News
Fiscal Times | Record Numbers Crack Open Retirement Nest Eggs
In the wake of the Great Recession, a record number of Americans are tapping their 401(k) retirement plans, according to a new report by Aon Hewitt, a consulting firm. Others are cashing out all together when they lose their jobs. Many more are taking loans from their accounts. Experts warn that employees weren’t saving enough to begin with and that the steady outflow of funds is putting the retirement nest eggs of millions of people at risk.
CNN: Money | Market outlook: More turbulence ahead
It's been a rough year for stocks. After getting off to a solid start, markets have spent the better part of the last couple of months digesting a spate of mushy economic data.
NYT | Midwest Manufacturing Picked Up Steam in June
The Institute for Supply Management, Chicago, said on Thursday that its business barometer rose to 61.1 after slowing abruptly to 56.6 in May. The gain defied economists’ expectations for a decline to 54.
CNN: Money | Economy to grow at 4%? Really? How?
Dallas Federal Reserve president Richard Fisher (not known for excessive optimism) even said in a speech earlier this week that 4% growth in gross domestic product in the last six months of the year would not be "unimaginable."
Fox News | 10 Ways to Save the Economy: Obama Assails Business Community's 'Complaining' on Regulations
“Keep in mind,” President Obama cautioned reporters halfway through his hour-long news conference Wednesday morning, “that the business community is always complaining about regulations. When unemployment is at 3 percent and they're making record profits, they're going to still complain about regulations because, frankly, they want to be able to do whatever they think is going to maximize their profits.”
National Journal | Alaska Pushes Drilling Plan for Offshore, Area Near ANWR
The Alaska governor’s office, which has long griped that the Obama administration has blocked oil drilling in the Arctic Ocean and Arctic National Wildlife Refuge, is aggressively pushing a plan to drill off a pristine strip of state-owned coast threading between the federally protected lands and waters.
Washington Times | Retailers to fight new debit card fees
Fed’s decision ‘caved’ to banks, merchants say.
Econ Comments
Washington Post | The GOP’s ideal America
The ideological certainties of the conservative movement often contrast with the conduct of conservative politicians. Activists may regard the New Deal as soft socialism, but conservative politicians do not seek the end of Social Security or unemployment insurance.
Politico | Quick FTA passage needed for small businesses
On July 1, the European Union-South Korea free trade agreement goes into effect. Then, on Aug. 15, the Colombia-Canada free trade agreement will take effect — leaving U.S. small businesses at a competitive disadvantage in the international marketplace.
Market Watch | China manufacturing growth slows further
China’s manufacturing activity decelerated to levels of only marginal growth amid a generally weak export outlook, though there was some good news in signs of easing inflation, according to rival surveys released Friday.
Bloomberg | Crude Oil Falls First Time in Four Days on China, U.S. Economic Slowdown
Oil declined, trimming the biggest weekly gain in almost three months, as signs of slowing manufacturing growth in China and the U.S., the world’s biggest energy users, stoked speculation fuel demand may falter.
Financial Times | Working out what China wants
We know what the west wants from a resurgent China. We have a pretty good sense of what China doesn’t want from the west. What’s missing from this story of global geopolitical upheaval is a clear idea of what China wants from its rise to great power status.
RCM | Moving Beyond the Unwisdom Of "Too Big To Fail"
Lost in the European debt shuffle has been a much larger conversation that needs to take place. Mainstream economics has given some cursory thought and half-hearted lip service to rethinking the wisdom of "too big to fail" (TBTF).
Blogs
Reason Foundatin | What Ails the Economy Today and What to Do About Fixing Tomorrow
The Federal Reserve has downgraded its outlook on GDP growth for the next year and the New York Yankees are recognizing the Double-A Portland Sea Dogs have a monumentally better bullpen than they could ever wish to assemble.
Daily Capitalist | Is the US Already in a New Recession?
