9/14/10 Post

BUZZ: 2010 US Deficit Likely to be Second Highest Ever

News
Obama says his policies have stabilized economy
Less than two months before the midterm elections, President Barack Obama is imploring voters to support his party's economic policies, even though he acknowledged that those policies haven't brought about a recovery fast enough for many Americans.
Thicker cushions, when you’re ready
Bank regulators make poor story-time princesses. Before the crisis, banks under their watch progressively thinned out the cushions of capital they were resting on while regulators slumbered on, oblivious to the huge lumpy risks beneath. Now they are trying to make amends.
US poverty on track to post record gain in 2009
The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama's watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
Aug. retail sales up 0.4 percent, best in 5 months
Retail sales rose in August by the largest amount in five months, suggesting a late-spring economic swoon was temporary and not the start of another recession.
Rand Paul: GOP Shares Blame for Deficits
Paul said Democrats share greater blame for rising red ink, but the tea party favorite said Republicans squandered past congressional majorities by presiding amid times of growing federal deficits.
Banks get years to adjust to new global rules
Bankers and analysts said new global rules could mean less money available to lend to businesses and consumers, but they praised a decision to give them plenty of time — until 2019 — before the so-called Basel III requirements come into full force.
Cuba to Cut State Jobs in Tilt Toward Free Market
Cuba will lay off more than half a million state workers and try to create hundreds of thousands of private-sector jobs, a dramatic attempt by the hemisphere's only Communist country to shift its nearly bankrupt economy toward a more market-oriented system.
Jobless Are Straining Social Security's Disability Benefits Program
Applications to the program soared by 21 percent, to 2.8 million, from 2008 to 2009, as the economy was seriously faltering.
Reinsurers face taxing time on premiums
The insurance industry is facing political and regulatory tension between the US and Europe that threatens to make life more difficult for companies doing business in the US – and more costly for US consumers.
Boehner Budget Rollback would Cut Scores of Agencies
It sounds easy, but House GOP leader John Boehner’s proposal to roll back non-security federal spending to 2008 levels would require wrenching 20 percent reductions in many agencies, possibly including the FBI.
GOP leader nixes talk of taxing
Dares Obama to pursue hike.
Positions Harden on Tax Cuts
Boehner's Hint at Possible Compromise on Bush-Era Rates Doesn't Gain Traction.
Buffett: No double-dip recession
"I'm a huge bull on this country," said the Omaha, Neb.-based billionaire investor and philanthropist. "We will not have a double-dip recession at all," he said. "I see business coming back almost across the board."
Plan to end oil industry tax breaks draws fire
The debate over eliminating tax breaks for the oil and gas companies is heating up, with an industry group saying Monday that the move could cost the energy sector thousands of jobs.
Retail: Not out of the woods yet
Several encouraging signs in the retail sector -- including a strong retail sales report and an improved outlook from a retail bellwether -- show that spending is picking up.
Intel CEO: Stimulus didn't work
"Take the uncertainly out. Businesses can't invest until they have fewer variables and right now there are just too many variables,"
Hill battles over Bush tax cuts
With their backs to the wall, Democrats want two things from Congress this fall: a fast break and a political bank shot — melding small-business relief with a fight over Bush-era tax cuts for the wealthy.
House GOP Presses Democrats On Spending
Republican leaders of the House Ways and Means, Appropriations, and Budget committees today wrote to their Democratic counterparts asking them to cooperate on legislation to be enacted this month that would reduce federal spending in FY11 to FY08 levels and freeze federal tax rates for the next two years.

Blogs
Secondary Sources: Mortgage Deduction, Unemployment, Lost Generation
A roundup of economic news from around the Web.
Are Social Security Commitments a Sunk Cost?
The Supreme Court made it supremely clear in Flemming v. Nestor that the the Social Security system is essentially a tax and transfer scheme. If the government decides that it doesn't want to give benefits to people who paid into it over a lifetime, it can legally do so. So it's not a debt and it's not a sunk cost.
Small-Business Optimism Recovers Slightly
The Small Business Optimism Index edged up 0.7 points to 88.8 in August, said the National Federation of Independent Business.
What If Size Does Matter?
Swedish economists Andreas Bergh and Magnus Henrekson looked at the available literature in their book Government Size and Implications for Economic Growth and found “with few exceptions … a negative relationship between government size and economic growth in rich countries.”

