Blog postings by CEPR staff and updates on the latest briefings and activities at the Center for Economic and Policy Research.

Chris Edwards complains that John Boehner’s plan for spending cuts "doesn’t actually cut spending at all."  So says his chart.


Unfortunately Edwards chooses to report budget authority rather than outlays—the actual cash flow.  Under Boehner’s plan, outlays (still net of spending “in Afghanistan and Iraq”) rise only from $1.262 trillion to $1.278 trillion.  Rather than an apparent 18 percent increase, the rise in outlays is less than 1.3 percent.

More importantly, however, these numbers are not adjusted for inflation.  According to projections by the Congressional Budget Office, inflation will rise at least 18 percent from 2012-21.  Thus, Boehner’s plan has real outlays falling by more than 14 percent by 2021.


Chris Edwards is repeating himself. Not that there is anything wrong with that. But he is still wrong.

Boehner’s amended proposal was scored by CBO as saving an additional $46 billion over the first two years, and guess what? As a result of those deeper cuts, spending goes up even faster than before! Rather than an increase in outlays of 1.3 percent (not adjusted for inflation) outlays now increase 3.0 percent.

Maybe, just maybe, Edwards has a ridiculous way of thinking about spending cuts.


What?  Did you say that stuff costs more today than it did a couple years ago?  Maybe somebody really ought to tell Chris Edwards over at Cato.  For the third time in only a few days, Edwards showed a chart of Speaker Boehner’s proposed discretionary budget authority and forgot to adjust for inflation.

At last check, Boehner proposed that by 2021 the government spend 14.9 less on discretionary outlays when adjusted for consumer prices.

If you fail to take prices into account, you might wind up saying ridiculous things like private spending was 10.1 percent higher in April through June than it was when Barack Obama took office.  Or you might say that despite the loss of millions of jobs, Americans managed to “produce” 8.0 percent more.

If you fail to account for inflation, then the economy grew 57 percent under Jimmy Carter—a whopping 12 percent per year!  By Edwards’ measure, national income grew more rapidly under Carter’s presidency than in any four-year period since the end of World War II.

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Over at the Heritage blog, David Weinberger attempted a fact-check.  He wrote, “But both Professor Krugman and President Obama have their history entirely incorrect. Total government spending never decreased in the 30s, certainly not after 1937. Rather, total government spending went up”

Sure enough, the graph presented shows no fall in government spending between 1936 and 1937.


Weinberger should have taken a closer look at his own source material.  Ignoring for the moment that the spending is in current dollars, not adjusted for inflation (even though allows the option) let us look at the table at Weinberger’s source.

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An interesting story was posted last week over at the website of the National Education Association.  A Massachusetts special-education teacher — Kathy Meltsakos — was laid off and then rehired by another school district.  At lower base wages, and bearing a greater share of her health-insurance costs, her take-home pay was reduced to zero.

This story may sound crazy at first, but is far from implausible.  According to the pay stub in the accompanying photograph, Meltsakos earned $622.92 in 58 hours of work.  Over nine months, this would total $12,146.94.  An indicated Medicare tax withholding and an 8 percent pension contribution would reduce pre-tax income to $564.78 every two weeks.

If she must pay 60 percent of the price of a full year’s medical and dental insurance over the course of nine months of employment, then $564.78 in deductions every other week implies total premiums of $18,255 per year—or $1,530 per month.  This may be on the high side even for low-deductible plans, but the article does not specify if the insurance covers anyone in addition to her.

That is, it is plausible that this teacher is working nine months out of the year for nothing more than health insurance and a small pension — with nothing left for living expenses.  Because Medicare seems to have been withheld, but not Social Security, it is safe to assume that Meltsakos is exempt from the program and will not receive a retirement benefit in addition to her pension.

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The 20-City Case-Shiller Index rose 1.0 percent in May, the second consecutive increase after eight consecutive months of decline. Seventeen of the 20 cities in the index experienced increases in housing prices, with the biggest increases in Washington, D.C., Minneapolis and Boston. The only cities that saw declines were Tampa Bay, Las Vegas and Detroit.

The 2.4 percent price increase in D.C. continued a pattern, as prices have now risen at a 10.7 percent annual rate over the last three months and are up 1.3 percent over the last year. The 2.6 percent price jump in Minneapolis, however, is the most surprising since prices had been falling sharply in the city. But this also raises the possibility that the increase is simply a result of quirks in measurement.

