Thursday, September 22, 2011

September 21, 2011 Hearing: "Manufacturing in the USA: How U.S. Trade Policy Offshores Jobs?"

"It is long past time to debunk the myth that the economic freedom to trade leads to offshoring of U.S. jobs. The facts are just the opposite. It is the absence of an aggressive, pro-active trade agenda that leaves America falling behind its global competitors and places our manufacturers at a severe disadvantage when competing for the 95% of the world’s consumers that live outside our borders.

For American manufacturing, trade means jobs. America is the third largest exporting nation in the world, and our share of global manufacturing has essentially held steady through the past 30 years. The concern is that our share of the world’s market in manufacturing has declined significantly while the Chinese share has exploded upward.

If you examine what America sells and ships overseas, it is manufacturing that accounts for the bulk of U.S. sales abroad. Much of those sales are in advanced technology and capital goods such as computers, electronics, scientific instruments and aerospace equipment – along with chemicals, oil and coal, machinery and equipment critical to the production of finished products. These are high value items, creating high paying jobs and requiring high-value research and development.

Trade is important to American workers. Not only is one of every five American manufacturing jobs tied to sales overseas, workers in the most trade competitive industries earn an average compensation package of $86,000 a year – which is nearly fifty percent higher than they would earn in the least trade-competitive industries, according to a report by the National Association of Manufacturing..."

Opening Statement from
Rep. Kevin Brady
Vice Chairman
Joint Economic Committee

To see the rest of Rep. Brady's Opening Statement and Witness Testimonies Click here

September 20, 2011 Hearing: "What is the Real Debt Limit?"

"When the Joint Economic Committee must hold a hearing on what the real debt limit is, the American people know instinctively that theif federal government is borrowing too much. One does not really want to contemplate the grave consequences if creditors were to lose faith in the federal government to repay its debts.

The United States supplies the world’s primary reserve currency; has the world’s largest economy; and is source of much of the world’s technological progress and economic development. The federal government should never violate its real debt limit because the consequences of exceeding it would be calamitous not just for the United States but indeed the entire world.

Nevertheless, the JEC must hold this hearing because the question now is asked: What is the real debt limit? Amazingly there are some that do not believe the U.S. has a serious debt problem. Given the anemic recovery, these individuals argue that President Obama’s deficit spending splurge should continue. "Don’t worry because interest rates on Treasuries remain low, and the federal government can print more money to pay all its debts," they say...."

Opening Statement
Rep. Kevin Brady
Vice Chairman
Joint Economic Committee

See Complete Opening Statement and Witness testimonies Here

See additional video of the Hearing here at the JEC youtube webstie

General Economics

National Journal | Moody’s Bank Downgrade Elevates Dodd-Frank
The rationale Moody’s gave for the ratings changes was more an evaluation of whether the financial-reform law has lived up to its goals than it was a reflection of changing fundamentals at the institutions.
WSJ | Select Cities See Brain Gain
Metro Areas With High Education and Income Levels Widen Lead, Census Finds.
Market Watch | Sales of existing homes surge 7.7% in August
Sales of existing homes climbed 7.7% to a five-month high in August, as previously delayed deals closed, prices fell and rents rose, according to data released Wednesday.
CNN: Money | Big bank bailouts less likely. Thanks Dodd-Frank!
When Moody's downgraded three banks on Wednesday, it gave a big thumbs up to the Dodd-Frank Wall Street reforms that aim to ensure there won't be any more big bank bailouts.
WSJ | Home Forecast Calls for Pain
Prices to Stumble Through 2015, Economists Say, Weighing Down Recovery.
Washington Times | Recession’s aftershocks take toll on middle class
Years after the recession’s peak, its effects caught up to middle-class residents initially insulated from its wrath.

Econ Comments                                                                                                             
Daily Caller | The president’s road to nowhere
The president seemed unaware that private companies and entrepreneurs, rather than government, have provided much of America’s infrastructure. And they could do so again, rather than asking our cash-strapped governments — and tapped-out taxpayers — to foot the bill.
Washington Times | ELLIG: Regulatory reform should be Job 1
Better attention to diagnosing problems would produce more effective solutions.
WSJ | The Anti-Solyndras
Smaller, growing firms need to be freed from Sarbox's burdens.
Daily Caller | Time to try a free-market energy policy
The consequences of huge subsidies to shift natural gas into the transportation sector are easy to foresee — especially if the EPA succeeds in its efforts to greatly curb natural gas production through restriction on fracking and other burdensome regulations.
WSJ | The Education Our Economy Needs
We lag in science, but students' historical illiteracy hurts our politics and our businesses.
AEI | What “Developing” Countries Can Teach the US
Today we've been seeing enormous growth in what we have been accustomed to call "developing" countries. They have been growing nearly four times faster than "developed" countries and they account for nearly half of total global investment and global economic growth today.
Forbes | Removing "Dismal" From Dismal Median Household Income Statistics
These are mean times for median incomes. Depending on which gloomy news story you’re reading, it turns out that U.S. incomes have stagnated over the last three years.

