In the Water, In the Air: Tuesday, December 10, 2013.

FISCAL FOLLIES -- DECEMBER 2013 CONTINUING RESOLUTION

Budget deal is sealed (Russell Berman, Erik Wasson and Mike Lillis, The Hill, 12/10).

House, Senate negotiators reach budget deal (Lori Montgomery, The Washington Post, 12/10).

DEFICITS AND DEBT

Five Good Ideas for a Budget Deal (FixGov blog / Brookings Institution, RealClearPolicy, 12/09).

ECONOMIC REPORTS

Is This Time Different? The Slowdown in Healthcare Spending (Amitabh Chandra, Jonathan Holmes and Jonathan Skinner, The National Bureau of Economic Research, 12/11).

Why has the US recovery been so slow? This chart suggests it’s not because of Obamanomics (James Pethokoukis, AEIdeas, 12/11).

Bailing out General Motors cost the US government $11 billion and it was worth every penny (Tim Fernholz, Quartz, 12/10).

Why the Rent Feels Too Damn High—in 1 Graph (Jordan Weissmann, The Atlantic, 12/09).

More Americans are stuck in housing purgatory (Nin-Hai Tseng, CNN Money, 12/10).

Why Is Everybody Sitting on Huge Piles of Cash? (Barry Ritholtz, Bloomberg, 12/10).

ECONOMICS 101

Health Care's Third-Party Spending Trap: Contrary to "conventional wisdom," health insurance—private or otherwise—does not make health care more affordable (Jeffrey A. Singer, Reason.com, 12/10).

THE NATURE OF POLITICS

Why Machiavelli Still Matters (John T. Scott and Robert Zaretsky, The New York Times, 12/09).

REVENUE-SIDE REFORM

Paying for “Tax Extenders” Would Shrink Projected Increase in Debt Ratio by One-Third (Chuck Marr and Nathaniel Frentz, Center on Budget and Policy Priorities, 12/09).

Expiring State and Local Tax Deduction: State Impact (Jeremy Ratner, The Pew Charitable Trusts, 12/09*).

ATR Supports Permanent End to Annual Medicare Doctor Bailout (Ryan Ellis, Americans for Tax Reform, 12/09).

SPENDING-SIDE REFORM

Rep. Tim Griffin — Standing Athwart ‘Pacman’ Yelling ‘Stop’ (Andrew Stiles, Doublethink Online, 12/09).

MIXED-SIDE AND REGULATORY REFORM

Republicans Are Right: Obamacare Is Redistribution (Jonathan Cohn, New Republic, 12/09).

Mandating higher minimum wage will hurt employees and economy (Steve Caldeira, The Hill, 12/09).

The Minimum Wage Ain’t What It Used to Be (David Neumark, Economix / The New York Times, 12/09).

Raise the Federal Minimum Wage (But Not Too Far) (Richard Posner, The Becker-Posner Blog, 12/08).

How to Really Rein in the Banks (Hester Peirce, US News & World Report, 12/09).

If We're Lucky Volcker Rule Will Make Banks Less Transparent (Matt Levine, Bloomberg, 12/09).

Will the Volcker Rule crush Goldman Sachs? (Stephen Gandel, CNN Money, 12/09).

Volcker Rule Is a Puzzle That Will Take Years to Understand (Rana Foroohar, Time / Business & Money, 12/10).

GROWTH AND JOBS

Obama can't solve the jobs problem (Glenn Harlan Reynolds, USA Today, 12/09).

How to Keep Workers Unemployed (The Wall Street Journal, 12/11).

The Real Jobless Rate (Gene Epstein, Barron's, 12/07).

Sorry Henry Blodget, The Rich DO Create Nearly Every Job (John Tamny, RealClearMarkets, 12/10).

Unemployment: Who’s the Real Scrooge? (Jonathan S. Tobin, Commentary, 12/10).