CardHub Study says Decline in Credit Card Debt a Result of Chargeoffs, Not Frugality
A spreading meme is that there is a new frugality among consumers, as evidenced by a decline in credit card balances outstanding over the past several quarters. An interesting new analysis by CardHub, however, argues that this is a measurement error: that the decline in outstanding balances is actually a result of increased chargeoffs of debt, not consumers paying down debt. In the aggregate a chargeoff or a payoff both count as retiring the debt.
The “s” word
This is one of the most honest and depressing statements about the state of our knowledge of macroeconomics that I have ever seen. The CBO is admitting that the “new data”—what actually happened in the aftermath of the stimulus—cannot be used to evaluate the stimulus.
CR Index: Amid declines in spending and jobs, one bright note
The U.S. job outlook remains especially bleak. The August results for the Consumer Reports Employment Index marks a two-month decline, down in September to 49.1 from 50.2 in August.
TARP Deadbeat list grows to more than 120 banks
"The latest report ... shows that more than 120 institutions ... have missed their scheduled quarterly dividend payments ... a record six banks each missed six dividend payments."
The Output Gap Story
I am not sure about the economic parallel between stimulus spending and foreign-aid spending. But the political parallel is clear. I think that people who believe in foreign aid are not going to change their minds, and I think that people who believe that stimulus works are not going to change their minds.
Pension Reforms on the Horizon in New Jersey
Governor Chris Christie has announced his plan to tackle New Jersey’s pension shortfall. Officially estimated at $46 billion, Andrew Biggs and I estimate the figure is closer to $174 billion (using the risk-free discount rate to assess the size of the liabilities).
Viard on Marginal Tax Rates
Alan says supporters of the Bush tax cuts have neglected the best arguments.
Does spending create prosperity?
People will argue forever whether the Obama stimulus package was a waste of money, saved the economy from an even bigger downturn, or delayed the natural rebound of the economy. There is no evidence that it saved the economy from a bigger downturn. It could be true, but there is no evidence. The evidence that we do have on massive injections of money into broken economies is that they have little effect on the economy as a whole. They benefit the people who receive the money but do not repair what is broken.
Investment Contributions to GDP: Leading and Lagging Sectors
The key leading sector - residential investment - has lagged the recovery because of the huge overhang of existing inventory. Usually RI is a strong contributor to GDP growth and employment in the early stages of a recovery, but not this time - and this is a key reason why the recovery has been sluggish so far.
The Dynamics of Creative Destruction
The future of empirical macro is in the new labor dynamics (JOLTS) and business dynamics data sets. I predict that if the CBO, Mark Zandi, and other traditional macro modelers continue to ignore these data sets, they will be stuck in a time warp, like somebody who doesn't know how to use email or a cell phone.
Why inequality is a red herring
My only quibble with Alex is that it’s not really a winner-take-all world. It’s more of a winner-take-lots kind of world. If LeBron James had decided to be a social worker, yes, someone else (Kobe, maybe) would be considered the best player alive and that person would get some extra rents for being the best.
The Cost of High Taxes
If the U.S. had higher tax rates, we might not end up with any higher revenues. Instead, we would spend more time mowing our own lawns, cooking our own meals, doing our own household repairs, and so on.
The Return of No-Money Down
...having negative equity is very, very dangerous. And that's what a no-money-down borrower has in this market, because prices aren't rising much, and they need to find thousands of dollars to pay broker commissions and closing costs if they want to sell.
Did France cause the Great Depression?
The results indicate that France was somewhat more to blame than the United States for the worldwide deflation of 1929-33. The deflation could have been avoided if central banks had simply maintained their 1928 cover ratios.
Social Security: The Privatization Shell Game
So the government is going to have to come up with revenues to pay two groups of workers: those who want the present value of their future SS checks and those who don't want it but, instead, want to get the checks. The government hasn't come up with any new revenues to do this.
What will Basel III do?
1. This agreement is probably good news.
2. It is difficult to divine the net future effects of such changes upon announcement. There is also the question of how binding this ends up being and whether the implementation lags will matter.
3. One key question is how much current systems prevent regulatory arbitrage, namely driving more intermediation into less regulated, less reliable and less easily monitored institutions.
Sizing Up Obama’s Nominee as Chief Economist
In nominating Austan Goolsbee as chairman of the Council of Economic Advisers, President Obama chose a first-rate scholar and an exceptional expositor, an economist as good as anyone in his (and my) generation at the essentials of this position – thinking through the economic implications of a wide range of policies.
How Many Jobs Do We Need?
The answer to how many jobs the United States needs depends on how you define “we” and how you define need.
Keynes Was Wrong on Stimulus, but the Keynesians Are Wrong on Just about Everything
It’s very important to draw a distinction between Keynes, who was wrong on a couple of things, and today’s Keynesians, who are wrong about almost everything.
ObamaCare’s Threat to Free Speech
HHS Secretary Kathleen Sebelius is attempting to stifle political speech by using the new powers that ObamaCare grants her to threaten health insurance companies that claim ObamaCare’s coverage mandates are one cause behind rising premiums.
Tax Hikes on the Rich Will Hurt the Recovery
Supporters of President Obama’s refusal to extend the Bush-era tax policies have cloaked themselves in a mantle of fiscal responsibility, arguing that extending cuts, particularly for high-income earners, would increase the deficit and national debt.
Advance Competitiveness Through Economic Freedom
Early this year, The Heritage Foundation’s Index of Economic Freedom reported that the U.S. economy is no longer in the top tier of economically free countries and runs the risk of falling further behind.
Obamacare vs. the Rule of Law
Obamacare is deeply unpopular with the American people because, as the massive regulatory regime goes into effect, the American people are noticing that none of the administration’s promises are being honored.
Setting the Record Straight: Spending Cuts
The Federal Government takes and spends an ever-growing portion of the wealth of this Nation, and spends the money of future generations. This cannot continue. We must overhaul Federal entitlement programs and get their cost under control, before the country bankrupts itself.
Kids Deserve Better: Stopping the Obama Education Agenda
An education agenda that serves only to empower bureaucrats and politicians will never improve children’s education. It is time for the federal government to step aside and give authority back to parents and local leaders.
Medicaid May Bust State Budgets Next Year
Medicaid spending now represents on average about 21 percent of the typical state budget. If state Medicaid spending increases by 41 percent as projected by CMS, then by next year Medicaid could end up consuming nearly 30 percent of the average state budget.
Obama Sweeps the Declaration of Independence Under the Rug
President Obama just redecorated The Oval Office. Part of his feng shui includes a new rug featuring several of his favorite quotes. Of all the memorable quotes in American history, Obama chooses no Founders’ words for his office rug. There is not even a nod to the Declaration of Independence.
Side Effects: Obamacare’s Small Business Tax Credits Won’t Go The Distance
Though small firms eligible for some level of the tax credit employ approximately 16.6 million employees, the report estimates that businesses that might actually take advantage of the credit employ only 3.4 million workers. Moreover, a large portion of those 3.4 million already receive health insurance through their job.
Obamacare in Pictures Busts Health Care Myths
As America closes in on the six-month anniversary of the passage of Obamacare and prepares for the November elections, liberal health groups are revving up to defend the unpopular new health care law.
Are Big Companies Regaining Their Luster?
There's been a shift underway in terms of recent performance: Large-cap just rose for a second straight week while mid-cap, small-cap dropped.

Research, Reports & Studies
RCM: Cato Policy Report: The Era of Expert Failure
A key difference between experts in the private sector and experts in the government sector is that the latter have monopoly power, ultimately backed by force.
The High-Income Rate Reductions: The Neglected Stepchild of the Bush Tax Cuts
Congress is considering allowing the Bush tax cuts’ rate reductions for high-income households to expire at the end of 2010 while providing a deficit-financed extension of the middle-class portion of the tax cuts. This combination would damage economic growth by hiking marginal tax rates on saving and investment while swelling the budget deficit.
Don’t Ask, I’ll Just Tell You What the Law Should Be: Log Cabin Republicans v. United States
In Log Cabin Republicans v. United States, the Obama Administration sought to win a policy victory by losing a case. By failing to adequately defend the “Don’t Ask, Don’t Tell” (DADT) statute President Obama is able to undermine or do away with a statute that he opposes.
Legalizing Marijuana: Why Citizens Should Just Say No
The scientific literature is clear that marijuana is addictive and that its use significantly impairs bodily and mental functions. Nonetheless, this November, California voters will consider a ballot initiative, the Regulate, Control and Tax Cannabis Act of 2010 (RCTCA), that would legalize most marijuana distribution and use under state law.
Short Sales Bans: Shooting the Messenger?
In response to the recent financial crisis, many governments chose to ban or restrict short sales, hoping to mitigate the impact of the stock market downturn.