Aside from the theme propounded on this site that the “Great Recession” never really ended, if we use mainstream terminology, then the recession ended two years ago. It may just be that another one has already begun. Here are some exhibits:
Financial TimesL A-List | Gridlock in Washington is hurting the US economy
Democracy is inherently a messy process, but it is still unsettling for foreign holders of US debt to see the Congress openly discussing whether there might be advantages in forcing the Treasury to “prioritise” its future payments so that the flow of interest obligations can be maintained.
Reason Foundatin | Jump, Geithner, Jump!
Treasury Secretary Timothy Geithner has all but said it's over. On the one hand, "considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the national debt limit" sounds pretty much like I quit.
Calafia Beach Pundit | The failure of Keynesian pump-priming
I've showed this before, but it's worthwhile repeating. The chart above makes a bold and striking statement: the more the government spends, in relation to the size of the economy, the higher the rate of unemployment; and the less the government spends, the lower the rate of unemployment.
Friday, July 1, 2011
Taxes
News
Fox News | Federal jobless tax for employers expiring quietly
It won't affect workers' paychecks. But the expiration of a 35-year-old "temporary" unemployment tax — about $14 a year per worker — will mean real money for some big companies at a time when President Barack Obama is pushing Congress to raise taxes on businesses by closing some loopholes.
WSJ | President Gets Flak for Jet-Tax Idea
Almost immediately, however, business leaders and some union officials criticized the president, saying such a move could jeopardize the executive-aircraft sector's still-fragile recovery.
Bloomberg | Bill Clinton Backs U.S. Tax Holiday on Foreign Profits, With Caveats
Former U.S. President Bill Clinton endorsed a tax holiday on repatriating offshore profits with conditions, taking a position contrary to the Obama administration.
Econ Comments
Washington Times | MILLER: Democrats gaga for taxes
Tax-hiking strategy will backfire with the American people.
AEI | Corporate Jets and Tax Breaks
For starters, Obama's most recent budget calls for adding $9.5 trillion in new debt over the next decade. If you got rid of the "accelerated depreciation" of corporate jets, Reuters economics columnist James Pethokoukis calculates, it would save a whopping .03 percent of that total.
Blogs
Cato@Liberty | The “Tax Expenditure” Con Job
For both political and policy reasons, the left is desperately trying to maneuver Republicans into going along with a tax increase. And they are smart to make this their top goal. After all, it will be very difficult – if not impossible – to increase the burden of government spending without more revenue coming to Washington.
Atlantic: Clive Crook | Reforming US Corporate Taxes
Robert Pozen has a proposal: move to a modified territorial system.
Fox News | Federal jobless tax for employers expiring quietly
It won't affect workers' paychecks. But the expiration of a 35-year-old "temporary" unemployment tax — about $14 a year per worker — will mean real money for some big companies at a time when President Barack Obama is pushing Congress to raise taxes on businesses by closing some loopholes.
WSJ | President Gets Flak for Jet-Tax Idea
Almost immediately, however, business leaders and some union officials criticized the president, saying such a move could jeopardize the executive-aircraft sector's still-fragile recovery.
Bloomberg | Bill Clinton Backs U.S. Tax Holiday on Foreign Profits, With Caveats
Former U.S. President Bill Clinton endorsed a tax holiday on repatriating offshore profits with conditions, taking a position contrary to the Obama administration.
Econ Comments
Washington Times | MILLER: Democrats gaga for taxes
Tax-hiking strategy will backfire with the American people.
AEI | Corporate Jets and Tax Breaks
For starters, Obama's most recent budget calls for adding $9.5 trillion in new debt over the next decade. If you got rid of the "accelerated depreciation" of corporate jets, Reuters economics columnist James Pethokoukis calculates, it would save a whopping .03 percent of that total.
Blogs
Cato@Liberty | The “Tax Expenditure” Con Job
For both political and policy reasons, the left is desperately trying to maneuver Republicans into going along with a tax increase. And they are smart to make this their top goal. After all, it will be very difficult – if not impossible – to increase the burden of government spending without more revenue coming to Washington.
