July 18, 2022
TOP THREE READS
Chicago Tribune
From July 17, by John Byrne, includes “… If Lightfoot decides to collect the full amount allowed under her annual tax formula, the tax increase would nearly quadruple in 2023 to $85.5 million, according to a Tribune analysis of the property tax levy and the mayor’s policy. While directed at property owners, the tax is likely to affect not only homeowners but renters and businesses across the city, hitting Chicagoans already reeling from higher costs at gas pumps and in grocery stores. …”
Forbes
How higher inflation increases your taxes, especially if you are retired
From July 14, by Bob Carlson, includes “The highest inflation rate in more than 40 years is doing more than eroding the purchasing power of your income and assets. It’s also increasing your taxes, automatically and quietly. Thanks primarily to the late U.S. Senator Robert Dole (R-KS), many sections of the tax code are indexed for inflation. … But not all parts of the tax code are indexed for inflation, and that causes automatic inflation-induced tax increases for many taxpayers. … Because these provisions aren’t indexed for inflation, when inflation increases taxes increase for many taxpayers without Congress having to enact a tax increase.”
CT Examiner
My mother-in-law and inflation
From July 16, by Kimberly Fiorello, includes “… I’m so sorry that it is people like my wonderful mother-in-law who will be hurt most by inflation, because she lives on her savings. To those on a fixed income or who have few or no assets that can appreciate in value in these times, inflation is cruelly eroding their ability to afford the necessities of life. … Inflation also hurts business owners who are seeing their costs rise wildly. In such a distorted environment, entrepreneurs cannot read pricing signals to discern market opportunities. It’s unclear what is real demand vs what is inflation so they hold off on taking risks that could grow their businesses. The beautiful benefits of economic activity – work, self-esteem, high morale – are diminished in inflationary times. … Inflation is the price of free money finally getting paid. … I love my mother-in-law. She’s wise and plucky. ‘Inflation?’ she says. ‘They should just call it robbery.’ ”
FEDERAL
MarketWatch
Eight unexpected ways inflation can lead to higher taxes
From July 18, by Richard Connor, includes “… Important parts of the federal tax code aren’t indexed for inflation. Result: If inflation leads to nominal increases in a family’s income, it could lead to larger tax bills at a time when many taxpayers are already contending with steeply higher consumer prices. That would be an ill-timed double whammy for many Americans. Consider eight examples …”
The Wall Street Journal
CPI doesn’t capture the true cost of living in Trump country
From July 15, op-ed by Gene Ludwig and Diana Dayoub, includes “Wednesday’s consumer-price index report showed a 9.1% year-over-year jump. Following similar news last month, the Federal Reserve increased interest rates by 0.75 percentage point. This spells double trouble for middle- and low-income Americans: increased expenses for the former and job losses from the latter. But the economic squeeze on these Americans is no new phenomenon, a truth that voting patterns have been better at revealing than official inflation data. …”
The Bakersfield Californian
Government does not create wealth
From July 17, letter to the editor by Andy Wahrenbrock, includes “… governments, generally speaking, have no capacity to create wealth, only to diminish it and direct it to favored groups. For crying out loud, any money they have was taken by force from the productive sector. This transpires in the modern American era through both direct tax and the despicable hidden tax of inflation, and it’s never enough. … A related sidebar, if the climate crowd is actually concerned about fossil fuel consumption, their first act would be to downsize the American military, reportedly the world’s largest consumer. …”
STATE AND LOCAL
Chicago Sun-Times
Trial of 4 charged in ComEd bribery case rescheduled for March
From July 14, by Jon Seidel, includes “The trial of four people accused of trying to bribe then-Illinois House Speaker Michael Madigan has been rescheduled for March 6. Charged in the case are longtime Madigan confidant Michael McClain, former ComEd CEO Anne Pramaggiore, ex-top ComEd lobbyist John Hooker and former City Club President Jay Doherty. … The group was originally charged in November 2020, and they had previously been set to go to trial in September. But U.S. District Judge Harry Leinenweber, who presides over the case, is also set to preside in August over the trial of R&B star … R. Kelly. Kelly’s trial on child pornography and obstruction of justice charges was recently pushed back two weeks, which was enough to knock the ComEd case off the calendar.” (Note: Is it only a coincidence that this development delayed the corruption trial until after midterm elections?)
The Texas Tribune
From July 14, by Mitchell Ferman, includes “Record-high tax revenues over the last year will give Texas lawmakers an astounding extra $27 billion to spend in the 2023 legislative session, the state’s top accountant said Thursday. … The massive revenues are largely a result of inflation and the Russian invasion of Ukraine, both of which have hurt Texans shopping at grocery stores, filling up their vehicles with gasoline and paying their home energy bills. Sales taxes are the primary driver of state revenues, so Texas coffers benefited from elevated prices of goods over the last year. The other main revenue stream for Texas is oil and gas production taxes.”
Insider NJ
Flynn and Scharfenberger call for a special tax relief session to fight out of control inflation
Press release from July 13, includes “Assemblywoman Flynn remarked … ‘In light of today’s inflation announcement, Gerry and I call upon our colleagues in the Legislature to return to Trenton to find ways we can provide immediate financial relief now because the crushing inflation rates are simply another hidden tax imposed upon all residents here in New Jersey.’ … Assemblyman Scharfenberger also commented … ‘Just a month ago, Treasury Secretary Janet Yellen conceded that she failed to anticipate the inflation rate increases we are experiencing and admitted she was wrong to say in 2021 that inflation only posed a ‘small risk’ to Americans.’ …”
FROM THE VAULTS
WBEZ 91.5 FM (Chicago)
Treasury Secretary Janet Yellen says she was wrong about the risks of inflation
From June 1, 2022, by Ximena Bustillo, includes “Treasury Secretary Janet Yellen said she was wrong a year ago when she said she anticipated inflation would be ‘a small risk,’ ‘manageable’ and ‘not a problem.’ … Yellen's concession also comes on a week when the Biden administration is touting its approach to tackling rising prices ahead of November midterms.”
WBEZ 91.5 FM (Chicago)
Treasury Secretary Janet Yellen faces judgement over inflation
From June 8, 2022, by Scott Horsley, includes “Members of a Senate committee grilled the Treasury secretary about what's behind today's high inflation and what the Biden administration plans to do about it. … Yellen says the administration is doing what it can to address supply imbalances - releasing oil from the strategic stockpile, for example - while giving the Federal Reserve room to tamp down demand with higher interest rates. Republican senators, like Steve Daines of Montana, accused Democrats of stoking demand by passing another big round of COVID relief in the early months of the Biden administration.”
July 15, 2022
TOP THREE READS
Discourse
Congress’ broken budget system helped create inflation
From July 14, by Kurt Couchman, includes “… The public correctly blames inflation on mistakes by Congress and the White House and the Federal Reserve. Often overlooked, however, is the contribution of dysfunctional federal budgeting. Congress’ broken budget system fails to check bad ideas and magnifies mistakes. Important repairs include adopting well-crafted budget targets, managing the budget holistically and ending the threat of government shutdowns. …”
Reuters
Fed staff say balance sheet runoff could strain Treasury market
From July 14, by Howard Schneider, includes “Two new analyses from Federal Reserve staff have concluded that strains in the U.S. Treasury market could complicate the central bank's plans to reduce its balance sheet by amplifying the effect of those reductions on financial markets and raising interest rates more than anticipated. The papers, from researchers at the Atlanta and Kansas City Fed regional banks, are similar to other efforts to estimate how markets may be influenced as the Fed allows the trillions of dollars of securities it bought to support the economy during the coronavirus pandemic to mature and ‘roll off’ its balance sheet. …”
Mises Institute
Who owns Federal Reserve Losses and how will they impact monetary policy?
From June 27, by Paul Kupiec and Alex Pollock, includes “… For only the second time in its history, the Federal Reserve system is facing the prospect of losses, only this time the losses are massive. The Fed already has huge market-value losses on its SOMA portfolio that it chooses not to recognize in its formal financial accounting statements. Any financial institution other than the Fed faced with market-value losses greater than 13 times its capital would have already lost public confidence and probably be in receivership. And soon the Federal Reserve will face large operating losses, losses which it must recognize on its financial statements. While the Federal Reserve Act explicitly requires that Federal Reserve member banks be assessed to cover operating losses, the Federal Reserve Board’s stated plan is to monetize these losses and still report a positive capital and surplus position through the use of ‘creative accounting’ entries not seen since the 1980s savings and loan crisis. Those that recall that historical period know that relying on “regulatory accounting standards” to create phantom capital cushions did not turn out well. In the Fed’s case, failure is not an issue because the Fed can literally print as much money as needed to pay its expenses and member bank dividends. Monetizing operating losses will however enrich the Fed member banks that are supposed to be bearing the loss, while the public at large will face higher interest rates, higher unemployment, reduced growth, and the inflationary consequences of the new money printed to cover Fed losses. The Fed seems to be hoping that nobody notices.”
FEDERAL
The Hill
Biden’s pension ‘guarantee’ stretches the law to bail out unions
From July 14, by Aharon Friedman, includes “Last Wednesday, President Biden said that the American Rescue Plan would provide a $90 billion bailout to multiemployer unions, ‘guaranteed’ to keep eligible pension plans solvent until 2051. Forcing taxpayers with losses in their own retirement plans to selectively bailout severely mismanaged union plans is bad enough. But the Pension Benefit Guaranty Corporation (PBGC) rule … is completely without statutory authority. … As Congress considers another reconciliation bill, its cost is a key consideration. Any Congressional Budget Office score of the bill would be meaningless if the Biden administration can later issue regulations changing the law to spend untold trillions in order to accomplish their policy objectives.”
Federal News Network
Manchin cites inflation concerns, roiling budget talks anew
From July 13, by Alan Fram, includes “Sen. Joe Manchin roiled his budget talks with Democratic leaders anew Wednesday, saying the latest inflation surge makes him ‘more cautious than I’ve ever been’ about agreeing to federal spending increases that could drive consumers’ costs even higher. The West Virginia Democrat, who single-handedly killed Democrats’ roughly $2 trillion, 10-year social and environment bill before Christmas, has been bargaining with Senate Majority Leader Chuck Schumer over a new economic package that would be around half that size. But Manchin said grim new inflation figures meant the energy, tax and health compromise he’s been discussing with the New York Democrat must be reviewed. …”
The Wall Street Journal
From July 13, editorial, includes “… The greatest tragedy is for American workers, who are suffering the largest reduction in real wages since the 1970s. … Senators Joe Manchin and Kyrsten Sinema can do the country a favor by finally ending the Beltway drama over all of this tax and spending. The return of virulent inflation didn’t have to happen, and the experience should discredit the policies that brought it on. The splurge of spending in 2020 and 2021, under Presidents Trump and Biden, spurred excessive demand. The Fed kept the monetary spigots open for too long, as Washington became enamored with Modern Monetary Theory. Whatever short-term financial help to Americans that Democrats provided with their trillions of dollars in welfare payments has been more than offset by inflation. The U.S. needs a return to growth economics rooted in stable money, supply-side tax policy, deregulation and fiscal restraint. That agenda hasn’t been as important since 1980.”
STATE AND LOCAL
CNN Business
The market meltdown threatening pensions for millions of Americans
From July 14, by Nicole Goodkind, includes “American public pension funds are facing serious challenges that threaten the retirement plans for millions of US state and local government employees. Pension plans remained severely underfunded during the 11-year bull market that followed the Great Recession. The plunge toward insolvency and high-return markets led fund managers to take on risky bets in hope of staying afloat. Now, the recent selloff has left funds struggling to keep up with their future obligations.”
Bonner Private Research
Forbidden fruit and a pension problem
From July 7, by Bill Bonner, includes “Our hoary president was in the news yesterday. CBSNews: ‘Biden’s visit was tied to the launch of a program launch of a program created under the American Rescue Plan that provides assistance to struggling multi-company pension plans, ensuring that as many as 3 million workers and retirees will receive their full benefits.’ This morning, the Wall Street Journal adds that pension funds will be able to use up to a third of the $90 billion in free money to gamble in the stock market. Republicans allegedly maligned these pension bailouts as ‘rat holes’. Of course, they were right. But the rats vote, and Joe will take votes from wherever he can get them. … Local governments made pension commitments that they couldn’t afford. Employees must have known it. So did fund managers. But such was the connivance between them that neither wanted to ask questions. They hoped for the best…and waited for the bailout. …”
Illinois Policy Institute
Pritzker claims fiscal responsibility but report shows ‘fiscal cliff’
From July 13, by Justin Carlson, includes “Gov. J.B. Pritzker is touting Illinois’ fiscal progress as he runs for reelection and claiming his accomplishments have ‘pulled the rug out from the naysayers and pessimists who have built a career on badmouthing our state.’ But there’s a difference between pessimism and acknowledging the state’s severe fiscal problems. Experts are again warning Illinois is facing big trouble. The Volcker Alliance, a non-partisan government watchdog, has issued a new report showing Illinois is at risk of facing a ‘fiscal cliff’ once one-time federal relief funds dry up. …”
Reason
Crony capitalism is apparently business-friendly
From July 13, by Joe Lancaster, includes “A new report by CNBC lists North Carolina as America's Top State for Business, based on a wide range of metrics. The site, which has compiled the list annually since 2007, noted the Tar Heel State has finished in the top 10 nearly every single year, coming in a close second for 2021. As for what put it over the top this year: ‘state leaders keep managing to put aside their very deep political divisions to boost business and the economy.’ … But despite CNBC's breathless praise, these types of deals have downsides. …”
FROM THE VAULTS
Bill’s Blog — Truth in Accounting
From December 2021, by Bill Bergman, includes “… Is it possible that a survey of what governments say about their business-friendliness tells you something different than what a survey of what businesses says about how friendly their government is? Yes. … The 10 states with biggest positive difference between the CNBC rankings and the average for the CEO Magazine and SBE Council rankings are … the average ‘Taxpayer Burden’ that TIA calculates for these ten states runs six times higher than the average for the rest of the states in the nation. And those 10 states tend to rank significantly worse on United Van Lines latest migration survey (the more chestpounding, the higher the outmigration). … A ‘State Chestpounding Index.’ Or a ‘State Desperation Index.’ …”
July 7, 2022
TOP THREE READS
CNBC
Biden to tout plan to protect millions of workers’ pensions
From July 6, by Rebecca Shabad and Sally Bronston, includes “President Joe Biden will travel to Cleveland, Ohio, on Wednesday to announce a plan to prevent cuts to millions of workers’ pensions. The launch of the program, created under the American Rescue Plan, comes as Biden’s approval rating remains in the doldrums and consumer anxiety mounts over 40-year-high inflation. Under the final rule for the program, 2 to 3 million workers and retirees who faced pension cuts because of investment losses will get the benefits they were set to receive for their retirement, a White House official said. More than 200 ‘multiemployer’ plans, which are created between employers and unions, ‘were on pace to become insolvent in the near term because their investments struggled during economic crises,’ the official said.”
Washington Examiner
Biden to tout effort bolstering retirement plans on Ohio trip
From July 6, by Naomi Lin, includes “President Joe Biden is expected to promote the Democrats-only $1.9 trillion COVID-19 spending bill's shoring up of multiemployer pension plans when he travels to Cleveland, Ohio. … ‘Two to three million workers and retirees who would have faced dramatic cuts to their pensions will receive the benefits they paid into and depended on for their retirement security, and previous cuts to their pensions will be reversed,’ the source said.”
United States Department of the Treasury
Statement from Secretary of the Treasury Janet L. Yellen on the release of the final pensions rule
From July 6, includes “Today’s action by President Biden ensures that millions of hardworking Americans will receive the pension benefits they worked all their lives for and feared were lost. This action will have a significant impact on the lives of workers and their families, and represents one of the most meaningful improvements in our nation’s retirement security in years. In addition, this initiative extends the solvency of the program that insures multiemployer pensions by nearly three decades.” (Note: In his 1946 book, Economics in One Lesson, Henry Hazlitt summarized the ‘one lesson’ as "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.")
FEDERAL
The Bruegel Newsletter
Central banks have been too slow in responding to higher inflation
From July 6, by Marek Dabrowski, includes “… More than three decades of low inflation in a context of strengthened central bank independence have helped anchor low inflationary expectations in advanced economies. Now, this achievement may be lost … After a more than a decade of quantitative easing, central banks’ balance sheets expanded and became dominated by government bonds on their asset side. Stopping inflation requires central banks to reduce their balance sheets and to hike interest rates. However, both actions will raise governments’ interest payments and further deteriorate their fiscal positions. It will lead to a conflict between central banks and governments, which may undermine central bank independence.”
