So goes the logic (with only mild exaggeration) of one of the most ridiculous policy proposals I've read in a while -- to make up for falling gas tax revenues with a new tax on miles driven.  Ashley Halsey III is on the case in The Washington Post yesterday. 

The appropriate tax instrument to make up for declining or inadequate gas tax revenues is ... a higher gas tax rate.  Compared to a higher gas tax rate, a tax on miles driven ignores the amount of fuel used to drive those miles.  Highway travel is taxed the same as city travel.  Gas guzzlers are taxed the same as hybrids. Neither change makes any sense from an environmental perspective. 

Reports of strong growth in the fourth quarter of 2009 were a welcome addition to the positive growth in the prior quarter, but I remain concerned about the sustainability of that growth.  The recession took down the financially weakest firms and weakened the rest.  Without robust growth in the rest of the economy, we will see the financially weakest of the remaining firms contract as well.  My home institution of Dartmouth is a case in point. 

For those not following the local news, the College has tasked itself with trimming $100 million from its annual expenditures over a two-year window.  The number comes from the simple arithmetic of having lost a billion dollars of endowment (which, at a 5% spending rate, is $50 million) and from making a prudent decision to reduce its spending rate down by 2 percentage points to about 5% (creating the other $50 million, when applied to the remining $2.5 billion).  The College's president has stated, correctly, that this cannot happen without reductions in staffing. 

At the Economix blog on Thursday, Catherine Rampell posted a must-read analysis of the composition of the unemployed population.  But I think her conclusion is too pessimistic.  She writes:

Whatever the underlying cause, the result is disconcerting: compared with previous recessions, many more of the employment gains in this recovery will have to come from new jobs.

That is much easier said than done.

Workers whose entire occupations — not just the previous payroll positions they held — are disappearing (think: auto workers) will need to start over and find a new career path. But the new skills they will need take a long time to acquire.

Even if the employment gains in this recovery will have to come from new jobs, it is not necessarily the workers whose entire occupations are disappearing that will have to fill the new jobs in emerging fields. 

I give President Obama high praise for the parts of his speech this evening where he chastised his own party in the Congress for its ineffectiveness and for telling the Senate Republicans that if they are going to insist on supermajorities to get any policy passed, then they are going to have to share in the responsibility for governing.  Good for him.  Nobody's perfect, but I cannot help but think that the conduct of the Congress in recent years, and the Senate in particular, would be enough to make a Founding Father vomit.

Despite the unusual circumstances of January 2010, much of the speech was the standard fare in January -- everybody should go to college, everybody should be healthy, the environment should be clean, people should save for retirement, and I've got the token programs in my budget to give me the credibility to pay lip service to it.  And, new this year, we will do all of these token programs and giveaways while insisting that we will freeze non-defense discretionary spending at current levels.

One item that stood out as different was the acknowledgement that we are on our way to export-led growth, if we are to have growth at all. 

In today's USA Today, Gene Steuerle discusses the "Fiscal Democracy Index," defined as the percentage of federal revenue not allocated for mandatory programs, including interest payments.  It is not a pretty picture:

and here is something that I did not know (links in the original):

For the first time in U.S. history, in 2009 every single dollar of revenue was committed before Congress voted on any spending program. Meanwhile, most of government's basic functions — from justice to education to turning on the lights in the Capitol — are paid for out of swelling, unsustainable deficits.

Tuesday's special election in Massachusetts was but the first of a number of interesting contests in New England this year.  Likely to rise to prominence over the spring and summer is the contest to succeed Senator Judd Gregg of New Hampshire.  Current Representative Paul Hodes is unopposed on the Democratic side of the ballot, and former Attorney General Kelly Ayotte will likely emerge from the herd of Republicans.  Here is how my very local paper reported on it today:

Hodes currently trails Ayotte by 9 percentage points but beats both Binnie and Lamontagne in one-on-one match-ups, according to the poll.

Mark Bergman, communications director for the Hodes campaign, said the polling numbers do not change Hodes’ campaign strategy.

“This election is going to be about choice,” Bergman said in an interview with The Dartmouth. “The Republicans all support the same failed economic agenda of [former President] George W. Bush that would return us to the failed policies that got us into this [economic crisis].”

If you had told me in November 2008 that Massachusetts would be represented by a Republican in the Senate, I would have had you committed.  And yet that has what has occurred.  From my admittedly biased viewpoint on the periphery of the Boston media market, I thought Martha Coakley ran an arrogant and nasty media campaign.  For example, I'm not sure what she hoped to accomplish by interrupting my football playoffs with ads attacking a guy I had never heard of and blatantly overstating her own accomplishments.What she should have done was to simply say that she was a firm vote in the Democratic camp on the key issues of the day; principally, extending the benefits of more universal health care to the rest of the nation. 

What the nation got, instead, was something other than a firm vote in that camp.  But don't overstate what this means.  President Obama does not now find himself negotiating directly with Senator Brown over his health care agenda. 

Some will say that the new deal reached on the tax on so-called Cadillac health care plans is a giveaway to unions -- and they won't be wrong -- but in isolation it is a step toward "the least worst way to do the wrong thing," which is what passes for success in Washington these days.  Buried in The Washington Post article by Lori Montgomery and Robert D. Shear:

The deal cut Thursday would raise the value of policies subject to the tax to $24,000 for families and $8,900 for individuals. Plans with significant numbers of women or older workers would receive an additional break, as would workers in high-cost states and high-risk professions. Dental and vision plans would be exempt starting in 2015. And workers with collective-bargaining agreements and government employers would be exempt until 2018, giving labor leaders time to negotiate new contracts.

Maybe the best four-minute explanation of how screwed up our policies toward financially distressed firms have been.  What does it say about us that The Daily Show is the best TV news program? That we are lucky to have The Daily Show.

Watch it here.

Donald Marron calls it "sobering," and James Pethokoukis gives nine reasons why it is "bad news" for Democrats.  Mark Thoma discusses the story beneath the story, which is that the decline in labor force participation kept the unemployment rate from rising despite the loss in jobs.  Menzie Chinn also discusses some subtle aspects of the report.