10/5/10 Post

BUZZ: Cities in Debt Turn to States, Adding Strain

News
Illinois Pays More Than Mexico as Cash-Strapped States Sell Bonds Overseas
Illinois capital-markets director John Sinsheimer and Citigroup Inc. bankers took a globe-girdling trip from the U.K. to China in June to persuade investors that the state’s $900 million of Build America Bonds were a bargain.
Retailers plan to bump up seasonal jobs
Macy's, Toys R Us, Pier 1, American Eagle Outfitters and Borders all plan to hire more temporary holiday workers this year than last, emboldened by several months of sales gains and a slowly improving economy.
Retirement funds tapped for kids' tuition
Nearly a quarter of the nation's parents saving for their children's college education intend to raid their own retirement accounts, despite increasing their tax liability, according to a new study released Tuesday.
Moody's Warns on Ireland Rating
Moody's Investors Service said Tuesday it may cut Ireland's debt rating again, citing the increased cost to the government of repairing the stricken banking system, weak economic growth and rising borrowing costs.
A stimulus program that won't be mourned
As the economy continues to sputter, President Obama recently signed legislation extending the life of several stimulus measures. But one program designed as an emergency rescue for small businesses didn't get life support, and no one seems to be mourning its loss.
Why did federal health-care costs increase?
Average increases for the Federal Employee Health Benefits Program will be 7.2 percent, significantly more than the anticipated 1.4 percent pay raise in 2011.
Obama Open to Lowering Corporate Tax Rate
Barack Obama signaled he was open to lowering the US corporate tax rate from its level of 35 per cent, amid speculation that the administration could seek broad-based reform of the tax code as early as next year.
Pending home sales rise 4.3 percent in August
The National Association of Realtors said Monday that its seasonally adjusted index of sales agreements for previously occupied homes rose 4.3 percent to a reading of 82.3. That's still more than 20 percent below the pace in the same month a year earlier.
Greek '09 Deficit May be Revised Higher: Official
Greece expects to slash this year's budget deficit to 7.8 percent of GDP from 13.8 percent in 2009, based on its draft 2011 budget unveiled on Monday.
Americans Sour on Trade
Generally, businesses and economists argue that free-trade pacts help America. "When we knock down barriers in those markets, we create jobs here," said Myron Brilliant, senior vice president for international affairs at the U.S. Chamber of Commerce. "We've got to trade to create jobs in our country."
Treasury Bailed Out 66 Weak Banks
Treasury Department officials sent bailout money to dozens of banks with known financial problems, and a growing number of bailed-out banks are struggling to stay afloat, a new government audit says.
Barack Obama debates over tax cuts
In a discussion that mirrored the Democrats’ split in Congress, President Barack Obama debated two members of his economic recovery board over middle-class tax cuts Monday, swatting down arguments that the richest Americans need the same relief.
Bank of Japan Reverts to Zero Rates in Surprise Move
The Bank of Japan on Tuesday effectively reverted to zero interest rates on growing signs the strong yen is hurting a fragile economy, surprising markets and preceding the Federal Reserve in stepping up its expansionary monetary policy.
States face Medicaid expansion challenge
Political hostility over the health care law and the potential for turnover in statehouses this November are creating uncertainty for state Medicaid leaders as they prepare for a huge expansion of their programs.
DOJ Hands Credit Cards Another Setback
The Justice Department reached a settlement Monday with Visa and MasterCard that would allow merchants to offer discounts to consumers who use lower-cost credit cards, the latest setback for an industry under increasing scrutiny by regulators and lawmakers.
Fed boss: Threat From Deficits 'Real and Growing'
The economy could be hurt if Congress and the White House fail to come up with a plan to curb the nation's huge budget deficits in the coming years, Federal Reserve Chairman Ben Bernanke warned Monday.
Euro Drops Below $1.37
Early afternoon, the euro was at $1.3686 from $1.3780 from late Friday. The dollar was at 83.35 yen from 83.31 yen, while the euro was at 114.07 yen from 114.80 yen. The U.K. pound was at $1.5841 from $1.5836. The dollar was at 0.9717 Swiss francs, from 0.9751 francs.

