March 12, 2007

US Treasury Results for February: Holding Steady, Big Months to Come

Filed under: Economy,Taxes & Government — Tom @ 2:46 pm

February is historically one of the worst months for receipts to the Treasury, primarily because there aren’t any deadlines for estimated taxes that occur during the month. So it was already a given that there was going to be a deficit; the only question was whether it would be narrower than it was a year ago.

Well, the answer is that’s it’s virtually the same:

TreasRecsDisbs0207

The February 2007 deficit did not show an improvement compared to 2006 as has mostly been the case in previous months (posts relating to January’s report are here and here). But, for those who expected a continuation of the 9%-plus performance of previous months, the 6.6% uptick on the receipts side is actually very good. Here’s why:

  • As explained at the start, February is a light month for receipts. Those that come in are mostly related to payroll and income tax withholding. It’s also the month where astute income tax filers who know they have big refunds coming get their returns in quickly.
  • The big months (e.g., April, June, September, and January) are that way because the more volatile taxes sensitive to supply-side tax cuts (capital gains, dividends, corporate profits) also come in.
  • So the fact that receipts would be up by 6.6%, which is well over twice the rate of inflation, means that the increases in real worker income that are being reported elsewhere (including in the Employment Report last Friday) are, well, very real, and are generating to higher tax collections. Cumulatively, receipts are still up over 9% from fiscal 2006. This is the level that I have previously said will need to be sustained for the budget to get back to what is commonly understood * as “balanced.”
  • As to refunds, this link notes that the average tax refund is up 3.6% to $2,733 and that tax refunds in total are up 5.8% (I’m not clear as to whether these stats reflect returns filed or refunds actually paid out). The point on refunds is that they’re not up radically, meaning that the previous point stands.

The spending side has to be rated as a mild disappointment, but I can’t imagine that anyone thought that the government could keep spending growth at the 1%-plus cumulative level it held at the end of January for the whole year. Taxpayers will indeed be grateful if the cumulative 2.4% increase in spending through the first 5 months holds for the rest of the fiscal year, but I believe that it will come in closer to 4%, or a bit higher.

For those who recall that the deficit through January was down by 57% through four months and wondering why it has dropped to 25% — Remember that February always has a big deficit, and that adding big numbers to the numerator and denominator will do that.

March, when calendar-year corporate estimated taxes that are supposed to settle companies up with Uncle Sam for 2006 are due, and of course April, when almost every individual filer will have to settle up for 2006 (AND make first-quarter estimated payments, if required), will really tell the tale as to whether the federal budget is on track to get back to what is commonly understood * as the break-even point sometime in fiscal 2008.

* – In my opinion this “understanding” is incorrect, because the figures above incorporate the Social Security surplus (i.e., both receipts and disbursements), which I believe should have been left alone. But that hasn’t been the case for decades.

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UPDATE: Dan Clifton at the American Shareholders Association blog points out that the rolling 12-month deficit-reduction performance continues to improve.

UPDATE 2: AP’s report wasn’t all that bad. What’s in the water in Washington (the story source byline)? Whatever it is, don’t stop putting it in. UPDATE 2A: Obviously not everywhere (HT NewsBusters), especially with the headline.

Are Thousands of Stock Analysts Rewriting Their Track Records? Could Very Well Be

Megan McArdle, one of those sitting in for Instapundit for a few days, calls attention to this stunner (I/B/E/S is the “Institutional Brokers Estimate System“):

Comparing two snapshots of the entire historical I/B/E/S database of research analyst stock recommendations, taken in 2002 and 2004 but each covering the same time period 1993-2002, we identify tens of thousands of changes which collectively call into question the principle of replicability of empirical research. The changes are of four types: 1) The non-random removal of 19,904 analyst names from historic recommendations (“anonymizations”); 2) the addition of 19,204 new records that were not previously part of the database; 3) the removal of 4,923 records that had been in the data; and 4) alterations to 10,698 historical recommendation levels. In total, we document 54,729 ex post changes to a database originally containing 280,463 observations.

Maybe there’s a perfectly acceptable explanation for an after-the-fact alteration rate of almost 20%, but until I hear it, it’s hard not to think that there is quite the contingent of “grown up” David Lightmans (the main character in the 1983 movie “War Games,” played by Matthew Broderick, who, among other things, hacked into his high school’s computer system and changed his grades) systematically rewriting their history. And I’d not only like to ask the Watergate question (“What did they know and when did they know it?”) of industry CEOs during that period, I’d like to know (again, if this really is abusive history rewriting) what they’re going to do to stop it now — AND to put things back to where they were.

