Category Archives: Economics

Miscellaneous economy stuff

Confusion

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The latest whiner pundit to weigh in on President Donald’s tax reform principles, laid out in a concise one-pager.  And yet these pundits pretend to confusion over it.

President Donald Trump’s plan is silent so far on crucial details Americans need to calculate their tax bills, including the personal exemption and the size of the tax brackets.

And

The president’s latest plan for middle-income households…has left tax experts puzzled. That is because his one-page tax outline released in April is silent on essential details, including how the tax code will treat the personal exemption that reduces taxable income depending on family size. It sets tax brackets of 10%, 25%, and 35% without establishing the income levels that divide them.

This is a preview of Confusion. Read the full post (302 words, estimated 1:12 mins reading time)

The Durbin Amendment and Price Fixing

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Senator Dick Durbin (D, IL) added to Dodd-Frank an amendment that mandated the maximum price large banks could charge merchants who process debit-card payments.  The House’s Financial Services Committee, in marking up Chairman Jeb Hensarling’s Financial Choice Act, included repeal of the Durbin Amendment.

Naturally, Durbin has demurred, and he did so, among other place, in a Letter to the Editor of The Wall Street Journal.

This is a preview of The Durbin Amendment and Price Fixing. Read the full post (379 words, estimated 1:31 mins reading time)

Puerto Rico’s Bankruptcy

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Andrew Scurria and Heather Gillers have a piece in The Wall Street Journal that discusses various considerations now that the story of Puerto Rico’s bankruptcy is “just beginning for investors.”  One remark in particular caught my eye.

Complicating matters, Puerto Rico hasn’t yet decided which creditors have priority in a restructuring.

This lack of forethought, even of understanding, is illustrative of how Puerto Rico got into this mess in the first place.

The question shouldn’t center on creditors; the order of priority of debt type should be the primary criterion, with creditors within each type treated equally.  This prioritization should have been defined long ago, too.

This is a preview of Puerto Rico’s Bankruptcy. Read the full post (152 words, estimated 36 secs reading time)

Long Maturity Debt Instruments

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Treasury Secretary Steven Mnuchin is kicking around the idea of instituting long-maturity debt instruments, specifically, 50-year and 100-year US bonds.

Treasury’s Borrowing Advisory Committee, though, demurs.  This committee, made of movers and shakers of financial institutions that are themselves movers and shakers in the bond market,

does not see evidence of strong or sustainable demand for maturities beyond 30 years.

They ask a not unreasonable question, too:

what types of investors would buy ultralong bonds….

On that, the US has tried long(er) maturity bonds before—50-year instruments to finance the Panama Canal and 40-year instruments in the Eisenhower and Kennedy administrations to, in Eisenhower’s words, stretch out the national debt, for instance.

This is a preview of Long Maturity Debt Instruments. Read the full post (274 words, estimated 1:06 mins reading time)

Little Compelling Evidence?

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Greg Ip, in his Monday Wall Street Journal piece on the matter of corporate tax cuts, says that

most of the US’ largest trading partners cut their corporate rates. But their experience offers a reality check. There is little compelling evidence any enjoyed substantially faster growth as a result, and certainly not on the scale of Mr Trump’s ambitions….

He offered some examples:

Britain reduced its corporate rate from 30% in 2007 to 19% now. A 2013 study by the British Treasury predicted the tax cuts since 2010 would eventually boost the level of gross domestic product by 0.6%. That is certainly worth having, but spread out over, say, six years, would boost the growth rate by a barely noticeable 0.1 percentage point.

This is a preview of Little Compelling Evidence?. Read the full post (377 words, estimated 1:30 mins reading time)

“We pay a lot to feed the civil servants”

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That’s what Zhou Dewen, Zhejiang Private Investment Enterprise Association Director, a business lobbying group in the People’s Republic of China has said.  He, like business representatives anywhere—including here in the US—is right to be concerned.  That concern is compounded by President Donald Trump’s tax proposal.

Now, Chinese officials and executives worry that the tax proposal Mr Trump announced last week will set back China’s global competitiveness and spur companies to invest in America instead of China.

Which is one of the points of Trump’s proposal that, among other things, seeks to drastically lower our usurious business tax rates.

This is a preview of “We pay a lot to feed the civil servants”. Read the full post (404 words, estimated 1:37 mins reading time)

EU Bad Faith

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The European Union now says that any trade deal discussions with Great Britain must come after the terms of Great Britain’s going out from the EU have been agreed.  Fair enough; it’s tough to negotiate a trade deal before the nature of the relationship between the two has been identified.

But now there’s this, too.

…EU courts must continue to have a role in Britain after Britain’s exit from the bloc.

And

They [the EU leadership] emphasize the importance of ensuring no hard border is re-established between Northern Ireland and the Republic of Ireland and even touch on issues like the future legal status of Gibraltar….

This is a preview of EU Bad Faith. Read the full post (293 words, estimated 1:10 mins reading time)

Hard to Tell

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…which is worse: the Left’s hypocrisy about decrying Wall Street and then requiring a ton of money in return for talking to them, or the Left’s demand that “you’ve made enough money.”

Ex-President Barack Obama (D) required, and got, 400 stacks for giving a 20-minute speech to a Cantor Fitzgerald healthcare conference, and he required, and got, another 400 large for being asked questions at an A&E Networks do.  This, after spending eight years squawking about Wall Street fat cats and their…large…incomes.

Then, there’s this, from Bill Maher, protesting Obama’s paydays.

This is a preview of Hard to Tell. Read the full post (153 words, estimated 37 secs reading time)

The Freedom Caucus of No

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Daniel Henninger had some thoughts in Wednesday’s Wall Street Journal on this group’s first 100 days; read the whole thing.  I’m interested in one aspect of the No-ers’ first 100 days that Henninger was too polite to say out loud.  Henninger pointed out

Back in 2016, Speaker Paul Ryan and the House leadership held public hearings, conducted negotiations inside the House conference, and published texts of the proposed legislation to repeal and reform ObamaCare. The American Health Care Act that emerged from this process had both a political and policy purpose.

This is a preview of The Freedom Caucus of No. Read the full post (353 words, estimated 1:25 mins reading time)

A Tax Code Proposal

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Below is the handout given to the NLMSM at Wednesday’s White House daily press briefing, this time hosted by Chief Economic Advisor Gary Cohn and Treasury Secretary Steve Mnuchin for the purpose of discussing President Donald Trump’s tax reform proposal, which was released today via that handout and press briefing.

Also included, as mentioned during the briefing though not on the handout, is a proposed reduction of the peak capital gains tax to 20%, which Cohn and Mnuchin said will stimulate investment—and, I add, stimulate both productivity and new job creation via that increased investment.

This is a preview of A Tax Code Proposal. Read the full post (767 words, 1 image, estimated 3:04 mins reading time)