Tuesday, September 13, 2011

General Economics

Politico | A tale of 2 depressions
Despite the president’s call for additional stimulus, the government has, in recent months, finally achieved a bipartisan agreement to focus on — austerity!
CNN: Money | Bankruptcy among college grads grows
"The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum -- including college-educated, high-income earners," said Leslie Linfield, executive director and founder of the Institute for Financial Literacy, which conducted the study.
Market Watch | Economy on thin ice, top forecaster says
The U.S. economy is skating on very thin ice. It’s still growing slowly, but it’s also vulnerable to a shock that could send us right through the ice and into deep water, according to Nigel Gault, chief U.S. economist for IHS Global Insight and the leader of the team that has won the MarketWatch Forecaster of the Month contest for the second month in a row.
Bloomberg | Business Economists Cut U.S. Growth Outlook Through ’12 as Confidence Dims
The U.S. economy will grow less than previously estimated through 2012, reflecting a slump in confidence, limited consumer spending and a struggling housing market, a survey showed.
Market Watch | No tax increase to pay for jobs plan: Cantor
Cantor, the No. 2 House Republican, listed tax relief to small businesses, passing trade bills, and cutting regulations as items of common ground with Obama and Democrats.
Fox News | Regulation Nation: Drowning in Rules, Businesses Brace for Cost and Time for Compliance
From financial services to farming, plumbing to computer repair, business owners say new regulations have them so bogged down in compliance that it is hindering their ability to plan and expand for the coming years.

Econ Comments                                                                                                             
Washington Times | BRENBERG: We don’t need an Obama recovery
The less the president ‘helps,’ the faster we’ll improve.
Daily Caller | Higher demand and a weaker economy. What gives?
If the president and his economic advisors are right in claiming that the problem with the economy is too little consumer demand, why was consumer spending in the second quarter of this year higher than in mid-2007, before the recession began?
Washington Times | BROWN: Bad news for savers
New Obama rule would prohibit financial advice from IRA brokers.
WSJ | Republican Overregulation
Republicans have rightly criticized the Obama Administration for overregulation, but they're not above doing economic harm as well. Witness immigration policy, which suddenly has House Republicans scrambling to counter the costs of their own restrictionist policies.
Washington Times | BACON: Good intentions bring terrible results
What’s holding back black Americans? Government, not discrimination.
Forbes | Obama Is Repeating JFK's Mistakes
A temporary tax cut, credits for home buyers, shovel-ready government spending, targeted measures for the chronically jobless, extended unemployment compensation. This is President Obama’s latest plan to nudge unemployment below its high new normal – and also precisely that of John F. Kennedy as he confronted recession on taking office in early 1961.
Washington Times | RAHN: Devoid of reality
Obama policies often accomplish the opposite of their intended effects.

WSJ: Real Time Economics | Economic Forecasters Become More Pessimistic
Professional forecasters are increasingly worried that the U.S. economy faces a prolonged period of malaise.
Café Hayek | Further Thoughts on Whether or Not Social Security is Ponzi Scheme
Is Social Security a Ponzi scheme? Celebrated scholars – left and right – have called it such, or at least alleged that it bears sufficient similarity to Ponzi schemes that the appellation is justly applied to Social Security.
WSJ: Real Time Economics | Secondary Sources: Postrecession Jobs, 1937-38 Recession, Investment
A roundup of economic news from around the Web.

AEI | Improving the Regulatory Process and Financial Cost-Benefit Analysis
The SEC now is seeking public comment on how to improve its process for retrospective reviews of existing rules. One of the central economic challenges confronting all regulators, in an environment in which a flood of new rules are being issued, is to ensure that the regulations meet the challenge of improving the operation of our economy, while meeting the standards of judicial review.

Health Care

National Journal | Maxim to Pay $150 Million Fine for Health Care Fraud
Maxim, a company that provides help from licensed nurses to home health aides, has admitted to $61 million worth of federal fraud and agreed to pay civil and criminal penalties totaling $150 million.
Fox Business | The Real Cost of Obamacare
As we wait for Obamacare to make its way to the Supreme Court, supporters of the sweeping law keep bringing up the same point. Obamacare can mandate Americans have health insurance, because it's already a requirement to have car insurance.
National Journal | Will 67 Be the New 65 for Medicare?
President Obama may be toying with the possibility of raising the Medicare eligibility age from 65 to 67 as a way of saving the federal government some money when he rolls out his deficit-reduction package on Sept. 19.

AEI: American | Slouching Towards Socialism: Health Fact of the Week
All levels of government face growing pressures to restrain spending. One downside to the rapid growth in tax-financed health spending that I have documented in several prior posts is the vulnerability of the health system to measures taken to curb government spending. But the degree of such vulnerability varies dramatically across different components of the health sector.

Mercatus Center | Attempts to Control Medicare Spending: A Sisyphean Task?
Medicare was not designed to pay the entire amount of a person‘s medical bills. After the beneficiary pays an established deductible, Medicare typically reimburses 80 percent of the approved amount for covered services leaving the beneficiary responsible for a 20-percent copayment.
Heritage Foundation | The Case for Competition in Medicare
Rapidly rising health care costs threaten to push the federal budget past the breaking point. In 1975, total federal spending on Medicare and Medicaid was 1.3 percent of gross domestic product (GDP). In 2010, it was 5.5 percent. The Congressional Budget Office (CBO) expects spending on these programs, together with spending on the entitlement expansions in the 2010 health law, to reach 9.7 percent of GDP by 2030.