The Reporting of Employment News Is Inadequate, or Worse; Here’s Why

Here are Three Things to Remember about The Government’s Monthly Employment Reports:

First, the initial report for the current month by the Bureaus of Labor Statistics (BLS) has usually contained significant upward revisions to previous months, as shown here:

EmpRpt0806to1206Announced

For the past seven months, the number reported for jobs added in the current month has been, on average, less than 2/3 of the total reported increase in jobs, because of significant revisions to prior months.

Second, as you would expect because of the first point, the current month’s initially reported total has usually been revised upward quite a bit in subsequent months:

EmpRpt0806to1206ByMonth

For the last five months of 2006 (the most recent months for which all revisions have been made), the number the BLS reported for jobs added in the current month has been, on average, only about 60% of what was ultimately reported for that month after revisions.

Third, BLS does an annual comprehensive revision to reported employment numbers that is released every February, as described more fully here. The latest comprehensive revision added over 900,000 jobs that were spread over the previous two years of revised results.

The problem, simply put is simply this:

  • The initial report gets the news coverage.
  • The routine revisions in the following two months, if they get coverage at all, almost never make the headlines and usually don’t get into the first couple of paragraphs of any media report.
  • The annual comprehensive revision is almost completely ignored.

The net effect is that even people who are paying reasonably close attention to news about the economy almost by definition have to be underestimating just how many jobs are being added. Because of the nearly invisible revisions and annual adjustments, almost no one would believe you if you told them that over 7.5 million jobs have been added in the past 3-1/2 years, but that is indeed the case:

Employment0207

You would hope that initial reports of increases in employment would be treated with at least a little bit of caution. But that is not the case, as this typical report from Reuters on the February jobs numbers from last week demonstrates:

The U.S. economy added a slightly weaker-than-expected 97,000 jobs in February, the smallest gain in more than two years, as increases in service-sector employment offset declines in construction and manufacturing, a government report showed on Friday.

Dan Clifton at the American Shareholders Association blog made a reasonable prediction last week that February’s numbers will go up, as they did in almost every month noted above, and, according to Dan, as they have in almost every month for the past two years:

These numbers will be revised higher and bring the level over 100,000. Yet, the naysayers will still be saying job growth is slowing. But this wrong.

If the general form of the recent past noted above holds, the final jobs increase number for February, which we won’t know until May, will go up by 40,000 or so and end up in the neighborhood of 140,000.

I therefore submit that reporting an initial figure as Reuters did with the “scare description” of “lowest in 2 years” will probably turn out to be wrong, and that reporting the initial number as if it’s a done deal, or that it won’t change much (which is what Reuters’ report at least implied), should therefore be seen as more than a little irresponsible. Why? Well, ask yourself this: What are the chances that Reuters will correct the initial report’s “lowest in two years” hysterics if the job numbers do go up quite a bit? (Similar headlines appeared with September’s initial reports, and were followed by whopping September revisions that were mostly ignored — Or have you seen any corrections I haven’t seen?) Even in the remote chance that a correction occurs, how many million readers have been influenced (probably incorrectly) to believe that job growth was mediocre and on a downward trend in February?

Cross-posted at NewsBusters.org.

Couldn’t Help But Notice (031207)

The news about Al Gore the energy hog is big stuff of course, but what is in many ways bigger is the fact that the insufferably liberal Nashville Tennessean had the story for at least a month before the Academy Awardsand sat on it (HT Bob Krumm). This excuse for why the paper didn’t run with the information they had requested and received is one of the all-time howlers:

Tennessean editor Mark Silverman says the paper did indeed make the public information request back in January, after Gore’s global warming film was nominated for an Academy Award on Jan. 23. He says the explanation for why the paper didn’t use the information until after the Oscars has nothing to do with a pro-Gore agenda.

“It’s very simple. We had other stuff. We got occupied by other stories,” he says. “We requested the information right after he was nominated for the Oscars…. It got put on the back burner simply because people were working on other stories. At that point, from a news peg standpoint, it seemed like the next logical news peg was he won or did not win an Oscar.”

