The Ticker Quick Views on Politics, Economics and Finance

Jose Barroso, president of the European Commission, gave a presentation at Bloomberg headquarters in New York Friday afternoon, dividing his time about equally between the outlook for the proposed U.S.-EU trade agreement and the state of the European economy. He was pretty optimistic about both.

The trade pact was a big deal, he said. Conventional trade barriers such as tariffs and tariff-rate quotas between Europe and the U.S. are already low (5.2 percent on average for the EU and 3.5 percent for the U.S.), but the volume of trade between the two economies is so huge that eliminating them altogether would still have a big effect, he said. The gains from removing behind-the-border barriers (such as regulatory differences that discourage imports, accidentally or otherwise) would be great as well.

The BBC has found itself at the center of a controversy over former U.K. Prime Minister Margaret Thatcher, who died last week after a long illness, and the late Wicked Witch of the West, who was killed in an unfortunate house accident more than seven decades ago.

Since Thatcher's death, an anti-Thatcher Facebook campaign has pushed "Ding Dong! The Witch Is Dead," a song from the 1939 movie "The Wizard of Oz," near the top of the U.K. charts. BBC Radio 1 airs a top-of-the-charts show every Sunday night, and at first there was some question whether it would play the song. Brits still remember the Beeb's decision not to play the Sex Pistols' anti-monarchist song "God Save the Queen" during Queen Elizabeth II's 25th silver jubilee celebration in 1977. (Yes, it seems silly now.)

The most recent data suggest that the U.S. economy may be slowing again. It remains to be seen whether this is a temporary phenomenon, a predictable consequence of the tax increases and spending cuts imposed earlier in the year, or something else.

The March employment report was the first indicator. As I wrote at the time, the news on jobs wasn’t quite as bad as the headlines suggested, but it wasn’t good, either. Surveys of business activity from the National Association of Purchasing Managers also contained some unwelcome news. The index of U.S. manufacturing activity fell to 51.3 in March from 54.2 in February. The index is still above 50, which means that manufacturing activity is still growing, but it implies a slowdown. Similarly, the index for services fell to 54.4 in March from 56.0 in February. Both indices are back to where they were last summer.

If you wanted to make the case for Bitcoin as a feasible and useful digital currency, yesterday wasn’t the best day to do so. According to Mt. Gox, the largest Bitcoin exchange, the currency started out at $230, spiked to $266, touched a low of $105 and then settled at just above $170 (it’s now $123). That’s, in the course of the day, a 15 percent jump followed by a 60 percent plunge off the day’s high and ending with a substantial loss.

And during the day, it wasn’t even clear where bids and offers were, or what the price was at any given moment. Joe Weisenthal of Business Insider reported seeing Bitcoin prices of $90, $170 and $225 on different sites. One exchange appeared to have suffered from a denial of service attack when there were severe lags in trading and quotes. Today, however, Mt. Gox's management team issued a press release saying they were a “victim of our own success” and that a flood of new accounts had overwhelmed the system and led to panic sales by clients that drove down the price. Mt. Gox shut down its exchange today to "allow the market to cooldown" and upgrade its systems.

If conspiracy theorists were hoping to score points with the early e-mail distribution of the Federal Reserve minutes yesterday, they had better look elsewhere.

Brian Gross, a member of the Fed's "congressional liaison staff" (i.e. a lobbyist), e-mailed a copy of the minutes from the March 19-20 meeting to his contact list at 2 p.m. on April 9, Bloomberg News reported. The minutes were scheduled to be released at 2 p.m. yesterday.

The Washington Post reports today that the death of Pastor Rick Warren's son, Matthew Warren, has "spurred discussion within church communities about how a fervent belief among evangelicals in the power of prayer and dependence on God and Jesus for healing might stifle congregants from talking about mental illness or seeking help for themselves or family members."

One of the nation's most popular and influential pastors, Warren last weekend sent an e-mail to followers announcing that his 27-year-old son had killed himself. Warren was explicit about his son's mental illness, citing Matthew's "dark holes of depression and even suicidal thoughts. In spite of America's best doctors, meds, counselors, and prayers for healing, the torture of mental illness never subsided."

