9/13/10 Post

BUZZ: Boehner Opens Door in Tax Talks

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

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

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

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

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

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

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

9/10/10 Post

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

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

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

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

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

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

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


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

9/9/10 Post

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

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

Blogs
Obama vs. JFK on taxes

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

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

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

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

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

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

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

9/8/10 Post

BUZZ: Businesses See Benefits of Tax Break as Limited

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

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

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

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

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

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

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

9/7/10 Post

BUZZ: Obama in Infrastructure Push

News
Economy's looking up for now as double-dip fears ease
A steady flow of not-entirely-terrible economic news has eased worries of renewed recession and shifted the political spotlight from the Federal Reserve to the White House.
EU OKs new financial supervision deal
European Union nations agreed to create new financial oversight institutions Tuesday, hoping to prevent a repeat of the government debt crisis that nearly left Greece bankrupt and brought the European banking system to its knees.
Obama assails GOP, promotes new jobs program
A combative President Barack Obama rolled out a long-term jobs program Monday that would exceed $50 billion to rebuild roads, railways and runways, and coupled it with a blunt campaign-season assault on Republicans for causing Americans' hard economic times.
Nation's economic woes jeopardize Dems' prospects
Frustrated, discouraged and just plain mad, a lot of people who have lost jobs - or know someone who has - now want to see the names of Democrats on pink slips. And that's jeopardizing the party's chances in Ohio and all across the country in November's elections.
Ethanol's mid-life crisis
The sugar industry produces food, fuel and environmental benefits. How fast it grows may depend on an argument about how it should be regulated.
Retiring Fed Official Considers More Bank Action
The former vice chairman of the Federal Reserve, who retired last week after 40 years at the central bank, says that the economy is in “a slow slog out of a very deep hole,” and that the Fed should consider additional stimulus unless the recovery shows signs of “decent progress.”
Economy's modest gains met with irreverence
Polls show many people believe the economy is still in recession or getting worse. Most surveys show that people are as upset about the economy now as they were when it was in deep recession more than a year ago. Voters angry about the economy appear ready to boot out another crop of congressional incumbents for the second election in a row.
Once a Dynamo, the Tech Sector Is Slow to Hire
...as the nation struggles to put people back to work, even high-tech companies have been slow to hire, a sign of just how difficult it will be to address persistently high joblessness.
Indian nuke bill seen as bad for business
A bill approved last week by the Indian Parliament that holds suppliers of nuclear reactors and raw materials liable in the event of an accident is raising concerns that it will scare away foreign businesses from India's lucrative energy market.
Unemployment in U.S. May Rise Toward 10% on `Feeble' Growth
The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.
Small Businesses Feel Squeezed by Obama Policies
Tax increases are keeping small business owners from hiring.
Wall Street Needs `Off-the-Charts' September to Rescue Quarter
After two months bankers would like to forget, Wall Street may need a September to remember to avoid closing the books on the worst quarter for investment banking and trading revenue since the peak of the financial crisis.
Obama to introduce another business tax cut
In another move aimed at stabilizing the still-shaky economy, President Barack Obama on Wednesday will introduce a new $200 billion tax cut giving businesses across the country an incentive to buy new equipment in the short term.
Taxpayer Identity Theft Rises 460 percent
The IRS office that advocates for individual taxpayers is receiving more cases than ever and is processing them more slowly, a report finds.
Four unexpected economic bright spots
Good economic news has been hard to come by lately, but not all is doom and gloom in America these days. The end of summer ushered in a few signs of progress in some of the unlikeliest corners of the economy.
81% rate U.S. economy as 'poor'
A new national poll released Sunday indicates that eight in 10 Americans say that the economy is in poor shape, and the number that say conditions are very poor is on the upswing after steady declines through the spring.
Study says that up to a point, money really can improve happiness
Researchers report: People's emotional well-being - happiness - increases along with their income up to about $75,000.
Homeless Outraged That $1 Menu at San Francisco McDonald's Now 50 Cents More
Such price hikes might be met by a grumble and a shrug elsewhere, but in bohemian Haight-Ashbury, street people are up in arms, saying they rely on the dollar deals to survive.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into these two categories.
Bush Tax Cuts Showing Some Bipartisan Vigor
The political environment surrounding tax cuts has become almost unthinkable for Democratic leaders and President Obama as Election day approaches.

