Press Briefing

Dec 09, 2010

Health Reform Wins Another Round in Court
http://www.whitehouse.gov/blog/2010/12/08/health-reform-wins-another-round-court

White House: The Framework for a Tax Agreement Is a Good Deal for Working Families
http://www.whitehouse.gov/blog/2010/12/08/framework-a-tax-agreement-a-good-deal-working-families


Giving Credit Where It's Due. WSJ Editorial
Speculators didn't destroy Greece
Dec 09, 2010, The Wall Street Journal, page 13
http://online.wsj.com/article/SB10001424052748703493504576007050934987050.html

Well, what do you know? Credit-default swaps didn't cause Greece's fiscal collapse last spring after all.

That's the conclusion of a study by the European Commission. The paper was drafted in the run-up to the Greek bailout, but has belatedly come to light following a freedom of information request from the Dutch newspaper Het Financieele Dagblad [http://www.fd.nl/artikel/20852357/geen-enkel-bewijs-speculaties-tegen-eurolanden]. Last March, as Greek bonds tumbled and the price of credit-default swaps on the country's debt soared, Greek Prime Minister George Papandreou repeatedly blamed "speculators" whose "abuses" of the CDS market and the bond markets were, he claimed, to blame for Greece's predicament.

So the Angela Merkel of Germany and French President Nicolas Sarkozy joined Mr. Papandreou in calling on the European Commission to investigate whether over-the-counter credit-default swaps—which pay the buyer if a debtor can't or won't make his payments—were being used to manipulate the sovereign debt markets.

The Commission's report looked at the prices of CDS and the yields on government bonds and concluded that, if anything, credit default swaps seemed to be underpricing the risk of default. What's more, the paper says, in many ways the CDS market in Europe is more liquid and more transparent than the market in the underlying bonds. The paper also cautions that restricting or even banning "naked" CDS on government bonds, as some EU leaders proposed last spring, would raise the cost of borrowing in Europe by denying investors a way of hedging their exposure.

In other words, the Commission's inquest into sovereign credit-default swaps found a market, free from nefarious influences and largely unregulated, working more or less as you'd expect. No wonder Brussels buried the findings.




Statement by the President on Tax Cuts and Unemployment Benefits
http://www.whitehouse.gov/the-press-office/2010/12/06/statement-president-tax-cuts-and-unemployment-benefits

Excerpts:

Now, Republicans have a different view.  They believe that we should also make permanent the tax cuts for the wealthiest 2 percent of Americans.  I completely disagree with this.  A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit.  And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy.

This is where the debate has stood for the last couple of weeks.  And what is abundantly clear to everyone in this town is that Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans, regardless of the cost or impact on the deficit.

[...]

So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do.  The American people didn’t send us here to wage symbolic battles or win symbolic victories.  They would much rather have the comfort of knowing that when they open their first paycheck on January of 2011, it won’t be smaller than it was before, all because Washington decided they preferred to have a fight and failed to act.

Make no mistake:  Allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family. And that could cost our economy well over a million jobs.

At the same time, I’m not about to add $700 billion to our deficit by allowing a permanent extension of the tax cuts for the wealthiest Americans.  And I won’t allow any extension of these tax cuts for the wealthy, even a temporary one, without also extending unemployment insurance for Americans who’ve lost their jobs or additional tax cuts for working families and small businesses -- because if Republicans truly believe we shouldn’t raise taxes on anyone while our economy is still recovering from the recession, then surely we shouldn’t cut taxes for wealthy people while letting them rise on parents and students and small businesses.

[...]

In exchange for a temporary extension of the tax cuts for the wealthiest Americans, we will be able to protect key tax cuts for working families -- the Earned Income Tax Credit that helps families climb out of poverty; the Child Tax Credit that makes sure families don’t see their taxes jump up to $1,000 for every child; and the American Opportunity Tax Credit that ensures over 8 million students and their families don’t suddenly see the cost of college shooting up.

[...]

I have no doubt that everyone will find something in this compromise that they don’t like.  In fact, there are things in here that I don’t like -- namely the extension of the tax cuts for the wealthiest Americans and the wealthiest estates.  But these tax cuts will expire in two years.  And I’m confident that as we make tough choices about bringing our deficit down, as I engage in a conversation with the American people about the hard choices we’re going to have to make to secure our future and our children’s future and our grandchildren’s future, it will become apparent that we cannot afford to extend those tax cuts any longer.