Atlantic: Clive Crook | Reforming US Corporate Taxes
Robert Pozen has a proposal: move to a modified territorial system.
Health Care
News
CNN: Money | Wal-Mart takes on Medicaid
For the first time in its history, the nation's largest retailer Wal-Mart is coming face-to-face with the nation's largest insurer, Medicaid.Wal-Mart is partnering with the Arkansas Children's Hospital to provide legal support for Medicaid patients and their families, free of charge.
National Journal | Feds Require Health Insurance Plans to Standardize Data
The Centers for Medicare and Medicaid Services released rules on Thursday requiring health insurance companies to collect and send information from doctors and hospitals in a uniform way.
Politico | Donald Rumsfeld: Hike military health care premiums
Donald Rumsfeld warned incoming Defense Secretary Leon Panetta not to acquiesce to the White House or Congress on deep cuts to defense spending – but also called for controversial increases in military health care premiums and the end of congressional earmarks in order to save money.
Blogs
Daily Capitalist | A Solution For The Medicaid Crisis
This latest video from the Center For Freedom and Prosperity Foundation, starring Dan Mitchell, deals with a solution to Medicaid’s runaway costs, costs that threaten a resolution of our debt crisis.
Cato @ Liberty | That’s Not Healthy: the GAO on Medicaid’s Lousy Access to Care
ObamaCare expands coverage mostly by cramming tens of millions of Americans into Medicaid, about which the Government Accountability Office just released these data:
Heritage Foundation | CBO Report Shows, Without Reform, the Future of Medicare Ain’t Pretty
Growing federal health care spending is a major driver of future deficits. As CBO explains, “Spending for health care in the United States has been growing faster than the economy for many years, posing a challenge not only for the federal government’s two major health insurance programs, Medicare and Medicaid, but also for state and local governments and the private sector.”
Marginal Revolution | Medicare Cost Control?
Long-time readers will know that I am skeptical of the FDA. Let’s ignore that for the purpose of this post. Now consider the following two quotes.
CNN: Money | Wal-Mart takes on Medicaid
For the first time in its history, the nation's largest retailer Wal-Mart is coming face-to-face with the nation's largest insurer, Medicaid.Wal-Mart is partnering with the Arkansas Children's Hospital to provide legal support for Medicaid patients and their families, free of charge.
National Journal | Feds Require Health Insurance Plans to Standardize Data
The Centers for Medicare and Medicaid Services released rules on Thursday requiring health insurance companies to collect and send information from doctors and hospitals in a uniform way.
Politico | Donald Rumsfeld: Hike military health care premiums
Donald Rumsfeld warned incoming Defense Secretary Leon Panetta not to acquiesce to the White House or Congress on deep cuts to defense spending – but also called for controversial increases in military health care premiums and the end of congressional earmarks in order to save money.
Blogs
Daily Capitalist | A Solution For The Medicaid Crisis
This latest video from the Center For Freedom and Prosperity Foundation, starring Dan Mitchell, deals with a solution to Medicaid’s runaway costs, costs that threaten a resolution of our debt crisis.
Cato @ Liberty | That’s Not Healthy: the GAO on Medicaid’s Lousy Access to Care
ObamaCare expands coverage mostly by cramming tens of millions of Americans into Medicaid, about which the Government Accountability Office just released these data:
Heritage Foundation | CBO Report Shows, Without Reform, the Future of Medicare Ain’t Pretty
Growing federal health care spending is a major driver of future deficits. As CBO explains, “Spending for health care in the United States has been growing faster than the economy for many years, posing a challenge not only for the federal government’s two major health insurance programs, Medicare and Medicaid, but also for state and local governments and the private sector.”
Marginal Revolution | Medicare Cost Control?
Long-time readers will know that I am skeptical of the FDA. Let’s ignore that for the purpose of this post. Now consider the following two quotes.
Monetary
News
Market Watch | Why bond funds continue to shine
Sounding a warning for a bond-market bubble has looked reasonably smart for several quarters and by several accounts still holds true, considering the stack of Treasury paper and the Federal Reserve’s resolve to keep interest rates ultra low.