Blogs
Obama’s New Stimulus Schemes: Same Song, Umpteenth Verse
Like a terrible remake of Groundhog Day, the White House has unveiled yet another so-called stimulus scheme. Actually, they have two new proposals to buy votes with our money.
‘Government Efficiency’
I recently criticized the idea that policymakers should focus their attention on making government more “efficient.” Instead, I argued that policymakers should focus their reform efforts on reducing government’s size.
The Obama Tax and Spend Hikes
26% of voters think the economy is going to be better in the next year, and 61% think the country is on the wrong track.
Not Enough Labor Day
How the government is destroying jobs
Reclaiming Rights
The never-ending struggle to go about your business without fear of government sanction
Labor Day Has Become Government Day
This Labor Day marks a milestone in the history of the U.S. union movement. It is the first Labor Day on which a majority of union members in United States work for the government.
While Unemployment Rises, 15 Minutes to Tee Time
President Obama, who has already tried a massive and massively ineffectual stimulus bill followed by a series of policy gimmicks has announced that, once again, he is focusing intently on the economy.
The Obama Budget: Expanding Welfare, Undermining Marriage
How can the government grow the nation’s welfare roles and undermine efforts to support marriage, in a single effort?
New Study Says Cash for Clunkers Was … a Clunker
Although it’s impossible to know what the economy would have done absent cash-for-clunkers, the authors of the study attempted to do so by analyzing “parts of the U.S. where, for one reason or another, there were almost no clunkers on the road when the program took effect. By comparing sales in those areas to sales in more clunker-rich parts of the country, they were able to estimate the program’s effects.”
Home Equity Lines of Credit: The Next Looming Disaster?
An in-depth look at these second liens and the dangers they pose for the housing market and large banks.
A Small Step in the Right Direction
...businesses would be able to fully and immediately deduct the cost of equipment, rather than having to gradually deduct the cost via depreciation allowances.
Unnecessary ER Visits
People who thought that we could end unnecessary ER visits by expanding access to primary care underestimated the vast reserves of American health paranoia.
How did America pay for World War II?
File under "Reasons why WWII does not provide a good case for massive fiscal stimulus today."
Jobs Surge for the Class of 2010
In fact, young adults between the ages of 20 and 24 enjoyed the greatest increase of all Americans counted as being employed by age group.
War is bad for children, other living things, and the economy
That’s the biggest and most dangerous economic myth of all time, the idea that war stimulates the economy. War stimulates the military sector of the economy.
Duration of Unemployment
In August 2010, the number of unemployed for 27 weeks or more declined significantly to 6.249 million (seasonally adjusted) from 6.752 million in July. It appears the number of long term unemployed has peaked, but it is still very difficult for these people to find a job - and this is a very serious employment issue.
Heterogeneous Labor
Labor, like capital goods, is specialized and specific to certain occupations. When those occupations disappear in recession, the next best alternative immediately available locally may pay considerably lower wages. Workers may “know” they have better alternatives, but their knowledge capital has also depreciated with the crisis and downturn. They must search for employment opportunities.
Broadening Economics Education
Absorbing a broader perspective would encourage tolerance for a variety of methods and a greater appreciation for the complexities of economic policy.
Finding What You're Looking For
One of the things I find most wearying about writing about economics is the extent to which people attempt to hijack economics to "scientifically prove" that their value judgements about things like the proper size and role of government are 100% factually correct--as if there were some way to empirically validate the correct marginal tax rate for people making over $100,000 a year.
Unofficial Problem Bank List increases to 844 institutions
On August 7, 2009, we listed 389 institutions with $276 billion in assets, and now the list has 844 institutions and $412 billion in assets.
Consumption Spending Is 70 Percent of GDP — So What?
...our crying need at present is for a robust revival of private long-term investment. Consumption-oriented government “stimulus” programs, at best, only ensure a protracted period of economic stagnation.
Earthquakes As Economic Phenomena
It will be interesting to see the response of government officials in Christchurch. Official policy response can either slowdown recovery (as it happened in New Orleans in 2005) or it can foster it.
The Medicare Fraud in Our Future
Scam artists get lists of patients, lists of expensive items they can bill to Medicare, and a bank account. Then they go to town and steal tens of millions of dollars.
Schedule for Week of September 5th
This will be a light week for economic data. The trade deficit for July on Thursday is probably the key release.
Temper, Temper…
Tea Partiers aren’t upset because Obamacare hasn’t worked its miracles yet; they’re upset because they believe that Obamacare will create inordinately burdensome costs and other ills in the future. Stimulus opponents aren’t up-in-arms because the economy isn’t “all better” already; they’re up-in-arms because they worry about the high debt burden and inflation that today’s stimulus makes more likely tomorrow.
Unemployment Rate and Level of Education
Note that the unemployment rate increased sharply for all four categories in 2008 and into 2009.
Secondary Sources: Rural Stimulus, Housing, Liability and Risk
A roundup of economic news from around the Web.
Update: Total people receiving unemployment benefits
That is an increase of almost 2 million people receiving aid since the program was reinstated... There are another 4.1 million people receiving regular unemployment benefits (NSA). So the total is close to 10 million (NSA).

