The Ticker Quick Views on Politics, Economics and Finance
(Corrects chart description in third paragraph.)
With everyone in Washington experiencing sea-bass-induced euphoria, we're talking again about a "grand bargain" to replace the sequestration and shrink the federal budget deficit. And that means we’re talking about using the chained consumer-price index, a lower and more accurate inflation measure, to modestly raise taxes and cut Social Security benefits over time.READ MORE
The job market is doing better. It's also not doing nearly well enough.
The Labor Department reported today that nonfarm employers added an estimated 236,000 jobs in February. That brings the three-month average to about 191,000, enough to accommodate new entrants to the labor force and even bring down unemployment. Appropriately, the unemployment rate slipped from 7.9 percent to 7.7 percent, its lowest point since early 2009.READ MORE
Brazil has a gun culture, a gun industry and a gun problem -- much like the U.S. In fact, more Brazilians than Americans died of gunfire in 2010.
Yet Brazil's 2010 tally, 34,300 deaths, was significantly lower than its gun fatalities in 2003 (39,284), when the government enacted major gun-control regulation. I asked Brazilian political scientist Antonio Bandeira, who coordinates the arms-control program of Viva Rio, a nongovernmental organization in Rio De Janeiro, how the campaign for gun regulation succeeded in Brazil.READ MORE
Watching the subjective comments about today's employment report for February on my Twitter feed -- everything from "HUGE" to "WOW" to the insightful "whoo-whoo" -- I started to wonder about the whole social-media thing again.
I quickly learned that the 236,000 increase in non-farm jobs "BLEW AWAY THE ESTIMATES" (that would be an expected increase of 165,000 according to a Bloomberg News survey, which is statistically insignificant from the actual result); that the 7.7 percent unemployment rate and 14.3 percent "U-6" measure of underemployment were the lowest since President Barack Obama took office; and that if people hadn't been exiting the labor force en masse, everything would look much worse.READ MORE
Call it the sea-bass bubble: President Barack Obama takes 12 Republican senators out to dinner, and all of a sudden Washington has its hopes up for a big fiscal deal.
Don’t bet on it. Obama and the Republicans both have political incentives to act like they are working hard on a deal to replace sequestration, provide fiscal policy certainty and maybe even reform the tax code. In fact, the odds of a permanent fiscal deal have gone way down in recent months because both sides have already gotten much of what they want, and there is an absence of any market pressure to do more. Without clear political or economic motivation for a deal, this attempt to find a grand bargain will fail, as previous ones did.READ MORE
Now that the results of the Federal Reserve's latest round of bank stress tests are out, the big question is how much money the Fed will allow the banks to give back to their shareholders. Ideally, the answer would be zero.
At first glance, the nation's largest financial institutions are in pretty decent shape. Even in a worst-case scenario, in which the Dow Jones Industrial Average falls to 7,221.7, the unemployment rate shoots up to 12 percent and the U.S. economy shrinks about 5 percent, 17 of 18 banks get passing grades. For the whole group, the average Tier 1 common capital ratio -- the measure of financial strength featured in the tests -- doesn't fall below 7.4 percent, compared to a minimum requirement of 5 percent.READ MORE
Justice Department officials for months have been denying that big banks are above the law. Then Holder told the Senate Judiciary Committee that the size of some large banks has made it difficult to bring criminal charges. He said "some of these institutions have become too large" and that their size "has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate." He added that bank size was something Congress would "need to consider."READ MORE
The United Nations Security Council resolution passed today tightening sanctions on the Democratic People's Republic of Korea is a significant U.S. diplomatic victory. Whether it will significantly retard North Korea supremo Kim Jong Un's quest for things that go boom is another question.
Let's start with at least two cheers for Susan Rice, the U.S. ambassador to the UN, who succeeded in getting China to agree, in relatively speedy fashion, to changes in the sanctions regime that are more than cosmetic.READ MORE
Today's lunch between Paul Ryan and President Barack Obama raises lots of questions, including this one: Did the Wisconsin representative thank Obama for helping him balance the federal budget within 10 years?
It's not likely, but he probably should have. After all, Ryan's budget is expected to achieve balance largely by banking on many of the policies Obama championed -- including Medicare savings from Obamacare and tax revenues raised during last year's fiscal cliff deal.
Margaret Carlson and Ramesh Ponnuru are columnists for Bloomberg View.
Margaret: I don't think his filibuster makes Senator Rand Paul a serious national figure, Ramesh, as you suggest (and as Charles Krauthammer says outright). He just doesn't convey solidity. Although I don't agree with his father, former Representative Ron Paul, his dad has a firm intellectual grounding for his sometimes wacky beliefs. He speaks confidently. The father may be able to hand off his political organization to his son, but he can't hand off his ability to thrust and parry in Republican presidential debates.READ MORE
(Corrects and updates events at Emory University in the 16th paragraph of this article published March 7.)