Blogs
At Citi, Risk Management Is Still Lacking
At least so says a new report from Crédit Agricole Securities financial analyst Mike Mayo, a vocal critic of Citigroup who met with company execs on Friday (after having “lobbied for nearly two years for an audience with” Citi chief exec Vikram Pandit) in preparation for the release of his long-term outlook on the company.
Secondary Sources: Fed Communication, Job Retraining, Long Stagnation
A roundup of economic news from around the Web.
ISM non-Manufacturing Index increases in September
The September ISM Non-manufacturing index was at 53.2%, up from 51.5% in August - and above expectations of 52.0%. The employment index showed slight expansion in September at 50.2%, up from 48.2% in August. Note: Above 50 indicates expansion, below 50 contraction.
Bernanke: Additional Asset Purchases Could Ease Financial Conditions
Speaking to college students, Bernanke illustrated how the Fed was able to lift the economy even after it took short-term interest rates close to zero by buying $1.7 trillion bonds in what he defined as an “effective program.”
Forecasting GDP for 2010-Q3
Using the official "final" estimate of GDP from the second quarter of 2010, we can now project that GDP, when adjusted for inflation, will fall between $13,019 billion and $13,550 billion during the third quarter of 2010, with a target value of $13,284.3 billion. All these values are expressed in terms of 2005 U.S. dollars.
Personal Bankruptcy Filings Jump
Personal filings for bankruptcy increased in September, pushing the total number of bankruptcies this year to nearly 1.2 million.
Current Data Survey Points To Stagnation
Reports on jobless claims, manufacturing, factory orders, and consumer spending were all rather flat to negative—except for jobless claims which have declined for the fifth straight week.
Coming soon to your bank statement: Tax info & Macy's coupons
If, for instance, you'd recently made debited several charitable donations from your bank account, your statement would instantly show how those donations would affect your upcoming Form 1040.
ABC vs. Recalculation
I think of Austrian Business Cycle theory as based on the notion that the structure of production can be long or short. Or, if you will, more roundabout or less roundabout.
The Future According to Dividends, September 2010 Edition
What we find is that investors expect very little in the way of economic growth in the fourth quarter of 2011. That would appear to be followed by a major economic boom in the first quarter of 2011, followed by a very sluggish second quarter, before growth would seem to pick up again in the third and fourth quarters of the year.
Central Banking, Limited Purpose Banking, Free Banking...
What needs to happen is bold and creative thinking through the institutional structures, not changing parties nor changing policy per se. Buchanan makes the distinction between policy (changes within the given institutional structure) and politics (changes of the institutional structure).
Does money boost real output?
We do have theoretical grounds for believing that monetary expansions will be potent when there are lots of unemployed resources and when the demand for money has recently spiked up. But if we're relying on theory, theory doesn't tell us much about expected employment effects...
Private Construction Spending declines in August
"Spending on private construction was at a seasonally adjusted annual rate of $498.2 billion, 0.9 percent (±1.1%)* below the revised July estimate of $502.6 billion."
Why taxpayer receipts aren’t a good idea
The idea of these receipts is to let people find out not just what their they’re putting into the system but what they’re getting out of it. And that’s a great idea — it would be fantastic if people understood exactly what their tax money was going to. But these receipts won’t do this, and here’s why.
Scary Monsters
The growth of government threatens freedom much more than mosque-building Muslims do.
Why Employment Won't Accompany the Economy's Recovery
We're facing a battle between expensive labor and cheap capital.
US Economy Not Turning Japanese
American culture and recent policy decisions have set the US on a similar but different path.
Data Survey Points to Stagnation
Over the last week, reports on manufacturing, factory orders, and consumer spending were all rather flat to negative.
Narrowing the Rights of the Minority
“Filibuster reform” is the new cause of the left. Senator Mark Udall (D–CO) has drafted up a rules change that would chip away at minority rights in the Senate by severely limiting the filibuster.
Local Control Is the Key to Education Reform
Greater federal control is not the answer to improving the nation’s education system.
Side Effects: Obamacare Fails to Halt Rising Premiums
President Obama and his supporters have said that one of the major benefits of the Patient Protection and Affordable Care Act would be a drop in health insurance premiums. But a new Hewitt Associates study shows that insurance costs will continue to rise for 2011.
$700K Taxpayer-Funded Play on Climate Change
The National Science Foundation (NSF) is “an independent federal agency created by Congress in 1950 ‘to promote the progress of science. The New York Times reports that the federal agency will award $700,000 of taxpayer money to a New York theater company to produce a show on climate change.
CBO Makes the Case for Change of a Different Sort
Congressional Budget Office (CBO) Director Douglas Elmendorf recently testified before the Senate Budget Committee on policies that might give the economy a helpful lift in the near term.
A Free Market Solution to Helping the World’s Poor
A featured op-ed in The Wall Street Journal last week documented the recent, surprising successes of Bangladesh. It has little economic freedom, and many in the international community saw little hope for it, but it has made some large achievements in recent years.
Arm Our Children to Succeed and Arm the Military to Prevail
As a nation, we shouldn’t have to choose between defense and education.
Anti-Poverty Approach Needs Reform: Who Said That?
“What’s needed most right now is creating the conditions where assistance is no longer needed.”
Is the Media Reporting or Distorting American Opinions About Trade?
The media seem intent on convincing Americans that they no longer support free trade.
Media Darken Americans’ Perceptions of Trade
Americans have soured on trade largely because of the way media conveys its stories about trade. There is no alternative explanation for a majority of Americans harboring ill-will toward trade.
Welfare and Fiscal Federalism
Federal policymakers should get out of the anti-poverty business as the Constitution intended.
Have Americans Turned against Free Trade?
The facts are on the side of expanding the freedom of Americans to trade and invest with people in other countries. What is lacking are political leaders in Washington who will stand up for the broader national interest of our country against the special interests who are exploiting anxiety about the economy to trash trade.
President Touts New Jobs At Solar Farm Funded By 5 Year Old Program
The President points to a revolutionary new solar plant that will employ 1,000 people and power 140,000 homes. Desperate for any good news about jobs, it is no wonder the President highlights this new solar farm from a company called BrightSource Energy. The problem is that this plant is being built largely thanks to a funding program that was passed 5 years ago.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: Factory Orders Slip in August, But Details Remain Solid
Factory orders fell 0.5 percent in August, which was slightly more than expected. The report’s details show non-defense capital goods orders excluding transportation are holding up somewhat better than anticipated.
Japan Launches Global Quantitative Easing
The usually-cautious Japan is leading the way with a policy of quantitative easing, hoping to boost exports and steer its economy away from deflation. But Japan’s problems are not unique; in the wake of the financial crisis, economies worldwide are facing a global shortage of demand and competing for their share of exports. The United States has moved decisively toward quantitative easing, with the Federal Reserve hinting at further steps by early November.
The Lieberman–Kerry Cap and Trade Bill: Making Housing Less Affordable
Proposed legislation would offer financial incentives to increase the population density of communities in an effort to reduce greenhouse gas emissions and energy use. However, the available evidence, which is admittedly limited, indicates that such “smart growth” policies are misguided, producing minimal results at great expense and disruption.
Obamacare’s Medicaid Policy: Putting the Doctors in Another “Fix”
Obamacare increases enrollment in the troubled Medicaid program by over 20 million persons. However, providers are already limiting the amount of Medicaid patients they accept because of low payment rates.

Economists’ Comments & Opinions
The Bill Gates Income Tax
If Washington's most famous billionaires are really worried about their state's finances, they'd write personal checks to the government and leave everyone else alone.
The False Obstacles to Pension Reform
... the problems with defined-benefit pensions aren't a one-time fluke caused by a bad recession and a stock market crash. Their flaw, especially in the public sector, is structural: they involve involves lawmakers making promises today about payments the state will make decades from now.
O's quietest jobs-killing machine
...a major contributor to businesses' worries is the Obama Environmental Protection Agency, which is issuing a daily barrage of rules and regulations threatening jobs in American industry.
$10,000 Gold?
...the most powerful argument to justify today’s high price of gold is the dramatic emergence of Asia, Latin America, and the Middle East into the global economy.
Hating 'Superman'
Teachers unions and the public school monopoly have long benefitted from wielding a moral trump card. They claimed to care for children, and caring was defined solely by how much taxpayers spent on schools.
Republican Record Backs Spending Cuts
Republicans will be under great pressure from the media to sign on to the tax increases in exchange for the spending cuts.
Stimulus even a deficit hawk could love
In the short-run, the jobs picture is bleak and consumers and businesses aren't spending. In the long run, the growing national debt could lead to many years of substandard growth or even an abrupt fiscal crisis. Fortunately, there is a solution: Tie stimulus to budget reforms. That would create a "twofer" out of each policy -- first help the economy and then the budget.
Peace Doesn't Keep Itself
Defense spending has increased at a much lower rate than domestic spending in recent years and is not the cause of soaring deficits.

Graph of the Day
Mercatus Center: Projected Interest Payments on Federal Debt Balloon
See: Bush vs Obama Spending
See also: TARP Is Dead; Long Live QE
See also: How volatile is the US stock market?

Book Excerpts
"There is but one way toward an increase of real wage rates for all those eager to earn wages: the progressive accumulation of new capital and the improvement of technical methods of production which the new capital brings about. The true interests of labor coincide with those of business." –Ludwig von Mises, Bureaucracy, (1944)

Did You Know
"Apparently the Greek original is “sittybas,” from “sittyba,” “parchment label or title-slip on a book” — but then an early printing of Cicero mistranscribed the word as “syllabos.” ...That’s the way language works: Errors, accepted long enough, become standard."

