Financial Reform: Wrong Diagnosis, Wrong Cure
Will the recently enacted financial reform law fix the problems that caused the economic crisis? That’s hard to say, since nobody really agrees what caused the crisis in the first place and the the Financial Crisis Inquiry Commission, which was created by President Obama in May 2009, isn't due to release its findings until December 2010. Read more...
Getty ImagesLessons from Germany’s Economic Recovery
After a tepid recovery from a deeper recession, the German economy seems to have achieved an “escape velocity,” which – to borrow a term from Larry Summers – has thus far eluded the U.S. Why has the German (and broader European) economy sizzled at the same time as the much touted “Summer of Recovery” in the U.S. has fizzled? Read more...
Taxes Aren’t the Problem, Spending Is
Fareed Zakaria had an interesting, but misguided piece, “Raise My Taxes, Mr. President!” in last week’s edition of Newsweek echoing what has become a familiar line from the left. However, in claiming that current tax rates are most to blame for our disastrous fiscal condition, Zakaria is wrong. Read more...
Getty ImagesAn Underreported Counterview on Fed Policy
The latest transcript from the Fed reveals a growing concern about the downside risk of deflation. Increasingly, monetary experts are discussing what additional steps the Fed can take to buttress the stalled economy – all while it keeps interest rates low for an extended period of time. Yet, Raghuram Rajan – who is widely known for his prescient warnings on the financial crisis – offers a noteworthy counter perspective. Read more...
Federal Stimulus Kicks Costs Down the Road
Today, the House returns from its six-week summer recess to vote on an emergency spending package for the states. The measure, which includes $16 billion to help states with Medicaid costs and another $10 billion for school districts, has already cleared the Senate. So, here we are again roughly 18 months after the February 2009 "stimulus." States are (still) facing big holes in their budgets. And, Congress is about to pass yet another state patch or bailout. Read more...
Getty ImagesCMS Medicare Actuary Disavows the Medicare Trustees’ Report
“(T)he financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range. . . or the long range. . . . I encourage readers to review the ‘illustrative alternative’ projections that are based on more sustainable assumptions for physician and other Medicare price updates.” Read more...
Understanding the 2010 Social Security Trustees’ Report
Everything We Know Looks Much Worse
The Social Security Trustees have finally released their long-delayed 2010 report projecting the program’s future finances. Our findings: virtually all of the updated hard information in the report looks significantly worse than was projected last year. The effects of this worsening have simply been balanced over the long-term by more optimistic assumptions going forward. Read more...
Rates of Deterioration Key to Understanding Budget Projections
Yesterday, the Medicare and Social Security Trustees released their annual reports on the status of these programs’ finances. The Administration cynically used the occasion to tout the benefits of the health care reform bill. Of course, the same funds that supposedly bolster Medicare’s financing were also counted as offsetting the cost of the new health care entitlement. The Administration must choose: they cannot have it both ways. Read more...
Should All Tax Cuts Be Paid For?
Should extensions of current tax policy have to be paid for or offset in the federal budget? Congressional Republicans don’t think so. Democrats mock this notion that tax cuts “pay for themselves” by generating higher revenues. Read more...
Getty ImagesA French Voice for Laissez-Faire
In a recent op-ed, European Central Bank (ECB) president Jean-Claude Trichet called on industrial countries on “both sides of the Atlantic” to end fiscal stimulus programs and reduce budget deficits now. The underlying message has been underappreciated: A French lifetime bureaucrat took to the op-ed page of an English language newspaper to defend free-market capitalism from his American counterparts. Read more...
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