WSJ: Real Time Economics | Economists React: ‘Strongest Sign’ of Europe Double Dip
Financial data company Markit said its preliminary survey of purchasing managers in the 17-nation euro zone fell into contraction territory – a reading below 50 – this month, marking the first reading in contraction territory since the euro zone climbed out of recession in the third quarter of 2009, and raising new fears of a double-dip.
Minyanville | What Happens When the Wealthy Become Price-Conscious?
Increasingly, organizations are not only looking to the wealthy for opportunity, but for outright survival.
Cato @ Liberty | The Right Way to ‘Enforce’ Trade Agreements
On Tuesday, the Office of the U.S. Trade Representative launched a formal dispute at the World Trade Organization over China’s imposition of antidumping and countervailing duties on U.S. exports of chicken broilers.
Daily Capitalist | Why I’m An Austrian In Economics
The financial crisis has led many people to doubt the merits of free markets and a liberal economic regime.

RCM: Wells Fargo | “Operation Twist” Gets Underway
The Fed’s intent is to bring down long-term interest rates even further and, hopefully, to spur more borrowing.

Health Care

National Journal | A Million Young Adults Go on Parents' Insurance
That rush of young adults to sign up for insurance has slowed a longstanding trend: Adults 19 to 25 have been the age group least likely to have insurance.
CNN: Money | Health insurance costs to rise again next year
Employee health care benefit costs are expected to increase 5.4% next year, while the projected health insurance increase would be the smallest recorded in 15 years, it still remains well above the general rate of inflation, which stands at 3.9%, and salary growth.

Econ Comments                                                                                                             
AEI | Means Testing and Its Limits
America faces a massive crisis of entitlement spending. The Congressional Budget Office projects that, just a decade from now, government debt will be greater than the nation's entire gross domestic product--and that the main driver of that debt will be entitlement programs.


WSJ | Fed Launches New Stimulus
Dramatic Recasting of Securities Holdings Aims to Reduce Long-Term Rates.
CNN: Money | Federal Reserve launches Operation Twist
While the move does not mean the Fed will pump additional money into the economy, it is designed to lower yields on long-term bonds, while keeping short-term rates little changed.
WSJ | Fed Twist Prompts Markets to Turn
The Federal Reserve pulled fresh levers in the bond markets but failed to dispel investors' skepticism about its ability to kick-start the economy.

Daily Capitalist | Operation Twist: The Consequences
So today, the Fed gave us, in addition to their normal pap about “downside risks” and “exceptionally low rates” forever, two new policies: (1) they will sell $400B worth of Treasurys of 3 years or shorter maturity, and buy $400B worth of Treasurys with 6 to 30 year maturity; and (2) the Fed will reinvest the proceeds when mortgages it owns are paid.
WSJ: Real Time Economcis | Parsing the Fed: How the Statement Changed
Reviewing changes in the Fed's statement between September and August.
Minyanville | 11 Aftereffects of Operation Twist
The Fed thinks Operation Twist will spur more borrowing and lending. This might happen, but there will be other consequences, too.
Cato @ Libert | The Federal Reserve, the ‘Twist,’ Inflation, QE3, and Pushing on a String
I’ve freely admitted before that it is difficult to identify the right monetary policy, but it certainly seems like this policy is — at best — an ineffective gesture. This is why the Fed’s various efforts to goose the economy with easy money have been described as “pushing on a string.”


WSJ | IRS Gives Employers a Break on Payrolls
The downside for such companies? Regulators say they are going to be more vigilant about misclassification of workers in the future.

Econ Comments                                                                                                             
WSJ | Obama's Tax Morass
Barack Obama and his perpetually angry Democratic "base" are the outliers on comprehensive tax reform.
Washington Times | TYRRELL: Not knowing when to say ‘when’ on taxes
Obama thinks all of our money is his money.

Political Calculations | Why Hiking the Top Income Tax Rate Won't Fix President Obama's Deficits
What we do see indicates that the maximum tax rate has little to no bearing on how much money the federal government collects per household in any given year. Since 1967, the government's RPH to MHI ratio has risen steadily on average, indicating that the U.S. government is collecting more and more money per household over time, with the changing level of the topmost income tax rate having little to no effect on the rate of that change.
Cato@Liberty | Warren Buffett’s Tax Story Is Bogus
Perhaps Buffett was referring to the fact that his secretary pays a heavy load of payroll taxes in addition to income taxes. But when you look at data which includes all federal taxes, the system is still highly graduated with much higher rates at the top end.
NRO: The Corner | Is Our Tax System Fair? If Not, Why?
I actually find the system unbelievably unfair because the amount of taxes one pays isn’t actually a product of how much one makes.


MarketWatch | Jobless claims drop to 423,000 from 432,000
Fewer out-of-work Americans filed new claims for unemployment benefits last week, but applications remain at an elevated level that reflects the slow pace of hiring in the U.S., government data showed Thursday.
Politico | Census: Young hit hard by recession
According to the new 2010 census data released Thursday, the country’s young adult population, made up of mostly 20-somethings and 30-somethings, is one of the worst hit by unemployment and poverty, with the state of the economy having a noticeable impact on their decision to delay marrying and moving out of their parents’ homes.


Washington Times | House bipartisan effort kills stopgap funding bill
Increases risk of federal shutdown.

Econ Comments                                                                                                             
WSJ | Don't Pay As You Go
Did someone say fiscal austerity?