10/4/10 Post

BUZZ: IMF admits that the West is stuck in near depression

News
A tax cut both parties should love -- but don't
Would you like a 6% raise in your next paycheck? Some economists want to give you one -- in the form of a payroll tax holiday -- to stimulate the struggling economy.
Voters in 3 states to consider opting out of 'Obamacare'
Following the lead of the successful Missouri initiative, which passed with 71 percent of the vote, Arizonans, Coloradans and Oklahomans will decide this fall whether to approve proposed constitutional amendments that would allow them to opt out of key provisions of President Obama's signature national health care law.
Obama tax plan: Who gets hit - and why
President Obama's plan to raise taxes on the nation's highest income households may not quite mean what you think. A closer look suggests that fewer people may get whacked than either Obama or his Republican critics suggest.
California Budget Plan Draws Skepticism
Rank-and-File Lawmakers Express Doubts About Proposal From Governor, Legislative Leaders to Close $19.1 Billion Gap.
Latest unemployed: Stimulus-subsidized workers
Tens of thousands of low-income workers lost their jobs Thursday as a stimulus-subsidized employment program came to an end.
Cheap Debt for Corporations Fails to Spur Economy
Corporations now sit atop a combined $1.6 trillion of cash, a figure equal to slightly more than 6 percent of their total assets. In the first quarter of this year it was 6.2 percent of assets, the highest level since 1964, when it was 6.4 percent.
Bernanke: Teach us out of the next crisis
Fed Chairman Ben Bernanke told a crowd of schoolteachers in Washington Thursday they can help prevent the next big financial crisis by teaching students personal finance basics of saving and budgeting.
NFL ticket prices on the rise
The average ticket price for professional football games increased 4.5 percent this year to $76.47, even as some teams struggled to fill every seat.
Visa, MasterCard Near Antitrust Settlement: Report
Visa and MasterCard are close to settling a Justice Department antitrust probe over credit card acceptance rules, the Wall Street Journal reported on Sunday, citing people familiar with the negotiations.
UK cuts child benefit payments in austerity drive
Britain will cap payments to jobless families and scrap child benefits for high earners in a sweeping overhaul of the country's welfare system, Treasury chief George Osborne said Monday.
Global Economy Week Ahead-Currency war fears tinge IMF meetings
If there's one thing the world's economic powers can agree on, it's that none of them wants a strong currency right now.
Wall Street Sees World Economy Decoupling From U.S.
Wall Street economists are reviving a bet that the global economy will withstand the U.S. slowdown.
More Countries Adopt China’s Tactics on Currency
As the Obama administration escalates its battle with Chinese leaders over the artificially low value of China’s currency, a growing number of countries are retreating from some free-market rules that have guided international trade in recent decades and have started playing by Chinese rules.
State DOTs: A Word from Our Sponsor
As the recession threatens popular highway programs, the Georgia Department of Transportation is looking to the private sector for creative funding solutions.
Liberals at 'One Nation Working Together' rally press for jobs, unity
Liberal activists who rallied in Washington Saturday seemed as concerned about bridging the divide between Democrats and disillusioned progressives as they were about promoting civil rights and other social issues.
Conflict Awaits in Lame-Duck Session
Democrats studiously avoided Senate floor fights over taxes and spending before hitting the campaign trail last week, but the post election debate on those issues promises drama and gridlock.
Stimulus: Design Is Important
Nobel Prize-winning economist Joseph Stiglitz and former Federal Reserve Board official Vincent Reinhart presented differing views of America's continuing economic challenges at a National Journal Live event on September 28, moderated by NJ Correspondent Major Garrett.
Summers On The Upside Of Economic Cycles
Lawrence Summers looks back at two years on the front lines, and ahead to the prospects of a stronger recovery.
August factory orders decline 0.5 percent
Orders to U.S. factories fell in August, reflecting a big drop in demand for commercial aircraft. But outside of the volatile transportation sector, orders rose for the first time since March.
Bank of America delays foreclosures in 23 states
Bank of America is delaying foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents. The move adds the nation's largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

Blogs
Number of the Week: 41.7 Million Spend Too Much on Housing
As of 2009, some 41.7 million U.S. households, or 36.7% of the total, faced housing costs that exceeded 30% of their pretax income — a level typically defined as the threshold of affordability. That’s an increase of 1.5 million from 2007, despite a sharp drop in house prices and policy makers’ extraordinary efforts to bring down mortgage payments.
Rates keep falling: 2-Year Treasury Yield Hits Record Low
"The 30-year fixed-rate mortgage rate [4.32 percent] dropped to tie the survey’s all-time low and the 15-year fixed-rate [3.75 percent] set another record low."
Secondary Sources: Tech and Income Redistribution, Keynes, IMF and Currency
A roundup of economic news from around the Web.
Limited Purpose Banking?
Whether the case for narrow banking can finally be convincingly made remains to be seen. The case for mutual-fund banking is a giant leap beyond that. The FFA would, I predict, create an even more horrible mess than yet witnessed in financial services.
Weekly Schedule for October 3rd
The key economic release this week is the September employment report on Friday. Fed Chairman Ben Bernanke will speak Monday evening, and his speech will be closely watched for additional hints on QE2.
The Debate over Fiscal Adjustment
1.The IMF and the Economist take on Alesina and Ardagna.
2.My Harvard colleague Alberto Alesina responds.
Real-Cash-Balance Effect
Beijing’s policy makes all consumer prices in the U.S. lower than they would otherwise be. Therefore, any given volume of dollar spending allows Americans to purchase more real goods. The volume of dollar aggregate demand depends most importantly on Federal Reserve policy, not on the Chinese.
Unofficial Problem Bank List increases to 877 institutions
"The number of institutions on the Unofficial Problem Bank List rose this week but assets fell with the removal of a large publicly traded bank."
Another Empty Promise of ObamaCare: More Jobs
Data is not Information: Would you like a Receipt for your Taxes?
Just because a only a couple hundred of your tax dollars were appropriated to the Department of Agriculture doesn’t make farm subsidies a good idea.
September Employment Report Preview
Goldman Sachs is forecasting a minus 50,000 headline payroll number and an increase in the unemployment rate to 9.7%.
Medicaid Costs: Take II
Coughlin and Zuckerman found that since 2001, 24 states expanded eligibility. In some cases, the expansion was dramatic. For example, New York expanded its eligibility requirements so that the share of those eligible grew from 13 to 35 percent of the state’s population. Most of these expansions did not target those who are least-advantaged.
The Sad State of Economic Modeling
It's fine to say "Our best guess is that TARP and the stimulus did some good. But it's well to remember that our best guess really isn't very good. And putting an exact number on it--"3.1 million jobs created or saved!" creates a dangerous false precision, giving people the illusion that we have good knowledge in a very foggy area.
School House Pork
By focusing on education pork—legislative earmarks that go directly to favored constituencies—the report highlights politicians literally glorifying themselves with “education” dough.
Immigration Enforcement at the Crossroads: Arizona v. Obama Administration
The Obama Justice Department has launched an unprecedented legal assault on Arizona’s attempts to stem the tide of illegal immigration, filing at least three lawsuits against Arizona and other state officials and entities.
Reviewing a Do-Nothing (Right) Congress
As Members of Congress limp out of Washington to face their constituents, it’s worth reviewing their accomplishments—or lack thereof.
Claim Check Needs to Do Fact Checks
Claim Check, which supposedly fact checks public statements, employs the different-must-be-wrong-theory in dismissing a Heritage analysis because it is an “outlier.”
Public Citizen and EPI on Trade and Employment
Reports from the Economic Policy Institute (EPI) are being misrepresented by leftist organizations like the AFL-CIO and the Alliance for American Manufacturing.
Marriage Goes Down, Poverty Goes Up
For the first time in recent history, adults between 25 and 34 years of age who are single outnumber their peers who are married. On top of this, the number of married adults in 2009 reached a historical low.
Small Reactors, Large Potential Impact
A new report by the Energy Policy Institute, in collaboration with the American Council on Global Nuclear Competitiveness, titled “Economic and Employment Impacts of Small Modular Nuclear Reactors,” investigates how four separate scenarios of small modular reactor (SMR) construction could affect the U.S. economy.
The Obama Experts vs. the Rule of Law
Last week President Barack Obama’s most recently minted czar, Special Advisor to the President for the Consumer Financial Protection Bureau Elizabeth Warren, spoke to 400 bankers at the swanky Mandarin Oriental Hotel in Washington, DC. Her message, according to The Washington Post: “Behave, play nice, and we’ll get along just fine.”
Where to Put Your Money in the Homestretch of 2010
Choppy markets are tough, but they usually signify good trends ahead. Here, a look at what's happening in equities, bonds, commodities, and more.
The Best Ideas in Oil, Capacity Utilization, Real Estate and Employment
John Hofmeister talks oil and gas, David Rosenberg sees negative growth by year end, and David Shilling looks at relationship between employment growth and GDP.
Markets Will Unravel Faster Than Expected
Peak Oil, sovereign insolvency, and currency debasement will permanently transform the economic landscape.

