​Today, I cover:

1) National: Whether or not the U.S. federal government will shut down, will student loan payments start soon, and how legal immigrants are helping combat the U.S. labor shortage;

• Here is a ranking of the total days when the federal government shut down.

• Check out what’s going on in the labor force per the WSJ.

2) States: North Carolina adopts Universal School Choice, why Texas should do the same along with addressing property taxes, and why Louisiana desperately needs tax reform; and

3) Other: My latest podcast episode with Taylor Barkley discussing abundance and digital parenting laws, and a sneak peek of next Monday's episode with Naomi Lopez on health care policy.

You can watch this TWE episode and others along with my Let People Prosper Show on YouTube or listen to it on Apple, Spotify, Google, or Anchor. Please share, subscribe, like, and leave a 5-star rating!

For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, please check out my website (www.vanceginn.com) and subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.

​This commentary was originally published at The Center Square here.

If you live in Texas, then your property taxes are skyrocketing. This has made housing less affordable, especially for the neediest among us.

The Texas Legislature passed what some are calling the “largest property tax cut in Texas history,” but it’s the second largest. Regardless, the amount of lower tax bills will likely be underwhelming and leave voters with a bad taste in their mouths come election time next November.

There have been some bright spots, but they’re dimming quickly.

Dallas was one place that showed promise. Its city council passed the largest budget in city history, going against Mayor Eric Johnson’s (a Democrat who recently stated he will switch to be a Republican) wishes.

He aptly voiced what most Texans are thinking in Dallas and beyond about the perils of big budget increases: “In an environment of such economic uncertainty for our residents and businesses, with inflation and interest rates being where they are, I simply could not vote for a budget that is the largest in the history of the city and that is paid for by raising taxes on our residents and businesses.”

This increase will completely override the city passing a one-cent tax rate decrease, making people’s property bills 8 percent higher due to rising property values.

Dallas is exhibiting on a smaller scale what occurred at the state level a few months ago.

Despite the Texas Legislature passing the state’s second-largest property tax cut of $12.7 billion to reduce school district maintenance and operations (M&O) property taxes earlier this year, half of the property tax burden is imposed by other local governments. Because many localities, like in Dallas, are poised to raise property taxes, there are very few places where taxpayers will see a lower property tax bill despite the statewide tax cut.

Or, like in Dallas, many local governments pursuing “cuts” will render it irrelevant with excessive spending.

Certainly not what should be expected from such a large state tax relief package. And this is likely to hurt Republicans in the next election as they (wrongly) sell this as the “largest property tax cut in Texas history.”

Mayor Johnson has it right that reining in spending is crucial to providing tax relief. When spending outpaces a responsible budget, and Dallas’ has for decades, higher taxes and less economic growth have resulted.

This is why the biggest governmental burden is always spending, not taxes. Excessive government spending by primarily blue localities in a sea of red helps explain why Texas has some of the most burdensome property taxes nationwide.

But Texas is also running up massive debts for even more spending to get around the requirement to pass a balanced budget. The Lone Star state’s total outstanding local government debt is $280 billion, making its local debt per person third most among the top 10 largest states. Regarding local debt, Texas looks much more like New York and California (largest debts per capita) than its southern counterparts, like Florida, where the debt per person is about half of that in Texas.

To get spending, and therefore taxes, under control, Texas needs to adopt a responsible budget at the state and local levels.

This responsible budget provides a limit that does not exceed what the average taxpayer can afford to fund, restricting the budget to the maximum rate of population growth plus inflation. Ideally, spending should always be below this fiscal rule, but even meeting that cap could save taxpayers billions of dollars.

For instance, had Dallas followed this responsible budget model yearly since 2013, the city would have saved $3.4 billion by 2022. This results in substantially higher property taxes in these localities, with similar results in other localities across the state than otherwise.

Implementing this budget rule would also result in substantial surpluses because tax revenues generated from sales taxes, fines, and fees typically increase faster than this rule. Through these surpluses, property taxes could be reduced until they are zero.

Cities that do this would create so much competition that other cities would be compelled to use their other current revenue sources to reduce their property taxes, leading to the state having much more competitive property taxes overall. With the most competitive rate being zero.

That’s one step. The second step to take Texas to the top is to do the same at the state level.

The state legislature recently took two steps back and one step forward by passing its largest budget increase in the state’s history in tandem with its hefty property tax cut.

But if they stick to the same fiscal rule or, even better, a “Frozen Budget,” they can use surplus funds generated to buy down school district M&O property tax rates each period until they’re eliminated. This process would also take about a decade for the state to fund 100% of the state’s school finance formulas as intended by the Texas Constitution.

While Texas boasts many freedoms, including no personal income tax and a business-friendly climate, its burdensome spending and property taxes reduce opportunities for people to flourish. Immediate fiscal restraint at the state and local levels is required for the Lone Star State to continue thriving by seeking to eliminate property taxes.

