​As we turn the page on another year, the questions facing the economy aren’t abstract—they’re deeply personal. 

Families are watching prices, businesses are weighing risk, and policymakers are deciding whether the year ahead will bring stability or more uncertainty. The choices made in the months ahead will shape not just headlines, but real lives and livelihoods.

In this episode of This Week’s Economy, I look ahead to 2026 and lay out the policy battles most likely to define the year. From trade and inflation to artificial intelligence, these decisions will determine whether we move toward prosperity or remain stuck in cycles of dysfunction. I urge leaders to return to the basic economic principles that work—and to choose policies that let people prosper in the year ahead.

Find the show notes at vanceginn.substack.com or visit my website vanceginn.com.

Originally published on Substack. 

If the economy feels harder to navigate—even after tax cuts, deregulation, and promises of growth—there’s a reason. I’ve seen it before, up close, from inside the White House.
​
This isn’t hindsight punditry. I lived it. Not sure how or why it happened, but God.

I served at the Office of Management and Budget from June 2019 through May 2020, at the pleasure of President Donald Trump as a political appointee as associate director for economic policy (“chief economist”).

I worked on what became the president’s final budget, which included $4.6 trillion in proposed savings over a decade—documented in the OMB Budget Historical Tables and scored against Congressional Budget Office baselines.
And even that wasn’t enough.

I’m writing this now because the second Trump administration reflects a deeper shift—away from pro-growth reform and toward national conservatism using progressive tools. If this continues, it will make life harder for millions of Americans, regardless of intent.

My goal here isn’t to attack; it’s to share lessons learned, warn about concerns, and offer a better path forward.

​What I Supported—and What I Warned About

Inside the administration, I strongly supported policies that genuinely helped people prosper:

• Tax relief and marginal rate reductions, especially the 2017 Tax Cuts and Jobs Act, which improved incentives for work, saving, and investment
• Deregulation, particularly in energy, finance, and labor markets, with compliance-cost reductions
• Pro-growth reforms that trusted people and markets—not Washington—to allocate resources

But I consistently raised concerns—internally—about three areas:

• Trade protectionism, which I warned would raise relative prices and distort supply chains—later confirmed by research
• Immigration restrictions, which reduce labor supply and long-run growth, as documented later
• Overspending, which I argued would eventually overwhelm much of the benefits of tax cuts and deregulation, which it did

At OMB, many of us pushed hard for spending restraint. The uncomfortable truth is that spending discipline was not a top priority for the president or many agency heads. Not then. And judging by today’s policies, definitely not now.

Internally, the warning was clear—and it bears repeating today: excessive spending and trade protectionism would undo the gains from tax cuts and deregulation.

When COVID Hit, Government Power Took Over

When COVID escalated in early 2020, I was often working with our senior leadership team at OMB and other executive personnel to devise ways to get government out of the way, not expand it—through regulatory relief, waivers, and flexibility consistent with OMB emergency guidance.

I also sat—more than once—in the White House’s Situation Room with economic teams to discuss how people (the economy) would respond to different policy paths.

I was vehemently opposed to lockdowns.

I warned senior leadership and others intensely that the policies being pushed by Dr. Anthony Fauci and others would:

• Break market coordination (supported by analyses on mobility restrictions and economic activity)
• Destroy small businesses (shown in data)
• Centralize power (massive expansion in spending by Congress and Fed)
• Cause long-run damage far worse than acknowledged (education loss, lockdown-related deaths, etc.)

Ultimately, whether President Trump agreed or not, he went along with lockdowns. That decision became one of the largest government failures in modern history—economically, socially, and institutionally.

Lockdowns didn’t just pause the economy. They rewired the relationship between government and markets, normalizing trillions in new spending, debt monetization by the Federal Reserve, and executive control over daily life.
Nearly every affordability crisis we face today traces back to then.

Why I’m More Concerned Today

Back then, there were still people inside the administration pushing back—arguing for restraint, markets, and limits on government power.

