QUOTE OF THE DAY
Bloomberg: Obama Says U.S. Needs Revenue Along With Spending Cuts
President Barack Obama said there is “no doubt” the government needs new revenue from closing tax “loopholes” and limiting deductions, along with enacting spending cuts, to reduce the federal deficit.
There’s “no reason why we can’t have really strong growth in 2013,” the president said in an interview with CBS television today before the network’s Super Bowl broadcast. He cited a recovering housing industry, strong manufacturing and rising car sales.
“There is no doubt we need additional revenue, coupled with smart spending reductions in order to bring down our deficit,” he said. “I don’t think the issue right now is raising rates.”
Two reports last week suggested worrying signs about the economy. The Commerce Department said Jan. 30 that the gross domestic product, the volume of all goods and services produced, dropped at a 0.1 percent annual rate in the fourth quarter, the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession.
The fourth-quarter drop in GDP was largely due to a decline in government outlays and a smaller gain in inventories that subtracted a combined 2.6 percentage points from growth, Commerce Department data showed Jan. 30.
CNBC: Dow 14,000 Fuels a New Wealth Boom
The next American wealth boom has officially begun.
It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven't seen since the Roaring Oughts.
The stock market has gone from wealth destroyer to the nation's largest manufacturer of new millionaires and billionaires. The market moves are creating a new virtuous cycle of confidence for the wealthy. A new survey from Spectrem Group shows that millionaire confidence in the economy hit the highest level in two years, led by their bullishness on the economy and corporate earnings.
The big question now is what the next Gilded Age will look like, who will benefit and how long the market-fueled prosperity will last.
Chicago Tribune: All they want is a choice
On Aug. 11 inside a school gymnasium in West Englewood, more than 200 parents scribbled their child's name on a pink raffle ticket.
They crossed their fingers, prayed and waited.
Representatives of Freedom to Learn Illinois fished the names of 15 youngsters out of a bin. The kids whose names were called won scholarships to attend private schools of their choice. They wouldn't be stuck at their designated neighborhood school. Fifteen children from at-risk families went home that day with a new backpack and a chance.
School choice gives parents alternatives to traditional public schools. In some states, parents are given a voucher — public money — that they can spend on private school tuition.
Illinois does not offer broad, state-sponsored school choice. Nonprofit organizations such as Freedom to Learn Illinois have tried to fill the void, but their reach is limited.
Teachers unions routinely block attempts to implement school choice, including a pilot program pushed by former state Sen. James Meeks in 2010 that would have helped more than 20,000 kids transfer out of chronically underperforming, overcrowded Chicago public schools. The unions don't want the competition.
Ad Age: How Oreo won the Brand Bowl: "Dunk in the dark"
For all the planning and millions of dollars that go into the creation of Super Bowl commercials, arguably the best ad of the game last night was a tweet.
CBS's broadcast of the Super Bowl was thrown into confusion and delay in the third quarter on Sunday when power in half of the Mercedes-Benz Superdome went out, prompting a surge of attempts at humor on Twitter, temper tantrums on the sideline and a decision by the network to let commentators riff without commercial break.
When the game resumed, commercials did, too, but not before disrupting the Ravens' momentum in a blowout against the 49ers -- who scored their first touchdown only after the long interruption and scored another touchdown soon after. CBS even displayed a presumably unprecedented stat on the screen: "Total Yards Since Power Outage."
Baltimore ultimately held on to their lead and won the Super Bowl. But viewers and the network were distracted from the traditional game-and-ad spectacle -- if viewers stayed around instead of switching to the "Puppy Bowl" over on Animal Planet during the interlude. CBS seemed to repeat commercials that had already aired.
Some quick-thinking brands, however, jumped into the disarray. Bud Light and Speed Stick bid on promoted tweets pegged to the term "power outage," so people who searched for that phrase saw their tweets.
Mercatus Center: Public pension plan portfolios: pursuing higher risk at what cost?