Research, Reports & Studies
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary: U.S. & Global Review
Slow Growth Is Still the Order of the Day; Japan’s Economy Stumbles as Export Growth Fades.
Learning From Canada's Budget Triumph
The United States can replicate this by pursuing fiscal discipline, with heavy emphasis on spending cuts rather than tax increases, and by making changes in the responsibilities for congressional committees.
From ‘Government’ Motors to ‘Shanghai’ Motors?
President Obama has a delicate balancing act to manage in the upcoming General Motors initial public stock offering.
Why is America Exceptional?
To this day, so many years after the American Revolution, these principles still define America as a nation and a people. Which is why friends of freedom the world over look to the United States not only as an ally against tyrants and despots but also as a powerful beacon to all those who strive to be free.

Economists’ Comments & Opinions
The Trade and Tax Doomsday Clocks
Thankfully, we're not repeating all the mistakes of 1937. But Congress and the Obama administration are flirting dangerously with one of them by failing to extend the expiring low tax rates for all Americans.
The Ghost of Smoot-Hawley Stalks Congress
Congress is angry that the Chinese government is screwing itself delivering great bargains to American consumers while financing the Obama administration's spending orgy. The solution is to tax American consumers every time they try to buy something made in China.
Entrepreneurs: The Real Jobs Machine
The good news is that the entrepreneurial instinct seems deeply ingrained in the nation's economic culture. Americans like to create; they're ambitious; many want to be "their own bosses"; many crave fame and fortune... The bad news is that venture capital for start-ups is scarce, and political leaders seem largely oblivious to burdensome government policies.
Facebook Exposes Tax and Consumption Myths
...Facebook’s existence is the certain result of rich individuals who chose to delay their consumption, as opposed to spending current income on fancy cars and mansions. Absent Thiel’s willingness to “squirrel” away his earned income, Facebook, along with every other economic innovation, would not be with us today. The seen is consumption, but the unseen is what delayed consumption brings to the economy.
Count on Sequels to TARP
Given the multiple bailouts of 2008, it is to be expected that the line of institutions clamoring to join the cannot-fail party will grow longer. That’s the definition of moral hazard — if you rescue one group, others are sure to want the same treatment and behave in a way that ensures they’ll get it. The losses that taxpayers may endure in the next debacle, meanwhile, mount higher.
Healthamburglar
...McDonald's didn't deny that the new rules will wipe out its existing plans. And that's precisely the point. The entire philosophical and policy architecture of ObamaCare is explicitly designed to standardize health benefits and how those benefits should be paid for. Those choices and tradeoffs will be made for everyone by Ms. Sebelius's regulators.
We Can't Afford the Luxury of High-speed Rail
This past Tuesday, Amtrak proposed to spend more than $100 billion increasing the top speeds of trains in its Boston-to-Washington corridor from 150 to 220 miles per hour. In August, Secretary of Transportation Ray LaHood estimated that President Obama's proposal to extend high-speed rail to other parts of the country will cost at least $500 billion.
Task force undermines freedom
The health reform law undermines Americans’ control over their health care in multiple ways. One of the most troubling provisions gives unchecked power to the U.S. Preventive Services Task Force.
Taxing the Rich
As I've said before, a tax cut is not a handout. It simply means government steals less. What progressives want to do is take money from some—by force—and spend it on others. It sounds less noble when plainly stated.
Doomsday Math That Doesn't Add Up
The US economy may actually face Armageddon, but the arguments that have been offered in substantiation of these claims often don't make sense.


"Key macro and finance theories are about twice-century events. Min. acceptable sample size=30 observations=15 centuries." -Garett Jones, Twitter


Graph of the Day
Dollarization Keeps Ecuador Economically Stable Despite Political Instability
See: 36% - Okay to "Walk Away" from a Mortgage

Book Excerpts
"If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants." –F.A. Hayek, "The Pretence of Knowledge," (1974)

Did You Know
"In fiscal year 2009, [San Francisco] spent $175 million on homelessness—that's $26,865 on each of the city's 6,514 "homeless" persons, the majority of whom are housed in city-subsidized lodgings. Its police budget was $442 million, or $52 per San Franciscan. The gargantuan outlay for the homeless has done little to dent the vagrancy problem."