Rand Paul Gets the Scrooge Award (Ruth Marcus, RealClearPolitics, 12/11).

Krugman's Unemployment Answer Stares Him In the Face (Diana Furchtgott-Roth, RealClearMarkets, 12/10).

MOBILITY AND EQUALITY OF OPPORTUNITY

Inequality: Obama picks the wrong war (Rich Lowry, The New York Post, 12/09).

GOVERNMENT FINANCE AND FINANCIAL POLICY

‘Seven percent solution’ backs Bernanke into a corner (John Crudele, The New York Post, 12/09).

Get ready, here it comes: A December taper (Steve Liesman, CNBC, 12/10).

PUBLIC PENSIONS -- ILLINOIS

Robbing Illinois's Public Employees (David Dayen, The American Prospect, 12/09).

GLOBAL ECONOMY -- CHINA

Think American Debt Is Bad? Try China (Benjamin Carlson, RealClearWorld, 12/10).

GLOBAL ECONOMY -- BRITAIN

Let's admit it: Britain is now a developing country (Aditya Chakrabortty, The Guardian, 12/09).

In the Water, In the Air: Monday, December 09, 2013.

FISCAL FOLLIES -- DECEMBER 2013 CONTINUING RESOLUTION

Budget deal expected this week amounts to a cease-fire as sides move to avert a standoff (Lori Montgomery, The Washington Post, 12/08).

Analysis: U.S. budget deal could bring truce, minimize shutdown threats (David Lawder and Richard Cowan, Reuters, 12/08).

DEFICITS AND DEBT

Stanley Druckenmiller: An Unsustainable Financial Situation (RealClearPolitics, 12/09).

Why Congress Needs a New Budget Process (Patrick Louis Knudsen, The Heritage Foundation, 12/05).

POLITICAL STUDIES

Why Government Institutions Fail to Deliver on Their
Promises: The Public Choice Explanation (Veronique De Rugy, Mercatus Center -- George Mason University, 12/04).

ECONOMIC REPORTS

Heritage Employment Report: Slow Recovery Continues in November (James Sherk and Salim Furth, Ph.D., The Heritage Foundation, 12/06).

The Distribution of Household Income and Federal Taxes, 2010 (Congressional Budget Office, 12/04).

Curb Your Enthusiasm About An Improved Jobs Market (Louis Woodhill, RealClearMarkets, 12/09).

ECONOMICS 101

The Gospel According to JCPenney (Michale Gerson, RealClearPolitics, 12/10).

Are You Riding the Gravy Train? (Steve Tobak, Fox Business, 12/09).

SPENDING-SIDE REFORM

America’s clash of generations is inevitable (Robert J. Samuelson, The Washington Post, 12/08).

Making the poor — and the U.S. — poorer still (Robert E. Rubin, Roger C. Altman and Melissa Kearney, The Washington Post, 12/08).

Wage subsidies (Noah Smith, Noahpinion, 12/07).

The sequester really was a good idea (Tyler Cowen, Marginal Revolution, 12/09).

The Punishment Cure (Paul Krugman, The New York Times, 12/08).

The Facts Are In, More Government Means Less Growth (Jeffrey Dorfman, RealClearMarkets, 12/09).

By George, Britain’s Austerity Experiment Didn’t Work! (John Cassidy, The New Yorker, 12/07).

GOVERNMENT FINANCE AND FINANCIAL POLICY

Bank on it: The Fed is a friend (Michael ivanovitch, CNBC, 12/08).

The Fed’s scandalous monetary policy (Scott S. Powell, The Washington Times, 12/08).

Free Money! Then Free The Rest Of The Economy (Harry Binswanger, Forbes, 12/05).

GLOBAL ECONOMY

As Democracy Grows So Does Global Corruption (Patrick Smith, The Fiscal Times, 12/09).

Why the Trade Deal in Bali Was a Game-Changer (Daniel W. Drezner, Foreign Policy, 12/09).

