Category Archives: Economics

Miscellaneous economy stuff

Tax Cuts are Costly

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Arkansas’ Republican Governor Sarah Huckabee Sanders has signed into law the State’s latest round of individual and corporate tax cuts. “Finance officials” say that

the cuts will cost about $483 million the first year and $322 million a year after that.

Sanders also has signed into law a different tax cut, this one in the form of a tax credit increase. This one

increases the homestead tax credit from $425 to $500, retroactive to January 1.

“Finance officials” piped up again:

That cut will cost $46 million.

Cost whom, exactly? The money isn’t the State government’s after all. The money belongs to the citizens of Arkansas, they just remit it in the form of tax levies. It doesn’t cost the government a single copper penny to not get what doesn’t belong to it.

Beyond those “financial officials'” distortion, there’s another item missing from their pseudo-analysis.

Those officials are ignoring the impacts of the increased economic activity in the State’s private economy from all that money now being left in the private hands of the State’s citizens and private businesses. There are two primary impacts. One is the increased prosperity of those citizens both from their being able to hold onto more of their money and from that increased economic activity. The other is the increased tax receipts the government will receive, on net despite the reduced tax rates, from the increased aggregated revenues flowing from all that increased economic activity.

Spending vs Revenue

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…in the Progressive-Democratic Party’s world.

The Wall Street Journal‘s editors have this one right.

CBO projects that this year’s budget deficit will clock in at roughly $2 trillion, some $400 billion more than it forecast in February and $300 billion larger than last year’s deficit.
…
Notably, CBO’s revenue projections are little changed. Revenue is expected to total 17.2% of GDP this year—roughly the 50-year average before the pandemic….

So, whence the deficit explosion? Plainly, it’s in all that spending that the Progressive-Democrat President Joe Biden and his Party syndicate in the House and Senate insist on doing.

CBO significantly revised up projections for federal spending. Outlays are now expected to hit 24.2% of GDP this year and average 24% over the next decade. Wow.

Mind you, that’s against a steadily, if slowly, growing GDP. That projection means that Party spending will be growing, too. All while revenue remains steady—which is to say, flat/not growing.

This is the politicians of the Progressive-Democratic Party’s utter inability to say “cut spending,” which plays into their inability actually to cut spending. After all, the money, in their minds, isn’t real; it’s only monopoly money, and if they need want more dollars, they have only to go to their Modern Monetary Policy money tree and pick more dollar bills from the branches.

The reality, though, is that the money Progressive-Democrats demand to spend is our money. Those politicians have no skin in the game beyond their political power. The skin us average Americans have in this game is real: our ability to get along in the real (and real economic) world in which we live, having as we do, only those real dollars that Party policies steadily devalue.

We need to remember that this November.

A False Choice

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And a politically hard, but eminently straightforward alternative.

California’s regulators want to ban older diesel locomotives from operating in California after 2029, requiring only battery locomotives or some other form of net-zero emission locomotion process to be the motive force over freight trains (and passenger trains after 2030).

The Wall Street Journal‘s editors think that would ban diesel locomotives nation-wide, and in one sense they’re right.

Since locomotives can’t be swapped at the state border, the rules in practice would affect trains far beyond the left coast.

That offering is a false choice, though. There’s nothing in California’s proposed regulations that would stop rail freight shippers from simply ceasing to ship goods into California. California’s businesses could use their State government-mandated battery locomotives to go get the goods warehoused just outside the State’s border.

The transition to this new shipping paradigm would be expensive, but there would be clear winners, both during the transition and after. During the transition, there would be a proliferation of construction jobs as the warehouse would be built along with a net increase of jobs for warehouse operators. There would be more jobs building and then operating new transshipment facilities for unloading the trains and short-haul transportation of the goods to the warehouses.

Longer-term, warehouse operators would make money, short haul truckers would see a large increase in business and business opportunities, and railroads would save money by not having to gussy up all of their rail equipment to meet California’s requirements. Even California’s range-limited battery locomotives would gain by not having their range limits play such a major role in their operation.

The biggest winner of all would be the railroads, which would have successfully rescued themselves from under the boots of the California government.

One More Reason…

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The Environmental Protection Agency is turning more and more into a Progressive-Democratic Party agenda protection agency and less and less devoted to protecting our environment. Recall that the EPA has been busily using some of its Inflation Reduction Act funding allocation to fund an outfit backing anti-Israel protests. It turns out that the EPA is using another tranche of its IRA allocation to fund groups that oppose immigration enforcement. The EPA received $3 billion for Environmental and Climate Justice block grants.

Here’s what the EPA is doing with those dollars:

EPA tapped Fordham University as a grantmaker to distribute $50 million, in collaboration with the New York Immigration Coalition (NYIC) and the New Jersey Alliance for Immigrant Justice (NJAIJ).

Aside from those agencies having nothing to do with climate, as the WSJ‘s editors note (I note, also, that climate is only peripherally related to the EPA’s environment DOC), the NYIC (at the least) sees its immigration role as one of defunding and getting rid of Immigration and Customs Enforcement.

This is just one more reason to abolish the EPA altogether and return its personnel, from Secretary on down to the janitors, to the private sector.

We do need an agency of some sort to protect the environment, but not this one, which is so badly damaged that it cannot be rehabilitated. The replacement needn’t be a huge and sprawling agency devoted to pseudo-science (atmospheric CO2 is more pollutant than plant food?), and so what’s used for the EPA’s budget needn’t be so monstrously huge, either. The difference could even be used to pay down some small part of the debt the Progressive-Democratic Party has been inflicting on our federal government.

Maybe…

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California has been getting plenty of rain for a couple of years—the State even has declared its drought over—and so reservoirs are nearly full and aquifers are refilling.

However.

…many farmers in Central Valley, America’s fruit and vegetable basket, will get just 40% of the federal water they are supposed to this year.
Why? Endangered fish.

The problem, to the extent it’s a legitimate problem (spoiler: it isn’t), is that those reservoirs and aquifers are in northern California, and the Central Valley…isn’t. That water must pass through the Sacramento-San Joaquin Delta to get to the Central Valley. Fish swim in the Delta, though, including some that are on the Endangered Species Act’s lists.

California’s environmentalists have functional control over the Delta, and they insist that fish are more important than food.

And downstream fallout—here’s just one example:

The nonprofit Latino Equity, Advocacy & Policy is converting a former cantaloupe and asparagus plant into a center to teach new work skills.

Maybe California’s farmers should look hard at eschewing planting for one year; leave their fields, en masse, to lie fallow. Alternatively, look into leasing their farm fields for that year (or longer if the deal works well enough) to ranchers to graze their herds. Either of these would be good for the fields, too.

Let California’s environmentalistas and regulators live without California’s farm crops for an extended period of time.

The rest of us need to move to reclaim the US Bureau of Reclamation and get it back under control or entirely rescinded and its employees, top to bottom, returned to the private sector.