Friday, January 27, 2012

General Economics

News                                                                                                                             
Investors | High Apartment Rents Seen Pushing People To Buy Homes
"There's no doubt rising rents will cause some potential homebuyers to think twice before renting. But we still look for only modest growth in home sales," said Paul Bishop, vice president of research at the National Association of Realtors.
Market Watch | Economy expands 2.8% in fourth quarter
The U.S. economy grew at the fastest rate in a year and a half in the fourth quarter, but a large chunk of the increase was fueled by an unexpected buildup in inventories, according to a preliminary government estimate.
WSJ | Recovery Doesn't Feature Typical Snapback in Growth
The U.S. economy has taken more than two years to claw its way back to producing the amount of goods and services it did just before the last recession.
Washington Times | Government-backed energy company files for bankruptcy
A company whose subsidiary won a $118 million grant from the Energy Department filed for bankruptcy Thursday, the third government-backed energy company to go broke in recent months.
WSJ | Obama Unveils Energy Plans
"We've got a supply of natural gas under our feet that can last America nearly a hundred years….It turns out we are the Saudi Arabia of natural gas," Mr. Obama said at a United Parcel Service Inc. facility that will serve as a refueling station for trucks that run on liquefied natural gas.
CNN Money | New-home sales hit a record low
Just 302,000 new homes were sold in 2011, 6.2% below 2010 and the lowest number of annual sales since the government started tracking home sales in 1963.
National Journal | Obama Announces Proposal to Push Colleges to Lower Tuition
"If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down," Obama said, speaking of universities at-large, to students gathered at University of Michigan in Ann Arbor.

Econ Comments & Analysis                                                                                            
CATO | Reshaping Social Security And Our Society
It all started March 18, 2010, with the enactment of the Hiring Incentives to Restore Employment (HIRE) Act. Under this law, employers who hired new workers from Feb. 4 to Dec. 31, 2010, qualified for up to a 6.2 percent payroll-tax deduction for each new worker, essentially exempting the employer from the Social Security tax. The tax deduction had no effect on the new employee’s Social Security retirement benefits, effectively delinking the two
AEI | The right idea in the wrong place
If America wants true high-speed rail, we should first improve the Northeast Corridor between Washington and Boston. The proposed high-speed rail line between Los Angeles and San Francisco is unlikely to meet that test.
Washington Post | Angry about inequality? Don’t blame the rich.
The “rich” in America are not a monolithic, unchanging class. A study by Thomas A. Garrett, economist at the Federal Reserve Bank of St. Louis, found that less than half of people in the top 1 percent in 1996 were still there in 2005.
Washington Times | Obama’s crony capitalism
Never in modern history has the U.S. government been used so extensively as a vehicle for benefiting political cronies at the expense of the rest of us.
WSJ | Your Tax Dollars Not at Work
Last week, President Barack Obama refused to allow private citizens to spend $7 billion improving America's energy infrastructure. Three years ago, he insisted that taxpayers spend more than 100 times that amount on an outlay that also addressed the nation's energy needs, among other goals.
Forbes | 'Systemic Risk' Is Not Event Driven, It Is Character Driven
Why does everybody start talking about systemic risk, after a crisis has already started? If we define a systemic risk event as something large enough to affect the entire global financial and economic system, then you would think that the best time for investors to be told about these terrible events is before they occur.

Blogs                                                                                                                             
Think Markets | President Obama’s State of Regulation
Barack Obama sounded a number of themes in his 2012 State of the Union Address this week, all underpinned by the proposition that socioeconomic ills can be solved by interventionist government in general and his administration in particular.
Heritage Foundation | World War II: Economic Stimulant or Depressant?
Did World War II spending boost economic growth? Although some statistics appear to affirm this, wiser historical analysis demonstrates that artificial increases in output during the war masked a debilitated private economy. Meaningful growth increased after the war, when free-market mechanisms returned and marginal tax rates were reduced.

Health Care

News                                                                                                                             
National Journal | Physicians Oppose Budget Cuts
The American College of Physicians says looming budget cuts and political discord are likely to undermine successful programs that ensure people can get the medical care they need.
National Journal | Obama Administration Highlights Health Care Innovation in Private Sector
Initiatives that seek to improve diabetes care and coordinate care for people after they leave the hospital were highlighted by federal officials Thursday hoping to encourage the private sector to take on some responsibility for improving the overpriced and underperforming U.S. health care system.

Econ Comments & Analysis                                                                                            
Politico | 'Obamacare' shreds social safety net
“Republicans are undermining Social Security, Medicare and Medicaid. Vote Democratic to stop them.” This has become a staple of liberal Democratic campaigns. Count on the Obama ‘reelection express’ to pound this message home.

