Tuesday, July 22, 2014

General Economics

CNN Money | Detroit retirees back pension cuts
On Monday, court documents showed thousands of employees and retirees had voted in favor of cuts to their pension benefits, raising the chances that the city will be able to emerge from bankruptcy later this year.
Market Watch | U.S. home prices rise 0.4% in May, FHFA says
The FHFA house price index is based on mortgages bought or guaranteed by Fannie Mae and Freddie Mac. Compared to May 2013, prices were up 5.5%, led by 9.6% growth in the Pacific region. Prices are 6.5% below the April 2007 peak, FHFA added.

Econ Comments & Analysis                                                                                            
WSJ | Heading Off the Entitlement Meltdown
This year's budget deficit of "only" $500 billion has brought some complacency on federal spending and deficits. It shouldn't. The Congressional Budget Office's long-term budget outlook released on July 15 shows a $40 trillion increase in debt over the next two decades.
Washington Times | Government corruption on the rampage
The Obama administration is arguably the most corrupt administration in U.S. history. Corruption destroys civil society and economic growth by undermining the rule of law and protection of private property. Corruption takes many forms, from the simple payment to a government official for a favor, to the failure of government employees to do what they are paid to do, to gross abuse of power.
WSJ | The Benefits of Failure
Four years ago, Democrats enacted the Dodd-Frank law on the theory that some banks are too big to fail and that regulators have the wisdom to identify which ones. Today the company that disproved that theory is back in the news.
Mercatus | Regulation by Stealth: Time to Re-Examine Federal Agencies
In recent weeks, President Barack Obama announced plans to use executive authority to implement immigration reforms in absence of cooperation from Congress. House Speaker John A. Boehner also announced plans to initiate a lawsuit designed to check the president's power to take unilateral executive actions. Given this tension, it's a good time to consider how exactly the executive branch is able to implement policy without congressional consent.
AEI | In year four of Dodd-Frank, over-regulation is getting old
The Dodd-Frank Act was signed into law four years ago today, mandating sweeping changes in the way U.S. banks and financial markets are regulated. As implementation continues, it is increasingly clear that Dodd-Frank's unbalanced mix of new regulatory powers and vague goals are causing over-regulation and reducing economic growth.

Health Care

Econ Comments & Analysis                                                                                            
National Journal | Long-Term Care Policy Should Aim to Keep More Elderly in Their Homes
Seventy percent of Americans over age 65 are expected to require some kind of long-term care. We can't build enough facilities or leave that responsibility to family members.

CATO | Government Can’t Rewrite Obamacare Text Without Legislation
The D.C. Circuit ruled today that the government isn’t Humpty Dumpty and so statutory text doesn’t mean whatever the government says it means.  The provision at issue, which grants tax credits for people to buy health insurance, only applies to people buying policies through “exchanges established by the State”–which in any sane world can’t apply to exchanges established by the federal government.


CNN Money | Fed hawks: Start draining the punch bowl!
In the last week, three vocal Federal Reserve officials have been urging their colleagues to stop filling up the proverbial punch bowl. Not only do they want the Fed to stop buying bonds (there's already a plan in place to eliminate those as early as October) -- they also want the central bank to raise its short-term interest rate sooner than investors are expecting.
Bloomberg | Consumer Prices in U.S. Climb on Jump in Gasoline Costs
A rise in the U.S. cost of living in June was driven by a jump in gasoline that is now reversing, bolstering Federal Reserve Chair Janet Yellen’s view that recent increases were temporary.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Will the Fed Hit the Brakes Too Soon?
Paul Samuelson, in a long ago policy debate, noted that a cat that jumps on a hot stove once never jumps on a hot stove again; of course, it never jumps on a cold stove either. Today, Samuelson's image applies to the long running complaint that expansionary policies are courting dangerous inflation.
Market Watch | The Federal Reserve talks too much
The Fed is puzzled by the lack of volatility in the financial markets, but its open-mouth policy is the chief reason for it.


WSJ | Senate Report: Tax Move Helped Hedge Funds Save Billions
Hedge funds used a tax avoidance technique offered by Wall Street banks for years to skirt federal leverage trading limits, with one well-known trading firm potentially saving $6.8 billion in U.S. taxes, Senate investigators claim in a report released Monday.

Econ Comments & Analysis                                                                                            
WSJ | Tax Inversions Must Be Stopped Now
In an inversion, a large U.S. firm acquires a much smaller target company domiciled in a tax-friendly jurisdiction such as Ireland or the U.K., but the deal is structured so that the foreign minnow swallows the domestic whale. U.S. shareholders of the U.S. firm must pay immediate capital gains tax for the privilege of inversion, and the U.S. company ends up as the nominal subsidiary of a publicly held foreign corporation.
CATO | Just One Way to Stop Corporate Inversions: Cut Taxes
The corporate inversion trend tells us that global tax competition is intense and that U.S. tax reform is long overdue. Our combined federal-state corporate tax rate of 40 percent is far higher than the rates of our trading partners. Inversions are a bid by companies to create self-help tax reform while Congress sits on its hands.


CNN Money | Only 63% of American adults are in labor force
As of June, only 63% of Americans over age 16 participate in the labor force, meaning they either have a job or are actively looking for one. That number is around its weakest level since the early 1980s.
WSJ | This Way Up: Mobility in America
The changing economy isn't encouraging. New technologies and globalization are driving deep-seated change—and no one knows for sure what it will mean for most Americans. But one thing is certain: The future will put a premium on technical skill. Educators and employers agree: High school is no longer enough.

WSJ | Grand Central: Fed Economists Find Good News on Long-Term Unemployed
Since December, the number of people out of work for more than 26 weeks has dropped from 3.9 million to 3.1 million and the unemployment rate for these long-term unemployed has dropped 0.5 percentage point. That accounts for 88% of the overall decline in unemployment.
WSJ | White House Economists See Few Labor Force Dropouts Returning
The American labor force, as a share of the overall population, has been shrinking for more than a decade. A detailed new report from the White House Council of Economic Advisers estimates the majority of that decline has been driven by the retirement of the Baby Boom generation and that only one-sixth of the decline is clearly attributable to the weak economy.


National Journal | Fiscal Doom: What You Weren't Told About the Latest Budget News
According to the nonpartisan CBO, the nation's spending pressures stem from an aging population, rising health care costs, and an expansion of federal subsidies for health insurance. Moreover, interest rates are expected to climb, adding to the red ink.
National Journal | Republicans Prep Short-Term Funding to Keep Government Open Through Election Day
Abandoning all pretense of the House and Senate agreeing on appropriations bills on time, House GOP leaders are tentatively planning to vote next week on a resolution keeping the government temporarily funded at current levels beyond the Oct. 1 start of the new fiscal year—and probably past Election Day.

Econ Comments & Analysis                                                                                            
Barrons | New Warning on U.S.'s Gathering Debt Storm
The CBO has cited debt-related crises in Argentina, Ireland, and Greece as useful comparisons with the one that could strike the U.S., a shocking analogy first unfurled in the agency's July 2010 issue brief, "Federal Debt and the Risk of a Fiscal Crisis." That brief was referenced in the agency's new warning, "The 2014 Long-Term Budget Outlook," released Tuesday.
Mercatus | In the Eye of the Debt Storm
In its July budget report to Congress, the White House’s Office of Management and Budget praised President Obama for presiding over the “most rapid sustained deficit reduction since World War II.” The president also deserves credit, we are told, for a budget that achieves a core goal of “fiscal sustainability.”