Texans deserve to stop renting from the government and start owning property. Limiting spending is the catalyst to take us there. And localities passing the no-new-revenue rate that would cover all property taxes collected would be a great path eventually eliminating property taxes to better let people prosper.

​In 2023, Americans for Tax Reform launched The Sustainable Budget Project, a new venture that monitors state government spending and tracks which states have or have not enacted sustainable budgets.

The Sustainable Budget Project defines a sustainable budget as one that limits the pace of state government spending to lower than the rate of population growth plus inflation, which accounts for the average taxpayer’s ability to pay for government spending. 

• The Sustainable Budget Project looks at the changes in state government spending over the past decade and next year. The findings illustrate how, in most states, overspending is the problem, not under-taxation.

From 2013 to 2022, the following happened:

• Federal spending shot up by 69.4%, more than three times faster than the 21.6% increase in the rate of population growth plus inflation.

• Had the federal government limited the growth in spending to the rate of population growth plus inflation during that decade, the federal government would’ve spent $1.6 trillion less in 2022 than it did.

• If the federal government had done this over the entire decade, the national debt would have increased by less than $500 billion instead of $19 trillion. 

Aggregate state spending, excluding funds received from the federal government, by the 50 state governments increased by 51.7% during that period. 

• Had their spending grown in line with the rate of population growth plus inflation during the past decade, state governments would’ve spent $1.39 trillion in 2022, $344 billion less than the $1.74 trillion that all state governments spent. 

Result: American taxpayers could have been spared more than $2 trillion in taxes and debt if federal and state governments had grown no faster than the rate of population growth plus inflation during the previous decade.  

There four states that held growth in state funds and all funds below the rate of population growth plus inflation over the last decade, thereby keeping taxes lower than the average taxpayer can afford:

• Alaska
• Colorado
• West Virginia
• Wyoming

There are seven states that held growth in state funds, but not all funds, below the rate of population growth plus inflation over the last decade, thereby keeping taxes for state funds lower than the average taxpayer can afford.  

• Connecticut
• Louisiana
• Massachusetts
• Montana
• North Carolina
• Oklahoma
• Texas

There is the one state that held growth in all funds, but not state funds, below the rate of population growth plus inflation over the last decade, thereby keeping taxes for all funds lower than the average taxpayer can afford.

• Mississippi

Go to ATR's Sustainable Budget Project to find out the following information:

• How government spending has changed in each state for all funds (including federal funds) and state funds (excluding federal funds) over the past decade,
• How the change compares to the rate of population growth plus inflation,
• What the dollar amount of the upcoming budget would need to stay below to be classified as a sustainable budget, and
• How each state compares with other states and other helpful fiscal and economic facts.

Originally posted at Americans for Tax Reform.

Click below to watch the episode and read on for show notes:

Taylor and I discuss:
1) The critical roles of accessible energy and technology for abundant living among Americans;
2) How Americans feel about “big tech” companies and AI according to recent polls anTaylor’s bio:

• Taylor Barkley is the Director of Technology and Innovation at the Center for Growth and Opportunity where he manages the research agenda, strategy, and represents the technology and innovation portfolio. His primary research and expertise are at the intersection of culture, technology, and innovation. His writing has been featured and published in outlets including IEEE Technology and Society Magazine, Scientific American and USA Today. Fox Business, Marketplace, and various talk radio and podcasts have featured him as a commentator on technology issues. He has extensive experience working with state-based technology policy projects and partners and most major federal technology policy topics.
  
• Previously he was the Director of Technology and Innovation at Stand Together Trust and Stand Together. He was also the Government Affairs Manager at the Competitive Enterprise Institute and the Assistant Director of Outreach for Technology Policy at the Mercatus Center at George Mason University. He is originally from southern California and a graduate of Taylor University in Indiana with a double major in history and political science. He and his family live in the Washington, DC area. For links to his professional and personal writing visit www.taylordbarkley.com.
  

You can watch this episode and others along with my Let People Prosper Show on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor. Please share, subscribe, like, and leave a 5-star rating!
For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, check out my website (www.vanceginn.com) and please subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.

​This commentary was originally published at EconLib here.

Americans say the economy is the most important problem facing the country. But major headlines covering the latest jobs report for August do their best to downplay this concern. The New York Times’ headline covering the news was, “August Jobs Report: U.S. Jobs Growth Forges On,” but the economic reality is far less cheerful. 

Sure, the jobs report beat the consensus estimate by economists. But that high-level look at the data fails to address underlying issues keenly felt by many Americans that are apparent with more scrutiny. And these problems won’t be over unless policies out of D.C. substantially and quickly improve.

Last month, 187,000 jobs were added, according to the payroll survey, compared with the anticipated 170,000. But the jobs added in the prior two months were revised lower by a cumulative 110,000 jobs, bringing the net jobs added in August to just 77,000. This extends an ongoing trend of downward revisions over the last several months.

