US Finds Organ Sale A Victimless Crime And Not A Moral Turpitude Offense

From Bloomberg, "Organ Broker Skirts Expulsion as U.S. Concludes His Crime Was 'Victimless' " by David Glovin:

An Israeli citizen who in 2011 became the only person in the U.S. convicted of organ trafficking will remain in the country after a federal immigration agency concluded his crime was "victimless" and not an offense of "moral turpitude," his lawyer said.

Levy Izhak Rosenbaum completed a 2 1/2-year sentence last week for brokering the sale of kidneys. By permitting his release from a New Jersey prison rather than holding him for deportation, the U.S. Immigration and Customs Enforcement agency concluded that Rosenbaum didn’t engage in a violent or immoral crime that would warrant his expulsion from the U.S., his lawyer said.

"It was a victimless crime because the recipient received a kidney and the donor was remunerated for his contribution," Edward Shulman, an immigration lawyer in Paterson, New Jersey, said in a phone interview. "Even though he was convicted, it was not immoral what he was doing."

Births To Single Moms Increasing In US For All Groups: 72 Percent Of Blacks Born To Single Mom: 36 Percent Of Whites Born To Single Mom

From The Washington Post, "The unbelievable rise of single motherhood in America over the last 50 years" by Emily Badger:

More women are having their children later in life. Or they're doing so in less traditional ways: before marriage, without marriage, or with unmarried partners. Single motherhood has grown so common in America that demographers now believe half of all children will live with a single mom at some point before the age of 18.***It [following chart] shows that more than 70 percent of all black children today are born to an unmarried mom, a three-fold increase in that rate since the 1960s:

Source: The Washington Post

US Census Hispanic Population Projection For 2050 Expected To Be 30 Million Lower Than Earlier Forecast

From PewResearchCenter, "With fewer new arrivals, Census lowers Hispanic population projections" by Jens ManuelKrogstad:

The Hispanic population is expected to reach about 106 million in 2050, about double what it is today, according to new U.S. Census Bureau population projections. But the new Hispanic population projection for 2050 is lower — by nearly 30 million — than earlier population projections published by the bureau.

Source: PewResearchCenter

Explicit Assumptions In Building Dynamic Scoring CBO Models Will Lay Bare The Ineffectiveness Of Government Programs: My Comment To BloombergView Article

My posted comment to BloombergView, "The Best Case Against Dynamic Scoring? These Guys" by Christopher Flavelle:

Let's just look at one quotation from a former CBO director June O'Neill, from the article, to see why many do not want dynamic scoring:

" 'You could attach it to anything with effects beyond cost,' she said. 'You might say education will increase growth, which should be taken into account.' That's unlikely to appeal to current Republicans, who scoff at the idea that government spending has a multiplier effect."

Yes, more useful (math, science, computer and technical) education would increase wages and economic growth, but for education to work and affect the economy, the US needs to increase its HS and college graduation rates and student reading and math test scores. Despite a tremendous increase in federal and state spending on education over the last 40 years, test scores, HS graduation rates (excluding GEDs) and college graduation rates have not increased.

So the simple answer to June O'Neill is that government spending on education, in the real world, does not increase economic growth.

The fear many have that favor government programs is that in dynamic scoring models because the models will have to include effects beyond immediate costs, the explicit assumptions that go into building them will lay bare the ineffectiveness of most government programs. Dynamic scoring and its real world test assumptions will show that the emperor has no clothes other than a law's title and a politician's speech.

85 Percent Of The 6300 Black Homicides In US Were By Black Civilians Last Year

From The Wall Street Journal, Opinion, "The Police Aren’t the Problem" by Jason L Riley:

There were about 6,300 black homicides in the U.S. last year, according to the FBI, and 85% involved black civilian perpetrators. Police officers, by contrast, were responsible for 3% of deaths, which in most cases resulted from the victim assaulting the officer (Brown) or resisting arrest (Garner). Nor do the data suggest that trigger-happy officers are gunning down black men for minor offenses. "There were 228,000 misdemeanor arrests in New York City in 2013," reports Bob McManus of the New York Post, "and every one of them had at least the potential to turn into an Eric Garner-like case. None did. So much for the out-of-control cop trope."

Affordable Care Act Fails Medicaid Enrollees, The Poor And Previously Uninsured: Half of The Doctors Listed In Medicaid Are Unavailable: The Emperor Has No Clothes

From The New York Times, "Half of Doctors Listed as Serving Medicaid Patients Are Unavailable, Investigation Finds" by Robert Pear:

Large numbers of doctors who are listed as serving Medicaid patients are not available to treat them, federal investigators said in a new report.

"Half of providers could not offer appointments to enrollees," the investigators said in the report, which will be issued on Tuesday.

Many of the doctors were not accepting new Medicaid patients or could not be found at their last known addresses, according to the report from the inspector general of the Department of Health and Human Services. The study raises questions about access to care for people gaining Medicaid coverage under the Affordable Care Act.

Lower Food Prices From Lower Oil Prices

From Bloomberg, "Cheap Oil Also Means Cheaper Commodities Amid Surpluses" by Isaac Arnsdorf:

Because energy accounts for as much as half the cost to produce food and metals, all sorts of commodities will keep dropping, according to Societe Generale SA and Citigroup Inc. With inventories ample and slowing economies eroding demand, cheaper oil lowers the price floor for mining companies and farmers to remain profitable. Corn may drop another 3 percent, cotton 6.5 percent and gold as much as 5 percent, SocGen estimates.

Costs are falling as surpluses emerge in copper and sugar and as the economy slows in China, the top consumer of energy, metals, pork and soybeans. The Bloomberg Commodity Index of 22 items is heading for a fourth straight annual drop, the longest slump since its inception in 1991. Brent crude, gasoline and heating oil are the biggest losers as an increase in U.S. drilling led to a price war with producers in OPEC. [Emphasis added.]

