Thursday, July 22, 2010
7/22/10 Post
News
Jobless Claims Increase
In its weekly report Thursday, the Labor Department said the number of U.S. workers filing initial claims for jobless benefits increased by 37,000 to 464,000 in the week ended July 17. Economists surveyed by Dow Jones Newswires had expected claims would rise by 21,000.
Obama's words sting CEOs
In the eyes of corporate America, President Barack Obama relied on a healthy dose of industry-bashing to sway votes in Congress for health reform and the new Wall Street regulations signed into law Wednesday.
Financial Overhaul: An Easy Guide to Complex Reforms
All of that means the real-world impact of the law will depend on how it's interpreted by regulators — the same regulators who were blamed for failing to head off the financial crisis. Still, the bill is now law. And regulators must enact rules consistent with Congress' blueprint.
Alaska Wells Halted
A unit of Royal Dutch Shell PLC had hoped to drill three exploratory wells this summer. Those plans were halted when President Obama decided to delay offshore oil drilling in the Arctic until at least 2011.
Gold Coin Sellers Angered by New Tax Law
Amendment Slipped Into Health Care Legislation Would Track, Tax Coin and Bullion Transactions.
Conflicted GOP provides key votes to pass popular trade bill
The House on Wednesday passed a tariff reduction bill that Democrats and business groups said would support tens of thousands of jobs after Republican opposition to the measure wilted.
Politicking clouds economic decision-making, with economists more optimistic than public
64% of economists surveyed in a Wall Street Journal poll said the economy would get better over the next 12 months compared with just 33% among the general public who said they believed that.
Gold Coin Sellers Angered by New Tax Law
Deep financial worries make economy a personal hardship for many Hispanics
57% worry a lot about being unable to pay bills, well above the 34 percent of the entire population who said that in the May. 48% of Hispanics said they worry greatly about becoming unemployed, double the overall population's concern.
20% of Americans hit by major economic loss
A new study released Wednesday estimates that 20% of Americans suffered a significant economic loss last year - the highest level in the past 25 years.
Job seekers' latest hurdle: Credit checks
An increasing number of employers are using credit checks to screen potential job applicants. So missed payments on your mortgage, car or credit card could keep you from getting hired.
New wave credit card abuses
A 2009 federal crackdown on abusive credit card practices has exposed a litany of other ways consumers are being hosed.
Existing-home sales fall as tax credit ends
Resales of U.S. homes fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million as a federal subsidy for home buyers ends.
June leading indicators fall; slower growth seen
The index of leading economic indicators declined 0.2% in June, slower economic growth is expected through the fall.
Blogs
The History and Future of Private Space Exploration
"For the majority of its history, space exploration in America has been funded privately. The trend of wealthy individuals, such as Paul Allen, Jeff Bezos, Robert Bigelow, and Elon Musk, devoting some of their resources to the exploration of space is not an emerging one, it is the long-run, dominant trend which is now re-emerging."
Secondary Sources: Inflation Expectations, Out of Touch, Krugman v. Rogoff
A roundup of economic news from around the Web.
Office Vacancy, Lease Rates and New Investment
Historically the billings index will turn up 6 to 9 months before an increase in non-residential structure investment - there is a long way to go!
Congress Created Them All
Is the power to command people to purchase health insurance, or the power to prohibit consenting adults from buying and selling certain kinds of financial instruments, really so mild and beneficial that we should calmly welcome the exercise of these powers while we simultaneously quake with fear at the exercise of “intelligence” powers?
Summer Reading III
Banking crises are not only frequent , but often accompanied by other kind of crises. These include exchange rate crises, domestic and foreign debt crises and inflation crises. The current financial crisis is still unfolding, but we have already seen the clustering of crises.
Apparently not obvious: neutrality neuters innovation
I wonder why it’s seemingly so easy to see the negative unintended consequences of regulating search, yet most people are blind to similar consequences from government regulation of other stuff. I think one reason is because proponents of regulation can yell about fairness and “leveling the playing field,” which sounds intuitive and appealing, so most people never realize that there’s potential for unintended consequences. Let alone what the costs and benefits of those consequences might be.
Testimony Highlights: Bernanke on the Hill
In his prepared testimony, he didn’t offer any new steps to support the economy but said that with an uncertain economic outlook, Fed officials “remain prepared to take further policy actions as needed.”
The FCC Won’t Be Let Be (Apologies to Eminem)
"The Freedom for Consumer Choice Act would require the FCC to prove consumers are being substantially harmed by a lack of marketplace choice before it can impose new regulations, as well as weigh the potential cost of action against any benefits to consumers or competition."
Crony Capitalism
It’s the pretense of knowledge. How can Obama be so sure that his brief introduction to these companies outweighs the private sector’s accumulated knowledge and conscious disregard for them?
And It Said “Let There Be Higher Wages.” And There Were.
Writing in today’s Baltimore Sun, Marta Mossberg correctly argues that a proposed “living-wage” bill for Baltimore will hurt the poor. This unintended effect is the inevitable result of prohibiting workers from accepting any wage lower than $10.57 per hour – a wage well above the hourly value that many unskilled workers are capable of producing for employers.
Existing Home Sales decline in June
Months of supply increased to 8.9 months in June from 8.3 months in May. A normal market has under 6 months of supply, so this is already high - and probably excludes some substantial shadow inventory.
Co-opting the Anti-Spenders
Voters who recognize the need to make major cuts to federal spending and think returning Republicans to power will accomplish this feat could be in for a big disappointment.
Morning Bell: The Obama Tax Tsunami is Here
$862 billion economic stimulus has completely failed to keep unemployment below 8% as promised; still-expanding health care law which the Congressional Budget Office now admits will cost more than $1 trillion; and a budget that increases government spending by $12,000 per household.
Dem Plan to Cut Deficit Will Pay for Failed Stimulus … by 2130
Reps. Gary Peters (D-MI), John Adler (D-NJ), Peter Welch (D-VT) and Jim Himes (D-CT), should be commended for forming their new Spending Cuts and Deficit Reduction Working Group.
Dodd-Frank Lets Fannie and Freddie Deadbeats Slide
As President Obama today signed into law the Dodd-Frank financial regulation bill, two words were left unspoken: Fannie and Freddie.
Research, Reports & Studies
Individual Mandate and Related Information Requirements under PPACA
Most individuals will be required to maintain minimum essential coverage, which includes eligible employer coverage, individual coverage, grandfathered plans, and federal programs such as Medicare and Medicaid, among others. Those who do not maintain minimum essential coverage, and who are not exempt from the mandate, will be required to pay a penalty for noncompliance.
The Economic Case Against the Death Tax
The death tax slows economic growth, destroys jobs, and suppresses wages because it is a tax on capital and on entrepreneurship.
Five Ways to Tackle Spending and Deficits
America's fate is not yet sealed. This bleak future of rising spending, painful tax increases and unsustainable deficits can be avoided if lawmakers quickly take the following five steps.
