Thursday, June 30, 2011

General Economics

News                                                                                                                             
WSJ | Fed Softens 'Swipe' Fees
The Federal Reserve ordered the nation's banks to cut the rate they charge merchants for debit-card transactions roughly in half, dealing banks a softer blow than many had feared, but one that will still likely cost them billions in annual revenue.
CNBC | Midwest Business Activity Grew More Than Expected
The Institute for Supply Management Chicago's business barometer rose to 61.1 in June, above the 56.6 in May and economists' expectatiosn for a drop to 54.
Bloomberg | Oil Drops, Extending Quarterly Loss, as U.S. Demand Falters
Futures in New York dropped as much as 0.7 percent, halting the biggest two-day rally in seven weeks. The U.S. Energy Department said yesterday gasoline demand dropped for a second week in the seven days to June 24. U.S. pump prices are up 29 percent from a year earlier.
CNBC | China to Grow Above 9% in 2011: Government Think Tank
China's economy is expected to grow a robust 9.5% in the first half of 2011 and retain much of the momentum the rest of the year with little chance of a hard landing, a government think tank said in a report published on Thursday.
Market Watch | Car sales seen holding steady in June
"The Japanese car makers are getting back to business as usual in the U.S. this month, but they likely lost more market share to still-surging Hyundai and the healing Detroit Three.
Bloomberg | Texas Cotton Farmers Abandon Record Acres on Drought as Gap’s Costs Rise
About 55 percent of the Texas cotton fields were in poor or very poor condition on June 26, matching the record low in 2006, the U.S. Department of Agriculture said. More than 70 percent of the state was experiencing “exceptional” drought as of June 21, and non-irrigated crops in the Panhandle and South Plains regions have all failed, a Texas A&M research unit said.

Econ Comments                                                                                                             
Washington Times | GLOZER: Corn-ethanol fiction
A careful review of current federal corn-ethanol policy reveals an array of subsidies, both direct and indirect. These include: 1) corn production subsidies to farmers, 2) a 45-cents-per-gallon ethanol-production tax credit, 3) a mandate requiring gasoline refiners to blend 15 billion gallons of ethanol into gasoline annually by 2015, and 4) a 59.5 cents-per-gallon tariff/tax on imported ethanol. No other energy product enjoys such government favor.
Financial Times | Strikes: Pension tension
Across the developed world, weakened political establishments are meeting fierce resistance in their efforts to curb public spending. The future viability of public sector pensions, as lifespans increase, is a particular headache almost everywhere.
Daily Caller | Not so independent
Jobs are scarce and inflated fuel costs are making everything from food to appliances more expensive. And while the same could have been said about the economy last year, or even the year before, we are struck this year by the weak response coming out of Washington: tapping the Strategic Petroleum Reserve.
Bloomberg | Republicans Seek Spending Cuts to Slow Economy, Schumer Says
Raising the rhetorical stakes while party leaders are far apart over a plan to cut the deficit and increase the U.S. debt limit, Schumer said Republican leaders are seeking deep spending cuts as part of an effort to slow U.S. growth and hurt President Barack Obama’s chances of winning re-election next year.
CNN: Money | Made (again) in the USA: The return of American manufacturing
Lost in a sea of troubling economic data is one bright spot: America is once again competing for -- and winning -- factories and manufacturing operations.

Blogs                                                                                                                             
WSJ: Real Time Economics | A Look at Case-Shiller, by Metro Area
S&P/Case-Shiller home-price data showed a gain for most cities in April amid a boost from the start of the spring selling season began, but prices still remain below year-earlier levels.
Café Hayek | Obama and manufacturing
President Obama spoke in Iowa the other day about the economy. In a sense, it was the launching of the re-election campaign. I thought it might be interesting to evaluate the economics and see what he thinks is going to be effective politically. The full text is here. I’ll be commenting on most of it. Here we go:
Cato @ Liberty | Economic Freedom
Some smart folks have drawn strongly on the Fraser Institute’s Economic Freedom of the World Annual Report to put together a short video extolling the virtues of economic freedom. Enjoy!

Reports                                                                                                                         
RCM: Wells Fargo | Housing Data Wrap-Up: June 2011
The Recovery Continues To Have a Tough Time Getting Going.

Taxes

News                                                                                                                             
WSJ | Obama Targets Tax Breaks
Republicans responded by repeating their opposition to any tax increases, saying they would hurt the fragile economy.
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
WSJ | California Online Tax Law Pressures Amazon
Amazon.com Inc. may soon have to collect sales taxes in California after Gov. Jerry Brown signed an online tax-collection bill.

