Wednesday, December 12, 2012

General Economics

WSJ | Trade Gap Grows As Exports Slide
U.S. exports in October posted their largest monthly drop in almost four years as slowing overseas economies curbed the global appetite for American goods and services.
NY Times | U.S. Students Still Lag Globally in Math and Science, Tests Show
Fourth- and eighth-grade students in the United States continue to lag behind students in several East Asian countries and some European nations in math and science, although American fourth graders are closer to the top performers in reading, according to test results released on Tuesday.
CNN Money | U.S. oil prices could sink to $50
U.S. oil prices could sink to $50 a barrel at some point over the next two years, according to analysts at Bank of America Merrill Lynch.
Bloomberg | American Companies Are Poised to Boost Capital Spending
American companies are poised to put idle cash to work as demand rebounds in 2013 after spending slumped amid the slowdown in China and Europe’s recession.
Market Watch | Economy will feel fiscal drag, top forecaster says
Even if Congress and the president reach a deal to avert the fiscal cliff, the U.S. economy will still labor next year under the burden of tighter fiscal policy, said Avery Shenfeld, chief economist for CIBC World Markets and the winner of the Forecaster of the Month award from MarketWatch.
USA Today | Mortgage delinquencies to remain high in 2013
If not for all the homeowners who haven't paid their mortgages in more than a year, the nation's home loan delinquency rate would be only slightly higher than normal, shows new research from credit monitor TransUnion.
CNN Money | Treasury sells remaining AIG shares
The Treasury Department said Tuesday it had agreed to sell the last of its shares in insurer AIG, resulting in what it says is a $22.7 billion profit on one of the key bailouts of the 2008 financial crisis.
Market Watch | Birth rates, migration expected to drop: Census
The population is expected to grow much more slowly over the next several decades as both the levels of births and net international migration fall.

Econ Comments & Analysis                                                                                            
Real Clear Markets | It's a Fact That Politicians Wreck Work Incentives
Despite gains in employment and a drop in the jobless rate in November, the labor force data released Friday were disturbing. They showed a drop of 350,000 in the number of people in the labor force, a big decline for one month and an extension of a troubling trend.
Real Clear Markets | Whom Do You Trust? A Bond Salesman or Government Official?
Fannie Mae and Freddie Mac, the notorious government-sponsored enterprises (GSEs), had before their failure very high leverage and very small capital ratios, with credit risk of about 60 times their capital. Yet together they were able to borrow $5 trillion from buyers of their bonds and mortgage-backed securities around the world.
Washington Times | Apple’s made-in-U.S.A. plan fuels wishful thinking
Sorry to spoil the party, but I am completely unimpressed with Apple’s announcement last week that it will resume manufacturing some computers in the United States next year. I’m even less impressed with the larger narrative continually fed by such news for months — that America is reclaiming from an over-the-hill China the mantle of global industrial leadership.
CBO | CBO Releases a Report on Supplemental Security Income
In fiscal year 2013, more than 8 million people will receive Supplemental Security Income (SSI) payments at a federal cost of about $53 billion, CBO estimates.

Heritage Foundation | Trade Deficit Increase Not Necessarily a Bad Thing
The U.S. Bureau of Economic Analysis (BEA) announced today that imports and exports both declined in October while the overall trade deficit increased.
Market Watch | U.S. economy may gain traction by half-time in 2013: Moody’s Analytics
The U.S. economy will temporarily go over the fiscal cliff, before lawmakers come under enough pressure to force them to reach a comprehensive agreement, according to Mark Zandi, chief economist at Moody’s Analytics.
Café Hayek | Interviewed by James Pethokoukis
Jim Pethokoukis interviewed me for Ricochet about the economy, Alan Greenspan’s confession, and the what economics has to say about policy.
Political Calculations | Record Dividends as the U.S. Creeps Deeper Toward Recession
According to S&P's latest Monthly Dividend Action Report [Excel spreadsheet], the month of November 2012 was a record month that saw some 3,327 U.S. companies make some kind of declaration involving their dividends (that's not the record!)
Greg Mankiw | The Poverty Trap in France
Let’s take an unemployed mother living alone with two children between six and 10 years old. In 2010, there were 284,445 French families in this situation that were on welfare.

Health Care

Politico | HHS: It's all or nothing on Medicaid expansion
Supporters of the massive Medicaid expansion under health reform cheered HHS’s Monday announcement that states have to do all or nothing — partial expansion isn’t an option.

Econ Comments & Analysis                                                                                            
Washington Times | Medicare reform crucial for economic health
The looming “fiscal cliff” threatens to turn our fragile recovery into another full-blown recession if President Obama’s push to raise taxes on U.S. job creators is successful. It also threatens to undermine our national defense by cutting resources for our military. The cliff absolutely must be avoided.


Bloomberg | Bernanke Critics Can’t Fight Bonds Showing No Inflation
As Ben S. Bernanke considers whether to worry about inflation before adding to his record monetary stimulus today, he has the bond market on his side.

Econ Comments & Analysis                                                                                            
WSJ | Inside the Risky Bets of Central Banks
Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.


WSJ | Corporate Taxes on Table in Cliff Talks
The White House has told Republicans it would include an overhaul of the corporate-tax code as part of any deal to reduce the deficit, people familiar with the talks said, a move to court business groups as budget negotiations intensify.
Politico | 180 economists oppose tax hike
A letter signed by 180 economists opposed to tax increases as part of a fiscal cliff deal will be delivered to Congress on Wednesday, according to a national anti-tax group.
National Journal | White House Adds Corporate Tax Reform to Cliff Offer
The White House sweetened its latest offer to House Republicans by including in the details an overhaul of the corporate tax code, according to sources familiar with the fiscal cliff talks.

