James Pethokoukis

Tracking the ‘Nanny State’ deficit

June 29, 2009

From Ed Yardeni:

Meanwhile, the “Nanny State Deficit” soared to a record $740.9bn (saar). It is simply the gap between the social benefits provided by the government minus the payroll taxes paid by employees and employers to pay for them. This deficit was close to zero at the start of 2001, the start of the data in the monthly personal income release. Such benefits were equivalent to 34.1% of wages and salaries in May. That’s a record high and well above readings of 10% before the start of the Great Society in the mid-1960s.

America, don’t let this happen to you!

June 29, 2009

Stick with me on this. The WSJ outlines three economic options for Germany, whose trade-based economy has fallen nearly 7 percent during the past four quarters: 1) do nothing and wait for the global economy to pick up; 2) increase domestic consumption via higher union wages; 3) innovate!

Cap-and-trade update

June 26, 2009

From a source: “I think that because of the nature of backroom deals this has a decent chance of passing. However due to the large public outcry, is has a decent chance of failing.” Again very close …

Cap-and-trade update

June 26, 2009

It is turning out to be a very, VERY close vote in the House of Representatives. Some of the moderate Rs who were going to vote for it are weakening — like Mary Bono Mack of California. Earlier, it looked like Speaker Pelosi had the votes but was trying to get a big enough margin that politically vulnerable Ds could vote fopr it …now I think the issue is finding enough votes, period. Big gamble for Pelosi might be a bridge too far …

Breaking the U.S. economy’s viscious cycle …

June 26, 2009

From the great David Goldman:

The negative multiplier occasioned by the retrenching of consumers (lower spending, more unemployment, lower incomes, lower spending in a vicious cycle) is stronger than the Keynesian multiplier from government spending (more government boondoggles for construction unions, more spending).

What is the cap-and-trade bill?

June 26, 2009

This is a smart summary: “Waxman-Markey is the climate policy equivalent of Sarbanes-Oxley financial regulation, guaranteeing extensive new bureaucracy and substantial economic cost to the productive economy while achieving few of its stated objectives. And the “cap and trade” system at the heart of the bill is riddled with so many loopholes that it should be considered more of a “hairnet and giveaway.”

More evidence ‘stimulus’ doesn’t work too well

June 26, 2009

From Action Economics (bold is mine):

Today’s U.S. reports revealed a bigger May income boost than we assumed from recent stimulus legislation, but a lower service consumption trajectory nevertheless, to leave a remarkable surge in the savings rate and a slightly weaker trajectory for aggregate demand as we approach mid-year.  We also saw a small upward bump in the Michigan sentiment index in June as the various confidence measures post gains from Q4-Q1 lows, though confidence remains remarkably lean. The soaring savings rate shows that households are still bracing for the worst despite improving market conditions, as they hoard distributed stimulus benefits and hence truncate some of the “stimulative” effects.

Why is clean/green energy the next big thing …

June 26, 2009

and not genetic engineering, nanotechnology, artificial intelligence, robotics or something else that Washington isn’t focusing on? Just asking …

Here is what’s wrong …

June 26, 2009

From IHS Global: “Reduced wealth, high debt, tight credit, and a weakening labor market are all weighing on consumers. Wages and salaries were down in May, and have fallen in four out of five months this year. And higher gasoline prices are biting into spending power.”