Economists’ Comments & Opinions
Reagan, Obama, Summers All Wrong on Tax Credit: Amity Shlaes
In reality, Obama’s idea isn’t such a noble idea. Because the investment tax credit has been around in different forms since the 1950s, it’s possible to examine the record. When you do, you find not great success but uneven performance.
Rep. John Boehner's Taxation Blunder
The real "cost" that needs to be trimmed is the $44.8 trillion in added federal spending expected over the next 10 years - which represents an 83% surge from the preceding decade.
The 1099 Insurrection
The White House fights an effort to ease a burden on small business.
Impulse Response
Except for a burst of census hiring that briefly pushed payroll growth above trend during the second quarter of this year, job growth has been perpetually below trend over the past two years.
The Day After Tomorrow
Throughout American history, in other words, there have been leaders who regarded government like fire — a useful tool when used judiciously and a dangerous menace when it gets out of control. They didn’t build their political philosophy on whether government was big or not. Government is a means, not an end. They built their philosophy on making America virtuous, dynamic and great. They supported government action when it furthered those ends and opposed it when it didn’t.
CANNON: Obamacare silences health insurers
Sebelius threatens companies that speak out of turn.
How Unreliable is CBO Scoring?
The bottom line is that CBO projections should be taken with a grain of salt — to say the least.
Obamanomics Meets Incentives
Why cuts in marginal tax rates increase economic growth, but cash for clunkers merely created a boom and bust cycle in auto sales.
Jump-starting the Economy
Because pumping trillions into the economy hasn't worked this time, maybe we ought to reflect on the last time government spending was under control — back in the 1920s.
Gangster Government Stifles Criticism of ObamaCare
"There will be zero tolerance for this type of misinformation and unjustified rate increases." That sounds like a stern headmistress dressing down some sophomores who have been misbehaving. But it's actually from a letter sent Thursday from Health and Human Services Secretary Kathleen Sebelius to Karen Ignagni, president of America's Health Insurance Plans--the chief lobbyist for private health insurance companies.
The Next Hoover
I'm beginning to think Barack Obama isn't the next FDR--as so many promised--but the next Hoover.
How to jump-start the economy
Americans have had enough of bailouts, government takeovers and stimulus spending sprees. All have combined to create massive uncertainty for businesses large and small, and our economy is showing the effects. The country has lost confidence in Washington — and rightly so.
Why It's More Than Just the Deficit, Part 2
If we want to reduce the deficits and reduce our personal debt, we must find a way to reduce the trade deficit.
Investing in the Coming Boom in Farming
Farming machinery, grain processing, and fertilizer companies are all options for investors who aren't prepared to buy a farm.

Graph of the Day
2010, a Year of No Inflation
See: Top 10% of Earners Paid 71% of Federal Income Tax
Obamacare: The Real Price Tag is a Moving Target

Book Excerpts
"We know, of course, that taxpayer adjustments to tax-rate changes take time. In response to rate increases, persons must seek out and find nontaxable substitutes for the tax base, or at least substitutes that are taxed at differentially lower rates, whether the tax is imposed on a source or a use of income. Persons must shift investment to nontaxed or low-taxed opportunities and must invest in opportunities that are complementary to those directly advantaged. Individuals must learn about, and take advantage of, legal loopholes, which may have to be invented by lawyers and accountants. The whole analysis here depends only on the plausible assumption that in considering the revenue potential of a tax or tax-rate increase, the participant in governmental decision making operates on the basis of a shorter time perspective (a higher discount rate) than the one that describes the adjustment of persons as taxpayers to a posttax equilibrium." –Geoffrey Brennan & James M. Buchanan, The Reason of Rules: Constitutional Political Economy (1985)

Did You Know
"From August 2008 to August 2010, the U.S. civilian workforce shrunk by 6.4 million, or 4.7 percent. While almost every single sector of the economy employed less workers in August than two years ago, two notable exceptions are the Federal government and the education & health services sector... Interestingly, there is one quasi-private sector that is booming and hiring a greater number of workers than the Federal government. The education & health services sector (defined as a single entity by the Bureau of Labor Statistics) employed 676,000, or 3.6 percent more workers than it did two years ago. In fact, for the past two years, this sector has never posted a single month-to-month decrease in employment."

9/13/10 Post

BUZZ: Boehner Opens Door in Tax Talks

News
Aid plan helps Pa. capital avoid default
State gives Harrisburg $4.3 million in loans and payments ahead of a Wednesday deadline to pay bondholders.
Three signs it's truly a jobless recovery
Average work week is still short, unemployment claims and the magic number and corporate cash balances remain high.
New year, no federal budget
With just a few weeks to go before kissing fiscal year 2010 goodbye, Congress won't be able to welcome the new year with any fiscal clarity because there is no budget.
Waning Economic Recovery Fuels Global Uncertainty
In recent weeks, data from around the world reveal a growth downshift. Companies that had been rushing to restock their inventories are now ordering only what they need to meet existing demand, affecting the entire global supply chain.
Big business and Wall St. bet on GOP
This election, more financial firms and business groups are giving to Republican campaigns than Democratic ones.
Obama’s New Econ Guru Holds the Line on Tax Cuts
In his television debut on the Sunday morning political shows, the newly appointed head of the White House Council of Economic Advisors, Austan Goolsbee, is making a clear case for ending the Bush tax cuts on high income earners.
New bank rules to curb risk
Global officials meeting in Switzerland Sunday announced new guidelines to strengthen the financial system by forcing banks to set aside more capital.
U.S. Poverty Set for Record Gains as Elections Loom
Economists are predicting the latest census figures coming out this week will show an almost 2 percent poverty rate increase.
China's inflation battle intensifies
Inflation in China accelerated last month, as rising food prices pushed overall prices higher. The consumer price index increased to 3.5% in August, compared to a 3.3% annual rate in July
A year later, tea party marches on
Thousands of tea party activists huddled in front of the U.S. Capitol on Sunday afternoon, eager to celebrate recent victories against the Republican establishment and rally together...
Fed Actions Seen, But Not Endorsed
Three in five economists surveyed by The Wall Street Journal expect the U.S. Federal Reserve to resume large-scale purchases of securities in the face of a deteriorating economic outlook—but, by a 3-to-2 margin, most of them also think that would be a mistake.

Blogs
Holding Economic Recovery Hostage
The last thing you want to do is raise taxes in the middle of a recession because that would just suck up, take more demand out of the economy and put businesses in a further hole.
Goolsbee on Tax Incentives
Here’s to hoping that Goolsbee doesn’t suffer the fate of his predecessor by abandoning everything he’s previously written in the interest of political expediency.
Goolsbee Appointment Good News for Global Trade
This appointment is good news for advocates of expanded international trade. One of the world’s leading trade economists, Jagdish Bhagwati, described Goolsbee as a valuable source of free-trade advice over almost a decade.
Slouching Towards a New Supreme Court Term
We’re now three weeks away from the new Supreme Court term and after a summer that included big opinions from The Nine, more confirmation hearings, and front-page district court decisions, we roll into a fall full of even more legal intrigue.
Obamacare and the Medicare Bureaucracy: A Dangerous Duo
In recent Heritage research, Clete DiGiovanni, MD, and Robert Moffit, Ph.D., lay out some of the other important changes to Medicare which could, depending on the direction taken in pending regulation, challenge the doctor-patient relationship and undercut physician autonomy.
Winner take-all economics
In a winner-take all economy, however, small differences in skills can mean large differences in returns and we have moved towards a winner take-all economy because technology has increased the size of the market that can be served by a single person or firm.
Back to Constitutional Basics in Education
In the mid 1960s, education policy took a wrong turn, away from America’s founding principles.
Austerity for Liberty
Instead of pushing for "constructive" free market reforms, libertarians should doggedly focus on austerity: opposing spending increases, and pushing spending cuts.
The First Part of ObamaCare to Go?
The provision is supposed to generate a substantial revenue — an estimated $17 billion over ten years — which could make repeal difficult, but it is interesting how many Democrats, including some who voted for the health care bill, now want repeal of this measure.
Schedule for Week of Sept 12th
The key releases this week will be retail sales (on Tues for August), Industrial Production (Weds for August) and the Empire state and Philly Fed surveys (Weds and Thurs for Sept).
A Dastardly Clever Scheme
In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.
Why does a rise in imports lower gdp?
The rationale is a) that is simply how the number is calculated, and b) a nation's capacity to produce goods and services determines its long-run standard of living. On b), you might argue that the world's capacity to produce goods and services is what matters in a globalized setting...
Against the Research and Development Tax Credit
...the economy would be better off if there no corporate income tax altogether. Instead, the combination of high rates and lots of holes yields relatively little revenue. It does, however, maximize the value of K street lobbyists.
Unofficial Problem Bank List increases to 849 institutions
"After six additions and one removal, the Unofficial Problem Bank List includes 849 institutions with aggregate assets of $415.3 billion, up from 844 institutions with assets of $412 billion last week."