1,000-man militia being trained in north Somalia

 1,000-man militia being trained in north Somalia
http://www.usatoday.com/news/world/2010-12-01-somalia_N.htm

Key political risks to watch in Angola and the Gulf of Guinea

Key political risks to watch in Angola
http://www.internationalpathfindersolutions.com/key-political-risks-to-watch-in-angola.html

Key political risks in the Gulf of Guinea
http://www.internationalpathfindersolutions.com/key-political-risks-in-the-gulf-of-guinea1.html

Ping Pong Robot Learns by Doing

Ping Pong Robot Learns by Doing

http://spectrum.ieee.org/automaton/robotics/artificial-intelligence/ping-pong-robot-learns-by-doing

New derivatives rules could punish firms that pose no systemic risk

Nov 29, 2010

The Hangover, Part II. WSJ Editorial
New derivatives rules could punish firms that pose no systemic risk.
WSJ, Nov 29, 2010
http://online.wsj.com/article/SB10001424052748704104104575622583155296368.html

Not even Mel Gibson would want a role in this political sequel. Readers will recall the true story of Congressman Barney Frank and Senator Chris Dodd, two pals who stayed up all night rewriting derivatives legislation.

The plot centered around the comedy premise that two Beltway buddies would quickly restructure multi-trillion-dollar markets to present their friend, President Barack Obama, with an apparent achievement before a G-8 meeting. As in the movies, the slapstick duo finished rewriting their bill just in time for the big meeting in Toronto last June.

But after the pair completed their mad-cap all-nighter, no hilarity ensued. That's because Main Street companies that had nothing to do with the financial crisis woke up to find billions of dollars in potential new costs. The threat was new authority for regulators to require higher margins on various financial contracts, even for small companies that nobody considers a systemic risk. The new rules could apply to companies that aren't speculating but are simply trying to protect against business risks, such as a sudden price hike in a critical raw material.

Businesses with good credit that have never had trouble off-loading such risks might have to put up additional cash at the whim of Washington bureaucrats, or simply hold on to the risks, making their businesses less competitive. Companies that make machine tools, for example, want to focus on making machine tools, not on the fluctuations of interest rates or the value of a foreign customer's local currency. So companies pay someone else to manage these risks. But Washington threatens to make that process much more costly.

Messrs. Frank and Dodd responded to the uproar first by suggesting that the problem could be fixed later in a "corrections" bill and then by denying the problem existed. Both proclaimed that their bill did not saddle commercial companies with new margin rules. But as we noted last summer, comments from the bill's authors cannot trump the language of the law.

Flash forward to today, and the Commodity Futures Trading Commission (CFTC) is drafting its new rules for swaps, the common derivatives contracts in which two parties exchange risks, such as trading fixed for floating interest rates. We're told that CFTC Chairman Gary Gensler has said privately that his agency now has the power to hit Main Street with new margin requirements, not just Wall Street.

Main Street companies that use these contracts are known as end-users. When we asked the CFTC if Mr. Gensler believes regulators can require swap dealers to demand margin from all end-users, a spokesman said, "It would be premature to say that a rule would include such a requirement or that the Chairman supports such a requirement."

It may only be premature until next month, when the CFTC is expected to issue its draft rules. While the commission doesn't have jurisdiction over the entire swaps market, other financial regulators are expected to follow its lead. Mr. Gensler, a Clinton Administration and Goldman Sachs alum, may not understand the impact of his actions outside of Washington and Wall Street.

In a sequel to the Dodd-Frank all-nighter, the law requires regulators to remake financial markets in a rush. CFTC Commissioner Michael Dunn said recently that to comply with Dodd-Frank, the commission may need to write 100 new regulations by next July.

"In my opinion it takes about three years to really promulgate a rule," he said, according to Bloomberg News. Congress instructed us to "forget what's physically possible," he added. The commission can't really use this impossible schedule as an excuse because Mr. Gensler had as much impact as anyone in crafting the derivatives provisions in Dodd-Frank. No surprise, the bill vastly expands his agency's regulatory turf.

And if anyone can pull off a complete overhaul of multi-trillion-dollar markets in a mere eight months, it must be the CFTC.

Just kidding. An internal CFTC report says that communication problems between the CFTC's enforcement and market oversight divisions "impede the overall effectiveness of the commission's efforts to not only detect and prevent, but in certain circumstances, to take enforcement action against market manipulation." The report adds that the commission's two primary surveillance programs use incompatible software. Speaking generally and not in response to the report, Mr. Gensler says that the agency is "trying to move more toward the use of 21st century computers," though he warns that "it's a multiyear process." No doubt.

