Economy Experts

Transforming the Highway Trust Fund

Tue, 22 Feb 2011 13:30:00 GMT

A single paragraph in the Transportation Department's fiscal 2012 budget could fundamentally alter the funding mechanism for highways and other transit. The administration is calling for replacing the current highway trust fund with a "transportation trust fund" that will have separate accounts for highways, transit, high-speed rail, and a national infrastructure bank. In the near term, this means that highways would see only a slightly smaller share of the overall national transportation funds that also go to inter-city transit and passenger rail. But over a longer period of time, the move away from a dedicated highway trust fund signals the administration's desire to wean the country away from the automobile.

Transportation Secretary Ray LaHood says the idea is to streamline disparate pots of money into a larger pool that will make the agency more nimble in funding good projects. The department also has proposed consolidating 55 separate highway programs into five to give states and communities the opportunity to build on the projects they identify as priorities.

Is this a good idea? Does it make sense to think of the various components of transportation as a whole entity rather than parcel them into distinct areas? Are there dangers to what the administration is proposing? Would a streamlined government make it easier or harder for states and cities to navigate the funding process?

How much further can the housing market sink?

Mon, 13 Dec 2010 21:14:29 GMT

Home prices have plunged by about one-third since the peak of the housing bubble, according to the S&P/Case Schiller composite index of 20 major cities. Sales of new and existing homes slumped again after the expiration of the Home Buyer's tax credit. And on Monday, Corelogic reported that 22.5 percent of residential properties were underwater in the third quarter, meaning the mortgage was higher than the property's resale value. All this at a time when the Federal Reserve has pushed mortgage interest rates down to nearly all-time lows.

What is holding the market down, despite cheap money and often firesale prices? Is there anything more the government can or should do?

What Can Be Done for the Housing Market?

Mon, 13 Dec 2010 19:00:14 GMT

How much further can the housing market sink? When will it begin to rebound?

Home prices have plunged by about one-third since the peak of the housing bubble, according to the S&P/Case Schiller composite index of 20 major cities. Sales of new and existing homes slumped again after the expiration of the homebuyer tax credit. And on Monday, CoreLogic reported that 22.5 percent of residential properties were underwater in the third quarter, meaning the mortgage was higher than the property's resale value. All this at a time when the Federal Reserve has pushed mortgage interest rates down to nearly all-time lows.

What is holding the market down, despite cheap money and often fire-sale prices? Is there anything more the government can or should do?

A Split on Monetary Policy?

Mon, 15 Nov 2010 14:22:06 GMT

In the two decades before the financial crisis, there was remarkably little partisan or ideological disagreement among economists about how the Federal Reserve should conduct monetary policy. Liberals and conservatives both wanted to keep inflation below about 2 percent and unemployment below about 5 percent. Disagreements were over nuance and timing, not about overall direction. But this week, economists with Republican ties are running newspaper ads warning that the Fed's decision to pump an extra $600 billion into the economy - "quantitative easing" - will debase the dollar and spur inflation. Economists with Democratic leanings say the real danger is the opposite: deflation and double-digit unemployment.

Is there a deepening partisan or ideological split among economists about monetary policy? And if so, what does that say about the state of economics? Do sophisticated models and data analysis take a back seat to political opinion?

What Are the Prospects for 'Balanced' Growth?

Mon, 08 Nov 2010 13:38:11 GMT

When President Obama meets with leaders from other Group of 20 nations this week, what is he most likely to accomplish in terms of persuading countries to adopt more "balanced'' growth strategies? The United States has been imploring countries that rely on exports for growth and have huge trade surpluses, especially China, to work harder at spurring domestic consumption. But now Asian countries are complaining that the United States is intentionally devaluing its currency through the Federal Reserve's new "quantitative easing" program. Has the Fed made the president's case harder to sell?

What Will Gridlock Mean?

Mon, 01 Nov 2010 12:29:23 GMT

Will the prospect of greater political gridlock in Washington, especially on deficit reduction, become a tangible source of fear in financial markets? If Republicans block any tax increases and neither side wants to touch entitlement spending for anybody older that 55, what are the chances Congress can come up with a credible plan for bring down deficits over the next five to ten years?

Any Progress From G-20?