Bloomberg | Fed’s Fisher Sees ‘High Bar’ for Supporting Additional Monetary Stimulus
Federal Reserve Bank of Dallas President Richard Fisher said he probably won’t support further monetary easing by the Fed, arguing that steps that would boost the recovery are the responsibility of fiscal authorities.
Bloomberg | U.K. Inflation Accelerates to 4.5%, Meets Estimates as Clothes Prices Jump
U.K. inflation accelerated in August as the end of seasonal discounts boosted prices for items such as clothes and furniture.
Bloomberg | French Inflation Climbs to Highest Level in Almost Three Years on Energy
French inflation accelerated to the highest in almost three years in August as the end of summer sales boosted prices of manufactured goods and the cost of energy jumped.

Econ Comments                                                                                                             
Financial Post | The deadly cocktail of Basel III
In commentaries on this page on bank capital requirements, I have repeatedly warned that the international push to implement Basel III, which mandates increases in bank capital-asset ratios, is a deadly cocktail to ingest in the middle of an economic slump.

AEI | The Basel Proposed Rule on Liquidity Regulation and a Suggestion for a Better Approach
The Basel proposal envisions two sets of liquidity requirements: a short-term liquidity funding ratio and a long-term net stable funding ratio. Both are quite complex and may become still more complicated once the process of consultation is concluded. We believe both ratios, as currently conceived, are too complex and would result in an opaque application of the standard that would be subject to excessive supervisory discretion.


WSJ | GOP Balks at Taxes to Finance Jobs Plan
The prospects for President Barack Obama's $447 billion jobs plan grew dimmer Monday as he unveiled the fine print of how it would be paid for—primarily through tax increases that Republicans said would destroy jobs, not create them.
CNN Money | Tax the rich: How Obama will pay for his stimulus package
Obama's largest proposed pay-for -- which the White House estimates would raise roughly $400 billion over 10 years -- would limit itemized deductions and certain other exemptions for individuals with adjusted gross incomes of $200,000 or more ($250,000 and up for married couples).

Econ Comments                                                                                                             
Investors | Higher Tax Rates On Rich Won't Increase Revenues
Writing recently in The New York Times, the famed chairman of Berkshire Hathaway complained that his federal income tax last year was "only 17.4% of my taxable income" — less than $7 million on a taxable income of about $40 million.


NY Times | U.S. Spending Billions on Rural Jobs, but Impact Is Uncertain
The Agriculture Department said it had provided more than $6.2 billion to help nearly 10,000 small and emerging rural businesses expand, creating or saving more than 250,000 jobs since 2009.
CNN Money | More layoffs looming on Wall Street
Wall Street should brace for an autumn of upward revisions among the big banks. Not for profits or revenue, but in the number of layoffs to come.

Econ Comments                                                                                                             
WSJ | What Job 'Training' Teaches? Bad Work Habits
A 1969 government study warned that teens in federal jobs programs 'regressed in their conception of what should reasonably be required in return for wages paid.'
Fox Business | Where are the Jobs in the American Jobs Act?
On Sept. 8 President Obama addressed a joint session of Congress to present the American Jobs Act. In his speech the president outlined tax breaks for individuals and small businesses, funding for infrastructure projects and an extension of unemployment benefits. But the looming question remains: will these moves actually create jobs?

Atlantic: McArdle | Obama's Job Plan: A Never-Never Bill
It's worth noting that a deduction phase-out is actually worse than a marginal tax hike.  Deduction phase-outs amplify other rate increases--depending on how they're structured, a deduction phase-out can actually mean that you make less money at $251,000 than $249,000.


WSJ | Student-Loan Defaults on the Rise
By Sept. 30, 2010, 8.8% of federal student loans whose payments started coming due in the previous fiscal year had fallen into default, up from 7% in fiscal 2008.
NY Times | Government Pays More in Contracts, Study Finds
The study found that in 33 of 35 occupations, the government actually paid billions of dollars more to hire contractors than it would have cost government employees to perform comparable services.
Politico | John Boehner tries to cut deeper on 2012 funds
Instead of the agreed-upon appropriations target of $1.043 trillion, a stopgap continuing resolution or CR this week would be calibrated at a lower $1.035 trillion level.
Roll Call | Some Groups Safe From Automatic Cuts
List May Give Advocates Leverage With Deficit Panel.

WSJ: Real Time Economics | IMF Says It Needs to Improve Debt Analysis
The International Monetary Fund needs much more realistic analyses of the abilities of countries to pay their debts, IMF staff warned in a new report published Monday.
WSJ: Real Time Economics | Vital Signs: Student Loans Lead Borrowing
Americans are borrowing more — for student loans. In July, consumers owed the government about $386 billion, largely for student loans, up from $139 billion two years earlier.

CBO | Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act
In all, those automatic cuts would produce net budgetary savings of about $1.1 trillion over the 2013–2021 period, CBO estimates. That amount is lower than the $1.2 trillion figure for deficit reduction in the Budget Control Act for three reasons.
Mercatus Center | Would More Infrastructure Spending Stimulate the Economy?
...while no one disputes the value of good infrastructure, this type of spending typically suffers from massive cost overruns, waste, fraud, and abuse. This makes it a particularly bad vehicle for stimulus. In sum, further stimulus would be a risky short-term gamble with near-certain negative consequences in the long term.