GLOBAL ECONOMY -- IRELAND

Irish exodus casts shadow on recovery from financial crisis (Jamie Smith, Financial Times, 12/09).

Cheer Up: World Growth Is Accelerating (Jim O'Neill, Bloomberg, 12/08).

GLOBAL ECONOMY -- GREECE

Greece's Dismal Demographics (Nikos Konstandaras, The New York Times, 12/09).

LOCAL GOVERNMENT BANKRUPTCY

In Shepherding Detroit Bankruptcy, Lawyer Tackles a Job He Didn’t Ask For (Monica Davey and Bill Vlasic, The New York Times, 12/08).

MOBILITY AND EQUALITY OF OPPORTUNITY

When is inequality harmful? When it's caused by cronyism (Timothy P. Carney, The Washington Examiner, 12/06).

The Great MacGuffin (Mickey Kaus, The Daily Caller, 12/09).

Income Inequality’s Ripple Effect (John Podesta, Politico Magazine, 12/09).

The myth of the American Dream (Steve Hargreaves, CNN Money, 12/09).

FACTION

America’s Partisan Peril (Mohamed A. El-Erian, Project Syndicate, 12/09).

In the Water, In the Air: Thursday, December 05, 2013.

FISCAL FOLLIES -- DECEMBER 2013 CONTINUING RESOLUTION

Budget Deal Looks Likely, But Passage Uncertain (Meredith Shiner, Roll Call, 12/04).

ECONOMIC REPORTS

Sorry, the U.S. Growth Surge Is Just a Blip (Peter Coy, Bloomberg Businessweek, 12/05).

ECONOMICS 101

Keynesians Revive a Depression Idea (Caroline Baum, Bloomberg, 12/04).

Papal Bull: Why Pope Francis Should Be Grateful For Capitalism (Louis Woodhill, Forbes, 12/04).

REVENUE-SIDE REFORM

Why Should the Tax Code Favor Commuters Who Drive? (Citizens for Tax Justice, 12/04).

Reform the Research Tax Credit -- Or Let It Die (Citizens for Tax Justice, 12/04).

SPENDING-SIDE REFORM

Pandering to seniors over Social Security (Charles Lane, The Washington Post, 12/04).

Three Quick Notes on the Basic Income (Matt Bruenig, Demos, 12/04).

The Great Recession, tax policy, and the future of charity in America (Arthur C. Brooks, AEI, 12/03).

MIXED-SIDE AND REGULATORY REFORM

The Problem With 'Job Creation' (James Huffman, Defining Ideas, 12/04).

Americans Want a Great Big Increase in the Minimum Wage (John Nichols, The Nation, 12/05).

GOVERNMENT FINANCE AND FINANCIAL POLICY

We Were Right: QE Can't Cure Our Economy (E21, 12/04).

HOUSEHOLD FINANCE -- STUDENT DEBT

The Student Loan Debacle: a Clear Moral Hazard (Gary Jason, Minding the Campus, 12/03).

GLOBAL ECONOMY -- GLOBAL CURRENCY

Age of Austerity Nearing End May Boost Global Economy (Simon Kennedy, Bloomberg, 12/05).

LOCAL GOVERNMENT BANKRUPTCY -- DETROIT

A wake-up call from Detroit (The Times editorial board, Los Angeles Times, 12/04).

In Detroit, there's just no money (Nolan Finley, The Detroit News, 12/05).

Who Really Betrayed Detroit? (Steven Malanga, City Journal, 12/04).

Why Detroit Needs Bankruptcy (Stephen Eide, Politico Magazine, 12/04).

What Michigan and Suburbanites Owe Detroit (Frank H. Shafroth, Bloomberg, 12/04).

MOBILITY AND EQUALITY OF OPPORTUNITY

Obama: 'Profoundly unequal' economy a 'fundamental threat' (Justin Sink, The Hill, 12/04).

Obama’s big inequality speech: short on facts and vision (James Pethokoukis, AEIdeas, 12/06).