Research, Reports & Studies
The Miscellaneous Tariff Bill: A Blueprint for Future Trade Expansion
For the past three decades a number of MTBs have been enacted that grant temporary relief, typically for three years, to U.S. manufacturers and other producers forced to pay duties that drive up the cost of imported inputs, such as chemicals and specialty parts. The bills have been relatively noncontroversial because the tariffs usually involve products no longer made in the United States, so there are no protected domestic competitors to oppose their suspension.
Obama Tax Hikes: Dividend Tax Increase Hurts Seniors and the Economy
A higher tax rate on dividend income will affect more than just decisions of companies. Senior citizens disproportionately hold dividend-paying stocks, with almost half of all tax filers ages 65 or older reporting dividend income. These seniors will have lower incomes and consume less due to lower payouts.
Implementing Obamacare: A New Exercise in Old-Fashioned Central Planning
Americans are confronted with the largest expan¬sion of government in almost half a century. President Barack Obama and the congressional Democratic leadership passed massive health care overhaul legis¬lation in March 2010 by the narrowest of margins. Despite the Administration’s ongoing efforts to per¬suade Americans that the medicine is good for them, well over half the country refuses to swallow it
Nine Years Since 9/11: When Will Congress Wake Up on Homeland Security?
This failure of leadership puts all Americans at risk. Congress must develop a homeland security agenda that will maintain security while keeping Americans free and prosperous. Such an agenda must include key reforms in oversight, grants and disaster declarations, terrorist detention policies, and immigration enforcement.
Over One-Third of New Tax Revenue Would Come from Business Income If High-Income Personal Tax Cuts Expire
Assuming that business income is the last dollar of income a taxpayer earns, Tax Foundation economists estimate that 39 per cent of the $629 billion tax increase on high-income taxpayers proposed in the Obama 2011 budget would be extracted from business income. Over ten years then, an extra $246 billion would be taken out of business income.
RCM: Wells Fargo Economics Group: U.S. Review
More Signs the Economic Recovery Is Still Intact.

Economists’ Comments & Opinions
POWELL: Jump-starting the economy
Because pumping trillions into the economy hasn't worked this time, maybe we ought to reflect on the last time government spending was under control - back in the 1920s.
Why the Bush Tax Cuts Worked
The Bush cuts provided lower taxes on ordinary income, especially for taxpayers at the high end of the income distribution. These are some of the most energetic and productive people in society; raising tax rates would discourage their effort and entrepreneurship. High-income taxpayers also have multiple ways of avoiding high tax rates, so any revenue gain from raising rates would be modest.
Financial Lifeguards Still on Duty
From Ireland to Germany to Pennsylvania, when the seas get rough, those drowning continue look to policymakers for help.
A Millionaire’s Bracket is a Bad Idea, Particularly for the Left
If the top 1 percent is responsible for 40.4 percent of revenue from federal individual income taxes, a new top rate will presumably increase revenue volatility, as income at the top of the distribution tends to fluctuate with the business cycle.
Why It's More Than Just the Deficit, Part 1
Increasing government debt crowds out the necessary savings for private investment -- the real factor in increasing productivity. But there's another part of that equation.
The Size of Government and the Choice This Fall
In polls, Americans overwhelmingly prefer small government and low taxes to the alternative. Yet they've been given big government, one program at a time.
How Obama Thinks
The President isn't exactly a socialist. So what's driving his hostility to private enterprise? Look to his roots.
GAO Finds Sebelius Misleading Taxpayers on Health Reform
The Government Accountability Office says a Medicare mailer sent out by Kathleen Sebelius, secretary of Health and Human Services, to Medicare recipients on the new health-care law isn’t accurate.

Graph of the Day
American Thinker: National Healthcare Expenditure Projections
See: Cuban Stagnation vs Chilean Growth

Book Excerpts
"Even the striving for equality by means of a directed economy can result only in an officially enforced inequality - an authoritarian determination of the status of each individual in the new hierarchical order." –F.A. Hayek, The Road to Serfdom (1944)

Did You Know
Thirty percent of those in the "overweight" class believed they were actually normal size, while 70% of those classified as obese felt they were simply overweight. Among the heaviest group, the morbidly obese, almost 60% pegged themselves as obese, while another 39% considered themselves merely overweight. According to the U.S. Centers for Disease Control and Prevention, 34% of adults aged 20 and older are obese, and 34% are overweight. Among children, 18% of teens aged 12 to 19 are obese, 20% of children aged 6 to 11 are obese, as are 10% of kids aged 2 to 5.

9/10/10 Post

BUZZ: Federal workers who owed money to the Internal Revenue Service in 2009

News
Goolsbee to Lead Council of Economic Advisers
President Barack Obama will name Austan Goolsbee, a longtime adviser and an architect of his campaign's economic message, to be chairman of the White House Council of Economic Advisers at a White House press conference Friday, an administration official said Thursday night.
Corporate debt issuance at 3-year high
Corporations issued $33.7 billion in investment grade debt this week, the highest weekly amount since May 2008, according to an analysis conducted by Thomson Reuters. Thirty-five offerings were made, the most in about three years.
Wall Street Faces a Grim Third Quarter
Less activity in the stock and bond markets may crimp profits.
Obama Says Economic Progress 'Painfully Slow'
Facing the possibility of a GOP blowout in November, Mr. Obama insisted again that Bush-era tax cuts be extended for individuals earning over $200,000 a year and joint filers earning over $250,000. All the tax cuts are due to expire at the end of this year unless Congress acts.
6-figure jobs - no degree required
You don't necessarily need to go to college to make big bucks. PayScale.com ran the numbers and found these 6 jobs where top performers can earn $100,000 or more a year without a bachelor's degree.
Calif. controller says no immediate threat of IOUs
Controller John Chiang issued a statement Thursday saying monthly cash totals for August were high enough to remove the immediate threat of IOUs. His office had earlier indicated it might need to issue them this month... Last year, his office issued IOUs for only the second time since the Great Depression.
Ireland, Hungary Have Success in Debt Sales
Ireland sold just €400 million ($508.6 million) of treasury bills, at the bottom of its targeted amount of €400 million to €600 million, but it paid lower yields than previously. Hungary sold 40% more bonds than planned, although at higher yields than two weeks ago but with reassuring coverage ratios.
AMT: A Bomb that Could Grind the Economy to a Halt
The Alternative Minimum Tax, or AMT, a huge and largely incomprehensible tax, will hit almost 27 million households in the next few months if Congress fails to act.
Growth Currencies Get a Data Lift
An unexpected improvement in Australian unemployment levels sent the Australian dollar to a four-month high against the greenback. The Canadian dollar hit a three-week high as it continued to benefit from Wednesday's increase in Canada's target interest rates.

