7/26/10 Post

BUZZ: Forecast for 2011 Deficit Is Raised to $1.4 Trillion

News
Fight brews over drilling watchdog
Now the agency that oversees offshore drilling - already entangled in a sex, drugs and rubber-stamping scandal even before the BP disaster - is up for a complete overhaul.
Tax hikes for the rich: Can the economy afford them?
The debate over what Congress should do, which has been playing out for months in policy circles, is now receiving more prominent attention.
Private sector must drive economy
The U.S. economy is gradually recovering, but the private sector now must drive growth rather than the government.
New-home sales rebound from record low in June
Sales rose 23.6% in June to a seasonally adjusted annual rate of 330,000.
Obama, Republicans spar over jobs
Obama has argued that the health-care law and the economic stimulus package will save money and create jobs. But Republicans say Democrats' spending is out of control and cite the deficit as they try to regain control of Congress this fall.
Democrats' fix for thorny economic debate: Manufacturing
With their manufacturing agenda, Democrats can skip the internal stimulus versus deficit-cutting debate altogether. The party is holding close its plans for the entire legislative package.
Europe's prospects brighten as U.S. fades
Dig beneath the headline and the contrast between the United States and Britain looks even sharper. Nearly all the growth in the British economy came from the private sector, led by construction and services.
Economic Outlook: US recovery stall expected
Recent weeks have been marked by increasing concern about the slow pace of recovery in the US and by disputes among policymakers on both sides of the Atlantic about whether stimulus measures should be maintained or public deficits cut.
Britain Plans to Decentralize Health Care
Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level.
Health Law Augurs Transfer of Funds From Old to Young
The trims mark the leading edge of a spending shift that could broaden as lawmakers grapple with a deficit expected to hit $1.47 trillion this year. Left unchanged, Medicare and Social Security will consume half of all federal spending by 2035, up from about one third today, according to the Congressional Budget Office.
At Risk: The Impact of Long Term Unemployment
Men hit hardest, suffering 75 percent of job losses.
Taleb: Government Deficits Could Be the Next 'Black Swan'
In a new edition of The Black Swan, author Nassim Nicholas Taleb warns against depending "on financial assets as a repository of value."
Next Test for Europe's Banks: Finding Funds
Europe's Tentative Economic Recovery May Hinge on Financial Institutions' Ability to Raise Billions to Lend to Business.
Cities View Homesteads as a Source of Income
The calculus is simple, if counterintuitive: hand out city land now to ensure property tax revenues in the future.
Van Jones: Stop worrying about the deficit.
The government can just take more money from rich companies.

Blogs
Secondary Sources: Jobless Recovery, Happiness and Productivity, Uncertainty
A roundup of economic news from around the Web.
New Home Sales: Worst June on Record
May was revised down sharply and that makes the increase look significant. Here is the bottom line: this was the worst June for new home sales on record.
What Kind of Job Can You Hope to Get with Your Education? Georgetown University's Center on Education and the Workforce is out with its latest publication: Help Wanted: Projections of Jobs and Education Requirements Through 2018.
Number of the Week: Tax Cuts and Debt
0.26%: Added revenue, as a percentage of annual economic output, generated by raising tax rates on top earners.
Does Europe Have a Paul Ryan? It Needs One
I think this is what keeps Rep. Paul Ryan up at night.
Taxes With and Without Bush Tax-Cut Extension
The Tax Foundation has come up with a new tax calculator that allows people to figure out their 2011 tax burden under three scenarios.
Chicago Fed: Economic activity declined in June
"The index’s three-month moving average, CFNAI-MA3, decreased to –0.05 in June from +0.31 in May."
The Complicated Economics of a Postal Increase
The cost of a stamp has increased from 34 cents in 2001 to, if approved, 46 cents in 2011.
Measuring fiscal policy and evaluating its results
The most important, most effective, and least controversial forms of fiscal policy are the automatic stabilizers.
Good Gubmint Rithmitick!
Our ethanol follies reduce a ton of carbon for the cost of $754 per ton.
Weekly Summary and Schedule, July 25th
The focus this week will be on the Q2 GDP report to be released on Friday. There are also two key housing reports: New Home Sales on Monday and Case-Shiller house prices on Tuesday.
The Recalculation Story: A Summary
Try not to think of macroeconomics in terms of equations or in terms of aggregate demand. Try to learn to think in a new language, rather than translate from the Recalculation language to something you are used to...
Exporting Trade Fallacies
"Alas, there’s nothing special about exports – which is to say, there’s nothing special about the geographic locations in which products are sold."
Fun Facts to Know and Tell: Stimulus Job Creation Edition“… the Mid-Willamette Valley Community Action Agency in Oregon had claimed to create 205 jobs with its $397,761 in stimulus money — spending less than $2,000 per “new” job.”
More Weird Metrics for Elizabeth Warren
Todd Zywicki wrote this a few years back; it's typical of the problems with the Two Income Trap.
Unintended Consequences, Episode 5829104571
"Some major health insurance companies will no longer issue certain types of policies for children, an unintended consequence of President Barack Obama’s health care overhaul law, state officials said Friday."
The Mid-Session Review
This budget document shows what would happen to the federal budget under the Administration's economic forecast and assuming that all the President's proposed policies are adopted.
The Government's Role in the Housing Bubble
As it happens, I think that the government did play a role. A big role. But I think it's rather subtler, and thus, rather more problematic, than most people on either side are discussing.
This Week’s Sign of the Economic Apocalypse
The government’s recipe for brownies is … 26 pages long. You cannot make this stuff up.
European Bank Stress Test Results
German financial supervisors say Hypo Real Estate is the only German bank to fail stress test. All Dutch banks pass. All Spanish listed banks pass.
The White House Has Declared Class War on the Rich, but the Poor and Middle Class Will Suffer Collateral Damage
The folks at the White House apparently don’t understand, however, that higher direct costs on the “rich” will translate into higher indirect costs on the rest of us.
Federal Court Strikes Down Another Example of Overcriminalization
A Colorado federal court last week struck down another of Congress’s well-intentioned but poorly drafted criminal laws—a law that exemplifies some of the root problems of overcriminalization.
An Admission of Failure
According to Friday’s report, the Obama administration now projects that unemployment will average 9% throughout all of next year and 8.1% throughout 2012.