Axios
Fed minutes: Officials worried about about inflation becoming ‘entrenched’
From July 6, by Neil Irwin, includes “Federal Reserve officials feared that high inflation could become entrenched in the economy and concluded that they may need to push interest rates higher than already planned in order to manage that risk. … the officials stressed that ‘clear and effective communications,’ along with higher rates, "would be essential in restoring price stability.’ That helps explain a drumbeat of speeches and interviews from the officials in recent weeks stressing their resolve in bringing inflation down. …” (Note: See “That Was Then, This is Now Department” below.)
The Wall Street Journal
ESG feeds inflation, hurts economic growth
From July 5, by David Henderson and Marc Joffe, includes “… If enough companies focus on ESG priorities, then, they risk higher inflation and slower growth or stagflation. That isn’t to say that the general principles ESG emphasizes are undesirable, but that it’s more important to do good than to be labeled good. … To get the U.S. economy back on a path to sustainable growth and low inflation, the Fed must rein in excess liquidity, as it is now doing. But that alone won’t be enough. Businesses, investors and those advising them must push back on ideas such as ESG that undermine corporate productivity.”
Route Fifty
This federal committee is watching over your pandemic funds spending
From July 5, by Liz Farmer, includes “The Pandemic Response Accountability Committee is on the lookout for fraud and other issues with trillions in federal Covid aid. But the watchdog is also assembling a wealth of data on programs the money is going to. … The committee is evaluating spending from more than 400 programs across more than 40 agencies and establishing several valuable databases for practitioners and other transparency stakeholders. … A number of data transparency groups have also taken it upon themselves to aggregate and analyze state and local pandemic spending data and outcomes. …”
STATE AND LOCAL
Route Fifty
Localities look to an untapped ‘gold mine’ of potential revenue
From July 6, by William Lucia, includes “McAdams is leading a new project known as the Putting Assets to Work Incubator, which aims to help local governments identify underused public assets that could be ripe for private investment. The idea is that the projects that follow, or the revenue from them could help to deliver environmental and social benefits for residents. … But there are also reasons to be wary of governments opening the door for private investment in assets owned by the public. Chicago's much-maligned deal to lease its parking meters for 75 years offers just one example of how such projects can work out in ways that are arguably not in the best interest of taxpayers.”
WGN-TV (Illinois)
Report: City to explore putting a dome on Soldier Field
From July 6, by Rick Tarsitano, includes “Mayor Lori Lightfoot appears to be doing everything she can to keep the Bears from moving to the suburbs. According to a Crain’s Chicago Business report, a mayoral committee is set to recommend looking into the feasibility of building a dome on top of Soldier Field. An early draft of the proposal obtained by Crain’s estimates costs in the ballpark of $400 million to $1.5 billion, which would likely be subsidized by taxpayers. …”
The Center Square
Taxpayer funding for NFL, other pro sports stadiums grows exponentially
From June 11, by Jon Styf, includes “Farren said the public subsidy deals follow a road map learned from previous teams, one identified by Joanna Cagan and Neil deMause in their book and now website ‘Field of Schemes.’ Bradbury said that it starts by getting state and local lawmakers on the same page to push a deal through quickly, before the full numbers are revealed and economists can tell the real story on benefits projections. And it doesn’t always work like regular economics, where a situation like the Washington Commanders could elicit a bidding war between states and municipalities such as Virginia, Maryland and Washington, D.C. ‘These coalitions don’t exist to win a bidding war,’ Bradbury said. ‘These coalitions exist to feel loved.’ …”
Illinois Policy Institute
AFSCME puts $100,000 into campaign to guaranteeing $2,100 property tax hike
From July 7, by Mailee Smith, includes “The American Federation of State, County and Municipal Employees – the largest state worker union in Illinois – is funding a campaign that would guarantee a $2,100 property tax increase for homeowners if passed. Records with the Illinois State Board of Elections show AFSCME has given at least $100,000 to the campaign supporting Amendment 1, which will be on the ballot Nov. 8. Misleadingly framed as a ‘workers’ rights amendment,’ Amendment 1 would prevent commonsense reforms to reduce homeowners’ tax burdens while giving government union leaders virtually limitless new ways to demand higher costs from taxpayers.”
Axios
Too much inflation aid from states may exacerbate the problem
From July 6, by Kate Marino, includes “… Politicians are caught in a bind as to whether they should offer short-term inflation relief for struggling constituents — or help address the underlying causes by curtailing consumer demand. … Most Americans probably don’t closely study things like the economics of fiscal stimulus, or how the Fed’s dual mandate works. … Many states have budget surpluses this year — so it shouldn't be surprising that leaders (many of whom will seek reelection at some point) are looking to offset the pain.”
THAT WAS THEN, THIS IS NOW DEPARTMENT
Reuters
Fed’s Evans: U.S. inflation extremely high, rates hikes needed
From March 2, 2022 by Ann Saphir, includes “Federal Reserve Bank of Chicago President Charles Evans on Wednesday said ‘extremely’ high inflation poses ‘quite a risk’ to economic growth, and the U.S. central bank needs to start raising rates to address it. ‘We are going to get going,’ on raising rates over the next several meetings, going carefully at first, but raising them faster if the inflation outlook worsens, Evans told the Lake Forest-Lake Bluff Rotary Club Foundation.”
Reuters
Fed’s Evans says policy likely on hold for some time
From May 5, 2021, includes “Though much more optimistic about U.S. economic growth and unemployment than just a few months ago, Chicago Federal Reserve Bank President Charles Evans on Wednesday reiterated his worries about reaching the Fed's 2% inflation goal and said he expects monetary policy to stay super-easy for some time. ‘Our employment mandate is within sight,’ Evans said in remarks prepared for delivery to the Hyman P. Minsky Conference. But with a projected rise in inflation in coming months likely to be short-lived, ‘achieving our inflation goal may prove more difficult,’ he said, adding: ‘policy is likely on hold for some time.’ …”
July 5, 2022
TOP THREE READS
The Conversation
What happens when your local council goes bankrupt?
From July 4, by Eugenio Vaccari, Laura Coordes, and Yseult Marique, includes “Local government fulfils an essential role in society. It provides fundamental services – from social care and transport to education, water and waste collection. And when it no longer can, when a council goes bankrupt, it is the most vulnerable citizens who bear the brunt of that failure. … Our research shows that when a local authority has strict accounting and reporting rules in place, it is less likely to experience financial problems. The national government, in turn, is less likely to have to use taxpayers’ money to rescue it. … We have found that local councils in those countries which have strict accounting rules – including Belgium, Canada, France, Germany, Japan, the Netherlands and the Russian Federation – are less likely to experience financial difficulties. …” (Note: Don’t see the USA in that list)
The Colorado Sun
Too slow and too predictable, the Fed is its own worst enemy
From July 2, by Nicholas Dwork, includes “The Fed has two mandates: full employment and price stability. Both are impacted by its interest rate, and by the amount of money available for spending and investing — also known as liquidity. … The Fed, though, is facing a new obstacle in its effort to reduce liquidity: an ever-increasing debt ceiling. Current inflation is a result of the Federal reserve making too much money available for far too long, along with simultaneous government constraints imposed on production. … Whoever gets elected, a significant fiscal restraint will be required to return purchasing power to the dollar and prevent burdening our children with even more debt.”
The Hill
Price stability is more than enough for the Fed — no new mandates
From July 2, by Paul Kupiec, includes “It’s no secret that the Fed is having a hard time controlling inflation. While it is failing at its primary duty, the Democrats are busy crafting executive orders, passing bills and proposing new legislation that will expand the list of goals the Fed must prioritize. As it stumbles to meet its current mandates to maintain price stability, maximum employment and financial stability, Congress and the administration are asking it to also control greenhouse gas emissions, promote equal employment, income, wealth and affordable credit outcomes across racial and ethnic groups, and proposing that the Fed be required to issue a new central bank digital currency. This insanity must stop. …”
FEDERAL
CNS News
Government cooks CPI to hide inflation
From June 29, by J. Kennerly Davis, includes “… There is no free lunch at the federal trough. We pay, one way or another, for every benefit payment we get from the government. As the renowned economist Henry Hazlitt explained, every dollar of government spending not paid for by taxation contributes to inflation, itself an onerous tax levied on all of us. … The Consumer Price Index, the most widely reported measurement of inflation, is calculated by the government using a methodology designed to greatly understate actual inflation. For example, the shelter component of CPI is not based on actual home prices, which rose more than 20% in the last year. Without its downward adjustments, CPI would, by some estimates, be twice the 8.6% reported for May! …”
Mises Institute
Here we go again: The Fed is causing another recession
From July 2, by Jon Wolfenbarger, includes “… Normally, the Fed would be slashing interest rates and printing money to try to prevent a recession and stock bear market at this point, which they tried and failed to do in the early 2000s Tech Bust and 2008–09 Great Recession. But instead, the Fed is being forced to hike rates aggressively to try to bring inflation down. … If the Fed succeeds in tightening financial conditions enough to try to maintain their reputation as an ‘inflation fighter’ (i.e., trying to lower the inflation they created in the first place), this will likely be the biggest government-caused economic catastrophe since the Great Depression, as we predicted here last year.”
Reason
The Army thinks printers cost over $1 million
From July 4, by Joe Lancaster, includes “The Army failed to properly account for tens of millions of dollars' worth of equipment, according to the Department of Defense's (DOD) internal watchdog. A report released last week by the DOD Office of the Inspector General detailed the results of a recent audit of military bases in Kuwait. …These issues are not new, and not isolated to two bases in Kuwait. In fact, after discovering the 12 printers listed for over $1 million each, the inspector general determined that throughout the entire U.S. Army, there were 83 printers listed for that price, totaling a cost overage of more than $93 million. Despite acknowledging GFP in the hands of contractors as a potential weakness and ‘audit priority’ in 2011, the DOD would not commit to a ‘resolution’ before 2026. …”
STATE AND LOCAL
WGEM (Illinois)
Mendoza reports Illinois having success this fiscal year
From July 1 (the first day for Illinois FY 2023, ‘this fiscal year’), includes “With the Fiscal Year 2022 ending on June 30, Comptroller Susana A. Mendoza is pleased to report good news on Illinois’ fiscal recovery. The state fiscal year ended with a General Funds accounts payable balance of $1.8 billion for the first time in more than a decade – and a General Revenue Funds payment cycle of ZERO days for the first time in decades. This means the office caught up on bills related to Medicaid, K-12 schools, higher education, Illinois’ Group Health Insurance program, and other government operations and programs. On July 1, the first day of the new fiscal year, the Illinois Office of Comptroller (IOC) is paying the remaining $200 million of the $500 million in additional funds earmarked for the five state pension funds to lower long-term pension liabilities by $1.8 billion.”
Wirepoints
From July 2, by Mark Glennon, includes “… Illinois published actual results in its newest CAFR this week for its 2021 fiscal year that ended June 30, 2021. It’s dismal, and in sharp contrast to the endless bragging by many Illinois politicians about ‘balanced budgets’ and the end of the state’s fiscal crisis. In layman’s terms, the state lost another $4.5 billion for the year. In accountants’ language, that’s the drop in the state’s ‘net position,’ which is like ‘net worth’ in private sector financial statements. …”
Illinois Policy Institute
Taxpayers funded 84% of public employee pensions in 2020
From July 2, by Patrick Andriesen, includes “Illinois residents contributed 84% of the funding for the state’s five public pension systems in 2020, up from 56% 20 years earlier. But employee contributions have remained relatively unchanged at just 5% of the individual benefits they will receive, according to an analysis of state records. While the taxpayer contributions have grown significantly, they cannot keep up with the overpromised benefits. …”
INTERNATIONAL
International Monetary Fund
By Francisco Roch, includes “In response to COVID-19, both advanced and emerging market economies have implemented large fiscal stimulus programs that have pushed public debt to historically high levels. The combination of higher debt and challenging economic conditions has elevated default risks, tightened borrowing constraints, and triggered a wave of debt downgrades, especially in emerging market economies. These developments have heightened the need to plan for future debt reduction strategies … Clear communication, strong fiscal institutions (for example, fiscal rules and fiscal councils), a good track record on past fiscal performances, and political will are all required to enhance fiscal credibility.”
July 1, 2022
TOP THREE READS
Congressional Research Service
The Federal Reserve’s balance sheet and quantitative easing
From June 28, by Marc Labonte, includes “… the Fed has responded to crises by increasing its balance sheet, which is now 10 times larger than it was before the 2008 financial crisis. … If the Fed’s net income became negative, it would temporarily stop remitting funds to the Treasury. But unlike a private company, under the Fed’s accounting conventions it would not reduce its capital, become insolvent, or require a capital infusion to maintain solvency. Instead, it would register the losses as a deferred asset. Unlike a private company, the Fed cannot be compelled by its creditors to declare bankruptcy. Nevertheless, there might be political implications— notably for its independence—if the Fed experienced losses. …”
The Hill
Who owns the Fed’s massive losses?
From June 23, by Paul Kupiec and Alex Pollock, includes “We estimate that at the end of May, the Federal Reserve had an unrecognized mark-to-market loss of about $540 billion on its $8.8 trillion portfolio of Treasury bonds and mortgage securities. This loss, which will only get larger as interest rates increase, is more than 13 times the Federal Reserve System’s consolidated capital of $41 billion. … Among Federal Reserve officials and many economists, it is fashionable to argue that any losses the Federal Reserve should suffer, no matter how large, will have no operational consequence. Now that the Fed has already experienced mark-to-market losses of epic proportions and will soon face large operating losses, something it it has never seen in its 108-year history, we are about to see if this is true. …”
Congressional Research Service
Social Security: The trust funds
From June 29, by Barry Huston, includes “The Social Security trust funds represent funds dedicated to pay current and future Social Security benefits. However, it is useful to view the trust funds in two ways: (1) as an internal federal accounting concept and (2) as the accumulated holdings of the Social Security program. By law, Social Security tax revenues must be invested in U.S. government obligations … The accumulated holdings of U.S. government obligations are often viewed as being similar to assets held by any other trust on behalf of the beneficiaries. However, the holdings of the Social Security trust funds differ from those of private trusts because (1) the types of investments the trust funds may hold are limited and (2) the U.S. government is both the buyer and seller of the investments. …”
FEDERAL
The Wall Street Journal
Rising interest rates will crush the federal budget
From June 29, by Red Jahnke, includes “The Federal Reserve’s policies of increasing interest rates and quantitative tightening—reducing its $8.9 trillion balance sheet—will increase the volume and cost of federal government borrowing, slamming the federal budget and exposing the consequences of decades of deficit spending. The impact will be felt even without a recession, but if the economy does contract, the government will have limited capacity to spur a recovery with fiscal stimulus.”
Zero Hedge
The Fed is quietly handing out $250 million to a handful of happy recepients a day
From June 30, by Tyler Durden, includes “… While one can debate for hours why there is a record $2.330 trillion in cash parked at the Fed's overnight facility and what it means for systemic plumbing problems, the fact is that there is a record $2.33 trillion in cash parked at the Fed's overnight facility, doing nothing. Well not nothing: it was nothing when rates were zero, but at 1.55% which is the current rate, that $2.33 trillion is a golden goose for the 108 counterparties … But wait, there's more! Remember excess reserves?… the Fed hopes to keep hiking at least another 175bps (or more) in the next 6 months, which will push the rate to 3.50% and will mean that the Fed will be paying half a billion in interest every single day to a handful of mostly unknown counterparties every day, money which for said counterparties is also known as (riskless) profit and which is only the result of the Fed's previous money printing.”