Blogs
The rule of law, or the rule of men (women)?
Nowhere is it stated that these [insurance premium] rate hikes are against the law (even if you think they should be), nor can this "misinformation" be against the law. Here is further information, including a copy of the [warning] letter [to insurance industry's top lobbyist from Kathleen Sebelius], which is worse than I had been expecting.
Jon Chait Admits Federal Employees Are Overpaid
...federal government employees are overpaid by around 12 percent relative to private-sector workers with the same education, experience, and other characteristics. Including benefits that comes to around $14,000 extra compensation per year, totaling around $40 billion annually.
Wholesales Inventories increase 1.3% in July
"Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $405.0 billion at the end of July, up 1.3 percent..."
Secondary Sources: Mortgage Crisis, U.S. and Japan, Productivity
A roundup of economic news from around the Web.
Pension Fact of the Day
...as the fraction of retirees goes up, so will the fraction of able-bodied retirees. In fact, we could maintain the status quo as long as people retired on the basis of how old they feel instead of how old they are.
On Comparing Tax Cuts to Social Security
To sum up: as I said in my follow-up post, the only reason the two numbers look even remotely similar is that they're using a present value calculation and a very long time frame. The present value calculation weights very near-term revenues and expenditures much more heavily than later ones; as a result, even though the expenditures on Social Security over the next 75 years are much larger than those on the Bush tax cuts for the wealthy in almost every time period, the early small surplus/small deficit of social security, and the fairly steady size of the Bush tax cuts, makes the present value much closer than the cash flows.
Education: First Cut, Then Improve
Strategically, my thinking is that a vast industry of researchers and activists is already trying to improve education. Competing with them isn't my comparative advantage. Instead, I should focus on the big reform that conventional researchers and activists Dare Not Name: Wasting less money on pseudo-investment in the nation's youth.
Political 'Thinking' on Stimulus
To my way of thinking, George Bush didn't do tax cuts because he cared about stimulus; he did tax cuts because he cared about tax cuts. And if Democrats had cared about stimulus, we would have gotten a stimulus bill that looked almost nothing like the one they actually delivered.
Double Digit Unemployment Rate early next year?
With growth slowing in the 2nd half (and into 2011), this means the unemployment rate will probably tick up too (unless the participation rate falls further).
What to Expect From Obama's Business Tax Cuts
Obviously, on the margin, this will make some investments more attractive, but I'd expect that effect to be swamped by the massive uncertainty surrounding the economy.
Prices Report Reality; Government Threatens to Shoot Messenger (Or At Least to Falsify the Message)
“Unreasonable” is too vague and subjective a standard for guiding a government agency that possesses the power to block price increases. While by definition any “unreasonable” action is questionable and likely harmful, there is in fact no objective way for government to distinguish reasonable price hikes from unreasonable ones.
Scary sentences
"It's not a good sign when the government has to intervene to prevent a run on a bank that is already owned by the government..."
Government Employment since 1976
Federal government employment has decreased over the last 35 years (mostly in the 1990s), state government employment has been flat, and local government employment has increased.
Stimulating $19,000,000,000 in New State Taxes
For every $1.00 in federal grants that a state receives today, the state can be expected to increase its own future taxes by somewhere between $0.33 and $0.42 in the future. Let’s assume it is the average of this range and that future state taxes will rise by $0.38 for every $1.00 in federal aid. If this is the case, then an additional $50 billion in “aid” to the states will cause states to raise their own future taxes by about $19 billion.
Austan Goolsbee to Head the CEA
Goolsbee was one of my favorite professors at the University of Chicago, and not merely because he's the most entertaining professor we had*. He's also one of the sharpest people I've ever met--he has a way of asking questions that cut through your fuzzy thinking to the heart of the problem.
Pension Reforms from California Progressive Leaders
California’s pension tsunami is a few years from decimating the cities. In 2015 it is estimated one-third of Los Angeles’ budget could go to pay for employee retirement costs.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: July Trade Deficit Narrows Substantially After June Jump
The trade deficit narrowed substantially in July following the sharp widening in June. Exports rose while imports contracted after surging in June. Petroleum imports held steady while non-petroleum imports fell.
AEI Political Report
Less than two months before Election Day, voters may be ready to reshuffle the deck, but as the data below show, they are deeply dissatisfied with both parties.

Economists’ Comments & Opinions
Treasurys and the Danger of Short-Term Debt
More than 60% of U.S. debt is set to mature within the next three years.
The Genteel Nation
The first lesson from the economic historians is that we should try to understand our situation by looking for shifts in ideas and values, not just material changes. Furthermore, most fundamental economic pivot points are poorly understood by people at the time.
Why We're in for a Long, Hard Economic Slog
Evidence from 14 U.S. recessions shows that the economy doesn't recover until housing recovers.
Restoring America's Growth
A straightforward plan to restore national growth.
Obama Discovers Incentives
The president's proposed tax cuts for business are a welcome departure from Keynesian stimulus.
The naked stimulus: Why savings stimulate more than spending
The Obama administration's stimulus package may have boosted spending in the short-term, but savings have a more lasting impact on the broader economy.
From Zombie Banks to Zombie Mortgages?
Japan misallocated capital during its lost decade. How the U.S. can avoid its mistakes.
Obama Stimulus Money Goes Where Needed Least: Veronique de Rugy
With a few exceptions, the data show little correlation between the level of unemployment and stimulus spending. In fact, the opposite is true. The federal government has given far fewer stimulus dollars to states with high unemployment than it has to states with low unemployment.
The Obama Heyday Is Over
With so many Democrats running against the president's agenda in the midterm, change will come in the next Congress, regardless of which party is in control.

Graph of the Day
American Thinker: Widespread Deceleration
See: Americans' Wellbeing Declines for Third Consecutive Month

Book Excerpts
"One would think that with at least 250 sovereign external default episodes during 1800-2009 and at least 68 cases of default on domestic public debt, it would be relatively straightforward to find a comprehensive long-range time series on public sector debt. Yet this is not the case; far from it. Government debt is among the most elusive of economic time series." –Carmen M. Reinhart & Kenneth S. Rogoff, This Time Is Different (2009)


Did You Know
"Capitol Hill employees owed $9.3 million in overdue taxes at the end of last year, a sliver of the $1 billion owed by federal workers nationwide but one with potential political ramifications for members of Congress."

