Daily Econ Digest

General Economics

2013-05-21T11:15:00.002-04:00

News
Politico | Alaska pushes D.C. on ANWR drilling
Alaskan officials are hoping to prod the federal government into measuring the amount of oil and gas beneath the Arctic National Wildlife Refuge and are offering state money as part of their plan to push the project forward.
CNN Money | Death cross brewing in bond market
Investors have been dumping bonds lately, but a little-known technical indicator suggests that may not last for long.
Market Watch | Large depositors not protected in new EU draft law
European Union lawmakers on Monday voted in favor of a draft law that would protect small bank depositors from losses in further bank rescues, but could see customers with more than 100,000 euros in savings being hurt.
WSJ | Wall Street's Giants Try 'Flow Monster' Formula
Here is a glimpse at the future of finance. When Deutsche Bank AG set out to win a role on Apple Inc.'s $17 billion bond, it eschewed Wall Street's traditional tactics.
CNBC | The Market Is Not the Economy: What the Fed Misses
Whatever course it chooses, the Federal Reserve will have to grapple with the reality that while its policies have helped levitate stocks, they've been considerably less effective at expanding the economy.
WSJ | Developed Economies See Slight Growth
Developed economies returned to growth in the first three months of the year, although the euro zone continued to lag behind the U.S. and Japan, according to figures released by the Organization for Economic Cooperation and Development Tuesday.
CNBC | Economy Is on the Move Again—and So Are Americans
Thanks to the slowly brightening employment picture, along with the uptick in the housing market, more and more people are packing up and relocating. And the pace is likely to pick up this summer, the peak season for moving, according to industry professionals.

Econ Comments & Analysis
Politico | Barriers hamper small businesses
Although we’ve seen signs of a slowly improving economy, we must remember that our nation’s potential is far better than this. Despite the improved unemployment rate, there is a combination of data points that is cause for concern.
WSJ | Natural Gas Exports, Maybe
President Obama can't seem to decide whether America's unconventional oil and gas revolution is good for the country, which is resulting in passive-aggressive government. Witness last week's approval of a new natural gas export terminal that may not be a real approval.

Blogs
Calculated Risk | Zillow: House Prices up over 5% year-over-year in March, Case-Shiller expected to show 9.8% YoY increase
A majority (55 percent) of the 365 metros covered saw home values climb in April from March. Of the 30 largest metro areas covered, Sacramento experienced the largest monthly increase, with home values rising 3.4 percent.
Calculated Risk | Discussion on Inequality and Economic Growth
As we endure the slow, uneven recovery from the “Great Recession,” there is no more critical or timely question than that of the relationship between economic growth and inequality.

Health Care

2013-05-21T11:15:00.000-04:00

News
WSJ | Gene Patents Drive Medical Innovation
The biotech industry began in 1978 when the University of California applied for a patent on the gene for the human growth hormone. Since that filing nearly 20% of the 20,000-plus genes in our DNA have been patented.

Econ Comments & Analysis
Heritage Foundation | Real Medicare Reform: Why Seniors Will Fare Better
Medicare reform based on a defined-contribution system of financing—commonly referred to as a “premium support” system—could slow or even reverse the growth in seniors’ annual premium costs.

Monetary

2013-05-21T11:14:00.005-04:00

News
Market Watch | Fed's Evans: Need more time to assess job gains
There has been "good progress" in the labor market, but questions remain over whether the gains are sustainable, said Charles Evans, the president of the Chicago Federal Reserve Bank, Monday.
WSJ | IMF Tells Central Europe to Spend More
The International Monetary Fund is recommending short-term stimulus for much of Central Europe, where economies are going through their roughest patch in years and the recession in the euro zone has dampened hopes for a quick recovery.

Blogs
Economist | The ECB can't substitute for periphery financial reform
While relieving the immediate pain makes the recovery process more tolerable, deterioration in the underlying fundamentals may be obscured, thereby hindering the achievement of a true diagnosis. In considering how to contribute to solving the euro area’s credit problems, the ECB faces a dilemma of this type.

Taxes

2013-05-21T11:14:00.000-04:00

News
Reuters | Taxes on some wealthy French top 100 pct of income: paper
More than 8,000 French households' tax bills topped 100 percent of their income last year, the business newspaper Les Echos reported on Saturday, citing Finance Ministry data.
WSJ | Apple Avoided Taxes on Overseas Billions, Senate Panel Finds
Apple Inc. paid no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate over whether the U.S. tax code needs an overhaul.
Washington Times | Study: GOP generational divide could sink Web sales tax bill
Critics of Internet sales tax say that rising resistance from newer GOP lawmakers could sink a bill now before the Republican-controlled House to require online retailers such as eBay to start collecting sales taxes for the states.