About One-Half Percent Of All Businesses Employ Over Half Of The Private Sector Workforce: 90 Percent Of Businesses Employ Less Than 20 Percent Of The Private Sector Workforce: Chart

From Tax Foundation, "Less Than One Percent of Businesses Employ Half of the Private Sector Workforce" by Andrew Lundeen and Kyle Pomerleau:

Source: Tax Foundation

Design Issues Of Revenue Neutral Carbon Tax: CBO Presentation

From Congressional Budget Office, "Revenue-Neutral Carbon Tax: Design Issues" November 24, 2014, Presentation by Terry M. Dinan, Senior Advisor in CBO’s Microeconomics Studies Division, to the Hoover Institution Energy Task Force Meeting at Stanford University:

Revenue Neutral Carbon Tax from Congressional Budget Office

Affordable Care Act High Deductible Health Insurance Policies Causing Insured To Delay Getting Medical Care: ACA Is Lowering Total Healthcare Costs By Lowering Healthcare Use Instead of Market Based Efficiencies From Competition Lowering Each Medical Procedure Cost

From The Wall Street Journal, "More Cost of Health Care Shifts to Consumers: High-Deductible Insurance Plans Prompt Some to Delay Treatment" by Stephanie Armour:

For the [Affordable Care Act] exchanges’ 2015 policies, which went on sale last month, “bronze- level” plans have an average deductible of $5,181 for individuals, up from $5,081 in 2014, according to a November report from HealthPocket, which publishes health insurance market analyses. Bronze plans generally cover 60% of consumers’ medical expenses.

While surveys show steeper out-of-pocket costs lead some people to defer even routine medical care, economists say the trend brings an important upside: It is helping fuel a period of historically low growth in health-care spending, which eases the federal deficit.***"There has been a steady increase in deductibles and the main effect is to reduce use," said Drew Altman, president of the nonprofit Kaiser Family Foundation. "The gradual shift to consumers having more skin in the game is encouraged as part of national policy, and it’s having an impact."***One in three Americans said they or a family member delayed medical care because of costs in 2014, according to a report last month by survey company Gallup. That is the highest percentage since Gallup began asking the question in 2001.

Not too long ago, a 50 inch plasma HDTV cost $20,000 and a 20 inch LCD HDTV cost $5500. Today, a 32 inch Samsung LED HDTV cost less than $200 and a 60 inch Vizio cost less than $800 (both are around a 96 percent reduction in price). Imagine that the US government decided that the US consumer was spending too much money on HDTVs and decided to decrease HDTV total spending by lowering the number of TVs purchased. If the US government had limited HDTV sales, HDTVs would be much more expensive today and many people would either choose to spend their money on other things or decide they could not be able to afford HDTVs.

Lowering total cost by lowering usage through government intervention is not the same as lowering the unit cost through competition. With a lower unit price through competition more people can buy the product or service. Lowering total cost without a lower unit price reduces the number of users and still leaves many who cannot afford to buy the service or product.

The Affordable Care Act does not foster medical care competition with the resulting lower unit cost of medical procedures. Instead the ACA policies lower Medicare reimbursement rates and indirectly increase consumers out of pocket expenses through higher deductibles. Both policies have the same effect of lowering medical usage. The first by limiting the supply of doctor appointments available and the second by making routine medical care unaffordable to many.

Increasing out of pocket costs to consumers is a good start to increasing competition in the medical profession, but there are so many other barriers to market based competition in the medical field that increasing the out of pocket costs is likely not enough by itself to be effective in lowering the unit cost of medical procedures.

Replace The Congressional Budget Office With A Legislation Effectiveness Office

My published comment to The Wall Street Journal Opinion, "How to Score in Congress: The GOP needs reformers to run CBO and the Joint Tax Committee:"

In the private sector, costs and revenue are associated with the same service or product. In the public sector, costs are incurred for a benefit, but the revenue is from unrelated taxes and fees.

Evaluate government programs by their effectiveness in achieving their purpose and not by the amount of taxes and fees that Congress includes in the same bill. Congress can enact the taxes and fees associated with many bills without the passage of the original program bill. The new funds could be used to lower our debt or balance our budget.

Instead of a Congressional Budget Office, the US needs an Effectiveness Office to analyze the likelihood that a proposed law or program will achieve its purposes; to study the effectiveness of previously enacted legislation in achieving stated goals.

Having ineffective programs and laws removed would do more good, then balancing the books of new programs and laws with more fees and taxes. Reorganize the CBO as a Program Effectiveness Office.

US Losing Its Competitive Edge In Attracting Top University Educated Immigrants: Increasing Share Going To Asia, Australia, Latin America, Oceania And Africa

From ScienceBlog, "Study: US attracting fewer educated, highly skilled migrants:"

The study ["Migration of Professionals to the US: Evidence from LinkedIn data" by Bogdan State, Mario Rodriguez, Dirk Helbing and and Emilio Zagheni] [weblink added], which was presented at the recent SocInfo conference in Barcelona, Spain, found that:

• While 27 percent of migrating professionals among the sample group chose the U.S. as a destination in 2000, in 2012 just 13 percent did.
  
• The decline was seen across professionals with bachelor’s, master’s and doctoral degrees.
  
• The biggest drop was among those in the science, technology, engineering and math (STEM) fields, from 37 to 15 percent.
  
• Asian countries saw the highest increase in professional migrants worldwide, attracting a cumulative 26 percent in 2012, compared with just 10 percent in 2000.
  
• Australia, Oceania, Africa and Latin America also saw an uptick in their share of the world’s professional migration flows.
  
• The U.S. attracted 24 percent of graduates from the top 500 universities worldwide in 2000, but just 12 percent in 2012.