9/9/10 Post

BUZZ: Obama Added More to National Debt in First 19 Months Than All Presidents from Washington Through Reagan Combined, Says Gov’t Data

News
U.S. Falls in Ranks of Global Economy
The U.S. fell two spots, to rank No. 4 behind Switzerland, Sweden and Singapore in the Geneva-based [World Economic Forum] organization's annual survey of global competitiveness. Germany climbed two notches to end in fifth place; Japan was ranked No. 6.
Budget Deficit at $1.3 Trillion So Far in Fiscal 2010
The federal government spent about $1.3 trillion more than it collected during the first 11 months of fiscal year 2010, a report said Wednesday.
Recovery Spreads Fitfully
Farm, Manufacturing States Hold Edge Over Regions That Lean on Housing.
Controversial Oregon Taxes May Spur Corporate Exodus
A new tax hike on high income earners and businesses in Oregon has sparked a debate over whether the move will eventually drive away businesses and generate far less tax revenue than proponents predict.
ECB: More Debt Action May Be Needed
Euro-zone countries should be ready to implement more measures to reduce their debt burden should the economy grow less than expected, the European Central Bank said in its monthly bulletin Thursday.
Holiday Job Outlook Stays Flat
Yet Most Retailers Are Optimistic, With 64% Expecting Seasonal Sales to Improve.
U.S. Trade Gap Narrows
The U.S. trade deficit contracted sharply in July, posting its biggest drop in 17 months as exports of airplanes surged and U.S. demand for imports fell across the board.
Consumers to Pay Nine Percent More Out of Pocket
The latest analysis of health care reform – out today from bean counters at Medicare – won’t make selling it on the stump any easier. Yet there’s a glimmer of hope in the out years of the 10-year projection that the plan will begin to “bend the cost curve.”
Fight Brewing on Dividend Taxes
Telecom Firms Say Higher Rate on Payouts Would Hurt Values of Their Stocks.
Help for homeowners who haven't missed a payment
Borrowers who are up-to-date with their payments but have seen their home's value drop way below their loan amount could get help from a new government program.
Teaching: No longer a recession-proof job
The hiring of new teachers has slowed dramatically and fewer veteran educators are staying in the field for their entire careers, said Segun Eubanks, director of teacher quality at the National Education Association, which has 3.4 million members.
Obama: Close tax loopholes to juice economy
As President Obama pushes a new campaign to juice up the economy, he's starting to fill in the details of how he would pay the estimated $180 billion tab. His plan: Eliminate some corporate tax breaks and subsidies, and close loopholes.
Consumer borrowing falls again in July as credit card use falls for 23rd straight month
Borrowing dropped at an annual rate of $3.6 billion in July, the Federal Reserve reported Wednesday. That marked the 17th drop in credit in the past 18 months.
Experts Plan Tour To Tout Deficit Measures
Five prominent budget experts said today they will tour at last six cities to discuss with the public ways to reduce the budget deficit, even though they doubt Congress will act on the issue before the end of the year.
GOP Blasts Obama’s Economic Plan
Republican leaders wasted little time responding to President Obama’s charge Wednesday that restoring GOP leadership in Washington would send the nation’s economy careening backward, and accused the president of proposing the wrong prescription for a turnaround.
Economists cut U.S. growth forecast again
Projected U.S. economic growth for the rest of this year and next was revised down for a third month in a row by a panel of about 50 economists.
Obama Targets Boehner, Casts Election as 'Fear Versus Hope'
President Obama, in Cleveland to deliver an aggressive campaign-style speech, urged voters not to buy the economic plan Republicans are selling, casting the upcoming election as one of "fear versus hope."
Audit of Priority Mail's ads: Doesn't 'fit'
Made popular by the "If it fits, it ships" slogan in television ads, the Priority Mail initiative is seen as a bright spot during otherwise tough economic times for the U.S. Postal Service, where multibillion-dollar deficits and declining mail volume have officials moving to cut a day of delivery. But questions have surfaced about whether the campaign is as profitable as it seems.
Budget dilemma pits raising revenues vs. spending cuts
President Obama says the federal government needs more revenue, while House Minority Leader John A. Boehner says it needs to spend less. One of them could walk out of this year's congressional elections with a mandate to handle one of the most intractable problems facing the country.

Blogs
Obama vs. JFK on taxes

New Jobs Data, a Late British Economist and a Fed Nominee
Job openings in July, at 3.042 million, were up from 2.864 million in June. But that is still a long, long way from pre-recession levels in excess of nearly 5 million. The economy, in other words, isn’t creating anywhere near enough jobs to absorb 14.9 million unemployed workers.
Adding insult to injury, some towns levy automobile "crash tax"
If you have an at-fault accident on certain stretches of Interstate 5 near Fresno, Calif., you may suffer an extra pain: A $370 bill from the Fresno County Fire Protection District.
Weekly Initial Unemployment Claims decline
"In the week ending Sept. 4, the advance figure for seasonally adjusted initial claims was 451,000, a decrease of 27,000 from the previous week's revised figure of 478,000."
Secondary Sources: Tax Cuts, Housing and Government, Obamanomics
A roundup of economic news from around the Web.
“There is no such thing as macroeconomics.”
Alchian didn’t deny there were aggregate economic phenomena, only that theory must be microeconomic. In substance, that was Hayek’s view.
Tech Spending Cushions Some Metro Areas
Demand in the technology sector has improved both from consumers’ willingness to splurge on electronics even on tighter budgets and from companies upgrading software.
Consumer Credit Declines in July
"In July, total consumer credit decreased at an annual rate of 1-3/4 percent. Revolving credit decreased at an annual rate of 6-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent."
The Obama tax plan, or Austro-Obama business cycle theory
[Kleinbard:] “You’re putting businesses in the same economic position as if you were inviting them to borrow money to buy tax-exempt bonds.”
Fed's Beige Book: Continued growth, but "widespread signs of a deceleration"
Pretty weak, but still growing in August.
Economics 101
President Obama’s problem is that the people aren’t buying what he’s selling – and for good reason. His ideas, far from being new, have been tried countless times, both here and abroad. They don’t work.
“We’re Talking Bridges…”
On Labor Day, President Obama announced his plan for an additional $50 billion in spending, mostly on transportation. An area Obama specifically mentioned was more spending for bridges. While clearly there are bridges that are greatly in need of repair and represent a threat to passenger safety, what has been the overall trend in bridge quality? In one word: improving.
The Clean Energy Future Looks Dim for Light Bulb Workers
This month General Electric will shut down the last major incandescent light bulb factory in the United States, and the 200 workers in Winchester will lose their jobs. Green advocates hold that more jobs will be created making the high-tech replacements. Too bad the green-job theory is wrong.
Obama’s Desperate Times and Desperate Measures
Faced with predictions of staggering losses for his party in November’s midterm elections, President Barack Obama today appeared on ABC’s “Good Morning America” and said, “If the election is a referendum on ‘are people satisfied about the economy as it currently is,’ then we’re not going to do well, because I think everybody feels like this economy needs to do better than it’s been doing.”
Side Effects: Obamacare Raises Your Premiums
It’s exactly what conservatives predicted. While the Congressional Budget Office (CBO) did estimate that Obamacare would cause health insurance premiums to rise, conservatives correctly pointed out that the CBO’s estimates were wildly optimistic.
White House Aide Contradicts Obama on Stimulus II
We already noted that White House aides were already backtracking on President Barack Obama’s promise that his $50 billion infrastructure plan
Hurricane Katrina: Grassroots Greatness and Federal Failure
On the fifth anniversary of Hurricane Katrina, credit for New Orleans’s ongoing recovery continues to go to the grassroots, not the federal government.
Obama Hoping to Counter Poor Polls With Pro-Business Agenda
During a talk in Cleveland, Obama will unveil one of the most aggressive business proposals of his administration.