Overspending on Multisource Drugs in Medicaid
This report assesses wasteful spending in Medicaid by examining specific brand drugs and quantifying the potential savings that could have been achieved had these drugs been replaced with lower-cost, generics that were available but not used.
Economists’ Comments & Opinions
No need for a panicked fiscal surge
Unfortunately, much of the world is going to be facing huge macroeconomic uncertainty for years to come. There is uncertainty about regulation, sovereign debt, the state of our banking and healthcare systems as well as about political fallout from the financial crisis. In this environment, measures to gradually stabilise debt burdens – to restore normality – surely make sense.
Son of Cap and Tax
The destructive fine print in Harry Reid's energy bill.
U.S. Workers Aren't Better Off
Until the president and Congress abandon this costly interventionism, the economy won't produce the jobs needed to reduce unemployment significantly. In other words, more aggregate demand alone may be unnecessary and surely is not sufficient.
Economists vs. Economics
Everybody knows that economists are terrible at predicting the future. If the price of pencils goes up, people buy less of them. If the price goes down, more. Economists can predict that much. But they can't say by how much. That would require a depth of knowledge known only to the divine. They would have to know to the shape and the slope of hundreds of millions of ever-changing individual demand curves for pencils at any given moment. The elasticity of demand for the same. They need the same information for competing products, like pens. Nobody has that kind of information. Nobody can predict the future.
Why the ObamaCare Tax Penalty Is Unconstitutional
The federal power to tax is not unlimited, as the Supreme Court recognized when it struck down the first national income tax.
Obama's Jobs Errors
The actual unemployment rate is 9.5 percent, a statistic that doesn't include the millions who've given up looking for work or can only find part-time jobs. What were President Obama's biggest mistakes?
Graph of the Day
Entitlement programs must be reformed to improve the long term budget
See: Where are the billionaires?
See also: Congress Ranks Last in Confidence in Institutions
Book Excerpts
"When it is a question of taxes, gentlemen, prove their usefulness by reasons with some foundation, but not with that lamentable assertion: ‘Public spending keeps the working class alive.’ It makes the mistake of covering up a fact that it is essential to know: namely, that public spending is always a substitute for private spending, and that consequently it may well support one worker in place of another but adds nothing to the lot of the working class taken as a whole. Your argument is fashionable, but it is quite absurd, for the reasoning is not correct." –Frédéric Bastiat, What is seen and what is not seen: or Political economy in one lesson (1850)
Did You Know
"Number of birds killed by the BP oil spill: at least 2,188 and counting.
Number of birds killed by wind farms: 10,000-40,000 annually.
Number of birds killed by cars: 80 million annually.
Number of birds killed by cats: Hundreds of millions to 1 billion annually."
Wednesday, July 21, 2010
7/21/10 Post
News
Slowing Economy Could Exacerbate Federal Debt Woes
The White House's Office of Management and Budget sees 4% average real GDP growth from 2011 to 2014. But if growth is 3%, OMB says deficits would be $2 trillion higher through 2020 than the $8.5 trillion under its baseline scenario.
TARP Lending Programs Curtailed
Treasury officials say they plan to end a long-delayed, never-utilized $30 billion program designed to boost small-business lending and cut the amount of money available for a Federal Reserve lending program.
Housing Market Stumbles
Construction Slows, Inventories Build Amid Weak Job Growth, Tax-Credit End.
Facing Pension Woes, Maine Looks to Social Security
With pension costs ballooning and taxpayers lashing out, many workers in states with deeply underfunded plans fear their benefits will be cut. Those being asked to put more into their pension funds complain they feel caught up in Ponzi schemes.
Bond Sale? Don't Quote Us, Request Credit Firms
The odd plea is emerging as the first consequence of the financial overhaul that is to be signed into law by President Obama on Wednesday. And it already is creating havoc in the bond markets, parts of which are shutting down in response to the request.
Social Security Loses $50 Million a Year in Benefit Overpayment
The overpayments go to retirees who have held state jobs and also worked in the private sector — teachers who worked on their summer breaks, for instance, or police officers who retired young enough to form their own companies.
Quinnipiac: Obama Approval Hits New Low
Just 36 percent of voters said they'd vote for Obama over an unnamed Republican candidate in 2012, compared with 39 percent who would vote for the Republican.
Fed in Hot Seat Again on Economic Stimulus
...for now the Fed is very much in the role of the anxious doctor, waiting to see if the patient can recover on his own without an additional dose of untested medicine.
Oil Spill: 90 Days Out, A Bold Look at the Big Numbers
Exactly 90 days after the Deepwater Horizon rig accident occurred in the Gulf of Mexico, The Fiscal Times takes a look at key numbers connected to the disastrous oil spill in the Gulf of Mexico
Wall Street wants to see sales growth, not just fatter profits
After five straight quarters of bigger profits for Big name companies, investors are showing they want more evidence the recovery is on the right path.
Jobless benefits extension passes Senate test
More than 2.5 million unemployed Americans are one step closer to having their unemployment benefits restored.
Economy still on government life support
All-in government support for financial institutions and the still-distressed housing market is up 23% this year, at around $3.7 trillion from $3 trillion last year.
U.S. debt: When is it safe to start cutting?
It's a refrain for those who think the government should do more to help the economy: The recovery is still fragile, so policymakers should wait before reining in U.S. debt. How strong does the economy have to be exactly? And when will it get there?
Wall Street reform law's starting line
As soon as President Obama's name shows up on the Dodd-Frank Wall Street reform law Wednesday, there will be some changes.
The Fed's toughest foe: Deflation
Prices have been slowing for three months. And members of the Federal Reserve openly voiced concerns about deflation.
The Fed's near-death and rebirth experience
At risk of losing all oversight powers, Fed fights to regulate another day.
Bernanke may seek to dispel double-dip fears
Bernanke faces no easy task to slay the double-dip dragon. Bernanke may benefit from the Fed's recent victory in the turf battle over reform of Wall Street oversight.
Blogs
Killing Jobs
A “safety net” is supposed to catch someone when he is falling, not two years after he falls. By 99 weeks -- the current length of unemployment benefits -- it is time for him to him to stand up.
Secondary Sources: Bernanke Questions, Housing Slump, Free Trade
A roundup of economic news from around the Web.
Government Spending by Another Name
If tax expenditures are not cut, taxes on households and businesses will have to rise to prevent an explosion of the national debt, which is now projected to increase to 90% of GDP by 2020 from today's 63%.
Survey: Americans Remain Wary of Stock Market
About 45% of people think the stock market will drop by more than 30% in the next year, according to a survey by economists at the University of Chicago and Northwestern University. That’s even worse than the 42% a year ago who thought such a sharp decline in stocks was likely.
In Search of Effective Stimulus
Dylan Matthews at the Washington Post has asked what we might be able to do for the economy if we repealed the Bush tax cuts for the wealthy and spent the money on something else.