Mon, 25 Oct 2010 12:32:16 GMT

Did Group of 20 ministers make any progress toward agreement on currency and "balanced growth" issues at their weekend meeting in South Korea? Based on what happened, what do you think the prospects are for the G-20 summit next month?

-- Ed Andrews, NationalJournal.com

Perspective on the Foreclosure Scandal

Mon, 18 Oct 2010 12:37:07 GMT

All this past month, the foreclosure fraud scandal has been spreading, and toward the end of this week, markets began taking notice -- punishing stocks of banks exposed to documentation fraud. But what are the real implications of this morass? In a year, will we look back on this as a mere blip or as something far more weighty -- and why?

Any Silver Linings In Jobs Report?

Tue, 12 Oct 2010 11:49:00 GMT

Last week's jobs report from the Labor Department brought more bleak news: weak private-sector job growth, an unemployment rate steady at 9.6 percent and a net national jobs loss, due largely to layoffs in state and local governments. As you look closer at the Labor Department report, do you see any cause for optimism? If there's a silver lining for this economy, where is it?

How Would You Steer Fed On Quantitative Easing?

Mon, 04 Oct 2010 11:58:00 GMT

Remarks last week from New York Fed President William C. Dudley and Chicago Fed President Charles Evans suggested that the Fed is leaning toward another round of quantitative easing. The next Federal Open Market Committee meeting isn't until early November, but let's say it was held today -- and you got to take part. What course of action would you advocate and what factors would you cite to try to convince an increasingly divided committee?

How Would GOP's 'Pledge' Affect Economy?

Mon, 27 Sep 2010 14:00:00 GMT

The Republican Party's "Pledge to America," released last week, contains several measures intended to boost the economy and stimulate job growth. It calls for more than $100 billion in unspecified spending cuts, permanent extension of all Bush-era tax cuts and a requirement for Congress to approve any executive-branch regulations that carry significant fiscal impacts. If the "Pledge" agenda were fully implemented, how would it affect the American economy, immediately and in the long term?

How To Put Businesses' Cash Reserves In Play?

Mon, 20 Sep 2010 12:01:00 GMT

The Federal Reserve confirmed on Friday that corporate America is still quietly sitting on $1.8 trillion in unspent cash and assets. President Obama, top Republicans and business leaders are all trying to bring that money in from the sidelines because, if invested, it could put millions of Americans to work. But no policy so far has succeeded in cracking the code to unleash that spending. What's holding business back from spending its cash, and what should Washington do to change that?

How Would You Speed Up Recovery?

Mon, 13 Sep 2010 13:30:00 GMT

With the economic recovery sputtering, leaders in both parties have put forward proposals intended to jumpstart job growth. Last week, President Obama proposed a $50 billion R&D tax credit and a provision allowing businesses to expense investment costs. Republicans leaders have kept up a steady drumbeat for spending cuts and full extension of the Bush tax cuts. Neither party, though, has offered many genuinely new ideas leading up to the election. What measure that you haven't heard advocated by party leaders would you propose to best speed economic recovery -- and why is it better than the proposals currently in play?

Fed Option: Buying More Debt

Mon, 30 Aug 2010 12:30:00 GMT

Federal Reserve Chairman Ben Bernanke seemed to indicate last week that more purchases of non-Treasury assets are a prominent option for the Fed if the economy continues to flag. While the Fed has little experience in these purchases, he said, selling off these assets when necessary to quell inflation should be simple. But plans to sell off its $1.3 trillion portfolio of mortgage debt are complicated by the state of the housing market. How do you assess the risks and the benefits of more asset purchases?

Do Tax Rebates Work?

Mon, 23 Aug 2010 12:38:32 GMT

New survey research indicates that recent efforts to stimulate the economy with tax rebates have been remarkably inefficient. The 2008 rebate, distributed in a lump sum check, led only 25 percent of recipients to increase spending, according to this paper. Partly because of evidence that the 2008 rebate didn't work very well, the 2009 rebate was spaced out and delivered in the form of lower tax withholding in paychecks. And yet, the same paper found this withholding was only half as effective -- 13 percent of recipients said they increased spending as a result. Should we scrap income tax rebates as a stimulus option? Which would be more effective? What about the idea of handing out gift cards?