Subscribe to List View Past Issues RSS translate   facebook facebook Like 0 Comment 0 twitter

 

dashed-line

Friday, April 13, 2012

dashed-line
Economic Events of the Week

Friday – Consumer Price Index

dashed-line
Story of the Day
Fed Officials Differ on Need to Keep Rates Low to 2014 (Bloomberg)

Washington Update
Van Hollen Dismisses "Dynamic Scoring" of Economic Growth From Tax Reform (National Journal)
Pew: States Don't Track Tax Breaks (Politico)

Market Talk
Trade Deficit Declined in February to $46 Billion (Calculated Risk Blog)
Consumer Prices in U.S. Probably Rose at Slower Pace (Bloomberg)

Editorials & Opinions
Free-lunch Egalitarianism (Charles Krauthammer in The Washington Post)
You Pay for Warren Buffett’s Medicare (Mona Charen in National Review)
‘Buffett Rule’ is a Sorry Excuse for Tax Reform (Sebastian Mallaby in Financial Times) 

dashed-line

Story of the Day

Fed Officials Differ on Need to Keep Rates Low to 2014 (Bloomberg)

Federal Reserve officials widened a rift over a commitment to keep rates near zero through late 2014 as an unexpected increase in claims for jobless benefits added to evidence of a weakening labor market. William C. Dudley, president of the New York Fed, and Vice Chairman Janet Yellen said the 2014 time-frame is needed to lower unemployment from 8.2 percent. Minneapolis Fed President Narayana Kocherlakota said rising inflation may prompt an interest-rate increase as early as this year, while Philadelphia’s Charles Plosser said policy should hinge on economic performance, not a calendar commitment. Central bankers next meet in two weeks to consider policy for an economy that Dudley and Yellen said may be sapped by cuts in government spending and the European debt crisis. Dudley and Yellen backed Chairman Ben S. Bernanke’s view that progress in reducing joblessness may not be sustained as growth cools.


arrow Back to Top dashed-line

Washington Update

Van Hollen Dismisses "Dynamic Scoring" of Economic Growth From Tax Reform (National Journal)

House Budget Committee ranking member Chris Van Hollen, D-Md., on Thursday bluntly dismissd the GOP-backed idea of “dynamic scoring” as a fantasy that “assumes magical growth effects from tax reform.” Sen. Chuck Grassley, R-Iowa, said on Wednesday that Republicans could get behind a net tax increase as long as they could get credit for growth generating some of the new revenue by having the Congressional Budget Office score the anticipated economic effects of lowering nominal tax rates. Considering the suggestion after a Thursday-morning press conference, Van Hollen was not receptive. “We should count what’s real — that’s the issue, right?” he said, before throwing a usual GOP argument about the negative economic impact of deficits back at Republicans.

Pew: States Don't Track Tax Breaks (Politico)

Every state offers tax incentives to attract the private sector, but none knows for sure whether the policies produce a reasonable return on investment, a report says. While many states are still grappling with their budgets in light of the sour economy and rethinking their taxing structures, they’re also facing stiff competition for jobs — from other states, according to the Pew Center on the States released Wednesday. Studying all 50 states, the report identified 13 — Arizona, Arkansas, Connecticut, Iowa, Kansas, Louisiana, Minnesota, Missouri, New Jersey, North Carolina, Oregon, Washington, and Wisconsin — that have developed the best review of their business-friendly tax incentive programs. Twelve other states have mixed results while half the states — including the District of Columbia — have not taken the basic steps needed to know whether their incentives are effective.


arrow Back to Top dashed-line

Market Talk

Trade Deficit Declined in February to $46 Billion (Calculated Risk Blog)

The Department of Commerce reported: Total February exports of $181.2 billion and imports of $227.2 billion resulted in a goods and services deficit of $46.0 billion, down from $52.5 billion in January, revised. February exports were $0.2 billion more than January exports of $180.9 billion. February imports were $6.3 billion less than January imports of $233.4 billion The trade deficit was well below the consensus forecast of $51.7 billion. Exports increased slightly in February, while imports decreased sharply. Exports are well above the pre-recession peak and up 9% compared to February 2011; imports are near the pre-recession high and imports are up about 8% compared to February 2011.