Today, I’m not sure that’s true.
​
It increasingly looks like national conservatives (“natcons”) have captured the MAGA policy agenda and are comfortable with:

• Government picking winners and losers through subsidies and mandates
• Price controls and caps on interest rates for credit cards
• Protectionism as an erratic policy with high tariff rates

• Industrial policy and subsidies for purchase of a share of Intel, use of $200 billion to purchase mortgage backed securities, Trump accounts, Trump RX, and more
• Carveouts and exemptions instead of pro-growth tax policy

That’s not conservatism.

It’s not libertarianism.

And it’s not free-market capitalism.
​
Functionally, it’s progressivism with different branding—and it erodes the institutional framework that made American prosperity possible.

Spending is the Problem: Economic Chain Reaction Too Few People See

Here are the steps for how spending seems benign but it is a malignant cancer metastasizing throughout our lives and livelihoods:

1. Overspending leads to deficits.
2. Deficits add to debt.
3. Debt pushes interest rates higher.
4. Higher rates attract foreign capital, strengthening the dollar.
5. A stronger dollar widens trade deficits (not an issue but some hate it), which politicians then “fix” with tariffs.
6. Higher rates pressure the Fed to buy Treasury debt.
7. Debt monetization fuels inflation, distorting the orders of production while reducing real wages and increasing inequality and poverty.

​This isn’t ideology. It’s arithmetic. And it’s happening now.

What Should Be Done Instead

The hopeful part is that none of this is irreversible.
​
That’s why my work has focused on sustainable budgeting with groups like Americans for Tax Reform, the Club for Growth Foundation, and others. You can see that framework here:

• Let Americans Prosper Project: Ensuring Fiscal Sustainability for America’s Future
• Responsible State Budgets Across the U.S.

States that limit spending growth to population growth plus inflation often run surpluses, cut taxes sustainably, and avoid debt spirals.

Washington should finally learn from them.
​
A real pro-growth agenda would:

• Spend less—now, not later (yes, cutting government spend is pro-growth!)
• End trade protectionism (end tariffs and have the focus on what we can control regarding policies at home instead of trying to change policies abroad)
• Reject price controls (say no to credit card interest rate caps, no to MFN drug pricing, and more)
• Stop picking winners and losers (don’t take shares of private businesses, don’t give $1,000 of taxpayer money to parents with newborns, don’t remove specific things like tips, overtime SS income, interest on car loans from the tax code but instead lower and flatten the income tax rates)

• Unleash supply in housing, energy, healthcare, and capital markets (end Dodd-Frank , CFPB and Section 1033 rule, empower patients, and remove incentives in demand and supply side of housing and other markets)
• Let people in markets work!

A Final, Personal Note—and a Small Ask

I’m not writing this to relitigate the past—or to score political points.

I’m writing it because I’ve seen how quickly good intentions turn into bad outcomes when government power replaces market institutions. I’ve also seen how powerful growth can be when policymakers trust people, markets, and sound rules.

The Trump administration has governed for growth before. It can do so again. But only if it rejects progressive tools—no matter how they’re labeled—and recommits to the institutions that allow people to prosper.
​
As Milton Friedman reminded us, policies should be judged by results, not intentions.

Originally published on Substack. 

​​If you want a clear snapshot of what’s contributing to Texas’ affordability crisis, look no further than property tax bills.

A recent Houston Chronicle article by EricaGrieder highlighted just how punishing these taxes have become in fast-growing suburbs of Houston.

​Cities like Conroe, Pearland, and The Woodlands now rank among the highest in property-tax burdens in the nation when measured as a share of household income.

In Conroe, homeowners pay a median property tax bill of nearly $5,900 on a median household income just over $114,000—5.2% of income. Pearland isn’t far behind near 5%. Even high-income areas like The Woodlands face bills approaching $9,000 a year.

This isn’t just a Texas problem, but it is becoming a Texas test. And the verdict is clear: property taxes are harsh, unworkable, and incompatible with prosperity.