The Census Department will release data on vacancy rates later this week, which will give us more information on the overall state of supply and demand in the housing market. The recent movement in rents provides no reason for believing that there is any underlying tightening of the market. Owners' equivalent rent is rising at just over a 1.0 percent annual rate.

For more, read the latest Housing Market Monitor.

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Catherine Rampell had a post last week declaring that “College is (Still) Worth It“. The piece is the latest in a series that she and her Economix blog colleague, David Leonhardt, have written on the financial benefits of college.

I agree with Rampell and Leonhardt that college is, on average, a good investment for the people who make it. But, Rampell and Leonhardt’s posts completely sidestep the key issue: why is it that when confronted with compelling evidence that college pays a big financial dividend, so many young people still don’t get a college degree?

Heather Boushey and I argue that the short answer  is that for a surprising share of college graduates, the large price tag may actually not pay off.

Rampell’s latest installment includes this nice graph of weekly earnings by worker characteristics, including educational attainment on the right-hand side:


Source: New York Times, Bureau of Labor Statistics

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The Center for Economic and Policy Research, Demos, Economic Policy Institute, Employment Policy Research Network, and National Employment Law Project released reports on labor-market policy over the past week.

Center for Economic and Policy Research

The Risk of Dismissal for Union Organizing and the Need to Modify the Process

Dean Baker


Under Attack: Washington’s Middle Class and the Jobs Crisis

Under Attack: Pennsylvania’s Middle Class and the Jobs Crisis

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I wish I had caught this a few months ago when it came out, but the Federal Reserve went ahead and re-interviewed folks studied in the 2007 Survey of Consumer Finances.  The SCF does not usually follow specific people through time—the last panel SCF was in 1989—so this study offers an interesting opportunity to see what happened to family finances following the collapse of the housing bubble.

Of course, we have produced several papers based on SCF data in which we estimate the impact on various groups of people based on housing and stock prices.  But a follow-up study of the 2007-vintage respondents would in theory be a better approach.

According to the Fed study, median family net worth fell 23 percent from $125,400 in 2007 to only $96,000 in 2009.  Largely, this change reflected falling assets rather than increased debt.  In particular, the median value of primary residences fell 15 percent from $207,100 to $176,000.

However, the numbers reported by the Fed do show something surprising.  According to the panel results, the percent of families owning their primary residences in 2007 stood at 68.9 percent.  This figure is slightly higher than the quarterly numbers reported by Census over the survey period (67.8-68.2 percent.)  Over the same period two years later, Census reported homeownership rates had fallen to between 67.1-67.4 percent.  The Fed, on the other hand, estimates that in 2009 some 70.3 percent of the 2007 panel families owned their primary residence.

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It is entertaining to see all the folks who missed the housing bubble try to apportion blame after the fact. Tyler Cowan is the latest entrant, pronouncing Fannie and Freddie at least partially responsible. While his indictment is impressive, the real question should be, “what is the charge?”

Of course Fannie and Freddie are at least partially responsible, they purchased hundreds of billions of dollars of loans that were used to buy properties at what they should have recognized as bubble-inflated prices. If they had refused to buy such loans, it almost certainly would have brought the irrational exuberance of the housing bubble to a quick halt.

Fannie and Freddie could have adopted a policy of requiring appraisals of rent, and refused to purchase any loan for a purchase price that exceeded a 15 to 1 ratio to rent (adjusted by metro area). This policy would almost certainly have required many buyers and lenders to give more serious thought to their purchase price.

Since housing is all that Fannie and Freddie do, it is reasonable to expect that they would have recognized the bubble and taken steps to counter it and protect themselves. [I was beating them up on the bubble since 2002]. Instead, they continued to throw money into the housing market even as prices grew ever more out of line with fundamentals.

However, giving the primary blame to Fannie and Freddie and the government policy of promoting homeownership ignores the fact that the worst subprime loans were sold to Merrill Lynch, Citigroup and other private investment banks. These banks do not have any pretense of having a mission of promoting homeownership; they are there to make money. And, in the peak years of the housing bubble, they were booking huge profits on the loans that they repackaged into mortgage backed securities and more complex financial instruments.

If the moral of the story is supposed to be that financial institutions don’t make reckless and often fraudulent loans without the prodding of the government, no one can make this case with a straight face. Angelo Mozillo’s Countrywide and Robert Rubin’s Citigroup issued and securitized bad mortgages because it was profitable. No government bureaucrat forced them to do it to advance homeownership. In fact, the main motive of Fannie and Freddie in this period was also almost certainly profit, which allowed their top executives to pocket tens of millions in compensation that they still hold.

