Today’s Links: February 13, 2012

OPINION

SHIKA DALMIA: “GM Profits, But Taxpayers Are Still On the Hook”
“Three years after being rescued by a taxpayer bailout, General Motors (GM) last week announced some rather ambitious profit targets for 2012. But even if it meets these targets — a big if — taxpayers should not wait on one foot to recover their remaining “investment” in the company.”

TYLER COWEN: “Break Up the Banks? Here’s an Alternative”
“The more a bank is legally limited in terms of easily measurable size, the more it may resort to off-balance-sheet activities to make up the difference. ‘Breaking up big banks’ may really mean making these less-transparent bank activities much more important to a bank’s fate. […] There is a better alternative: expanding the liability for major financial institutions. If a shareholder invests a dollar in a big bank, why not make that shareholder liable for the first $1.50 — or more — of losses as insolvency approaches? In essence, we would be making the shareholders liable for the costs that bank failures impose on society, and making the banks sort out the right mixes of activities and risks.”

MEGAN MCARDLE: “New Drugs Cost Even More Than You Think”
“For every approved drug, pharma spent between $4 billion and $11 billion on R&D.  Yes, there’s probably some wiggle room on the accounting, but not that much–your auditor is not going to let you reclassify your new delivery trucks, or a Human Resources SVP, as a research expense.  As Herper points out, this isn’t necessarily a vindication of pharma–one could demand to know why they have to spend so much money to develop new drugs.  Yes, I know, it’s getting harder to find approvable new drugs, but the industry has been flailing for ten years, and so far, the only answer they have hit on seems to be ‘more layoffs!'”

NEWS

BUDGET – Obama Sends FY2013 Budget Proposals to Congress
“President Barack Obama on Monday sent Congress a new budget that seeks to achieve $4 trillion in deficit reduction over the next decade while at the same time showering billions of dollars of increased spending on areas aimed at giving the economy a quick boost.”

ENVIRONMENT – Obama Administration Slows Environmental Rules As It Weighs Political Costs
“Rules aimed at curbing emissions from cars and light trucks are on hold because the White House has yet to give the Office of Management and Budget the go-ahead to review them. And a proposal to regulate soot, ready last fall, will not be issued before June.”

HEALTH – Catholic Bishops Oppose Compromise on Birth-Control Insurance
“Catholic bishops said Friday night that they would not support the Obama administration’s proposed compromise on a controversial rule that requires most employers to fully cover contraception in their workers’ health plans.”