The Federal Reserve Board has kept overnight interest rates near zero since December 2008 and conducted a large-scale campaign of quantitative easing. The latter has ended — although the issue of reducing its massive portfolio of Treasuries and mortgage-backed securities remains — and the remaining task is to begin to “normalize” monetary policy; i.e. raise interest rates. The exit from extraordinary policy has always been expected to be a difficult matter and yesterday’s Fed announcement is illustrative of the difficulties.
The recent slowdown in the growth rate of national health care spending has been a bit of good news, with only the danger that the slowdown will be reversed (as has happened in the past). Many have tried to attribute the slowdown to Obamacare's delivery system reforms, a claim nicely dissected by Jim Capretta. More likely, the slowdown in part reflects the diffusion of stronger incentives like copays, deductibles, and — in particular — Health Savings Accounts (HSAs).
The Social Security Disability Insurance (SSDI) program is in need of immediate reform. The federal trust fund responsible for funding the program is projected to become insolvent in 2016, and risks immediate benefit cuts to 11.4 million disabled Americans. Potential reforms range from accounting changes (“gimmicks”), to throwing money at the problem (tax increases), to real reforms that control spending.
Exhale. It is over. Saturday, the Senate passed the $1.1 trillion 2015 funding bill known as the “Cromnibus.” But it was not without controversy, particularly because of the inclusion of a provision amending the Dodd-Frank financial reform act. As described by the progressive Huffington Post "One controversial provision in the spending bill weakens the Dodd-Frank Act's restrictions on banks that want to trade in the same sorts of risky derivatives that sparked the financial meltdown of 2008, and allows the banks to back their bets with taxpayer-backed insurance.
Everything, seemingly, has been sold as creating jobs or “stimulus.” So it should hardly be surprising that over the past year several studies have claimed that the Affordable Care Act's (ACA) Medicaid expansion will create new jobs and economic activity. By implication, states that decline the expansion are needlessly forgoing jobs and economic growth that could be obtained at no cost. T
The House will turn to passage of the so-called “cromnibus” — a cross between a full-year omnibus bill (for all departments except the Department of Homeland Security (DHS)) and a continuing resolution (for DHS as a penalty for the president’s executive action on immigration) through the end of February, 2015. After extensive negotiations, it is expected to pass both houses of Congress and solve most 2015 funding issues so that the next Congress starts with a clean slate.
In the aftermath of the financial crisis and Great Recession, U.S. housing markets were beset by two problems. In some areas; notably Ohio, Michigan, and other parts of the center of the country; poor economic growth had driven homeowners to use their homes as ATMs and the pricey first plus second mortgages proved too difficult to service as the economy worsened further. In the “sandy states” of California, Nevada, Arizona, Florida and the like, a boom in housing prices lured buyers into highly leveraged housing financial packages that proved unsustainable when the house-price bubble burst. Homeowners found themselves “underwater,” with homes worth less than the mortgage balance.
Last week, protestors in 190 cities demanded the fast-food industry pay a “living wage” and the federal government increase the minimum wage to $10.10 or even $15 per hour. Advocates often claim that a central benefit of raising the minimum wage is that it would save the federal government money. These supporters claim that as low wage workers get a raise their dependence on public assistance will fall causing federal spending on safety net programs to decrease as well. Sounds great, right? Not quite. In new research, AAF finds that raising the federal minimum wage fails to significantly reduce federal outlays, and the policy’s detrimental costs to the labor market would far outweigh any fiscal savings.
After contradictory decisions were handed down in two separate court cases involving the Affordable Care Act (King v. Burwell and Halbig v Burwell) on the same day, it became apparent that the main question in these cases would ultimately need to be settled by the Supreme Court. And on November 7th, at least four Justices voted to hear King v. Burwell.
The November National Employment Report will be released at 8:30. Thus far in 2014, payroll employment gains have averaged 219,000 jobs per month, while the unemployment rate has declined to 5.8 percent. The October report showed 214,000 jobs and increases in labor force participation. The remainder was less impressive as growth in hours, wages, and payrolls continued to disappoint. Year-over-year hours growth was 0.5 percent in October, while year-over-year growth in average hourly earnings barely outpaced inflation at 2.0 percent.