Unemployment Extension Fight Is Just Beginning
In past recessions, unemployment extensions continued until the unemployment rate dropped below 7.5%. That’s a long way from the 9.5% rate recorded in June.
The Forgotten Employer
What’s lost in these arguments about jobs, especially by those on the left, are the voices of the jobs’ creators themselves. Those would be the employers.
Wages Fail to Keep Pace With Inflation
Median weekly earnings increased slightly to $740 in the second quarter from $734 a year ago, a 0.8% increase. The consumer price index, meanwhile, rose 1.8% in the same period.
Obamacare Is Not Entitlement Reform
The United States faces financial collapse due to out-of-control government spending, and entitlement programs have a lot to do with it.
Veto Bait for President Obama?
The President is scheduled to sign the financial overhaul bill today, yet he might want to consider not signing this bill because of the potentially unconstitutional racial and gender preference provisions buried in the massive bill.
Odd Pick for Immigration Enforcement
As the new state and local coordination director, Harold Hurtt will be responsible for the 287g program, which allows local law enforcement to “act in the stead of ICE agents by processing illegal aliens for removal.”
The Miscellaneous Tariff Bill: No Trivial Matter
Without passing judgment on the specific bill, the miscellaneous tariff bill (MTB) process has been a quiet trade policy success for almost 30 years.
The Economic Case Against the Death Tax
The death tax is a scourge for family-owned businesses, it also destroy jobs, lowers wages, and stifles entrepreneurship.
Research, Reports & Studies
Federal Trust Funds and the Budget
The Treasury securities in the trust fund are claims on the government and the government will to find real resources (by raising revenue, decreasing spending, or issuing more debt) to cover these claims when the obligations are redeemed.
The Boundless Beneficence of Big Brother
Comparing government to a wealthy brother or sister is simply a category error. Can you get a gift or loan from your relatives by shouting, "Give me my money!"?
Game of Chicken over Bush Tax Cuts Is Near
Either way, there will be a shock to an economy still reeling and teetering at the abyss of deflation and deeper downturn.
The Inefficiency of Clearing Mandates
This paper lays out the advantages and risks to a mandated clearing requirement, showing how, in some instances, such a mandate can actually increase systemic risk and result in more financial bailouts.
Cap-and-Trade Bill Would Make Housing Less Affordable
Just as there is ample evidence to suggest that smart growth and New Urbanist housing policies would do little or nothing to curb Green House Gas emissions, there is plenty of evidence to suggest that they would disrupt the already wobbly housing market.
Creating a Crisis: Unions Stifle Education Reform
Union influence and power has continued to prevent meaningful education reform, and another public education bailout from Washington will further empower unions.
Economists’ Comments & Opinions
Atlas Shrugged's Timeless Moral: Profit-Making Is Virtue, Not Vice
It's remarkably similar to the state of the world in Ayn Rand's "Atlas Shrugged," a mystery story about a future America whose economy is disintegrating and whose government is accumulating power faster than anyone thought possible. This parallel is a big reason a record 500,000 people bought "Atlas Shrugged" last year.
Obama's Economic Fish Stories
On unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.
Setting the Table for Fiscal Restraint
A Federal Reserve program of buying longer-term securities is the right policy for now and makes the right policy more likely in the future.
Washington's Tax Oracles
How to think about revenue estimates.
Professor Blinder Shows a Blindness to the Entrepreneurial Spirit
One mustn't reduce the sphere of economic activity from which entrepreneurs can draw sustenance.
Stimulating Unemployment
If you can't create any jobs, pay people not to work.
Making a Bad System Worse
Imposing national standards does nothing to change the basic political reality that has created this dismal situation: Public schooling is a government monopoly.
Graph of the Day
The extended unemployment benefits will have an impact on jobless workers all across the country
See: Flying high in the east
See also: Animation of Unemployment from 2007-2009
Book Excerpts
"'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded -- and once they are suspended it is not difficult for anyone who has assumed such emergency powers to see to it that the emergency will persist." -F.A. Hayek, Law, Legislation, and Liberty (1982)
Did You Know
"The ranks of U.S. restaurants are thinning. The number of establishments fell 1% between the spring of 2009 and the spring of 2010, a loss of 5,204 eateries. The decline was driven by closures of mom-and-pop outfits, while the number of chain restaurants was flat from a year earlier. There are fewer restaurants now than in 2007, with the drop coming in lock step with waning customer traffic."
Tuesday, July 20, 2010
7/20/10 Post
News
SEC needs to add jobs due to reform law
The Securities and Exchange Commission will need to hire about 800 new people to carry out the Wall Street reform legislation.
The wrong fix for small business lending
Something must be done to get small businesses up and running again. Small businesses employ roughly half of Americans and account for 60% of new jobs. But it's unclear whether foisting loans on them will solve the problem.
New home construction drops
New home construction fell to the lowest level of the year in June. Housing starts fell 5% from May to a seasonally adjusted annual rate of 549,000 last month.
Business versus Obama
Sitting on $2 trillion in cash, corporate chieftains appear to have decided that their inability to find suitable investments and create new jobs is not due to any lack of imagination on their part but solely to adverse policies of the Obama administration.
Unemployment rate falls in majority of states
A total of 39 states and the District of Columbia posted unemployment rate decreases in June. In May, 37 states and D.C. saw rates decline, six states suffered rate hikes and seven states reported no change.
Faith in Social Security tanking
Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.
Spain, Ireland, Greece Sell Debt as `Funding Pressure' Eases
The Counties sold almost 10 billion Euros ($13 billion) of debt, with demand rising for shorter-dated securities, on optimism the European Union’s aid programs will contain the region’s fiscal crisis.
Double dip looks doubly certain
Some think the worst is behind us, and that output and employment will slowly but steadily increase during the next few years. Others believe we are headed for another crash.
Many receive mortgage help from Obama plan
Some 51,205 troubled homeowners received long-term mortgage modifications under President Obama's foreclosure prevention program in June, bringing the total to 389,198 since the program began in the spring of 2009.
Fed workers to be urged to commute, travel less
In a statement, Obama noted that the government is the biggest energy user. "The government has a responsibility to use that energy wisely, to reduce consumption, improve efficiency, use renewable energy, like wind and solar, and cut costs," he said.
U.S. Approves Shallow-Water Well in Gulf
A de facto freeze on federal permits for new shallow-water oil and gas wells could be starting to thaw.
Longer-term risks remain despite the euro’s rally
The euro’s rebound from the four-year low it hit against the dollar in June has been impressive.
CEOs Get Ready to Spend Again
In what may signal an important shift, some chief executives say they are ready to start spending the mountains of cash they have stockpiled over the past year, despite lingering worries about the global economy.
Credit spreads predicted to widen
Credit spreads for a broad range of companies in both the US and Europe are expected to widen over the next three months amid concern about the global economic recovery and the possibility of a sovereign default, according to a survey of credit portfolio managers at financial institutions around the world.
IRS Erred in High-Stakes Tax Case
The Internal Revenue Service said it made a more than $325 million error in a high-stakes tax battle with Vi, an operator of upscale retirement communities.