The Wall Street Journal
If inflation hasn’t made you crazy, try buying an I bond
From June 29, by Andrea Fuller and Jason Zweig, includes “… When Ms. Bordowitz, 61, took Form 5444 to her local bank in late April, a manager she’d known for years said she couldn’t certify her identity. Instead, Ms. Bordowitz says she was told she’d have to get a special seal known as a medallion stamp, which authenticates signatures when securities are transferred. … That required driving an hour and 45 minutes each way to another branch in Springfield, Ill. … ‘I felt like it was ‘Legend of Zelda,’ she said, referring to a videogame, ‘where you have to go to one place to get an ingredient like, let’s say, a mushroom, and you have to take that to the witch, and the witch makes a potion, and you have to take the potion to the wizard…and the person gives you a medallion.’ …”
STATE AND LOCAL
The Press of Atlantic City
Surplus should have offset record jump in NJ debt
From June 30, editorial, includes “New Jersey state government apparently doesn’t have the billions in extra money to spend from collecting more taxes and getting lots of federal funds, not if it pays its bills. Turns out the state has been running up debt at a record pace, far in excess of its so-called surplus. This was made clear in an audit of state debt and obligations for fiscal year 2021, the one before this fiscal year that will end June 30 and the most recent to be audited. The audit delivered a shock -- total state debt increased $44 billion from the year before.”
Eastern Progress (Illinois)
Temporary tax relief measures to begin Friday in Illinois
From June 30, includes “Illinoisans will receive some modest tax relief starting Friday when the state’s new fiscal year begins. That includes some income tax rebates, property tax rebates, a suspension of the state’s 1 percent tax on groceries, and a six-month pause on the scheduled inflationary increase in the state’s motor fuel tax. … Gov. J.B. Pritzker and legislative Democrats held a news conference publicizing those tax breaks as consumers grappled with 8.6 percent inflation, the highest rate in nearly 40 years. ‘We're sending $1.8 billion in tax relief to Illinois families, and we are able to do that because Democrats balanced the budget, eliminated the bill backlog, and state government is now running a surplus,’ Pritzker said at a news conference in Chicago.”
Illinois.gov
Illinois Family Relief Plan to begin July 1
From June 30, press release from the State of Illinois, includes “Beginning tomorrow, the Illinois Family Relief Plan will go into effect, making good on the promise by Governor Pritzker and the General Assembly to provide relief on the grocery tax, gas tax, and property taxes. The plan totals an estimated $1.83 billion in relief, including income and property tax rebates and a temporary cut in several sales taxes. … said Governor JB Pritzker. ‘We are sending $1.8 billion in tax relief to Illinois families - and we are doing that because Democrats balanced the budget, eliminated the bill backlog, and state government is now running a surplus.’ …” (Note: Illinois just released its annual financial report for the fiscal year ended June 30, 2021 — a year that ended a year ago. It included a disclaimer audit opinion, and the state government’s overall financial position continued to deteriorate, claims to ‘balanced budgets’ notwithstanding. More to follow.)
The Center Square (Illinois)
Price of Independence Day cookout substantially more than last year
From June 29, by Kevin Bessler, includes “If you plan on holding a July 4 cookout this weekend, expect to pay a lot more than what you paid for last year’s meal. According to the American Farm Bureau Federation market basket survey, the overall cost for the Independence Day cookout is up 17%, or about $10 from last year.”
FROM THE VAULTS
From 1776, by Thomas Paine, includes “Some writers have so confounded society with government, as to leave little or no distinction between them; whereas they are not only different, but have different origins. Society is produced by our wants, and government by our wickedness; the former promotes our happiness POSITIVELY by uniting our affections, the latter NEGATIVELY by restraining our vices. The one encourages intercourse, the other creates distinctions. The first is a patron, the last a punisher. Society in every state is a blessing, but Government, even in its best state, is but a necessary evil; in its worst state an intolerable one: for when we suffer, or are exposed to the same miseries BY A GOVERNMENT, which we might expect in a country WITHOUT GOVERNMENT, our calamity is heightened by reflecting that we furnish the means by which we suffer.”
June 29, 2022
TOP THREE READS
The Hill
The next financial hammer to fall: Public pension funds
From June 28, op-ed by Merrill Matthews, includes “… While leveraging can multiply market gains in the fat years, it can also magnify losses in the lean years. Those down-times tend to drive some public pension funds to take even riskier steps hoping to recoup some of the losses. It’s like the gambler who’s on a losing streak but keeps betting in the hope of making up some of the losses. … Of course, some of the private sector’s best money managers have been losing money in this market. But they won’t be able to go to the government and get a taxpayer bailout. If public pensions find themselves severely underfunded, whether because of a down market or bad, even ludicrously risky, investment decisions, or both, that’s exactly what they will do.”
GoLocalProv (Rhode Island)
New study of pension obligation bonds in MA warns plan is a ‘risky quick fix’
From June 28, includes “A new warning has been issued about the risk of issuing pension obligation bonds. Providence is poised to move forward with a plan to borrow $515 million to pay down the unfunded liability of Providence’s pension system. The new study released in Massachusetts warns that the issuing of POBs to refinance $360 million of the MBTA Retirement Fund’s (MBTARF’s) $1.3 billion unfunded pension liability would only compound the T’s already serious financial risks.”
Mises Institute
How governments expropriate wealth with inflation and taxes
From June 27, by Daniel Lacalle, includes “Central banks and governments have exhausted all demand-side policies at the expense of the middle class by eroding real wages and deposit savings. Even worse, governments created a larger inflationary spiral by maintaining all ‘pandemic relief’ packages even after the reopening, well beyond the recovery. They expected a spectacular aggregate demand increase and they got it. Now the result is higher inflation and lower economic growth. But government size and deficit spending remain. Everything that government spends is paid by you. There is no free money.”
FEDERAL
Cato Institute
How inflation erodes financial privacy
From June 10, by Nicholas Anthony, includes “The hidden tax of inflation has been a little less hidden lately. From grocery stores to gas stations, people are seeing prices rise before their eyes. Yet it’s not just our wallets that are paying the price. For 50 years, inflation has helped the U.S. government increase financial surveillance under the Bank Secrecy Act by silently increasing the activities banks must report in their effort to counter financial crime. … The $10,000 threshold was set 50 years ago. … So while it may have been politically feasible to set a ‘high’ threshold of $10,000 in the 1970s when you could buy two brand new Corvettes for that price …”
EY
Government and public sector services
Includes “… Every day, we solve the most complex challenges so the government can build a stronger country — for the people. We work with federal, state and local government agencies and education institutions to create better outcomes for the public they serve. We deliver results and change through high-performing teams, exceptional client service, and commitment to our people and communities. … EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited.”
Yahoo Finance
‘Simply outrageous’ — EY hit with $100 million fine after audit employees cheat on CPA ethics exam
From June 28, by Matthew Robinson (Bloomberg), includes “Ernst & Young LLP admitted that dozens of its audit personnel cheated on the ethics portion of the Certified Public Accountant exam and that the firm misled US regulators probing the misconduct, according to the Securities and Exchange Commission. … The SEC announced on Tuesday that EY would pay a $100 million fine -- the largest ever penalty for an audit firm. In addition to violating accounting rules, EY didn’t cooperate with a key part of the regulator’s probe, the agency said.”
Reason
The government’s coronavirus response was a complete failure. Who will be held accountable?
From June 24, by Veronique de Rugy, includes “From the CDC to the FDA, there are too many missteps to list. … Don't forget about the explosion of government spending that extended long past 2020 with no plan for post-crisis fiscal consolidation, or the Federal Reserve's failure to foresee the largest inflation in decades. … The best example of this comes from the Government Accountability Office, which publishes a report about improper payments every few years. The set of government programs making these payments always seems to involve the same offenders. But nothing happens, and the number of improper payments grows. …”
STATE AND LOCAL
Wirepoints
What balanced budgets? Illinois Auditor General report debunks Pritzker claims
From June 28, by Ted Dabrowski and John Klingner, includes “Gov. J.B. Pritzker has made a big deal about “balancing the budget” during his three years in office, but like we’ve said all along, the budget isn’t balanced and hasn’t been for years. Any claims of balance are simply untrue. For proof, look at the recent Auditor General’s review of Illinois’ five state-run pension funds. The report shows that Illinois’ statutory pension payments over the last few years have each been $4 billion short of what the state’s pension actuaries say should have been put in. How, you might ask, can budgets be “balanced” if the contributions to pension funds have been shorted by $4 billion every year since 2018? Because the legislature says it’s balanced, that’s how. …”
The Wall Street Journal
From June 27, editorial, includes “A tradition in big-city politics is known as ‘street money,’ which is cash that politicians dole out in return for political support to get out the vote. California Democrats have decided to take the practice statewide and call it ‘inflation relief.’ Gov. Gavin Newsom and Democratic legislative leaders over the weekend announced a $300 billion budget agreement that includes $17 billion in what amounts to political relief for lawmakers. “Millions of Californians will be receiving up to $1,050 as part of a NEW middle class tax rebate,” the Governor tweeted. Street money by any other name. …”
American Institute for Economic Research
Public schools are using inflation to extort taxpayers
From June 27, by Garion Frankel, includes “Prices for basic goods like books, papers, pencils, and school lunches have all increased substantially in recent months. As anyone with a vehicle knows, oil and diesel, which are needed to power large fleets of school buses, have become ridiculously expensive. … As such, many school districts have to make a choice: They can either take responsibility and trim the excess fat off their finances, or they can beg taxpayers for more money in the form of tax hikes and new bonds. Naturally, being government entities, most school districts have chosen the latter.”
INTERNATIONAL
World Bank Blogs
When the debt crises hit, don’t simply blame the pandemic
From June 28, by Marcello Esteveo and Sebastian Essl, includes “Every debt crisis begins with unheeded warnings and ends with severe limits on investment in education, health, and infrastructure among other things. These crises often spark civil unrest and government collapse, delivering a lasting setback to the growth prospects of the affected country. In the wake of the COVID-19 pandemic, global debt has surged. … But it would be a mistake to pin the blame on the pandemic should those crises arrive. The seeds were sown long before COVID-19.”
June 28, 2022
TOP THREE READS
The Wall Street Journal
The Fed can’t cure inflation by itself
From June 27, op-ed by John Cochrane, subtitled “Economic and fiscal reforms are necessary to persuade the world that the U.S. will pay its debts,” includes “Monetary policy alone can’t cure a sustained inflation. The government will also have to fix the underlying fiscal problem. Short-run deficit reduction, temporary measures or accounting gimmicks won’t work. Neither will a bout of growth-killing high-tax ‘austerity.’ The U.S. has to persuade people that over the long haul of several decades it will return to its tradition of running small primary surpluses that gradually repay debts.”
City Journal
From June 27, by Steven Malanga, includes “One of the most persistent myths about taxpayer investments in sports is that pumping public money into stadiums and arenas or hosting big international events generates enormous economic returns for communities. We got another repeat of that fairytale recently, when mayors and governors around the country touted the benefits that the World Cup would bring if soccer’s international governing body named them as host cities for the 2026 North American tournament. … But the exaggerated claims of the economic benefits reinforce the misleading narrative that big-time sports and their venues are economic engines. In truth, they’re more of a luxury that teams enjoy at the expense of the cities and states that often pay for them.”
American Banker
Are banks holding too much capital, or too little?
From June 26, by Kyle Campbell, includes ‘Following another round of Federal Reserve stress testing in which banks withstood a financial doomsday scenario with relative ease, a debate has reemerged about the calibration of capital requirements. At the heart of the discourse is a fundamental disagreement about the ultimate goal of minimum capital requirements. On the one hand, requiring banks to hold capital ensures their solvency and keeps credit available through the business cycle. On the other hand, more capital retention means less money can be lent out, thus limiting the benefits that such lending can provide to the economy.” (Note: See “From the Vaults” below.)
FEDERAL
Better Markets
The Federal Reserve’s stress tests are too stress-less …
From June 23, statement by Phillip Basil includes “… When all too-big-to-fail banks pass comfortably year-after-year, the tests clearly don’t actually stress or test the banks. While these results may cause some to think these tests show that the banks are sufficiently resilient and have enough capital, it is little more than false comfort misleading the American people into thinking there won’t be more taxpayer bailouts when future bank failures happen. …”
Reason
Biden ignores his own role in inflation
From ‘the July 2022 edition,’ by Eric Boehm, includes “… The textbook explanation for inflation is that it results from more money chasing the same amount of goods. And there is a lot more money in the economy right now than there was before the COVID-19 pandemic, thanks to $800 billion in stimulus payments distributed to nearly all American households. … Biden is now poised to dig a deeper hole. In a notice published on March 18, the Department of Labor said it would begin the process of changing how ‘prevailing wages’ are determined for contractors on infrastructure projects. …”
Cato Institute
Old fallacies die hard: Economic growth does not cause inflation
From June 9, by Norbert Michel, includes “It happens that my colleague, George Selgin, has been trying to put this delusion to rest for decades. In his 1997 book Less Than Zero, for instance, he explains that the more output an economy generates, the cheaper things tend to get, other things equal. In other words, if inflation is more money chasing fewer goods, healthy economic growth is more goods chasing the same amount of money. What’s more, Selgin shows that the sort of deflation healthy growth causes can itself be perfectly healthy: unlike deflation caused by a lack of demand, it doesn’t mean that anyone has to earn less. … Let’s hope it won’t take another 20‐plus years to get members of Congress to admit that price stability should not be the Fed’s mandate.”
STATE AND LOCAL
Route Fifty
How one state used its giant budget surplus
From June 24, by Bill Lucia, includes “… Idaho is not in a unique position with its finances. The National Association of State Budget Officers said in its semi-annual fiscal survey of states issued last week that 49 states had reported fiscal 2022 general fund collections exceeding original forecasts. … In other words, revenue is strong, spending and saving is up, and state lawmakers have been lowering taxes. … One broad concern these days is that states will set themselves on course for a ‘fiscal cliff’ by using extra revenue that is fleeting to start up new permanent programs or add to payrolls, resulting in costs that will outlast these strong fiscal years and become unaffordable going forward. …”
National Association of State Budget Officers
Fiscal survey of states — Spring 2022
Survey referred to in Route Fifty story above, summary headlined “States in Strong Fiscal Position as They Spend Surpluses, with Slower Growth Expected,” text includes “… States continue to strengthen their reserves to guard against this uncertainty and prepare for the next downturn. Rainy day funds in fiscal 2022 are estimated to reach new heights, with 41 states projecting increases. … As states prepare to enter fiscal 2023, they continue to be in a strong fiscal position after two consecutive years of robust growth and widespread revenue surpluses. …” (Note: What is a ‘strong fiscal position?’ It appears to be defined, from these government sources anyway, in terms of current liquidity, not long-term solvency — which, in many states, is abysmal. This is partly due to a focus on deceptive, cash-basis-accounting for funds statements.)
FROM THE VAULTS
Cato Institute
Math gone mad: Regulatory risk modeling by the Federal Reserve
From 2014, by Kevin Dowd, includes “The U.S. financial system faces a major, growing, and much under‐appreciated threat from the Federal Reserve’s risk modeling agenda—the ‘Fed stress tests.’ These were intended to make the financial system safe but instead create the potential for a new systemic financial crisis. The principal purpose of these models is to determine banks’ regulatory capital requirements—the capital ‘buffers’ to be set aside so banks can withstand adverse events and remain solvent. …”
Huffington Post
How is Jamie Dimon like a smoker on an airplane?
From June 2015, interview of Edward Kane, includes “In a crisis, the cultures of regulation and Wall Street intersect in a way that's very unhealthy for taxpayers. We get a coerced game of chicken. The world's biggest banks are aiming at the regulators and taxpayers, and the regulators want to avoid a collision. Regulators can either take over these insolvent zombies, and that's really a mess. Or they can give the zombies money and let them keep going in the hope that they'll somehow heal themselves. The distorted culture tells the regulators to pick the second option. …This is the cultural norm -- the industry expects rescue. Taxpayers have been forced to provide a massively valuable guarantee for giant banks. It's a very unjust situation.”
Truth in Accounting — Bill’s Blog
The scariest state governments walking among us this Halloween
From October 2020, includes “The index is inspired by the work of Edward Kane, a professor of finance at Boston College. Kane wrote books warning about the developing crisis in the bank deposit insurance system in the late 1980s, before and during the savings and loan crisis. Kane coined the term ‘zombie bank’ to refer to banks and thrifts that were effectively insolvent but allowed to remain open, in part with deceptive accounting. Kane called these banks ‘zombies’ as they were really dead but allowed to walk among the living. False accounting delayed loss recognition and regulatory intervention. The possible socialization of losses through the government safety net for banking firms gave zombies incentives to take large risks -- particularly if insiders gathered any upside but taxpayers would take the downside. Zombies had incentives, in Kane's words, to ‘gamble for resurrection.’ These incentives amplified the cost of resolving the savings and loan crisis to taxpayers. Today, similar incentives could be at work in state and local governments, particularly those with sorely underfunded pension plans.”