According to the household survey, the unemployment rate, a weak indicator of the labor market’s strength, jumped substantially from 3.5% to 3.8%. Coupled with news of slow wage growth of just 0.2% last month, there is growing concern among Americans trying to make ends meet. 

We know the higher unemployment rate isn’t from too few jobs available. The number of job openings has been nearly double that of those unemployed for a long time, though decreasing quickly. Instead, the higher rate suggests a sluggish economy in which there are more unemployed or ghost job openings from companies that do not intend to hire but want to gauge interest and competition.   

There is some good news. The labor force increased by 736,000, which raised the participation rate to 62.8% in August. This is the highest rate since February 2020, just before the shutdowns in response to the COVID-19 pandemic. 

More people entering the labor force and higher participation rates appear promising. However, the increase in the labor force was a combination of 222,000 more people employed, with the other 514,000 people becoming unemployed. And diving deeper, 4.2 million more adults remain not in the labor force compared with February 2020. 

Many of these individuals have been unemployed for years, so obtaining employment could be difficult due to a lack of productivity signals in their resume on top of employers dealing with a stagnant economy.

The rise in the unemployment rate, lackluster wage growth, and the possibility of unfilled job openings all point to a weak labor market. Add in ongoing stagflation, as too-high inflation continues, and Americans are rightly concerned about the future. 

Some blame the Federal Reserve for this weakness because of its fight to bring down inflation after creating it. However, Milton Friedman debunked this tradeoff between lower inflation and a higher unemployment rate decades ago. Specifically, there’s no long-run tradeoff between the two, so the Fed must focus on the single mandate of price stability instead. 

The Fed has been working to combat inflation by hiking its interest rate target to a multi-decade high of 5.5% and slowly reducing its bloated balance sheet. This is why you’ve seen car loan and mortgage rates soar to multi-decade highs. These higher rates significantly disrupt the new car and housing markets. 

But this is the resulting bust after the artificial post-pandemic “boom” as new money moves throughout the economy and manipulated interest rates create malinvestments. We felt the higher inflation rate last year from the Fed’s actions of close to 9%, and now it’s about one-third of that rate, but this remains about 50% higher than its 2% flexible average inflation target.

The Fed has stated that it may raise interest rates further. And I believe that it will be forced to raise its target rate to about 6% before this hiking cycle is over. But just raising this rate won’t be enough to curb inflation for long if Congress’ deficit spending remains unchecked. This will force the Fed to monetize it to avoid putting more pressure on Congress to get their irresponsible fiscal house in order.

President Biden and Democrats in Congress made this situation worse with the passage of the misnamed Inflation Reduction Act, which is likely to cost about four times the initial $300 billion estimate over a decade. Their wasteful spending, along with Republicans’ excessive spending before them, has led to a fiscal crisis, the most significant national threat. 

Congress will unlikely make the needed reforms to the primary drivers of the deficit of mandatory spending programs like Social Security and Medicare because of rent-seeking in politics. This will likely result in the Fed not sufficiently cutting its balance sheet to stop inflation. Rather, the Fed will probably choose to increase its balance sheet, putting more inflationary pressure on the economy when that’s the last thing it needs.

A vital measure of the economy known as real gross domestic output, the real average of gross domestic product and gross domestic income, has declined in three of the last six quarters. While I don’t want there to be a hard landing, this is the situation that central planners by Congress spending and taxing too much, President Biden regulating too much, and the Fed printing too much have left us. 

There will be efforts by the government to correct these government failures, but we shouldn’t double down on past mistakes. Let’s learn from these failures and remember the most recent lesson in the 1980s: President Reagan cutting regulations, Congress passing tax cuts (but spending too much), and Fed Chairman Paul Volcker cutting the balance sheet. 

Initially, the cuts to the Fed’s balance sheet contributed to soaring double-digit interest rates, and the economy suffered a double-dip recession. However, afterward, the economy was able to heal from the prior hindrances of past presidents, congressional members, and the Fed, resulting in a long period of economic prosperity, which is often called the Great Moderation.  

What we have today is an economy where the government is growing, and markets aren’t as much. This must be reversed. When workers, entrepreneurs, and employers are free to engage in voluntary transactions, competition thrives, innovation flourishes, and resources are allocated efficiently.

Moreover, free markets promote consumer choice and personal freedom. When government interventions, such as wasteful spending, excessive regulations, and high taxes, are removed, markets can function more efficiently and respond dynamically to changing economic conditions.

Striking the right balance between constitutionally limited government functions and preserving the freedom of markets is crucial for achieving a vibrant and prosperous economy.

Rising unemployment, stagnant wages, and the specter of inflation require a multifaceted approach. Raising interest rates hasn’t been enough. The government must focus on responsible fiscal and monetary policies, including reducing government spending, addressing burdensome regulations and taxes, and substantially cutting the Fed’s balance sheet. 

​Americans are still suffering, and there is no time to waste in aggressively assessing these measures that cause economic strain so that people can get back to flourishing instead of merely “making it.”