"These other countries are attracting not only a higher share of migrants, but also migrants from the top universities in the world," Zagheni said. "That was surprising." The study...counters conventional wisdom that the U.S. is the incontestable top choice for professionals migrating from other countries.

Government Created Taxi Monopoly And Mandated Inflated Prices Broken By Free Market Competitors Like Uber And Lyft: Declines In Fares And Value Of Taxi Medallions

From The New York Times, Upshot, "Taxi Medallions Fall in Value, a Gauge of the Uber Revolution" by Josh Barro:

In major cities throughout the United States, taxi medallion prices are tumbling as taxis face competition from car-service apps like Uber and Lyft.

The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data.***In Chicago, prices are down 17 percent. In Boston, they’re down at least 20 percent, though it’s hard to establish an exact market price because there have been only five trades since July. In Philadelphia, the taxi authority recently scrapped a planned medallion auction.***A seven mile ride from the Loop to the University of Chicago in a medallion taxi costs about $26, including tip. The same trip cost $12.29 this April with UberX, the lowest-cost service option from Uber.

Viral Video Of Milwaukee Police Chief On Homicides In Milwaukee

From FOXNEWSinsider, "Police Chief Explodes on Protesters:"

Milwaukee Police Chief Edward Flynn had fiery comments for reporters after a commission meeting Thursday night concerning the shooting of a black man by a white police officer.

The crowd lashed out because Flynn was seen checking his cell phone during the meeting, but his impassioned response put critics in their place, and the video has gone viral (watch below).

Gary Becker's Legacy By Guy Sorman

From City Journal, "Markets Everywhere: How economist Gary Becker changed our lives" by Guy Sorman:

[Gary] Becker not only came up with market-based solutions to public problems; he also debunked government efforts to use extensive regulations and spending to address those problems. This was a critical task, since the regulate-and-spend nanny-state approach, which denies the rationality of individuals and their capacity to take care of themselves, is seductive to many politicians and even to the public, in part because its unintended negative consequences, both moral and fiscal, aren’t always evident at first.

Becker viewed the Bloomberg administration’s 2006 ban on trans fats in restaurants as a classic example of overreaching regulation. The administration presumed that New Yorkers were too ignorant to make decisions in their own health interests. But were they? Yes, the evidence suggested that trans fats contributed to heart disease—though the degree of harm remained unclear. But before the ban, half of the city’s restaurants didn’t use trans fats, so health-conscious consumers could already easily avoid them if they wished. Further, the ban likely raised the cost of eating out in the city. Could such a price increase lead some New Yorkers to eat more at home—and perhaps eat more trans fats, too? Policymakers ignored such a possibility. Some customers, of course, may really love trans fats and want to consume them, even knowing that they could have bad health effects in the future. Defenders of the ban would say that making that choice could increase the incidence of heart disease in the city, which would burden Medicare and hence the taxpayer—a negative externality. If this were true, though, why not just let insurers require individuals who want to eat unhealthily to pay higher premiums? Why should the government impose a new regulation that diminishes freedom?

Public policies that curb personal liberty, Becker argued, too often are based on insufficient data; politicians regularly put them into effect without considering all their potential consequences or exploring alternatives. And such prohibitions are politically hard to remove, he added, meaning that the sphere of freedom continues to shrink.

Giant Offshore Oil Projects Return To Gulf Of Mexico

From The Wall Street Journal, "Oil Boom Returns to Gulf After Deepwater Horizon Disaster: Exxon, Shell—Even BP—Push Ahead With Giant Offshore Projects" by Daniel Gilbert, Amy Harder and Justin Scheck:

For the near term, though, the activity promises to return the Gulf to prominence as a major source of U.S. energy. In 2001, the waters produced about a quarter of all American oil and gas. Since then, production has fallen by half as wells petered out and the government issued fewer permits in the aftermath of the 2010 Deepwater Horizon explosion and oil spill. Last year, the Gulf accounted for less than 10% of the country’s energy production, in part because of soaring output from wells drilled in onshore shale formations.

The new projects here, from such companies as Hess Corp. , Exxon Mobil Corp. and Chevron Corp. , have the combined capacity to pump about 900,000 barrels a day—more than the oil and gas output of California. And that doesn’t include supplies from two projects led by BP PLC, which declined to provide details on output.

Costs here have been jumping, in part because companies are drilling farther from shore and in deeper waters. Deep-water wells are up to 25% more expensive today than in 2010, according to Shell and Chevron, and can cost $300 million each. New regulations have prompted companies to add safety features such as an extra stack of valves designed to stop an out-of-control well. The failure of such a device was a cause of the Deepwater Horizon disaster.

Source: The Wall Street Journal

Professor John Cochrane's Opinion On Inequality

From The Wall Street Journal, "What the Inequality Warriors Really Want: Confiscating wealth is ultimately about political power. Koch brothers, no. Public-employee unions, yes." by John Cochrane, professor of finance at the University of Chicago Booth School of Business, a senior fellow at the Hoover Institution, and an adjunct scholar at the Cato Institute:

If some get rich and others get richer, who cares? If we all become poor equally, is that not a problem? Why not fix policies and problems that make it harder to earn more?

Yes, the reported taxable income and wealth earned by the top 1% may have grown faster than for the rest. This could be good inequality—entrepreneurs start companies, develop new products and services, and get rich from a tiny fraction of the social benefit. Or it could be bad inequality—crony capitalists who get rich by exploiting favors from government. Most U.S. billionaires are entrepreneurs from modest backgrounds, operating in competitive new industries, suggesting the former.

But there are many other kinds and sources of inequality. The returns to skill have increased. People who can use or program computers, do math or run organizations have enjoyed relative wage increases. But why don’t others observe these returns, get skills and compete away the skill premium? A big reason: awful public schools dominated by teachers unions, which leave kids unprepared even to enter college. Limits on high-skill immigration also raise the skill premium.