10/1/10 Post

BUZZ: McDonald's May Drop Health Plan

News
The legacy of the 111th Congress
Like a tale of two cities, the 111th Congress roared out of the starting gate in January 2009 only to gasp to a pre-election halt this week after punting major spending and tax decisions to an uncertain lame-duck finale.
Pew Report Finds 'No Silver Bullet' For Deficits
Both tax hikes and spending cuts will be needed to reduce crippling national debt, new study shows.
Foreclosures Slow as Document Flaws Emerge
Evictions are expected to slow sharply, housing analysts said, as state and national law enforcement officials shine a light on questionable foreclosure methods revealed by two of the country’s biggest home lenders in the last two weeks.
Bloomberg Would Extend Tax Cuts For Two Years
"I'd be worried a little about the economics of stopping any growth," he told the audience gathered at the Newseum for the Washington Ideas Forum. "The economy is so fragile you don't want to do that."
Many wheat growers won't benefit from price jump
Although the poor harvest in Russia helps U.S. wheat growers, no one expects wheat prices to reach the record levels they did two years ago when the world was down to almost a 60-day supply of wheat.
Dollar Reverses Course on Upbeat U.S. Data
Second-quarter gross domestic product data, weekly jobless claims and a closely watched survey of Chicago-area purchasing managers all gave investors heart that the economy may be regaining some steam.
Americans tread water in gulf between rich, poor
The recession technically ended in the middle of last year, but the numbers can't tell the whole story. The census report translates to stories of impatience, resignation and hopelessness for those who are living it across the country.
Austerity Plan Spurs Bond Rush
A measure on the Colorado ballot for November would ban all borrowing by the state and severely restrict it at the municipal level, making Colorado the only state whose agencies would be unable to issue debt, municipal experts say.
Holiday hiring picture gets a bit merrier
The jobs probably won't be enough to be a dent in the nation's nearly 10 percent unemployment rate, but for Americans desperate for some work, they're far more than an early Christmas present.
Bernanke: Teach us out of the next crisis
Fed Chairman Ben Bernanke told a crowd of schoolteachers in Washington Thursday they can help prevent the next big financial crisis by teaching students personal finance basics of saving and budgeting.
Veteran Staffer To Replace Emanuel
White House Chief of Staff Rahm Emanuel, one of the most visible faces of the Obama presidency, will step down Friday to run for mayor of Chicago, leaving the high-profile post at least temporarily to a longtime Obama aide who has guarded his privacy fiercely.
Postal Service denied rate hike
Christmas is not coming early this year for the U.S. Postal Service, after regulators denied a request Thursday that would have raised the price of a first-class stamp by 2 cents, to 46 cents.
Irish Crisis Shakes Europe
Dublin to Spend Billions More to Shore Up Lenders; Jitters Over Euro's Future.
Personal income is up, and so is spending
Personal income increased $59.3 billion, or 0.5% last month, while spending by individuals remained steady.
Regulators: Much to do on Wall Street reform
The Federal Reserve has 50 new rules to write, the Federal Deposit Insurance Corp. has 44 new rules to write. The Securities and Exchange Commission has 100 rules and 20 studies on its plate. And Treasury has two new agencies and an oversight council to set up.
U.N. Says Global Employment Needs 5 Years to Rebound
To get back to the level of employment in 2007, the global economy needs to create nearly 23 million jobs, including more than 14 million in developed countries, the report said.
China manufacturing sector grows
China's manufacturing sector picked up pace in September, easing some fears that the world's third largest economy might be in for a rapid slowdown.
China warns U.S. currency bill might hurt ties
Beijing warned Washington Thursday that economic ties might be damaged after American lawmakers escalated the conflict over China's currency controls, inching the two economic giants closer to a trade war.
Health reform to worsen doctor shortage: group
The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday.
Ireland Prices Bank Rescue; Deficit at 32% of GDP
Ireland's central bank has put a 34 billion euro price on bailing out stricken Anglo Irish Bank under a worst case scenario and said Allied Irish Banks needs to raise an additional 3 billion euros by the end of the year.
Global employment crisis will stir social unrest, warns UN agency
Global employment will not recover to pre-crisis levels until 2015 if current policies are pursued, creating social tension, the International Labor Organization has warned.
Thousands show up in LA for free mortgage help
Armed with folding chairs, coolers and jugs of water, thousands of people who want to avoid losing their homes lined up around the Los Angeles Convention Center on Thursday seeking help with mortgages they can no longer afford.
Latest unemployed: Stimulus-subsidized workers
Tens of thousands of low-income workers lost their jobs Thursday as a stimulus-subsidized employment program came to an end.
Consumer spending, incomes both rose in August
Consumer spending rose by a moderate amount in August while incomes increased by the largest amount in eight months, a gain that was propelled by the resumption of extended unemployment benefits.
Child nutrition bill stalls in House
First lady Michelle Obama's campaign for healthier school lunches has stalled in Congress after anti-hunger groups and more than 100 Democrats protested the use of food stamp dollars to pay for it.
Second-Quarter Growth Is Revised Higher, to 1.7%
Still, that is a sharp slowdown from a 3.7 percent rate in the first quarter and does not change the big picture: the economy has been losing momentum since the end of last year.

Blogs
ObamaCare Prods Yet Another Insurer to Flee the Market
By forcing the exit of Principal Financial Group — which ran a profitable, $1.6 billion health insurance business — ObamaCare has now left 840,000 Americans to find another source of coverage.
Hotel Occupancy Rate: Slightly below 2008 Levels
"Overall, the U.S. hotel industry rose 7.5% in occupancy to 64.2%, average daily rate was up 2.6% to US$103.09, and RevPAR ended the week up 10.3% to US$66.15."
Postal Service’s Financial Woes
The U.S. Postal Service is in a lurch after Congress wrapped up business until November without giving the USPS a break on a $5.5 billion retiree health benefits payment that’s due tomorrow. Combined with an expected loss in the billions of dollars, the USPS could run out of money in October.
Which Cities Face Biggest Housing Risks?
Within more than 500 metro areas, the top 20 most stressed include nine in California and six in Florida, where the housing bust has been particularly acute. Among the most populous cities, Miami tops the list, followed by California’s Inland Empire, Los Angeles and San Diego.
McDonald’s Case Highlights ObamaCare’s Threat to Low-Income Workers’ Health Insurance, Political Freedom
Many employers, such as McDonald’s, provide health benefits that are less comprehensive than most. They may have an annual claims limit of $10,000 or less. These are the health plans (and the workers), however, that are seeing the highest premium increases under ObamaCare.
What Makes the US Health Care System So Expensive?
In particular, Aaron Carroll's series on What Makes the US Health Care System so Expensive does a very good job of locating the sectors where the US health care system is more expensive than we would expect compared to other countries (it's less good at identifying why these sectors are expensive but we have to start somewhere.)
Overhauling CBO and JCT Is a Real Test of GOP Resolve, not the ‘Pledge to America’
Redemption is a good thing, however, so maybe the GOP actually intends to do the right thing this time around. One key test is whether Republicans do a top-to-bottom housecleaning at both the Congressional Budget Office and the Joint Committee on Taxation.
Secondary Sources: Small Business Job Creation, Fiscal State of the Union, Economics of Lobbying
A roundup of economic news from around the Web.
One reason why fiscal reform is difficult
The dilemma is simple: variations in Medicaid coverage account for a lot of the variation in the health of state government finances. Yet if states cut back on Medicaid in some manner, there will be more people on the more expensive subsidized exchanges, come the full onset of the Obama health plan.
Geithner on the Economy, Politics and More
Treasury Secretary Timothy Geithner spoke for roughly a half hour at The Washington Ideas Forum hosted by The Atlantic and the Aspen Institute on Thursday. Here are some points he made during his appearance...
Balancing the Fed’s Hawks, Doves
The Senate’s confirmation of Janet Yellen and Sarah Bloom Raskin to the Federal Reserve’s Board of Governors, continues to shift the balance of those who want more action to spur growth with those who are more concerned about inflation.
The Keynesian Attraction
Introspection, though fallible, is genuinely informative. We use it all the time to our great profit. And Keynesians should celebrate this truth, because some of their key premises pass the test of introspection with flying colors. Much unemployment is involuntary - there's no denying it. And workers genuinely resent - and employers therefore genuinely fear - nominal wage cuts. ...Of course, once Keynesians admit their real reasons, they do have a little problem: Some of their positions fail the introspective test!
Goolsbee Takes a Turn at the White Board to Explain Tax Cuts
Austan Goolsbee, the newly minted chairman of President Barack Obama’s Council of Economic Advisers, takes a turn at the White Board to explain the tax fight in Congress – and why Obama does not want to extend the expiring tax cuts of George W. Bush for households earning more than $250,000.
Is a Municipal Debt Crisis Imminent?
The basic problem: state and local governments are facing a new budgetary reality.
China's Embarrassing Foreign Aid Scam
While China spent tens of billions on hosting the Olympics, it still has its other hand out asking for donations.
Let the Market Control Pharmaceutical Costs
US consumers are being burdened with unnecessary costs that could be alleviated if worldwide prices were factored into the equation.
Is the Obama DOJ Committed to Race Neutral Law Enforcement?
On May 14, 2010, Department of Justice Civil Rights Division Assistant Attorney General Thomas E. Perez testified before the U.S. Commission on Civil Rights about the DOJ’s decision to completely drop charges against the New Black Panther Party and two of its members for alleged voter intimidation in violation of the 1964 Voting Rights Act.
Duck Season Opens
As Congress vacates Washington to campaign, they promise to return after Election Day to clean up the mess they leave behind.
Side Effects: Massachusetts Seniors Will Lose Medicare Advantage Plans in 2011
President Barack Obama’s promise that “if you like it you can keep it” may be this generation’s “read my lips—no new taxes,” claim.
The “Myth” of the American Founding
You should think twice the next time you invoke the Constitution or argue that the federal government is overreaching its power. According to The Economist, you may well have succumbed to “The Perils of Constitution Worship.”