The CFTC report also noted that "the staff has no standard protocol for documenting their work." If we were tasked with restructuring a complex trading market to conform to the vision of Chris Dodd and Barney Frank, we wouldn't want our fingerprints on it either.

The report was completed in 2009 but only became public this month thanks to a Freedom of Information Act request from our colleagues at Dow Jones Newswires. Would Messrs. Dodd and Frank have responded differently to Mr. Gensler's power grab if they had realized how much trouble the CFTC was having fulfilling its traditional mission? We doubt it, but it certainly would have made their reform a tougher sell, even to the Washington press corps.

Congress should scrutinize this process that is all but guaranteed to result in ill-considered, poorly crafted regulation. In January, legislators should start acting, not like buddies pulling all-nighters, but like adults who understand it's their job to make the tough calls, rather than kicking them over to the bureaucracy with an arbitrary deadline.

Press Briefing

Nov 27, 2010

Against Ridley, Bill Gates: Africa Needs Aid, Not Flawed Theories - http://on.wsj.com/eME4cP

Africa Needs Growth, Not Pity and Big Plans. By MATT RIDLEY

WSJ, Saturday, November 27, 2010

http://online.wsj.com/article/SB10001424052748704648604575621122887824544.html

Bill Gates likes my book "The Rational Optimist." Really, he does. Even though he dislikes my points about Africa and climate change, these take up, as he notes, just one chapter. The rest he summarizes fairly and intelligently, and I appreciate that. It's great for an author when anybody reviews a book "well" in both senses of the word.

It is worth explaining why I chose Africa and climate change as the "two great pessimisms of today." The answer is simple: Whenever I speak about optimism and someone in the audience protests, "But surely you cannot think that we can ever solve..." the subjects that most frequently cross their lips next are African poverty and global warming. Mr. Gates also mentions potential threats from super-intelligent computers and pandemics. Maybe he is right to worry about them, but I have yet to be persuaded that either is more than a small risk.

Mr. Gates dislikes my comments on climate change, which I think will be less damaging than official forecasts predict, while the policies designed to combat climate change will be more damaging than their supporters recognize. I argue that if we rush into low-carbon technologies too soon, because we think the problem is more urgent than it is, we risk doing real harm to ecosystems as well as human living standards—as the biofuel fiasco all too graphically illustrates. The rush to turn American corn into ethanol instead of food has contributed to spikes in world food prices and real hunger, while the rush to grow biodiesel for Europe has encouraged the destruction of orangutan habitat in Borneo.

I also argue, however, that it is highly unlikely, given the rate at which human technology changes, that we will fail to solve the problem of man-made climate change even if it does prove more severe than I expect. For example, the world is on a surprisingly steady trajectory toward decarbonization. The number of carbon atoms we burn per unit of energy we generate is falling as we gradually switch from carbon-rich fuels like wood and coal to hydrogen-rich fuels like oil and especially gas. At current rates, we would be burning almost no carbon by about 2070, though I suspect that point will never actually be reached.

The question that I pose in the book is whether optimism is likely to be right. In essence, neither Mr. Gates nor I think that the problem of man-made climate change is going to prove insoluble or fatal to civilization. We disagree only on how urgent it is to devote massive expenditures to dealing with it, which would put poverty reduction at risk. I think that direct spending to alleviate malaria, which now kills a million people a year and whose incidence is likely to increase as a result of global warming by less than 0.03% per year, is a far higher priority. So does Mr. Gates, judging by his foundation's spending.

It is on Africa that Mr. Gates throws his sharpest barbs. Yet, once again, I think that we agree on the most important point, namely, that Africa can have a good future. "Development in Africa is difficult to achieve," he writes, "but I am optimistic that it will accelerate."

Yes! I don't believe that "everything will be just fine in Africa," but I do think that Africa's real and profound problems can be overcome. My targets are the ubiquitous pessimists who say that, whatever we do, Africa is doomed to remain stuck "in deepest, darkest poverty," in the words of one environmentalist.

Yet, with exceptions such as Somalia and the Congo, economic growth is gaining momentum all over the continent, birth rates are dropping and poverty is falling, as the Spanish economist Xavier Sala-i-Martin has documented. Lots of people deserve credit for this, among them Bill Gates. His foundation, as far as I can tell, does exactly what I suggest in the book by concentrating on solving real medical and humanitarian problems.