Research, Reports & Studies
Wells Fargo Economics Group: Weekly Econmoic & Financial Commentary
Home Is Where the Economy's Heart Is...
The Role of Immigrants in the U.S. Labor Market: An Update
...the growth of the foreign-born labor force was much slower between 2004 and 2009 than between 1994 and 2004. In that earlier period, the size of the foreign-born labor force grew at an average annual rate of more than 5 percent, whereas from 2004 to 2009, the rate was about 2 percent.
Some Welcome Signs of Life From Private Sector
The American private sector somehow seems to be exerting itself despite the vast expansion of government by the Obama administration and congressional Democrats.
Obama Defines Dysfunction with One Appointment
One of President Barack Obama's first acts in office was signing Executive Order 13502. Obama launched a dizzying flurry of actions designed to reward organized labor at the expense of everyone else. Perhaps the low point was his attempt to appoint Becker to the National Labor Relations Board.
The “Beijing Consensus” in Energy and the Environment
There are many flaws in the notion of using the Chinese economy as a model, perhaps chief among them that widespread imitation of Chinese policies would cause those same policies to no longer work for China itself.
Crisis Economics
Why were the administration's projections off the mark? What should their experience teach us regarding stimulus policies in future downturns? And what can the government do now, as unemployment remains very high, to help the patient heal faster? Trying to resolve these questions illustrates not only the difficulty confronting policymakers in a crisis, but also the inherent limitations of the economics profession — limitations that both economists and politicians would be wise to keep in mind.

Economists’ Comments & Opinions
Sam's Club Exposes The Bank Bailout Lie
By leaving the economy alone, non-traditional forms of finance grow and traditional banks decline in relevance.
Uncle Sam has worse woes than Greece
...debt alone tells us little about a country’s fiscal condition. Economists call this the labelling problem, because governments can describe receipts and payments in any way they like. Payroll taxes to fund pensions and healthcare can, for instance, be labelled as borrowing, with the future benefits called repayment less a future tax. Measured thus, the US budget deficit is 15 per cent of GDP, not 9 per cent.
Prime Numbers: Deficit Cuts A Priority for Americans
Big deficits rob national savings, pushing up interest rates and crimping private investment, which eats into economic growth. They limit the government’s ability to respond to recessions, and can erode investors’ confidence in the government’s fiscal responsibility.
The Democratic Fisc
The White House budget office offers a scorecard on Obamanomics.
Autopilot Thinking on the Bush Tax Cuts
Congressional tax analysts largely do not take into account how people and businesses react--whether they shift income into different, non-taxable investments, work more or less, or hide their income to lower their taxes.
Early Returns on ObamaCare Are Disappointing
The evidence suggests that it is a failure even by the standards of its supporters.
How financial reform could impede growth
If we have made the financial institutions much less profitable that they no longer have as much money to lend, or they're going to be so gun shy that they don't even lend to even very credit-worthy customers, then that would impact economic growth.