June 27, 2001
TOP THREE READS
The Wall Street Journal
Pension funds plunge into riskier bets - just as markets are struggling
From June 26, by Dion Rabouin and Heather Gillers, includes “U.S. public pension funds don’t have nearly enough money to pay for all their obligations to future retirees. A growing number are adopting a risky solution: investing borrowed money. As both stock and bond markets struggle, it’s a precarious gamble. More than 100 state, city, county and other governments borrowed for their pension funds last year, twice the highest number that did so in any prior year, according to a Municipal Market Analytics analysis of Bloomberg data. Nearly $13 billion of these pension obligation bonds were sold last year, which is more than in the prior five years combined.”
The Hill
Biden’s plan to cancel student debt will send inflation skyrocketing
From June 25, by Isabelle Morales, includes “… It is an unfair handout that would cost an immense amount of money, drive inflation, and benefit affluent elites over low- and middle-class families. The American people need relief, not policies that will worsen their already-abysmal conditions to line the pockets of the liberal elite. … The national debt and federal spending are already out of control. … This policy is a slap in the face to working families.”
American Institute for Economic Research
Consumer sentiment plunged to a record low in June
From June 24, by Robert Hughes, includes “The final June results from the University of Michigan Surveys of Consumers show overall consumer sentiment plunged to a new record low (see first chart). … The index is consistent with prior recessions. … According to the report, ‘Inflation continued to be of paramount concern to consumers; 47% of consumers blamed inflation for eroding their living standards, just one point shy of the all-time high last reached during the Great Recession.’ … The report adds, ‘Consumers also expressed the highest level of uncertainty over long-run inflation since 1991, continuing a sharp increase that began in 2021.’ The plunge in consumer attitudes reflects a confluence of events, with inflation leading the pack. …”
FEDERAL
FreedomWorks
Poll indicates majority of Americans believe that cutting federal spending helps economy
By Clara Del Vellar, includes “Recent polling by Scott Rasmussen has indicated that a majority of voters believe that cutting government spending is good for the economy, while a far lesser minority believe it would benefit the economy. A majority of voters also believe that cutting government spending leads to less inflation. A minority of Americans are also confident that they will have enough money to last throughout their retirement years.”
CNBC
From June 25, by Lorie Konish, includes “A new Social Security trustees report points to a slightly longer time horizon for the program’s trust funds. But even with a new depletion date of 2035 — a year later than projected last year — the program still faces a 75-year deficit. A one-year bump represents a small change for a huge program that Alicia Munnell, director of the Center for Retirement Research at Boston College, compares to a big ocean liner. And time is running out for Congress to take action to turn it around from the direction in which it is currently going.”
AFL-CIO
President of alliance for retired Americans tells Senate committee Social Security must be expanded
From June 25, by David Blank, includes “Robert Roach Jr., president of the Alliance for Retired Americans, testified on June 9 at a Senate Budget Committee hearing focused on expanding Social Security for all beneficiaries. … The testimony came on the same day that Sen. Bernie Sanders of Vermont, chair of the Senate Budget Committee, and other Democratic legislators put forward new Social Security legislation that would increase benefits by $200 per month and extend the system’s solvency past the year 2096 by ensuring that the wealthiest Americans pay their fair share of Social Security taxes.”
The Lever
Biden taps anti-Social Security idealogue to oversee program
From June 21, by Matthew Cunningham-Cook, includes “Last month, President Joe Biden nominated a longtime advocate of Social Security privatization and benefit cuts to a key board overseeing the Social Security system. The move comes as Republicans get ready to push cuts to Social Security and Medicare, if they end up winning control of Congress during the November’s midterms, as expected. … On May 13, Biden chose to nominate Andrew Biggs … for a Republican seat on the bipartisan Social Security Advisory Board … In response to questions from The Lever, Biggs suggested he no longer favors privatizing Social Security. … Establishing such savings accounts would be a solution in search of a problem. …”
Insider
Trump-backed Arizona Senate candidate suggests he wants to privatize Social Security
From June 24, by Joseph Zaballos-Roig, includes “A Trump-backed Republican Senate candidate in Arizona suggested privatizing Social Security on Thursday, arguing the safety-net program will be long gone by the time he reaches retirement age. ‘We got to cut the knot at some point though because I'll tell you what, I'm not going to receive Social Security,’ GOP Senate primary candidate Blake Masters said at a primary debate hosted by the conservative group FreedomWorks. ‘I'm a millennial.’ …”
STATE AND LOCAL
Illinois Policy Institute
Citadel 3rd major company to leave Illinois in 2 months
From June 23, by Dylan Sharkey, includes “Boeing, Caterpillar and now the $50-billion hedge fund, Citadel, all within two months said they were moving their headquarters out of Illinois. Citadel CEO Ken Griffin announced to employees June 23 the firm’s headquarters is leaving Chicago for Miami after 30 years. Griffin, Illinois’ wealthiest resident, is picking Florida for its better corporate environment. … ‘Chicago will continue to be important to the future of Citadel, as many of our colleagues have deep ties to Illinois,’ Griffin wrote. ‘Over the past year, however, many of our Chicago teams have asked to relocate to Miami, New York and our other offices around the world.’ …”
Wirepoints
The Illinois political establishment’s shameful response to the departure of Ken Griffin and Citadel
From June 25, by Mark Glennon, includes “… Miller and others cynically ascribe Griffin’s decision only to the failing campaign of Richard Irvin for governor, who Griffin heavily supported. Employee concerns about crime, taxes, corruption, insurmountable debts and all the rest had nothing to do with it, they’d have us believe. Illinois’ loss from Citadel’s departure is enormous. … There’s a special irony here and a more important lesson. Illinois did reduce inequality by driving Griffin away. Inequality drops whenever the rich flee. But does that really help the poor and middle class? …”
Gothamist (New York)
At hearing, councilmembers decry funding cuts to public schools
From June 24, by Jessica Gould, includes “Following outrage among parents and educators over cuts to the city’s education budget, New York City Council members are calling on the education department to restore $215 million in funding that’s resulted in cuts to many school budgets. Council members joined teachers’ union officials and education advocates on the steps of City Hall Friday morning to decry the cuts.”
Wall Street Journal
Money for children’s education, not schools
From June 22, op-ed by Jeff Yass, includes “… The Census Bureau reports inflation-adjusted spending in K-12 education has tripled since 1970 to a record $751.7 billion. … Now imagine if that same mother could choose how the $500,000 was spent. … Affluent people have always had this luxury for their children. Extending the same privilege to less-advantaged families might seem like a radical idea. Yet the truly radical and inequitable option is doing nothing.”
May 31, 2002
TOP THREE READS
National Taxpayers Union Foundation
CBO’s budget outlook projects massive rising tide of red ink
From May 25, by Demian Brady, includes “The Congressional Budget Office has finally released its budget and economic outlook. … In FY 2023, the deficit will drop to $984 billion before rising to over $2 trillion per year by 2031. Over the decade, the government is on track to add another $15.7 trillion in deficit spending, driving the national publicly-held debt to over $40 trillion – 110 percent of GDP. This will also drive up the costs of financing the interest on the national debt. Interest payments will triple in size from $399 billion this year to $1.2 trillion in 2032, consuming 13 percent of federal spending. …”
Reason
New CBO report exposes Biden’s deficit reduction misinformation
From May 27, by Eric Boehm, includes “The president is trying to claim credit for falling deficits. Actually, his administration has overseen a $2.4 trillion increase in the long-term deficit. … To really understand the usefulness of the CBO's projections, then, you have to look at what the agency was projecting last year and the year before that—then compare it to what the CBO is expecting now. That's especially important to do right now because the Biden administration is pushing a wildly misleading talking point about the falling federal budget deficit. …”
Antiwar.com
From May 27, by David Stockman, includes “… Such horrendous projections do not phase these clowns one single bit – as was underscored in spades by Congress’ shameful boondoggling on the Ukraine aid bill. That $40 billion was rushed into law sight unseen and without the benefit of any committee hearings at all. Worse still, the historic party of the antiwar left went abjectly AWOL. The vote among Dems was 48-0 in the Senate and 223-0 in the House. … Historians will someday wonder how today’s insanities actually came to pass, but there is actually no mystery. Washington has become the world’s capital of perpetual war because it was able – for a time – to perpetually issue debt and then monetize it at the central bank.”
FEDERAL
Goldmoney
From May 26, includes “After two centuries of debasement the Roman denarius ended up with no silver content. The decline of the empire was accompanied by increasingly costly bureaucracy, stifling the economy. It was a template for today. There are differences. But we share suffocating bureaucracy and the lack of specie in our currency systems. As Rome did from Nero onwards, we have lost the plot. … Central banks are keenly aware of some systemic dangers, which is why they want to move us to a cashless society. With no cash, there cannot be an old-fashioned bank run. Their response to every successive credit crisis has been to restrict how businesses and people can protect themselves in the event of a systemic meltdown.”
MarketWatch
Biden pledges Federal Reserve independence ahead of meeting with Powell
From May 31, by Steve Goldstein, includes “President Joe Biden has pledged he will refrain from meddling on interest-rate policy ahead of a meeting with Federal Reserve Chair Jerome Powell. In an op-ed in The Wall Street Journal, Biden said he would stand aside and let the Fed do its job — though he also put the blame for rising prices on the institution. …”
Common Dreams
Are we headed for mass revolts to upturn the global economic model?
From May 29, by Paul Rogers, includes “How long can billionaires continue to amass wealth while the world's poorest struggle to buy food? … While it has long been blatantly obvious that the global economic model is not working for all, the rate of accumulation of wealth by a small minority is now breathtaking – if not totally obscene. With the situation only being worsened by the economic impact of the Ukraine War – which has come on top of the effects of the COVID-19 pandemic – could we be headed for mass revolts sparked by a desperate need for change?”
STATE AND LOCAL
The Wall Street Journal
More money than government can spend
From May 30, letter to the editor by Michael Smith, includes “The problems outlined in ‘Schools Struggle to Spend Billions in Covid Aid’ aren’t limited to school districts, but are apparently shared by many government agencies that were showered with cash during the pandemic. Here is a radical idea: Instead of searching for ways to spend the cash before it expires, why not give it back to the government and the taxpayers that supplied it?”
National Review
Despite inflation, these states are poised to flourish
From May 30, by Jonathan Williams and Lee Schalk, includes “Inflation was up 8.3 percent in April over the preceding twelve months. From groceries to gasoline, Americans are feeling the squeeze. Meanwhile, some leaders in Washington are calling for higher taxes -- despite raking in a record $2.1 trillion in tax revenue in the first half of the fiscal year. This tax-and-spend habit in Washington is one of the culprits for the higher levels of inflation, and our national debt recently surpassed $30 trillion. Fortunately, many states are countering the big-government policies of D.C. with their own fiscally responsible reforms.”
Chicago Sun-Times
Parking meter deal gets even worse for Chicagoans, annual audit shows
From May 26, by Fran Spielman, includes “In their failed attempt to block Bally’s $1.7 billion River West casino, downtown City Council members warned the deal was being rushed — just like the one that privatized Chicago parking meters — and that it would end up being ‘even worse’ for taxpayers. That dire prediction is difficult to imagine, considering results of the latest parking meter audit by accounting giant KPMG. … Now that parking revenues have returned to normal, the company should end up making at least six times more than investors put in over the life of the deal. Results of the latest audits were provided to the Chicago Sun-Times by attorney Clint Krislov. …”
The Next Web
When self-driving cars crash, who’s responsible?
Includes “While self-driving cars are new, they are still machines made and sold by manufacturers. When they cause harm, we should ask whether the manufacturer (or software developer) has met their safety responsibilities. Modern negligence law comes from the famous case of Donoghue v Stevenson, where a woman discovered a decomposing snail in her bottle of ginger beer. … Keeping our roads as safe as possible will require close collaboration between AI and legal experts, and regulators, manufacturers, insurers, and users will all have roles to play.”
May 6, 2022
TOP THREE READS
U.S. Government Accountability Office
Larger federal deficits and higher interest rates point to the need for urgent fiscal action
From May 5, includes “Increased federal spending in response to COVID-19, as well as rising interest rates, have added to our nation’s financial woes. … Today’s WatchBlog post looks at our latest and sixth annual report on the nation’s fiscal health, including areas where immediate action is needed. ‘GAO’s latest report on the nation’s fiscal health paints a sobering picture. Without substantive changes to revenue and spending policy, the federal debt is poised to grow faster than the economy, a trend that is unsustainable,’ said Gene L. Dodaro, Comptroller General of the United States and head of the GAO.”
U.S. Government Accountability Office
The nation’s fiscal health: Federal action critical to pivot toward fiscal sustainability
From May 5, report referred to above, includes “The federal government faces an unsustainable fiscal future. If policies don't change, debt will continue to grow faster than the economy. … Large annual budget deficits drive debt growth, as the government borrows money to finance spending that exceeds revenue. Medicare and Social Security costs drive spending increases, especially as the population continues to get older. … Interest costs are projected to grow and could increase even faster if interest rates rise more than expected. … Difficult policy decisions are needed to address the growing debt and change the government's fiscal path.”
Congressional Research Service
The role of the President in budget development: In brief
From May 5, includes “The federal budget sustains government functions and plays an important role in shaping policy decisions. In practice, the process for developing and executing the federal budget is multifaceted. The Constitution vests Congress with the power of the purse, with provisions that refer to congressional authority to levy taxes, authorize the issuance of debt, and make appropriations to fund the federal government.1 The Constitution does not provide an explicit role for the President in the budget process. Rather, the executive budget process exists primarily due to statutes enacted by Congress …”
FEDERAL
Government Executive
The public service loan forgiveness floodgates have opened
From May 4, by Erich Wagner, includes “Recent changes to an embattled program designed to cancel student loan debt for federal employees and other people who work in public service appear to have made it more accessible, as the Education Department announced Wednesday that it has canceled $6.8 billion in student debt in recent months.”
MetroNews (West Virginia)
Student loan bailout makes suckers out of rule followers
From May 5, by Hoppy Kercheval, includes “Two years ago during a campaign stop in Iowa, Senator Elizabeth Warren (D-MA) was confronted by a parent angry over Warren’s proposal to forgive student loan debt. ‘I just wanted to ask one question,’ he said. ‘My daughter is getting out of school. I’ve saved all my money. She doesn’t have any student loans. Am I going to get my money back?’ …”
Washington Examiner
Taxpayers should not be forced to fund professional stadiums
From May 4, by Ryan Lanier, includes “… In each case, stadium discussions have centered on the use of tax-exempt municipal bonds as a primary funding source. … Following a boom in the construction of professional stadiums with these bonds beginning in the 1950s, Congress tried to put an end to the practice through the Tax Reform Act of 1986. However, provisions designed to block public spending on stadiums have instead built in a loophole for municipalities to provide funding at the expense of taxpayers. … When cities and states with professional teams use tax-exempt bonds to build stadiums, they take away federal tax revenues that the sale of bonds would usually bring. As a result, taxpayers in the 22 states that lack a professional sports franchise subsidize the cities and states that do.”
STATE AND LOCAL
Wirepoints (Illinois)
From May 5, by Ted Dabrowski and John Klingner, includes “It’s amazing what nearly $200 billion in federal COVID aid can do to paper over a state’s crumbling finances. Illinois’ state tax revenues are temporarily at record levels, the unpaid bills backlog has been cut and Illinois even saw its credit rating saved from the precipice of junk. Comptroller Susana Mendoza recently called the state’s changed circumstances an ‘absolutely remarkable turnaround.’ But while ‘free’ federal money might make Illinois’ finances look better temporarily, the state continues to struggle where it really matters – economic growth and job creation.”
WGN-TV (Chicago)
Lightfoot selects Bally’s River West location for Chicago’s first casino
From May 5, by Erik Runge, includes “The mayor said in a tweet, “The Chicago casino will generate jobs for the City – guaranteeing 3,000 construction jobs per year & 3,000 permanent jobs. The casino will also support the police and fire pensions. Bally’s Chicago will be a luxury destination for residents and tourists all year long.”
