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The $350 billon in proposed cuts to Medicare and Medicaid in the 2011 deficit reduction talks will do little to reduce the rapid rise in medical costs. Instead it shifts the costs to seniors, state governments and public hospitals. Gail Wilensky, former head of Medicare under the first President Bush and now a senior fellow at Project Hope, says this should not be confused with real reform to Medicare which reduces the rapid increase in costs. It does little in the way of fundamental changes that would reduce the growth in costs. About $53 billion comes from reductions to senior's ability to buy extra Medicare supplemental insurance or Medigap. Another $14-26 billion would have the government reduce payments to hospitals for unpaid debt. The few items to curtail fraud in the use of CT scans or purchase of power wheelchairs would provide savings of $2-3 billion over 10 years. $4 billion comes from lowering Medicaid payments to hospitals treating a high percentage of low income patients, hospitals such as Cook County Hospital in Chicago, San Francisco General Hospital, and Parkland Hospital in Dallas....

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This WSJ editorial on March 7 with Cruz winning in Maine and Kansas with wide margins, and Trump winning narrowly by 3.6% in Louisiana and in Kentucky, says that the Cruz win in Maine shows he could win in other states. It points out that Trump actually lost in Louisiana with those who voted on election day, that early voters made a difference. As Trump gets not just media attention on which he thrives, but also close scrutiny in media the situation appears to be changing. The WSJ calls for Trump to release his tax returns, particularly important in Trump's situations says the Journal because of his flamboyant statements about competence as a wealthy businessman. Also a factor in the elections in March will be how much Trump spends on ads as he has spent little so far.

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Experts compare the performance of two states with thriving economies California and Texas, but run by governors who are different, one passionately liberal Democrat and the other passionately conservative Republican. The Texas economy is slowing following the drop in oil prices. The Dallas Fed has lowered the forecast for growth in Texas to 0.5%-1% from the 1.5% rate projection. This compares with a growth rate of 3.4% in 2014. During the economic downturn following the financial crisis of 2008, Texas was lucky to have laws that prevented the kind of housing bubble that happened in California. It also benefitted from high oil prices. California has recovered from the worst effects of the crisis with unemployment dropping from 12% in 2011 to 6.3% in 2015, and half million jobs added in the last 12 months. Many of the jobs are in the higher paying tech sector. Critics point to the weakness in education and lower paying jobs in Texas. Texas has diversified ite economy since the 1980's, with about 13% of the state's GDP from the oil and gas industry in 2015 compared to 19% in the earler period. ...

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Internet company valuations and IPO's in mid- 2012 reach the frenzied levels before the the tech bubble burst in 2000-2001.

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Former Senator Chuck Hagel of Nebraska, has called for fresh thinking in U.S. foreign policy and foreign engagements after the wars in Iran and Afghanistan cost the U.S. about one trillion dollars. He says the U.S. should avoid single issue engagement, get the participation of other countries, and increase common ground on a host of issues which concern most of the major nations in the world. This is why we have a G-20 and not a G-8, says Hagel. This policy also helps the U.S. by having other countries in Europe, Asia and the Middle East take up some of the responsibilities that would otherwise fall disproportionately on the U.S., and lets the U.S. devote attention to strengthening the domestic economy which underpins strength in world affairs. On Iran he sees continuing talks as the better approach to coming up with a solution, for which he has come under criticism from some Republicans.

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The authors, Becker, Davis and Murphy, are from the University of Chicago. They point out that the uncertainty created by the Obama administration's programs including healthcare and social investments in education, energy conservation, and the desire to reduce carbon emissions, all tend to slow business expansion and investments to create jobs by putting additional costs on business. The expanding federal deficit and national debt also create additional uncertainty. Their point is that it was a mistake to start making major changes to transform the U.S. economy at this time, and that it would have been wiser to do these changes after the economy had recovered completely from the crisis. All efforts they say should have been concentrated on establishing conditions for a strong recovery. When combined with the lack of regulatory reforms to fix problems left behind from the crisis, and other failures, serious questions arise about how things will turn out in coming years. See Krugman- The Feeling of 1937, where Krugman takes this up from another angle, again with concerns about the future....

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John Cochrane, professor at the Booth School of Business, University of Chicago points to the simple truths about U.S. healthcare- out of control pricing because of the pathologies created by previous laws and regulations. He points out that costs are high in healthcare because regulations keep them high. Supply of new doctors is controlled because Congress and the AMA made it that way with a cap on residency programs and AMA opposing the expansion of medical schools. In a system of open competition new hospitals and health care businesses would challenge old ones which is not happening in a regulated market with regulations working to limit competition for the firms already in the business and with the influence to limit competition. Insurance costs for major expenses in an open and deregulated competitive market without the regulations would be so much lower than todays costs that its likely we would not even need a mandate such as the one the Obama healthcare law imposes.

