Thursday, July 28, 2011

General Economics

USA Today | Political gridlock not so good for markets this time
The mere thought of political gridlock normally makes investors smile. But grins are giving way to frowns and worry lines as the countdown to a U.S. debt default inches closer with divided lawmakers still unable to strike a deal.
CNN Money | Economy still stuck in the mud
Despite a pick-up in growth at the end of last year, the economy has taken a hard turn for the worse in the last few months. On Friday, the government will report how much the economy expanded in the second quarter -- but don't expect much good news.
USA Today | Fed: Growth slows across much of the U.S.
A Federal Reserve survey says seven of the Fed's 12 bank regions reported slower growth in June and early July compared with the spring. That's a worse showing than in the previous survey. Of the remaining five districts, four reported modest growth. A fifth, the Minneapolis district, said its economy was disrupted by bad weather and the shutdown of Minnesota's state government.
CNN Money | Foreclosures fall in most U.S. cities
Foreclosures declined in more than 84% of U.S. metro areas during the first half of the year, according to the latest report from RealtyTrac, an online marketer of foreclosed properties. But that doesn't mean these markets are staging a turnaround.
National Journal | Another Hit for Housing?
The debt-ceiling impasse could make the biggest economic weight even heavier.

Econ Comments                                                                                                             
Washington Times | EDITORIAL: Jacking up your electric bill
More regulations on industry will hurt the flickering economy.
WSJ | Chinese Innovation Is a Paper Tiger
A closer look at China's patent filings and R&D spending reveals a country that has a long way to go.
Washington Times | BRADLEY: Renewable energy running scared
This may be the beginning of the end of the energy welfare state.

Heritage Foundation | Plugged-in Poverty: Half of America’s Poor Have Computers
How poor are America’s poor? The typical poor family has at least two color TVs, a VCR and a DVD player. A third have a widescreen, plasma or LCD TV. And the typical poor family with children has a video game system such as Xbox or PlayStation. Are these government numbers a fluke? Perhaps they’re artificially inflated because working-class families (with lots of conveniences in the home) have lost job+G49s in the recession and temporarily joined the ranks of the poor?


MarketWatch | Taxpayers still on hook for $130 bln in TARP funds
Treasury has 77% stake in AIG, 32% stake in GM, 74% stake in Ally Financial.

Econ Comments                                                                                                             
RCM | How to Cut Taxes, Boost Revenue
At the heart of the painful negotiations over deficit reduction has been the tension between eliminating tax expenditures, namely tax breaks for individuals and businesses, and cutting tax rates.
WSJ | Warren Buffett Is Wrong On Taxes
Millionaires and billionaires pay a higher share of their income in taxes than the middle class.
Daily Caller | Don’t allow another payroll tax accounting gimmick
Last December, Congress temporarily cut the employee share of the Social Security payroll tax rate from 6.2 percent to 4.2 percent. Tucked away in the legislation, however, was text mandating that the government continue to credit the trust funds as though that payroll tax rate were still 6.2 percent.

Cato@Liberty | Debunking the Left’s Tax Burden Deception
Keep in mind, though, that government forecasters assume that higher tax rates have no adverse impact on economic performance, so it’s quite likely that neither tax revenues nor GDP would match the forecast.

Health Care

WSJ | Uncle Sam to Pay More of the Tab For Health
Federal and state governments will take on a greater portion because the health overhaul will greatly expand the number of Americans on the Medicaid insurance program for the poor, and the federal government will subsidize insurance plans for millions of lower earners through new insurance exchanges. In addition, the growth of Medicare enrollment from an aging population will push up federal health-care spending.
Bloomberg | Health Spending Will Account for 20% of U.S. Economy by 2020, Study Shows
National health expenditures rose 4 percent to $2.6 trillion in 2010 from a year earlier, the Office of the Actuary at the U.S. Centers for Medicare and Medicaid Services estimates today in an article in the journal Health Affairs. Growth will be fueled by demand from 30 million Americans who will receive new subsidies under the health overhaul.
National Journal | Recession Slows Health Costs, but Just Wait Until 2014
The recession helped slow the growth of U.S. health costs in 2010, but expenses will pop up in 2014 when the biggest provisions of the health care law take effect, federal government researchers reported on Thursday. After that, however, rising costs should flatten out.

Heritage Foundation | If Health Spending Controls Fail, What Are the Options?
Imagine that the 2010 health reform legislation goes into effect as planned. If the skeptics are correct and it fails to control long-term federal health spending, what could a future Congress do to modify it? There are three approaches.