GamingAmerica
Bally’s snags sole casino license in Chicago
From May 5, by Michael Bartlett, includes “The office of Chicago Mayor Lori E. Lightfoot on Thursday said the city has selected Bally’s Corporation to be the recipient of its sole casino license. Bally’s beat out two other finalists and will serve as the developer in charge of creating a casino-resort and entertainment experience in the Windy City. .. Bally’s has completed an agreement with organized labor, which the city deemed necessary for the process to move forward. Bally’s will commit to 60% minority hiring and will create a jobs program specifically targeting neighborhoods with the highest levels of unemployment and lowest income.”
FROM THE VAULTS
UConn Today (Connecticut)
Setting limits to stop the gambling epidemic
From April 2019, by Lauren Woods, includes “Gambling problems tend to be concentrated, though not exclusively, in the most vulnerable and disadvantaged groups, including ethnic minorities, the homeless, the unemployed, the mentally ill, alcohol and drug users, and those who have lower incomes and socioeconomic status. Gambling as a solution to social revenue needs faces the risk of turning poverty into misery, even for many who do not themselves gamble at all.”
May 4, 2022
TOP THREE READS
CNN Business
Fed issues biggest rate hike in 22 years
From May 4, by Anneken Tappe, includes “The Federal Reserve said Wednesday it is raising interest rates by a half-percentage point to get a handle on the worst inflation America has seen in 40 years. It's the first time in 22 years that the central bank has hiked rates this much. The decision was unanimous, with all 12 members of the policy-setting Federal Open Market Committee agreeing on it.”
Mises Institute
It’s mid-2022, and the Fed has still done nothing to fight inflation
From May 4, by Ryan McMaken, includes “… It was last August when Jerome Powell began to admit that inflation just might be a problem. But even then, he was only willing to say that inflation would likely be ‘moderately’ above the arbitrary 2 percent inflation standard. Back in August, low inflation—not high inflation—was still perceived to be the ‘problem.’ … It was not until late January, for instance that asset purchases at the Fed began to slow. They didn’t stop, of course. They merely slowed. But assets purchases—which function to create new money, prop up asset prices, and generally inflate the money supply—continued in an upward trend well into April. … It’s hard to see how Powell could do the same, as Powell has continually demonstrated that his Fed is very much a Fed committed to kicking the can down the road to serve short term political interests. This is an election year, after all. That means it's time to buckle up for more inflation.”
American Institute for Economic Research
Lisa Cook is unqualified for the Federal Reserve Board
From May 4, by Alexander William Salter, includes “There was recently a heated debate in the United States Senate over the Federal Reserve Board. Dr. Lisa Cook, one of President Biden’s nominees, failed her confirmation vote 51-47. Senate Majority Leader Chuck Schumer (D-NY) voted ‘no,’ which enabled him to bring Cook’s appointment up for another vote in the future. … There’s very little on Dr. Cook’s CV to suggest she knows the ins and outs of monetary policy. During her nomination hearing on February 3rd, she listed one promising qualification: election to the board of the Federal Reserve Bank of Chicago. But this happened less than a month prior … Nobody is this quick a study. … One might find her lack of expertise disqualifying by itself. But things look even worse when we consider the likely reason for her nomination. There’s been a recent, misguided push to expand the Fed’s mandate to include broader social issues, such as racial justice and climate change. … Our central bank has enough on its plate with monetary and financial stability.”
FEDERAL
Investing Daily
Federal debt: Is the balloon about to pop?
From May 2, by Jim Pearce, includes “In response to the coronavirus pandemic, the money supply in the United States (as measured by M1) has quintupled over the past five years as the Federal Reserve pumped trillions of dollars into the economy. At the same time, public debt as a percentage of gross domestic product (GDP) jumped nearly 25% and is now among the highest of all industrialized nations. Even more concerning, total federal net liabilities and unfunded social insurance obligations have grown from $20.4 trillion in 2000 to $110.1 trillion in 2021. These disturbing trends have prompted David M. Walker, the immediate former comptroller general of the United States, to get behind an effort to introduce a Federal Fiscal Responsibility Amendment to the U.S. Constitution that would place strict limits on federal debt levels.”
Committee for a Responsible Federal Budget
‘A Sacred Trust’ would weaken Social Security
From May 4, includes “Lawmakers may soon consider Social Security Subcommittee Chairman John Larson's (D-CT) Social Security 2100: A Sacred Trust (A Sacred Trust), a bill designed to expand Social Security benefits and prevent trust fund insolvency in 2034. Unfortunately, the bill is a substantial downgrade from 2019's Social Security 2100 Act (SS2100), which we've praised as a responsible solution to Social Security's financial troubles. Whereas SS2100 would have restored the program to sustainable solvency, A Sacred Trust would close half the solvency gap on paper and would actually worsen solvency once gimmicks are removed.”
The Wall Street Journal
Bring sanity to the student loan racket
From May 4, letters to the editor, one by Michael Macguire reads “As the parents of three college graduates, we are morally offended by the Democrats’ proposal to eliminate college debt. My wife and I had a deal with our children … My wife and I sacrificed greatly. We worked multiple jobs, cashed in savings and took loans from our life insurance to cover those costs. Now we are being asked to pay the debts of others. You can count me in on any legal action being taken to get my money back if the president signs an executive order waiving student debt.”
Hickory Daily Record (North Carolina)
With deficit falling, Biden highlights fiscal responsibility
From May 4, by Josh Boak and Fatima Hussein, includes “President Joe Biden plans to highlight deficit reduction in remarks Wednesday at the White House, noting that the government will pay down the national debt this quarter for the first time in six years. Biden will emphasize how strong job gains have increased total incomes and led to additional tax revenues that have improved the government's balance sheet, said a White House official who previewed the speech on condition of anonymity.”
Reason
Joe Biden’s phony fiscal responsibility
From May 4, by Eric Boehm, includes “Biden gloats over a historically astronomical budget deficit as if he's accomplished something significant. He hasn't. … Here are some words that actually tumbled out of the president's mouth at a press conference on Wednesday morning: ‘We're on track to cut the federal deficit by another $1.5 trillion by the end of this fiscal year. The biggest decline ever in a single year, ever, in American history.’ … Those facts, however, exclude a few key details. Like the fact that Biden took office the year after the budget deficit hit previously unimaginable highs due to a completely unprecedented spending binge triggered by a once-in-a-generation public health disaster.”
STATE AND LOCAL
Accounting Today
GASB chair works on improving standards for government accountants
From May 2, by Michael Cohn, includes “… Other projects afoot at GASB include redeliberations on the conceptual framework and disclosure framework. … The leases standard, GASB 87, would put leases on the balance sheet for the first time for many state and local governments, much as the Financial Accounting Standards Board’s leases standard would do for companies. As with many private companies, state and local governments seem to be waiting to implement it. … On the other hand, some watchdog groups such as Truth in Accounting have warned about the way that some states and cities are accounting for their finances and making perhaps overly optimistic budget projections, especially with pension liabilities and other government obligations for retiree health care coming up in the future. They have been pressing for GASB to adjust its standards to be more upfront about their projected debts. … GASB has listened to the feedback and made some adjustments to the proposal. …”
Pennsylvania Institute of CPAs
Don’t mess with accrual accounting in governments
From April 6, by William Bergman, includes “The Governmental Accounting Standards Board (GASB) has embarked on a fundamental reexamination of its financial reporting model, and it had appeared that it was about to reinforce existing unreliable and misleading cash-basis-like principles for governmental funds statements. In recent months, however, GASB has pulled back from claims that its proposals are grounded in accrual-based accounting principles. … Anticipated borrowing proceeds – basically planning to run up the credit card – isn’t the only way to deceptively ‘balance’ government budgets. Deliberately underfunding pension and other retirement obligations can also reduce short-term cash outflow, with long-term consequences. … In June 2020, GASB issued an optimistically titled exposure draft, ‘Financial Reporting Model Improvements.’ A few days earlier, they had issued another exposure draft, ‘Recognition of Elements of Financial Statements.’ The former could lead to a new standard and the latter to a new fundamental concept statement. Together, the two exposure drafts would have reinforced the past practices that lead to unreliable funds statements while trying to claim the ‘improved’ practices constitute accrual accounting, not the “modified accrual” practices from the past. The GASB is now in ‘redeliberations’ regarding these projects, including a review of comment letters received on its exposure drafts. The comment letters included one from Martin Ives, a former GASB member [who said] ‘In my opinion, stating that the Board’s proposal regarding fund reporting results in the ‘accrual basis of accounting’ is grossly misleading and must be dropped.’ Ives wasn’t alone, and the commenters appear to have made an impact. … At least they aren’t trying to stretch the meaning of accrual accounting anymore. School districts, citizens, and taxpayers should more generally remain watchful over government budget-balancing.”
Copyright (C) 2022 Bill Bergman. All rights reserved.
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April 29, 2022
TOP THREE READS
Peter G. Peterson Foundation
US fiscal confidence falls as nation faces higher inflation and unsustainable budget outlook
From April 28, by Jeremy Rosen, includes “U.S. fiscal confidence fell in April, amidst news of inflation rising 8.5%, the largest annual increase in more than 40 years. The Peter G. Peterson Foundation’s April Fiscal Confidence Index, modeled after the Consumer Confidence Index, is 42 (100 is neutral), reflecting heightened voter concern about the latest economic indicators, including high inflation, Fed interest rate hikes, and America’s unsustainable federal debt and budget outlook.”
Fiscal Times
Biden’s massive Ukraine aid request
From April 28, by Yuval Rosenberg and Michael Rainey, includes “According to a White House statement, Biden’s request includes $20.4 billion in military assistance for Ukraine, $8.5 billion in economic assistance meant to help the Ukrainian government continue to function and provide basic services and $3 billion in humanitarian aid, which includes assistance to Ukrainians displaced by the war and food support for developing countries hurt by the disruption of Ukrainian supplies of wheat and other crops. … Biden said the U.S. has nearly exhausted the $13.6 billion in funding provided by Congress in March. ‘Basically, we’re out of money,’ he said.” (Note: In a 1976 book, Peter Bauer defined foreign aid as “... a process by which poor people in rich countries help rich people in poor countries.”)
RealClear Politics
From April 27, by Christopher Caldwell, includes “President Biden is hanging on to Vladimir Putin for dear life. … The recklessness of the American Recovery Plan is proportionate to the gravity of the 2020 social crisis, as the Biden administration saw it. Whatever wokeness has been about, it has involved keeping two sets of books. One man’s reparations is another man’s 401(k). We don’t have the resources to leave both sides feeling fairly treated, so we promise money that we don’t have. That is what inflation is. You can speak of inflation as a ‘problem’ if you like, but for the politicians who bring it into being, it looks more like a solution.”
FEDERAL
The Wall Street Journal
Tax increases won’t cure inflation
From April 27, editorial, includes “The same policy wizards who brought you soaring inflation are now offering what they claim is a solution to inflation: Raise taxes. Our advice is to consider the source and the economic record their previous advice produced. … The main cure for inflation is better monetary policy. But tax increases would make inflation worse by further suppressing the supply side of the economy. That’s especially true of the corporate tax increases that Mr. Schumer is pitching.”
The Wall Street Journal
Rumors of stagflation in first quarter GDP
From April 28, editorial, includes “Americans have good reason to be anxious amid rapid inflation, and on Thursday they received another one. The U.S. economy shrank in the first quarter of 2022 by 1.4%, the first decline since the pandemic lockdown recession in the first half of 2020. The question is whether this is, well, transitory, or the sign of stagflation or a recession to come. … The GDP decline also coincided with an accelerating rise in prices. … The tragedy of the Biden Presidency is that it should be presiding over a long post-pandemic boom. Instead it went for broke to transform the economy by creating a vast and permanently larger entitlement state. And politically broke it soon may be. The result has been soaring inflation, and now declining economic growth. …”
Wall Street on Parade
From April 28, by Pam Martens and Russ Martens, includes “… All three federal agencies adopted the narrative that the biggest trading houses on Wall Street were the hapless victims of the Archegos’ fraud. That narrative is going to be difficult for a jury to swallow. … There was a lot of backslapping at the press conference on how fast and how great the work of the federal investigators had been to bring charges in just a little over a year since Archegos collapsed, resulting in at least $10 billion in losses to its bank counterparties. But one question from a reporter at the press conference revealed just how skimpy this investigation had been. …”
RealClear Markets
An abusive IRS was just handed a decisive defeat in court
From April 25, by Andrew Wilford, includes “With Tax Day having come and gone, you’ve (hopefully) finished filing and paying your taxes. Well, maybe it’ll take away a bit of the sting of doing so to learn that the Internal Revenue Service (IRS) was just handed a decisive defeat in court over its ongoing attempts to treat all taxpayers who make mistakes in filing their taxes as criminals and tax evaders. As I’ve noted once or twice of late, the IRS has been even more of a mess than usual this tax season. Persistent, fundamental failures to implement technology that the rest of the country figured out a decade ago has led the agency to provide grossly inadequate customer service and take eons to process returns and paperwork. …”
STATE AND LOCAL
Route Fifty
Federal COVID aid is fueling a pickleball court construction boom
From April 26, by Danielle Altimari, includes “Dozens of municipalities are adding pickleball courts to their park and recreation offerings – and many are using a slice of their coronavirus aid package to underwrite the construction boom. If the Hoover Dam and the Lincoln Tunnel are enduring monuments to the New Deal’s infrastructure spending, perhaps pickleball courts will become a lasting legacy of the $1.9 trillion American Rescue Plan Act. … From Seguin, Texas to Chesterfield, Missouri to Groton, Connecticut, dozens of cities and towns are planning to use the historic infusion of federal cash to support the growing demand for pickleball venues.”
Iowans for Tax Relief
The growing cost of municipal debt
From April 28, by Sarah Curry, includes “With inflation and rising interest rates, it’s normal to worry about the national debt and what that means for our country. But what about Iowa and our local communities? During the last few years, the state of Iowa tightened its belt and has reduced its overall debt burden. However, the combined total of state and local government debt increased by 5.3% to $18.8 billion in FY2021, the highest percentage increase in a decade. … Some of the higher-than-normal amounts in 2021 can be attributed to the pandemic and the federal stimulus money sent to local governments. Cities were flooded with cash during the pandemic … Being flush with cash and having record low interest rates is a combination that encouraged cities to pursue infrastructure projects or to refinance previously held debt, which isn’t necessarily a bad thing. …”
The Center Square - Illinois
Pritzker defends mandated gas pump sticker in face of expected lawsuit
From April 27, by Greg Bishop, includes “… Last week, after the governor signed the state budget package requiring the stickers announcing the delayed tax, the Illinois Fuel and Retail Association’s Josh Sharp said to expect a lawsuit. ‘The state of Illinois is seeking to force businesses under the threat of fines and criminal penalties to post political speech,’ Sharp said, also pointing out this is an election year. … Asked why there wasn’t a required sticker for when the gas tax doubled in 2019, Pritzker didn’t respond … In Pritzker's first year in office, the governor signed a bill into law that increased the state's gas tax from 19 cents a gallon to 38 cents.”
National Taxpayers Union Federation
Taxpayer Defense Center files brief pushing back against violations of Colorado’s TABOR
From April 27, by Tyler Martinez, includes “… At the Colorado Supreme Court, NTUF’s Taxpayer Defense Center weighed in with an analysis showing that Colorado and forty-eight other states have resolved tax statutory ambiguities in favor of the taxpayer, which aligns well with the test of TABOR Section 1’s “preferred interpretation.” The Denver District Court set aside the well-established rule favoring taxpayers …”
April 28, 2022
TOP THREE READS
Peter G. Peterson Foundation
US fiscal confidence falls as nation faces higher inflation and unsustainable budget outlook
From April 28, by Jeremy Rosen, includes “U.S. fiscal confidence fell in April, amidst news of inflation rising 8.5%, the largest annual increase in more than 40 years. The Peter G. Peterson Foundation’s April Fiscal Confidence Index, modeled after the Consumer Confidence Index, is 42 (100 is neutral), reflecting heightened voter concern about the latest economic indicators, including high inflation, Fed interest rate hikes, and America’s unsustainable federal debt and budget outlook.”
Fiscal Times
Biden’s massive Ukraine aid request
From April 28, by Yuval Rosenberg and Michael Rainey, includes “According to a White House statement, Biden’s request includes $20.4 billion in military assistance for Ukraine, $8.5 billion in economic assistance meant to help the Ukrainian government continue to function and provide basic services and $3 billion in humanitarian aid, which includes assistance to Ukrainians displaced by the war and food support for developing countries hurt by the disruption of Ukrainian supplies of wheat and other crops. … Biden said the U.S. has nearly exhausted the $13.6 billion in funding provided by Congress in March. ‘Basically, we’re out of money,’ he said.” (Note: In a 1976 book, Peter Bauer defined foreign aid as “... a process by which poor people in rich countries help rich people in poor countries.”)
