Morning Brief: Cities Combat Cash Crunches

While debate rages over the federal deficit, state and local governments face their own budget crises. Stateline describes the successes of North Carolina’s Local Government Commission in imposing budget controls and offering advice to troubled communities, but not giving them loans. The state agency was created in 1931, and no North Carolinian city, county, or special district has defaulted since 1942; the bond market rewards this record with high bond ratings and low interest rates. Meanwhile, other communities are cutting costs; on Tuesday, San Diego and San Jose voters approved ballot initiatives to cut retirement benefits for city workers (NYT).

Michigan’s Fiscal Accountability Act was the subject of a recent Policy Initiative Spotlight by Jonathan Masters. The law increased the state’s power to intervene in local fiscal matters by appointing an emergency financial manager who has decision making authority when certain financial stress criteria are met.

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

Limited Evidence of Skills Mismatch

The Chicago Federal Reserve Bank released a study that found limited evidence of a skills mismatch weighing down the labor market. Researchers found evidence that may suggest a shortage of engineers and of medium skilled workers. A skills mismatch increases structural unemployment, because employers are unable to find qualified workers to fill vacancies and workers cannot find jobs that make use of their skills.

CFR’s Ted Alden discusses the shortage of skilled workers in the U.S. manufacturing pipeline and the need for firms, governments, and unions to work together to encourage young people to pursue manufacturing careers, and schools to increase relevant education.

The Case for No-Stakes Testing

While debate continues over the role standardized testing plays in evaluating the performance of students, teachers and schools, research suggests that simply taking a test may improve learning (TIME). The author suggests expanding “no-stakes” testing, like giving ungraded quizzes at the end of a class, to promote retention. Current research suggests that memories are strengthened and made longer lasting through more frequent recall; in a sense, memories can be strengthened like muscles.

Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.

Farm Bill Under Debate

Congress is debating a farm bill that replaces direct payments to farmers with increased crop insurance support (NYT). The federal government currently pays for two-thirds of premiums and all administrative costs for crop insurance that covers poor yields, declines in prices, or both. Critics say the program is exploited by farmers who plant in marginal lands which have poor yields because the subsidized insurance ensures profitable returns. One farmer said: “I can farm on low-quality land that I know is not going to produce and still turn a profit.”

Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.

Apple Battles Samsung Smartphone in Court

Apple is seeking to prevent Samsung from releasing its Galaxy S III to the United States on patent infringement grounds (Bloomberg). Apple asked a federal judge to add Samsung’s newest smartphone to a patent infringement case Apple brought against Samsung’s tablet. It is the latest salvo in an escalating patent war on four continents between the two consumer electronics giants for dominance of the $219 billion global smartphone market. The Galaxy S III was released in the United Kingdom last month to rave reviews (Daily Mail).

Should the United States adopt a “patent box” tax incentive as several European countries have done in recent years in order to spur innovation? This Policy Initiative Spotlight by Jonathan Masters examines the issue alongside a more conventional policy, the research, and development tax credit.

Making a Smart Milk Jug

Quirky unveiled a smart milk jug that tells its owner when to buy milk (TechCrunch). The stylish device monitors the amount of milk left in the jug, and its pH level—pH changes as milk begins to spoil—and texts the homeowner when it’s time to pickup more milk. The product emerged from a contest sponsored by Quirky and GE for ideas to improve everyday objects with software. Quirky uses the wisdom of crowds to innovate by allowing internet users to “influence” the product design and determine pricing.

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.