Econ Comments & Analysis
Politico | End the political circus on tax reform
On Tuesday morning, a political sideshow masquerading as a Senate hearing will target America’s economic champions — companies that are creating American jobs and strengthening American innovation.
Washington Times | Why the IRS cannot be reformed
Every few years, at least from the time of President Franklin D. Roosevelt, there is a scandal involving abuse of power at the Internal Revenue Service. We are again in the midst of one of these periodic abuse scandals, with many solemn promises that the problems will be corrected and will not happen again.
Mercatus | The Hidden Costs of Tax Compliance
The tax code, far beyond simply collecting revenue to fund the operations of the federal government, attempts to perform policy and political functions as well. This paper does not examine the normative value of these provisions, but instead examines the hidden costs of today’s tax code: time and money spent submitting tax forms, foregone economic growth, lobbying expenditures, and gaps in revenue collection.

Employment

2013-05-21T11:12:00.004-04:00

News
CNN Money | Make $30 an hour, no bachelor's degree required
No college degree? No problem. Become a web developer. The job is growing quickly, offers a median salary around $30 an hour, or $62,500 a year, and does not necessarily require a bachelor's degree.
Washington Post | As rich gain optimism, lawmakers lose economic urgency
Washington has all but abandoned efforts to help the economy recover faster — and lawmakers don’t seem worried that voters will punish them for it.

Econ Comments & Analysis
NBER | Post-recession US Employment through the Lens of a Non-linear Okun's law
This paper aims at investigating the relationship between employment and GDP in the United States. We disentangle trend and cyclical employment components by estimating a non-linear Okun’s law based on a smooth transition error-correction model that simultaneously accounts for long-term relationships between growth and employment and short-run instability over the business cycle.

Blogs
WSJ | What’s Holding Back Hiring?
Nearly four years after the recession officially ended, the unemployment rate remains elevated, at 7.5%. The share of the population that’s working or looking for work is at a 30-year low. More than 2.5 million fewer Americans are working today than when the recession began.

Budget

2013-05-21T11:12:00.001-04:00

News
Bloomberg | U.S. Treasury Takes Extra Steps to Stay Under Federal Debt Limit
The Treasury Department announced further steps to keep funding the government without going over the nation’s debt limit, amid a stalemate between Congress and the Obama administration on approving an increase in the ceiling.
National Journal | S&P Warns Congress of Risks of Political Brinkmanship on Debt
The debt-ceiling deal expired this weekend, but the credit-rating agency that sent shock waves through financial markets when it downgraded the U.S. credit rating in 2011 is again warning Congress that a credible five-year plan to stabilize the federal deficit is as necessary—and elusive—as ever.

Econ Comments & Analysis
National Journal | How Much Does Debt-Limit Brinksmanship Cost? Last Time, More Than $1B
Whenever the federal government reaches its debt limit, as it did on Sunday, it marks the beginning of a period of uncertainty. In the case of such a fiscal emergency, the Treasury Department breaks the glass and pulls out emergency tools to buy some extra time before the government defaults on its debts.

General Economics

2013-05-20T11:16:00.002-04:00

News
Market Watch | U.S. economy walks uneven path
The bubbling U.S. stock market might get more pop this week from positive sales trends in housing, but danger signs lurk in other parts of the economy.
CNN Money | Gas prices lower, but not leading to more spending
Gas prices are slightly lower this year, but that's not leading to a large pick-up in consumer spending, according to a survey by Bankrate.com.
Market Watch | Chicago Fed national activity index falls in April
The Chicago Fed's national activity index worsened in April, falling to negative 0.53 from negative 0.23 in March. The three-month moving average meanwhile was at negative 0.04 from negative 0.05 in March.
CNN Money | Oil-price manipulation: the next Libor?
Some of the world's biggest oil companies may have a new mess on their hands.
Washington Times | New top Realtor sees a rebound, but full recovery years away
As a Realtor in Orange County, Calif., Gary Thomas lives at the epicenter of the past decade’s epic housing boom and bust that is only now beginning to release the economy from its withering grip.
Market Watch | Japan raises economic outlook
The Japanese government said in its May report issued Monday that the nation's economy was slowly improving, marking an upgrade from its views in the April update, according to reports.