The Tennessean reporter involved filed her story just after the awards, but the paper got scooped by the Tennessee Center for Policy Research. You’ll have to forgive me for believing that the folks at the Tennessean aren’t losing sleep over it, despite the potential hits (and ad revenue) lost.

Ed Driscoll and Mark Steyn also have something to say about this “inconvenient” prioritization of news stories.

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Gas rationingin Iran (HT Hot Air).
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I know, I know, consider the source: But the contention that Scott “Burger King” Ritter is making in the Alternet Universe is too enticing to ignore –

Hillary Clinton knew years before she voted for the Iraq war that Saddam Hussein didn’t have WMDs — Bill Clinton lied about Iraq’s weapons programs to justify attacking the country in 1998.

Pinch me. In historical context, Scotty is saying somthing about that supposedly “ridiculous” “Wag the Dog” contention made by many that the 1998 Iraq bombings were deliberately contrived by then-President Bill “My Fulltime Effort At Legacy Rehabilitation Is Starting to Work” Clinton to distract from goings-on that related to his ultimate impeachment. Scotty is saying that critics were right from the very start.

Now I personally don’t believe Scott Ritter any time his lips are moving (though the jury is still out on the “Wag the Dog” thing). But moonbats who do should be calling for retro-impeachment of the guy who abused his pardon privilege, lied under oath, and now, according to Ritter, “lied about WMD” in 1998.

Back in the real world, there were WMDs found (puncturing the “NO WMD” claim). In fact, the “no WMD” claim is the first myth, uh, exploded here.

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Which country’s government is this? It wants legislation (HT Slashdot via Instapundit) for “a far-reaching wiretapping programme,” but has actually been spying on its citizens for decades. So guess before clicking — Which country?

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So pre-dic-ta-ble — Ex-Congressman and SarBox co-author Michael Oxley has a new gig (HT Sox First; bolds are mine):

Oxley yesterday said he starts next week at politically-connected Washington law firm Baker Hostetter to help “companies and investors comprehend the changing landscape of corporate compliance.”

He’ll also run a white-collar crime defense team to defend against the law’s violations.

Oxley, a former FBI man before joining Congress, earned $165,000 annually on Capitol Hill. At the law firm he stands to earn in excess of $10 million a year, legal sources said.

Oxley’s co-authorship of SarBox turns out to have been the ultimate self-help project.

An Aptly Named ‘Lackey’ Has Been Very ‘Busy’

Filed under: Education,Taxes & Government — Tom @ 6:11 am

That would be one Ricky Lackey, who on Friday attempted to add a new verb to our rich language when he told a Cincinnati judge how he managed to “accomplish” so much:

“I be concubining.”

Yeah, I looked it up, and it’s not a verb, nor is it even a word.

You won’t like it what you see, but you really, really must read about the “accomplishments” resulting from Lackey’s “concubinations” at the link (“Concubinate” is a noun, which though obsolete, is useful enough to resurrect in this instance).

The mind, absolutely, staggers.

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UPDATE, Mar. 14 — La Shawn Barber caught the story.

4th Quarter 2006 Home-Price Report: The Sky Is Not Falling

The Office For Housing Enterprise Oversight released its Fourth Quarter 2006 House Price Index (HPI) report (PDF) on March 1.

Given the recent gloomy reporting about the industry, you may not know that housing prices nationwide actually went up a bit more in the fourth quarter (1.12%) than they did in the third (1.07%). Though there are certainly problematic metro areas, it would appear that the sky was not falling on home prices.

In fact, based on the press’s coverage of the housing industry during the past year or so, you might think that OFHEO Director James B. Lockhart was blowing smoke in the News Release on Page 1 that introduces the report:

“These data show that, on the whole, prices are still rising, albeit at a much slower pace,” said Lockhart. “This suggests that house price appreciation is, for now, more in line with historical norms.”

He’s kidding, right? Wrong (from page 4 of the report):

HPIpage4forQ406

Well, I’ll be, the Mr. Lockhart is correct:

  • The 5.87% home-price appreciation in the past four quarters is greater than the average of the eight four-quarter numbers reported during 1998 and 1999 (5.03%).
  • In fact, all eight four-quarter numbers during 1998 and 1999 are less than that recorded in 2006′s fourth quarter.
  • Three times during 1998 and 1999, quarterly appreciation was lower than the 1.12% recorded in 2006′s fourth quarter.
  • Four-quarter appreciation has been greater than 2006′s fourth quarter by 1% of less six times during the 2000-2003 time period, the latest being the 5.98% recorded in the third quarter of 2003, just 13 quarters ago.