----

AID TO AFRICA

* $44 billion

Official development aid given to Africa in 2008

* $3.3 billion

Official development aid given to Ethiopia, Africa's top recipient of aid, in 2008

* 41% Aid to Africa that went to social services, including education and health care, in 2008

* 19% Aid to Africa that went to economic development in 2008

* $7.2 billion

Amount of development aid given by the U.S. to Africa in 2008

* 58% Africans living on less than $1.25 a day in 1996

* 50% Africans living on less than $1.25 a day in 2009

* $510 Gross domestic product per capita in sub-Saharan Africa in 2000 (in 2000 dollars)

* $623 Gross domestic product per capita in sub-Saharan Africa in 2008 (in 2000 dollars)

Sources: Organization for Economic Cooperation and Development, World Bank

---

Far from saying that aid "doesn't work, hasn't worked and won't work," I actually say this in my book: "Some of the most urgent needs of Africa can surely be met by increased aid from the rich world. Aid can save lives, reduce hunger, deliver a medicine, a mosquito net, a meal or a metalled road."

I go on to say that "statistics, anecdotes and case histories all demonstrate that the one thing aid cannot reliably do is to start or accelerate economic growth." Now here I admit that Mr. Gates does have a point. Unintentionally, I have given him and perhaps other readers the impression that, in my view, combating malaria or AIDS does not pay economic dividends. It does.

What I do take issue with is economic aid designed to stimulate economic growth. For example, a 2006 study by Simeon Djankov of the World Bank (now deputy prime minister of Bulgaria) and his colleagues concluded that "foreign aid has a negative impact on the democratic stance of developing countries and on economic growth by reducing investment and increasing government consumption." Economic aid diverts resources into projects that fail, puts money into the pockets of corrupt government officials and crowds out the efforts of entrepreneurs. In one example, only 13% of educational aid to Uganda reached schools; the rest was siphoned off by rent-seeking officials.

I am disappointed that Mr. Gates is so defensive about "top-down" aid. Just as everything from software design to education can benefit from bottom-up crowd sourcing in which elites no longer determine what happens, so surely humanitarian aid can benefit too, however much vested interests in governments and in big agencies dislike this trend.

Likewise, Mr. Gates takes issue with my assertion that the economy of the future will be post-corporatist and post-capitalist. I know that these radical ideas are not to everybody's taste, and he is right that most innovation takes place within existing companies. But it is very striking that some of the most far-reaching innovations over the past several decades have come from driven, visionary outsiders like Mr. Gates, Mark Zuckerberg and Sergey Brin rather than from corporate research and development departments. What is more, these innovations have been achieved with much less capital investment up front than in the days of Andrew Carnegie and Henry Ford.

It is true that there is still a vast amount of work needed to bring ideas to market, and this requires cash and corporate organization. But increasingly, corporations are turning themselves into virtual entities, arranged around flexible networks of suppliers, retailers and researchers, rather than monolithic bodies sitting in fixed plants. That seems to me to make the word "capitalist" somewhat misleading.

Mr. Gates thinks I underplay the role of education, government, patents and science in the innovation that drives economic improvement. Maybe, but I make a carefully argued case that most of the existing commentary overplays the role of these institutions and that innovation is sometimes hindered by these institutions, too, especially by patents and government monopolies.

Am I saying that we should cease worrying about trends that might cause problems? Of course not. I am arguing that we should worry about real problems, including Africa's plight, but that we should do so in the knowledge that we have solved many such problems before and can do so again. I am certainly not saying, "Don't worry, be happy." Rather, I'm saying, "Don't despair, be ambitious"—though I admit it's not nearly as snappy a song lyric.

—Matt Ridley's many books include, most recently, "The Rational Optimist" and "Francis Crick." His website is rationaloptimist.com .

It Gets Better: Office of Personnel Management Director John Berry http://goo.gl/fb/BNSwk

Time for 'Demographic Stress Tests' - By 2030, Germany's ratio of public debt to GDP could be twice what Greece's is today. Japan, the United States and others face similar challenges http://on.wsj.com/henGKZ

A Worthy Immigration Bill - The Dream Act rewards military service and student achievement http://on.wsj.com/eZ5Jvm

Capital Punishment and Human Fallibility - Then-Gov. George W. Bush would almost certainly have stayed Claude Jones's execution had he known that a DNA test had been requested  http://on.wsj.com/ew5pWJ

Blog Post: A Few Interesting Things About the White House's Email List http://goo.gl/fb/jaLPK