Research, Reports & Studies
Canada’s Budget Triumph
...just 16 years later, Canada’s federal debt had fallen from 67 percent to only 29 percent of GDP. Moreover, in every year between 1997 and 2008, Canada’s federal government had a budget surplus.
Fiscal Policy Report Card on America's Governors: 2010
America needs a lot more "A" governors to face the fiscal challenges and make the needed tax and spending reforms.

Economists’ Comments & Opinions
Echoes of the Great Depression
As in the 1930s, policy uncertainty and hostility to business have retarded recovery. At least this time around the political price for economic failure promises to be swift.
Workers, Not Employers, Bear the (Full) Cost of Health Benefits
The Kaiser Family Foundation recently issued its annual survey of employer-sponsored health benefits, declaring: "Family Health Premiums Rise 3 Percent to $13,770 in 2010, But Workers' Share Jumps 14 Percent as Firms Shift Cost Burden." That's half-right — but the other half perpetuates a myth about employee health benefits that stands in the way of real health care reform.
CBO: Obama's Tax Plan Could Be Worst of All
...Obama's plan to extend only 80 percent of the Bush tax cuts could be worse for the economy in 2020 than the Republican plan to extend 100 percent, even though the GOP's plan would saddle us with more debt.
Curb Medicare Spending the Ryan Way
Nothing presents as great a threat to the federal budget — and therefore to economic growth — as the persistent and rapid growth of Medicare spending.
The Newspeak of Paul Krugman
To believe that spending — any kind of spending — is the cure for what ails us is to ignore the subjective nature of wealth and the microeconomic basis of economic growth in favor of an absolute reification of economic aggregates such as GDP and unemployment.
WARREN: It's Time to Simplify Financial Regulation
Perhaps most remarkably, the agency will not simply create new regulations: It has the power to get rid of old ones that are outdated, expensive or don't work.
They’re Coming to Get You
A fiscal horror story so terrifying, it can only be told in 3D!
Consumers Still Unaware of Impending Doom, Part 1
Credit cards and the government have encouraged spending, leaving many completely unprepared for retirement. This financial crisis will take decades to repair.
Why America Won't Have Hyperinflation
Many of the most respected names in economics predict hyperinflation, yet none of the actual economic or political factors required are present.
Consumers Still Unaware of Impending Doom, Part 2
Nobody believes today that major mega retailers like Target might not exist in 10 years, but it's an entirely plausible scenario.
David Rubenstein: U.S. is losing its competitive edge
The Carlyle Group co-founder says the U.S. threatens to fall behind China, thanks to our growing deficit and government debt. Meanwhile, Treasury Secretary Tim Geithner downplays the threat of a looming trade war.

"We get rich by finding ways to do more with less. As productivity increases in manufacturing and agriculture, employment falls." -Russ Roberts, Twitter

Graph of the Day
Mercatus Center: Tax Cuts, or Hikes, Are a Sideshow
Bush Tax Cuts: The Cheat Sheet
See: The Luck of the Irish
See: Where your taxes all go
VIDEO: The Latest from the Standup Economist

Book Excerpts
"The consumer-voter may be viewed as picking that community which best satisfies his preference pattern for public goods. This is a major difference between central and local provision of public goods. At the central level the preferences of the consumer-voter are given, and the government tries to adjust to the pattern of these preferences, whereas at the local level various governments have their revenue and expenditure patterns more or less set. Given these revenue and expenditure patterns, the consumer-voter moves to that community whose local government best satisfies his set of preferences. The greater the number of communities and the greater the variance among them, the closer the consumer will come to fully realizing his preference position." –Charles M. Tiebout, "A Pure Theory of Local Expenditures," (1956)

Did You Know
In Washington D.C. and the surrounding suburbs, 47.3% of people 25 years or older have bachelor's, master's, professional school or doctorate degrees, according to new Census Bureau data released Tuesday. The national average barely tips 25%. That metro area has the nation's highest percentage of residents with college degrees so you can call it America's brainiest place to live.

9/30/10 Post

BUZZ: Spain loses AAA status, presents tough budget

News
Jobless Claims Post Decline
Initial unemployment claims fell by 16,000 to 453,000 in the week ended Sept. 25, the Labor Department said in its weekly report Thursday. New claims for the previous week, ended Sept. 18, were revised upward to 469,000 from 465,000.
In Tax Cut Plan, Debate Over the Definition of Rich
One proposal being discussed is a millionaires’ tax, which would create one or two additional tax brackets for the wealthiest Americans and eliminate the Bush tax cuts only for those who earn more than seven-figure incomes.
House passes tariff bill to stop China's yuan imbalance with U.S.
Republicans from industrial states joined most Democrats in giving new powers to the Commerce Department to consider whether China's policy of tying the value of its currency to the dollar, rather than allowing it to rise in response to market forces, represents an unfair trade practice.
European debt woes hit world markets
A new flare-up in Europe's debt crisis hit world stock markets Thursday after Ireland announced it would sink more billions into its failed banks and Spain's public debt rating was downgraded.
Foreclosures Make Up 24% of Home Sales
A total of 248,534 U.S. properties in some stage of foreclosure -- default, scheduled for auction or bank repossession -- sold to third parties in the second quarter. While this represents an increase of nearly 5% from the previous quarter, the figures are down 20% from the same time last year.
US mortgage rates at record lows-Freddie Mac
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.32 percent for the week ended Sept. 30, down from the previous week's 4.37 percent and matching a record low set earlier in the month, according to the survey.
Oops! F.D.A. Error Is Talk of Henhouse
Ms. Balmer was in Pennsylvania to teach inspectors about how to keep germs away from poultry flocks, known as biosecurity. But the industry executives and state officials said she was breaking a basic biosecurity rule: keep vehicles, which may have driven through manure on rural roads or other farms, as far from the hens as possible.