Econ Comments & Analysis                                                                                            
WSJ | Taxes Are Much Higher Than You Think
President Obama argues that the election gave him a mandate to raise taxes on high earners, and the White House indicates that he won't compromise on this issue as the so-called fiscal cliff approaches.
NBER | The Hated Property Tax: Salience, Tax Rates, and Tax Revolts
Because of the manner in which it is normally paid, the property tax is almost certainly the most salient major tax in the U.S. The property tax is also the least popular tax and the only major tax whose revenues have declined as a share of income.

Library of Economics | When Taxes are Cut, What Does Regressive Mean?
How starting with a progressive tax system and cutting everyone's taxes by the same percent gives you a regressive tax cut.
Tax Foundation | Virginia May Consider Gasoline Tax Increase
In FY 2013, the Virginia state government is expected to spend around $4.9 billion on transportation, including some $4.1 billion on roads. However, the state gasoline tax of 17.5 cents per gallon will raise just $961 million; other road- and vehicle-related state taxes raise another $1.3 billion.
Library of Economics | The More-Visible Are Property Taxes, the Lower they Are
People hate the property tax more than other taxes. There are fairly regular "tax revolts" against the property tax, many of which are based on local or statewide referenda.
CATO | Regardless, You'll Pay More
The president may be calling for $1.6 trillion in tax hikes by 2022 in exchange for not driving the country over the cliff, but that does not count Obamacare, which will impose an additional $1 trillion in new or increased taxes over the next ten years, a big portion of which take effect in 2013.
National Review | More on Increasing Tax Rates On High-Income Earners
Recently I’ve been reading economists Leonard Burman and Joel Slemrod’s Taxes in America. Like pretty much everything else these two write, this book is well worth reading.


FOX Business | Avon to Axe 1,500 Jobs, Exit Some Markets
Avon (AVP) said Wednesday it will cut 1,500 jobs globally over the next year and exit South Korea and Vietnam as it looks to shed the excess fat from its operations and hone in on faster growing "high priority" markets.

Café Hayek | Is the safety net keeping the unemployment rate high?
I talked to Casey Mulligan about his new book, The Redistribution Recession. He argues in that book that the increased generosity of the safety net–unemployment compensation, food stamps, help with health care and so on, played a major role in worsening the recession and slowing down the recovery.
Calculated Risk | BLS: Job Openings "little changed" in October
The level of total nonfarm job openings in October was up from 2.4 million at the end of the recession in June 2009.
AEI | Michigan becomes 24th right-to-work state and joins states creating jobs at almost 3X the rate of forced unionism states
In an historic milestone for the rights of American workers to decide whether to join labor unions, Michigan became a “right to work” state today over the protests of thousands of union workers and teachers. 


Bloomberg | American Companies Are Poised to Boost Capital Spending
American companies are poised to put idle cash to work as demand rebounds in 2013 after spending slumped amid the slowdown in China and Europe’s recession.
WSJ | Make Your Own Deficit-Reduction Plan
Unless lawmakers can agree on measures to reduce the deficit, standing legislation will do it for them. Under the "Fiscal Cliff" scenario, the Congressional Budget Office projects a deficit of $142 billion by 2020, or a $1.102 trillion deficit if some tax cuts are extended and other policies remain in effect.

Econ Comments & Analysis                                                                                            
Heritage Foundation | Fiscal Cliff: Five Budget Tactics to Reject
If plunging over the fiscal cliff[1] in January would threaten the nation’s economy, Congress and the President could also do harm in another way: by dodging the cliff through gimmicks and bogus budget cuts that create only illusory savings in a “grand” budget bargain.
WSJ | We Can't Fix the Budget in Secret
The United States is on an unsustainable spending and debt course. Without reform, it will lead to economic disaster. Yet a fundamental alteration in U.S. policy won't occur until the American people understand the depth of the danger and the scale of change required. One thing is already clear: Such change can begin only with extensive, messy and even contentious legislative work carried on for months in the open light of day.
Real Clear Markets | Where Have the Heroes Gone In the Fiscal Cliff Debate?
As the nation contemplates the Fiscal Cliff and its yawning abyss, many people wonder if there are any close historical parallels to guide us. Our country has lived through, and endured, many crises, but never one exactly like this. One past budget crisis, however, has some similarities from which we might be able to learn.
WSJ | A Truly Balanced Approach to the Deficit
The dangers of the "fiscal cliff" are by now well known. Most agree that the year-end $500 billion in tax increases and $110 billion in arbitrary, across-the-board discretionary spending cuts, including defense, must be averted to avoid plunging the U.S. economy back into recession. But how the danger is averted is important.
Investors | Fiscal Cliff Offers Chance To Change How Congress Frames Debate
Getting a truly satisfying bargain in fiscal cliff negotiations, including comprehensive tax reform, seems unlikely, especially before Christmas. People are too dug in.
Washington Times | Obama’s fuzzy math
The deadline for reaching a deal to avoid the fiscal cliff is looming, and the solution remains elusive. President Obama appears no closer to accepting any spending cuts. Instead, he’s trying to push a plan that would only add to the existing $16.4 trillion debt.

Keith Hennessey | A third option changes the negotiation
The conventional wisdom on the fiscal cliff is that there are two options: (1) an Obama-Boehner deal; or (2) no deal, in which case there is no legislation before the end of the year and we “go off the fiscal cliff.” Even those who acknowledge the possibility of other legislative paths appear to treat the Obama-Boehner negotiation as if it were the only alternative to a failure to legislate.
WSJ | As U.S. Approaches Debt Limit, Treasury Readies ‘Extraordinary’ Measures
As the federal government closes in on its legal debt limit, the U.S. Treasury is dusting off its book of so-called extraordinary measures — moves that will buy it a few extra months to finance Social Security, military salaries and other payments.