Research, Reports & Studies
Cut or be Cut
This collection of eight essays by Reason authors from the Washington Times series “Cut or Be Cut”, illustrates just a small fraction of how “government as usual” is spending your tax dollars.
Heritage Employment Reports: Summer Slowdown of Jobs Continues in August
The unemployment rate increased from 9.5 to 9.6 percent. This was in part because participation in the labor force increased from 64.6 to 64.7 percent as 550,000 workers entered the labor market. The participation rate is unchanged from the start of the year but down 0.5 percent from April.
Obama Tax Hikes Defended by Myths and Straw Man Arguments: Summary
Raising taxes now or in the future is the wrong course. Projected deficits are due to excessive spending, not a dearth of revenues. The arguments for defeating the tax increase are sound. Proponents of raising taxes have offered many straw man arguments and myths to support their case.
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: Stability at Low Altitude.


Economists’ Comments & Opinions
'Stimulus' Snake Oil
Those who argue that the US unemployment rate, still stuck at 9.6 percent, is reason to try "a second fiscal stimulus" to raise "aggregate demand," are wrong in many ways.
The Biggest Bubble-Makers
Amid signs that another financial bubble might be in the making — this time involving U.S. Treasury bonds priced at about 100 times their yield — it would be helpful to review what one might call bubble dynamics.
Housing Crisis? Look to Canada for Answers
President Barack Obama has tried to prop up the housing market by helping people stay in their homes, even though they're still overwhelmed with mortgage debt. This is the latest in a long series of government interventions intended to promote homeownership.
Your Fat Paycheck Keeps Neighbors Unemployed
Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them. Ignoring the facts, though, leads to bad policies, and with the U.S. unemployment rate at a stubborn 9.6 percent, we don't need more of those.
A Speech from the Far Side: What Our Enemies Heard
Obama’s speech from the Far Side…what was really said.
ORSZAG: One Nation, Two Deficits
It would be tough, then, to squeeze more than a half percent of G.D.P. from spending by 2015. Additional revenue — in the range of 0.5 to 1.5 percent of the economy — will therefore be necessary to reduce the deficit to sustainable levels.
Bad Medicine Begets Bad Economy
Government policy mistakes bring on crises; the correction of those mistakes will quickly cure them.
The Obama Economy
How trillions in fiscal and monetary stimulus produced a 1.6% recovery.
Factchecking the Democratic Leadership on Jobs
Economists now attribute a chunk of the decline in the jobless rate to 9.6% versus 10.1% in October ’09 to the 1.4 million people who left labor force since May. Add in 1.4 million people, and the jobless rate zooms higher to 10.3%, says Miller Tabak strategist Dan Greenhaus.
Masking the level of job losses
...331,000 people lost full-time jobs and are now working part-time, not because they want to do so, but rather because their employer had to cut back.
Paranoid About Paranoia
But obsessing about the paranoia of the masses is often a way for American elites to gloss over their own, entirely nonsymbolic failures.
More on Small Businesses and the Administration
It’s really fascinating that in the face of all its previous failures, the administration continues in the same direction.
Washington and the 'Recovery Summer' That Wasn't
The nation's capital endures recessions with less discomfort than anywhere else, and that's truer than ever today.
Will Unemployment Continue to Climb?
A look at the factors that will continue to depress employment and indicate weak economic growth.
Now the Bad News: Those August Jobs Were Rented
Despite what some on Wall Street say, the August jobs report shows little hope for recovery.

