Forecasters keep eye on looming ‘Solar Max’ The coming year will be an important one for space weather as the Sun pulls out of a trough of low activity and heads into a long-awaited and possibly destructive period of turbulence. . "The latest prediction looks at around midway 2013 as being the maximum phase of the solar cycle," said Joe Kunches of the Space Weather Prediction Center at the US National Oceanic and Atmospheric Administration (NOAA). But there is a prolonged period of high activity, "more like a season, lasting about two and a half years," either side of the peak, he cautioned. At its angriest, the Sun can vomit forth tides of electromagnetic radiation and charged matter known as coronal mass ejections, or CMEs. They can unleash static discharges and geomagnetic storms that can disrupt or even knock out the electronics on which our urbanised, Internet-obsessed, data-saturated society depends.
Tax Revenues Gain, but Still Below Peak – State and local tax revenues continue to recover as the economy improves, but remain below pre-recession peaks and are likely to face continued pressure in 2011. Combined state and local tax revenues rose 5.2% to $284.3 billion in the third quarter of 2010 from the same period a year ago, the Census Bureau reported Wednesday. That was a big reversal from the third quarter of 2009, when tax revenues fell by 5.4% from the year-earlier period. This gain in third-quarter revenues was driven in part by increases in income- and sales-tax receipts, which have rebounded along with Americans’ salaries and spending. Many cities and states have also passed income- and sales-tax increases to battle falling receipts during the recession. Personal income tax receipts rose 4.8% in the third quarter while sales taxes rose 4%, according to the Census. Corporate income tax collections, which are volatile, fell 3.3% in the quarter.
States’ Revenues Continue Upward Trend — State tax revenues rose for a third consecutive quarter, continuing the reversal of a downward trend that has devastated state budgets, according to preliminary data in a new report from the Rockefeller Institute of Government. Despite the improved collections in July-September 2010, however, revenues remain significantly below peak levels and are still weak in a number of states, the report shows. Tax collections increased by 3.9 percent in the third quarter of 2010, compared to the same period a year earlier, based on data from 48 states. Of states reporting, 42 showed gains in overall tax revenues. Collections improved for the two largest revenue sources — personal income and sales taxes — while corporate income tax revenues declined slightly.
State Budget Cuts: The Undeclared War on the Middle Class – The next round of the Great Recession — the feared “double dip” in employment — is coming. The Federal Reserve Board is so worried about it that it is encouraging inflation. What policy makers are not saying is that the next round will be the direct result of government policy and that this round will disproportionately target women, families and the most vulnerable. The explanation is simple. In a recession, tax revenues fall, increasing deficits. State governments are required by law to balance their budgets, so they must either raise taxes or cut spending. Doing either in the middle of a recession makes it worse by increasing unemployment and reducing the money people have to spend, setting off another round of economic decline. Since the Great Depression, economists have emphasized the importance of efforts to counter this vicious cycle. Republicans, starting with Nixon, have argued that revenue sharing that sends federal money to the states is the most effective way to save jobs and avoid waste.
Marginal Income Tax Rates and Economic Growth, Ctd. – Building on yesterday’s post about Mike Kimel’s data crunching of top marginal rates vs. economic growth, today Kimel has created a handy bar chart of t+1 real GDP growth vs. top marginal income tax rate. Personally, I’d like to see some numbers run on effective tax rates vs. GDP growth (not to mention some inclusion of state and local tax data), but Kimel’s use of the data shows pretty effectively that cutting the top marginal income tax rate does not, in fact, lead to improved economic growth–if there was a cause and effect relationship between low taxes and improved economic growth, there would definitely be a stronger correlation between the two–but there simply isn’t. This is contra the opinions of pretty much all mainstream economists, and defiitely contradicts one of the fundamental talking points of conservative politicians. It also, I might add, goes against what my intuitive expectations would lead me to believe. But the numbers are what they are
A new type of wind-turbine platform can be placed much farther from shore. – Deepwater Wind, a company based in Providence, Rhode Island, has drawn up plans for what could be the largest wind farm in U.S. waters, the company announced last week. The proposed farm would generate a huge 1,000 megawatts of power and would be located 18 to 27 miles off the coast of Rhode Island and Massachusetts at a depth of 52 meters—considerably deeper than any other large scale wind project to date. By moving into deeper waters, turbines can harness stronger, more sustained winds. And the massive turbines the company plans to use—each capable of generating more than 5 megawatts of power, with blades rising 150 meters above the water’s surface—will be nearly invisible from shore, thereby avoiding potential legal battles with coastal communities that perceive the turbines as eyesores.
Pittsburgh City Council, Mayor Clash on Pension ‘Armageddon’ – Pittsburgh’s City Council ordered Mayor Luke Ravenstahl to attend a meeting today to hash out a plan to avoid a state takeover of the underfunded municipal pension, which may more than double its cost to taxpayers. A vote to compel Ravenstahl to come before the council’s finance committee followed about six hours of debate on shoring up the pension system using parking fees. The retirement plan has about $325 million in assets to cover $1 billion in promised benefits, according to a consultant’s report. The city has until Dec. 31 to show the state how it will bolster the plan. “It’s merely an accounting gimmick to get past Dec. 31,” Pittsburgh, whose pension problem was called a “financial Armageddon” by two city councilors yesterday, joins cities such as San Diego and states such as Illinois and New Jersey that may cut services or raise taxes to meet ballooning retirement costs. Those states and 18 others skipped payments or underfunded their retirement systems from 2007 to 2009,
A Time to Spend – A normal gap between supply and demand for some subset of currently produced commodities is not a serious problem, because it is balanced by excess demand for other currently produced commodities. As industries suffering from insufficient demand shed workers, industries benefiting from surplus demand hire them. The economy rapidly rebalances itself and thus returns to full employment – and does so with a configuration of employment and production that is better adapted to current consumer preferences. By contrast, a gap between supply and demand when the corresponding excess demand is for financial assets is a recipe for economic meltdown. There is, after all, no easy way that unemployed workers can start producing the assets – money and bonds that not only are rated investment-grade, but really are – that financial markets are not adequately supplying. The flow of workers out of employment exceeds the flow back into employment. And, as employment and incomes drop, spending on currently produced commodities drops further, and the economy spirals down into depression. Thus, the first principle of macroeconomic policy is that because only the government can create the investment-grade financial assets that are in short supply in a depression, it is the government’s task to do so. The government must ensure that the money supply matches the full-employment level of money demand, and that the supply of safe savings vehicles in which investors can park their wealth also meets demand.