Tag Archives: political economy

Taxing the Middle Class and Poor

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Arizona’s Progressive-Democrat Governor Katie Hobbs has vetoed a bill that would have barred cities and municipalities from taxing food purchases. Hobbs’ rationalization went like this:

The bill, originally unveiled as a way to mitigate inflation, does not take effect for more than two years. What’s more, it does nothing for the more than 800,000 Arizonans who use SNAP and WIC benefits for their groceries, as these constituents are already exempt from the tax.

Hobbs’ first beef might seem like a reasonable objection, and one easily corrected. However, it’s reasonable, also, to give those cities and municipalities whose budgets currently use those food taxes time to adjust their budgets.

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The Purpose of Medicaid

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State Medicaid programs were created for the explicit purpose of providing health insurance coverage for State citizens on the lower rungs of that State’s economic ladder. The Federal government transfers Federal funds—the tax remittances of all of us citizens regardless of the State of which we might also be citizens—to support those Medicaid programs.

In California’s case, Federal transfers in support of Medi-Cal, that State’s Medicaid program, comprise more than 69% of the program. That amounts to 71.4 billion of our tax dollars.

Now the Progressive-Democrat governor of California, Gavin Newsom, wants Medi-Cal to pay the rent for the State’s homeless.

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Yellen and Law

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The Wall Street Journal editors wrote Thursday about Treasury Secretary Janet Yellen’s…flip-flopping…on making whole, or not, nominally uninsured depositors in the wake of SVB’s failure and the government takeover of Signature Bank. Their subheadline accurately summarized the matter.

Are all deposits insured or not? Only [Yellen] seems to know.

The editors’ lede was this:

Treasury Secretary Janet Yellen on Thursday walked back her comments from the day before that walked back her remarks the day before about providing a de facto guarantee on all US bank deposits.

The editors then asked the question: Who’s on first?

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Gainful Employment

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In her Wednesday Wall Street Journal op-ed, Judy Shelton wrote extensively about the Federal Reserve Bank’s spotty performance in combatting the latest round of inflation, effort in which the Fed has been engaged for the last year.

Then she concluded her piece with this:

In other words, when capital is allocated through meaningful price signals that reward long-term investment in productive economic opportunities, people become gainfully employed and real growth leads to greater prosperity.

True enough as far as it goes. However, the Fed’s impact on capital allocation isn’t the only factor.

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Studying for the Test

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Instead of studying the material. In a Monday Wall Street Journal op-ed, Michael Faulkender and Tyler Goodspeed, University of Maryland Finance Professor and Fellow at Stanford University’s Hoover Institution, respectively, wrote about bank stress tests and their resulting uniformity of banks’ risk management techniques. Citing a Boston Federal Reserve study, they noted that

banks that performed poorly on the mandated Dodd-Frank stress tests subsequently adjusted their portfolios such that they more closely resembled the portfolios of banks that performed well. The average institution’s portfolio is more diversified, but the system is more uniform. By requiring all of the biggest financial institutions to adhere to the same measures, pass the same tests, and follow the same practices, America has lost diversification in the entire banking sector.

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Mistake

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Treasury Secretary Janet Yellen wants to extend the Federal government’s intrusion into our banking system.

Our intervention was necessary to protect the broader US banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion[.]

No, it wasn’t. No, it would not be.

Businesses thrive or fail on their managers’—individual Americans acting in concert with other individual Americans—performance or failure to perform. We individual Americans thrive, or not, on our own decisions, made out of our own obligations and determination to get ahead.

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Wrong Answer

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The Biden/Regan Environmental Protection Agency has decided to get into individual municipalities’ business.

For the first time in 26 years, the US Environmental Protection Agency has issued new guidelines for drinking water safety. Municipal utilities will be required to install expensive filtration systems to lower the amount of PFAS in water supplies.

The cost of such “guidelines” will run to billions of dollars just for Illinois’ cities, towns, and villages. Multiply that by all the cities, towns, and villages across the US and our territories—the reach of the EPA—and we get a ton of costs.

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“The Fed Got Us Into the SVB Mess”

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That’s the headline on The Wall Street Journal‘s Sunday Letters section. There’s also this from a letter by Desmond Lachman of the American Enterprise Institute:

The real lesson from SVB’s failure is that things break when the Fed is forced to raise interest rates at an unusually rapid rate to regain inflation control.

And this, from another Letter-writer in that section:

…the Fed sowed the seeds of the current crisis as SVB stretched for yield in a zero-interest-rate environment and then failed to manage its duration risk. The Fed’s efforts to micromanage the economy creates unforeseen problems that continue to erupt.

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An Attack on Workers’ Rights

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Hypocritically, it’s by the Progressive-Democratic Party, which runs Michigan’s government. That’s the party that claims to champion the rights of America’s workers.

[State] Senate Democrats voted along party lines in support of repealing the decade-old “right-to-work” law in a state long considered a pillar of organized labor.

The State’s House already had passed a substantially similar bill, now the two go to conference to reconcile the differences, then the result will be voted up in both houses and sent to Governor Gretchen Whitmer (D) to be signed into law.

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Balancing Act

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That’s what conventional “wisdom” says confronts the government of Australia as it contemplates buying nuclear-powered submarines from the US. The buy is part of AUKUS’ combined effort to counter the People’s Republic of China’s military buildup and its continued strengthening of the PLA in the PRC’s occupation of the South China Sea.

Australia is trying to strike a balance between its close relationship with the US and its ties to China, which buys much of its valuable iron ore and is its largest trading partner.

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