Graph of the Day
Mercatus Center: Marginal Tax Rates Must Nearly Double to Fund Entitlement Spending
See: Big Mac index suggests the euro is still overvalued
See also:Federal Spending per Household Is Skyrocketing

Book Excerpts
"Forecasting by bureaucrats tends to be used for anxiety relief rather than for adequate policy making." –Nassim Nicholas Taleb, The Black Swan (2007)

Did You Know
The World Trade Organization (WTO) today issued its World Trade Report 2010, an annual publication that offers definitive statistics on international trade. In recent months, media reports have widely described China as the world’s largest exporter, but today’s report indicates that the United States remained the world’s largest exporter of goods and services through 2009. China has indeed overtaken the United States and Germany to become the world’s largest exporter of merchandise.

7/23/10 Post

BUZZ: Senate Halts Effort to Cap Emissions

News
Geithner: Taxes on Wealthiest to Rise
Mr. Geithner said the White House would allow taxes on top earners to increase in 2011 as part of an effort to bring down the U.S. budget deficit. He said the White House plans to extend expiring tax cuts for middle- and lower-income Americans, and expects to undertake a broader revision of the tax code next year.
Pentagon Faces Growing Pressures to Trim Budget
At the moment, the administration projects that the Pentagon’s base budget and the extra war spending will peak at $708 billion in the coming fiscal year, though analysts say it is likely that the Pentagon will need at least $30 billion more in supplemental war financing.
Geithner bored by complaints from business about Obama policies
“Businesses always want their taxes lower and always want to live with low regulation,” Geithner said. “There is nothing remarkable, or particularly interesting frankly, that we’re in the midst of another debate, which you hear in almost any administration, with people looking for ways to help affect the outcome on the basic path of regulation and taxes.”
Home Sales Dip as Unsold Inventory Persists
Glut of Properties on Market Hints at Falling Prices Through Rest of Year as Sector Adjusts to End of Buyers' Tax Credit.
Less Money for Dead People: Obama Signs Waste Law
President Barack Obama on Thursday signed legislation intended to slash by $50 billion the taxpayer money improperly paid to dead people, fugitives and those in jail who shouldn't be getting benefits.
SEC Breaks Impasse With Rating Firms
Late Thursday the agency said it would temporarily allow bond sales to go ahead without credit ratings in bond offering documents, a move that would end an effective stalemate between ratings agencies and issuers.
Biden: 'The heavy lifting is over'
The "heavy lifting is over" when it comes to the Obama administration's legislative priorities this year, Vice President Joe Biden said Thursday evening... “Barack and I are realists," the vice president added.
Measure creating $30B lending fund for small businesses clears GOP filibuster in Senate
Democrats in Congress said the banks should be able to use the money to leverage up to $300 billion in loans to small businesses, helping to loosen tight credit markets. GOP opponents called it another unwise bank bailout.
Jobless benefits restored for millions
Hours after the House voted Thursday to push back the deadline to file for extended unemployment benefits until the end of November, President Obama signed the measure into law.
Senate shelves global warming bill
Democrat leaders in the Senate decided Thursday to sideline a contentious plan to limit greenhouses gases. Instead, they will push for a much more modest energy measure which focuses on conservation and issues related to offshore drilling.
Newark mayor: No toilet paper for city offices
In a desperate attempt to fill a $70 million budget hole, Newark's mayor is taking a chainsaw to the town's budget.
Fed prepared to ease if economy weakens: Bernanke
"We are ready and we will act if the economy does not continue to improve -- if we don't see the kind of improvements in the labor market that we are hoping for and expecting,"

Blogs
The Origins of Moral Sentiments
Just as workable economic arrangements are not, and cannot be, designed and imposed by a higher power, so too, Smith explained, workable morality itself is the product not of any grand design but of the everyday actions, reactions, and observations of ordinary people going about their daily business.
Hungary debt may be downgraded by S&P and Moody's
"Moody's placed Hungary's Baa1 local and foreign currency government bond ratings on review, citing increased fiscal risks after the International Monetary Fund and the European Union suspended talks over their 20 billion euro ($25 billion) financing deal at the weekend."
What's the critical debt-gdp ratio?
I don't agree with Jim Buchanan on either a balanced budget amendment (I am against it, preferring deficits in recessions), or on the intergenerational incidence of domestic debt. Nonetheless his writings are an undervalued resource in this debate. Very often he focuses on what debt does to a country, drawing upon the Founding Fathers, the classical economists, and the Italian public finance theorists, among others.
Cowen on Monetary Misperception
The difference is that when central banks create excess supplies of money and push interest rates below their natural level, there really are resources available to borrowers.
Prufrockian Political Economy
When I talk about risk and safety, I always like to point out that it’s easy to make sure that no one ever dies in an airplane crash: ban air travel. The fact that we don’t suggests that we really don’t want perfectly safe air travel... Similarly, we don’t want ratings agencies to be perfect seers.
Unemployment Insurance, Take II
So: low income people are more likely to be unemployed; and according to the Sahm, Shapiro, and Slemrod study, low-income workers seem not to have high marginal propensity to consume. Putting these two facts together, I would be surprised if unemployment insurance were particularly stimulative.
Conservative Scare Tactics to Blame for Loss of Faith in Social Security? Or Reality?
Gallup recently released new polling on Social Security that found confidence in the system at an all-time low. Some bloggers on the left take this to be a product of conservative scare tactics against the program. But a closer look at the poll shows that’s probably not the case.
How Long Might It Take You To Get A New Job?
By and large, the answer to these questions depends specifically upon what kind of work you can do, but surprisingly, it also depends upon where you might work.
Side Effects: Obamacare Encouraging Insurers to Cut Corners
Americans could end up with plans that restrict their access to care due to provisions that raise premiums.
Gulf Spill Update: Obama Deepwater Ban Becoming Total Drilling Ban
The Obama administration’s recently re-imposed deepwater drilling moratorium is now reportedly stopping shallow-water drilling as well.
New START, New Slogan … Trust But Don’t Verify
Only in the bizarro world of the Obama administration is this country made any safer by signing treaty that the counter party has no intention of following. And that is just the beginning of New START’s many fatal flaws.
The ‘Public Option’ Is Back
The Congressional Budget Office scores the bill as reducing federal deficits by $53 billion by 2019. How? Paying doctors and hospitals less!
Obamanomics 101: Failure Explained
According to President Obama, “every economist who’s looked at it says that the Recovery Act has done its job.”