A Geneticist's Cancer Crusade - The discoverer of the double-helix says the disease can be cured in his lifetime. He's 82. http://on.wsj.com/fOmOhW

Video: West Wing Week: 11/26/10 or "The Turkey Behind the Turkey" http://goo.gl/fb/DHY0G

1-800-Trial-Bar - Dialing for lawsuits with the Labor Department and American Bar Association http://on.wsj.com/ft9Qcf

Weekly Address: President Obama Delivers Thanksgiving Greeting http://goo.gl/fb/liJ0t

Al Gore's Ethanol Epiphany - He concedes the industry he promoted serves no useful purpose http://on.wsj.com/hsXYwo

Press Briefing

Nov 22, 2010

Kristina Schake to Join First Lady's Office as Communications Director http://goo.gl/fb/LySJf

Op-Ed by Vice President Joe Biden in the New York Times: "What we must do for Iraq now" http://goo.gl/fb/a9n15

Lifting Euro Area Growth: Priorities for Structural Reforms and Governance
http://www.imf.org/external/pubs/ft/spn/2010/spn1019.pdf

Statement by the President at end of the EU-U.S. Summit http://goo.gl/fb/WbYDQ

DREAM Act Gathers Momentum http://goo.gl/fb/f8FIu

Dick Lugar vs. the GOP - The senior Republican's contrarian streak may be a sign that he's raring for the fight of his political life
http://online.wsj.com/article/SB10001424052748704170404575624664226055500.html

White House White Board: Your Health Care Dollars http://goo.gl/fb/IxLZj

The Doctor Con - The AMA gets its payment fix—for all of four weeks
http://online.wsj.com/article/SB10001424052748704170404575624643400449172.html

Press Conference of the President after NATO Summit http://goo.gl/fb/KkgOe

Remembering JFK in an Age of Terror - He offered no apology for our strength, declaring we have both the 'will and weapons' to defend freedom
http://online.wsj.com/article/SB10001424052748703506904575592783814697048.html

President Obama at NATO: "And Today We Stand United in Afghanistan" http://goo.gl/fb/YiLEZ

The EPA Permitorium - The agency's regulatory onslaught has stopped new power generation
http://online.wsj.com/article/SB10001424052748704658204575610924168519824.html

Larry Summers in the WSJ
http://online.wsj.com/article/SB10001424052748703628204575619250079601996.html

Higher Taxes Won't Reduce the Deficit - History shows that when Congress gets more revenue, the pols spend it
http://on.wsj.com/dwd4e8

In China's Orbit
http://online.wsj.com/article/SB10001424052748704104104575622531909154228.html

The 'Build America' Debt Bomb - The state and city fiscal mess is getting worse, yet the Obama administration wants Congress to make new taxpayer-subsidized bonds permanent
http://digs.by/b2nCYc

North Korea Nuclear Claims Set Off Scramble http://on.wsj.com/9SBIeG

Scourge of Humankind - High-profile efforts to fight malaria confront an ever-changing enemy that has evolved alongside man http://on.wsj.com/dmmeI6

India's GDP to grow at 9.3% on avg till 2030: StanChart
http://www.moneycontrol.com/news/economy/india39s-gdp-to-grow-at-93avg-till-2030-stanchart_500370.html

Kracked Up Over Krakatoa: Models Have It All Wrong
http://www.worldclimatereport.com/index.php/2010/11/17/kracked-up-over-kratatoa-models-have-it-all-wrong/

Press Briefing

Nov 20, 2010

Weekly Address: Senators Opposing New START "Want to Trust But Not Verify" http://goo.gl/fb/EP3sH

Our Economy Can’t Afford More GM “Success” Stories
http://blog.heritage.org/2010/11/19/morning-bell-our-economy-cant-afford-more-gm-success-stories

Top 10 Must-Have Government Apps http://goo.gl/fb/2hO9l

How to Succeed in Teaching Without Lifetime Tenure - The Franklin W. Olin College of Engineering attracts 140 applicants for every faculty position. And they can even be fired. http://on.wsj.com/9yz02W

RT CNN Obama says Russia, U.S. agree to cooperate on missile defense and to work closely in Afghanistan. http://on.cnn.com/c7X0qu

Why I Still Believe in the Future - I believe, above all else, in reason—in the power of the human mind to cope with the problems of life http://on.wsj.com/cpKa8l

Helping Middle-Class Families Pursue Justice http://goo.gl/fb/8feLY

Science and the Drilling Ban - An inspector general's report shows science played little role in the moratorium http://on.wsj.com/c4gKJc