Americans stuck in a cycle of terrible early-child experiences, substance abuse, broken families, unemployment and criminality represent a different source of inequality. Their problems have proven immune to floods of government money. And government programs and drug laws are arguably part of the problem.

Local Rail Systems Fare to Expense Ratio: Chart

From The Wall Street Journal, "Funding Battle Looms for New York’s Subway, Buses, Bridges: Fare and Toll Increases by New York’s Metropolitan Transportation Authority Could be Overshadowed by a Battle Over Overall Transit Funding Next Year" by Andrew Tangel:

Riders of the New York City subway, the nation’s largest mass transit network, last year shouldered 63.6% of the system’s $4.8 billion in operating costs, the third-highest so-called farebox recovery ratio for such U.S. systems, according to Federal Transit Administration data.

Source: The Wall Street Journal

Opponents To Keystone XL Delayed The Pipeline But Lost The Battle Against Canadian Oils Sands Fracking And Increased US Oil Production

From Bloomberg, "Keystone Pipe Vote Tackles Questions History Answered" by Jim Snyder and Jeremy van Loon:

The 830,000 barrels per day Keystone would carry have found other paths to the U.S. Cross-border pipelines such as Enbridge Inc.’s Alberta Clipper are considering expansion. By next year, Alberta, home to the Canadian oil sands, will have built about 700,000 barrels a day of rail capacity from almost nothing a few years ago, said Patrick Kenny, an analyst at National Bank Financial in Calgary.

“A lot of work has been done to backfill the capacity that Keystone XL was supposed to represent,” Kenny said. “Keystone would have been a ‘must-have’ without all the crude-by-rail that has come on in the last couple of years.”

U.S. production, meanwhile, is booming. In 2008, wells were pumping out around 5 million barrels a day. By August, that had risen to more than 8.6 million barrels, more than a 70 percent jump, according to the U.S. Energy Information Administration.

Farmed Grown Seafood Increasingly Meeting Consumption Demands And Accounts For Over 40 Percent Of Global Fish Output

From The Wall Street Journal, "Taming the Wild Tuna: Why Farmed Fish Are Taking Over Our Dinner Plates" by Yuka Hayashi:

With a decadeslong global consumption boom depleting natural fish populations of all kinds, demand is increasingly being met by farm-grown seafood. In 2012, farmed fish accounted for a record 42.2% of global output, compared with 13.4% in 1990 and 25.7% in 2000. A full 56% of global shrimp consumption now comes from farms, mostly in Southeast Asia and China. Oysters are started in hatcheries and then seeded in ocean beds. Atlantic salmon farming, which only started in earnest in the mid-1980s, now accounts for 99% of world-wide production—so much so that it has drawn criticism for polluting local water systems and spreading diseases to wild fish.

My Comment To Peter Orszag's Bloomberg Article About CBO's Non-Partisan Analysis

From BloombergView, "A Party Hack Would Ruin the CBO" by Peter R. Orszag:

The Congressional Budget Office should be able to celebrate its 40th anniversary this coming February with pride. The agency plays a crucial role in the nation's policy-making, providing rigorous and nonpartisan analysis of the budgetary and economic issues Congress considers, and objectively estimating the cost of legislative proposals.

The occasion will be ruined, however, if the new Republican Congress breaks its long tradition of naming an objective economist/policy analyst as CBO director, when the position becomes vacant next year, and instead appoints a party hack.

My posted comment to BloombergView, "A Party Hack Would Ruin the CBO" by Peter R. Orszag:

CBO's existing methodology can be greatly improved. The current methodology is a political compromise of arbitrary analytical policies that are subject to gamesmanship and do not follow accepted financial analysis protocol. CBO's analytical policies are biased towards bigger government and tax increases over smaller government and tax reductions.

CBO uses a 10-year window for analysis and does not time-value (present value) revenue and expenses. Any costs or revenues beyond the 10th year are not considered. For example, If CBO analyzed a government annuity program that collected premiums for 10 years and did not start payouts until the 11th year, CBO would count the premiums as revenue and say the program has no payout expenses. Likewise, if all the payouts occurred in year one and an equal amount of new taxes were collected in year 10, CBO would say the program is revenue neutral, where revenue equals costs. The correct analytical way to deal with mismatched timing of revenue/ expense, and to have an analytical period that coincides with the programs expected duration, is to use a present value framework where a dollar today is worth more that a dollar tomorrow. Present value allows CBO to analyze the financial impact of a program over its expected duration with mismatched revenue and expenses beyond 10 years.

CBO uses a static economic model instead of a dynamic model. CBO assumes government programs and policies will not change projected GDP, employment, hours worked, business formations, household formations, capital investment, etc. This policy favors bigger government and tax increases since CBO does not model negative or positive effects on GDP growth or employment from tax increases/decreases or new government legislation.

CBO assumes all enacted legislation will remain unchanged. Congress regularly enacts cost savings measures that have a future start date. CBO will assume those cost savings will occur and reduce government expenses, even if Congress has a history of delaying that start date of program reductions and cost savings. Similarly, some programs have expiration provisions, but Congress regularly extends the life of program. CBO assumes the expenses will end at the legislated expiration date.

CBO does not use expected values or a probabilistic approach to outcomes. Nor does CBO discuss a range of values for modeling outcomes of a government program. Suppose a new government program has a 70 percent chance of costing $40 billion and a 30 percent chance of costing $70 billion. CBO will use the $40 billion figure to analyze the program. A proper analysis would use the expected value (average) of the cost, which is $49 billion (.7x$40b + .3x$70b).