Blogs
Morning Bell: White House Admits Obama-care’s Individual Mandate is a Tax
Throughout his presidential campaign, Barack Obama promised the American people: “If you’re a family that’s making $250,000 a year or less, you will see no increase in your taxes.”
START the Debate, Stop the Name-Calling
Chiefly, experts are troubled that New START will lock America into all the wrong commitments at a time when the threat of nuclear and missile proliferation is actually growing.
Send Trade Critics Back to School
By selectively misusing bits and pieces of international trade data, trade critics distort the big picture. It’s time to send them back to school for a lesson in how to honestly add and subtract.
Back in the Black — But Not Out of the Woods
As states tally up spending and revenues for fiscal year 2010, which ended June 30 in most states, some are finding that they ended their year with their budgets in the black.
Maywood, California Outsources the Government; Life Goes On
Anarchy did not follow. Public safety duties were handed over to the Los Angeles County Sheriff’s Department. The Mayor’s husband got a parking ticket from enforcement officials contracted by the city a few hours after the municipal employees were let go.
E-Books: The Future Is Here
...it not only means that e-books are entering the mass adoption phase, but also that the price-discrimination model that publishers have used for decades may be on its way out.
It’s Broken
Many years ago, the pollster Frank Luntz asked young people if they believed they would ever see a UFO. He then asked them whether they believed they would ever see a Social Security check. Surprise, surprise: More of them believed they would see a UFO than a Social Security check.
Parking Perspectives
...if municipalities broadened the role of the private sector in parking garage provisions, they could unleash incentives for entrepreneurs to improve the mix of uses of existing garages.
Tax Cuts and Aggregate Demand
...the chief argument for tax cuts is not that they increase aggregate demand but, rather, that they increase the return to productive effort and risk-taking.
Response: The important thing is Chinese productivity is rising
If it is somehow the case that the wealthy economies need labour which is cheaper than that currently offered by the Chinese, there are plenty of other countries on the rise, including large parts of a highly populous Africa.
Another Stimulus Boondoggle
Dr. Romer was not very long ago a widely respected student of economic history. Now, as Nobel laureate Joseph Stiglitz before her, she seems to have caught “Potomac Fever” and to have succumbed to the flawed Keynesian idea that deficit public spending can “create” jobs.
June Unemployment Rates, by State: Most Regions Show Improvement
Follow the change in unemployment from the beginning of the current recession. Below, the state-by-state unemployment rate from the Bureau of Labor Statistics, seasonally adjusted.
“Of Constitutional Decapitation and Healthcare”
In brief, the argument is: The tax is not an excise tax, and it could not be a constitutional excise tax because it is not uniform. The tax is not an income tax, and it could not be a constitutional income tax, because it is not a tax on derived income. Accordingly, the tax must be a capitation or direct tax. Article I, section 9 provides: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” The tax is not apportioned, and therefore is contrary to Article I, section 9.
What went wrong–a narrative is born
So how will the Keynesians explain the failure of the Obama stimulus spending?
Is Unemployment Insurance Stimulative?
Now there may very well be humanitarian reasons for unemployment insurance (I’ll leave it to others to debate those). But is seems to me that the data are making it increasingly more difficult to argue that redistribution through unemployment benefits is both humanitarian and stimulative.
Krugman on Cowen and Germany
the simpler historical-explanatory point that, no matter how you slice and dice the data, the poor outcome in absolute terms explains why the Germans are not so impressed by ideas of debt, spending and aggregate demand. And if stimulus proponents keep on losing heart at the critical moments, the citizenry is still right to be skeptical.
Life in Post-America America
The article [on the world of intelligence post-9/11] does not describe sensible steps to augment our intelligence capacity to meet a new threat, but mindless overreaction by bureaucrats given vast budgets and manpower, acting beyond the reach of any meaningful public assessment or oversight, doing things that have profound long-term implications for the immunization of the government to the wishes of the people.
Secondary Sources: Fannie and Freddie, Panic, Social Security
A roundup of economic news from around the Web.
Research, Reports & Studies
Rethinking Our Defense Budget
“Indeed, in what I admit is a most challenging environment given the fiscal health of this country, I will argue that instead of spending too much on America’s defenses, we are spending too little.”
The GOP's Counterinsurgency by Spenders
In the current environment, even GOP moderates are tacking to the right on fiscal issues.
David Cameron and Barack Obama Must Advance Economic Freedom—Not More Foreign Aid
Cameron and Obama should use the summit as a critical first step toward bringing real changes to the less developed world by shifting their commitment to the principles of economic freedom rather than the false promise of foreign aid.
Everyman’s Deficit
Spending Beyond Our Means.
Uncertainty and Economic Activity: Evidence from Business Survey Data
We argue that high uncertainty events are a mere epiphenomenon of bad economic times: recessions breed uncertainty.
Economists’ Comments & Opinions
The ObamaCare Lies Are Still Coming
The law will add significantly to the already crushing burden of government spending, taxes and debt.
Today’s Keynesians have learnt nothing
In some ways, of course, this is not an argument about economics at all. It is an argument about history.
The Deficit is Bad for America
Deficit "stimulus" is not the road to economic recovery.
Abolish state income taxes
Statistics show they retard economic growth.
Worry Over the Wealth Gap Is Wasted
In considering how wealth is created, it should be said that the economic interest or greed of the entrepreneur must logically coincide with the needs of the consumer.
Regulation Reform
The Consequences of Dodd-Frank Part II
Graph of the Day
U.S. spends more on monthly interest payments to the debt than it spends on some federal departments in a year
See: Abortion, Third-Party Payer, and the Cost of Health Care
Book Excerpts
"In public administration there is no connection between revenue and expenditure." -Ludwig von Mises, Bureaucracy (1944)
Did You Know
Half of all state and local spending in 2008 went toward employee wages and benefits. Those states whose government workers are less than 40 percent unionized have median per capita state debt of $2,238, while those states where unionization rates are over 60 percent have a median per capita state debt of $6,380.
Monday, July 19, 2010
7/19/10 Post
News
Warning! Avalanche of earnings ahead
The quarterly reporting period kicks into full swing this week, with 122 of the largest companies due to report, giving investors more clarity on how corporate America and the consumer are faring amid the economic slowdown.
Economists see a modest pickup in hiring
In its second-quarter industry survey, the National Association for Business Economics said employers grew payrolls for a second consecutive quarter. The percentage of firms increasing staff levels grew to 31% in the quarter.
Obama to Senate: Pass the unemployment bill
Obama wants the Senate to pass a bill that would extend the deadline to file for unemployment benefits through the end of November. The bill would cost $34 billion in additional deficit spending, according to the CBO.
Obama's debt panel: Hints of an endgame
Here are just two ideas from the co-chair of the president's bipartisan debt commission to get the federal budget back on the right track: Rein in tax breaks. Set hard caps on federal revenue and spending.
