Wednesday, April 25, 2012

General Economics

WSJ | U.K. Back in Recession
The U.K. slid back into recession in the first quarter of 2012, dealing a fresh blow to Prime Minister David Cameron's governing coalition and complicating its efforts to fix the nation's public finances.
NY Times | With Venezuelan Food Shortages, Some Blame Price Controls
By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries.
WSJ | S&P Cuts India Outlook to Negative
Standard & Poor's Ratings Services cut the outlook on India's long-term credit rating Wednesday in a surprise move that could see Asia's third biggest economy lose its investment-grade status if the government fails to solve deep-seated problems that have clouded its economic prospects and spooked investors.
USA Today | Economy's recovery caught between opposing forces
Economists may have finally learned CEOs' first rule of dealing with Wall Street: It's better to underpromise and overdeliver.
WSJ | Housing Notches Tiny Gains
Fresh economic benchmarks painted a mixed picture of the nation's housing market, reflecting a sector that is inching forward amid fits and starts.
Market Watch | Orders for big-ticket items fall 4.2% in March
Orders for long-lasting U.S. goods fell sharply in March, largely because of fewer bookings for commercial jets, the Commerce Department reported Wednesday.

Econ Comments & Analysis                                                                                            
CNN Money | Companies see slower growth ahead
In what could be yet another sign that the recovery is losing momentum, a new survey shows medium-sized companies are still not confident enough to hire.
The American | Right in the Middle: The Midwest’s Growth Lessons for America
Middle America is a clear picture of how much the basics matter: Cost of living, job quality, schools, and opportunities to develop the right skills for the best jobs.
Fortune | Don't blame the 1% for America's pay gap
It's time to end the myth that the nation's wealthy are getting rich off the backs of the poor. Instead let's figure out what they're doing right.
WSJ | Europe's Phony Growth Debate
Growth or austerity? That's the choice facing Europe these days—or so the Keynesian consensus keeps saying. According to this view, which has dominated world economic councils since the 2008 crisis began, "growth" is mainly a function of government spending.
Washington Times | Not so high-speed rail
Trainmakers interested in getting a big slice of taxpayer cash have until May 11 to notify federal officials that they want to build America’s next-generation high-speed rail cars. Over $550 million is being made available for these next-generation purchases through a program meant to fulfill the White House vision of “trains zipping along at up to 220 miles per hour in our most densely populated corridors.”

Atlantic | Does Stimulus Grow the Private Economy?
Let's start off by rehashing the battle over whether the 2009 stimulus bill--ARRA, the American Reinvestment and Recovery Act--really worked. I'm not talking about the tax cuts--I'm talking about the spending: green jobs, new government buildings, health clinic staffers.

Health Care

CNN Money | Pollution report: More Americans breathing easier
While dangerous pollutants still threaten the health of millions of Americans, the United States has made great strides in clearing the air, according to the American Lung Association.

Econ Comments & Analysis                                                                                            
NBER | Effects of Medicare Payment Reform: Evidence from the Home Health Interim and Prospective Payment Systems
Medicare continues to implement payment reforms that shift reimbursement from fee-for-service towards episode-based payment, affecting average and marginal reimbursement. We contrast the effects of two reforms for home health agencies.

Library of Economics | Economists on Health-Care Licensing
Loosening current licensing restrictions on the range of services that nurses, physician assistants, dental hygienists and pharmacists are permitted to perform would help patients on balance, because the additional safety risks would be small compared to the decreased costs in waiting time and fees.
National Review | The Trustees’ Report: Things Aren’t Looking up
The annual reports of the Social Security and Medicare trustees were released yesterday. As always, the reports present a grim and deteriorating picture of the two programs’ financial outlooks. Here are a few highlights


Bloomberg | Draghi Softens Tone on Inflation, Calls for Growth Compact
European Central Bank President Mario Draghi softened his tone on the inflation outlook and called for a “growth compact” as the sovereign debt crisis weighs on the euro-area economy.
USA Today | Fed not likely to change rates Wednesday; statement is key
The Federal Reserve will have plenty to say about the economy Wednesday, when its two-day policy meeting ends with a statement, updated forecasts and Chairman Ben Bernanke's news conference.
Politico | Stimulus expected to lapse in June
The Federal Reserve looks ready to take the training wheels off the recovery, despite signs that the economy is wobbling again.
Bloomberg | Fed Officials Weigh Rules-Based Policy That Stay Flexible
Federal Reserve officials are struggling to find consensus on a policy rule that’s predictable to investors yet flexible enough to adjust to shifts in the economy or markets.