Way Past The Time to End Teacher Tenure, Limit Charter Schools Or Deny School Vouchers In NYC

From The Wall Street Journal, "In New York City, Few Students Seek Transfers From Underperforming Schools: Some Who Ask to Change Schools Don’t Get Their Choice" by Leslie Brody:

More than 143,000 New York City students go to schools with such low test scores or graduation rates that they have the right to seek transfers to better ones.

But only 6,662 families took advantage of the option this year, according to city data, and 1,815 didn’t get the transfer they wanted.
***Such transfers can be daunting, however. Students who get them often travel long distances across the city. Working parents who don’t want their children alone on buses or subways must patch together elaborate after-school pickup plans.

Source: The Wall Street Journal

Researchers Demonstrate Non-Invasive Device To Control Another's Hand Movements Over The Internet By Thoughts

From ScienceBlog, "Study shows direct brain interface between humans:"

University of Washington researchers have successfully replicated a direct brain-to-brain connection between pairs of people as part of a scientific study following the team’s initial demonstration a year ago. In the newly published study, which involved six people, researchers were able to transmit the signals from one person’s brain over the Internet and use these signals to control the hand motions of another person within a split second of sending that signal.***The research team combined two kinds of noninvasive instruments and fine-tuned software to connect two human brains in real time. The process is fairly straightforward. One participant is hooked to an electroencephalography machine that reads brain activity and sends electrical pulses via the Web to the second participant, who is wearing a swim cap with a transcranial magnetic stimulation coil placed near the part of the brain that controls hand movements.

Using this setup, one person can send a command to move the hand of the other by simply thinking about that hand movement.

Capitalism Works: Producers, Retailers Increase Supply Of Antibiotic-Free Poultry And Meats To Meet Market Demand: No Government Regulation Needed

From The Wall Street Journal, "Meat Companies Go Antibiotics-Free as More Consumers Demand It: Food Producers Increasingly Offer Chicken, Beef and Pork Raised Without Antibiotics, Responding to Consumer Concerns About Resistant Bacteria" by David Kesmodel, Jacob Bunge and Betsy McKay:

"I was pretty apprehensive," the Kentucky farmer [Brandon Glenn] says of instructions three years ago from Perdue Farms Inc. to halt almost all antibiotic use. "How are we going to keep these chickens alive without giving them their medication? But Perdue said: ‘This is what the market is going to.’ "

Perdue is among a growing array of food producers moving to limit the routine use of antibiotics in livestock production—less in response to regulatory action than to consumer pressure.

Competitor Tyson Foods Inc. launched a brand of chicken without antibiotics last year and also markets antibiotic-free beef. Retailers where people now can buy meat raised without antibiotics include Wal-Mart Stores Inc. and BJ’s Wholesale Club Inc. Fast-food chain Chick-fil-A Inc. says it is phasing out all chicken raised with antibiotics over five years.

Source: The Wall Street Journal

As US per capita GDP increased over the years and as US poverty declined as government programs, such as SNAP (Food Stamps), supplemented the income of the poor, there is a consistent tendency of better-off consumers to change their consumption preferences to items that they perceive as higher quality. In this case, consumers are switching their consumption to a perceived higher quality meat and poultry that are antibiotic free.

At first consumers wanted low cost, readily available meats and poultry and the producers responded by increasing the supply and lowering the cost by increasing productivity at the farm level. Now that consumer product preferences and views about antibiotics are changing, the suppliers are responding to the new consumer wants for a product without antibiotics.

Pass-Through Businesses Account For Majority Of Private Sector Employment And Net Business Income

From Tax Foundation, "Most of the Private Sector Workforce is Employed by Pass-through Businesses" by Kyle Pomerleau:

In the past three decades, the importance of “pass-through” businesses has grown substantially. The combined net income of sole proprietors, LLCs, Partnerships, and S corporations has increased fivefold and now accounts for more than 50 percent of all business income. C corporations now earn less than half of all business income.

Another way to look at how pass-through businesses have increased in importance is their role as employers. Not only do they account for more than 50 percent of net business income in the United States, they account for more than 50 percent of employment too.

According to 2012 census data, 54.8 percent of all business employment (employment excluding non-profits and governments) is pass-through business employment. This represents approximately 66.6 million workers and sole proprietors. C corporations comprise the remaining 45 percent, or 54.9 million workers.

Source: Tax Foundation

Employee Wages Increase When Employers Make More Capital Investment

From The Wall Street Journal, "Obama Soaks the Rich, Drowns the Middle Class: The ripple effect of the president’s tax hikes is swamping take-home pay." in Opinion:

...the paradox that even as American businesses today are generally efficient and highly profitable, they aren’t reinvesting in new plants, equipment and technology or hiring more workers at the pace they normally would. Business investment was up last quarter—a hopeful sign—but over the recovery the trend has been sluggish.***What does investment have to do with stagnant wages? Everything. As Paul Samuelson, the premiere Keynesian economist who sold more economics textbooks than anyone in history, once explained: “What happens to the wage rate when each person works with more capital goods? Because each worker has more capital to work with, his or her marginal product [or productivity] rises. Therefore, the competitive real wage rises as workers become worth more to capitalists and meet with spirited bidding up of their market wage rates.”

History bears this out. Workers did very well in jobs and rising incomes in the 1960s, 1980s and late 1990s when capital gains and dividend taxes fell.