Econ Comments & Analysis
USA Today | 15% capital reserve is excessive: Opposing view
The financial services industry plays a vital role in fueling businesses to expand and create jobs, helping our economy to grow. At the same time, Americans should know that no institution should be too big to fail and that taxpayers should never again be put at risk in a future financial crisis.
WSJ | Red Tape Record Breakers
President Obama is opposing a bill passed by the House last week that would require the Securities and Exchange Commission to better measure the costs and benefits of new regulations. That's no surprise considering that the latest annual index of federal rules shows that Team Obama is now the red tape record holder.
Politico | Finding truth in the Keystone debate
Our national debate over the Keystone XL pipeline has reached a critical point as we await a decision. The decision to allow development of this pipeline is long overdue, and hopefully may finally come in just a few weeks or months. Despite the economic benefits its construction is sure to provide, critics continue to argue that the project poses too great a risk to American citizens and our environment.

Health Care

2013-05-20T11:15:00.002-04:00

News
WSJ | Employers Eye Bare-Bones Health Plans Under New Law
Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.

Econ Comments & Analysis
Washington Post | Is the health-care spending slowdown for real?
We all know that Stein’s Law will someday apply to health-care spending, which has risen from 5 percent of the economy (gross domestic product) in 1960 to almost 18 percent now. What we don’t know is how and when its share of the economy will stabilize.
Real Clear Markets | Is This Really An Obamacare 'Train Wreck'?
Senate Finance Committee Chairman Max Baucus, an architect and supporter of the Affordable Care Act (ACA), recently caught the Administration's attention when he voiced his concerns about the implementation of the health exchanges -- the centerpiece of Obamacare now scheduled to go live on October 1 -- saying that he sees "a huge train wreck coming."
NBER | Using Performance Incentives to Improve Medical Care Productivity and Health Outcomes
We nested a large-scale field experiment into the national rollout of the introduction of performance pay for medical care providers in Rwanda to study the effect of incentives for health care providers.

Blogs
Market Watch | Plans for equal Medicare, Medicaid drug payments saves billions: CBO
The Obama administration is looking to save up to $155 billion in various health-care programs over the next 10 years that have virtually nothing to do with the president’s initiative to get the nation insured and much to do with equalizing drug payments for government-sponsored coverage, according to a Congressional Budget Office report issued Friday.
Heritage Foundation | This Week’s Reasons to Repeal Obamacare
It has been over three years since Obamacare became law. This week, the House voted again to completely repeal it.

Monetary

2013-05-20T11:13:00.006-04:00

Econ Comments & Analysis
Market Watch | Fed's Fisher wants to slow pace of MBS purchases
The Federal Reserve can only slow the pace of its mortgage-backed securities, as a sudden stop would be "too violent" for the market, said Richard Fisher, the president of the Dallas Federal Reserve Bank on Monday.
Forbes | Everything You Hear About the Fed's 'Exit Strategy' Is Wrong
In modern times the role of money has been almost totally perverted by the commentariat. Though money’s sole purpose is as a measure that facilitates the exchange of actual wealth (your bread for my wine), the desire to get something for nothing is so great that people actually believe prosperity can be had with the revving up of a printing press.
AEI | How the Fed can unwind
As the Federal Reserve has continued to buy bonds to aid the economic recovery, critics of its actions, and even some supporters, have grown increasingly concerned about what comes after all of this “quantitative easing”: How will the Fed “unwind” its balance sheet — that is, sell off the bonds it has purchased — without harming the economy?

Taxes

2013-05-20T11:13:00.003-04:00

News
WSJ | States Bank On Online Sales Tax
Congress hasn't yet agreed to end tax-free shopping on the Internet, but some states already are planning how they'll spend the money.

Employment

2013-05-20T11:12:00.006-04:00

News
CNN Money | Federal workers under fire
The Internal Revenue Service scandal couldn't have come at a worse time for the nation's 2 million federal workers, who are desperate to end furloughs and get their first raise in three years.
Washington Post | Steady hiring pushes down unemployment rates in 40 US states in April; only 3 report increases
Solid hiring helped lower unemployment rates in 40 U.S. states last month, the most since November. The declines show the job market is improving throughout most of the country.

