Thursday, July 24, 2014

General Economics

Fox Business | These Unorthodox Economic Gauges Show the Economy is Chugging Along
Last week Federal Reserve Chairwoman Janet Yellen testified to lawmakers over the current state of the U.S. economy, and her comments painted a less-than robust picture.  While the stock market tends to dote on these semi-annual testimonies, when it comes to the tone of the economy there are far better indicators that bear watching.
Reuters | IMF cuts U.S. 2014 growth forecast to 1.7 percent
The International Monetary Fund on Wednesday said it expects the U.S. economy to grow 1.7 percent in 2014, even more slowly than it predicted a month ago, as weakness in the first quarter offsets an expected pick-up in the second half of the year.
Fox Business | Renting is Hip … But Prices are Hopping in Hot Urban Areas
America’s major urban centers are seeing some major price hikes in the apartment-rental market.
Bloomberg | Euro Economy Shows Unexpected Strength After ECB Action
Euro-area manufacturing and services activity strengthened in a sign of confidence that further stimulus by the European Central Bank will consolidate a fledgling economic recovery.
WSJ | Paul Ryan to Propose Sweeping Consolidation in Antipoverty Pitch
House Budget Committee Chairman Paul Ryan is proposing to consolidate up to 11 federal antipoverty programs into a single funding stream for states, a plan he says will include new work requirements and create more accountability and efficiency in assisting low-income Americans.

Econ Comments & Analysis                                                                                            
USA Today | Paul Ryan: An opportunity to cut poverty
This week, our economy received some bad news: The International Monetary Fund revised its projection for U.S. economic growth this year to just 1.7%. Working families will pay the price. Real median household income is still lower than before the recession. Deep poverty in America has reached record levels over the past three years.
AEI | Employers must respond to the market to stay in business
This week, Representatives George Miller and Rosa De Lauro introduced the “Schedules that Work Act,” a well-intentioned bill that aims to protect working families from the negative consequences of uncertain work schedules. But it misses the point.
WSJ | The Lingering, Hidden Costs of the Bank Bailout
The rescue of incumbent investors in the government bailout of the largest U.S. banks in the autumn of 2008 has been widely viewed as unfair, as indeed it was in applying different rules to different players. The bailout through the Troubled Asset Relief Program has been justified by the Federal Reserve and Treasury as preventing a financial collapse of the economy.
AEI | America's first world inequality problem
The National Basketball Association has an income inequality problem. The highest-paid players make upwards of $20 million per season, while the lowest-paid ones make a measly half a million. In the upcoming season, almost 30 percent of the total pie will go to the top 10 percent of players. And that’s just based on salaries; adding in income from endorsements would likely widen these disparities.
Daily Signal | The Government Should Let Americans Control More of Their Retirement Savings
The LIMRA Secure Retirement Institute reports that 78 percent of workers recognize their personal responsibility to save for retirement. Among those already contributing to a defined contribution (DC) plan, like a 401k or IRA, 84 percent believe they are personally responsible for retirement saving.

Health Care

National Journal | GAO Launched an Obamacare Sting Operation—and Almost All Fake Insurance Applications Were Approved
Fake applicants were able to get subsidized insurance coverage in 11 of 18 attempts, according to a report from the nonpartisan Government Accountability Office. The agency conducted the sting operation to test the strength of the Affordable Care Act's eligibility-verification system.

Econ Comments & Analysis                                                                                            
Daily Signal | The Obamacare Employer Mandate Could Die in Some States
Tuesday’s D.C. Circuit and Fourth Circuit Court of Appeals rulings raise new doubts over the future of Obamacare. At the heart of these conflicting decisions is whether or not the Internal Revenue Service overstepped its authority in its interpretation of the Affordable Care Act.


Bloomberg | Dollar Bulls Gain Ground on Fed First-Mover Status
Currency traders are betting the Federal Reserve has stolen a march against rival central banks on the road to higher interest rates.