Top Ten Industries With Best Performing Privately Held Companies Over Past 12 Months

From Sageworks, Data Releases, "The best performing industries in the U.S. this year:"

Based on an analysis of private company financial statements, Sageworks, a financial information company, identified the ten industries with the strongest financial performance in the current economy, according to sales growth and profitability.***

Best performing industries – 12 months ended September 30, 2014

Industry	Sales Growth	Net Profit Margin	Total Current Liabilities (as % of Total Assets)
Support Activities for Mining	21.6%	10.5%	33.4%
Oil & Gas Extraction	18.6%	16.3%	26.0%
Computer Systems Design Firms	15.7%	7.4%	50.0%
Services to Buildings and Dwellings	14.2%	8.0%	41.4%
Architectural Firms	12.9%	8.6%	42.7%
Consumer Goods Rental	12.4%	7.5%	51.48%
Management, Scientific, and Technical Consulting	12.0%	10.4%	49.8%
Accounting Firms	10.0%	18.9%	38.4%
Advertising & Public Relations Firms	9.8%	7.5%	59.6%
Outpatient Care Centers	9.8%	11.8%	31.0%
Private Company Average	8.6%	6.8%	36.2%

Source: Sageworks, a financial information company (www.sageworks.com)

Growth Of Small, Independent US Beer Breweries: 2009 - 2013 Chart

From The Wall Street Journal, "How a Brewing Hobby Became a Business: Scott Smith Talks About Growing His Beer Sales—but Not Too Much" by James R Hagerty:

Source: The Wall Street Journal

1934 Depression Era Dust Bowl Drought Was Worst North American Drought In 1000 Years

From "NASA Study Finds 1934 Had Worst Drought of Last Thousand Years" in ScienceBlog:

A new study using a reconstruction of North American drought history over the last 1,000 years found that the drought of 1934 was the driest and most widespread of the last millennium.

Using a tree-ring-based drought record from the years 1000 to 2005 and modern records, scientists from NASA and Lamont-Doherty Earth Observatory found the 1934 drought was 30 percent more severe than the runner-up drought (in 1580) and extended across 71.6 percent of western North America. For comparison, the average extent of the 2012 drought was 59.7 percent.

"It was the worst by a large margin, falling pretty far outside the normal range of variability that we see in the record," said climate scientist Ben Cook at NASA’s Goddard Institute for Space Studies in New York. Cook is lead author of the study, which will publish in the Oct. 17 edition of Geophysical Research Letters.

States That Enacted Medical Malpractice Reform Did Not Reduce Rates Of Hospital Admissions Or Imaging Tests

From National Institute of Health, MedlinePlus, "Limiting Malpractice Claims May Not Curb Costly Medical Tests: ER charges haven't declined in 3 states with legislative reforms, study says:"

Emergency room physicians in three states that enacted malpractice reform continued to order imaging tests and admit patients for treatment at the same rate, even though the law had been changed to make it more difficult for patients to sue them, according to researchers at RAND Corporation, a nonprofit research organization.***"If you're looking at ways to decrease our national spending on health care or reduce waste, then you're going down a blind alley if you're spending your time thinking about malpractice reform," concluded lead author Dr. Daniel Waxman, an adjunct natural scientist at RAND and a visiting associate professor of emergency medicine at the University of California, Los Angeles.***Researchers reviewed over 3.8 million Medicare patient records from 1,166 hospital emergency rooms between 1997 and 2011. They compared care in the three reform states to care in neighboring states that did not pass malpractice reform.***The findings are published in the Oct. 16 edition of the New England Journal of Medicine.

2014 US Budget Deficit As GDP Percent Slightly Below Past 40 Year Average

From Congressional Budget Office, "Monthly Budget Review for September 2014" by David Rafferty, Joshua Shakin, and Adam Wilson:

The federal government ran a budget deficit of $486 billion in fiscal year 2014, the Congressional Budget Office (CBO) estimates—$195 billion less than the shortfall recorded in fiscal year 2013, and the smallest deficit recorded since 2008. Relative to the size of the economy, that deficit—at an estimated 2.8 percent of gross domestic product (GDP)—was slightly below the average experienced over the past 40 years, and 2014 was the fifth consecutive year in which the deficit declined as a percentage of GDP since peaking at 9.8 percent in 2009. [Emphasis added.]

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Source: CBO

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Source: CBO

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Source: CBO

US Workers Least Likely To Seek Work Abroad: Majority Of 21 To 30 Year Old Americans Willing To Relocate To Outside US

From The Wall Street Journal, Real Time Economics, "Americans Don’t Fancy Jobs Abroad. Oh, Except Millennials." by Jonathan House:

American workers are among the world’s least likely to seek employment abroad, although attitudes are changing among younger generations, a new study on worker mobility shows.

The Boston Consulting Group and The Network, an alliance of global recruiting websites, surveyed 200,000 workers in 189 countries and found that just 35% of U.S. respondents were willing to relocate to another country. That was the lowest percentage among the 31 largest countries surveyed.

However, 59% of American respondents between the ages of 21 and 30 said they would be willing to go abroad.

US Savings And Investment: 1969 - 2013 Chart

From Tax Foundation, "Losing the Future: The Decline of U.S. Saving and Investment" by Alan Cole:

As saving has declined in the U.S., though, so has investment.
  

Source: Tax Foundation

Figure 2 (above) includes all saving and investment in the U.S. as a percentage of GDP, including both the private and public sectors. Over the last four decades, saving and investment have continued on a downward trend, falling from over 10 percent of GDP to less than 4 percent today.

Saving and investment move in similar patterns overall. In general, saving is necessary to enable investment. But saving and investment are not exactly the same thing; in the U.S., investment outpaces saving. This discrepancy exists because the United States has an open economy. Foreign savers can purchase investments in our nation, and vice versa. Much of the investment in America is financed from abroad. Foreign savers, in other words, are stepping in with their savings to fund the investments that American savers cannot afford. [Footnotes omitted.]

US Real Median Household Income: 1999-2013 Graph

From The Wall Street Journal, "The President of Inequality: Policies promoting equality over growth have damaged both:"

As the nearby chart shows, incomes fell after 1999 through 2004 but then rose again for three straight years and nearly reached the 1999 level in 2007 at $56,436. The bottom fell out with the 2008 financial panic and recession, as you would expect. But the amazing fact of the Obama years is that incomes did not rebound with the recovery as they have in every other expansion. Only in 2013 did incomes begin to pick up modestly, five long years into recovery.

