Expanding their Empire?

The SEC—the Securities and Exchange Commission—doesn’t have enough power; it wants to convince more private companies, over which it has no jurisdiction, to go public so it can regulate them, too?

To spur more companies to go public, the new head of the Securities and Exchange Commission has turned to a veteran Silicon Valley lawyer whose career has involved some of the biggest deals in history.

SEC Commissioner Jay Clayton seems to be sincere in this effort, but he won’t be around forever, and his predecessor had different regulatory ideas, and so likely will his successors.

Then there’s this:

The USPS and Price Increases

The United States Postal Service lost more than $560 million in the previous quarter (!), and it wants a pay raise to pay for it, a rise in the price of stamps by a penny.  Now, a penny might not seem like much, especially against the current price for a first class stamp on a 1oz letter, but it is symptomatic of a much larger problem: the USPS, a protected monopoly in the first class mail niche and so lacking actual competition and associated innovative pressures, is a money-losing (to the tune of two and a quarter billion dollars each year) proposition.

Going Soft

Senate pseudo-Republicans are balking at one good item that was contained the House-passed American Health Care Act: repeal of Obamacare’s trillion dollars’ worth of taxes.  These guys actually don’t see the value of that repeal.  Senator Susan Collins (R, ME) is typical:

I don’t see how you can repeal all of the pay-fors…and still meet the goal of providing health-insurance coverage for people who truly need assistance[.]

Aside from the false premise of needing Federal government “pay-fors” as a default position, rather than a last result, the Lady from Maine and her fellows plainly either don’t understand free market principles, or they have no confidence in free markets.

Getting Rid of Federal Government Rules

A couple of random thoughts triggered by a Wall Street Journal article.  The Republican Congress has been using the Congressional Review Act to rescind rules enacted by various Executive Branch agencies.  The Act allows Congress, by simple majority vote (no Senate filibuster) and Presidential signature to rescind rules so long as the rescission is done within 60 days of the rule’s promulgation in the Federal Register or formal reporting to Congress.  There are potsful of rules that haven’t yet passed that threshold, and so Congress can reach back years for rescissions under the Act.

Senate Democrats have insisted the rules have lengthy debate time….

Confusion

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.

The Durbin Amendment and Price Fixing

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.

Puerto Rico’s Bankruptcy

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.

Long Maturity Debt Instruments

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.

The Apocalypse is Upon Us

Or so Lauren Collins would have us believe in her fearful piece in the New Yorker, titled The Future of Europe Hinges on a Face-Off in France about this weekend’s money round of the Presidential election in France.

After all, this election is a referendum between a globalist economy and a globalist identity (Macron) and a nationalist economy and a nationalist identity (LePen).  That does sound apocalyptic, but really, it’s more apocryphal.

Little Compelling Evidence?

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.