RealClear Politics
From April 27, by Christopher Caldwell, includes “President Biden is hanging on to Vladimir Putin for dear life. … The recklessness of the American Recovery Plan is proportionate to the gravity of the 2020 social crisis, as the Biden administration saw it. Whatever wokeness has been about, it has involved keeping two sets of books. One man’s reparations is another man’s 401(k). We don’t have the resources to leave both sides feeling fairly treated, so we promise money that we don’t have. That is what inflation is. You can speak of inflation as a ‘problem’ if you like, but for the politicians who bring it into being, it looks more like a solution.”
FEDERAL
The Wall Street Journal
Tax increases won’t cure inflation
From April 27, editorial, includes “The same policy wizards who brought you soaring inflation are now offering what they claim is a solution to inflation: Raise taxes. Our advice is to consider the source and the economic record their previous advice produced. … The main cure for inflation is better monetary policy. But tax increases would make inflation worse by further suppressing the supply side of the economy. That’s especially true of the corporate tax increases that Mr. Schumer is pitching.”
The Wall Street Journal
Rumors of stagflation in first quarter GDP
From April 28, editorial, includes “Americans have good reason to be anxious amid rapid inflation, and on Thursday they received another one. The U.S. economy shrank in the first quarter of 2022 by 1.4%, the first decline since the pandemic lockdown recession in the first half of 2020. The question is whether this is, well, transitory, or the sign of stagflation or a recession to come. … The GDP decline also coincided with an accelerating rise in prices. … The tragedy of the Biden Presidency is that it should be presiding over a long post-pandemic boom. Instead it went for broke to transform the economy by creating a vast and permanently larger entitlement state. And politically broke it soon may be. The result has been soaring inflation, and now declining economic growth. …”
Wall Street on Parade
From April 28, by Pam Martens and Russ Martens, includes “… All three federal agencies adopted the narrative that the biggest trading houses on Wall Street were the hapless victims of the Archegos’ fraud. That narrative is going to be difficult for a jury to swallow. … There was a lot of backslapping at the press conference on how fast and how great the work of the federal investigators had been to bring charges in just a little over a year since Archegos collapsed, resulting in at least $10 billion in losses to its bank counterparties. But one question from a reporter at the press conference revealed just how skimpy this investigation had been. …”
RealClear Markets
An abusive IRS was just handed a decisive defeat in court
From April 25, by Andrew Wilford, includes “With Tax Day having come and gone, you’ve (hopefully) finished filing and paying your taxes. Well, maybe it’ll take away a bit of the sting of doing so to learn that the Internal Revenue Service (IRS) was just handed a decisive defeat in court over its ongoing attempts to treat all taxpayers who make mistakes in filing their taxes as criminals and tax evaders. As I’ve noted once or twice of late, the IRS has been even more of a mess than usual this tax season. Persistent, fundamental failures to implement technology that the rest of the country figured out a decade ago has led the agency to provide grossly inadequate customer service and take eons to process returns and paperwork. …”
STATE AND LOCAL
Route Fifty
Federal COVID aid is fueling a pickleball court construction boom
From April 26, by Danielle Altimari, includes “Dozens of municipalities are adding pickleball courts to their park and recreation offerings – and many are using a slice of their coronavirus aid package to underwrite the construction boom. If the Hoover Dam and the Lincoln Tunnel are enduring monuments to the New Deal’s infrastructure spending, perhaps pickleball courts will become a lasting legacy of the $1.9 trillion American Rescue Plan Act. … From Seguin, Texas to Chesterfield, Missouri to Groton, Connecticut, dozens of cities and towns are planning to use the historic infusion of federal cash to support the growing demand for pickleball venues.”
Iowans for Tax Relief
The growing cost of municipal debt
From April 28, by Sarah Curry, includes “With inflation and rising interest rates, it’s normal to worry about the national debt and what that means for our country. But what about Iowa and our local communities? During the last few years, the state of Iowa tightened its belt and has reduced its overall debt burden. However, the combined total of state and local government debt increased by 5.3% to $18.8 billion in FY2021, the highest percentage increase in a decade. … Some of the higher-than-normal amounts in 2021 can be attributed to the pandemic and the federal stimulus money sent to local governments. Cities were flooded with cash during the pandemic … Being flush with cash and having record low interest rates is a combination that encouraged cities to pursue infrastructure projects or to refinance previously held debt, which isn’t necessarily a bad thing. …”
The Center Square - Illinois
Pritzker defends mandated gas pump sticker in face of expected lawsuit
From April 27, by Greg Bishop, includes “… Last week, after the governor signed the state budget package requiring the stickers announcing the delayed tax, the Illinois Fuel and Retail Association’s Josh Sharp said to expect a lawsuit. ‘The state of Illinois is seeking to force businesses under the threat of fines and criminal penalties to post political speech,’ Sharp said, also pointing out this is an election year. … Asked why there wasn’t a required sticker for when the gas tax doubled in 2019, Pritzker didn’t respond … In Pritzker's first year in office, the governor signed a bill into law that increased the state's gas tax from 19 cents a gallon to 38 cents.”
National Taxpayers Union Federation
Taxpayer Defense Center files brief pushing back against violations of Colorado’s TABOR
From April 27, by Tyler Martinez, includes “… At the Colorado Supreme Court, NTUF’s Taxpayer Defense Center weighed in with an analysis showing that Colorado and forty-eight other states have resolved tax statutory ambiguities in favor of the taxpayer, which aligns well with the test of TABOR Section 1’s “preferred interpretation.” The Denver District Court set aside the well-established rule favoring taxpayers …”
April 26, 2022
TOP THREE READS
CNBC
Global government debt set to soar to record $70 trillion this year, new research says
From April 6, by Elliott Smith, includes “Global sovereign debt is expected to climb by 9.5% to a record $71.6 trillion in 2022, according to a new report, while fresh borrowing is also broadly set to remain elevated. … The ongoing conflict’s global macroeconomic repercussions are expected to exert further upward pressure on government funding needs, while tighter monetary conditions will increase government funding costs, the report highlighted.” (Note: Are “government debt” and “sovereign debt” interchangeable terms? Who is sovereign, in the USA?)
National Bureau of Economic Research
Measuring US fiscal capacity using discounted cash flow analysis
From April 2022, by Zhengyang Jiang, Hanno Lustig, Stijn Van Nieuwerburgh & Mindy Z. Xiaolan, abstract includes “We apply our valuation method to the CBO's projections for the U.S. federal government's deficit between 2022 and 2051 and debt in 2051. … Because of the backloading of projected surpluses, the duration of the surplus claim far exceeds the duration of the outstanding Treasury portfolio. This duration mismatch exposes the government to the risk of rising rates, which would trigger the need for higher tax revenue or lower spending. Reducing this risk by front-loading the surpluses also requires major fiscal adjustment.”
The Wall Street Journal
Special districts are kingdoms of unaccountable power
From April 25, op-ed by Judge Glock, includes “Disney’s Reedy Creek is only one of 38,000 such entities nationwide—twice the number of U.S. cities. … They are means to escape citizen limitations on government power and should be brought under the control of regular voters and local governments again. … After the tax revolt in the 1970s, special districts became a convenient way for government to escape new limitations on taxes. Over the past four decades, states have created more than 8,000 local governments. Ninety-six percent of these have been special districts. … Special districts are an increasing burden to taxpayers. They intentionally keep their accounting obscure, but by one estimate they collectively spend more than $200 billion a year.”
FEDERAL
Congressional Research Service
Challenges for taxpayers filing in 2022
From April 25, by Gary Guenther, includes “In her latest report to Congress, National Taxpayer Advocate (NTA) Erin Collins described 2021 as the ‘most challenging year taxpayers and tax professionals have ever experienced.’ Central to those challenges were large backlogs of unprocessed tax returns and unanswered taxpayer correspondence, mostly from the 2020 tax year. The backlogs meant that millions of taxpayers encountered delays in 2021 in having their returns processed, receiving refunds, and corresponding with the IRS about tax issues. Similar challenges have materialized in 2022.”
Wall Street on Parade
Fed chair Powell telegraphs the perfect storm for Wall Street’s megabanks
From April 25, by Pam Martens and Russ Martens, includes “The Federal Reserve (the Fed) is the central bank of the United States. It sets monetary policy, including control of the benchmark short-term interest rate … Unfortunately, over time, the Fed has also been granted a supervisory role by Congress over Wall Street’s megabanks alongside its ability to bail them out when its crony brand of supervision fails. There was an epic failure in the Fed’s supervision of the Wall Street megabanks in the leadup to the 2008 financial crash and the September 2019 repo blowup. In both cases, the Fed made trillions of dollars in cumulative loans at below-market interest rates to the trading units of these megabanks in order to resuscitate them and cover up its own failure to properly supervise the banks.”
U.S. Government Accountability Office
From April 20, includes “To make student loans more affordable, income-driven repayment plans base monthly payments on a borrower's income and family size, and extend repayment periods. Borrowers in these plans are also eligible for forgiveness after 20 or 25 years of qualifying payments. But the Department of Education has had trouble tracking borrowers' payments and hasn't done enough to ensure that all eligible borrowers receive the forgiveness to which they are entitled. We found thousands of borrowers still in repayment who could be eligible for forgiveness now.”
STATE AND LOCAL
Arkansas Democrat-Gazette
Government operations: Why people don’t trust them
From April 23, editorial, includes “The Government Accountability Office reported this week that the federal Education Department has mismanaged income-driven repayment plans. Many students--actually most students--who were eligible for some sort of debt forgiveness didn't get it. … Do you think banks would have this kind of mess in their accounting of who owes what and how much and when? Of course not, because they have an incentive to collect. Also, they are regulated. Who's regulating the Department of Education? Congress?” (Note: Is this consistent with the GAO’s findings in the story above? And how well are banks regulated?)
City Journal
Time for receivership in Boston
From April 25, by James Stergios, Charles Chieppo, and Cara Candal, includes “The Massachusetts Department of Elementary and Secondary Education (DESE) recently launched its second review of the Boston Public Schools (BPS) in three years. The move has some up in arms because state law requires that officials conduct a review no more than a year before approving state receivership. For BPS, receivership is long overdue. … Boston Teachers Union president Jessica Tang has said that “the state has no grounds to say it should run the Boston schools that it has starved for so long.” Out of the 100 largest school systems in the U.S., BPS ranks second in funding, behind only New York City. In 2020, the system spent $24,000 per student, according to DESE. To compare, Miami Dade County spends just over $11,000 per pupil.”
Wirepoints
Slew of bills signed by Gov. Pritzker helps propel Illinois property taxes to nation’s highest
From April 25, by Ted Dabrowski and John Klingner, includes “We’ve written in detail about the many laws signed by Gov. J.B. Pritzker that will lead to higher property taxes. A list of cost hikes, which we include below, includes end-of-year salary spiking for teachers, increased striking power for the Chicago Teachers Union and bigger Tier 2 benefits for public safety workers. So it’s not surprising that Illinois has retaken the top spot for the nation’s highest effective property taxes. … More than two years ago, Pritzker promised a task force would reform and lower property taxes and cut Illinois’ 7,000 units of government. … Pritzker’s commission was a flop. After blowing past its initial due date, the commission released a final report that ended up a hodgepodge of half-baked ideas and no firm solutions.”
Illinois Policy Institute
Rising Illinois energy costs are legacy of Madigan’s corruption
From April 25, by Austin Atterbury-Kiernan, includes “Laws that go around the normal rate-setting process are driving up energy prices for Illinois consumers. These laws were central to the scandal that brought down the nation’s longest-serving House speaker. … Hint: it’s the embattled former Illinois House speaker who was recently indicted for corruption over his dealings with ComEd. Mike Madigan is responsible more than anyone else for forging the state’s complex and costly energy policy during his 36 years in power. Energy bills are one of the focal points of the corruption probe into Madigan’s tenure. … These laws, especially the Smart Grid law, have only served to harm Illinoisans: netting billions for ComEd, while ratepayers are left another burden alongside high taxes and untenable public pension payouts.”
FROM THE VAULTS
Microgrid Knowledge
Commonwealth Edison CEO Anne Pramaggiore to keynote Microgrid 2017
From August 2017, by Elisa Wood, includes “… A recognized industry leader and voice for innovation, Pramaggiore will share insights on the evolution of the electric utility industry … In 2009, Pramaggiore was appointed as ComEd’s COO and became responsible for overseeing day-to-day operations on the electric grid and in customer operations. In that role, she led the company’s effort to set the legislative framework for ComEd’s smart grid build-out, a leading model nationally for modernizing one of the largest utility systems in the country.”
Chicago Tribune
From October 2019, by Ray Long, includes “Anne Pramaggiore’s latest move follows Exelon and ComEd receiving two federal grand jury subpoenas in the probe. A source with knowledge of the case has told the Tribune that Pramaggiore is one focus of the ongoing federal investigation.”
Chicago Sun-Times
Trial date set for members of Madigan’s inner circle, but feds won’t comment on additional charges
From August 2021, by Jon Seidel, includes “Four members of former House Speaker Michael Madigan’s inner circle could face trial late in 2022 for their alleged roles in the ComEd bribery scandal. What’s still not clear is whether new allegations might surface in the case by then. U.S. District Judge Harry Leinenweber on Tuesday scheduled a Sept. 12, 2022, trial for Madigan confidant Michael McClain, former ComEd CEO Anne Pramaggiore, onetime ComEd lobbyist John Hooker and ex-City Club President Jay Doherty. All four have pleaded not guilty in response to a 50-page indictment filed last November that accused them of a long-term bribery scheme designed to curry favor with Madigan.”
April 25, 2022
TOP THREE READS
Miami Herald
Every day is Tax Day, and elected officials should stop pretending otherwise
From April 20, by Preston Brashers, includes “… Americans don’t just pay taxes one day out of the year. Taxes are a part of our everyday lives. Many politicians prefer that we don’t notice how much we’re taxed, so, taxes are often buried in the cost of products or subtly taken from our paychecks. … For young adults entering the job market, the first tax they may notice is the payroll tax. Looking at their pay stubs, they are often shocked to see 6.2% was taken out for Social Security and 1.45% for Medicare. What they may not realize, though, is that their employers also paid that same amount in Social Security and Medicare taxes. Since that’s part of the cost of hiring someone, that amount is also built into the paycheck — in the form of lower wages. …”
The Wall Street Journal
From April 22, editorial, includes “Does Wall Street finally believe the Federal Reserve? Officials have warned for weeks that the central bank would tighten policy faster than many expected to break inflation. So the tumult among bond and stock traders after Chairman Jerome Powell repeated the promise on Thursday is late in coming. … Going back to the Alan Greenspan era, the Fed has acted as if rising asset prices are a measure of its success. Mr. Powell delayed winding down pandemic-era asset purchases under its quantitative-easing program so he’d have time to warn investors that change was coming. A bad market reaction to quantitative tightening, the 2013 taper tantrum, lives in Fed lore, and markets know the Fed wants to avoid another one.”
Reuters
Explaining the Fed’s tolerance for high inflation
From April 21, by Edward Chancellor, includes “Inflation in the United States is running at more than 8%. According to the Taylor rule, a rough-and-ready guide to help central bankers meet their inflation targets, the U.S. Federal Reserve’s target interest rate should be closer to 11% than its current level of 0.3%. … Why is the Fed so far behind the curve? Leaving aside the question of whether its economic models are flawed, two answers suggest themselves. First, central bankers are aware that any sudden monetary tightening could unleash another financial crisis. Second, rising prices are generally a sign of deep-seated social conflicts. History suggests that policymakers are incapable of resisting inflation until the underlying structural forces that encouraged it have dissipated.”
FEDERAL
The Washington Post
America’s era of free-lunch politics is over
From April 24, by Matthew Iglesias, includes “The return of inflation for the first time in my lifetime also means the return of difficult short-term tradeoffs in economic policy for the first time in the 21st century. To put it another way: The era of free-lunch politics is over — and it’s Republicans, even more than Democrats, who will have a hard time adjusting. … Democrats actually have an answer to the question of how to pay for all that — raise taxes, mostly on rich people — even if they don’t have a realistic strategy for a transformation of American society. But Republicans really don’t have an answer.”