Remember when the campus Culture Wars ended? It was about 15 years ago, sometime after we learned that Paul de Man was a Nazi and Bill Bennett had blown the equivalent of the gross domestic product of Belize at a Vegas Keno parlor. As I remember it, a pact was forged atop the smoldering ruins of the Deke house at Dartmouth College. The radicals were allowed to keep their Afrikana Studies programs and Neo-Pagan safe zones, the conservatives to restock the library shelves with the works of Allan Bloom and unexpurgated copies of "The Adventures of Huckleberry Finn," and the nation's elite universities went back to producing engineers and bankers rather than papers with titles such as "Aspects of Iconicity in Some Indiana Hydronyms."READ MORE
You might have heard some people talking about women recently. Sheryl Sandberg's "Lean In: Women, Work, and the Will to Lead," part manifesto, part female empowerment movement, will be published next week. And Sandberg couldn't have hired a better press agent than Marissa Mayer, whose Yahoo! Inc. employees were told two weeks ago to get out of their pajamas and come to the office.
Women who opine about their experiences in the workforce often include a series of disclaimers. I'm rich, they say. I'm powerful and well-educated. I have 13 nannies, four houses and a bionic husband. These qualifications highlight the contradiction underlying all this talk: The women whose voices attract attention do not represent the wide swaths of society they hope to help. Those women are too busy getting jobs in the first place or caring for kids as single mothers to write books and articles. They must rely on the imperfect voices of the rich and powerful lest they have no voices at all.READ MORE
Margaret Carlson and Ramesh Ponnuru are Bloomberg View columnists.
Margaret: I don't like everything Senator Rand Paul said in his amazing filibuster last night and this morning against the nomination of John Brennan to be CIA director. But I love to death that he said it.READ MORE
Margaret Carlson and Ramesh Ponnuru are discussing Republican politics and policy.
Margaret: Until Jeb Bush's new book and his round of muddled interviews, I had vowed not to talk about 2016. People rightly hate us for writing about the next election while they’re still counting votes from the last.READ MORE
Below is the most distressing slide I saw at this week's National Association for Business Economics Conference, courtesy of the National Association of State Budget Officers:
From fiscal year 2003 through fiscal year 2012, state general fund budgets increased 34 percent, almost exactly in line with population growth and inflation. But that growth wasn't evenly shared across program areas.READ MORE
It was hard, in the week before the sequestration took effect, to avoid the ceaseless warnings and doom-filled prophecies coming from the White House. From the president to the lowliest Cabinet secretary, federal officials claimed the U.S. would see immediate and severe disruption to government operations.
Well, they were wrong. The sequestration won't be devastating. It will be slow, boring, and local. That's the message sent by the flurry of reports from federal agencies as they detail their plans to cope with their budget cuts under sequestration.READ MORE
This week, I received a pitch for a new book: "Sand in the Gears: How Public Policy Has Crippled American Manufacturing," by Andrew O. Smith. The press release cites the catastrophic, two-decade decline in manufacturing, attributable not only to globalization and cheap labor overseas but also to "misguided policies."
Without knowing exactly what public-policy remedies the author is advocating, my initial reaction was: Stop the presses! U.S. manufacturing is well along in its self-help program and is retooling with impressive results.READ MORE
Jim Pethokoukis of the American Enterprise Institute says not to think about Republican Representative Paul Ryan's budget proposals as actual budget proposals:
"I view Ryan’s previous plans more, ultimately, as fiscal education modules than actual budget blueprints. They highlight good ideas, such a Medicaid block granting and Medicare premium support, and suggest how those ideas might affect budgeting.
"The Ryan plans also quietly highlight challenges: Slow economic growth + (roughly) historical levels of tax revenues + a promise to spare retirees and near-retirees from Medicare changes = a long-road road to debt reduction + severe Medicaid cuts + severe discretionary spending cuts. My conclusion is that a) tax revenues and spending levels will in the future probably need to be above historical levels and the levels Ryan targets, b) we cannot settle for the level of GDP growth CBO forecasts, c) entitlement reform ASAP. Ryan has the right ideas — and certainly knows the need for faster growth — but implementation poses major political challenges."
This is roughly, circa 2011, how I used to write about Ryan's proposals. It's not how I write about them anymore, even though the substantive nature of my objections to his plans hasn't changed very much.
After helping keep the U.S. banking system afloat, is the Federal Reserve about to lose a fortune on its own bond purchases?
If you listen to opponents of Fed policy, you might think that the large expansion of its balance sheet -- from assets of less than $1 trillion in 2007 to more than $3 trillion today -- will result in it hemorrhaging money, draining the Treasury and disrupting monetary policy. Calm down: While the Fed may have to book a loss, catastrophe will not follow. Such an accounting item would be a small price to pay for the Fed's vital stimulative efforts.READ MORE
Two recent events underscore why the U.S. has a deficit problem and why it's unlikely to be solved without deep concessions by both parties and most Americans.
The first is Representative Paul Ryan's budget proposal, which is expected to be unveiled next week. Ryan, a Wisconsin Republican, is expected to balance the budget within 10 years -- without raising any additional taxes beyond those agreed to earlier this year. To make this math work, Ryan needs to cut costs and was reportedly considering raising the age cutoff for his Medicare premium-support plan to 56. While details haven't been released, such a move could shave the health program's near-term costs, since fewer people would be eligible for traditional Medicare within the 10-year budget window.READ MORE