In the blame game there is plenty to go around. Certainly the economic policy wonks, regulators and business media who totally missed the largest asset bubble in the history of the world should all be wearing dunce caps for the rest of their career. The top executives of Fannie and Freddie also deserve to occupy one of the inner rings of hell. The fact these characters were able to pocket tens of millions from this disaster should have all right thinking people outraged. But no one acted worse than the issuers of subprime loans who often committed outright fraud by putting in false information to allow people to get loans for which they were not otherwise qualified. And the investment banks who securitized this garbage and the rating agencies who blessed it as investment grade come in a close second.

Unfortunately, the main lesson seems to be that crime pays. With few exceptions, the evils doers are doing just fine – in fact much better than almost anyone who doesn’t break the law for a living. And, we also seem to have learned nothing about pushing homeownership, as some community groups are now devoting their efforts to ensure nothing is done that could raise the interest rate on higher risk, low down payment loans.

If we were to ask George W. Bush’s famous question:

“Is our policy wonks learning?”  The answer would undoubtedly be no.

There is one final point that is worth noting on Tyler Cowan's scorekeeping between the banks and Fannie and Freddie. The banks got far more generous bailout terms than Fannie and Freddie, getting loans and loan guarantees at way below market rates. (In keeping to their deference to Wall Street, almost no economists are so rude as to point out that below market loans and guarantees involve massive subsidies. This allows people like Timothy Geithner to claim that we actually made money on the TARP, even though every card carrying economist knows this is nonsense.)

Also the policy of temporarily propping up the housing market with the first time homebuyers tax credit and Fed purchases of mortgage-backed securities allowed millions of mortgages, that would have otherwise soured, to be transferred from the banks to Fannie and Freddie through being sold or refinanced. So if Fannie and Freddie end up with the bulk of the bill it was not just the result of their bad judgment. It was a conscious goal of government policy.

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This week, Demos, Economic Policy Institute, and National Employment Law Project released LMPRR reports and briefs.


Under Attack: Florida’s Middle Class and the Jobs Crisis

Putting Massachusetts Money to Work for Massachusetts
Heather C. McGhee, Jason Judd, and Sarah Babbage

Economic Policy Institute

J visas: Minimal oversight despite significant implications for the U.S. labor market
Daniel Costa

National Employment Law Project

Hiring Discrimination Against the Unemployed: Federal Bill Outlaws Excluding the Unemployed

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This week, the LMPRR features reports and briefs from Demos, Economic Policy Institute, and Institute for Women’s Policy Research.


Enduring Flaws: FTA Deal With Colombia Still Has Major Problems
David Callahan and Lauren Damme

Economic Policy Institute

Historically Deep Job Loss, but Not An Unusual Recovery
Josh Bivens and Isaac Shapiro

Institute for Women’s Policy Research

Paid Sick Days and Employer Penalties for Absence
Kevin Miller, Ph.D, Robert Drago, Ph.D., and Claudia Williams

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This week, the LMPRR features reports from Center on Budget and Policy Priorities, Demos, Economic Policy Institute, Institute for Research on Labor and Employment, and Institute for Women’s Policy Research.

Center on Budget and Policy Priorities

New Fiscal Year Brings Further Budget Cuts to Most States, Slowing Economic Recovery
Michael Leachman, Erica Williams and Nicholas Johnson


Wisconsin’s Middle Class and the Jobs Crisis

New York’s Middle Class and the Jobs Crisis

Economic Policy Institute

The Need for Paid Sick Days
Elise Gould, Kai Filion and Andrew Green

Institute for Research on Labor and Employment

Do Frictions Matter in the Labor Market? Accessions, Separations, and Minimum Wage Effects
Arindrajit Dube, T. William Lester and Michael Reich

Institute for Women’s Policy Research

Pension Crediting for Caregivers: Policies in Finland, France, Germany, Sweden, the United Kingdom, Canada, and Japan
Elaine Fultz, Ph.D.

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The following highlights CEPR's latest research, publications, events and much more.

CEPR on Greece
CEPR Co-director Mark Weisbrot’s views on the Greek debt crisis continue to garner media attention. Mark was one of the first to suggest that Greece at least consider defaulting on its debt rather than accepting further austerity measures. Mark has become a sought-after expert on the Greek debt crisis. He appeared on Democracy Now! On June 29th, commenting on the breaking news that the Greek parliament had approved the harsh austerity package of budget cuts and tax increases.  