Research, Reports & Studies
Keys to Sustainable Recovery
With economic growth lower than expected, policymakers should undertake measures with a higher probability of stimulating the economy. Plenty of options have not yet been tried.
Obama’s Desperate Search for Effective Stimulus
An economy floundering and an election looming have President Obama thrashing about for a viable jobs policy.
Infrastructure Stimulus Spending: Pandering to Organized Labor
In a normal world, one would expect that the sorry outcome of an increasingly unpopular ARRA would have discouraged the President and his economic team from repeating the mistake. But apparently not…
Study: Impact of tweaking 14th
Repealing birthright citizenship under the 14th Amendment would actually increase illegal immigration rather than decrease it, according to a nonpartisan report. The Migration Policy Institute says that by denying automatic citizenship to U.S.-born babies of undocumented immigrants, the nation’s illegal immigrant population would grow to 16 million over the next 40 years, an increase of at least 5 million people.

Economists’ Comments & Opinions
What’s Stalling the Next Economic Revolution?
The next economic revolution is likely to come in healthcare and education. Two things stand in the way: credentials cartels and state-subsidized incumbents.
Tax Contradictions
Obama says the economy needs a tax cut—and a tax increase.
JOHN STOSSEL: Entrepreneurs Under Attack
Every day, federal, state and local governments stifle small businesses to privilege well-connected incumbent companies. It's a system of protectionism for influential insiders who don't want competition. Every locality has its share of business moguls who are cozy with politicians.
The Federal Heath-Care Tease
Minnesota's Governor declines to take the ObamaCare bait.

Graph of the Day
Do Unemployment Benefits Keep the Jobless at Home?
•See: Dept. of Education Spending

Book Excerpts
"We can now stand back and look at the overall pattern built into our government. Here is what we see: (1) We see the arbitrary assaults on business and the slow destruction of our productive system, which is the source of all wealth. (2) We see the redistribution of increasing amounts of wealth to a combined clientele of the acutely needy and a growing portion of the middle class. (3) We see the tax burden growing steadily to finance the redistribution process. (4) We see an abyss of governmental debt piled on debt, much of it hidden from the public by budgetary manipulation. (5) We see a commitment to a vast network of lifelong pensions to government employees and others in the middle-class populace.

…As this incessantly compounding debt and ravenous devouring of investment capital coincides with a nonstop regulatory assault on our productive system and a nonstop redistributionist assault on our productive classes, the national Ponzi game too must ultimately self-destruct." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
The number of people who died on the nation's roads fell 3,615, or 9.7%, from 2008 to 33,808 last year, the latest available data from the Department of Transportation. That was the lowest total since 33,186 people were killed in 1950, when there were one-fifth the number of vehicles on the road than today.

9/8/10 Post

BUZZ: Businesses See Benefits of Tax Break as Limited

News
Obama's economic plan: Too little, too late
This week, the Obama administration began outlining additional measures to jumpstart the economy and create jobs. But even if passed, Obama's proposals are too little and too late to reverse the downward trend of economic activity, according to some economists.
State Budget Crises Mount as Medicaid Rolls Soar
Florida and other states faced with soaring Medicaid rolls amid a stubborn recession are struggling to balance their budgets.
Why carmakers aren't coming back anytime soon
With the home stretch in sight, 2010 is shaping up to be a weaker U.S. auto market than predicted, probably closer to 11.5 million new-vehicle deliveries, rather than the 12 million that automakers and forecasters had figured - and hoped - would be sold.
Tax Havens: Offshore Operations Cost U.S. Billions
Companies can save big bucks by shifting operations to offshore locations, a loophole in the U.S. tax code that some lawmakers are seeking to close.
Taxes: What people forget about Reagan
Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government.
Obama's jobs pitch fails to dazzle Washington
President Obama's latest round of job-bolstering proposals boasts something for everyone: corporate tax breaks for conservatives and spending on roads and railways for liberals. Yet he's having a hard time getting everyone on board.
Midterm debacle: The blame game begins
Come Nov. 2, one of two big things will happen: Democrats will blow the most complete dominion a party has held over government since the advent of the Reagan revolution. Or Republicans will blow the biggest advantages an out-of-power party has enjoyed since Watergate.
Republicans Slip From Unprecedented Lead to a Tie in Gallup Survey
Democrats and Republicans are now tied in Gallup’s weekly tracking of voter preferences just a week after Republicans took an unprecedented 10-point lead.
Obama Is Against a Compromise on Bush Tax Cuts
President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
Boehner Calls for 2-Year Freeze on All Tax Rates
U.S. House of Representatives Republican leader John Boehner called Wednesday for a two-year freeze on all current U.S. tax rates, including Bush-era tax cuts for the rich set to expire at the end of this year.
Harry Reid: "I had nothing to do with" bad economy
Senate Majority Leader Harry Reid, facing a tough re-election bid in one of the states hardest hit by the recession, said today that the economic downturn was not his fault.
BP: Multiple companies, teams contributed to spill
Oil giant BP PLC laid much of the blame for the rig explosion and the massive Gulf of Mexico spill on workers at sea, other companies and a complex series of failures in an internal report released Wednesday before a key piece of evidence has been analyzed.
China Will Be Working On a Railroad For Iran
China is about to sign a $2 billion deal to build a railway line for Iran. This is the first step of a broader railway plan that will connect the Middle East and Central Asia to Beijing.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers: Professional fields with higher pay. Think lawyers, research scientists and software engineers and lower-skill and lower-paying jobs, like home health care aides and store clerks.