Econ Comments & Analysis                                                                                            
WSJ | John Taylor's Reply to Alan Blinder
In a Wall Street Journal op-ed on July 18 called "An Unnecessary Fix for the Fed," economist Alan Blinder takes aim at legislation now under consideration in the House of Representatives to amend the Federal Reserve Act.


Econ Comments & Analysis                                                                                            
Market Watch | How to stop corporations from fleeing the U.S. tax laws
Instead of a U.S. company owning a foreign subsidiary, now a foreign-based company owns the U.S. company. (For this reason, this type of transaction has been called an inversion.) Often, this restructuring does not shift the company’s production, employment, sales, or even management. And it has little to do with where the shareholders of the corporate group live. But it can substantially reduce the firm’s tax liability.
Real Clear Markets | To Keep Corporations Here, Cut Their Taxes
Just last week, U.S. drugmaker AbbVie agreed to buy a foreign firm, Shire PLC, in part to reduce its corporate tax rate, which is expected to drop from 22% to 13%. In most inversions, companies keep their headquarters' physical activities - the people, the buildings - in the U.S., as would AbbVie. Still, the practice has understandably provoked a furious backlash.

CATO | Corporate Tax Inversions Made Simple
Numerous responses to my article in the New York Times yesterday about corporate tax inversions indicated a lack of understanding. Related articles by Levin, Johnston, and Huang similarly suggested that further enlightenment is needed.


Market Watch | U.S. jobless claims lowest in more than eight years
The number of people who applied for regular state unemployment-insurance benefits in the week that ended July 19 tumbled by 19,000 to 284,000 -- the lowest level since February 2006 -- signaling that companies have further slowed down the pace of layoffs and are letting go of few workers, according to government data released Thursday.
Bloomberg | Recession Graduates Grind Away With Low Pay as U.S. Mends
Nickole Gambrill is still paying the price for graduating college at the wrong time.

Econ Comments & Analysis                                                                                            
CATO | Regulation Depresses the Job Market
Any attempt to regulate part-time work schedules is misguided — just like all government intervention in the labor market (minimum wage laws, union protections, and hours and overtime rules) is misguided.

Reuters | $18 billion in job training = lots of trained unemployed people
President Barack Obama told Americans in his July 19 weekly address that every worker deserves to know that “if you lose your job, your country will help you train for an even better one.” A nice sentiment — and politically safe. It’s just the wrong answer. Those “better jobs” don’t exist, and training doesn’t create jobs. Despite all that, every year the U.S. government spends billions of dollars on job training, with little impact.


Econ Comments & Analysis                                                                                            
WSJ | Saving Taxpayers From Money Funds
Since 2008 politicians have put taxpayers on the hook for guaranteeing losses in ever more of the financial system. So behold Wednesday's little miracle, in which the Securities and Exchange Commission began shrinking the implied taxpayer safety net around money-market mutual funds.
National Journal | Do You Have Emergency Savings to Get You Through a Crisis?
The stock market is booming, but $57 billion disappeared from 401(k) accounts in 2011. Why? Without emergency savings, millions of Americans who found themselves out of work, on the verge of losing their homes, or facing other financial emergencies were forced to raid their retirement accounts. In addition to incurring the standard penalties and taxes required when a worker does so, these individuals damaged their long-term economic prospects.
Mercatus | Constitutional Solutions to our Escalating National Debt: Examining Balanced Budget Amendments
Chairman Goodlatte, Ranking Member Conyers, and members of the committee: Thank you for inviting me here today to discuss the need for a constitutional amendment to help achieve credible and sustainable fiscal reform.
CATO | D.C. Forgets about the Debt
Although it is expected to top $17.6 trillion by August 1, the national debt has dropped out of the headlines recently. Out of sight may indeed mean out of mind, especially in Washington, but that hardly means the problem has gone away — as a new report from the Congressional Budget Office makes clear.