Bloomberg | Gold Falls to Six-Week Low Amid Reduced Concern Greece May Default on Debt
Greece may receive as much as 85 billion euros ($124 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the euro-region’s debt crisis, according to an Austrian Finance Ministry official. Gold has dropped 5.5 percent since reaching a record at the beginning of May.
USA Today | Kansas City Fed chief Thomas Hoenig sounds alarm
"We have this leveraged economy that we have used to build our growth over the last 10 to 15 years that we cannot carry forward," he said. Hoenig, long a vocal critic of Fed policy, reiterated his call for the Federal Reserve to raise interest rates. He said the longer interest rates are low, the more the economy will suffer when rates inevitably rise.
Econ Comments
Minyanville | At Behest of Banks, Fed Relaxes Debit Card Regs in Final Rule
The finalized rule caps debit card fees at 21 to 24 cents per transaction for banks with more than $10 billion in assets.
Forbes | A Return To Basics: What Is Stable Money?
To be perfect, currency should be invariable in value.
Market Watch | Why bond funds continue to shine
Sounding a warning for a bond-market bubble has looked reasonably smart for several quarters and by several accounts still holds true, considering the stack of Treasury paper and the Federal Reserve’s resolve to keep interest rates ultra low.
Bloomberg | Gold Falls to Six-Week Low Amid Reduced Concern Greece May Default on Debt
Greece may receive as much as 85 billion euros ($124 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the euro-region’s debt crisis, according to an Austrian Finance Ministry official. Gold has dropped 5.5 percent since reaching a record at the beginning of May.
USA Today | Kansas City Fed chief Thomas Hoenig sounds alarm
"We have this leveraged economy that we have used to build our growth over the last 10 to 15 years that we cannot carry forward," he said. Hoenig, long a vocal critic of Fed policy, reiterated his call for the Federal Reserve to raise interest rates. He said the longer interest rates are low, the more the economy will suffer when rates inevitably rise.
Econ Comments
Minyanville | At Behest of Banks, Fed Relaxes Debit Card Regs in Final Rule
The finalized rule caps debit card fees at 21 to 24 cents per transaction for banks with more than $10 billion in assets.
Forbes | A Return To Basics: What Is Stable Money?
To be perfect, currency should be invariable in value.
Budget
News
National Journal | First 2012 Spending Bill Approved by Senate Appropriations Committee
Military construction-Veterans' Affairs bill would provide $142 billion in total funding, including $72 billion in discretionary spending.
CNN Money | Minnesota government shuts down
A budget stalemate forced a virtual full shut down of the Minnesota government on Friday and left only a limited array of state services in operation over the busy holiday weekend.
Politico | Republicans to push tough-to-sell balanced budget amendment
One option contains hard spending caps and a two-thirds supermajority vote for any tax increases. This version is embraced by the right but has little chance of passing.
WSJ | Obama Pushes for a Deficit Deal by July 22
The Obama administration believes congressional leaders must agree to a deficit-reduction deal by July 22 in order to raise the government's borrowing limit in time to avoid a default in early August, according to Democratic officials with knowledge of the negotiations.
Econ Comments
National Journal | Failure on Debt-Ceiling Talks May Mean Constitutional, Economic Double Bind
Does the 14th Amendment hold the answer to potential default?
WSJ | Debate Decoder: What the Euphemisms in the Debt Standoff Really Mean
If you couldn't follow that declaration from the president's news conference Wednesday, don't feel bad. Both Democrats and Republicans are trading partisan shots wrapped in code words, which mean a lot to insiders but are hard for others to follow—often intentionally so.
Washington Times | WHEELER: Defense appropriations: pork and gimmicks, as usual
Democrats and Republicans alike pretend that austerity is the new rule.
WSJ | The GOP's Debt-Ceiling Divide
The Biden talks give budget hawks a chance to carve away some of the GOP's own sacred-cow subsidies.