Even then real median income did not increase in 2013 in 36 states. Instead, the gains were concentrated in metro areas like Washington-Arlington-Alexandria (median: $90,149), San Francisco-Oakland-Hayward ($79,624) and Boston-Cambridge-Newton ($72,907). Wyoming amid the fracking revolution was another standout, with the median rising 5.7%.

Source: The Wall Street Journal

$2 Trillion Funding Gap At Largest US Public Pensions

From Bloomberg, "Largest Public Pensions Face $2 Trillion Hole, Moody’s Says" by Brian Chappatta:

The 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities, showing that investment returns can’t keep up with ballooning obligations, according to Moody’s Investors Service.

The 25 biggest systems by assets averaged a 7.45 percent return from 2004 to 2013, close to the expected 7.65 percent rate, Moody’s said in a report released today. Yet the New York-based credit rater’s calculation of liabilities tripled in the eight years through 2012, according to the report.

"Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns," Moody’s said. "This growth is due to inadequate pension contributions, stemming from a variety of actuarial and funding practices, as well as the sheer growth of pension liabilities as benefit accruals accelerate with the passage of time, salary increases and additional years of service."

20 Percent Of Pumped US Oil Ship Via Rail: Railroad Revenue For Hauling Crude In 2013 Was 80 Times 2008 Revenue

From The Wall Street Journal, "Dangers Aside, Railways Reshape Crude Market: Shipping Crude by Rail Expands as New Pipelines Hit Headwinds and Train Companies Reap Revenue" by Russell Gold and Chester Dawson:

Today, 1.6 million barrels of oil a day are riding the rails, close to 20% of the total pumped in the U.S., according to the Energy Information Administration, chugging across plains and over bridges, rumbling through cities and towns on their way to refineries on the coasts and along the Gulf of Mexico. If all the railcars loaded with crude on one day were hitched to a single locomotive, the resulting train would be about 29 miles long.

Initially conceived of as a stopgap measure until pipelines could be constructed, and plagued by high-profile safety problems, crude by rail has nevertheless become a permanent part of the nation's energy infrastructure, experts say. Even pipeline companies have jumped into the rail business, building terminals to load and unload crude.

Behind the new industry are powerful economics. While it costs a bit more to ship petroleum on trains than through pipelines, railroads have the flexibility to deliver it to wherever it will fetch the highest prices. And capital expenses are far lower. Major railroads' revenue for hauling crude has jumped from $25.8 million in 2008 to $2.15 billion in 2013, according to federal data.

Government Poverty Program Spending Averages To $87,000 For A Family of Four

From The Wall Street Journal, "A Republican War on Poverty: The myth about the uncaring GOP is being debunked again." by Gary MacDougal:

... the Rube Goldberg patchwork of 126 federal safety-net human-services programs focused largely on the 46 million Americans now in poverty. Including state-level programs, annual government spending on these programs is almost $1 trillion. Dividing $1 trillion by 46 million shows an average of $21,700 for each American in poverty, or nearly $87,000 for a family of four. That's almost four times the $23,850 a year federal poverty line for that family. While not practical, a cash payment of that amount would lift everyone in poverty well into the middle class. Clearly we are not getting the results we should from this enormous level of spending. [Emphasis added.]

CBO Starts A Youtube Channel

From Congressional Budget Office, "CBO Launches YouTube Channel" posted by Doug Elmendorf on September 12, 2014:

CBO is excited to announce the launch of its YouTube channel! We will post videos of Congressional testimonies, press briefings, and other events involving CBO at www.youtube.com/uscbo.

The Credit Card Premium Effect: Higher Spending Per Item

From Bloomberg, "Apple Pay Could Make You Poorer" by Cass R. Sunstein:

A little social science: People who use credit cards tend to give bigger tips at restaurants and spend more at department stores. They are also more likely to forget, or to underestimate, the amounts of their recent purchases.

A study in 2001 by the Massachusetts Institute of Technology's Drazen Prelec and Duncan Simester found that people pay a substantial "credit-card premium," meaning a higher expenditure for a given good simply because they are using a credit card rather than cash. Their experiment showed that the premium may be as high as 100 percent, at least when the market price of the good is uncertain (such as tickets for a sold-out sporting event). Even for ordinary goods, where market prices are easy to find, they found a credit-card premium of as much as 36 percent.

You might think that credit cards are special, because people are essentially borrowing money. Maybe the credit-card premium is a product of the time lag between consumption and payment. But a study in Denmark, made public this year, finds that when university students use debit cards rather than cash, they are willing to spend significantly more on coffee and beer.

Chart Of Franchisers With Highest SBA Default Rates: 2004 Through 2013

From The Wall Street Journal, "Franchise Brands With Higher-Than-Average Default Rates: Quiznos, Cold Stone Creamery, Planet Beach Franchising, Huntington Learning Centers Franchisees Had Trouble" by Sarah E. Needleman and Coulter Jones:

Source: The Wall Street Journal

60 Percent Of NY Baby Boomers Will Likely Move Out Of State Upon Retirement: High Taxes And Utility Costs A Factor

From The Washington Post, "New York’s Baby Boomers might give up on their state for retirement, study finds" by Niraj Chokshi:

Among working, voting New York Baby Boomers, 73 percent said they’re more confident than not that they will be able to retire, according to an AARP study published Monday. Of that group, exactly 3 in 5 say it’s likely they will retire out of state.
***The study estimates the impact of their departure at $105 billion annually—the sum of the estimated 1.6 million retirees likely to leave, an average retirement income of $28,000 and a retirement-dollar economic multiplier of $2.36.***About half of the 50+ population—52 percent—noted a high level of concern over property taxes and utilities costs, while slightly more than one in three were concerned about monthly rent or mortgage payments.