Mises Institute
From April 22, by Jeff Deist, includes “… Covid had to be defeated, by God, and monetary policy would lead the way. So the Fed went into hyperdrive, buying trillions in additional assets to send its balance sheet soaring to nearly $9 trillion today—adding nearly 20 percent of all dollars ever created to the M2 money supply measure in 2020 alone. That same year, with lockdowns firmly in place and a crisis mindset whipped up by both parties, Congress managed to spend almost twice what the Treasury collected in taxes ($3.4 trillion in revenue versus $6.5 trillion in outlays). … We should force the US federal government to sell assets, especially land, to pay off Treasury obligations and fund future Social Security and Medicare entitlements. And if necessary, the federal government should be forced to default or apply a haircut to Treasury investors, who, after all, took a risk like any investor.”
Ramsey Solutions
7 ways the government spends your tax money
From April 21, includes “As a taxpayer, you hand over the dough to keep some important federal programs afloat. If you’ve ever been curious about where your tax dollars go, check out these seven ways the government spends your tax money … While your tax money is essential to keep our government running, that’s no reason to pay more taxes than you have to. But, each year taxpayers voluntarily hand over more than $1 billion to the government by failing to file a return or claim credits they’re eligible for. That’s money that rightfully belongs in the taxpayers’ pockets, but they leave it all for Uncle Sam without batting an eye.”
CFA Institute
What if the U.S. Government were valued like a company?
From April 18, by Joachim Klement, includes “How much would the US government be worth if we valued it using a discounted cash flow (DCF) model like any other firm? … If the US government were a normal company, it would have had to declare bankruptcy long ago. … But the US government is not a normal company. It has two distinct advantages. First, it can print money and generate revenue through the privilege of seigniorage. … This brings us to the second advantage. The US government can raise taxes and force its citizens to pay them. … The faster interest rates rise today, the more financial repression will be required in the coming decades and the more the United States will come to resemble Japan. I see no other way out of the current situation. All the other paths lead to a US government default and with it a global economic meltdown that will make that of the COVID-19 pandemic and the Great Depression look like child’s play.” (Note: The study on which this article was based deserves a closer look.)
STATE AND LOCAL
NJ.com (New Jersey)
NJ tax revenues are shockingly high as we’re slammed by inflation
From April 18, by Derek Hall, includes “New Jersey tax revenues have taken a wild ride over the past two years, and collections for the state’s major taxes are reaching historic highs. Gov. Phil Murphy’s administration says it expects to collect nearly $47 billion in taxes for the current fiscal year that ends June 30. That is nearly $5 billion above initial estimates last summer and more than $8 billion higher than the pre-pandemic peak in 2019.”
Illinois Policy Institute
Lightfoot’s orders her name on $12.5 million in gas, transit cards
From April 21, by Patrick Andrieson, includes “Mayor Lori Lightfoot’s proposal to raffle $12.5 million in prepaid transit cards with her name printed on them to Chicagoans was narrowly approved April 20 by the City Council Budget Committee, moving it to the council floor for consideration. Lightfoot’s plan to send 50,000 prepaid gas cards each worth $150 and 100,000 passes covering $50 in Chicago Transit Authority fares to city residents, dubbed ‘Chicago Moves,’ was initially rejected by the council April 6. Council members alleged the mayor’s program was an election stunt offering only minor relief from high fuel prices for Chicagoans.”
TwinCities.com
We have a huge budget surplus in Minnesota. Stop taxing Social Security
From April 24, letter to the editor by Brian Campbell, includes “So five years ago there was a Minnesota state budget surplus of $1.7 billion. It has now grown to $9.3 billion. May I please make a request as a newly retired person in Minnesota? I really don’t want to leave the state, I love the change of the seasons, the people, and the beauty of the state … but, perhaps Minnesota can be one more of the states that does not tax Social Security income. Out of 50 states, only 12 tax all or some of Social Security, Minnesota being one that does!”
April 22, 2022
TOP THREE READS
Better Markets
From April 11, includes “… The stable NAV, which is still maintained by many MMFs, is a fiction bordering on a fraud that enables regulatory arbitrage and unfair competition while obscuring billions of dollars in government subsidies for the MMF sponsors, as detailed in a comment letter we filed with the SEC today. The ineffective regulation of MMFs is ultimately what allows them to offer a slightly higher yield than bank savings accounts. MMFs get the benefit of de facto government insurance and periodic bailouts, while bank accounts are required to pay deposit insurance and limit their asset mix. This is classic privatization of profits for MMFs in good times and socialization of losses shifted to the public in bad times.”
City Journal
From April 20, by Connor Harris, includes “One common complaint among American public-transit advocates is that U.S. infrastructure planners talk to and learn only from one another, or at best from other English-speaking nations with many of the same problems—meaning that obsolete or inefficient methods get established as best practices. My investigations suggest that even far more routine infrastructure upgrades such as road widenings suffer from the same problems. Any state transportation planner willing to go against the grain and find ways to learn from foreign experiences could likely save taxpayers billions of dollars.”
Chicago, IL Patch
‘Chicago cartel’ cannabis monopoly violates antitrust act, lawsuit says
From April 19, by Jonah Meadows, includes “The market for legal marijuana in Illinois is monopolized by the ‘Chicago Cartel,’ according to a federal antitrust lawsuit filed Monday by a group called True Social Equity in Cannabis. … As a result, a pound of legal marijuana in 2022 sells for more than $4,000 in Illinois, compared with $300 in California, according to the suit. … Marijuana companies linked to the Pritzker, Wrigley and Kovler families ‘collude to charge monopolist prices,’ according to the lawsuit.”
FEDERAL
National Taxpayers Union Foundation
New York constitutional challenge to SALT cap fails
From April 19, by Joe Bishop-Henchman, includes “The end of this case means the SALT battle will now return to the political arena, where Congress will have to decide whether the cap is extended or allowed to expire at the end of 2025. High-tax states had grown used to pointing to the SALT deduction as a way of softening the blow of the high income tax rates they subject their higher-income residents to — meaning that the capping of the deduction represented a sudden dose of competition for states used to being insulated from the consequences of their aggressive tax policies. …”
The Economist
Why the Federal Reserve has made a historic mistake on inflation
From the April 23 issue, includes “In Washington inflation-watching is usually the preserve of wonks in shabby offices. Now nearly a fifth of Americans say inflation is the country’s most important problem; President Joe Biden has released oil from strategic reserves to try to curb petrol prices; and Democrats are searching for villains to blame, from greedy bosses to Vladimir Putin.”
Mises Institute
From April 21, by Robert Aro, includes “The Fed’s gross income was $122.555 billion. Approximately $13 billion was spent on expenses such as salaries, dividends, interest to banks and other remittances. $109 billion paid to the treasury should in no way constitute a win for the American people. Nearly 100% of the Fed’s income is derived from just two revenue sources: $92.610 billion from interest on US Treasuries and $29.619 billion on interest from Mortgage-Backed Securities (MBS). …”
Cato Institute
Central bank digital currencies are about control — they should be stopped
From April 12, by Norbert Michel, includes “… This feature–making electronic transactions using a liability of the Federal Reserve–is central to why Congress should make sure that the Fed never issues a retail CBDC. The problem is that the federal government, not privately owned commercial banks, would be responsible for issuing deposits. And while this fact might seem like a feature instead of bug, it’s a major problem for anything that resembles a free society.”
STATE AND LOCAL
Route Fifty
Are states in good shape to handle a recession?
From April 21, by Daniela Altimari, includes “The economy could be in for a bumpy period but states and municipalities are well-equipped to weather the turbulence. That was the conclusion of the experts who spoke Thursday at a briefing on inflation and recession risks hosted by the Volcker Alliance and the Penn Institute for Urban Research. ‘State and local governments are in good shape to navigate whatever … path we go down,’’ said Mark Zandi, chief economist at Moody’s Analytics.” (Note: Zandi, representing an organization with a significant role rating government credit quality, was one of the biggest cheerleaders for the massive federal aid/bailouts that arrived in recent years).
Rockefeller Institute
How COVID-19 shifted the balance of payments between the states and the federal government
From April 19, by Laura Schultz, includes “COVID-19 dramatically disrupted the fiscal balance between the states and the Federal government. In more conventional years, states with a large number of high-income residents such as New York, California, New Jersey, and Illinois pay more in taxes than they receive in Federal spending making them net donor states. The Rockefeller Institute’s Balance of Payments report shows that Federal Fiscal Year (FFY) 2020 was, however, far from a conventional fiscal year. … For the first time since the Rockefeller Institute began conducting this analysis in 2017 (for FFY 2015), there were no donor states in this year’s Balance of Payments report.” (Note: Studies like this deserve scrutiny in how they deal with individuals within states relative to governments within states.)
CNBC
Florida taxpayers could face a $1 billion Disney debt bomb if its special district status is revoked
From April 21, by Robert Frank, includes “A repeal of Disney’s self-government status in Florida could leave local taxpayers with more than $1 billion in bond debt, according to tax officials and legislators. … Disney’s Reedy Creek Improvement District was created in 1967 and gives the Walt Disney Company full regulatory control over Disney World as well as government services such as fire protection, emergency services, water, utilities, sewage and infrastructure. … If the special district is dissolved, Orange and Osceola counties would have to provide the local services currently provided by Reedy Creek. And, the $105 million in revenue would disappear, meaning county and local taxpayers would be on the hook for part or all of the added costs.”
Copyright (C) 2022 Bill Bergman. All rights reserved.
April 21, 2022
TOP THREE READS
John Locke Foundation
Taxes were due yesterday, but the inflation tax is every day
From April 19, by Brian Balfour, includes “… Just like the income tax reduces the amount of your paycheck, inflation reduces the purchasing power of your income, while diminishing the value of your savings. The inflation tax hits low-income households the hardest, because most of their income is spent on necessities and they are least likely to see wage gains that keep up with the rising cost of living. … Yes, it works if your goal is to paper over the economic devastation of shutting down the economy in the short term, tomorrow’s consequences be damned. Well, tomorrow is here, and the inevitable rise in the cost of living is crushing the little guy, pain that progressives could not care less about.”
Chicago Tribune
Couples who rescheduled pandemic weddings now face a new headache: inflation
From April 18, by Karen Ann Cullotta, includes “With most COVID-19 restrictions lifted in Chicago and much of the U.S., those who postponed their dream wedding celebrations as well as a contingent of newly engaged couples have led to a surge in demand for wedding-related businesses. But while the wedding industry is welcoming the uptick in couples seeking caterers, florists and pastry chefs for wedding celebrations this year, soaring inflation rates and steep worker shortages are making the resurgence of business bittersweet.”
The Wall Street Journal
Retirees’ re-entering the workforce isn’t ‘good for the economy’
From April 20, by Walter Block, includes “Does inflation increase wealth? That is the contention of some economists and business journalists who should know better. Inflation has a silver lining for economic welfare, they claim, or price increases are good for the economy as a whole. The argument in a nutshell is that inflation induces newly impoverished retirees back into the labor force. Their work increases gross domestic product, and we will all benefit from the increased goods and services it creates. … It is true that inflation makes people on fixed incomes poorer, and that some people respond by going back to work. But does that really help the economy?”
FEDERAL
Reason
Who’s really to blame for inflation?
From April 20, by Jonathan Bydlak, includes “… One claim—that corporate greed causes inflation—can be easily dismissed as it offers little explanation for why it didn't cause inflation in the past. … Similarly, the claim that President Joe Biden is solely to blame is untrue. … That's not to say Biden hasn't played a key role. … Trump spent extravagantly, spending more in four years than President Barack Obama did in eight. While Biden may be fanning the flames of inflation, Trump collected the kindling and lit the match. … while the 2020 election happened alongside increasing prices, an expansion of the money supply occurred long beforehand. This is important because one cannot understand inflation without considering the Federal Reserve. … No president controls interest rates or dollars in circulation: Jerome Powell and the Federal Open Market Committee do. And Powell admitted last year that they got inflation completely wrong.”
Northern Trust
From April 15, by Carl Tannenbaum, includes “The United States has one of the most complicated tax codes in the world; the rules currently cover more than 70,000 pages. The Internal Revenue Service (IRS) estimates that the average American spends 13 hours assembling the needed documents; by contrast, a number of countries do tax preparation for their citizens. Every April, I consider moving to one of them. It’s not just the time required to prepare a return, of course. Most people think their taxes are too high, and mumble about government waste when hitting the send key to file. But as discontenting as the process is today, it will likely become much more so in the years ahead. The national debt has mushroomed, and rising interest rates will make it harder to service. Society may finally be putting the pandemic in the past, but the bill for surviving it is coming due.”
The Hill
The IRS is in no position to do your taxes
From April 20, by Alex Hendrie, includes “Progressives routinely say that there is a simple solution to this tax complexity — have the government create a tax preparation ‘return-free file’ system. While it may sound like a reasonable solution to tax complexity — there are numerous problems with creating and implementing this system. It would be near impossible for the government to administer this system with the plethora of tax credits and deductions that exist, and it would require Americans to disclose more private information to the government creating the potential for privacy violations.”
Budget Committee, U.S. House of Representatives
Biden spending billions on costly student loan waivers, pushing bailouts for the wealthy
From April 18, by Ranking Member Jason Smith, includes “… Today, President Biden added billions more to the taxpayer’s tab by cancelling the student loan debts of thousands of borrowers and rewriting repayment contracts for millions more with the swipe of a pen. This comes soon after the President extended a blanket student loan payment moratorium that is costing taxpayers $4.3 billion every month, and further fueling the inflation fire raging across our country. Democrats have made it clear that their goal is total forgiveness of all federal student loans – a gross attack on hardworking Americans who would have to foot the bill for a $1.6 trillion bailout to the wealthiest twenty percent of American households – those with graduate degrees, six-figure incomes, and high lifetime earnings.
Journal of Accountancy
SALT cap challenge is denied Supreme Court review
From April 18, by Paul Bonner, includes “The U.S. Supreme Court declined Monday to review an appellate case that upheld the $10,000 limit on the amount of state and local taxes (SALT) that can be claimed as a deduction on individual federal income tax returns. … New York, joined by Connecticut, Maryland, and New Jersey, had sued the United States, Treasury, and the IRS, and their respective secretary and commissioner, soon after the enactment of the limitation by the law known as the Tax Cuts and Jobs Act … while Congress surely knew the SALT cap would affect some states more adversely than others, the cap is nonetheless like other federal tax laws in that respect and was within Congress's permissible legislative purpose of influencing, while not compelling, tax policy, the Second Circuit stated. Thus, it held, the SALT cap also did not violate the principle of states' equal sovereignty.”
STATE AND LOCAL
Route Fifty
Short on workers, state and local governments turn to retirees
From April 20, by Daniela Altimari, includes “State and local governments are turning to public sector retirees to help fill the vacancies left by an exodus of workers. Lawmakers in several states are weighing changes to work rules intended to bring retirees back into the government workforce. … State and local governments across the nation are facing staffing shortages, with burnout and stress from the Covid-19 pandemic, along with a desire for better pay, erode the public sector workforce. Some states are also seeing a ‘gray tsunami’ of retirements as members of a workforce that trends older reach the end of their careers.” (Note: How old are these retirees, and how many of them get to receive a salary along with pension payments?)
Michigan Capitol Confidential
Disgruntled? Double-dipping part-time school teacher was doing pretty well
From February 11, by Tom Gantert, includes “… The article cited union officials, who said Groth’s departure illustrated the fact that teachers in the district were feeling disgruntled over low pay and the administration’s lack of support. … But Groth was not a typical substitute teacher. … When she took the Manchester job, she was allowed to collect both the full amount of her pension and her part-time salary, a practice known as double-dipping. She also had the option of keeping her public school health insurance into retirement.”
Muddy River News
More double-dipping Illinois school superintendents
From March 8, by Ted Dabrowski and John Klingner, includes “Illinois school district superintendents keep finding ways to retire with generous Illinois pensions while continuing to get salaries to boot. … Dr. John Correll and Ellen Correll served as the interim superintendents at Skokie School District 73.5 during the 2020/2021 school year. They were each paid $90,000 or a combined $180,000, according to the Illinois State Board of Education’s 2021 EIS database. … What makes their work a double-dip is the fact that both retired and began collecting retirement checks from the Teachers Retirement System in 2019. John Correll is currently receiving more than $210,000 a year and can expect more than $5 million in benefits during retirement. Ellen Correll, with fewer years of service credit in Illinois, is collecting a pension of nearly $80,000 and can expect $2.2 million in total benefits.”