President Barack Obama has put a respectably high price tag on his preschool proposal -- $75 billion over the next 10 years. The spending would start modestly, amounting to $1.3 billion in the first year, but rise to about $10 billion annually by 2020. That would go a long way toward helping states create and expand programs for the poorest American 4-year-olds.

Added to that, in the president's budget released yesterday, is a bonus for teenagers and others well beyond preschool age: Obama suggests paying for the preschool plan by almost doubling the federal tax on cigarettes, to $1.95 a pack from $1.01. History shows that when cigarette taxes rise, consumption drops, especially among the youngest smokers.

Almost all economists are in favor of taxing carbon. In survey after survey, they support the idea.

It's easy to see why. The theoretical argument is convincing. Negative externalities -- social costs created, but not considered, in private transactions -- ought to be "internalized" through taxes on the activities in question. Any other outcome is inefficient, meaning that you could make at least one person better off without making anybody (including the polluters) worse off.

President Barack Obama's latest budget contains some intriguing economic forecasts. Stock market bulls better hope those forecasts are wrong.

According to the boffins in the Office of Management and Budget, corporate income in 2023 will be more than 13 percent lower than it is today -- and that's before accounting for inflation and taxes. This decline is not predicted to be smooth. Instead, the forecasters predict steady earnings growth until the beginning of 2018. Profits are then projected to fall by nearly a third over the following six years. That's a surprisingly steep decline.

Ramesh, you put your finger on what distinguishes today's American conservatives from Margaret Thatcher. She was controversial for good reasons, not for no reason at all.

Look at Republican Senator Ted Cruz of Texas, a man in a hurry, who will do anything to be provocative. He even questioned the loyalty and patriotism of Vietnam veteran Chuck Hagel at Hagel's hearings to be defense secretary.

Yesterday, I got this sort of comical PR pitch in my inbox: I should check out a report from the American Institute for Economic Research that examines "the current state of inflation using their proprietary Everyday Price Index, which heated up significantly in February and shows inflation running at 25% on an annualized basis." 25 percent! And I thought AIER was being bold last year when it said we had 8 percent inflation.

As Matt Yglesias notes, the Everyday Price Index is nonsense. It looks only at "everyday" items the typical household purchases once a month or more. That means the index is heavily weighted toward food and fuel, and ignores major components of consumer spending like housing and durable goods.

Fuel prices are very volatile, and both food and fuel have had faster price growth than most goods and services over the last 10 years, driven in large part by increasing demand from middle-income countries. A methodology that focuses on food and fuel won’t tell you about the overall price level, but it will produce an inflation index that is faster-rising and more volatile than the Consumer Price Index, which will make it catnip for hard-money advocates who are perpetually convinced that “real” inflation exceeds what the government claims.

President Barack Obama's new budget proposal won't be going anywhere in Congress. But the president still has the power to set the terms of conversation as the House and Senate try to reconcile their deeply oppositional visions of reform.

In that regard, the primary cost-cutting ideas Obama proposes -- means-testing Medicare and using chained CPI to calculate increases to Social Security benefits -- suggest sensible progress toward a larger compromise.

Melissa Harris-Perry has caused a stir with her MSNBC “Lean Forward” video, which reignites the “It Takes a Village to Raise a Child” debate by asserting a “collective” responsibility to raise children. Perry is wrong on this topic, but not for the reason most of her detractors are saying. Here’s her quote:

“We have never invested as much in public education as we should have because we’ve always had a private notion of children. Your kid is yours and totally your responsibility. We haven’t had a very collective notion of these are our children. So part of it is we have to break through our kind of private idea that kids belong to their parents or kids belong to their families and recognize that kids belong to whole communities.”

Every time I get to the part in the Federal Reserve minutes where the results of the New York Fed's primary dealer survey are discussed, I chuckle.