Blogs
Three Fed Officials, Three Divergent Views
Three Federal Reserve officials are out today with divergent views on the economy and on whether the Fed should buy more Treasury bonds (which is known to some as quantitative easing) to push down long-term interest rates and stimulate growth.
Fannie Mae and Freddie Mac: Serious Delinquent Rates decline
Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business decreased to 4.82% in July, down from 4.99% in June - and up from 4.17% in July 2009.
Secondary Sources: September Consumption, Basel III, Development Research
A roundup of economic news from around the Web.
CBO Says China Currency Bill Won’t Do Much
A little perspective may be helpful here. In 2009, U.S. imports of goods from China were $297 billion. So we’re talking about an average tariff rate change of 0.0017 percent. That’s expected to triple in fiscal 2013, to $15 million in revenue, perhaps 0.005 percent.
Worried Consumers and CEOs Are Stuck in Logjam
Earlier this week, the Conference Board’s consumer confidence index unexpectedly plunged to 48.5 in September, the lowest reading since February. On the heels of the consumer report came news from the Business Roundtable that its CEO economic outlook index fell to 86.0 in the third quarter, from 94.6 in the second.
Recalculation vs. Structural Unemployment vs. AS/AD
The information technology workers laid off from financial firms may need different skills in order to be able to work on projects in nonfinancial businesses. They may need to start their own enterprises.
City Unemployment: Uneven
The Labor Department’s report on metro area employment Wednesday showed jobless rates in August were lower in 182 of 372 metro areas surveyed, compared to a year ago. But the unemployment rate was up in 169 places and flat in 21. El Centro, Calif. and Yuma, Ariz., led the pack with the highest jobless rates at 30.4% and 30.2%, respectively.

Research, Reports & Studies
Competition, Consumer Welfare and State Alcohol Regulation
Prudent public policy seeks the right balance between the responsible consumer’s interest in low prices and availability and the potential social costs associated with underage drinking and irresponsible use of alcohol by adults. The Commerce Clause and the Granholm decision require just such a balance. Creating some form of a Commerce Clause exemption for state alcohol laws would disturb this balance and raise the risk that anticompetitive laws would be tailored to take advantage of such a refuge.
Trade Freedom Continues to Advance—Barely
The 10 countries with the highest percentage of people living in poverty have an average freedom score of only 70.3 in the 2011 Index. By contrast, the 31 countries with the lowest poverty levels have an average trade freedom score nearly 10 points higher, at 79.9. The lesson here is that reducing trade barriers reduces poverty.

Economists’ Comments & Opinions
Outsourcing and the 21st-Century Economy
Taxing new U.S. corporate investment at 35%, when the world average is just over 18%, pushes companies to invest offshore.
The Only Policy Left: Growth
Reducing spending, controlling entitlements, reforming public pensions—all of that matters. It's important. But any population being asked to "sacrifice" needs to be able to believe something better is possible.
Why A Deficit-Financed Stimulus Leads Nowhere But To Stagnation
In the business or entrepreneurial sector, rising productivity and an enhanced pace of technological innovation mean that the economic value of investing is higher. Consequently, by employing more resources today, greater consumption will be possible tomorrow.
In Elizabeth Warren We Trust?
The unaccountable head of the new Consumer Financial Protection Bureau has repeatedly used shoddy data to push policies she favors.
Two Cheers for the New Bank Capital Standards
Why do we still rely on the rating agencies, and why are we still allowing Lehman Brothers levels of leverage?

Graph of the Day
CNN: Rising Medicaid costs to blow hole in state budgets
Where Did the TARP Money Go?

Book Excerpts
"The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." –Ludwig von Mises, Human Action (1949)

Did You Know
"...24% of men in newly formed couples in 2010 didn’t work last year compared to 14% in 2009. Meanwhile, the percentage of couples in which one partner was employed and the other was unemployed increased to 15% in 2010 from 8% in 2008, suggesting economic concerns are pushing people together. ...However, even as more people are moving in together, the U.S. marriage rate continues its long-term trend downward, according to data released last month by the Centers for Disease Control and Prevention. The marriage rate in 2009 fell to 6.8% in 2009 from 7.3% in 2007. There were 80,000 fewer marriages in 2009 than 2008, even as the population base rose 2.3 million."

9/29/10 Post

BUZZ: Home Prices Edge Up But Outlook Darkens

News
Schaumburg Votes to Lower Property Taxes
The village of Schaumburg bucked the national trend of raising taxes and fees to cover rising expenses when its board unanimously approved a 4.4 percent reduction to the 2010 property tax levy.
French budget makes 'historic' spending cuts
President Nicolas Sarkozy's government launched a "historic" attack on France's soaring overspending on Wednesday, unveiling a budget which closes tax loopholes and imposes unprecedented spending cuts.
Dollar tumbles, gold hits record high
The dollar sank against the euro and hit a record low point against the Swiss franc on Wednesday while gold struck a new all-time peak, as traders mulled possible US moves to boost its ailing economy.
CEOs less willing to hire, sales a worry
U.S. chief executive officers' view of the economy darkened in the third quarter, with top executives saying they were less willing to hire new workers as they fear sales growth will slow.
Haitians suffer as U.S. aid is stuck in red tape
Nearly nine months after the earthquake, more than a million Haitians still live on the streets between piles of rubble. One reason: Not a cent of the $1.15 billion the U.S. promised for rebuilding has arrived.
Senate advances bill aimed at averting shutdown
A stopgap spending bill that's needed to avert a government shutdown on Friday advanced in the Senate as lawmakers prepared to head for the exits for the midterm elections.
House set to approve bill on China’s yuan
The House of Representatives is poised on Wednesday to pass legislation to pressure China to let its yuan currency rise more quickly, fanning the flames of a long-running dispute over trade and jobs.
Inhofe Says EPA's New Boiler Rule Could Kill Nearly 800,000 Manufacturing Jobs
The top Republican on the Senate environmental panel released a scathing report Tuesday that he contends shows that the Environmental Protection Agency's new proposed rule on cleaning up boilers nationwide could devastate America's manufacturing base and imperil hundreds of thousands of jobs without providing any real public health or environmental benefits.
Why Gold is Soaring
Gold has topped $1,300 an ounce for good reason. The Obama administration has flooded the world with greenbacks and Treasuries, global investors have little confidence in the management of the U.S. economy, and investors have taken refuge in gold.
Southwest's AirTran Acquisition May Bring Higher Ticket Prices
Southwest Airlines Co.’s planned purchase of AirTran Holdings Inc. may lead to higher ticket prices as a low-fare competitor is eliminated and the merged carrier works to make up for higher costs.
Recession's Toll in U.S. Ranged From Incomes to Marriage, Census Data Show
The worst U.S. recession since the Great Depression last year hurt almost every part of American life, from household finances to marriage rates and teenage employment, according to Census Bureau figures.
Final Senate jobs bill fails
The jobs agenda put forth by Senate Democrats has begun to lose support within their own caucus, including a Tuesday vote in which a bipartisan filibuster defeated a bill to stop jobs from being shipped overseas.
EU proposes tougher budget rules
The European Commission proposed new penalties for countries that spend themselves into debt in hopes of preventing another crisis like the one that pushed Greece ot the edge of bankruptcy and shook confidence in the euro.
Deficit-cut panel convenes amid skepticism
With just two months left before it has to issue a final report, a U.S. commission looking at ways to cut the federal deficit was to meet again on Wednesday amid questions about its hard-headedness.
Treasury nears plan to exit AIG
The U.S. government and AIG are finalizing a plan for how the Treasury Department would exit its majority stake in the insurance giant, according to several published reports.
Tax cuts: Extend them but beware
The problem is that if those tax cuts are not accompanied by other changes in the government budget, and are simply funded through borrowing, that borrowing crowds out other private investment in productive capital ... the computers, the machinery, the buildings, that are the source of long-term economic growth.
Small business for Congress!
Small business people are frustrated. They don't feel like Congress, specifically, and the government, generally, gets what they need, especially in a difficult economy
25 percent increase in depression cases along Gulf Coast since massive BP spill
A Gallup survey released Tuesday of almost 2,600 coastal residents showed that depression cases are up more than 25 percent. The conclusions were consistent with trends seen in smaller studies and witnessed by mental health workers.
Oil prices rise as corporate deals encourage investors, gas pump prices continue down
Benchmark crude for November delivery rose 13 cents to $76.66 a barrel in midday trading on the New York Mercantile Exchange. At the pump, the national average for a gallon of regular dipped to $2.691 on Tuesday. That's 3 cents lower than a week ago, although it remained 19.2 cents higher than a year ago.
Fate Of Fannie, Freddie Could Test Limits Of GOP Pledge
Beneath the bold promises of the GOP's Pledge to America rests the tough task of implementing policy. And on that front, a battle over housing policy offers a glimpse of how difficult it may be for House Republicans to carry forward their goal of smaller government in the next Congress.
Stimulus, Deficit Drive Debate At Workforce Conference
Experts on both sides of the chasm separating deficit reduction and economic stimulus argued Tuesday over the best solution to the hot-button issue of economic recovery.
Gulf leaders push to revive economy
Now that the oil has stopped flowing in the Gulf of Mexico, renewed economic development efforts have begun along the Gulf Coast.