Why Obama Can't Rescue the Middle Class (Eric Pianin, The Fiscal Times, 12/05).

The President on Inequality (The Editorial Board, The New York Times, 12/04).

The War of the Wages (The Wall Street Journal, 12/05).

Obama’s Shallow Inequality Speech And The Presidency That Might Have Been (Ben Domenech, The Federalist, 12/05).

Presidential economics (Russ Roberts, Cafe Hayek, 12/04).

FACTION

Segregation by Culture (Claude S. Fischer, Boston Review, 12/04).

In the Water, In the Air: Wednesday, December 04, 2013.

FISCAL FOLLIES: DECEMBER 2013 CONTINUING RESOLUTION

Government shutdown part 2? Democrats line up against stopgap spending bill (Mike Lillis and Erik Wasson, The Hill, 12/03).

FISCAL FOLLIES: FEBRUARY/MARCH 2014 DEBT LIMIT

Why the Next Debt Limit Debacle Might be Worse (Ben Harris, Tax Policy Center, 12/03).

DEFICITS AND DEBT

Washington Is In Denial About the Budget Deficit (Ron Haskins, RealClearMarkets, 12/04).

ECONOMIC REPORTS

Slate Writer Is Dead Wrong to Root Against Community Banks (Rob Blackwell, American Banker, 12/03).

ECONOMICS 101

War on the Poor: The welfare state has eroded the culture of individual initiative (John C. Goodman, Ph.D., Psychology Today, 12/03).

Where Is the Love? (Nicholas D. Kristof, The New York Times, 11/27).

Is Poverty Really The Result Of Bad Luck? (John Goodman, Forbes, 12/03).

What the Pope Got Right About Capitalism (Robert Scheer, The Nation, 12/03).

Pope Francis Is No Economist (Bill Frezza, Forbes, 12/03).

Love the poor? Pope called a commie for obeying Jesus (Al Lewis, MarketWatch, 12/04).

REVENUE-SIDE REFORM

The Corporate Tax Rate Debate: Lower Taxes on Corporate Profits Not Linked to Job Creation (Center for Effective Government, MonthSlashDay).

Give Families’ Second Earners a Break (Peter R. Orszag, Bloomberg, 12/03).

Big picture on corporate tax reform (Walter Glavin, The Hill, 12/03).

MIXED-SIDE AND REGULATORY REFORM

Left and Right Are Both Wrong About Regulation (Cass R. Sunstein, Bloomberg, 12/03).

Minimum Wage Boosters Don't Know Basic Economics (Diana Furchtgott-Roth, RealClearMarkets, 12/04).

GOVERNMENT FINANCE AND FINANCIAL POLICY

Credit Bubble Bulletin: Fed fails to learn (Doug Noland, Asia Times, 12/02).

HOUSEHOLD FINANCE -- STUDENT DEBT

Students Blame Colleges for Debt Woes (Quick Takes, Inside Higher Ed, 12/04).

GLOBAL ECONOMY

What’s the Problem With Advanced Economies? (Kenneth Rogoff, Project Syndicate, 12/04).

PUBLIC PENSIONS -- ILLINOIS

Long way to go after pension deal (Editorial, Chicago Sun-Times, 12/03).

LOCAL GOVERNMENT BANKRUPTCY

Detroit Is Bankrupt: What Now? (Anna Clark, Pacific Standard, 12/03).

Detroit Bankruptcy Bankrupts Democracy (John Nichols, The Nation, 12/03).

Lesson from Detroit: Get ready for more muni mess (Jeff Cox, CNBC NetNet, 12/04).

MOBILITY AND EQUALITY OF OPPORTUNITY

Rand Paul offers 'Freedom Zones' to save bankrupt Detroit (Paul Bedard, Washington Examiner, 12/04).

About the Demos/Rockefeller convening on New Economic Paradigms (Demos).