Copyright (C) 2022 Bill Bergman. All rights reserved.
April 20, 2022
TOP THREE READS
Heritage Foundation
Government’s bar tab starts long before tax day
From April 19, by Richard Stern, includes “In essence, while you’ve been working hard to earn money, the government has been ordering rounds at the bar for friends of the bureaucracy. … Taxation is only expected to cover roughly 80% of federal spending over the next decade. … Of course, that doesn’t remove the cost to American families. It simply shifts the cost to that other tax imposed by the government; namely, inflation. … So, this Tax Day, as you walk away from the bar having covered the government’s drinks, remember to listen for the government calling out ‘another round,’ as the bills pile up anew.”
Dalton Daily Citizen (Georgia)
From April 18, by Kyle Wingfield, includes “There are taxes, and then there are hidden taxes, and there’s no hidden tax quite like inflation. … Unfortunately, our household cash flow isn’t the only place inflation takes a bite. As our purchasing power declines, so does the value of our savings. … As bad as inflation is for our personal finances, it can be even worse for our public finances. … The last time inflation was this bad, the economy had to crash before things could stabilize. That eventually set the stage for a period of growth and prosperity, but the pain came first. We may be looking at a repeat of that chapter of our history.”
City Journal
From April 19, by James Piereson, includes “… The four-decade period of declining inflation and interest rates has rewarded investors, entrepreneurs, homeowners, and consumers. It stands in sharp contrast to the 1965–1980 period, when erratic and ineffective policies were the norm. Yet the U.S. has flirted with some of those former policies, with federal deficits running at $3 trillion per year in 2020 and 2021 and the central bank seemingly behind the monetary-policy curve. … Some important differences exist between the 1970s and the 2020s, yet many of these are cause for pessimism. … For all these reasons, rising inflation and interest rates, leading to a recession and falling stock and bond markets, stand to cause even greater conflict and distemper today than they did four decades ago.”
FEDERAL
Reason
The restaurant industry doesn’t need another bailout
From April 18, by Christian Britschgi, includes “Diners have returned to eating out at pre-pandemic levels. But many restaurant owners … are demanding another round of federal support for their industry. … The bill would spend another $42 billion on grants to cover the pandemic-era losses of restaurants, bars, and other hospitality businesses. … The trouble with the restaurant relief bill moving through Congress is that it would compensate businesses for lost revenue regardless of whether those losses were a result of government mandates or a voluntary unwillingness among customers to dine out.”
Bloomberg Law
Biden to nominate crisis veteran Barr as Fed banking supervisor
From April 15, includes “President Joe Biden will nominate Michael Barr, a Treasury Department veteran and one of the architects of the Dodd-Frank Act of 2010, as the U.S. Federal Reserve’s chief banking supervisor. …’The Federal Reserve plays a critical role in fighting inflation and Barr will make a strong vice chair for supervision, joining my other nominees for the Federal Reserve that the Senate is considering,’ Biden said in his statement. … One key Republican, however, was quick to express concerns over Barr’s nomination. ‘Michael Barr has defended Dodd-Frank’s big-bank bailout mechanism, which enshrined into law taxpayer bailouts of banks,’ Pennsylvania’s Pat Toomey, the senior Republican on the Senate Banking Committee, said in a statement.”
The Edwardsville Intelligencer
Social Security supports teachers online
From April 19, by Betsy Buchheit, includes “… This year, we celebrate Teacher Appreciation Week from May 2 through May 6, and honor all educators who prepare our children for the future. We know that well-informed instructors can have a powerful and positive influence on their students. That’s why we created an Educator Toolkit. It’s a shareable online resource for teachers to engage students and educate them on Social Security. … You can access the toolkit at www.ssa.gov/thirdparty/educators.html.” (Note: Lesson Plan 2 includes “Will Social Security be there for me?”)
STATE AND LOCAL
UIC Today (Illinois)
New report shows flat income taxes can also redistribute tax burden
From April 19, includes “The Policy Spotlight, titled The Earth isn’t Flat, and Neither is Illinois’— or any other state’s— Income Tax, discusses the many factors that determine state personal income tax liabilities and demonstrates that graduated tax rates are not the only way to achieve a progressive tax system. … ‘Switching from a flat to a graduated tax-rate system will not automatically promote progressivity, and our research shows that even a flat tax system can allow tax burdens to rise with income.’ The authors looked to Illinois to illustrate this point. In 2011, Illinois had one statutory state income tax rate of 5%. However, the share of income that tax filers actually paid varied from below zero to more than 5%.”
Gotham Gazette
Ethics, transparency, campaign financing and voting in the new state budget
From April 19, by Ethan Geringer-Samath, includes “Good government groups and reform-minded officials have for years called for New York State’s Joint Commission on Public Ethics (JCOPE) to be scrapped and replaced with more independence from the elected officials it is meant to regulate. But since the details of a deal to replace the troubled commission began to emerge last month, reformers have raised alarms that the new body would hardly be better than the old. … As they do every year, lawmakers packed the budget with subsidies to businesses looking to move to, stay, or grow in New York State. …”
Prescott eNews (Arizona)
On Tax Day, GOP holds Arizona Democrats accountable for Biden inflation tax
From April 19, by Ben Peterson, includes “Today on Tax Day, Republicans held Arizona Democrats accountable for backing Biden’s inflation tax on struggling Arizona families. Republicans sent Tax Day invoices to Arizona Democrat incumbents … Arizonans are on track to pay $7,721 more for the things they buy on an annualized basis due to Bidenflation.”
Mountain Democrat (California)
Republican hypocrisy in overdrive
From March 17, letter to the editor by Ben Garon, includes “… Contrary to right-wing propaganda, the largest contributor to deficit spending is not welfare, including Medicaid, which accounts only for $1,875 billion, nor Social Security/Medicare, both financed by our contributions, but the military. The Department of Defense’s 2022 budget is $770 billion. … The Pentagon budget benefits few people beyond the narrow military/industrial complex, while the BBB Act would benefit society at large. This country cannot put its house in order until the runaway military budget is brought under control.”
FROM THE VAULTS
Economy in the National Government (1952)
Book by Sen. Paul Douglas, includes “… the public interest in economy is diffused. Any one appropriation means very little to an individual taxpayer. … He is interested in economy, but it is a diffused interest, not a concentrated one. The public interest is weak as Congress makes its decisions, as it must, on individual items. … The individual groups, in order to achieve their ends and to protect their particular interests, tacitly combine with one another. … The total result is that each particular group tends to get what it wants: and there are more and more expenditures for more and more groups. The further result is a fine paradox. Everybody is for economy as a general principle; but no one can get his special privilege unless he consents to special privileges for others. As groups win their battle for special expenditures, they lose the more important war for general economy.”
April 19, 2023
TOP THREE READS
Newsweek
Most Americans to save tax refund or use for bills as inflation soars: Poll
From April 18, by Alexandra Hutzler, includes “As Tax Day arrives in the United States, a new survey found most Americans will use their refund to boost their savings account or to pay bills as inflation rises to its highest level in more than four decades. The poll out Monday from CBS News found that 37 percent of Americans expecting a tax refund are going to use it to pay bills or debt. … 45 percent of Americans feel they pay more than their fair share in taxes, while 47 percent said the amount they pay is about right.”
CNBC
57% of US households paid no federal income tax last year
From March 25, by Robert Frank, includes “More than half of American households paid no federal income tax last year due to Covid-relief funds, tax credits and stimulus, according to a new report. The nonpartisan Tax Policy Center estimates that 57% of U.S. households paid no federal income taxes for 2021, up substantially from the 44% before the pandemic. Since most workers pay payroll taxes, the share of Americans who pay neither payroll nor federal income taxes was only 19% in 2021, slightly higher than the 17% rate before the crisis.”
Reason
High inflation means rising tax bills
From April 18, by Eric Boehm, includes “Sharply rising inflation has already eroded Americans' purchasing power. Now it's poised to raise a lot of tax bills too. In more than a dozen states where income tax brackets are not indexed to inflation—as they are at the federal level—the current run of price increases could tip taxpayers into higher brackets, where they will owe larger slices of their income to the government. … According to the Tax Foundation, 22 states and the District of Columbia fail to fully adjust their tax codes for inflation—either by not indexing income tax brackets to inflation or by leaving other major components such as the standard deduction unindexed. Of those, 13 fail to index any major component of their income tax codes.”
FEDERAL
Mises Institute
Keynesians and market monetarists didn’t see inflation coming
From April 18, by Robert Murphy, includes “… Ever since the rounds of QE failed to yield surging consumer price inflation at the scale some of us warned of, the Keynesians and market monetarists understandably ran victory laps, saying that they were to be trusted over those permabear Cassandra Austrians. … So it is not with gloating or vindictiveness that I write the present article, but rather I do it to set the record straight and document for posterity that the leading Keynesians and market monetarists totally missed this bout of price inflation. …Let’s do the fun one first: Paul Krugman has not fared well in light of our current inflationary experience. …”
Fox Business
From April 16, by Andrew Mark Miller, includes “Progressive Congresswoman Pramila Jayapal claimed on Twitter that student debt cancellation is a form of racial, gender, and economic justice. … Jayapal also posted a link to a poll that found a majority of Americans support canceling student loan debt.”
Insider
From April 16, by John Dorman, includes “White House press secretary Jen Psaki on Friday said President Joe Biden's use of executive action for the cancellation of some federal student loan debt is ‘still on the table,’ with a decision likely to come in the months ahead.”
(Note: Student loans are the largest and, since 2008, fastest growing ‘asset’ on the federal government’s balance sheet. In 2021, the federal government reported more than $1.3 trillion in student loan assets — ten times the $132 billion in 2008, before the onset of the 2008/2009 financial and economic crisis. And the federal government justifies not including tens of trillions of dollars of unfunded Social Security and Medicare obligations as liabilities on its balance sheet under the dubious reasoning that the government controls the law, and can change the law at any time. If so, why are student loans a $1 trillion asset?)
STATE AND LOCAL
Moline Dispatch / Rock Island Argus (Illinois)
A lot to like in new Illinois budget
From April 18, editorial, includes “A week ago, lawmakers in Springfield approved a $46.5 billion budget. The process wasn’t pretty, and there was the usual back-room lack of transparency. But in the end, we see a lot to like about the state's fiscal year 2023 spending plan. Buoyed by increasing revenues, the budget keeps its commitment to fully fund the shift to the evidence-based K-12 funding formula approved a few years ago, a move that should have a meaningful impact on local property taxes and create more equity in education; the budget also pays down bills and makes an advance payment on the state’s pension obligations; it even deposits $1 billion into the state’s rainy day fund.”
River Cities Reader (Illinois)
Illinois’ rainy-day fund better hope it doesn’t rain
From April 18, by Rich Miller, includes “The end of the coming fiscal year may be tight on paper. General Fund revenues are projected to be just $2 million higher than total spending next year. Yes, the state will have $1 billion in its rainy-day fund just in case … But a worse-than-expected economic downturn could still cause some fiscal pain, although not nearly as much as in the days when the state had no cushion at all (or even no budget).” (Note: Illinois may sport a $1 billion ‘rainy day fund,’ but it also faces a future with governments owing hundreds of billions of dollars in unfunded employee retirement benefits.)
Wirepoints
Nine things Gov. Pritzker didn’t tell you about Illinois’ 2023 budget
From April 19, by Ted Dabrowski and John Klingner, includes “It’s been over a week since Illinois lawmakers passed the state’s 2023 budget. Many lawmakers declared the budget responsible and historic, a win for the middle class, and more. … All of their celebrations ignore a simple fact. Illinois lawmakers had almost nothing to do with creating the state’s record budget. Revenues are up, deficits are papered over and Illinois’ credit ratings are improved for one reason: the Fed’s unprecedented $200 billion stimulus. The reality is, even after the federal bailout, Illinois remains at the bottom of the barrel nationally.”
CBS News Chicago (Illinois)
Former Oakbrook Terrace Mayor Anthony Ragucci charged in red light camera bribery scheme
From April 18, by Todd Feurer, includes “Former Oakbrook Terrace Mayor Anthony Ragucci is facing federal corruption charges, accused of taking thousands of dollars in payoffs in exchange for allowing red light cameras in the suburb. Ragucci, who resigned in January 2020 amid published reports of a federal investigation of the city's red light camera contract, has been charged with one count of wire fraud and one count of filing a false tax return. He is scheduled to be arraigned on Thursday.”
FROM THE VAULTS
Forbes
Illinois’ public pension debt is a moral issue
From February 2020, by Elizabeth Bauer, includes “Corruption costs the city, and it costs the state, and it’s not merely a matter of a few bad apples, but of a political system that is still too close to the machine politics of the past, in which what matters to voters is whether they and their interest groups get what they want. And it is no mere coincidence that a state with such a legacy of corruption is so severely in debt. (emphasis in original) … Corrupt state and local government officials who rationalize skimming a little for themselves, and voters who overlook this if they think their interest group (neighborhood, union, ethnic group, etc.) benefits from the state or city’s spending … And this is the very same mindset that accepts unfunded/underfunded pensions, in which the costs are not placed on other taxpayers in the here-and-now, but rather the people on whom the burden is being placed is the next generation.”
RealClear Policy, $281 billion in improper payments in 2021
From March 30, by Adam Andrzejewski, includes “In 2021, the Treasury admitted to over $281 billion in improper payments, a $75 billion increase from the $206 billion in improper payments the GAO found in 2020. One might think the increase came from massive Covid-19 relief programs. However, the auditors generally excluded major relief programs like the Paycheck Protection Program from their analysis, meaning the amount may be much higher.”
From March 28, by Ken Dilanian and Laura Strickler, includes “Many who participated in what prosecutors are calling the largest fraud in U.S. history — the theft of hundreds of billions of dollars in taxpayer money intended to help those harmed by the coronavirus pandemic — couldn’t resist purchasing luxury automobiles. Also mansions, private jet flights and swanky vacations. They came into their riches by participating in what experts say is the theft of as much as $80 billion — or about 10 percent — of the $800 billion handed out in a Covid relief plan known as the Paycheck Protection Program, or PPP.”
The Wall Street Journal, “No more IMF subsidies for dictators”
From March 22, op-ed by Sen. John Kennedy, includes “… As Mr. Putin prepared to invade a sovereign democracy, the Biden administration continued pushing for more than $17 billion in International Monetary Fund allocations for Moscow. … The White House’s most egregious move may be yet to come. The Biden administration purposefully structured the 2021 allocation as a down payment on another flood of special drawing rights this year, totaling $350 billion. … Mr. Biden and Ms. Yellen can’t say they weren’t warned. I started imploring Ms. Yellen not to subsidize our enemies in the name of Covid relief last March, as did the Journal’s editorial board.”
City Journal, “CBDC caution”
From March 22, by Frank Lyon, includes “Few likely paid much attention when, on March 9, President Biden signed an executive order directing the government to begin developing a “central bank digital currency” (CBDC) to be issued by the Federal Reserve, alongside a framework to regulate private cryptocurrencies. But this was a moment to which close attention is very much due. CBDCs have the potential to become an unprecedented totalitarian nightmare. …”
From March 22, by Khristopher Brooks, includes “Former U.S. Secretary of Education John King has a bold proposal for speeding the nation's economic recovery from the coronavirus pandemic and putting millions of people on a better path to achieve financial security: Forgive all $1.7 trillion Americans still owe on their student loans. King, who served under President Barack Obama, told CBS News that the federal government paid roughly 80% of the cost of college for students through its Pell grant program in the 1980s. But the government's move in recent decades to cut its investment in higher education has left many students deeply in debt …”
Ron Paul Institute, “End the Fed and get more Doritos”
From March 21, by Ron Paul, includes “… To put an end to the welfare-warfare state, Congress can drastically reduce the military budget, end all corporate welfare, and shut down all unconstitutional cabinet departments. The savings can be used to pay down debt and to support those truly dependent on government programs while responsibility for providing assistance returns to local institutions and private charities. … Ending the era of the welfare-warfare state and fiat currency can lead to a transition to a new era of liberty, peace, prosperity — and full bags of Doritos.”