Tuesday Talks: Health Care Reform Implementation with Nancy-Ann DeParle http://goo.gl/fb/jKhhg

Cap and Retreat - Chicago Climate Exchange, the largest U.S. carbon market, collapses http://on.wsj.com/bKsSVW

Read-out of the President's Bilateral Meeting with President Saakashvili of Georgia http://goo.gl/fb/KUXEW

Statement by the President on the Senate Passage of the Claims Settlement Act http://goo.gl/fb/5MKH8

The Fed's Bipolar Mandate - Time to repeal the Humphrey-Hawkins Act of 1978 http://on.wsj.com/cJaUin

Read-out of the President's Conversation with President Gul of Turkey http://goo.gl/fb/BaPO0

The Fed's Bipolar Mandate http://on.wsj.com/cJaUin

Press Briefing

Nov 17, 2010

U.S. Government Cholera Outbreak and Hurricane Preparedness Update
http://www.usaid.gov/helphaiti/cholera/crfs_111510.html

Tuesday Talks: The National Medals Laureates of Science, Technology and Innovation http://goo.gl/fb/q6Tix

Cutting Earmarks http://goo.gl/fb/lfpZV

Press Gaggle by the President en route Andrews Air Force Base http://goo.gl/fb/2Vm2V

APEC/Yokohama: The Leaders' Growth Strategy http://goo.gl/fb/Aebfw

Washington's Equal Pay Obsession - There's no epidemic of gender discrimination. So why is Congress proposing another law?
WSJ, Nov 16, 2010
http://online.wsj.com/article/SB10001424052748703326204575616450950657916.html

Women in the workplace don't face rampant pay discrimination, and yet the Senate may soon pass a bill—already passed in the House—premised on the erroneous charge that they do. The Paycheck Fairness Act (PFA) would be a harmful addition to the many federal laws that already protect women and men from labor-market discrimination.

The original Equal Pay Act of 1963 made it illegal for firms to pay different wages to women and men who performed equal work on jobs in the same establishment. Title VII of the 1964 Civil Rights Act outlawed discrimination against women and minorities in all aspects of employment, including hiring, promotion and compensation. Additional protections came with the 1978 Pregnancy Discrimination Act; the 1991 amendments to Title VII, which boosted penalties for discrimination; and the 2009 Lilly Ledbetter Act, which essentially eliminated the time limit for filing discrimination claims.

In addition, for more than 40 years two major federal agencies have been dedicated to fighting labor-market discrimination: the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance.

Why do we need still more legislation? The reason, say the bill's sponsors, is that women earn 77% as much as men, according to the Bureau of Labor Statistics. But this figure refers to the annual earnings of full-time, year-round workers. It doesn't compare comparable men and women, and it doesn't reflect that full-time men work 8%-10% more hours per week than full-time women.

It also doesn't reflect what research of mine and others have shown: Men typically accumulate more continuous work experience and therefore acquire higher productivity in the labor market. In fact, the gender gap shrinks to between 8% and 0% when the study incorporates measures such as work experience, career breaks and part-time work.

The most important source of the gender wage gap is that women assume greater responsibility for child-rearing than men. That influences women's extent and continuity of work, which affects women's skills and therefore wages. In addition, women often seek flexible work schedules, less stressful work environments, and other conditions compatible with meeting the demands of family responsibilities. Those come at a price—namely, lower wages.

The PFA ignores research showing that factors other than discrimination explain the current gender wage gap. The bill would force employers to raise women's pay by sharply reducing their ability to defend what they believe is a justified differential in pay based on merit.

Under the existing Equal Pay Act, an employer charged with gender discrimination in pay can defend himself or herself by offering evidence that the differential is based on nondiscriminatory factors such as work experience and education. But the PFA limits the use of these bona fide factors by requiring that employers demonstrate that they are job-related necessities.

The PFA also empowers complaining employees to propose alternative methods of determining pay that, if accepted by courts, would presumably be imposed on employers. This unprecedented shift in bargaining power would lead to endless lawsuits.

So would the PFA's changes to the rules governing class-action lawsuits. Under the Equal Pay Act, workers are included in class-action suits only if they opt in. Under the PFA, they would be included automatically—just for being women in a firm that is being sued. And the act provides for compensatory and punitive damages, apparently without limit.

A particularly ridiculous provision would authorize grants to "eligible entities"—supporters of the bill like the American Association of University Women—for training women in negotiation skills. Men are excluded. But if women are the equal of men, why do only they need such training?