Homebuilder Confidence in U.S. Falls to One-Year Low
The National Association of Home Builders/Wells Fargo confidence index dropped to 14 this month, the lowest level since April 2009.
China reduces US Treasury debt holdings in May as total foreign holdings post slight increase
The report said that China's holdings fell by $32.5 billion to $867.7 billion meanwhile total holdings of Treasury securities edged up $5.8 billion to $3.96 trillion in May, a slight increase of 0.1 % compared to April.
Senate expected to vote soon on extending jobless benefits
The U.S. Senate is expected to vote Tuesday. Since the extensions lapsed, more than 2 million people have lost benefits. Unless benefits are extended, that number will rise to about 2.86 million by July 24, and more than 3.2 million by July 31.
Moody's downgrades Ireland on loss of financial strength
Ireland's government debt-to-GDP ratio rose from 25% before the crisis to 64% by the end of 2009 and Moody's said it expects the further near-term deterioration in the country's debt metrics to be severe.
Why the financial reform bill won't prevent another crisis
The bill does not address the problematic nature of modern executive and professional compensation even though the data shows that these are leading causes of the Great Recession.
China Passes U.S. as World's Biggest Energy Consumer
...knocking the U.S. off a perch it held for more than a century, according to new data from the International Energy Agency.
Reality gap: U.S. struggles, D.C. booms
America is struggling with a sputtering economy and high unemployment — but times are booming for Washington’s governing class.
Cities Rent Police, Janitors to Save Cash
After years of whittling staff and cutting back on services, towns and cities are now outsourcing some of the most basic functions of local government, from policing to trash collection.
Ethanol Industry Struggles to Keep Tax Credits
The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities.
Fall in Treasury Yields Poised to Continue
Treasury yields appear headed back to their lows for the year as worries about the U.S. economy replace worries about the euro zone.
Investors Ignore Plump Profits, Dump Stocks
One possible reason for the curious market behavior: We're all focused on the big picture now, and things are looking ugly.
McDonnell wants to show Virginia the way out of liquor business
sales bring in about $220 million a year, and many lawmakers -- particularly the Democrats who hold a majority in the state Senate -- are unwilling to support privatization unless it generates much more than that.
Prime Numbers: Small Business Problems Hinder Recovery
The index of small business optimism, published by the National Federation of Independent Business (NFIB), fell in June and is holding at levels that are still below those plumbed during the last two recessions.
Blogs
Texas versus California
In this case, the contrast can be easily seen by comparing total employment in California and Texas.
Persistent unemployment
Maybe Ed Leamer was on to something important and Keynesian aggregate demand stimulus is not going to help unemployed construction workers until the housing market is allowed to return to normal pricing and quantity responses.
Weekly Summary and a Look Ahead
Three housing related reports will be released this week: the NAHB builder confidence survey on Monday, housing starts on Tuesday, and existing home sales on Thursday.
Macro Thought Experiment II
Ironically, in the real world, animal spirits make Keynes’s world less plausible.
Spectre Haunting Spectrum
It is worth asking the FCC if the harm done by regulations outweighs benefits that never materialize.
Zero marginal product workers
In general, which hypotheses predict lots more short-term unemployment among the less educated, but among the long-term unemployed, a disproportionately high degree of older, more educated people?
Housing Policy, Labor Mobility, and Unemployment Duration
One of the distinguishing features of this recession is that the duration of unemployment has been notably longer than in other recessions.
So Much For the Commerce Clause Challenge to Individual Mandate Being “Frivolous”
Just because the constitutional challenge to the health insurance mandate is not frivolous does not mean it will prevail. The odds are always that the Supreme Court will uphold an act of Congress. Given the wording of the Act, however, the implications of doing so using the Tax Power are so sweeping and dangerous that I doubt a majority of the Court would adopt this claim of power on these facts.
What Germany knows about debt
There really is a supply-side multipler, and a sustainble one at that.
NAHB Builder Confidence falls to lowest level since April 2009
Note: any number under 50 indicates that more builders view sales conditions as poor than good.
The Behavioral Economics of Marketing Behavioral Economics:
Could it be that there is a bubble in the way in which behavioral law and economics has grown so rapidly in recent years?
China's Housing Policy Paradox
The problem is that the productivity growth has kept the property bubble inflated, pricing out those looking to get into the housing market. Across China, new workers struggling to find affordable housing are becoming resentful.
Federal Bailouts of Medicaid Encourage the Unsustainable Status Quo
“Additional federal funds will have the effect of punishing states that essentially lived within their budgets while rewarding states that were more reckless or were counting on further federal dollars.”
Obama Flip-Flops on the Individual Mandate
The individual mandate has been a tricky issue for Barack Obama, leading him to make some impressive self-reversals.
Government Essentially Concedes Commerce Clause Challenge to Obamacare, Calls Individual Mandate a Tax
When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”
Research, Reports & Studies
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
Slower Growth, Low Inflation with Big Budget Deficits.
Hudson Institute Economic Report
Retail sales fell for the second straight month, down 0.5 percent for June after falling 1.1 percent in May. This two-month slide could be the start of a worrying trend after half a year of growth in retail sales.
Surveying the Wreckage
What can we learn from the top books on the financial crisis?
Beware Greedy Heirs If You Hope to See 2011
Unless Congress extends the tax cut, starting on Jan. 1 all taxable estates that exceed $1 million will be taxed at the pre-2001 rate of 55 %.
Obama's Health Care Reform Gives Consumers Fewer Choices
The growing number of private health plans that are giving consumers fewer choices among doctors surprises proponents of Mr. Obama's health care reform.
Comparing Pay in the Federal Government and the Private Sector
Federal employees get substantially better wages and benefits than do the private sector workers. Federal employees earn cash wages 22 % above comparable private sector workers.
Economists’ Comments & Opinions
What Germany Knows About Debt
What an American considers as bad economic times, a German might see as relative prosperity. That perspective helps support a greater concern with long-run fiscal caution, because it is not assumed that a brighter future will pay all the bills.
Lost in Taxation
The IRS's vast new ObamaCare powers.
Three little pigs: How entitlements will destroy us
Our national debt recently topped the $13 trillion mark. That amounts to nearly 90% of this country’s GDP; $72,000 in debt for every household in America.
To Peer Into Obamacare's Future, Look to Massachusetts
The system's fundamental incentives won't change. The lesson from Massachusetts is that genuine cost control is avoided because it's so politically difficult. It means curbing the incomes of doctors, hospitals and other providers.
Venture Capital Could Shrivel Away
The only way to break some habits is to hit rock bottom.
A radical idea for airline security
The government shouldn't decide who can fly.
When Did the Rules Change?
The rules may have changed in ways no one would have predicted two years ago. And perhaps 10 years from now we'll look back on this moment and it will all seem so obvious.