Monetary

News                                                                                                                             
CNN Money | Why is the Fed still so nervous?
The Fed may now be too bearish. It is now pledging to keep interest rates near zero for nearly another three years, pushing out its expectations for its next rate hike from mid-2013 to late 2014.

Econ Comments & Analysis                                                                                            
Bloomberg | Fed Easing May Harm Long-Term Economic Growth, Warsh Says
“Recent policy activism -- measures that go beyond a central bank’s capacity or traditional remit -- threatens to forestall recovery and harms long-term growth,” Warsh said in a speech today in Stanford, California.
WSJ | The Zero Decade
The two most powerful men in Washington have a big disagreement. We mean Mr. Obama and Federal Reserve Chairman Ben Bernanke, who can't seem to agree on the health of the U.S. economy.
Washington Times | Making sense of Fed keeping interest rates low
Compared to the initial weeks of 2012, this week was chock-full of activity from a pickup in corporate earnings, Republican presidential candidate debates, the State of the Union address, economic forecast updates and, of course, the latest economic data.

Taxes

News                                                                                                                             
Washington Times | Taxpayers still owed $132.9B from bailout
Some bailout programs, such as the effort to help homeowners avoid foreclosure by reducing mortgage payments, will last as late as 2017, costing the government an additional $51 billion or so.

Blogs                                                                                                                             
Tax Foundation | The Buffett Rule: Lessons from the Recession on Taxing Millionaires
Comparing the 2009 data to the pre-recession data for 2007 shows that not only did the number of millionaires fall by 40 percent, but the overall income of millionaires fell by 50 percent. The result for the U.S. Treasury was that 54 percent of the total drop in tax revenues during this period was due to the falling tax collections from millionaires.
Library of Economics | One-Sentence Tax Reform
If A and B earn the same income, but A saves and B spends more, then A should not have to pay higher lifetime taxes.
Marginal Revolution | Cell phone taxes and the tragedy of the anticommons
In the United States we tax cell phones more than beer. The usual explanations for high taxes, negative externalities and low elasticity of demand don’t seem to apply to cell phones.
The American | Look at just how progressive the U.S. tax system is
Great, great table from the Tax Foundation looking at the average real income tax rate for various income groups.
Reason | The Tax Foundation Releases 2012 State Business Tax Climate Index
The states of interest include: Illinois, which raised taxes that have gone into effect; Connecticut, which raised taxes that are going into effect; Colorado, which had a tax increase ballot initiative defeated by voters; and finally New Jersey, which is exploring cutting taxes.

Employment

News                                                                                                                             
WSJ | NEC Forecasts a Loss
NEC Corp. plans to cut 10,000 jobs and warned that a combination of asset write-downs and restructuring costs will result in a net loss of more than $1 billion for this fiscal year.
WSJ | Spain Unemployment Rate Hits 22%
The number of jobless Spaniards rose by 295,300 in the fourth quarter from the third, to 5.27 million.

Econ Comments & Analysis                                                                                            
Washington Times | Help the unemployed off the rolls
When it comes to job creation, President Obama has no clue. Under his leadership, the average amount of time spent in the unemployment lines more than doubled from four to nine months.

Blogs                                                                                                                             
Political Calculations | New Jobless Claims: Still on Track, But Increasingly Volatile
The rate of improvement in the number of new jobless claims filed each week is leveling off between 370,000 and 380,000.
Tax Foundation | Unemployment Drops in 46 States: Exceptions are Hawaii, Illinois, Mississippi, North Carolina
Unemployment rates have dropped in 46 states from January 2011 to January 2012. There were four exceptions:

Budget

News                                                                                                                             
Washington Times | Senate paves way for final debt increase
Thursday the Senate voted to clear the way for President Obama to raise the federal government’s borrowing limit by another $1.2 trillion to $16.4 trillion, which he hopes will last past the November election.
WSJ | Greece Edges Towards Debt Deal
Talks between Greece and its private sector creditors over a €100 billion ($131 billion) debt write-down edged towards an agreement
Politico | Debt ceiling increase allowed by Senate
The Senate on Thursday voted to allow President Barack Obama to increase the debt ceiling by $1.2 trillion, an amount large enough to ensure the federal government can pay its bills through the November elections.

Blogs                                                                                                                             
CATO | Biennial Budgeting: Baloney Budget Reform
I don’t recall ever agreeing with the left-liberal Center on Budget and Policy Priorities (CBPP), but their new paper on the drawbacks of the federal government switching to biennial budgeting is a good read.