FACTION

The Center Cannot Hold (Thomas B. Edsall, The New York Times, 12/03).

In the Water, In the Air: Tuesday, December 03, 2013.

DEFICITS AND DEBT

The Next GOP Crackup?: Republican spenders want to break the annual budget caps (The Wall Street Journal, 12/03).

ECONOMIC REPORTS

America's Microbank Problem (Matthew Yglesias, Slate, 12/02).

No, America Doesn’t Have Too Many Banks (Sean Davis, The Federalist, 12/03).

ECONOMICS 101

Nationality Swapping: The Latest Craze Of The World’s Ultra Rich (Tara Loader Wilkinson, Wealth-X, 11/20).

Robert Bartley's 'The Seven Fat Years' - One of the Greatest Economics Books Ever Written (John Tamny, RealClearMarkets, 12/03).

REVENUE-SIDE REFORM

Please, there is a better way to help workers than the minimum wage, and everybody knows it (James Pethokoukis, AEIdeas, 12/03).

Primer: Minimum Wage and Combating Poverty (Ben Gitis, American Action Forum, 12/03).

SPENDING-SIDE REFORM

Please, there is a better way to help workers than the minimum wage, and everybody knows it (James Pethokoukis, AEIdeas, 12/03).

GLOBAL ECONOMY

The Coming Global Wealth Tax: Indebted governments may soon consider a big one-time levy on capital assets (Romain Hatchuel, The Wall Street Journal, 12/03).

America's greatest export is its debt (Frances Coppola, The Week, 12/03).

GLOBAL ECONOMY -- JAPAN

Japan in a Post-Growth Age (Norihiro Kato, The New York Times, 12/02).

PUBLIC PENSIONS

Detroit Pensions: Unsafe at Any Speed? (Megan McArdle, Bloomberg, 12/02).

MOBILITY AND EQUALITY OF OPPORTUNITY

Training for Success: A Policy to Expand Apprenticeships in the United States (Ben Olinsky, Center For American Progress, 12/02).

Getting Back to Full Employment: A Better Bargain for Working People (Jared Bernstein and Dean Baker, Center for Economic and Policy Research).

FACTION -- GRIDLOCK

The Congress that would rather fight than pass bills (Editorial Board, The Washington Post, 12/02).

In the Water, In the Air: Monday, December 02, 2013.

DEFICITS AND DEBT

US and European governments gained $1.6 trillion from low interest rates on the backs of over 50 year old savers and pensions (Brian Wang, Next Big Future, 12/01).

ECONOMIC REPORTS

Tally of U.S. Banks Sinks to Record Low: Small Lenders Are Having the Hardest Time With New Rules, Weak Economy and Low Interest Rates (Ryan Tracy, The Wall Street Journal, 12/02).

ECONOMICS 101

A JP Morgan economist (in effect) responds to Pope Francis (James Pethokoukis, AEIdeas, 12/02).

We Have a Failure of Economic Vocabulary (Robert Samuelson, RealClearMarkets, 12/02).

REVENUE-SIDE REFORM

CEOs want you -- to fix the debt (Scott Klinger, Los Angeles Times, 12/01). 

A Value-Added Tax Plan All Sides Can Embrace (Albert R. Hunt, Bloomberg, 12/01).

Which Corporate Taxation for America? (Laura Tyson, Eric Drabkin and Ken Serwin, Project Syndicate, 11/30).

Internet sales tax would level start-ups: Opposing view (Steve DelBianco, USA Today, 11/28).

GOVERNMENT FINANCE AND FINANCIAL POLICY

The QE Postmortem Delivered Ex Ante (Vince Foster, Minyanville, 12/02).

GLOBAL ECONOMY -- CHINA

America’s Role as Consumer of Last Resort Goes Missing (Simon Kennedy, Bloomberg, 12/02).

GLOBAL ECONOMY -- EUROPE

Are Europeans Giving Up on Europe? (Moises Naim, The Atlantic, 11/29).