Sticky prices and wages, lending relationships, agency problems: Macroeconomics is the study of trust and trustworthiness -Garett Jones, Twitter
Graphic of the Day
Mercatus Center: Medium-Term Debt Exceeds Expectations
See: Number of months required to close the job gap
See Also: ObamaCare Still Unpopular, Especially among Voters
Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S.
Book Excerpts
"Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world." -David Ricardo, On the Principles of Political Economy and Taxation (1821)
Did You Know
The New START Treaty would require greater U.S. reductions than Russian. The U.S. would have to cut delivery/ launch vehicles by 151 while Russia has room to add 134. The U.S would have to decrease its number of warheads by 265 while Russia would only decrease its arsenal by 189 warheads.
Friday, July 16, 2010
7/16/10 Post
News
Double-dip fears outweigh robust earnings
Fears of a “double-dip” recession in the US returned to haunt the markets as a welter of negative economic releases overshadowed positive news on the earnings front and another encouraging eurozone sovereign debt auction.
Data Shows the Factory Sector Slipping and the Economic Recovery Slowing
New evidence of a slowing economic rebound emerged Thursday in reports that manufacturing activity was slowing after helping push the early stages of the recovery.
Impact to Reach Beyond Wall Street
Key Questions Unresolved for Businesses and Consumers Until Bill Goes Into Effect.
Financial Overhaul Signals Shift on Deregulation
That era of hands-off optimism was gaveled to an end on Thursday as the Senate gave final approval to a bill that reasserts the importance of federal supervision of financial transactions.
Economists Split on Finance Bill
Asked how much the legislation would do to prevent a repeat of the global financial crisis, a majority (58%) said the overhaul would reduce the risks "just slightly," and only 6% thought it would have a "significant" impact.
Fiscal panel co-chair supports lower corporate taxes and a VAT
Erskine Bowles, co-chair of President Obama’s fiscal commission, said Wednesday that while he wants most of the government’s budget deficits to be closed by cutting spending, he also thinks a value-added tax is called for.
Obesity Rating for Every American Must Be Included in Stimulus-Mandated Electronic Health Records, Says HHS
The obesity-rating regulation states that every American's electronic health record must: “Calculate body mass index. Automatically calculate and display body mass index (BMI) based on a patient’s height and weight.”
Google search: political power
Google’s aggressive tactics have put it on top of the business world, and now the Internet giant is looking to leverage the high profile and sterling connections of its CEO to achieve similar power in the political sphere.
Senate Appropriators Set Cap $14 Billion Below Obama’s Budget Request
Senate appropriators agreed Thursday to slice $14 billion from President Obama’s fiscal 2011 budget request, roughly double the cut proposed by House Democrats. But that was not enough to satisfy Republicans in a year of pitched battles over federal spending.
Senate close to extending jobless benefits.
The Senate plans to take up a measure Tuesday to restore the extended benefits, right after a new Democratic senator from West Virginia is sworn in.
Consumer prices dip for third straight month
The prices that U.S. consumers pay for goods and services fell slightly in June, mainly because of lower gasoline costs.
Virginia has a $220 million surplus
After facing a $1.8 billion shortfall just six months ago, Virginia closed its fiscal 2010 budget with a $220 million budget surplus. Virginia scaled back expenditures in several areas, including public education and state-employee compensation.
Is the U.S. battery business for real?
Projects dedicated to advanced batteries have received over $2 billion in federal funding as part of the administration's $800 billion-plus plan.
Greenspan: Let Bush tax cuts expire
Former Federal Reserve chief Alan Greenspan believes Congress should let the tax cuts enacted by President George W. Bush expire for all Americans in order to address the widening deficit.
New Orleans takes another hit
First it was Hurricane Katrina and then it was the BP oil spill. Now the Louisiana coastal region faces a third economic crisis: Northrop Grumman Corp. will close the shipyard in Avondale, eliminating 5,000 jobs.
U.S. July consumer sentiment plummets
The UMich index fell to 66.5 in early July from 76 in late June as consumers have been worried about weak hiring and a slowly healing economy.
Blogs
New hires or new jobs?
I’m not saying Keynes (or Obama or Larry Summers) is wrong because all spending does is bid up prices and wages. I’m not trying to prove that the stimulus failed. I’m challenging the standard macro textbook story that says aggregate demand leads to output that leads to employment.
Median Duration of Unemployment
This recession looks very different, and much more troubling, than those in the recent past.
When Nudging Isn’t Enough
When a policy is enacted to achieve a specific goal and then fails to achieve it, further policies are justified on grounds of achieving the goal that “we” have already agreed upon. In Loewenstein and Ubel’s op-ed, I believe our prediction is vindicated.
Experts at work
Great. I’m sure we’ll all be paying as much attention to those new rules as they get made as the people whose livelihood is affected. A field day for the bootleggers, no doubt, done in the name of protecting consumers and creating financial stability.
Europe vs. U.S.: The Post-Recession Productivity Divide
Each region is now at a key inflection point when it comes to productivity and the recovery. The drop in euro zone productivity suggests hiring won’t take place on a large scale even as the region recovers, since firms can simply increase the hours worked of their existing work forces.
Financial Reform: A Brief Take
I worry about these highly sophisticated financial mechanisms that enjoy de facto government insurance. My concern is that insurance that is free, or very much under-priced, is going to foster a lot of economically unsound financial practices.
Just Lend And Be Done With It!
So Bernanke has no “macroeconomic knowledge problem.” He knows that we would all be better off if there were more lending because matters like credit allocation as well as restructuring of firms and economic activities after a period of misallocations are irrelevant to business cycles. Feed the Aggregate Demand God and all will be better.
Pension spike
More hard-to-believe info on the world of public employee compensation in California.
Secondary Sources: Curious Job Market, Long-Term Unemployed, Deficits
A roundup of economic news from around the Web.
Drowning in Debt
no matter what one's ideology is, it is odd that anyone would claim that the U.S. does have a spending problem; the co-chairmen of the deficit commission were just in the news for talking about how our country is broken.
Three Million Imaginary Jobs
The White House says the stimulus worked beyond even its hopes. Seriously.
Businesses Are Not Hiring Because They Are Grouchy
The way I see it, the business community is often very conflicted and way too cozy with the government policies and officials from which, sadly, it derives many privileges. Isn't that more reasons to listen to businesspeople when they complain?
Major Whistleblower Provisions in Financial Regulation Bill
While it has not been a major focus of bill opponents, the Dodd-Frank financial regulation bill is loaded with major new extensions of whistleblower law into the economy’s financial sector.
Europe Falls Out of Love with Barack Obama
You know things must be going really badly for Barack Obama when even his most ardent supporters across the Atlantic are turning against him.
Chipping Away at the Union Stranglehold
Despite decades of union gridlock, the Washington, D.C., school board has successfully contracted with teachers unions to implement performance pay.
Side Effects: Obamacare Could Punish Docs for Better Quality Care
Pay-for-performance allows third parties to pay physicians based on treatment outcomes. In theory, this sounds like a great way to encourage doctors to improve outcomes. But in practice, it’s a bit more complex.