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Ireland went off the cliff by taking enormous unregulated loans. The banks lent money freely and the regulators simply ignored the bubble that was developing through the last decade. The speculators, developers, bankers and regulators all let the bubble reach astounding proportions. One developer got a $6.3 million loan on a personal guarantee without meeting his banker. One 1000 square foot Dublin carraige house went for 3 million euros in an auction. One of the developers, Simon Kelly, says that everything was funded by the Germans through the European Central Bank. The sale of the Jury's hotel in 2005 resulted in the amazing price of 60 to 70 million euros per acre. Ireland's GDP which was $25 billion in the 1980's, reached $267 billion in 2008. The boom that was initially based on export competitiveness and the low corporate tax rate combined with an educated English speaking workforce, was followed by a speculative boom in real estate financed by Irish banks, where regulators simply looked aside and placed no controls on lending. To get an idea how the government looked at anyone who raised a red flag, look at this quote from Bertie Ahern, prime minister of Ireland from 1997 to 2008, who said at a trade union conference: "sitting on the sidelines cribbing and moaning is a lost opportunity. I don't know how people who engage in that don't commit sucide." And this coming from an Irish politician who helped in arranging the Irish peace accords with the help of Bill Clinton and Tony Blair. The risks of such uncontrolled speculation in real estate was lost on regulators, the government, and politicians. And the bankers stopped paying attention to their loans, with everyone wanting to lend money to 10-15 deveopers who were able to drive the market. The regulator at the central bank simply didn't pay much attention to the reports he received every quarter about the lending. Now the average household in Ireland owes 132,000 to the banks, according to David McWilliams of the Central Bank of Ireland, and unemployment is at 14%. If the Irish had completely lost track of the picture, what about the German and British banks that loaned money to Ireland? Why was money being made so freely available to Ireland. One Irishman says getting a mortgage in those days was like getting cupcakes. With prices haveing reached the stratosphere at 60 million euros an acre, were the European banks also pushing money into Ireland beyond the ability of a small country like Ireland to repay? According to the Bank for International Settlements based in Basel, Switzerland, Ireland owes $139 billion to German banks and $132 billion to British banks. Easy money was also available from US banks for countries such as Argentina which suffered similar crisis in prior decades. Banking crises ocurred in Asian countries in the 1980's. Much of this experience was lost in the manner German, British and other European banks loaned money to countries such as Iceland, Greece, Ireland and Portugal. The Asian banking crises of the 1980's are being followed by European banking crises over two decades later. The ...

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Nate Cohn of the NYT points out that based on the way in which moderate voters shifted to vote for Cruz in Wisconsin, especially in the eastern part of the state, this could be a turning point in the Cruz campaign. Cohn cites exit polls showing 29% of moderate voters went for Cruz in Wisconsin compared to 12% in Michigan and 15% in Illinois. In Madison's Dane County, a moderate area, Cruz had 38% of the vote. If this proves to be resilient then Trump could become the underdog in California, Indiana, Maryland, and Montana, with Pennsylvania becoming competitive, says Cohn. Reasons why this shift of moderate voters to Cruz could be a lasting shift are the results on March 15, 2016, with Cruz getting 40% of the vote in Missouri, and 30 percent in Illinois.

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Jason Zweig cites the St. Petersburg Paradox in questioning how much someone should pay for a bet on Facebook shares at the high valuation set for this inital public offering. This riddle asks how much would one pay for playing a game in which one gets $1 for winning the first toss of a coin and the game ends, or $2 if the coin comes up heads the second time, or $4 the next time, $8 next and keep doing this , the payment doubles each time. The point is that the payoff is infinite because at each toss the probability is 50% and 12.5% for the next toss, and one could get to the 30th toss or the 60th toss, with payoff in hundreds of millions. People also could be out of the game when the heads come up and not see the later supposed gains. Because of this experts say the most people should pay for playing is $20. The Facebook offering has infinite potential of this sort, but the reality is that for businesses of this type one can only see a couple of years ahead in terms of growth, with large uncertainties ahead about growth beyond that point. Charles Lee, professor of accounting at Stanford Business School, and former head of equity research at Barclays Global Investors, says its hard to see further than two or three years for this type of company. Another problem is pointed out by Prof. Ritter of the University of Florida. He says the valuation is so high today that even if Facebook followed Google's growth and had a total market value of $190 billon that Google has today in 10 years, the annual return would be around 6.8%....

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U.S. president Obama outlines foreign policy goals at West Point in May 2014. It raises more questions than it answers about the substance of U.S. foreign policy, what it wishes to achieve, and the kind of world we want to live in in the light of the president's record.

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During the Ozzie and Harriet era of the 1950's Americans saved 8% of their disposable income. Now thrift is becoming popular again. And one estimate is that as Americans go back to saving like this again about 10% of disposable income may be saved. This is also because of the need to pay down debt. And this means consumption will be much lower and businesses slow to add jobs.

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A report by pharmacy benefits managing company Express Scripts shows a 13% increase in the price of branded drugs in the U.S. from Sept 2011 to Sept 2012. Generic drug prices declined by 22% in this period. The report also shows that growing spending on specialty drugs for cancer, MS and other diseases is a big reason for the increase in prices of branded drugs. This report is from a random sample of six millon Express Scripts members using prescription drug coverage. Prof. Schondelmeyer of the University of Minnesota, who manages the drug benefits program at the university and conducts a similiar price report for AARP, says the potential benefits for these specialty drugs are not that good to justify the high prices.