Subject: Busy week in Congress, the facts about corporate inversions, Q2 growth fundamentals (AEI

Economics Ledger)

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Congress stays busy before August recess

Testimony Does SNAP support work? Yes and no. Robert Doar: The Supplemental Nutrition
Assistance Program (SNAP) alleviates material hardship, reduces poverty, helps the elderly and disabled,
and provides needed food to children in low income families. Despite these positive aspects, some efforts
to promote the use of SNAP in the post-recession period have reduced the work support aspect of the
program.

Testimony Increasing economic opportunity for African Americans: Local initiatives that are
making a difference. Aparna Mathur: Amongst all races, economic mobility is of particular concern for
African-Americans. African-Americans experience significantly less upward economic mobility compared
to whites. Forty-four percent of blacks in the bottom quintile stay there into adulthood compared to just 25
percent of comparable whites. A large majority of blacks born in the bottom half of the income distribution
are likely to exceed their parents place in the income distribution, but only 35 percent improve their
relative position by 20 percentiles or more, less than the nearly 50 percent statistic for whites.

Testimony Even if you like your plan, you may well lose your plan. And even if you like your
doctor, you may well lose your doctor. Stan Veuger: By 2018 between 73 to 96 percent of employer
plans will lose their grandfathered status. Therefore, even more families that were happy with their
coverage will not be able to keep it and see their plans change. Enacting H.R. 3522, the Employee
Health Care Protection Act of 2013, would extend grandfathered status to plans offered in 2013 and
allow the president to come closer to keeping his promise.

Spotlight on corporate inversions

President Obamas mi sleading commentary about corporate inversions. Alan Viard: Rather than
condemning corporations that change their technical address to lower their taxes, we should be asking
why we base tax liability on that technicality in the first place. If we tell a corporation that it must pay
millions of extra dollars in tax because it has a piece of paper that was issued in the United States rather
than abroad, should we really be surprised when it tries to get a new piece of paper issued abroad?

State of the economy

Second-quarter growth beats expectations. J ohn Makin: Surprise! say the sell-side, upbeat economy
touts. Second-quarter GDP growth came in at a 4% pace, well above the expected 3% pace. But thats as
good as the news gets.

Whats behind the US energy boom? Mark Perry: It would be easy to look at the dramatic 35%
increase in America's oil and natural gas production since President Obama took office and think the
administration deserves much of the credit. But the energy boom has happened in spite of him.

Social Security deficit rises again. Andrew Biggs: Like the CBO, the Social Security Trustees see a
worsening picture for Social Security: last year they projected a 75-year deficit of 2.72% of payroll, while
this year its up to 2.88%. Thats a mere $10.6 trillion in present value for anyone counting, up $1 trillion
from a year ago.

Too big to fail and other financial risks

Too big to fail lives on. Paul Kupiec: Data on bank funding costs provides clear evidence that Dodd-
Frank has not ended TBTF. In the years prior to the financial crisis 2005, 2006, 2007 the largest
banks, those with assets greater than $100 billion, paid a higher average cost for their funding than did
smaller banks. After the financial crisis and passage of the Dodd-Frank Act 2012, 2013 and 2014
the largest banks have lower average funding costs compared to smaller banks.

Housing risk declines, for now. Edward Pinto and Stephen Oliner: AEIs National Mortgage Risk Index
for home purchase loans fell almost half of a percentage point in J une to 11.44%. This drop reflected
declines for three of the four agencies (Fannie Mae, Freddie Mac, and the FHA), along with a decline in
the share of purchase loans guaranteed by the FHA and Rural Housing Service (RHS). The index for the
Rural Housing Service hit a new series high at 19.75%.

Around the world

Passing the trans-Pacific trade pact comes down to this. Claude Barfield: The TPP has become the
single most important symbol of future US leadership in Asia. Failure will have not only economic but also
debilitating diplomatic and security consequences. Within the United States, two imperatives are key:
hands-on presidential leadership (admittedly not a normal Obama strength), and responsible initiatives
from congressional Republicans, who have provided the bedrock majorities for FTAs for the past two
decades.

No free lunch for the ECB. Desmond Lachman: Before opting for a policy of quantitative easing,
European policymakers should weigh alternative policy options. They might consider supporting the
ECBs present monetary policy with more expansionary fiscal policies for suitable countries, such as
Germany. They might also consider policies aimed at increasing the flow of credit and at reducing
borrowing costs for small and medium-sized firms in the European periphery.

In other news

Hillary's weak-but-illuminated critique of the Ryan antipoverty pl an. J im Pethokoukis: Does Hillary
really think state governments, particularly those led by GOP governors, hate their poor people? Is that
where the political debate is? Another, more constructive way of looking at it: the Rubio/Ryan approach is
a perfect antidote to the rejection of Medicaid funds mindset because it strips the federalism politics out
of it and invites/empowers states to innovate.

Mark your calendar

Today! Monthly employment situation numbers released
8.7 Weekly jobless claims released

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