Research, Reports & Studies
Wells Fargo Economics Group: Factory Sector Gains Continue, Pace Moderating
Industrial production managed a 0.1 percent gain in June following its increase of 1.3 percent in May. And slower growth over the next few months after a very strong first half is the theme in the factory sector.
CBO’s Economic Forecasting Record: 2010 Update
...the current degree of economic dislocation exceeds that of any previous period in the past half-century, so the uncertainty inherent in current forecasts probably exceeds the historical average.
When Did the Rules Change?
Clinton proclaimed the era of Big Government was over, and left office quite popular. Barack Obama said, in effect, "Oh no, it's not!" and his presidency and his party are in freefall.
China’s Suspect Economic Data
China’s GDP officially rose 11.1 % on-year in price-adjusted terms in the first six months of 2010. A second glance is troubling, though. The comparison of GDP through June 2010 to GDP through June 2009 shows a nominal 23.6 percent gain.
Reclaiming America: Why We Honor the Tea Party Movement For 200 years, America’s principles have been under attack in the name of history and science and relativism, in favor of evolving truths, living constitutions, and bureaucratic government, through the Progressive Movement and the New Deal, the Great Society, and now into the age of Obama.
Europe What Future
…the full implications of what has gone wrong still need to be grasped by euro-zone countries, European countries outside the zone, and the United States. The global lessons to be learned are both political and economic; they relate especially to the danger of allowing politics to prevail over economics.
Economists’ Comments & Opinions
The Yo-Yo Market and You
The stock market will suffer dizzy spells until the fog of monetary policy uncertainty is lifted.
How to Tell a Nation Is at Risk
The ones with private sectors that are not doing well enough to bail out the government.
When the Cure is Worse Than the Disease
Invariably, the government rarely receives the amount of tax revenue the CBO estimates it will when tax rates are raised.
About That Financial Reform 'Victory'
Dodd-Frank may backfire on Democrats.
Economy puzzle solved
With each private-property owner seeking only the highest returns on the use of his or her property, an overall economic order is brought about. This order — this outcome — is intended by no one.
It's Time to Shift Spending to States
The U.S. fiscal path is unsustainable, primarily because of out-of-control entitlement spending. One way to avoid this outcome would be to transfer entitlement programs to the states.
Graphic of the Day
The Enterprise Blog: Major Financial Legislation: Number of Pages
VIDEO: Job creation and stimulus spending
See: The share of foreign-born labour in rich countries
See also: Travel and Tourism Expenditures in America
Book Excerpts
"…the Hudson Institute, Europe, has done a revealing study of the relationship between the growth of the public sector and real economic growth in fourteen countries. The findings show that overall growth is the lowest in countries where the government sector is largest… All such studies conclude that the expansion of government in the Western industrial nations results in shrinking profits, falling investment, and plunging growth rates." -Former Treasury Secretary William E. Simon, A Time for Truth (1978)
Did You Know
Recent reports from the L.A. Times show that since 2007, nearly $4.8 million in welfare funds have been withdrawn from ATMs in California casinos. And a new report shows that more than $12,000 from the Temporary Assistance for Needy Families program was withdrawn from ATMs in California strip clubs.
Thursday, July 15, 2010
7/15/10 Post
News
The financial regulation bill
Highlights of the compromise legislation to overhaul financial rules.
U.S. June producer prices fall 0.5%; core rises 0.1%
U.S. wholesale prices fell a seasonally adjusted 0.5% in June, marking their largest decline since February, led by lower food prices.
U.S. pockets $20.6 bln in sin taxes in FY'09
The U.S. federal government collected $20.6 billion in taxes on alcohol, tobacco, firearms and ammunition in fiscal year 2009, up 41 percent from the previous fiscal year.
Jobless claims sink to near 2-year low
The number of Americans filing for initial unemployment insurance dropped to the lowest level in nearly two years last week.
Lost decade: The new threat to the U.S. economy
Now some economists are starting to talk about an even worse fate: a prolonged period of very weak growth, a so-called "lost decade."
China's economic growth eases to 10.3%
China's GDP grew at an annual rate of 10.3% during the second quarter of 2010. The pace slowed from the 11.9% growth posted in the first quarter.
Industrial Production in U.S. Rose 0.1% in June
Industrial production in the U.S. unexpectedly rose in June as higher temperatures across the nation led to increased utility use. Factory output, which makes up 75 percent of the total, declined the most in a year.
The Fed's broken crystal ball
The latest forecasts from the Fed cut estimates for economic growth, predicted that high unemployment will be more persistent than previously thought and raised the risk of a deflation.
Signs of the Stimulus
Some Call it Transparency, Others Another Example of Government Waste.
Payday: Trial lawyers could get major tax cut despite major federal deficit
According to a Legal Newsline report from the annual meeting of the American Association for Justice, the nation’s lobbying arm for trial lawyers, the industry may get a tax break from the U.S. Treasury Department that would give trial lawyers the ability to write off expenses involved in contingency fee cases much in the same way businesses write off expenses. But unlike businesses, lawyers will benefit from the tax write-off in addition to the fee they charge clients.
Companies pile up cash but remain hesitant to add jobs
Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession.
As Tax Cuts' Expiration Date Nears, Little Consensus
President Barack Obama wants to extend the Bush-era tax cuts for the middle class only. Many House Democrats want to extend them for that group, too, but perhaps only for a year or two. Republicans, and a handful of centrist Democrats, are talking about extending all the tax cuts.
Public Policy Polling: Obama approval hits record low
45% of voters approve of the job he’s doing while 52% disapprove. This is the first time he’s topped the 50% disapproval mark in our surveys.
Rousing the Spirits of Business to Create More Jobs
Optimistic forecasters say the U.S. economy is likely to grow at a bit better than a 3.5% annual pace over the next 12 months, but even they say that will leave unemployment at a still-high 9% or so a year from now. The moderately pessimistic, whose ranks are growing daily, foresee growth a full percentage point or more slower. The seriously pessimistic are talking "double dip."
The Crippling Costs of Obesity in the Workplace
...private employers are hit with an estimated $45 billion a year in medical expenditures and work loss, according to a 2008 report by the Conference Board (the latest report available).
Richmond Fed chief opposes bail-outs
Jeffrey Lacker told the Financial Times that markets must have clear expectations about how short-term creditors would be treated in a bank failure. “Ambiguity about that was just deadly over the past few years coming into this crisis,” he said.
Blogs
U.S. Trade Deficit Improves
The trade data showed good news on the export and import front, with U.S. exports up 17.7 percent, imports up 21.4 percent from the first five months of last year.
Morning Bell: Why the Obama Stimulus Failed
A new CBS poll out today shows that 74 percent of Americans believe the Obama stimulus either damaged the economy or had no effect.
GOP Spending Cap
Republicans on the Senate Appropriations Committee have announced support for caps on the discretionary spending portion of the federal budget.