Of the 8 regions OFHEO tracks, only one (New England at 2.26%) had full-year home-price appreciation that was less than 2006′s inflation of 2.54%.

Only one state had a four-quarter housing price decline (Michigan), and only 5 states (MI, MA, OH, IN, MN) had four-quarter appreciation below 2006′s inflation. Put another way, the average homeowner in 45 states and the District of Columbia did NOT suffer a real decline in 2006 in his or her investment in their home. Only five states had single quarter declines (CA, HI, ND, NE, and NV); every one except HI (-0.80%) was less than -0.4%.

Concerning individual metro areas, this local Tennessee cheerleading link notes that “Of the 282 cities on OFHEO’s list of ‘ranked’ MSAs, 256 had positive four quarter appreciation, 25 had price declines, and prices were unchanged in one city.” A review of the detail indicates that most of the MSA declines are in Midwestern cities tied to the old-line auto industry, and not as much in areas that have been described as “overheated.”

That is hardly the pervasive housing bust that many in the business press seem to be almost rooting for, or at least expecting almost as an article of faith (particularly the MarketWatch reporter discussed here, here, and here).

Perhaps the lack of morbid news explains the relative lack of notice this particular OFHEO report received.

Final question: If today’s housing market (as opposed to the mortgage-lending industry) is considered problematic, why was it not so in 1998 or 1999?

Cross-posted at NewsBusters.org.

Czech This Out: ‘Environmentalism Is a Religion’

Filed under: Environment,Scams,Taxes & Government — Tom @ 6:01 am

First there was the “Slovak” in the old Czechoslovakia, Vaclav Klaus (quote at Update 4 at this post).

The Czech side Czeched in on Friday:

Czech Pres: Environmentalism is a religion
WASHINGTON, March 9 (UPI) — Environmentalism is a religion that is based more on political ambitions than science, the president of the Czech Republic warned Friday.

Speaking at the Cato Institute, a public policy think-tank, President Vaclav Klaus said that environmentalists who clamor for policy change to combat global warming “only pretend” to be promoting environmental protection, and are actually being driven by a political agenda.

“Environmentalism should belong in the social sciences,” much like the idea of communism or other “-isms” such as feminism, Klaus said, adding that “environmentalism is a religion” that seeks to reorganize the world order as well as social behavior and value systems worldwide.

As for government spending on global warming studies, the former finance minister and of the Eastern European nation and trained economist said that such efforts were a “waste of money,” adding that there was already sufficient scientific evidence for those seeking policy change to back up their proposals.

Meanwhile, he pointed out that those seeking to protect the environment could do a great deal under the existing political framework and with existing technologies, such as importing less goods from far-flung regions that require enormous jet fuel use.

More will hopefully be heard from Eastern European leaders, who have plenty of experience in recognizing totalitarianism and statism in its various clever disguises.

Positivity: Neighbor Saves Praying Elderly Woman From Fire

Filed under: Positivity — Tom @ 5:56 am

From San Antonio, TX:

POSTED: 7:44 pm CST March 4, 2007
UPDATED: 11:39 am CST March 5, 2007

A neighbor saved an elderly woman from her burning home Sunday morning on the city’s West Side.

Humberto Niavez braved the flames of 86-year-old Susie Llano’s home around 4 a.m. on Sunday morning.

Niavez said he was awakened by the flames and did the first thing he could do think of.

“I went straight through and I saw her sitting on her bed,” Niavez said. “I said, ‘Susie, let’s go. The house is on fire and I can’t breathe.’”

At that point, Niavez said he grabbed her and pulled her out of the smoldering home.

Llano’s relatives said Niavez coming to their loved ones rescue was an answer to prayer.

When Llano noticed the fire, she began to pray and continued to do so until her neighbor rescued her.

Rudy Orozco, Llano’s nephew, said he is grateful that Niavez came to the rescue.

“(My aunt) is always helping everybody and now I’m just glad I have neighbors to help her,” Orozco said. “I’m glad she’s okay. Thank you, Jesus.”

Relatives overwhelmed Niavez with hugs and appreciation after the rescue.

Niavez said although he’s considered a hero, he was just being a good neighbor.

“I’m just a neighbor looking out for my neighbors and I would do this for anyone around here or anywhere else,” Niavez said.

Llano was not injured by the fire.