Blogs
FOX Business | Where the Jobs Are This Week
I am working for you to find you a job, a lead, an idea, but there is a group of Americans I have not helped: college graduates.

Budget

2013-05-20T11:12:00.001-04:00

Econ Comments & Analysis
Washington Times | The deficit dip
The deficit is shrinking, but it’s too soon to celebrate a return to sanity. America is still sinking more into debt by the minute and is still on a path to ruin.

Blogs
Heritage Foundation | Washington Hits the $16.7 Trillion Debt Ceiling with $300 Billion in New Debt
On May 19, the United States hit its debt ceiling after adding $300 billion in more debt since lawmakers suspended the ceiling in February.
WSJ | Number of the Week: Class of 2013, Most Indebted Ever
$30,000: The average student-loan debt for a borrower who received a bachelor’s degree in 2013.

General Economics

2013-05-17T13:57:00.001-04:00

News
National Journal | Where Are We on Too Big to Fail?
Even in a week where headline-grabbing scandals seem to be dominating all of Washington's time, concern over "too big to fail" banks continues to simmer.
CNN Money | The U.S. looks like Japan: Investors rejoice
The U.S. economy is still not close to being fully recovered from the Great Recession, but investors could give a mouse's posterior about this sad fact.
Bloomberg | Abe Vows to Boost Japan’s Investment in Growth Strategy Outline
Japanese Prime Minister Shinzo Abe vowed to increase private investment and infrastructure exports as part of his strategy to overcome deflation and build on an economic expansion fueled by rising consumer spending.
WSJ | Low Inflation Poses a Growth Test
The sluggishness of the U.S. economy is keeping a lid on inflation, leaving companies unable to increase prices and raising doubts about the durability of the recovery.
Bloomberg | From Brooklyn to California, Housing Bubble Threat Grows
Just a year since the U.S. housing market hit bottom after the biggest plunge in eight decades, signs of excess are re-emerging.
CNBC | Slow Growing: Bad News for Jobs, Housing; CPI Tame
Thursday's economic reports featured mostly bad news, with housing starts plunging and jobless claims rising while inflation remained under control.

Econ Comments & Analysis
Forbes | Prosperity: The Three Questions That Really Matter
Tune in to financial TV, read financial news, listen to financial radio and most of what you watch, read and hear is noise. Cable TV increased the number of channels from several to hundreds, and new media increased it from hundreds to tens of millions.
CRS | Japan's Possible Entry Into the Trans-Pacific Partnership and Its Implications
On March 15, 2013, Prime Minister Abe announced that Japan would formally seek to participate in the negotiations to establish the Trans-Pacific Partnership (TPP). Japan's membership in the TPP with the United States would constitute a de facto U.S.-Japan FTA.
AEI | Unleash the private sector
In "Can America Be Fixed?" (January/February 2013), Fareed Zakaria argues that American democracy has grown increasingly dysfunctional since the 1970s and that "a series of lucky breaks" -- namely, the end of inflation, new information technologies, globalization, and excessive borrowing, which has allowed Americans to consume more than they have produced -- have covered up structural problems in the U.S. economy.

Blogs

Health Care

2013-05-17T13:56:00.001-04:00

News
Politico | Obamacare repeal now about the IRS
Republicans have hated Obamacare for years, and on their 37th repeal vote Thursday, they found a reason to hate it even more: the IRS.

Blogs
Library of Economics | Linda Gorman on How ObamaCare Treats Middle Class
Here are some sample calculations for a wage earner couple with two children living in a state that offers Medicaid to households with incomes at or below 133 percent of the federal poverty level (FPL).

Monetary

2013-05-17T13:55:00.003-04:00

News
Market Watch | Talk of Fed wind down grows louder
The drumbeat to reduce the rate of bond purchases by the Federal Reserve grew louder Thursday, with a dovish voice joining the group.
Bloomberg | Central Bankers Prisoner of Policy Guidance: Cutting Research
Policy makers can become “constrained” when they inform investors about the likely direction of interest rates, according to economists Nikola Mirkov of the University of St. Gallen and Norges Bank’s Gisle James Natvik. The topic is a hot issue at the moment as central bankers, including Federal Reserve Chairman Ben S. Bernanke, embrace so-called forward guidance to enhance the power of interest rates in providing stimulus.