In his latest Guardian column, Mark discusses the potential impact of the Greek crisis on the U.S., and asks “Where is the U.S. government?” As Mark pointed out on NPR’s All Things Considered, the austerity demands being pushed on Greece by the IMF and European Central Bank are a form of collective punishment against the Greek people. But as Mark explained on Bloomberg Television, default might be a better option for Greece than continued recession.

Mark also wrote about the recent protests in Greece in thisGuardian column, and was cited in coverage by the BBC, Voice of America, and Firstpost (India’s largest news site), among others. Mark has also discussed Greece’s debt crisis on a string of radio programs. Mark’s, and CEPR’s, perspective on Greece have carried into the Greek media, where Mark continues to be interviewed by a variety of outlets, and other European coverage as well. His latest interview with the BBC can be seen here.

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For the first time since July of last year, the Case-Shiller 20-City Index rose 0.7 percent in April. Thirteen of the 20 cities showed increases in April, with several cities such as Atlanta, Seattle and Washington D.C. showing large price jumps. Atlanta and Seattle experienced price increases of 1.6 percent, while Washington, D.C., saw prices rise 3.0 percent.

The Atlanta market had price increases in all three tiers, but the bottom tier showed by far the biggest jump with an 8.6 percent gain. The Seattle market was driven by a 1.7 percent price rise for houses in the upper tier, which may be explained by the lowering of the loan limit for Fannie Mae and Freddie Mac. In Washington, D.C.,  prices are rising sharply all across the board, with the biggest rise being a 3.7 percent jump in the bottom tier. This segment of the market has risen at an 18.4 percent annual rate over the last three months. This is the sort of price rise that was seen in the bubble and may reflect some irrational exuberance about the D.C. market. It will not be sustained.

Many analysts seem to have missed the fact that the plunge in house prices has sharply reduced homeowners’ equity. According to data from the Federal Reserve Board, the ratio of homeowners’ equity to value at the end of the first quarter was just 38.0 percent at the end of the first quarter, the lowest on record. This massive loss in household wealth explains weaker consumption, not consumer pessimism.

For more, read the latest Housing Market Monitor.

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In his diatribe against progressive economics Rob Atkinson included the Center for Economic and Policy Research (CEPR) in the list of institutions who he is attacking. I will let my friends at the Economic Policy Institute, the Levy Institute, Demos, and Center for American Progress argue their own cases, but Atkinson makes a number of mistakes that should be corrected.

First, his basic economic story is more than a bit confused. He is anxious to tout Germany and Japan as successes to contrast with the United States failure. While CEPR has put out numerous papers and articles over the years touting aspects of Germany's labor market policy along with that of other European welfare states (for example here, here, and here), and in particular its short work policy which has allowed Germany to actual lower its unemployment rate in this downturn, it's not clear that Germany and Japan have actually been successes in the way that Atkinson claims. Germany and Japan's productivity growth has consistently trailed that of the U.S. over the last 15 years. The gap is not huge, but it goes the wrong way for Atkinson's argument.

Germany and Japan do have large trade surpluses, as opposed to a trade deficit in the U.S., but this has a lot to do with informal protectionist barriers that presumably Atkinson does not want to see adopted in the U.S. The other major factor hurting U.S. trade is a dollar that is seriously over-valued, making U.S. goods uncompetitive. CEPR has written a great deal on this issue, arguing in numerous papers that the trade deficit will not be brought down to a manageable level until the dollar declines to a point where U.S. goods can be competitive in international markets.

Atkinson also seems not to like a vast body of research that indicates that growth is demand driven. Atkinson is right that this argument is getting old, but so is the theory of evolution. When he has some evidence showing that this research is wrong, I'm sure that he will have no problem getting an audience.

However, it is most bizarre to see Atkinson say that CEPR is not concerned about the supply conditions that foster growth. It would be almost impossible to look at our website without realizing that we deal with supply conditions all the time.

For example, we have written on alternatives to the incredibly inefficient patent system for supporting prescription drug research. In a free market drugs are cheap. As a result of patent protection, the U.S. Is projected to spend $3.7 trillion over the next decade on drugs. We could save close to 90 percent of this money ($3.3 trillion) if drugs were sold in a free market. Replacing the research currently supported by patents would cost us at most one-fourth this amount.