From the minutes of the March 19-20 meeting, released today:

A lot of the attacks and street parties in the U.K. celebrating Margaret Thatcher's death have come from people too young to remember what she did. Judging by their photos, some of her harshest critics on Twitter weren't born yet when she was prime minister. I find this odd.

You would think they'd mainly be bemused by all the fuss over an 87-year-old who left power 23 years ago. As @cagssoc offered: "For those under 25's who want to understand #Thatcher's legacy. I'll use a Harry Potter analogy. She was a 'death-eater.'"

The obsessive attention paid to White House budget proposals always reminds me of a Woody Allen joke: "I've worked everything out to the last detail. Now all I need is the main points." The effort expended on the administration's budget seems insane when you remember that the whole production is just a suggestion, and that Congress is the branch of government that says what taxes and spending will be. The separation of powers, if you will, is the main point.

It's a political more than policymaking exercise -- and seen that way, this year's budget looks smart. At the cost of offending some progressives, it's a plan that could split a few sensible Republicans from the herd.

U.S. President Barack Obama wants to trim the deficit by replacing the traditional Consumer Price Index with the "chained CPI." One appeal of this approach -- for the administration -- is that it simultaneously increases middle-class taxes and reduces future spending on programs such as Social Security and veterans benefits. According to the president's budget released today, the measure "will reduce deficits by at least $230 billion over the next 10 years," although my colleague Peter Orszag has noted that this might be overly optimistic.

Either way, adopting the chained CPI would be a mistake. It is a dishonest measure of the cost of living.

There are good reasons, perhaps, that the White House released a 2014 budget today that did not include the full $55 billion in cuts to base Defense Department spending mandated by the 2011 debt-ceiling deal. Perhaps Congress will find a way around sequestration. Perhaps the military brass has a secret Plan B in hand in case the budget ax drops. Perhaps Secretary Chuck Hagel will sell off $600 hammers from a van behind the Pentagon.

The most reasonable explanation is that the military feared that submitting a budget showing it could handle trimming an additional 10 percent would make it easier for Congress to consider those savings a fait accompli. Problem is, even if a sequestration deal is accomplished, it still seems likely the Pentagon is going to have to find cuts in the neighborhood of an extra $500 billion over a decade as part of any long-term deficit-reduction deal.

The Pentagon tried the same game last year as the sequestration deadline approached: Then-Secretary Leon Panetta, insisting that sequestration was such an "unacceptable risk" to U.S. security, refused to admit he was even planning for it. What most observers assumed was a bluff turned out to be pretty much accurate -- after Congress failed to seal a deal, the Pentagon and its contractors were left scrambling to find ways to make the numbers work.

If the Defense Department truly has no contingency blueprint, that's a failure on the level of what we saw in Iraq after Saddam Hussein fell. Hagel should leave the bluffing to Kim Jong Un and tell us how he's going to create a leaner fighting machine. This budget included a couple of good first steps: another round of base-closure commissions and dropping all spending on the unnecessary Medium Extended Air Defense System. But he needs to consider bigger targets, including one 20 stories high: the Ford-class supercarrier.

Washington experienced a rare moment of bipartisanship yesterday when Marilyn Tavenner, U.S. President Barack Obama’s nominee for Administrator of the Center for Medicare and Medicaid Services, breezed through her confirmation hearing before the Senate Finance Committee. It was a significant moment because the agency she will formally lead administers health-care services to roughly one in three Americans and plays a major role in carrying out the Patient Protection and Affordable Care Act.

Overall, Tavenner performed well at the hearing and answered questions in a way that suggests she will be an able leader of the agency -- even while she is given the unenviable task of putting in place President Obama’s misguided health-care reform bill.

With a title like “The Eurosystem Household Finance and Consumption Survey," the European Central Bank’s latest piece in its Statistics Paper Series doesn't sound like a page-turner. It has received a lot of attention, though, because of its conclusion that the poorest households in the euro area are German.

These findings are likely to incite a lot of resentment among German taxpayers, who will no doubt feel all the more strongly that they shouldn’t have to bailout other countries where households are even wealthier than theirs. So the study deserves some scrutiny.