Reports                                                                                                                         
Tax Foundation | Minnesota Income Tax Increase Modification Could Encourage Tax Avoidance and Promote Poor Investment Decisions
Minnesota is one of 46 states that begin their fiscal year on July 1. However, it is the only state that may endure a government shutdown, due to a tax policy impasse between Governor Mark Dayton (DFL) and the legislature.

Health Care

News                                                                                                                             
National Journal | Bill Clinton: Raise Taxes ... but Not Yet
Former President Clinton, living up to his reputation as a shrewd politician adept at “triangulating,” has some advice for policymakers locked in a stalemate over raising the debt limit: Cut spending and raise taxes. But, he said, lawmakers should delay the implementing such a compromise until after the economy improves.
National Journal | Pain, Smoking, and Cancer: How Far Should the U.S. Go to Save Lives?
Two reports and a controversial vote on a cancer drug Wednesday highlighted pressures that will only worsen as the federal government grapples with reforming the U.S. health care system – whether through the 2010 health care law or Republican approaches stressing personal responsibility.

Econ Comments                                                                                                             
AEI | Tampering with Part D Will Not Solve Our Debt Crisis
"Under the proposed legislation, AEI's Joseph Antos, a former Congressional Budget Office official, and Guy King, a former chief actuary for Medicare, find that:
1.Many Medicare Part D plans could change significantly or face failure, disproportionally affecting the most vulnerable seniors.
2.Premiums for all seniors would be likely to increase, with the strongest impact borne by low-income seniors.
3.Government spending on Medicare as a whole is likely to increase, offsetting any savings."

Blogs                                                                                                                             
Heritage Foundation | White House Silent on Obamacare Transparency Bill
A freshman congressman has offered legislation that would make the extensive federal rulemaking process associated with the new Obamacare law dramatically more transparent. The bill would also give Congress a stepped-up oversight role as federal agencies begin drafting rules to implement the law, which will go fully into effect by 2014.

Monetary

News                                                                                                                             
Market Watch | QE2 worked, St. Louis Fed’s Bullard says
The Federal Reserve’s innovative and controversial plan to pursue monetary policy through a second round of asset purchases, known as QE2, “worked in reality” by helping avoid a bout of mild deflation akin to Japan, a regional Fed president said Thursday.

Budget

News                                                                                                                             
CNN Money | Is the debt ceiling unconstitutional?
They say default -- and by extension, the debt limit -- violates the 14th Amendment.
Bloomberg | Corporate Jet Benefit Gets Six Obama Mentions, Aids Little in Deficit Cuts
President Barack Obama’s proposal to end a tax break for corporate jet owners, a repeated refrain in his news conference yesterday, would achieve less than one-tenth of 1 percent of his target for reducing the federal deficit.

Econ Comments                                                                                                             
Washington Times | MILLER: Ending deficit sprawl
House and Senate leaders need to unify behind the Balanced Budget Amendment.
WSJ | Obama's Real Revenue Problem
Tax receipts are low because of the mediocre economic recovery.
RCM | Greek Bailout, Global Economic Tragedy
As any mildly sentient being knew would happen, the Greek government got its bailout. It was a foregone conclusion, and there's a 99% chance that the IMF would have disbursed more billions to the profligate government even if Greece's Parliament had failed to pass an "austerity" program.
Politico | Real implications of debt debate
Particular August days will be far worse than the monthly totals suggest. For example, on Aug. 3, we project that the government will have about $12 billion in receipts and $32 billion in committed payments, including a $23 billion Social Security payment.

Blogs                                                                                                                             
Atlantic: McArdle | How to Deal With the Debt Ceiling
This is why schools and other government agencies facing budget cuts tend to immediately slash something high-profile and politically popular.  
Daily Capitalist | The New Theater Of The Absurd: The Budget Debates
Government spending can’t make the economy grow. It never has, never will.
Atlantic: McArdle | Is Greece's Austerity Budget a Big Mistake?
At best, Greece has some limited value in illustrating what happens when you let your government finances out of control--but only limited, because they have a whole set of currency issues that America doesn't face.
Cato@Liberty | $2 Trillion in Cuts in Perspective
Even with the cuts, federal spending would still increase by $1.8 trillion.
Heritage Foundation | Morning Bell: Time For Congress to Lead on the Debt Ceiling
The Heritage Foundation has previously laid out exactly what an acceptable package might look like. It must: 1) significantly cut current spending; 2) restrict future spending; and 3) fix the budget process.

Employment

News                                                                                                                             
MarketWatch | Requests for jobless benefits little changed
New U.S. claims dipped by 1,000 to 428,000 last week.

Blogs                                                                                                                             
WSJ: Real Time Economics | Most Cities Post Annual Drop in Unemployment
The job market is hardly healthy. But in most places in the U.S., it’s far better than a year ago.