The Daily Dish

Good Morning –

In an op-ed this morning, Doug Holtz-Eakin makes the point that the bold selection of Paul Ryan really marks the revenge of the budget nerds. “[Paul] Ryan has a comprehensive grasp of federal budgeting; health, tax, and economic policy; and the relationships among them. For anyone who craves a substance-filled campaign debate over the future of federal policy, there cannot be a better choice.”

What budget nerds do is “make sure the facts add up. They debate alternatives, but ultimately must make a choice. They are impatient with temporizing, delay and distortion.”

Paul Ryan elevates the discussion. He has “an inspiring and comprehensive vision for the nation,” and “his political brilliance is the capacity to education on a vision, run on a record of accomplishment, and – yes – stand on his feet and talk persuasively about both.”

On our radar: Wednesday: U.S. Housing Recovery: Lessons from Arizona, details here.

Doug’s Daily Economic Outlook

There is no more important aspect of economics than innovation.  The policy fundamentals for innovation are quite varied: access to risk capital, adequate basic research, intellectual property protection, low taxation of the return to risk-taking, an efficient and predictable regulatory regime.  In two crucial areas of innovation – medical technology and information services — the climate for innovation is deteriorating.  Taxes — the medical device tax, the Medicare surtax — the independent payment advisory board, and a struggling FDA — threaten the U.S. leadership in medical  science.  At the same time, the Federal Communications Commission clings to a regulatory model based on poles, wires, and desktop phones in a world characterized by bytes, wi-fi, and multi-use devices.  Maintaining a strong innovation environment is just as important the more visible policy needs like tax reform and entitlement reform.

What we’re reading

Economists see budget impasse blocking growth – Most economists surveyed by USA Today have little faith a divided Congress will adequately address looming tax increases and spending cuts, significantly hampering economic growth will into 2013. (USA Today)

Selection Sets Off Debate on Government – Mitt Romney’s choice of Rep. Paul Ryan of Wisconsin, an uncommonly assertive spokesman for free markets and small government, to be his running mate on the Republican ticket has highlighted the differences between them and President Barack Obama – and nowhere is the clash more apparent than on the subject of Medicare. (WSJ)

‘Sequestration,’ today a political football, would cripple Virginia’s economy if it happens – Bearing the brunt would be Virginia’s two most populous, economically important and politically decisive regions – northern Virginia and Hampton Roads. Both have enormous pools of active-duty military, civilian Defense Department employees and contractors, tens of thousands of federal workers and untold others who work for businesses that would suffer in the ripples such draconian layoffs cause. (WaPo)  

Economy Should Be Growing at a Much Faster Pace: Rosenberg – Economic growth is far slower than it would be in a normal recovery, despite ‘gobs of stimulus’ from the government and U.S. Federal Reserve, economist David Rosenberg told CNBC. With gross domestic product growth in the U.S. at just 1.5 percent and Europe and China slowing considerably, investors need to understand that this is no normal recovery from a recession that technically ended three years ago, said Rosenberg. (CNBC)

Summer’s record heat, drought point to longer-term climate issues – Under the most wide-reaching drought since 1956, and torched by the hottest July on record dating from 1895, the United Sates has been under the kind of weather stress that climatologists say will be more common if the long-standing trend toward higher U.S. temperatures continues. Most immediately affected are the nation’s water sources and the people and crops that rely on them. (WaPo)

Obama Mileage Rule Called Coercion For Carmaker Favorites – A proposed rule requiring automakers to double their average fuel economy by 2025 is unrealistic and stemmed from a secret deal favoring companies receiving U.S. government bailouts, according to a report released today by House Republicans. (Bloomberg)

Medicare To Penalize 2,211 Hospitals for Excess Readmissions – Together, these hospitals will forfeit about $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide. With nearly one in five Medicare patients returning to the hospital within a month of discharge, the government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. (Kaiser Health News) 

Oil Gains Amid Concern Mideast Tensions May Curb Supply – Futures climbed as much as 0.9 percent after the U.S. said one of its guided-missile destroyers collided with an oil tanker near the Strait of Hormuz in the Persian Gulf. Israel will hold home defense drills this week as the Haaretz daily reported that the nation is considering a strike against Iran over its nuclear program. Crude has advanced 10 percent since European Union sanctions against Iran took effect last month. U.S. retail sales probably increased in July for the first time in four months, easing concern that economic expansion is faltering. (Bloomberg)

The One Housing Solution Left: Mass Mortgage Refinancing – More than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon. With 13.5 million homeowners underwater – they owe more than their home is now worth – the odds are high that many millions more will lose their homes. (NYT) 

Also From the Forum

Understanding the Multifamily Mortgage Market – Single-family mortgages dominate discussions of the mortgage market and, especially, the housing government-sponsored enterprises (GSEs). But the GSEs have a significant history with the multifamily sector as well. (Paper here)

A Reminder on Tax Fairness – According to the data in the IRS’s report on  “Individual Income Tax Returns 2010,” for the most part, the share and magnitude of taxes paid rises, indeed “progressively,” with income. (Blog here)

The Past and Future of Higher Education Finance – Despite billions of dollars spent over the last four years, the percentage of Americans with a postsecondary degree has barely ticked upward, only two tenths of a percentage point in 2010. (Study here)