Source: The Washington Post

Resale Ticket Prices For US Open Tennis Men's Final Drop With Lack Of Star Power Players

From Bloomberg, "U.S. Open Final Ticket Prices Plunge Without Star Power" by Eben Novy-Williams:

The odds before the [US Open Tennis] tournament of [Kei] Nishikori and [Marin] Cilic meeting in the final were 1,000-1, according to U.K. bookmaker William Hill Plc. (WMH) Both men entered the tennis season’s final major tournament with 66-1 odds of winning the title.

Yesterday morning, the day after the semifinal upsets, the average price paid for resale tickets for today’s 5 p.m. final at the National Tennis Center in New York had fallen 26 percent to $390, according to ticket aggregator Seatgeek. Analyst Connor Gregoire said the $147 get-in price was the cheapest the company had seen for a U.S. Open men’s final since it began tracking the event in 2010.***The average ticket sold for today’s match is $390, down $136 from the $526 average three days earlier, when Federer and Djokovic were both favored to make the championship match, according to Seatgeek. In that time span, the resale price of courtside seats has dropped 19 percent to $1,542.

2014 Annual Medicare Trustees Report Plus Link To Errata Sheet

Medicare Trustee Report 2014

Link to Errata Sheet for the 2014 Medicare Trustee Report.

Link to the Centers for Medicare and Medicaid Services website to download the trustees report from the government website.

Median Age Of TV Viewers Aging Faster Than US Population

From The Washington Post, "TV is increasingly for old people" by Cecilia Kang:

TV is increasingly for the old, and the Internet is for the young, according to new research by media analyst Michael Nathanson of Moffett Nathanson Research.

The median age of a broadcast or cable television viewer during the 2013-2014 TV season was 44.4 years old, a 6 percent increase in age from four years earlier. Audiences for the major broadcast network shows are much older and aging even faster, with a median age of 53.9 years old, up 7 percent from four years ago.

These television viewers are aging faster than the U.S. population, Nathanson points out. The median age in the U.S. was 37.2, according to the U.S. Census, a figure that increased 1.9 percent over a decade. So to put that in context of television viewing, he said TV audiences aged 5 percent faster than the average American.

US Subsidiaries Of Foreign Based Companies Have Higher Effective US Tax Rates Than US Based Companies

From the Tax Foundation, "IRS Data Contradicts Kleinbard’s Warnings of Earnings Stripping from Inversions" by Scott A. Hodge:

... IRS data actually shows that the U.S. subsidiaries of foreign-based companies have smaller interest deductions relative to their total receipts than do American-headquartered firms and, interestingly, they have higher effective tax rates than their domestic counterparts.

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Source: Tax Foundation

New York State Has Slowest Growth in Millionaires In US

From the Tax Foundation, "New Study Finds New York Growth in Millionaires Slowest in the Nation" by Josh D. McCaherty and Lyman Stone:

The Empire Center, a nonpartisan think tank in New York, released a report today suggesting that New York has lagged behind the rest of the nation in making new millionaires. From 2011-2012, the United States on the whole saw a 29 percent increase in the number of millionaire tax filers. New York however saw only a 14.6 percent increase in the same period, the lowest rate of growth in the country.

The report further points out that New York had also "trailed the national rate of increase in the number of taxpayers earning AGI of $200,000 or more." Authors E.J. McMahon and Daniel Russo argue that these are troubling indicators and point to weaknesses in the state’s economic growth and wealth creation. In fact, there is good reason to believe taxes may play a role in slowing the rate at which states gain new millionaires.

One deterrent for the state’s wealth creation is its "Millionaires Tax."***At least some portion of New York’s slow millionaire growth may be due to migration. This can be seen from our state migration map, which shows that from 2000-2010, New York had a net loss of $45.6 billion in personal income from people leaving the state. While the state remains a leader in terms of millionaires per capita for now, the state’s continuing high taxes may help other states take the lead. Just since 2010, New York’s share of millionaires nationwide fell from 12.7 percent to 11.2, while Texas’ rose from 8.5 percent to 9.3.

US Counties That Have Received The Most Undocumented Immigrant Children: Map

From The Washington Post, "Map: The counties that have received the most undocumented immigrant children" by Niraj Chokshi:

Counties with more than 50 undocumented immigrant kids. Click to view interactive version 
Source: Niraj Chokshi/The Washington Post

US Interest Payments On Government Debt Will Triple Over The Next Decade: CBO

From Congressional Budget Office, "CBO’s Projection of Federal Interest Payments" Posted by Wendy Edelberg, Assistant Director for Macroeconomic Analysis, on September 3, 2014:

Federal debt held by the public will reach about $12.8 trillion by the end of this fiscal year, an amount that equals 74 percent of the nation’s total output (gross domestic product, or GDP) this year. If current laws generally remained unchanged—the assumption that underlies CBO’s baseline projections—CBO projects that such debt would climb to $20.6 trillion, or 77 percent of GDP, in 2024.

Interest payments on that debt represent a large and rapidly growing expense of the federal government. CBO’s baseline shows net interest payments more than tripling under current law, climbing from $231 billion in 2014, or 1.3 percent of GDP, to $799 billion in 2024, or 3.0 percent of GDP—the highest ratio since 1996. The rising debt accounts for some of that increase, but much of it stems from CBO’s expectation that—largely owing to the improving economy—the average interest rate paid on that debt will more than double over the next 10 years, from 1.8 percent in 2014 to 3.9 percent in 2024. (Although interest rates are projected to rise sharply, CBO’s current projections of those rates are lower than its projections earlier in the year, reflecting the agency’s reassessment of the factors influencing real interest rates.)[Emphasis added.]