We have also proposed alternatives to copyright support for recorded music and videos, software, and even textbooks. The potential savings from ending copyright monopolies in these areas could easily exceed $100 billion a year.

We have also proposed a financial speculation tax which could raise close to $150 billion a year, while making the financial sector more efficient by eliminating tens of billions in transactions that serve no productive purpose.

We have also proposed expanding trade to subject highly paid professionals, like doctors, engineers, and lawyers to the same of international competition as autoworkers and steelworkers currently face. Patients could save themselves tens of thousands of dollars by getting major medical procedure in countries with more efficient health care systems. The government could save itself trillions of dollars if it let Medicare beneficiaries buy into the more efficient health care systems of countries like Canada and Germany. Unfortunately, when it comes to highly paid professional services Atkinson is an old-fashioned protectionist.

Atkinson would know that his caricature of progressive economists does not fit CEPR if he had ever looked at our website. Of course, anyone reading Atkinson's article would know there is a lot of material that he has not read.

One final point: it really is entertaining to be lectured about economics by someone who completely missed the stock and housing bubbles, the two largest asset bubbles in the history of the world.

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Yesterday CEPR released a new report about how work sharing can help prevent layoffs and reduce unemployment,  On the same day, both the Center for American Progress and the New America Foundation also published issue briefs about work sharing.

Really, it was a coincidence!  But is it a sign that work sharing is an idea whose time has come?

As "the first of our ideas that we believe could be achievable in Washington today," CAP's proposal provides context and analysis of how work sharing fits in today's political context.  It concludes:

Work sharing may not create jobs, but it will certainly help keep those who have a job at work if employers need to reduce hours. We’ve seen this policy work—very effectively—in other countries. And it’s a relatively simple (and cheap) way to reduce unemployment here at home. For workers and their families and for the broader pace of economic recovery, Congress clearly needs to consider these job-sharing ideas, and soon.

NAF's policy brief goes into more detail, looking at the effects of work sharing in OECD countries, with special focus on Germany and Canada, as well as in the U.S. states that currently have work sharing programs in place.


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The Center for Economic and Policy Research, Center on Budget and Policy Priorities, Demos, Economic Policy Institute, Employment Policy Research Network, and Political Economy Research Institute released the following reports on labor-market policy over the past week.

Center for Economic and Policy Research

Work Sharing: The Quick Route Back to Full Employment
Dean Baker

Center on Budget and Policy Priorities

Tax Holiday for Overseas Corporate Profits Would Increase Deficits, Fail to Boost the Economy, and Ultimately Shift More Investment and Jobs Overseas
Chuck Marr and Brian Highsmith

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Let's take this great moment of national deficit hysteria to teach people a bit about the Federal Reserve Board and the deficit. The Wall Street types get very upset when the rest of the country thinks that they should have any influence over Fed policy. But the Fed is part of the government, which means until Goldman Sachs and J.P.Morgan suspend the constitution, the public through its elected representatives can tell Ben Bernanke and the Fed what to do.

One thing that the public could tell Ben Bernanke to do is to hold on to $3 trillion in government bonds and/or mortgage backed securities over the next decade, instead of selling these assets back to the public. This matters hugely for future deficits.

Although you will not hear it discussed in the Washington Post, the Fed refunds the interest it earns each year back to the Treasury. If it hold $3 trillion in bonds that earn an average interest rate of 5 percent a year (the Congressional Budget Office's projected interest rate for the longer term), this translates into $150 billion a year refunded to the Treasury. That would come to $1.5 trillion over a decade.

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The Center for American Progress, Center on Budget and Policy Priorities, Employment Policy Research Network, and Political Economy Research Institute released reports on labor-market policy over the past week.

Center for American Progress

Partnering for Compensation Reform: Collaborations between Union and District Leadership in Four School Systems
Meg Sommerfeld

Center on Budget and Policy Priorities

Camp-Hatch Proposal Would Harm Long-Term Unemployed and Weaken Recovery
Michael Leachman, Hannah Shaw, and Chad Stone

Employment Policy Research Network

Underemployment Problems Experienced By Workers Dislocated From Their Jobs Between 2007 and 2009
Joseph McLaughlin, Mykhaylo Trubskyy, and Andrew Sum

No Rights Without a Remedy: The Long Struggle for Effective National Labor Relation Act Remedies
Ellen Dannin

Why At-Will Employment Is Bad for Employers and Just Cause is Good for Them
Ellen Dannin