So the PFA is not fair, sensible or warranted, and it will impose great costs on employers. Some firms undoubtedly discriminate against women, but their number is small and the federal government's existing antidiscrimination apparatus is more than adequate. This new legislation would simply provide a feast for lawyers—and, by increasing the cost of employing women, would likely harm its intended beneficiaries.

Ms. O'Neill is a professor of economics at Baruch College and an adjunct scholar at the American Enterprise Institute.


APEC Leaders Declaration: "The Yokohama Vision - Bogor and Beyond" http://goo.gl/fb/6fIGG

Trans-Pacific Partnership: Progress Towards a Regional Agreement http://goo.gl/fb/xSYB6

Remarks by President Obama and President Medvedev of Russia After Bilateral Meeting http://goo.gl/fb/1cHt8

Statement by the President on the release of Aung San Suu Ky http://goo.gl/fb/kAse9

Conservatives on Federal President's Asia trip: A Failing Agenda Fails
http://blog.heritage.org/2010/11/15/morning-bell-a-failing-agenda-fails

Alzheimer's Disease: Nearly 100 New Medicines - New treatments needed to avert "national crisis"
http://www.innovation.org/index.cfm/FutureOfInnovation/NewMedicinesinDevelopment/Alzheimer%27s_Disease

The Obamacare Burden To Your State Budget
http://blog.heritage.org/2010/11/12/morning-bell-the-obamacare-burden-to-your-state-budget

Press Briefing

Nov 15, 2010

Remarks to the Young Leaders Dialogue Conference
http://www.state.gov/r/remarks/2010/150841.htm

Cameron Speaks to China - A worthy first effort by the British Prime Minister
http://online.wsj.com/article/SB10001424052748703805004575606762540186610.html

Obama Acts Like a Republican on Social Security: http://progressive.org/radio/12nov10.html (audio)

Forget any 'Right to Be Forgotten' - Don't count on government to censor information about you online
http://online.wsj.com/article/SB10001424052748704658204575610771677242174.html

From the archives | Aung San Suu Kyi Interview, March '97 issue of The Progressive magazine: http://www.progressive.org/mag_intv0397

In Defense of Ben Bernanke - To create the fearsome inflation rates envisioned by the more hysterical critics, the Fed would have to be incredibly incompetent, which it is not.
http://online.wsj.com/article/SB10001424052748704658204575611052418939656.html

The Senate shouldn't ratify the New Strategic Arms Reduction Treaty without guarantees that the administration will modernize weapons and improve missile defense
http://online.wsj.com/article/SB10001424052748703514904575602992172574172.html

Gary Locke and Larry Summers: America's Broadband Opportunity - Today the administration is freeing up a chunk of new wireless spectrum
http://online.wsj.com/article/SB10001424052748703848204575608872054624914.html

Fan and Fred's New Boss - Another 'affordable housing' advocate
http://online.wsj.com/article/SB10001424052748704658204575610920770030704

Federal President's Weekly Address: Exports & Earmarks
http://goo.gl/fb/h2kme

The Accidental Statist - Obama says the crisis made him do it
http://online.wsj.com/article/SB10001424052748703514904575602410060970630.html

Press Briefing

Nov 13, 2010

President Obama Lays Out His Priorities on Tax Cuts
http://goo.gl/fb/pn9VU

The Adventures of Samuel Clemens - Twain's autobiography, finally available after a century, is a garrulous outpouring—and every word beguiles
http://online.wsj.com/article/SB10001424052702303341904575576672011487264.html

Vice President Biden Honors "Those Who Served and Sacrificed"
http://goo.gl/fb/KooTF

An administration elected with a mandate to stabilize misread the situation and believed the country wanted the deep changes that liberals have wanted for decades
http://online.wsj.com/article/SB10001424052748704658204575610810332410800.html

The Trouble With Robo-Lending - There's a lot to be said for bankers knowing their customers. Too bad the financial reform bill does nothing to restore that tradition.
http://online.wsj.com/article/SB10001424052748704658204575610770240874674.html

The Radical School Reform You've Never Heard Of - With 'parent trigger,' families can forcibly change failing schools
http://online.wsj.com/article/SB10001424052748704462704575609781273579228.html

Obama: Pelosi an “Outstanding Partner”
http://thecaucus.blogs.nytimes.com/2010/11/12/obama-pelosi-an-outstanding-partner/

Al Qaeda Discovers the Mail Bomb - How about not overreacting for a change?
http://online.wsj.com/article/SB10001424052748703848204575608493572325302.html