Graph of the Day
Mercatus Center: Job Creation Update
See: When the GOP Wrote Federal Budgets
See also: Government Spending as a Share of Gross Domestic Product
PODCAST: Kling on Knowledge, Power, and Unchecked and Unbalanced

Book Excerpts
"A major problem of our time is that people have come to expect policies to produce results that they are incapable of producing. …we economists in recent years have done vast harm—to society at large and to our profession in particular—by claiming more than we can deliver. We have thereby encouraged politicians to make extravagant promises, inculcate unrealistic expectations in the public at large, and promote discontent with reasonably
satisfactory results because they fall short of the economists’ promised land." –Milton Friedman, “Have Monetary Policies Failed?” (1972)

Did You Know
Only 47.6% of people ages 16 to 24 had jobs in August, the lowest level since the government began keeping track in 1948, according to the Labor Department. By comparison, 62.8% of that age group was employed in August 2000.

9/3/10 Post

BUZZ: Unemployment Rate Rises to 9.6%

News
'Recovery Summer' Ends With Economic Pothole
This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government's stimulus program. But summer is coming to an end, and the recovery has not taken root.
White House considering emergency economic stimuli
Administration officials have been huddling almost continuously during the past week, brainstorming for ideas that would boost employment without hiking the massive federal deficit – with Treasury Secretary Tim Geithner rushing to the West Wing for further consultations late Thursday.
A slight reprieve?
Extending the cuts for a while may turn out to be prudent policy.
Wheat Rises on Russian Export Ban; Mozambique Riots
Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique.
Bernanke out of moves, critics say
With interest rates near zero and the Federal Reserve already owning a large share of the mortgage and Treasury securities markets, many investors fear the central bank may be out of ammunition should the economy take a serious turn for the worse.
GAO: State, local governments 'will steadily decline'
"... closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures. Closing the fiscal gap through revenue increases would require action of a similar magnitude ...."
Obama loses backing on taxes
Defying President Obama, Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.
Jobs Suspense Keeps Dollar Down
The dollar declined modestly against the euro and yen Thursday, with investors unwilling to stake out new positions ahead of the August U.S. employment report.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
July factory orders edge up as strong demand for aircraft offsets weakness in other sectors
Factory orders edged up 0.1 percent in July, the first increase after two months of declines. But the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.
Budget Woes: Lessons for Washington from California
California’s budget mess has lessons for Washington: Move fast to slow the growth of government pensions, and broaden the tax base.
Struggling youth crime prevention groups see salvation
A $1.6 billion congressional bailout of sorts could help financially flailing groups that fight to keep young people out of trouble, yet lawmakers are reluctant to take up the expensive proposal amid a sour economy and other, more pressing issues.
President Obama versus the world on jobs
For a president elected on a promise of showing a kinder American face to the world, Barack Obama doesn’t seem to mind throwing a few elbows at allies and rivals alike when it comes to the economy.
Democrats Retreat from Increasing Taxes on the Rich
Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama's plans to let some of the Bush administration's tax cuts expire.
Few options for Barack Obama on 9/11
The White House has not yet announced the president’s plans for next week, though a source familiar with the matter was doubtful Obama would travel to New York.
Chamber Urges Extension of Bush Tax Cuts
The U.S Chamber of Commerce called for an extension of the Bush tax cuts at its annual Labor Day briefing.

Blogs
Broader U-6 Jobless Rate up to 16.7%: Why the Jump?
The U.S. jobless rate rose to 9.6% in August, but the government’s broader measure of unemployment rose even more to 16.7%, the highest rate since April.
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
The Employment-Population ratio increased to 58.5% in August from 58.4% in July.
Relief in the Temp Sector
The temporary-help services sector added 16,800 jobs in August, the government said Friday.
Take This Job and Love It
"Employed workers are less fearful of losing their jobs than they were last year, but worries about cuts in benefits and work hours loom larger this year."
Greece: Default Probabilities before and after policy response
...now - after further analysis - the default probabilities have increased for longer time frames...
Lessons in Crony Capitalism
The United States is exploiting our economic system around the world!
The Audacity of Failure
By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.
The Repeal Windfall
As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching.
U.N. Throws $290 Million Lifeline to North Korean Regime
North Korea can count on at least one ally. As reported by FoxNews, “the United Nations is laying plans to spend more than $290 million on a welter of programs in the communist state.” The chief U.N. organizations involved in this effort are: United Nations Development Program (UNDP), UNICEF, the World Food Program (WFP) and the World Health Organization (WHO).
Social Security: Waving the Bloody Shirt Will Delay Needed Reform
Now, it’s liberals who are “waving the bloody shirt,” this time through wild exaggerations of conservatives’ plans for Social Security reform.
How Burger King Lost Its Crown
The fast food chain, which has never been able to fully compete with McDonald's, was sold to 3G Capital for $3.26 billion
Second Gulf Explosion Doesn’t Take Away Need for Drilling
What exploded was not a drilling rig but a production platform. AP reports that the shallow-water platform was not producing oil at the time of the explosion, although the well does normally produce approximately 58,800 gallons of oil and 900,000 cubic feet of gas per day.
Important Manufacturing Indicators Look Weak
Recently released data indicate prolonged economic weakness and a continuing decline in factory orders and the build-up of inventories.

