Monday, December 3, 2012

General Economics

WSJ | Consumer Spending Declines 0.2%
U.S. consumer spending fell in October, partly reflecting superstorm Sandy's impact on the Northeast during the final days of the month.

Econ Comments & Analysis                                                                                            
Forbes | Booming Economic Growth Can Be Broken Down To Four Easy Words
I sometimes refer to the Magic Formula for economic prosperity. Here it is: Low Taxes, Stable Money. It’s only four words. That’s so it is easy to remember.
Forbes | Why Does The Federal Government Subsidize Retirement?
Have you ever wondered why we have a Social Security system? Now that the Obama administration and Congress are facing a “fiscal cliff,” it’s time to rethink that question.

Calculated Risk | Unofficial Problem Bank list declines to 856 Institutions
CR Note: Usually I post this on Saturday - sorry for the delay. The first unofficial problem bank list was published in August 2009 with 389 institutions. The number of unofficial problem banks grew steadily and peaked at 1,002 institutions on June 10, 2011. The list has been declining recently.
Political Calculations | 2012Q3 GDP: An Upward Revision, As Expected
The revised Q3 GDP number jumped upward to 2.7%, the best quarter of the year, although still substantially a stagnation number, especially when one sees the source of the growth
Marginal Revolution | Is the eurozone doomed?
On the bright side, the fact that markets haven’t ended the European mess by themselves — say, through a truly huge capital flight from the more troubled countries — suggests that a solution does exist in principle, and may even take hold.
Calculated Risk | Schedule for Week of Dec 2nd
The key report next week is the November employment report to be released on Friday. Other key reports include November auto sales on Monday, the November ISM manufacturing index, and the November ISM service index.

Health Care

Econ Comments & Analysis                                                                                            
WSJ | An Entitlement Reform Guide
President Obama has said he wants to reform entitlements eventually, someday, after Republicans raise taxes. Republicans want the President to sign on to serious reform now as part of any deal, since AARP and the left will kill anything that isn't passed immediately.


Daily Capitalist | Record Low U.S. Birth Rate Parallels Japan
Fewer babies born per capita are pushing the U.S. toward zero population growth.  This began happening in Japan around the time it moved from an era of rising prices to one of price stability or very mild deflation, despite repeated “quantitative easing” by the Bank of Japan.
Free Banking | Fedophilia
Although the movement to “End the Fed” has a considerable popular following, only a very tiny number of economists—our illustrious contributors amongst them—take the possibility seriously. For the rest, the Federal Reserve System is, not an ideal currency system to be sure (for who would dare to call it that?), but, implicitly at least, the best of all possible systems.


Econ Comments & Analysis                                                                                            
WSJ | Britain's Missing Millionaires
A funny thing often happens on the way to soaking the rich: They don't stick around for the bath. Take Britain, where Her Majesty's Revenue and Customs service reports that the number of taxpayers declaring £1 million a year in income fell by more than 60% in fiscal 2010-2011 from the year before.

Greg Mankiw | The Gray Lady's Misleading Headline
Over my coffee this morning, I read the following headline on the front page of The New York Times: "Complaints Aside, Most Face Lower Tax Burden Than in the Reagan ’80s."  Below it was a graphic comparing average tax rates for various income groups in 1980 and 2010.
AEI | After 30 years, The New York Times admits Reaganomics worked
According to an analysis by The New York Times, the combination of all income taxes, sales taxes and property taxes took a smaller share of their income than it took from households with the same inflation-adjusted income in 1980.
Greg Mankiw | Why the President is Not So Keen on Just Limiting Deductions
From the White House blog.  Bottom line: If you apply a $25,000 deduction cap only to households with income above $250K, phase in the cap gradually as income rises above $250K, and exclude charitible giving from the cap, you increase revenue by only $450 billion over ten years.
Tax Foundation | The Tax Rate Paid by the Top 1% Is Double the National Average
The average federal tax rate for all taxpayers rose slightly in 2010 to 11.81 percent, up from 11.06 percent the previous year. The tax rate paid by individuals with incomes in the top 1 percent averaged 23.39 percent, while all filers in the bottom 50 percent paid an average tax rate of 2.37 percent, according to our newest analysis on the distribution of federal income taxes.


CNN Money | Europe's jobless lines keep growing
Unemployment in the eurozone hit a new peak in October, underlining the misery facing millions of households suffering the effects of a recession that could last well into next year.
USA Today | Many jobless in U.S. don't collect unemployment
About 2 million jobless Americans fear they'll lose their extended unemployment benefits, which are slated to end next month unless Congress votes to renew them.


WSJ | Greece Offers to Buy Back Debt
Greece's debt agency launched a multibillion euro offer to retire roughly half of the debt the country owes to private creditors, part of the latest effort to trim Greece's towering debt burden.
WSJ | Fiscal Cliff Talks at Stalemate
The White House and congressional Republicans remained at loggerheads—in both public and private—over how to design a deficit-reduction package, with just a few weeks remaining before the nation hits the fiscal cliff.

AEI | Why Obama feels little pressure to cut spending
The Tax Policy Center is out with a new report making the case for tax reform that would increase revenue and make the tax code more efficient. Like many tax experts, authors Samuel Brown and William Gale love the idea of a value-added tax, and they advocate a 10% VAT raised revenue equal to 2% of GDP. No surprise there.
National Review | The White House’s Unbalanced Approach
The president “balanced” plan is $1.6 trillion in tax hikes over 10 years and the promise of $400 billion in spending cuts over the same period. As Knudsen calculates “the package consists of at least $4 of tax increases to $1 of spending cuts” — and that’s assuming that the spending cuts will materialize, which they haven’t in previous deals. 
AEI | Math is hard: Why spending, not tax revenue, is the big problem
OK, so Team Obama is proposing $4 trillion in debt reduction. About $1.6 trillion would come immediately via tax hikes — both higher rates and lower deductions — from wealthier Americans. So based on that, this plan is roughly 60% spending cuts, 40% tax hikes. Balance?