Tuesday, June 28, 2011

General Economics

WSJ | Colombia Trade Deal Loses Key Support
The top Democrat on a key House trade panel whipped up a new furor over three stalled trade deals Monday when he said he wouldn't support a pact with Colombia if the White House and Republicans refuse to include references to pro-labor provisions negotiated by the Obama administration.
Washington Times | Spending dips in U.S. for first time in a year
Consumer spending failed to budge from April to May, evidence that high gas prices and unemployment are squeezing household budgets. When adjusted for inflation, spending actually dropped 0.1 percent last month, the Commerce Department reported Monday.
Market Watch | Cut mortgage-interest deduction: Fed official
Congress should reduce the amount of mortgage interest and debt payments that households and corporations can deduct to trim incentives for leverage, a regional Fed bank president said Monday.
Bloomberg | Home Prices in 20 U.S. Cities Fell 4% in April
A backlog of foreclosures and falling sales raise the risk that prices will decline further, discouraging builders from taking on new projects. The drop in property values and a jobless rate hovering around 9 percent are holding back consumer sentiment and spending, which accounts for 70 percent of the economy.
Politico | Breakthrough on trade may come
That deal could lead to a breakthrough on long stalled U.S. trade agreements with South Korea, Colombia and Panama. Those argreements were initially negotiated under Presdient George W. Bush and have been strongly opposed by organzied labor and many House Democrats.

Econ Comments                                                                                                             
WSJ | The Deficit Is Worse Than We Think
Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal.

Daily Capitalist | Why GDP Is Useless and Deceptive: There Was No Recovery
We have not recovered from the Great Recession and thus our current economic stagnation is less a new event than a continuation of the original collapse. The basis for the so-called “recovery” was a rise in GDP, that measure of what we have spent in the economy. It’s a fairly useless bit of data.
Reason Foundation | Debt Ceiling with GSEs on the Red Carpet
The debt ceiling itself is paralyzed with indecision. Yet there is another option the gossip pages haven't mentioned: a sunset date for Fannie Mae and Freddie Mac.

RCM: Wells Fargo | Consumer Spending Rose Less than Expected in May
Personal income rose 0.3 percent in May, while consumer spending was flat. Real outlays fell 0.1 percent. The core PCE deflator rose 1.2 percent and is still well within the Fed’s implicit comfort zone.
NBER | Confidence and the Transmission of Government Spending Shocks
There seems to be a widespread belief among economists, policy-makers, and members of the media that the "confidence'" of households and businesses is a critical component in the transmission of fiscal policy shocks into economic activity. We take this proposition to the data using standard structural VARs with government spending and aggregate output augmented to include empirical measures of consumer or business confidence.

Health Care

CNN: Money | Early retirement a scary health care option
A majority of large employers today offer some form of retiree insurance -- both to early retirees and to retired workers who are Medicare eligible.
National Journal | Report: 5 Percent of People Account for Half of U.S. Health Care Spending
U.S. health care spending has sharply increased over the past few years. Between 2005 and 2009, national health care spending rose by 23 percent from $2 billion to $2.5 billion, according to the NIHCM Foundation, a nonprofit, nonpartisan organization focused on health care.
Politico | Health exchanges: A new gold mine
The secret to its success: the health reform law and the millions of dollars it invests in health exchanges, the new market places that sates must launch by 2014 or risk the federal government coming in and taking over the task.

Econ Comments                                                                                                             
WSJ | Overlapping Health Plans Are Double Trouble for Taxpayers
As the U.S. wrestles with rising health expenses, one group of patients stands out for government-paid care that is both ultra-costly and plagued with problems.
Washington Times | HOWARD: Obamacare’s ‘one size fits all’ health care guidelines
People are individuals, not government-defined herds.
Cato @ Liberty | ObamaCare's Admission of Failure: Waivers on Demand
The American health care system is a mess, an inefficient public-private hybrid. Federal spending and tax policy have encouraged development of a third party payment system which generates wasteful over-spending.


WSJ | Negotiators Wrangle on Taxes
In Private Meeting, White House Pushes for Changes in Deductions, Subsidies.
MarketWatch | Is your child a tax cheat?
Did you know that all Americans have to report their worldwide income on their tax returns? Even children.

Econ Comments                                                                                                             
Washington Times | RAHN: Tax increase con men
‘Revenue’ boost plan depends on assuming away growth.
Daily Caller | Why Ohio should lower its investment tax
Not all taxes are alike: some have little impact on the economy while others can be quite disruptive and hamper growth and investment. Capital gains taxes fall in the latter category.


Financial Times | Dollar seen losing global reserve status
The US dollar will lose its status as the global reserve currency over the next 25 years, according to tha survey of central bank reserve managers who collectively control more than $8,000bn.

Econ Comments                                                                                                             
Minyanville | Deflation Is Here: Retailing in a Data Economy
Part retailer, part psychological experiment, big box stores are a statement about size -- and that's exactly what consumers now fear and despise.
Minyanville | The Euro Is Dying
Time is of the essence, and the only ways out are via some combination of devaluation, default, and resolution of problem banks.

Heritage Foundation | Chinese Currency Manipulation: Lies and Statistics
There’s a very old political rule getting a new twist in the House of Representatives right now: When your policies fail, blame someone else. The new twist is: When unemployment is above the level you said would be a catastrophe, and you’re on the road to bankrupting the country in the meantime, start talking about Chinese currency.


WSJ | Debt Talks' Impasse Masks Real Progress
First, Washington's long-term attitudes about spending and debt are slowly but surely changing. Second, as a result, a meaningful short-term deficit deal should be within reach.
CNN Money | California budget deal reached
The plan, cobbled together with Democratic legislative leaders, calls for a total of $14.6 billion in cuts. Much of the bloodletting was agreed to in March, but this week's deal would add at least $2.5 billion in additional reductions.

Econ Comments                                                                                                             
Washington Times | MILLER: Permanent spending restraint
There has never been a better chance of passage, and securing ratification from at least 38 states next year would inevitably become the central issue of the 2012 election - no presidential signature is required.

WSJ: Real Time Economics | Fed Official Warns of Too Much Debt for Consumers, Corporations
Overly leveraged U.S. consumers and financial firms expose the financial system to shocks, a top Federal Reserve official said Monday, urging changes to the tax code that would lower the incentives of piling on debt.


Econ Comments                                                                                                             
Washington Times | UPTON: Employment crash demands real change in Washington
Creating an American jobs decade crucial to recovery.
Minyanville | Job Creation: Why There's None; What Should Be Done
Despite record deficits, spending, various stimulus schemes, and money printing programs, jobs are not being created at a pace that results in a falling unemployment rate.