Blogs
Do You Hold These Truths?
For more than 200 hundred years, America’s first principles—liberty and equality, natural rights the consent of the governed, private property, religious freedom, the rule of law and constitutionalism—have defined us as a nation and united us as a people.
Secondary Sources: Currency Manipulation, Jobs Bill, Asia vs. Latin America
A roundup of economic news from around the Web.
Leaving Children Behind? It’s Time to Embrace Online Education
It’s 2010, but you wouldn’t know it from looking at the American school system. Technological advances that we all take for granted in our homes, offices, and cars have yet to fully make their way into our children’s classrooms.
MBA: Mortgage Applications Purchase Index increases slightly
"The Refinance Index decreased 1.6 percent from the previous week, which is the fourth straight weekly decrease. The seasonally adjusted Purchase Index increased 2.4 percent from one week earlier."
Congress Again Creates Confusion and Again Harms the Economy
The inability of Congress to stop the Obama tax hikes is already having a real, negative impact on the U.S. economy. Businesses are delaying hiring and investment decisions because they do not know what their tax liability will be next year. Even tax experts have noticed the incredible amount of confusion that now exists as Congress flees D.C. without preventing the tax hikes.
CEOs Grow More Pessimistic
A third-quarter survey of chief executives showed they predict the economy will grow 1.9% this year, down from their 2.7% estimate last quarter, the Business Roundtable, an association of U.S. CEOs, said Tuesday.
Side Effects: Doughnut Hole Deal Not so Sweet
Currently 3.4 million Americans seniors covered by Medicare find themselves in a giant “doughnut hole,” but despite the tasty terminology, there’s nothing sweet about it.
Krugman Mangles Smith
In fact, as Smith’s example of the laborer’s woolen coat shows, he thought of the real division of labor as being carried out across the whole globe, across many, many years, and among a multitude of enterprises. Whereas Smith saw the progress of the division of labor as depending on the “extent of the market,” Krugman translates that to “the size of the factory”!
The Protectionist Threat of Another Great Depression
A financial bubble fueled by easy money and loose credit bursts. Unemployment shoots up, and gross domestic product falls sharply. Some in the U.S. Congress blame foreigners for unfair trade practices and pass a trade bill that prompts widespread retaliation, exacerbates the popping of the bubble, and sends the country into further economic trouble. That is what happened with the Wall Street Crash of 1929, the Smoot–Hawley Tariff Act of 1930 and the Great Depression.
Why Don't U.S. Corporations Threaten to Exit?
Within the U.S., there is some evidence that economic activity has shifted away from business-hostile "blue" states to business-friendly "red" states. To the extent that this is true, it does not seem to have caused politicians in blue states to switch colors.
Estimate of Decennial Census impact on September payroll employment: minus 78,000
The Census payroll decreased from 83,955 for the week ending August 14th to 6,038 for the week ending September 18th.
If Not Fannie, then Who?
We devote too much capital to mortgages, at the expense of more productive sectors of our economy.
End Drug War, Save Billions in Wealth
A new Cato Institute report examines the budgetary impact of ending the drug war and concludes that $88 billion could be saved each year (about $41 billion from canceled spending and about $47 billion in new tax revenue).

Graphic of the Day
Fixing Europe's Single Currency
See: Dealing with Debt
See also: U.S. Economic Confidence Remains Steady at 2010 Low

Economists' Comments & Opinions
The Pelosi-Reid Deficits
Blame Congress, not presidents Bush or Obama, for our perilous fiscal situation.
First, Do No Harm--But Please Do Something
If Congress wants to get serious about the jobs challenge ahead, the sooner we pass it, the better.
40 Years of Energy Panic
We seem to get all the oil we want at a price we're willing to pay.
Cut Taxes and Help Government Steal Less
Progressives want to raise taxes on individuals who make more than $200,000 a year because they say it's wrong for the rich to be "given" more money. Sunday's New York Times carries a cartoon showing Uncle Sam handing money to a fat cat. They just don't get it.
Department of Disinformation
Sebelius tells a North Carolina fairy tale.
Why the Statistical "Recovery" Feels Bad
The alleged recovery is nothing more than an illusion caused by unsustainable deficit spending.
The Light Bulb Switchover: In the Dark
So, are you ready to comply with the federal government’s ban on incandescent light bulbs? Starting in January 2012, a little over a year from now, the phase-out begins.

Research, Reports & Studies
Making Budget Rules Work
Congress faces two sets of problems, a commitment problem and an enforcement problem, that prevent well-meaning legislators from effecting change.
Going Cold Turkey
Most of the plans put forward for replacing Fannie Mae and Freddie Mac involve some continuing role for the government in housing finance. The reasons behind these plans are less than persuasive, and recent experience has shown that the moral hazard created by the government's presence in the housing-finance market can produce catastrophic results for taxpayers.
RCM: Wells Fargo Economics Group: Consumer Confidence Falls in September
The Consumer Confidence Index fell 4.7 points in September to 48.5. Both the current conditions and expectations series declined during the month, and the labor market components of the survey weakened.

Book Excerpts
"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources — if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality." –F.A. Hayek, "The Use of Knowledge in Society" (1948)

"Did You Know"
The annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income. This cost is in addition to the federal tax burden of 21%, for a combined cost of 35% of national income. One out of every three dollars earned in the U.S. goes to pay for or comply with federal laws and regulations, and new policies enacted in 2010 for health care and financial services will increase this burden.