How Insurgencies End
http://www.rand.org/pubs/monographs/MG965/

Liberated in Colorado - Disclosure vs. democracy
http://online.wsj.com/article/SB10001424052748704658204575610902777852436.html

Are ETFs a Menace—or Just Misunderstood?
http://online.wsj.com/article/SB10001424052748704865704575610833659564558.html

Iranian hip-hop artists risk it all to express their desire for political and religious freedom
http://online.wsj.com/article/SB10001424052748703805004575606580855611258.html

@theprogressive: "The Republicans want to decrease the debt and lower taxes at the same time. And then they’ll try to lose weight by eating ice cream." Durst

Embarrassment in Seoul - The world won't follow slow-growth, weak-dollar America
http://online.wsj.com/article/SB10001424052748704462704575609770024501384.html

Press Briefing

Nov 12, 2010

The Human Cost of Recessions: Assessing It, Reducing It
http://www.imf.org/external/pubs/ft/spn/2010/spn1017.pdf

Sec Sebelius: The Beginning of the End of the Tobacco Epidemic
http://www.whitehouse.gov/blog/2010/11/10/beginning-end-tobacco-epidemic

Pelosi's Troop Defections - Even longtime liberals are exasperated by Ms. Pelosi's stubbornness in clinging to the remnants of her former power
http://online.wsj.com/article/SB10001424052748703848204575608901587928526.html

West Wing Week: "OCONUS - Outside the Continental United States" http://goo.gl/fb/Jqbpx

The Four Ps of Global Business Expansion - For most of the past century, U.S. multinationals have functioned as American companies with overseas operations. That won't do anymore.
http://online.wsj.com/article/SB10001424052748703514904575602933928110168.html

Cross-Cutting Themes in Employment Experiences during the Crisis
http://www.imf.org/external/pubs/ft/spn/2010/spn1018.pdf

The High Price of Journalism in Putin's Russia - Five of my colleagues at Novaya Gazeta have been murdered. No one has been brought to justice.
http://online.wsj.com/article/SB10001424052748703805004575606461059832950.html

President Obama and President Yudhoyono Press Availability http://goo.gl/fb/dg6gZ

Israel's Ultra-Orthodox Welfare Kings - There is no precedent in Jewish history for a whole community devoting itself to Torah scholarship
http://online.wsj.com/article/SB10001424052748703848204575608473772263624.html

Remarks by President Obama and German Chancellor Merkel before Bilateral Meeting
http://goo.gl/fb/Fuj5Q

Can Anything Serious Happen in Cancun? - The upcoming climate summit promises more proposals that ignore economic reality
http://online.wsj.com/article/SB10001424052748703848204575608311276024450.html

Remarks by President Obama and President Hu of China Before Bilateral Meeting
http://goo.gl/fb/x0KAH

Jan F Qvigstad: On making good decisions
http://www.bis.org/review/r101111c.pdf

The 8,011-Person Crisis - ObamaCare's pre-existing condition program is a bust
http://online.wsj.com/article/SB10001424052748703805004575606891744060162.html

President Obama to America's Veterans: "We Remember."
http://goo.gl/fb/6oEGn

Should Advanced Countries Adopt a Fiscal Responsibility Law?
http://www.imf.org/external/pubs/cat/longres.cfm?sk=24345.0

A Deficit of Nerve - Obama's commission has ideas that Republicans can use
http://online.wsj.com/article/SB10001424052748703848204575608610971091280.html

On the Chinese Currency Issue: Narrative and Reality
http://www.brookings.edu/opinions/2010/1110_chinese_currency_kharas.aspx

A Growth Agenda for the New Congress - For now: Extend the Bush tax cuts, repeal ObamaCare, support free trade. After 2012: Enact a flat tax, stabilize prices, balance the budget, give politicians incentive pay.
http://online.wsj.com/article/SB10001424052748703514904575602912888140050.html

Commission of millionaires attacks Social Security
http://act.boldprogressives.org/cms/survey/ssletter_main/?source=typ-fb&referring_akid=.294363.E4OQlY

Obama's Gifts to the GOP - Republicans own the political center for now. Not because they deserve it.
http://online.wsj.com/article/SB10001424052748703848204575608453836688106.html

White House White Board: The President in Asia & the National Export Initiative
http://goo.gl/fb/3al6I

The Alaska Vote Count
http://online.wsj.com/article/SB10001424052748703805004575606702552775666.html