Blogs
Economist | Only the ECB can improve bank credit supply
As the recession in the Eurozone moves into its sixth quarter and fiscal austerity continues, the importance of reviving credit supply to the private sector in order to stimulate output growth has become all the more apparent. In the European context boosting credit supply to the private sector requires a significant recovery in bank lending, given the relatively small size of the continent’s corporate bond markets compared to those in the United States.
WSJ | Loose Central Bank Policies Looking Increasingly Dangerous, BIS Official Warns
It’s a refrain that is being heard more and more often, especially from central bankers: the world is expecting too much of them.

Taxes

2013-05-17T13:55:00.000-04:00

News
WSJ | The IRS Scandal Started at the Top
Was the White House involved in the IRS's targeting of conservatives? No investigation needed to answer that one. Of course it was.

Econ Comments & Analysis
Real Clear Markets | The IRS Non-Scandal Calls For a National Sales Tax
As seemingly every sentient being now knows, the Internal Revenue Service (IRS) has apparently been selective when it comes to the entities its agents scrutinize. Tea Party groups in particular (organizations known to be less sympathetic toward the IRS) seem to have generated abnormal amounts of attention from it.
WSJ | This Is No Ordinary Scandal
We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous.
CRS | Overview of the Federal Tax System
The major sources of federal tax revenue are individual income taxes, Social Security and other payroll taxes, corporate income taxes, excise taxes, and estate and gift taxes. This report describes the federal tax structure, provides some statistics on the tax system as a whole, and presents analysis of selected tax concepts.
AEI | How the R&D tax credit is like duct tape
Oh, the wonders of duct tape! Isn’t it a practically ideal solution for solving minor leakages, temporarily? If that's the only thing you do, using duct tape all the time would be utterly justified.
Heritage Foundation | Net Tax Increase in Obama’s Budget Over $1 Trillion
President Obama released his fiscal year 2014 budget almost two months after it was due by law. With all that extra time, the President had plenty of opportunity to clearly account for his tax increases. But like his budgets from previous years, this year’s effort hides the total tax increase he proposes

Blogs
CATO | OECD Study Admits Income Taxes Penalize Growth, Acknowledges that Tax Competition Restrains Excessive Government
I’m not a fan of the Paris-based Organization for Economic Cooperation and Development. The international bureaucracy is infamous for using American tax dollars to promote a statist economic agenda. Most recently, it launched a new scheme to raise the tax burden on multinational companies, which is really just a backdoor way of saying that the OECD (and the high-tax nations that it represents) wants higher taxes on workers, consumers, and shareholders. But the OECD’s anti-market agenda goes much deeper.

Employment

2013-05-17T13:54:00.004-04:00

Econ Comments & Analysis
Forbes | Obamamcare + Food Stamps = Jobless Recovery
If President Obama were to stand before the magic mirror and chant, “Mirror, mirror, on the wall, whose is the most jobless recovery of them all?” the mirror would answer, “Yours is, Master.” We are now 46 months into our third jobless recovery since 1991, and this one is the most jobless by far.

Budget

2013-05-17T13:54:00.001-04:00

News
Politico | GOP looks at big cuts for Labor, Education, HHS
House Republicans late Thursday began circulating new spending targets for appropriations bills for the coming year with Labor, Education and Health and Human Services facing a nearly 20 percent reduction on top of the cuts already made in the March 1 sequestration order.
CNN Money | Debt ceiling: Treasury soon to start juggling act
The debt ceiling clock is about to start running again. The U.S. Treasury on Friday will begin using "extraordinary measures" to keep the country from defaulting on its obligations.

Econ Comments & Analysis
Washington Post | The $642 billion excuse
Can we get real? For starters, $642 billion is serious money, and despite the modest improvements of the latest CBO report, the basic trends in federal finances remain the same. From 2014 to 2023, the government will spend $6 trillion more than it collects in taxes. The budget never comes close to balancing.

General Economics

2013-05-16T11:06:00.005-04:00

News
Bloomberg | Consumers’ Outlooks on U.S. Economy Improve to Five-Month High
Consumers’ economic outlook improved in May to its best reading in five months, showing Americans are looking beyond the current slowdown to a rebound in growth later this year.
FOX Business | Lacker: Time for Fed to Get Out of Mortgage Market
An improving U.S. housing market suggests it is time for the Federal Reserve to stop aiming its stimulus at the real estate sector, Richmond Fed President Jeffrey Lacker said on Wednesday.
CNN Money | Apartment construction slows sharply
A sharp pullback in apartment and condominium construction led to a big decline in overall home building in April, even as single-family home construction remained strong, according to government data released Thursday.
Bloomberg | Wal-Mart Second-Quarter Forecast Trails Estimates
Wal-Mart Stores Inc (WMT)., the world’s largest retailer, forecast second-quarter profit that was less than analysts estimated as consumers struggle amid the slow U.S. economy and higher taxes.
WSJ | Euro Zone Runs Record Trade Surplus
The trade surplus for the 17 nations that use the euro hit its highest level in March since records began in 1999, driven by a sharp rise in exports and a decline in imports.