Research, Reports & Studies
Fiscal Evasion in State Budgeting
This paper establishes a basic definitional framework that can be used to assess long-running fiscal practices in the states against a standard of fiscal prudence. The aim is to further refine this framework to capture the drivers of the states’ long-running fiscal problems and to offer recommendations for reform.
Economic Recovery: Sustaining U.S. Economic Growth in a Post-Crisis Economy
There is concern that this time the U.S. economy will either not return to its pre-recession growth path but perhaps remain permanently below it, or return to the pre-crisis path but at a slower than normal pace. Problems on the supply side and the demand side of the economy may lead to a weaker than normal recovery.
The Drawbacks of Dutch-Style Health Care Rules: Lessons for Americans
In 2006, the Dutch government implemented a universal insurance mandate. After just three years, the Dutch insurance market is a clear-cut oligopoly. America appears to be on a similar path.
The CLASS Act: Repeal Now, or Face Permanent Taxpayer Bailout Later
Proponents of Obamacare claim that it will simultaneously provide millions of Americans with health insurance and reduce the budget deficit by hundreds of billions of dollars. Yet Obamacare’s proclaimed budgetary discipline rests on unlikely assumptions and budget gimmicks.

Economists’ Comments & Opinions
Rebooting America
The interest rate elevator doesn't have a button for going lower than the subbasement.
Liberal Tax Revolt
Some Democrats decide they prefer lower rates. Obama isn't one of them.
No Answers, New Lows
Bernanke offers no silver bullets, which means depressed yields and P/Es amid more dreary, deflation.
It's a Fiscal Problem, Not a Fed Problem
Think of all the economic obstacles of spending, taxing, and regulating coming out of Washington. What should be done to spur growth? Keep tax rates down. And stop passing massive regulatory bills, like the bank reform Obama just signed into law.
Jobless Numbers Are Worse Than You Think
The situation is much more dire now than it was during the 1980s.
Why Is the Euro Rising and the US Dollar Falling?
An analysis of Fundamental Equilibrium Exchange Rates might provide some clues.
The U.N. Threat to Internet Freedom
The FCC's move to treat broadband providers like phone company monopolies could spur international efforts to regulate the Web.
Unnecessary evils
The next big task of financial reform: dismantling Fannie and Freddie.

Graph of the Day
Seeking Alpha: The One Economic Chart That Really Matters
See: Facebook has become the third-largest nation

Book Excerpts
"If the energy industries were simply freed from their regulatory bondage and are allowed to function sanely, they will pay for their own expansion out of their own profits. That is free enterprise, and in the entire history of mankind, nothing has ever served better as a “catalyst and stimulant” to invention and innovation than the profit system." –Former Treasury Secretary William E. Simon, A Time for Truth (1978)

Did You Know
Improper payments totaled nearly $110 billion in 2009, according to the White House. They included payments made in error or because of fraudulent claims by contractors, and benefits sent to deceased or jailed people. Obama has set a goal to cut wasteful, improper payments by $50 billion.

7/22/10 Post

BUZZ: The Tax Tsunami On The Horizon

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."

7/21/10 Post

BUZZ: Total US govt financial system support seen at $3.7 trln

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."

7/20/10 Post

BUZZ: Senate Set to Extend Jobless Benefits

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.

7/19/10 Post

BUZZ: Changing Stance, Administration Now Defends Insurance Mandate as a Tax

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.