Power & Growth Initiative Report
No. 1 July 2012
Generally speaking, with the exception of the period of World War 2, we find that the federal government used to be pretty well contained when it came to imposing new rules and regulations on the American people – at least, all the way up to 1970, when it appears to have undergone a bureaucratic explosion!
Here, the creation of the Environmental Protection Agency appears to have been the impetus for unleashing unprecedented waves of new rules and regulations affecting nearly every aspect of American life all throughout the next decade.
That changed in the 1980s, as the number of new rules and regulations being issued each year was brought under control. In the 1990s though, the number of federal regulations began creeping steadily upward.
In the first decade of the twenty-first century though, the amount of new rules and regulations issued each year was largely stable. That changed with the financial crisis of 2008, which saw new rules and regulations issued by the federal government spike in that year, but which abated with the waning of the crisis in 2009 as the number of pages issued to the Federal Register fell.
They are now falling at a steeper pace than in early 2008. Current activity in manufacturing fell 16 points from -1 to -17. That is a major shock.
Posted by Guest writer on Jul 24 13:05
Maugeri’s discussion of reserve growth elides the well-known exaggerations of proven reserves among the world’s major oil producers. Producers in the Persian Gulf, North Africa OPEC, Russia, Venezuela and Canada report “reserves” estimates that can only be economically produced if oil prices are at least double the $70 per barrel assumption in his analysis. He does not provide any further details about the economics of production in his analysis, except to say that “More than 80 percent of the additional production under development globally appears to be profitable with a price of oil higher than $70 per barrel.”
This claim seems highly dubious given recent estimates of production costs. Research by petroleum economist Chris Skrebowski, along with analysts Steven Kopits and Robert Hirsch, finds a new barrel of production capacity in deepwater, some OPEC countries, the Canadian tar sands, and Venezuela’s Orinoco belt will cost up to $80 or $90 a barrel. Canada’s Globe and Mail reported in June that $80 a barrel was low enough to cause several tar sands operators to slash their expansion plans. And a recent report from Bernstein Research found that the real floor of new production in 2011 was around $92 a barrel, and will be closer to $100 a barrel this year.
Professor Mark J. Perry’s Blog for Economics and Finance
The chart above is based on data in the recently-released CBO report “Distribution of Household Income and Federal Taxes, 2008 and 2009,” showing the share of federal income taxes paid by income group in 2009. In 2009, almost all (94.1%) federal income taxes collected were paid by just one-fifth of Americans (top quintile) and the top 1% paid almost 39% of all taxes collected. In contrast, the lowest and second quintiles were net “tax collectors” because that 40% of Americans received more in refundable tax credits than they paid in income taxes.
By Steve Clemons
Jul 22 2012, 12:15 PM
In a short report (pdf) we are releasing today that explores the behavior of private debt before and after economic crises — not only in the US, but in Japan as well as a number of European nations — we have noted that (1) a fast run-up of private debt combined with (2) a level of private debt more than 150% of GDP were evident in both the Great Recession of 2008-2009 as well as in America’s Great Depression.
Federal debt was inconsequential to these crises. Charts in the report (pdf) we are posting today make clear that Spain, economically beleaguered today, was in excellent federal balance sheet health before the recent Eurozone financial quakes started.
So as a predictor of future crises, we suggest that private debt growth rates combined with the absolute level of non-government, private debt are the two most important factors to flag.
John Tamny, Forbes Staff
As for education, Moretti (as so many do) falls for the alleged correlation between income and a college degree. He writes that “One way to correct this market failure is to provide subsidies for college education.” Oddly missed by Moretti is how heavily subsidized college education already is such that its costs have far outpaced seemingly all price indices. Beyond that, he mistakes cause and effect. Smart, hard working people tend to matriculate to Harvard, MIT and Stanford as opposed to the three teaching anything that makes the individual economically viable. This false correlation has of course driven up education subsidies, and it has too many Americans wasting way too much time and money on schooling that offers little of relevance to the real world. On education, Moretti could stand to read some John Stuart Mill, who noted that “the increased facilities of education which already are, and will be in a much greater degree, brought within the reach of all, tend to produce, among many excellent effects, one which is the reverse; they tend to bring down the wages of skilled labor.” Americans will continue to chase the college degree in greater numbers, and this rush to campus ensures that the real value of education will plummet.
I would say I have to deal with at least one major lie a day and a few minor ones. But I’m relaxed about it because after awhile you get to know basic rules:
July 9, 2012
Until the 1960s, Americans generally believed in low inflation and balanced budgets. President John Kennedy shared the consensus but was persuaded to change his mind. His economic advisers argued that, through deficit spending and modest increases in inflation, government could raise economic growth, lower unemployment and smooth business cycles.
None of this proved true; all of it led to grief.
Chapter One involved inflation. Increases weren’t modest; by 1980, they approached 14 percent annually. Business cycles weren’t smoothed; from 1969 to 1981, there were four recessions. Unemployment, on average, didn’t fall; the peak monthly rate – reached in the savage 1980-82 slump – was 10.8 percent. Americans lost faith in government and the future, much as now. Confidence revived only after high inflation was quashed in the early 1980s.
Now comes Chapter Two: How the retreat from balanced budgets has weakened America’s response to today’s downturn, the worst since the Great Depression. It has limited government’s ability to “stimulate” the economy through higher spending or deeper tax cuts – or, at least, to have a meaningful debate over these proposals. The careless resort to deficits in the past has made them harder to use in the present, when the justification is stronger.
Kennedy’s economists, fashioning themselves as heirs to John Maynard Keynes (1883-1946), shattered this consensus. They contended that deficits weren’t immoral and could be manipulated to boost economic performance. This destroyed the intellectual and moral props for balanced budgets.
Norms changed. Political leaders and average Americans noticed that continuous deficits did no great economic harm. Neither, of course, did they do much good, but their charm was “something for nothing.” Politicians could spend more and tax less. This appealed to both parties and the public. Since 1961, the federal government has balanced its budget only five times. Arguably, only one of these (1969) resulted from policy; the other four (1998-2001) stemmed heavily from the surging tax revenue of the then-economic boom.
We are now facing the consequences of all these permissive deficits. The recovery is lackluster. Economic growth creeps along at 2 percent annually or less. Unemployment has exceeded 8 percent for 41 months. But economic policy seems ineffective. Since late 2008, the Federal Reserve has kept interest rates low. And budget deficits are enormous, about $5.5 trillion since 2008.