The Stolen Auto Sales
Remember back in 2009, when critics were claiming in the Cash for Clunkers program would just steal demand from the future? Well, about a year later here is some evidence that could be attributable that.
Spending Can Be Cut
It’s time for lawmakers and the policy community to start acting like real people with real money and to start excising those billions from the nation’s bloated budget.
Bill Gates Gets It
If we want to move forward on fixing our institutions, we have to get an accurate picture of how badly they’re being mismanaged, and eliminate those harmful practices.
Jobless Claims: Take the Latest Drop with a Grain of Salt
Aside from the usual disclaimer about not reading too much into a one-week trend, there are additional complications with the claims data right now resulting from some seasonal quirks.
Reid’s Cap-and-Trade Doublespeak
...Reid’s assumption of voter stupidity might actually outreach Kerry’s, because he also seems to think that chanting “utilities only” will fool people into thinking that, somehow, they won’t ultimately pay the price of higher energy costs resulting from the need of power generators to pay for carbon emissions.
The CEA's Impossible Job
The stimulus act instructed them to do the (nearly) impossible. Perhaps someday someone will conduct a study that credibly measures the macroeconomic effects of this particular fiscal stimulus. But it won't be easy. And it won't look much like the study released today.
Big Box Stores Don’t Produce Big Tax Gains
So-called big box stores like Wal-Mart and Home Depot produce few tax revenues relative to their size, according to a presentation by Peter Katz, Sarasota County, Fla. Director of Smart Growth.
More on Debt Collection
My commenters offer wise advice. One points out something I neglected to mention: do not pay the debts of dead people. Many collectors will attempt to collect from children. That's a matter for the estate, not the kids, and if there is no meaningful estate, the debt dies with them. Do not let an unscrupulous collector tell you otherwise.
Another Credit Market Regulation, With a Twist
The bottom line here is that those who are supporting legislation to chase out payday lenders are portraying themselves as the humanitarians, but it is they who are denying some of the poorest among us access to the credit they need to put food on the table between paychecks or to not have to wait what might be a crucial few days to buy medicine for their children.
The road to poverty
As I say in The Choice, self-sufficiency is the road to poverty. I’m liking this Keynes fellow less and less.
Minority-Owned Businesses Grew at Fast Rate From 2002-2007
The number of minority-owned businesses grew nearly 46% between 2002 and 2007, more than twice the rate of all U.S. businesses, according to a new U.S. Census Bureau’s survey of business owners.
What is the Fed Thinking? and What is the Fed Thinking, 2?
...the Fed could be thinking that setting an inflation dial to 3 percent is not an option. For small changes in Fed policy, the inflation rate will not be affected. And if the Fed goes beserk, the result will be to move us into the regime of high and variable inflation rates, which will actually be worse.
Just Say No to Extending the Bush Tax Cuts
...a temporary extension is simply going to make it harder to let them expire next year, for the same reasons that the AMT keeps getting "fixed" on an annual "temporary" basis. It is going to be hard enough, psychologically, for people to give up tax breaks they have had for ten years. Stretching it out longer just makes the pain more fierce.
Research, Reports & Studies
“Mostly Free” - The Startling Decline of America’s Economic Freedom and What to Do About It
With a score of only 78.0 the United States has fallen below the cutoff that earns countries the right to call themselves truly “free.”
A Rational Post-Spill Policy That Allows Offshore Drilling
Louisianans are the ones bearing the brunt of the damage from Deepwater Horizon, yet they overwhelmingly support continued offshore oil and gas production.
Obama's Tax Plan: Bad for Economic Growth
The 2001 and 2003 tax relief packages expire at the end of 2010. All taxpayers will see a steep tax hike in 2011 unless Congress acts soon.
The Constitutionalization of Money
The market will not work effectively with monetary anarchy. Politicization is not an effective alternative. We must commence meaningful dialogue with acceptance of these elementary verities.
Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals
...assesses the incentives provided by the biofuel tax credits for producing different types of biofuels and analyzes whether they favor one type of biofuel over others. In addition, the study estimates the cost to U.S. taxpayers of reducing the use of petroleum fuels and emissions of greenhouse gases through those tax credits; it also analyzes the interaction of the credits and the biofuel mandates.
Wells Fargo Economics Group: Retail Sales Stalled in June
June’s retail sales figures provide further evidence that economic activity has slowed in a major way. Overall retail sales fell 0.5 percent, following a 1.1 percent drop in May. Sales ex autos fell 0.1 percent.
Migration as Trade Facilitation: Assessing the Links between International Trade and Migration
The results suggest that both immigrants and emigrants are significantly related to higher trade volumes. Immigrants seem to be especially good at facilitating trade in differentiated goods, for which information costs are particularly important.
Economists’ Comments & Opinions
Speaking Up for American Capitalism
Business has taken a pounding on Capitol Hill and at the White House and for the most part has remained silent. It's time to make our case.
Andy Grove Shouldn't Lose Faith In Startups
New businesses create a net of 3 million new jobs in America every year.
The Ugly Truth About Financial-Regulatory Reform
The financial-reform bill that hits the president’s desk this week is a 2,500-page failure that will only create more problems for federal regulators...
Economics Behaving Badly
As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address.
Graphic of the Day
States are facing a record decline in revenues due to the recession.
See: Summer Spending Trends Similar to 2009
See also: Where Have All the Millionaires Gone?
See also: June Industrial Production
Economic Outlook Hearing
JEC Ranking Republican Brownback questions Chair Romer about Unemployment Insurance during the July 14th Joint Economic Committee Hearing on the Economic Outlook.
Click to see addtional videos of the Hearing
"In January 2009, you published an economic analysis of Obama's stimulas $787 billion plan and forecast that if Congress were to pass this plan
1. The unemployment rate would remain below 8%
2. Non-farm payroll employment would increase to 137.6 million by the fourth quarter of 2010
3. 90% of the jobs created would be in the private sector.
Now let us compare your promises with reality
1. Since the stimulus was enacted the unemployment rate has never been below 8%. It has been up to 10.1% and is currently at 9.5%
2. In June 2010, non-farm payroll employment was 130.5 million, 7.1 million payroll jobs short of your forcast
3. Since February 2009, only the federal government has added payrol jobs. The private sector has actually lost 3.3 million payroll jobs.
Clearly, Obama's stimulus plan failed to work as you predicted. Instead this recovery has been unusually weak for one after a severe recession. Turning to the long-term consequences of the Democrats' economic policies, one sees higher taxes, heavy regulation, gaping federal budget deficits, and soaring federal debt."
- Congressman Kevin Brady, Ranking Republican House Member, Joint Economic Committee
Congressman Brady's opening statement to Chair Romer, in reference to the The Economic Impact of the American Recover and Reinvestment Act of 2009 Fourth Quarter Report released July 14, 2010
Click here to see the Fourth Quarter report
Book Excerpts
"It is not in the power of the government to make everybody more prosperous." - Ludwig von Mises, Bureaucracy (1944)
Did You Know
Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009. The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009. In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.
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