The Daily Dish
Good Morning –
David Siegel delivered sobering news to his employees at Westgate Resorts yesterday. Siegel says that, “if any new taxes are levied on me, or my company, as our current President plans, I will have no choice but to reduce the size of this company. Rather than grow this company I will be forced to cut back. This means fewer jobs, less benefits and certainly less opportunity for everyone…The combination of Obamacare and taxes could be a disaster. I would probably just call it a day and that would be a disaster.”CNBC has Siegel’s full email.
A broader warning on the looming fiscal cliff came from Dallas Fed President Fisher who said “short-term fixes to our fiscal and regulatory pathology will not solve the problem of unemployment and economic sluggishness.” Fisher warned that, though businesses “are poised to expand…they will not do so as long as we have a government that cannot resist the temptation to devise a politically convenient patchwork instead of laying out a convincing, reliable, long-term program that job creators and consumers can count on and plan around.” The Fed’s Beige Book also out yesterday. More on that below.
On our radar: The Commerce Department will release August trade data at 8:30 AM. “The gap widened to $44 billion during the month from $42 billion in July, according to the median forecast of 73 economists in a Bloomberg survey. More expensive oil pushed up import prices in September, and claims for jobless benefits rose, figures from the Labor Department may also show.”
Weekly jobless claims also out today at 8:30 AM.
Doug’s Daily Economic Outlook
The vice-presidential debate is center stage. Who knows what they will talk about, but here are three suggestions:
Tax reform. For Mr. Ryan, why are lower rates and a broad base a better way to collect the same ( or more) revenue? What should that base look like? More generally, why is tax reform important beyond having a neat and tidy code? For VP Biden, why is it a good idea to have higher marginal rates on pass thru businesses than corporations? How will you get the rate to the promised 28 percent, and is that low enough?
Medicare. For VP Biden, what is the long run strategy? Is it just provider cuts and the IPAB? What magic will make the program be able to take annual funding slashes? For Mr. Ryan, why Medicare reform, and why now? How will premium support competition bend the cost curve?
Governance. For both, how will you enact reforms? Will it be bipartisan? If so, what is the strategy to get there?
What We’re Reading
Geithner says US economic, financial reforms yielding results, but housing finance needs work – Speaking at a financial conference in Tokyo on Thursday, Geithner said the Obama administration would strive to resolve by the end of the year the impasse with the Congress that threatens to impose a so-called “fiscal cliff of tax increases and deep spending cuts if the two sides do not reach agreement. The U.S. has been relatively successful in managing to clean up the mess left behind by the 2008 financial crisis while not starving the economy of credit, Geithner said. Growth has dragged, though, due to the European crisis and severe draught across the U.S. (WaPo)
U.S. economy growing modestly, Fed report suggests – The Federal Reserve on Wednesday said its business contacts suggest economic activity is still expanding modestly in most regions though pockets of weakness and strained labor markets remain a problem for some districts. In its September Biege Book report, based on anecdotal evidence collected by regional Fed banks, the Fed said hiring conditions were little changed over the several weeks. New York and Chicago however, pointed to a weakening backdrop. Consumer spending appeared to be holding up despite a slack job market, with a number of districts reporting modest gains in retail sales. Still, the pace of growth seemed consistent with the U.S. economy's recent track record of softness. U.S. second-quarter gross domestic product was recently revised down to a paltry 1.3 percent annual rate. (Reuters)
Data show US foreclosure filings fell to 5-year low in September; homes on track down 12 pct. – U.S. foreclosure filings dropped to a five-year low in September as fewer homes were on track to be seized by lenders. It was the second-consecutive monthly decline in filings, although there remains a sharp divergence along state lines, according to a report Thursday by foreclosure listing firm RealtyTrac Inc. (WaPo)
Clean coal projects face political, financial headwinds: report – At least 130 projects that capture and store carbon emissions at coal power and industrial plans must come online by 2020 if the world is to stay on course to keeping the rise in global temperatures below a threshold deemed dangerous by scientists, a new report released Wednesday said. In its 2012 report on the global state of carbon capture and storage (CCS) deployment, the Global CCS Institute warned that reaching the 130-project goal from 16 in the works will be unlikely amid current investment levels and regulatory uncertainty. The institute projected that only 51 of the 59 projects identified in its annual survey may be operational by then and some are unlikely to proceed. (Reuters)
S&P Downgrades Spain, Citing Backtracking on Bank – Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited euro-region peers’ backtracking on a pledge to severe the link between the sovereign and its banks as it considers a second bailout. (Bloomberg)
Also From the Forum
The State by State Impact of ACA Regulations – Since passage of the Affordable Care Act (ACA), the American Action Forum (AAF) has tracked the state of its regulatory implementation. To date, the ACA has imposed a total of $27.6 billion in new regulations – at least $20.4 billion in lifetime costs on private entities and $7.2 billion in increased burdens on state budgets. In this paper AAF examines how this $27.6 billion in new costs break down on a state-by-state level. The data show that five states will endure at least $1 billion in ACA regulatory costs. (Study here)