Blogs
Mercatus Center: Neighborhood Effects | Do Revenues Need to be Part of the Debt Solution?
We are not the first nation to wrestle with unsustainable debts. And fortunately for us, we can learn from the measures that others have taken.
NRO: The Corner | WaPo’s Fact Checker on the Debt-Ceiling Debate
First, Glenn Kessler notes, correctly, that the debt ceiling will ultimately have to be raised. It is a sad reality that under any of the proposed budgets out there, including Chairman Ryan’s, our debt will grow, at least for a while.
Reports
Mercatus Center | The Debt-Limit Debate: Addressing Key Concerns
While most are keenly aware of the rapidly nearing debt-limit increase deadline, few can explain—or even agree on—what that deadline means: specifically, what are the potential implications of missing the deadline, and what’s at stake in the negotiations for passing an increase?
National Journal | First 2012 Spending Bill Approved by Senate Appropriations Committee
Military construction-Veterans' Affairs bill would provide $142 billion in total funding, including $72 billion in discretionary spending.
CNN Money | Minnesota government shuts down
A budget stalemate forced a virtual full shut down of the Minnesota government on Friday and left only a limited array of state services in operation over the busy holiday weekend.
Politico | Republicans to push tough-to-sell balanced budget amendment
One option contains hard spending caps and a two-thirds supermajority vote for any tax increases. This version is embraced by the right but has little chance of passing.
WSJ | Obama Pushes for a Deficit Deal by July 22
The Obama administration believes congressional leaders must agree to a deficit-reduction deal by July 22 in order to raise the government's borrowing limit in time to avoid a default in early August, according to Democratic officials with knowledge of the negotiations.
Econ Comments
National Journal | Failure on Debt-Ceiling Talks May Mean Constitutional, Economic Double Bind
Does the 14th Amendment hold the answer to potential default?
WSJ | Debate Decoder: What the Euphemisms in the Debt Standoff Really Mean
If you couldn't follow that declaration from the president's news conference Wednesday, don't feel bad. Both Democrats and Republicans are trading partisan shots wrapped in code words, which mean a lot to insiders but are hard for others to follow—often intentionally so.
Washington Times | WHEELER: Defense appropriations: pork and gimmicks, as usual
Democrats and Republicans alike pretend that austerity is the new rule.
WSJ | The GOP's Debt-Ceiling Divide
The Biden talks give budget hawks a chance to carve away some of the GOP's own sacred-cow subsidies.
Blogs
Mercatus Center: Neighborhood Effects | Do Revenues Need to be Part of the Debt Solution?
We are not the first nation to wrestle with unsustainable debts. And fortunately for us, we can learn from the measures that others have taken.
NRO: The Corner | WaPo’s Fact Checker on the Debt-Ceiling Debate
First, Glenn Kessler notes, correctly, that the debt ceiling will ultimately have to be raised. It is a sad reality that under any of the proposed budgets out there, including Chairman Ryan’s, our debt will grow, at least for a while.
Reports
Mercatus Center | The Debt-Limit Debate: Addressing Key Concerns
While most are keenly aware of the rapidly nearing debt-limit increase deadline, few can explain—or even agree on—what that deadline means: specifically, what are the potential implications of missing the deadline, and what’s at stake in the negotiations for passing an increase?
Employment
Blogs
Heritage Foundation | How Higher Energy Prices Threaten U.S. Jobs
America’s trucking industry is on pace to pay a whopping $138.7 billion for fuel in 2011 — an increase of $37.2 billion over last year due to higher energy prices. That’s a lot of money for gas. And unfortunately for consumers, they’re likely to pick up the tab.
Heritage Foundation | How Higher Energy Prices Threaten U.S. Jobs
America’s trucking industry is on pace to pay a whopping $138.7 billion for fuel in 2011 — an increase of $37.2 billion over last year due to higher energy prices. That’s a lot of money for gas. And unfortunately for consumers, they’re likely to pick up the tab.
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