Econ Comments & Analysis
Real Clear Energy | North Dakota Proves Obama Doesn't Get Energy
The Bakken and Three Forks formations in North Dakota, South Dakota and Montana contain significantly more oil-and-gas resources than previously thought, according to a new U.S. Geological Survey (USGS) reassessment. The survey found an estimated 7.4 billion barrels of undiscovered, technically recoverable shale oil (resources that can be recovered with current technology but whose precise location is unknown), double its 2008 assessment. The reassessment also found three times as much recoverable natural gas than previously believed to exist.
WSJ | Europe's Sinking Feeling
The latest growth figures for the euro zone are in, and pretty they are not. Italy's economy shrank for the seventh quarter in a row. France reported its second consecutive quarter of contraction, pushing it into recession. The currency bloc as a whole shrank for the sixth straight quarter.
Forbes | Don't Cry For Me, America: Comparing Argentina And The United States
Many observers have pondered if the United States is following the same troubled path as Argentina. In the 1940s, Argentina’s Juan Domingo Perón used government agencies for political gain and created a popular form of fascism called Perónism. In the United States, the recent revelation of the Internal Revenue Service targeting political enemies is a bad omen. Are we on an Argentinean course?
Washington Post | The rich can save Social Security, by giving up their checks
In the aftermath of 9/11, many young, strong Americans enlisted, willingly agreeing to sacrifice their lives if necessary to protect our country’s interests. Today’s wealthiest Americans have the same opportunity to put their country’s interests before their own. Politicians should not shy away from asking them to put forth not their lives but what are, for them, their modest Social Security checks.

Blogs
Economist | What the euro has meant
According to Eurostat's first estimate, output in the euro area shrank 0.2% from the fourth quarter of 2012 to the first of 2013 and fell 1% year-on-year. The euro zone has been in recession since the third quarter of 2011.
WSJ | Sorry, World, U.S. Consumers Can’t Save You
To the consternation of U.S. manufacturers and probably Federal Reserve officials, American consumers are being asked — once again — to be Shoppers to the World.

Health Care

2013-05-16T11:06:00.003-04:00

News
Politico | Obamacare repeal central for GOP primary field
Republicans know their repeal votes on Obamacare are symbolic — but repeal remains a potent GOP message on the campaign trail for the 2014 midterm elections.

Econ Comments & Analysis
CRS | Appropriations and Fund Transfers in the Patient Protection and Affordable Care Act (ACA)
Among its many provisions, the Patient Protection and Affordable Care Act (ACA) restructures the private health insurance market, sets minimum standards for health coverage, and, beginning in 2014, mandates that most U.S. residents obtain health insurance coverage or pay a penalty.

Monetary

2013-05-16T11:06:00.001-04:00

News
FOX Business | Inflation Falls in April as Energy Prices Plunge
A sharp drop in gasoline costs led U.S. consumer prices to tumble in April by the most in over four years, while a gauge of underlying inflation was so weak it could worry the U.S. Federal Reserve.

Econ Comments & Analysis
WSJ | How to Let Too-Big-To-Fail Banks Fail
It is now almost three years since the Dodd-Frank Act was enacted to prevent the possibility that taxpayers would have to bail out "too-big-to-fail" banks. Yet there is serious concern that the legislation has not solved the problem. Many have called for new laws to limit the activities of very large banks or even, as in the bill recently introduced by Sens. Sherrod Brown and David Vitter, to cause them to break up. On Wednesday, the House Financial Services Oversight and Investigations Subcommittee held hearings on the continuing bailout issue, at which one of us (John Taylor) testified.
Bloomberg | The Question the Fed Should Be Asking
Ed Koch, the late mayor of New York City, used to stop residents on the street and ask, “How am I doing?”

