Economic Daily Outlook

MONDAY, MARCH 26, 2012



Economists see higher taxes as way to cut deficit

Economists say a combination of higher taxes and lower spending is the best way to reduce the federal budget deficit.

A survey on economic policies conducted by the National Association for Business Economists released Monday also forecast that short-term interest rates would remain at current levels for at least another year.



EDITORIAL: A Long Road to Regulating Derivatives

If there is one lesson from the financial crisis that should be indelible, it is that unregulated derivatives are prone to catastrophic failure. And yet, nearly four years after the crash, and nearly two years since the passage of the Dodd-Frank law, the multitrillion-dollar derivatives market is still dominated by a handful of big banks, and regulation is a slow work in progress.

That means Americans, and the economy, remain at risk. Properly regulated, derivatives — financial instruments that hedge risk — help to stabilize the economy. Unregulated, they are all too easily converted into tools for vast speculation, as demonstrated by their role in inflating the real estate bubble, amplifying the bust and provoking the bailouts. Unreformed, they will cause havoc again.



Week ahead: Supreme Court weighs health law’s fate

President Obama’s healthcare law goes before the Supreme Court this week, inaugurating another high-stakes fight over the biggest domestic policy achievement of his time in office.

The court is set to hear six hours of oral arguments over the healthcare law — a modern record. The proceedings begin Monday with a debate over whether the court can issue a ruling on the law’s individual mandate before it goes into effect in 2014. The justices will tackle the fundamental constitutional issues Tuesday.

5 things to watch in health law arguments

The Super Bowl for Supreme Court watchers kicks off this week as the justices hear three days of oral arguments in what could be the blockbuster case of a generation: whether President Barack Obama’s signature law overhauling the American health care system is constitutional.

The stakes couldn’t be higher for Obama, for the balance of power between the states and federal government and for the reputation of the court itself.

Here’s a user’s guide to some key questions longtime court observers say they’ll be asking.

Also in Healthcare:

Supreme Court Oral Arguments on Anti-Injunction Act at 10AM

Audio Recordings Released by C-SPAN around 1PM



Speaker Boehner goes toe-to-toe with Obama over Keystone, rising gas prices

If you want to see Speaker John Boehner (R-Ohio) get riled up these days, ask him about President Obama’s energy policy.

The Speaker has been hammering the president over energy for months, first over his delay of the Keystone pipeline and more recently as gas prices have risen.



OPINION: Ignoring a reform that works (Leonie Haimson)

Two thirds of teachers are experiencing increased class sizes at their schools due to budget cuts, according to a recent national MET life survey. The problem is particularly evident for those who teach in urban areas with large numbers of at-risk students. In schools from New York to Arizona, Texas to California, class sizes in many schools have swelled to thirty or more, denying teachers a real opportunity to teach and children a real chance to learn.

The same survey showed that these worsening conditions have caused a sharp drop in teacher morale, which has fallen to the lowest level in 20 years. As a result, a growing number of teachers say they intend to quit the profession in the next few years. Swelling class sizes and budget cuts have also led to a growing pessimism, with nearly half of teachers saying that it is unlikely that student achievement will have improved five years from now.



Obama urged North Korea to show ‘courage to pursue peace’

President Obama on Monday pressed North Korea’s new dictator Kim Jong-Un to “have the courage to pursue peace” and said that if the leadership in Pyongyang didn’t change course, the nation would be faced with “more broken dreams” and isolation.

During a speech to college students in Seoul–held at the beginning of a two-day Nuclear Security Summit–Obama spoke directly to the new regime in Pyongyang, telling the leadership that the U.S. has “no hostile intent toward your country” and was “committed to peace.” But a stern Obama also warned North Korea that the “provocations and pursuit of nuclear weapons have not achieved the security you seek,” but they have “undermined it.”

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