Blogs
BLS: Job Openings increases in July, Low Labor Turnover
"There were 3.0 million job openings on the last business day of July 2010, the U.S. Bureau of Labor Statistics reported today."
Prices Must Be Free To Tell The Truth
The Keynesian habit of ignoring the causes of depressions and dealing only with the analytically-secondary phenomena of aggregate expenditure is or should be unacceptable among intelligent economists.
Should we let housing prices fall?
Arguably many banks would once again be "under water." Enthusiasm for another set of bailouts is weak, to say the least. Our government would end up nationalizing these banks and it still would be on the hook for their debts. ...Housing prices must fall, yet...housing prices must not fall.
There is Nothing So Permanent as Temporary Stimulus
...CBO has issued another report. This one shows spending as a share of GDP remaining will above its 40-year average for the foreseeable future. Note, however, that they still show spending as a share of GDP declining somewhat in the coming years.
Educational “reform”
...the rest of the problem is the top-down design of curricula, textbooks, and the motivation of teachers in a system that does not reward teaching excellence and does not punish teacher mediocrity.
Secondary Sources: Back to School, State Role, Inequality
A roundup of economic news from around the Web.
Whose fault was it?
Krugman never gives an iota or quark of blame for the crisis on government policies. I guess this comforts the faithful. It does not help his reputation as a truth-seeker.
Visualizing the U.S. Higher Education Bubble
Ultimately, like a housing bubble or a bubble in the stock market, we strongly suspect that today's highly inflated tuition is not something that can be sustained indefinitely.
Crumbling Infrastructure?
Here’s some evidence that America’s transportation infrastructure isn’t “crumbling.”
Some Good News!
Monday’s NY Times actually got some things right.
First, the front page carried A STORY that said it might be good to let the free market prevail in housing!
MBA: Mortgage Purchase Activity increases slightly
"The Refinance Index decreased 3.1 percent from the previous week. The seasonally adjusted Purchase Index increased 6.3 percent from one week earlier."
Paying Third-Graders for Better Test Scores
Efforts to improve education in the U.S. has included financial incentives for high-performing teachers and programs have targeted middle- and high-school students, but a recent study found success in giving money to kids as young as third grade who scored well on standardized tests.
China (Australia) fact of the day
...the Australian dollar [is] the fifth-most-traded currency in the world -- after the U.S. dollar, the yen, the pound, and the euro -- even though Australia is the 18th largest economy.
Kansas City, Dallas Feds Called for Rate Increase
Prior to the Fed’s latest policy-setting meeting Aug. 10, directors of the Federal Reserve Bank of Kansas City and from the Dallas Fed voted to increase the discount rate by a quarter percentage point to 1%.
Very good sentences
“I’m all for reducing the number of public-sector employees,” an I.M.F. investigator had said to me. “But how do you do that if you don’t know how many there are to start with?”
One in Six Americans Receives Government Assistance
Fifty million are on Medicaid, ten million Americans receive unemployment benefits, and 4.4 million get direct cash assistance.
The Founders, Free Markets, and Sound Money
Founders saw little or no role for government in the economy—that they embraced a purely laissez faire economic theory.
Debunking Orszag’s Tax Hike Myths
We have paired some of Orszag’s op-ed statement “myths” with “facts” from JD Foster’s new paper: Obama Tax Hikes Defended by Myths and Straw Man Arguments.
Neglecting Allies and Appeasing Foes
“Since taking office, President Obama has reached out to the Muslim world as a whole, to China, to Turkey and to Iran, but has devoted scant serious diplomatic energy to Europe.”
Why Deflation Never Had a Chance
What the deflationists fail to acknowledge is that in a purely fiat monetary system, deflation is a choice, not an inevitability.
To End Obesity, Start by Dismantling Sugar Quotas
During National Childhood Obesity Awareness Month the White House has the opportunity to change the antiquated, unhealthy sugar quotas and tariffs that foster production of high fructose corn syrup.
America's weirdest government monopoly
One of the more interesting, though perhaps less significant, fault lines between social conservatism and economic conservatism is the peculiar issue of state liquor monopolies. There are nine states in the union where the government maintains a direct monopoly on the sale of hard liquor.

Research, Reports & Studies
Do Intergovernmental Grants Create Ratchets in State and Local Taxes?
Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
Workers who suffered a spell of unemployment during Great Recession are, on average, less satisfied with their new jobs than workers who didn't. They are more likely to consider themselves over-qualified for their current position.
India: Fast Growth Does Not Mean a Strong Economy
Indian growth, driven for more than a decade by market reform initiated in 1991, is now being achieved the old fashioned, unsustainable way: through intense fiscal and monetary stimulus. Growth thus stems in part from New Delhi deliberately choosing to risk high inflation.

Economists’ Comments & Opinions
Are rising imports a boon or bane to the economy?
It has become conventional wisdom in reporting on the economy that rising imports and a growing trade deficit are bad signs for growth.
Economic Malpractice
If a medical doctor prescribed a treatment for a patient that only worked in theory, and the patient did not get better, the doctor could rightly be sued for medical malpractice if tried-and-true cures were known. When members of Congress and a president engage in economic malpractice, the patient's (i.e., the American public's) only recourse is to vote them out of office.
In November, it's Democrats vs. Obamacare
When Obamacare finally passed the House, 34 Democrats voted no. Thirty-one of those Democrats are now running for reelection, and, not surprisingly, many of them are highlighting their opposition to the bill.
I, Market Economy
Any healthy civilization, never mind any healthy economy, involves unfathomably vast amounts of harmonious cooperation. According to Hayek, no central planner or bureaucrat could ever have enough knowledge to consistently and successfully guide all of those economic actions in a more efficient manner.
How You, Mr. President, Can Speed the Recovery
Details of the government's failures thus far and innovative suggestions for getting the economy back on track.
The Rules of Economics, Part 1
A look at some of the more important rules, and the consequences for individuals, companies, and countries that break them.
The Rules of Economics, Part 2
There are two ways you can grow your economy: You can either increase your (working-age) population or increase your productivity. That's it.
Obama's New Stimulus Won't Stimulate
Piling on more spending now isn't just unwise policy, it's a form of fiscal insanity.
Time for Emergency Economic Reform
How about a payroll tax holiday, funded by a federal spending, hiring and pay freeze?
Don't dismiss the market economy
We shouldn't forget that the modern market economy is the greatest communal enterprise ever undertaken.
RAHN: Economic malpractice
President's policy has a long history of failure.
The German Miracle: Another Look
Germany has cut government spending and its economy is growing smartly. It's not the first time that market-friendly policies have led the nation out of crisis.
Payroll Tax Doubles in This Republican Dream Plan: Amity Shlaes
Impossible Idea No. 1: Double the payroll tax... Impossible Idea No. 2: Cut the capital-gains rate and the tax on dividends to 5 percent, permanently... Idea No. 3: Make all tax cuts permanent.

Graph of the Day
American Thinker: Unemployment Rate With and Without the Recovery Plan UPDATE
See: Charting jobs & unemployment
See also: Union Members, by Industry
See also: Favorability Ratings of Labor Unions Fall Sharply

Book Excerpts
"The cornerstone of trade unionism is compulsory membership. The workers refuse to work with men who belong to an organization not recognized by themselves. They exclude the non-union men by threatening to strike or, ultimately, by striking. Those who refuse to join the union are sometimes compelled to do so by rough handling. It is not necessary to dilate upon the drastic violation of the liberty of the individual which this implies... No one has seriously contested the destructionist function of trade unionism. There has never yet been a wage-theory from which one could deduce that association by means of trade unions led to a permanent increase in the real income of the workers." –Ludwig von Mises, Socialism: An Economic and Sociological Analysis (1922)

Did You Know
According to a recent survey 75% of likely voters nationwide want Congress to cut its own pay, and 54% believe that most federal workers are overpaid just 24% disagreed and 22% were not sure. The survey results come on the heels of a USA Today analysis of Bureau of Economic Analysis data that revealed that federal workers earned average pay and benefits of $123,049 in 2009, more than twice as much as the $61,051 earned by private workers.