GLOBAL ECONOMY -- CHINA

Will a Rising China Be a Responsible China? (Frank Ching, RealClearWorld, 12/02).

Is China Trading a Fly Zone for a Growing Economy? (Patrick Smith, The Fiscal Times, 12/02).

In the Water, In the Air: Friday, March 1, 2013.

Friday, March 1, 2013.  A question of courage! maybe.

A QUESTION OF COURAGE! MAYBE: Steve Rattner writes in The New York Times that even though the sequester involves only a 2.3 percent reduction in federal spending, that reduction will fall disproportionately on various spending programs.  Because of this, various spending programs will see a greater than 2.3 percent reduction in their specific budgets.  (Steven Rattner, The New York Times, Breaking Down the Budget Mess, Feb. 28, 2013.)

Mr. Rattner provides the following table of helpful data:

	Spending As % of Total Budget	Cuts As % of Total
Defense	14%	38%
Non-Defense	14%	44%
Entitlements	48%	4%
Other Mandatory	13%	1%
Interest	11%	13%

This data doesn't quite tell the whole story, though -- those "Cuts as a % of Total" look like pretty high percentages, but we know that the entire Defense budget isn't being cut by 38%.  38% of the total being cut -- which is, as Mr. Rattner points out, 2.3 percent of federal spending -- is a much smaller percentage of the entire Defense budget than 38%.  Fortunately, Mr. Rattner's data allows us to estimate the actual percentages of various budgets being cut as follows*:

	Spending As % of Total Budget	Cuts As % of Total	Cuts As % of Each Budget
Defense	14%	38%	6.2%
Non-Defense	14%	44%	7.2%
Entitlements	48%	4%	0.2%
Other Mandatory	13%	1%	0.2%
Interest	11%	13%	2.7%

* i.e., the "Cuts As % of Total" multiplied by 0.023 to determine the percentage of the total federal budget represented by the cut for each spending program, then divided by the "Spending As % of Total Budget" to determine the percentage of each spending program's budget represented by the cut for each spending program

So, based on Mr. Rattner's numbers, the sequester will cut the Defense budget by 6.2%.

Even these numbers may appear scarier than they are, though--Mr. Rattner concedes that "these cuts are based on projected higher levels of spending, not today's levels of spending."  So, that 6.2% is relative to a budget scheduled to increase by some percentage over this year's budget.  Let's say, for example, that the budget for defense spending had been set to increase next by 2.2% over this year's budget.  In that case, relative to this year's budget, the actual cut would be more like 4%.  However, without knowing what those currently-scheduled higher levels of future spending are for each spending program (and without accounting for a projected rate of inflation), this data does not allow one to calculate the percentage of each spending program's budget for this year that the sequester will end up cutting in actual, absolute dollars.

At any rate, Mr. Rattner contends that this sort of deficit reduction package, which "so disproportionately inflicts its pain", is "policy making at its worst."  He says that in dealing with our federal deficit, we need "a balanced approach in which everything is on the table, including more revenues and entitlements," and provides some specific ideas regarding tax reform and Medicare reform.  He concludes by saying:

All the blather about whose idea the sequester was or whether more golf would help the process is just a sideshow. The core question is whether our political leaders have the courage to compromise their absolutist positions and agree on a long-term balanced approach that ends budget making by crisis and removes the dark cloud of uncertainty that hovers over our economy.

Well, maybe.

But what if our political leaders didn't need to have any courage in order to end our "budget making by crisis"?

What if we could change the way we establish our spending-side and revenue-side policies so that our budgeting problems would just work themselves out in the natural course of events, under our ordinary and familiar law-making process?  What if we could make a modest change to our budgeting processes, and by doing so ensure that our country behaves in a fiscally responsible way, in perpetuity?

Because it is possible for us to do exactly that. 

Maybe the real question is...

Have you heard about the Solvency Amendment?