield on 10-year notes and inflation-indexed securities, a gauge of expectations for consumer prices over the life of the debt, widened after reaching the narrowest level in three months. Minutes of the Fed’s meeting showed most policy makers favored an exit strategy of raising interest rates before selling assets.
Minyanville | Are Expected Inflation and the Yield Curve Related?
Fed claims claims it will use markets' assessments of when inflation is getting out of hand to adjust policy. But these market-driven indicators follow, not lead, almost everything else.


WSJ | Geithner Wants Debt Ceiling "Done and Clean" in July
Treasury Secretary Timothy Geithner said Tuesday he wanted a vote to raise the $14.294 trillion debt ceiling "done and clean" by July, weeks before the government could potentially default on its debts on Aug. 2.
WSJ | Budget Talks by 'Gang' Falter
Negotiations among a group of senators seeking a deficit-reduction deal threatened to collapse Tuesday as a key lawmaker pulled out, endangering what many in Washington had considered the best chance for a comprehensive, long-term budget agreement this year
Market Watch | Budget talks stall as Geithner issues warning
Talks among a key group of senators aimed at coming up with a plan to tackle long-term deficits stalled on Tuesday, as Treasury Secretary Timothy Geithner issued a fresh warning about raising the U.S. debt limit.

Econ Comments                                                                                                             
WSJ | The Hidden State Financial Crisis
My latest research into opaque state financial statements suggests taxpayers will be surprised by how much pensions are underfunded.
Market Watch | The Congress that couldn’t cut straight
Cutting government spending is a lot harder than it looks. Just ask John Boehner and Paul Ryan, who found out Monday that all the work they did this spring to cut spending will actually result in more spending.
WSJ | California's Next Train Wreck
Transportation Secretary Ray LaHood announced last week that he plans to divert to California some $300 million in high-speed rail funds that Florida rejected. Nice timing. California's Legislative Analyst's Office released a study last week warning the state legislature not to appropriate funds for the same project.
Politico | The debt ceiling dance
The need to raise the debt ceiling is a symptom of the broken budegetary past characterized by massive overspending. Presidnet Barack Obama's bill is coming due; there is no cash on hand; and the debt ceiling will have to rise.

Atlantic | What if Our National Budget Belonged to a Typical Household?
Our debt has already risen to uncomfortable levels, and it's getting worse.  Every 10% of GDP we borrow, even at low interest rates, commits us to more interest payments.  
Political Calculations | The Right Frame of Reference
How does today's U.S. federal government spending compare to the levels recorded before the recession?
Forbes | Don’t Raise the Debt Ceiling, Raze It
While each side makes some valid points, each ignores this crucial fact: the size and scope of American government is wildly excessive, regardless of whether it’s funded by taxes, borrowing or money-printing.
NRO: The Corner | Enough Doomsday Scenarios, Secretary Geithner
I understand the strategy that consists of making a risk look  much worse than it is in order to get something you want, but Treasury Secretary Tim Geithner is really pushing it. On Friday, he sent another letter to Sen. Michael Bennet (D, CO) arguing that a U.S. default would cause a double-dip recession and focusing on the doomsday scenario if we default on the debt.
Heritage Foundation | Paul Ryan’s Budget is Good for America
When considering Representative Paul Ryan’s (R–WI) budget plan, it goes without saying that if one disagrees with Ryan’s vision, then of course he or she won’t like his plan, regardless of whether it fixes our budget problems.


National Journal | Recovery in Manufacturing Sector Not Seen in Factory Wages
While factories are beginning to make up for the jobs lost during the recession -- adding 250,000 jobs since the beginning of last year, a 13 percent recovery -- wages have dropped sharply. The Post profiles a new factory in Ohio that makes small appliances like space heaters and vacuums, where new jobs will start at $7.50 an hour.

Econ Comments                                                                                                             
Minyanville | How the Weak Dollar Could Create Jobs
A recent report predicts the US will experience a manufacturing renaissance over the next five years due, in part, to the decline in the value of the dollar against other currencies.