How should a public sector pension plan invest its assets? A trend since the 2007 financial crisis is public pension funds making up for losses by seeking higher returns in riskier portfolios. Michael Corkery at The Wall Street Journal takes a look at the Texas Teachers’ Retirement Fund which is placing more of its assets in private equity in an attempt to “hit its target” of 8 percent annual returns. Therein lies the problem.
Due to how public pension liabilities (i.e. the benefits owed to retirees) are valued (based on the expected return on plan assets), there is pressure to invest plan assets to achieve a targeted return that is linked to how the liability is valued. This approach is deeply flawed and been criticized often. Instead, plan assets should be invested in a way that hedges the risks inherent in the liability. These risks include changes in wages and interest rates since the value of the retiree’s benefits is affected by changes to wages and are usually indexed to inflation.
In a recent paper in the Journal of Pension Economics and Finance entitled Portfolio Allocation for Public Pension Funds, George Pennachhi and Mahdi Rastad find that a “benchmark” portfolio for public pensions would consist of 160 percent fixed income, with a 9 percent short position in equities, a 67 percent short position in hedge funds and a 24 percent investment in private equity. A short position implies the fund should borrow in other asset categories to increase its holdings in fixed income. Where short selling isn’t feasible or permitted one would take a 100 percent position in fixed income.
MarketWatch: 10 best-paid jobs, no bachelor’s required
There’s hope for Homer Simpson. Though most believe the path to prosperity runs through the college quad, it’s possible to earn a good salary without earning a bachelor’s degree first, according to a new survey. In some cases, graduates get great returns on a two-year community-college degree, the study by CareerBuilder.com and Economic Modeling Specialists, an employment analytics firm, found. In some ways, a graduate with a bachelor’s degree in philosophy may be less marketable than someone with two years of technical education, experts say. “It does help if your training directly relates to your profession,” says a spokesman for Generation Opportunity, a nonprofit think tank in Arlington, Va. One word of caution: In today’s economy, prospects may be dwindling for those with two-year associate’s degrees. “Nearly one in five employers reported that their educational requirements for jobs in their organizations have increased over the last five years,” says Brent Rasmussen, president of CareerBuilder North America. With that caveat in mind, here are the top 10 best-paid jobs that do not require a four-year degree.
News Gazette: Progressive tax flim-flam
Beware of legislators pushing tax hikes under the guise of saving you money.
Hang on to your wallets, because the politicians are coming after your money once again — all in the name of progress, of course.
It's called the progressive income tax, escalating rates of taxation as income escalates. Illinois has a flat income tax rate of 5 percent while 34 states have a progressive state income tax.
Gov. Pat Quinn, state Rep. Naomi Jakobsson, D-Urbana, and state Sen. Michael Frerichs, D-Champaign, among others, are backing a proposed state constitutional amendment to shift Illinois from a flat tax rate to progressive tax rates. It very well could be approved this year or next by the General Assembly and then put up for a public ratification vote in the 2014 election.
They sell it as a means of lowering state income taxes on most people while generating a substantial increase in revenues. That's enough right there to raise suspicions.
The devil, of course, is in the details. But legislators won't even get to them until the amendment is sold to voters and the specific tax rates are addressed in subsequent legislation.
Reuters: Revenue must be part of any budget deal: Senator Reid
The top Senate Democrat said on Sunday tax revenue must be part of any deal to replace looming automatic spending cuts, despite Republican warnings that they will not buckle over this issue after conceding on tax rises for the rich a month ago.
In separate remarks, Defense Secretary Leon Panetta also took aim at the $85 billion in across-the-board spending cuts, known as the sequester, which bite on March 1 unless Congress takes action, and warned they would harm U.S. security.
Senate Majority Leader Harry Reid said the American people backed his party in the argument over tax increases and spending cuts, singling out tax breaks for oil companies and corporate jets as examples of loopholes he would close.
"The American people are on our side. The American people don't believe in these austere things. We believe that the rich should contribute," he told ABC News program "This Week With George Stephanopoulos."
CARTOON OF THE DAY