Taxes

2013-05-16T11:05:00.007-04:00

News
Politico | Roger Wicker: ‘Cold water’ hits tax reform
Mississippi GOP Sen. Roger Wicker, one of the targets of the White House’s charm offensive, said the trio of controversies dominating conversation in Washington this week could hurt efforts to reach bipartisan deals on the budget and tax reform.
Washington Times | Obama pushes out IRS chief, pledges to fix tax agency; move unlikely to end scandal
President Obama forced acting IRS Commissioner Steven Miller to resign Wednesday and said he will cooperate fully as he and Congress try to clean up the tax agency after it admitted targeting conservative groups for extra scrutiny during last year’s campaign season.

Econ Comments & Analysis
Washington Times | An opportunity to abolish the IRS
The news that the Internal Revenue Service (IRS) has targeted Tea Party and conservative groups has come as a huge shock to Republicans. “How could this happen,” Republican lawmakers have wailed. Democrats, however, are only upset that Tea Party groups fought back and that the IRS‘ actions were exposed.
CATO | IRS’s Soaring Budget and Refundable Tax Credits
Chris Edwards showed that the Internal Revenue Service’s budget has been soaring and the main culprit is refundable tax credits. The magnitude of refundable tax cuts is obfuscated in the IRS’s budget because only the refunded portion of the credit shows up as an outlay —the rest is recorded as a reduction in revenues.

Employment

2013-05-16T11:05:00.004-04:00

News
Bloomberg | Jobless Claims in U.S. Jump to Highest Level in Six Weeks
More Americans than projected filed applications for unemployment benefits last week, which may raise concern the slowdown in economic growth is prompting an increase in firings.
CNBC | Longer Benefits Keep People Jobless? Maybe Not
Despite arguments to the contrary, giving unemployed Americans extended jobless benefits of up to 99 weeks didn't prevent them from taking jobs, according a new report.

Budget

2013-05-16T11:05:00.001-04:00

News
Market Watch | U.S. more austere than U.K., Europe: Rosengren
The cuts in government spending in the U.S. have been larger in percentage terms than in the U.K. or the euro area, where fiscal austerity has received more attention, Boston Fed President Eric Rosengren told an audience in Milan.

Econ Comments & Analysis
CRS | Reaching the Debt Limit: Background and Potential Effects on Government Operations
Treasury has yet to face a situation in which it was unable to pay its obligations as a result of reaching the debt limit. In the past, the debt limit has always been raised before the debt reached the limit.

Blogs
Economist | The need for a targeted lending scheme in the euro area
The Free Exchange column makes a strong case in support of view that there is something wrong with provision of credit to small and medium enterprises (SMEs) in the euro area. I agree. However I would go further than suggesting that lending support targeted at the SME sector, as the UK’s funding for lending scheme (FLS) does, is something the ECB could consider; I believe such targeted lending is something that the ECB must adopt, and sooner rather than later.

General Economics

2013-05-15T13:12:00.006-04:00

News
CNN Money | Tesla: The anti-Solyndra
Its electric cars are selling and its stock closed Tuesday up 146% this year. Elon Musk's company is making enough money to repay a $465 million Energy Department loan in the next five years, around half the time that was initially expected.
Market Watch | Euro-zone GDP drops 0.2%, worse than expected
Gross domestic product for the euro zone contracted by a worse-than-expected 0.2% in the first quarter of 2013, keeping the region mired in recession, data from Eurostat, the statistical office of the European Union, showed on Wednesday.
Bloomberg | New York Area Manufacturing Unexpectedly Contracts
The Federal Reserve Bank of New York’s general economic index declined to minus 1.4 this month from 3.1 in April. Readings less than zero signal contraction in New York, northern New Jersey and southern Connecticut. The median projection in a Bloomberg survey called for an increase to 4.
Market Watch | Industrial production drops 0.5% in April
Industrial production slumped 0.5% in April, dragged lower by a big drop in utilities output but also by a drop in manufacturing, the Federal Reserve said Wednesday.
CNN Money | Retirement savers lose $117,000 to unexpected events
Unexpected setbacks, ranging from stock market declines to suddenly supporting an adult child, have taken a major hit to Baby Boomers' retirement savings, according to a recent survey.

Econ Comments & Analysis
Real Clear Markets | America's Growing Social Security Disability Problem
The latest Social Security Administration data document that Social Security Disability Insurance (SSDI) rolls reached a record high of 8.85 million in March 2013, an increase of 1.6 million or 21 percent since the start of the Great Recession in 2007.