Econ Comments & Analysis                                                                                            
Forbes | Maintaining America's Prosperity Requires A Single Fed Mandate
In 2008 and 2009, the Federal Reserve joined with the Administration and Congress to take bold and pervasive steps, some might even argue outside their boundaries, to successfully stabilize a teetering global economy.
CATO | A Gold-based Currency Board, Please
Until early in the 20th century, gold played a central role in the world of money. Gold had an incredible run — almost three thousand years. And why not?


Market Watch | Taxpayers still on hook for $119 bln in TARP funds
Taxpayers are still owed $119 billion in outstanding Troubled Asset Relief Program funds, a watchdog for the government crisis response program said Wednesday in a quarterly report to Congress.

Econ Comments & Analysis                                                                                            
WSJ | A Payroll Tax Cut Could Help Social Security
After decades of delay, Congress and the next president will need to take steps to restore Social Security's finances and improve Americans' retirement income security. Although it might seem counterintuitive, one positive step toward achieving both goals is to cut the 12.4% payroll tax for workers nearing retirement, say, at age 62.
Real Clear Markets | What If We Had Overhauled Our Tax Code?
One of the biggest economic policy decisions facing our nation this year will be whether to extend the Bush tax cuts come December 2012. Ominously labeled "Taxmageddon," a host of tax policy changes are set to occur at year-end, and there truly is much at stake: $3.67 trillion of additional tax revenue over 10 years from the Bush tax cuts alone.
WSJ | Obama's Budget Means a Tax Increase on Everyone
The defeat in the Senate of the so-called "Buffett Rule"—that targets millionaires for a tax increase—marks one more step in the election-year discussion about raising taxes on higher-income individuals to close the nation's yawning budget gap.
CBO | Federal Support for State and Local Governments Through the Tax Code
My testimony focuses on two particular aspects of current policy: (1) the use of tax-preferred bonds by state and local governments for subsidizing investment in capital-intensive projects for such things as highways, water resources, and school buildings and (2) the deductibility of state and local taxes.

Tax Foundation | Nobel Laureate Economist: Prices Don’t Matter
In today's Wall Street Journal, Nobel laureate Peter Diamond and Emmanuel Saez write "High Tax Rates Won't Slow Growth".  This is certainly out of the box thinking - the box that defines the foundation of economics. 
The American | 7 reasons why higher tax rates hurt economic growth (A response to Diamond and Saez)
Diamond and Saez argue that high tax rates tend to “go with higher economic growth.” As evidence, they note that per capita GDP growth averaged 1.68% between 1980 and 2010 when top tax rates were “relatively low,” while growth averaged 2.23% between 1950 and 1980 when rates were at or above 70%. In addition, they find “no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.”
Heritage Foundation | Of Course Higher Taxes Slow Growth — A Response to Diamond and Saez
In The Wall Street Journal on Tuesday, Peter Diamond and Emmanuel Saez present a rambling defense of higher taxes on the rich to fund an engorged federal government. That they needed to throw out so many tired and errant arguments shows their entire argument is so much hot air.
The American | Actually, the Diamond-Saez op-ed in the WSJ is even worse than I first thought
Why would Diamond and Saez start from 1970s instead of 1980? Margaret Thatcher didn’t take office until 1979,  Ronald Reagan until 1981? If you run the numbers from 1981-2010, you find out, for instance, that the U.S. economy grew by 62% vs. 46% for France. And the UK grew by 78% vs. 57% for Germany.


CNN Money | Plan to fix Postal Service likely to pass Senate
The Senate is expected Wednesday to pass a plan to save the struggling U.S. Postal Service, an effort that could save thousands of jobs and 100 mail processing plants now slated to be closed or consolidated next month.


WSJ | Europe Struggles With Painful Deficit Cures
A pledge by European Union governments to bring their swollen budget deficits back in line with EU rules by the end of 2013 is causing economic pain and political discontent across Europe, prompting officials to begin a politically sensitive discussion on how the goal could be changed to avoid driving the Continent further into turmoil.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Some State Budgets Will Never Be the Same
When the U.S. Census announced earlier this month that state tax collections had increased robustly last year, by 10 percent, the news was hailed as further evidence that the economy was bouncing back and that state and local budget pressures were sure to diminish as a result of all that extra tax money.

Keith Hennessey | America’s entitlement spending problem (part 1)
We must change policy to address both demographics and health cost growth, and we must address demographics in all three major entitlement programs: Social Security, Medicare, and Medicaid.
Tax Foundation | 1944 Tax Foundation Report Foreshadows Social Security Insolvency
In 1944, less than a decade after the enactment of Social Security, the Tax Foundation issued a dire report on the system's finances - specifically warning about the false sense of security of allowing balances to accrue in the so-called trust fund.