Research, Reports & Studies
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
An estimated 26% (or 36 million) of the 139 million currently employed workers in the United States suffered at least one spell of unemployment during the Great Recession that began in December, 2007.
Are Economists Human?
...analyzes the apparent inability of professional economists to give a better than chance response to a very elementary question about consumer surplus.
Indian Planning and Development Economics
The growth of the Indian economy under Nehru‘s socialism, as we will see, was disappointing. More vigorous growth awaited the liberalization of the economy that began in the 1980s.
The New Face of the Union Movement: Government Employees
The American union movement has reached a historic milestone—more union members currently work for the government than for private businesses.

Economists’ Comments & Opinions
The Small Business The 97% Fallacy
The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.
It Isn't Just Lost Jobs—It's the Lost Jobs Machine
The American economy hasn't been a very robust jobs-producer for quite a while. That's the broader question that needs to be discussed, even as we work on the immediate problem.
120 Days to Go Until the Largest Tax Hikes in History
In just 120 days, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011.
Cantor: Beware of the Obama tax increases
Listening to the Democrats this summer, you're unlikely to hear about an impending tax increase.
Should US government debt be rated junk?
The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall.
Global Economy's Second Day of Reckoning
On the second anniversary of the Lehman crisis, the world economy finds itself yet again at a very troubling juncture.

Graph of the Day
August jobs report
See: Employment Rate Cause for Alarm
See: Monetary Illusions
See: 45% - Unemployment Ain't All Bad
See Also: U.S. Underemployment at 18.6% in August

Book Excerpts
"In the 1962 Report of the Council of Economic Advisers, full employment was officially defined to be present when there was a 4-percent measured rate of unemployment. This was, however, taken to be only some interim rate, with the long-run objective rate considerably lower. The much-discussed Humphrey-Hawkins bill in 1976 set out a 3-percent target rate, to be attained within four years. Historically, however, unemployment in the United States has only infrequently, and then only temporarily, fallen below 4 percent. During the sixty-three-year period after the creation of the Federal Reserve System, the period 1913-1975, there were only twenty years in which unemployment averaged 4 percent or less. Ten of these years—1918, 1943-1945, 1951-1953, and 1966-1968—occurred during periods when the United States was at war, although the mobilization was not so intense in the latter two periods as it was in the former two. The normal rate of unemployment, though unmeasurable, would appear to lie somewhat above 4 percent. During the fifteen-year period 1946-1960, a period that included both moderate mobilization and moderate recession, as well as predating the full Keynesian conversion of our politicians, unemployment averaged 4.5 percent. Even if we could make the heroic assumption that the institutional-structural features affecting employment have remained invariant over the long periods noted, it would seem clear that the "normal" rate of unemployment lies considerably above 4 percent. And, of course, it would be illegitimate to make such an assumption of invariance through time. Both demographic shifts within the labor force (toward younger and female workers) and policy changes (unemployment compensation, extended minimum wage coverage, increases in welfare payments and retirement support) have had the effect of increasing the level of unemployment that would be consistent with any specified rate of inflation." –James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (1977)

Did You Know
Americans will take to the roads and skies for the Labor Day holiday in greater numbers than a year ago, thanks to low gas prices and pent-up demand for air travel, experts say. Auto club AAA projects a 10% increase in holiday travelers over last year. About 34.4 million people are likely to take trips of at least 50 miles.