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President Obama is supposed to send his budget proposal to Congress today and the word is that he wants an increase of $74 billion in discretionary spending above the sequester level that is the current legal baseline for spending. This would be a seven percent increase above current levels. While seven percent sounds like a very large increase, the $74 billion might not sound all that large. However, it is only the tip of the iceberg.
Based on the most recent projections from the Congressional Budget Office, mandatory spending is expected to increase by $220 billion in the next fiscal year…

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Mitt Romney showed once again that he is truly a class act. In his announcement that he will not be running for president in 2016, he stated, “I believe that one of our next generation of Republican leaders, one who may not be as well known as I am today, one who has not yet taken their message across the country, one who is just getting started, may well emerge as being better able to defeat the Democrat nominee.”
This was unusual political humility. But let me highlight this specific phrase: “one who has not yet taken their message across the country.”
Message.
If there’s anything the GOP…

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For more than half a decade now, the mighty economic hopes of all of Europe have been almost totally dependent on Germany (the UK to a lesser extent). When the continent fell into recession in 2012, it was relatively mild in blended terms because Germany only slowed. That meant the ECB could focus its massive intrusions on the “periphery”, the PIIGS mostly, aiming squarely at its very own banks to somehow force them to stop paying attention to national boundaries.
None of it worked, as the ECB has now implicitly admitted (see Mario Draghi’s latest press conference). Instead of fostering…

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According to the National Bureau of Economic Research, the official arbiter of US business cycles, the “great recession” ended in June 2009. But in the half decade since then, the US economy has experienced the feeblest recovery on record with real GDP growing at a rate of just 2.4%. Not surprisingly, the job market has also recovered slowly. Total employment did not recover to its pre-recession peak (January 2008) until last May. Against this backdrop, it is not surprising that the business press was delighted to report earlier this month that business establishments added more jobs (nearly…

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At the beginning of January, Governor Jerry Brown stated in his 2015 State of the State/Inaugural address that “California has seen more than 1.3 million new jobs created in just four years and the unemployment rate has dropped to 7.2%.” This statement perfectly encapsulates the elation so many in Sacramento have when talking about the Golden State’s economy. But if you dig deeper, the story isn’t as celebratory.
It is true that California’s job market has improved substantially from the depths of the recession. California has more than recovered all the jobs it lost during the downturn…

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The art of successful monetary policy is in the timing. Measures that might have worked a year or two ago might not be very effective today. Sadly, this would seem to be the case with the European Central Bank’s (ECB’s) latest monetary policy action. Bold as that action might appear to be, it comes at a time when Europe’s economic and political problems have become deeply entrenched. Late in the day, it is too much to expect that monetary policy alone will succeed in turning around Europe’s moribund economy or in improving the dismal state of its politics.Ever since the onset of the European…

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Monday was Australia Day. To celebrate, the United States ought to take a page from Australia’s regulatory reform book. Australia is in the midst of a red-tape cutting initiative, which includes discarding unnecessary regulations and taking greater care in adopting new ones. The United States would greatly benefit from a similar regulatory reform effort.Australia’s prime minister, in announcing the round of regulatory reforms, noted that “Red tape is what officials wrap people in when they think that government knows best.” To loosen that overly constrictive regulatory wrapping, on two…

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The biggest reason to be concerned about polarization in the nation’s capital is that much of the public’s business lies dormant. Most observers believe that there are public benefits to be had by enacting new trade authority, an immigration bill, debt-reduction, Medicare reform, and many other improvements. But one of the most important opportunities relates to the nation’s infrastructure - its roads, bridges, ports, airports, and other investments that help the the private sector and government to conduct its business. We have a lot to gain by maintaining or even improving these public…

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In his recent State of the Union speech, President Obama extolled the virtues of “middle class economics,” as a means of spurring economic growth and creating a more inclusive economy. Just what this entails is unclear, but President Obama says this “means helping folks afford child care, college, health care, a home, retirement, and my budget will address each of these issues, lowering the taxes of working families and putting thousands of dollars back into their pockets each year.” On closer examination, the policy agenda the president is laying out is a tired mix of class warfare, new…

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President Obama has declared the economic crisis over - and for the United States, maybe it seems that way. But for most other countries, not so much. Their recoveries are faltering. The obvious question is whether the global weakness will infect the U.S. expansion. This is a crucial footnote to Obama’s optimism.
Two major reports - one from the World Bank, the other from its sister organization, the International Monetary Fund - recently lowered estimates for global economic growth in 2015. Said the IMF: “The United States is the only major economy for which growth projections have been…

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Deflation is a situation where the prices of goods and services are falling on average, so that most things we buy are getting less expensive over time. Central bankers and politicians around the world are pursuing policies designed to create inflation because of an irrational fear of deflation. Rather than trying to maintain stable prices, these policy makers believe they must maintain a safe cushion of inflation, generally taken to be inflation of 2 percent per year, to ensure that if their policies miss the mark we do not accidentally get deflation. Yet, the idea that deflation would have…

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On Thursday, January 15th, the Swiss National Bank (SNB) discontinued its three year effort to maintain its minimum currency floor of the Swiss franc. In a single day the move sent the Swiss Franc (SWF) climbing a massive 21% against the U.S. dollar and 41% against the euro. The move sent shockwaves of unprecedented ferocity through the massive foreign exchange (FX) market, which is by far the largest, and most highly levered, trading market in the world. The monetary tsunami threatened both FX participants and even their brokers. But more importantly, even as the rest of Europe looks to…

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It’s too easy to label President Obama’s State of the Union as more tax-the-rich and redistribution. We know that. Rather than name-calling, Republicans must draw a clear line in the sand between their worldview and Obama’s. I’d call that line commonsense economics.
First, you can’t create a new business or sustain an existing one without the seed corn and nourishment of capital investment.
Second, only businesses create jobs. You can’t have a job without a business.
Third, jobs create all incomes, including middle-class incomes.
Fourth, incomes create family and consumer spending.
Okay? This…

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In November 2011, “inflation” in the EU was measured at 3.3%, while it was a touch lower for the defined “Euro area.” Thus began both an age of great monetary experimentation and no appreciable effects on the one measure intended to “benefit” the most from it all. The ECB has engaged literally trillions in “stimulus” of almost every form imaginable, from buying covered bonds (instruments where banks own their own liabilities) to traditional interest rate maneuvers to simple and dramatic flooding the zone with LTRO’s. And in that time, through all of it, the inflation rate in Europe has…

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President Barrack Obama’s sixth State of the Union address on Tuesday night was not his best. What it lacked in passion was made up for with sheer fantasy.
He began with assurances that all is well - as all presidents do - and then pronounced that such success proved that “middle-class economics works.”
If you are wondering what middle-class economics means, the president said it “means helping folks afford childcare, college, healthcare, a home and retirement.” My father, who in a lifetime of 6 and 7-day work weeks never made more than $150 a week, would have been offended at the suggestion…

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