What We Owe Our Coal Miners
Anne Marie Lofaso

Economic Analysis of Labor Markets and Labor Law: An Institutional/Industrial Relations Perspective
Bruce Kaufman

Political Economy Research Institute

Employment Estimates for Energy Efficiency Retrofits of Commercial Buildings
Dr. Heidi Garrett-Peltier

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With much chatter over the past week about the White House suggesting an employer-side payroll tax cut to stimulate the economy and hiring, let's look at what CEPR's Dean Baker (currently on vacation) said about the Schumer-Hatch employer tax credit for new hires that was in effect for much of 2010:

There has been extensive research on the impact of the minimum wage on employment, almost all of which finds that the 15-20 percent increase in the cost of labor that resulted from recent increases in the minimum wage have led to no measurable decline in employment. If a 15-20 percent increase in the cost of labor does not cause firms to cutback employment, then we can’t believe that the 6.2 percent decline in the cost of labor from the Schumer-Hatch bill will lead to any noticeable increase in employment.

Recently, the Economix blog in the New York Times noted about this policy:

Congress passed a temporary job creation tax cut last year that does not seem to have been terribly effective.

Remember:  That tax credit was for the full 6.2% in payroll taxes paid by employers, while the current idea being floated is for a cut of only 2%, so we can assume the effect would be even more miniscule.

Are there tax cuts that could work better?

Does the phrase "Making Work Pay" ring a bell?  At the end of last year, the Making Work Pay tax credit ended.  As CEPR's Shawn Fremstad pointed out earlier this year, that policy was more progressive than a payroll tax cut, providing greater relative financial relief to low-income and disabled workers, who are more likely to spend any extra money in their pockets than those with higher incomes.

And there's an employer tax credit for work-sharing, another idea from Dean Baker. The Nation magazine this week calls it one of The Five Smartest Congressional Bills You've Never Heard Of:

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Energy prices fell in May, resulting in the slowest rate of increase in the Consumer Price Index since last November, according to the latest Bureau of Labor Statistics' reports on the consumer price, import/export price and producer price indexes. Energy prices had increased 26.4 percent since last June and 42.5 percent since the end of 2008.  However, prices had fallen rapidly in the second half of 2008 and are now 8.3 percent below their July 2008 peak. In regards to the May numbers, while we should not expect a sustained fall, it seems that energy inflation is abating.

Nonagricultural export prices rose 0.5 percent in May and have now risen 7.0 percent over the past 12 months.  While fuel accounts for about 7.6 percent of this index, driving up prices over this period, the dollar has also fallen 8.8 percent in the last year.  Consequently, the price seen by purchasers of U.S. exports in local currency has fallen by 2.4 relative to May 2010. The effect of the fall in the dollar on trade prices has resulted in conditions favorable to a reduction in the trade deficit.  Though the immediate mechanism is slightly higher inflation, the possibility of increased exports and domestic substitution of foreign goods bring welcome opportunities for the U.S. economy.

For more, check out our latest Prices Byte.

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Famous conservative economist Milton Friedman used to compare an expansionary monetary policy to the government (the Fed in this case) dropping dollar bills from a helicopter. As it is well known, that led many to call Ben Bernanke "Helicopter Ben" because of the large increase in the monetary base that he has presided over to prevent a more serious credit crunch and to save the big banks from themselves.

Nowadays many analysts, including Mr. Larry Summers, think that not much more can be achieved with expansionary monetary policy. The U.S. economy is badly in need of a new fiscal stimulus. There is a great economic, political and ideological debate over whether a new stimulus would be necessary, efficient and/or politically acceptable in the present circumstances.

Many conservatives are very much against a new stimulus, almost as much as they one day were in favor of the second war against Iraq. Perhaps it would be easier to convince them to support a new stimulus by reminding them of a little-known but quite interesting fiscal stimulus operation that happened during the Bush Administration.

It appears that during May 2004 the U.S. government sent to Iraq military cargo planes full of U.S. dollars in cash to help with the "recovery" of the Iraqi economy. It is reported that 21 flights of Hercules C-130 planes full of 100-dollar bills took place. The amount of the "stimulus" appears to have been something like 12 billion dollars. The money was distributed widely among U.S. "contractors" and Iraqi ministries. It seems also that of that money, about 6.6 billion dollars has vanished without a trace and remains unaccounted for even today.

Now that must have made the operation particularly stimulating, especially for American "contractors." It seems that it is time to relive this operation. Bring on the C-130 planes. Forget "Helicopter Ben." What we need now is "Hercules Geithner."

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