Consumer Prices in U.S. Probably Rose at Slower Pace (Bloomberg)

The cost of living in the U.S. probably rose at a slower pace in March as the run-up in energy prices lost steam, economists said before a report today. The consumer-price index increased 0.3 percent last month after rising 0.4 percent in February, according to the median forecast of 80 economists surveyed by Bloomberg News. So-called core prices, which exclude volatile food and energy costs, may have climbed 0.2 percent. Companies like Levi Strauss & Co. and Jos. A. Bank Clothiers Inc. may find it difficult to keep raising prices as 12.7 million Americans remain unemployed, almost twice the number at the end of the last expansion. Less inflation would give Federal Reserve policy makers room to keep interest rates near zero to spur the economic recovery and boost employment.


arrow Back to Top dashed-line

Editorials & Opinions

Free-Lunch Egalitarianism (Charles Krauthammer in The Washington Post)

At the beginning of his presidency, Barack Obama argued that the country’s spiraling debt was largely the result of exploding health-care costs. That was true. He then said the cure for these exploding costs would be his health-care reform. That was not true. It was obvious at the time that it could never be true. If government gives health insurance to 33 million uninsured, that costs. Costs a lot. There is no free lunch. Now we know. The Congressional Budget Office’s latest estimate is that Obamacare will add $1.76 trillion in federal expenditures through 2022. And, as one of the Medicare trustees has just made clear, if you don’t double count the $575 billion set aside for the Medicare trust fund, Obamacare adds to the already crushing national debt.

You Pay for Warren Buffett’s Medicare (Mona Charen in National Review)

The president is barnstorming around the nation, hoping to enrage voters at the injustice that the wealthy pay less in taxes than the middle class. “Now that’s wrong,” Mr. Obama objected. “That’s not fair.” It also isn’t true. According to the National Taxpayers Union, in 2009, the top 1 percent of earners paid 36.7 percent of income taxes. The top 5 percent paid 58.6 percent. And the top 10 percent paid more than 70 percent. Social Security and Medicare taxes fall more evenly on all income groups (except the poor), but are lower. Further, Mr. Obama had the opportunity to repeal the Bush tax cuts he claims to find so odious when his party controlled both houses of Congress, but he chose to extend them instead.

‘Buffett Rule’ is a Sorry Excuse for Tax Reform (Sebastian Mallaby in Financial Times)

No reasonable person can doubt that the US must eventually raise taxes. The country is running an unsustainable budget deficit. Its tax take, measured as a share of gross domestic product, is the lowest in the OECD. The 1990s suggest the US can raise revenues without damaging growth. Other countries have also managed similar feats. Sweden, for example, which collects 53 per cent of GDP in taxes, has grown faster over the past decade than the US, which collects 32 per cent, counting state and local government. From all this it follows that a distressingly large slice of the Republican party is unreasonable. Equally, no reasonable person can doubt that the tax system must be used to soften inequality. Some inequality is good: it is a spur to enterprise and effort. But too much is clearly bad: it punctures meritocracy. As gaps in wealth and income have widened, it has become steadily harder for talented poor kids to compete against lavishly tutored rich kids armed with iPhones full of contacts. This is politically corrosive, morally unjust, and a shocking waste of human capital.


arrow Back to Top dashed-line

solid-line

e21: Economic Policies for the 21st Century is a nonprofit, nonpartisan organization dedicated to economic research and innovative public policies for the 21st century. Drawing on the expertise of practitioners, policymakers, and academics, we aim to advance free enterprise, fiscal discipline, economic growth, and the rule of law.

solid-line_1px

2011, e21: Economic Policies for the 21st Century


1150 17th Street, NW - Suite 504 - Washington, DC 20036
Phone: 202-232-0090 | Email: info@economics21.org

52 Vanderbilt Avenue - New York, New York 10017
Phone: 646-673-8539 | Email: info@economics21.org