Bloomberg | Yen Rises as U.S. Debt Impasse Encourages Demand for Refuge; Euro Slumps
The yen appreciated 0.9 percent to 111.04 versus the euro at 9:15 a.m. in New York, from 112.04 yesterday, after touching 110.83, the strongest level since July 18. The yen gained 0.2 percent to 77.84 per dollar, from 77.98, after advancing yesterday to 77.57, the strongest since it hit a postwar high of 76.25 on March 17. The dollar was little changed at 80.21 Swiss centimes after touching a record low 79.90. The euro slid 0.7 percent to $1.4267 after dropping 1 percent yesterday.


MarketWatch | Growth slows as labor markets ‘soft’: Beige Book
Soft labor markets and weak real estate offset a slight boost to consumer spending and an encouraging start to the tourism season, the Federal Reserve reported Wednesday in its Beige Book of anecdotal evidence on the U.S. economy.
MarketWatch | Jobless claims hit 3-month low of 398,000
Applications for benefits below 400,000 for first time since April.

Econ Comments                                                                                                             
WSJ | The White House vs. Boeing
The Obama Administration opposes a bill to rein in the NLRB.
FT | America’s turbulent jobs flight
US manufacturing has a good story to tell but that story is about technology and productivity rather than jobs for the millions of people out of work and facing a jobless recovery.
WSJ | Want Jobs? Cut Local Regulations
It takes 700 hours of training to become a licensed manicurist in Alabama.

Forbes: Unconventional Logic | The Unemployment Situation Is Getting Worse
So, in terms of the rate of employment deterioration, Obama’s presidency has been more than twice as bad as George W. Bush’s. Obama’s jobs regression totals are not (yet) as high as Bush’s, but he has not had nearly as much time in office.


WSJ | Debt-Crisis Vote Goes Down to Wire in House
The House was headed for a cliffhanger vote Thursday on a revised debt plan from Republican Speaker John Boehner that could go a long way in determining if the government's borrowing limit is raised in time to avoid a possible default next week.
CNN Money | Debt ceiling: The trillion dollar mystery
House Speaker John Boehner says his bill has $1.2 trillion in discretionary spending cuts over ten years. Senate Majority Leader Harry Reid says his bill has about the same level of such cuts.
WSJ | S&P Stays Mum on Rating for U.S.
Standard & Poor's Ratings Services left the threat of a downgrade hanging over the U.S., declining to tell anxious lawmakers on Wednesday whether rival tax and spending plans floated in Washington would save the U.S.'s triple-A credit rating.
FT | Insurance cost against US default hits record
The cost of buying insurance against a default by the US rose to a record on Wednesday, in a sign of growing unease that gridlock in Washington over raising the federal debt ceiling may result in the Treasury failing to pay interest to bondholders.

Econ Comments                                                                                                             
Politico | In pursuit of a balanced budget
As Washington struggles to find a way to raise the debt ceiling, one piece likely left out of a compromise is the Balanced Budget Amendment. That’s a shame.
Bloomberg Businessweek | Why the Debt Crisis Is Even Worse Than You Think
If Washington is deadlocked now, how will it deal with the much bigger debt problems that lurk in the decades to come?
FreedomWorks | Top 10 Reasons to Support 'Cut Cap Balance' over Boehner Plan
This fight is not about raising the debt ceiling. It’s about getting the debt under control.  Which means getting Washington spending under control.
RCM | Growth Should Inform Debt-Ceiling Debate
In the last few centuries, the betterment of mankind's lot has resulted from overall economic output increasing-that is, growing not redistributing wealth. And that increase in output has been driven by free market capitalism-an economic system where the entrepreneur can only succeed by serving the needs of others.
Washington Times | MCCLINTOCK: Debt reduction means difficult decisions
Families get what Washington doesn’t: Live within your means.

NRO: The Corner | Worried About a Downgrade?
We are not going to address our long-term debt problems without making changes to health-care and retirement spending. We just aren’t. Being worried about a downgrade should mean being willing to talk about reforming entitlements.
Heritage Foundation | The Truth about Obama’s Budget Deficits, in Pictures
The fact is that Obama’s budget would set America on a dangerous fiscal course that leads to massive deficits well into the future—hitting $1.2 trillion in 2012 and, after dipping slightly, rising back to $1.2 trillion again by 2021.

CRS | Statutory Limits on Total Spending as a Method of Budget Control
Often when there is dissatisfaction with budgetary levels, budget process reforms are proposed to mandate a specific budgetary policy or fiscal objective. This report focuses specifically on one such budget process reform—the concept of creating a statutory limit on total spending.