Why Property Taxes Are So Harmful
​
Property taxes don’t rise automatically because “the market” failed. They rise because local governments choose to spend more, then set the tax rate to collect more taxes that cover spending.

Local taxing entities—school districts, cities, counties, and special districts—set tax rates every year. Those rates are applied to the county’s appraised values that tend to rise quickly over time, especially in growing communities. Even when officials claim they’ve “lowered the tax rate,” it is often not enough to offset higher appraisals when spending continues to grow.

In other words, appraisals help set the base—but spending decisions determine the bill and the tax rate to get there.

That’s why property taxes are uniquely destructive. All taxes are destructive but some more than others. Families can budget for purchases and sales taxes. They can plan their work or leisure around income taxes. But property tax payments are due regardless of income, job loss, or retirement—driven by government budgets, not household choice.

Data from SmartAsset confirm this reality nationwide.

Their 2025 study shows Texas ranks among the states with the highest effective property-tax burdens, a point echoed by the Tax Foundation.

This tax system punishes homeownership. It turns ownership into something closer to renting from the government.

The Moral Case Against Property Taxes

There’s also a deeper issue here—one that often gets ignored.

Property taxes violate the basic principle of property rights.

If you must keep paying the government simply to remain in your home, then you don’t truly own it. And for seniors on fixed incomes, young families stretching to buy their first home, or small businesses operating on thin margins, that’s not just inefficient—it’s unjust.

These taxes are fueling the affordability crisis created by years of bad policy: excessive spending, loose fiscal rules, and governments that grow faster than the taxpayers’ ability to pay for it.

Families didn’t create this problem. Government did.

A Responsible Path to Elimination

The good news is that eliminating property taxes can be done responsibly—without gimmicks, carve-outs, or distortions like ever-larger homestead exemptions, flawed appraisal caps, or arbitrary age freezes, which have been thrown around by key leaders in Texas.

The most realistic path forward currently is likely a surplus buydown strategy, paired with strict spending limits, which Gov. Abbott rightfully made a local spending limit the number one item in his property tax plan.

Here’s how it works:

• At the state level, use budget surpluses—generated by economic growth, not tax hikes—above a strict spending limit to permanently compress (“buy down”) tax rates and eliminate school district M&O property taxes, starting immediately and continuing until they reach zero.
• At the local level, cities, counties, and special purpose districts should adopt the same approach simultaneously, using surpluses above the state’s population growth plus inflation to eliminate their property taxes over time. In places that can’t, they should consider refining in spending to reduce property taxes, join a compact with nearby localities for services and funds, and consider ways for more growth in a sales tax base to eliminate them.
• Rollback rates must become true no-new-revenue rates, and exceeding them should require a supermajority vote of voters, not politicians, on a uniform election date.

The key is discipline. None of this works without strict limits on spending growth, ideally capped below population growth plus inflation. Spending is the ultimate driver of property taxes—and the ultimate burden of government.

What About Other Options?

There is a faster, more comprehensive option: redesigning the tax system by broadening the sales-tax base without a VAT while keeping the state-local sales tax rate competitive, potentially eliminating property taxes much sooner than the surplus buy-down approach. The state’s sales tax rate would just cover the school district property taxes and local governments’ sales tax rates would cover their property taxes where possible.

My research finds that we could be at a state-local sales tax rate of at most 8.75% with a broader sales tax base from 8.25% today to eliminate school district M&O property taxes.

Any additional sales tax revenue collected by local governments at their lower rates from the broader sales tax base and dynamic growth must go to reducing their property taxes through tax rate cuts.

This allows lower local property taxes, then local governments can use the surplus buydown approach to eliminate the rest, where possible.

Done correctly, dynamic growth effects and spending restraint should lower the overall tax burden and deliver immediate property ownership to all Texans.

In my view, this redesign approach is stronger.

But politically, the surplus buydown seems the most viable path today—and importantly, it still moves us in the right direction.

Either way, the non-negotiable principle remains the same: less spending, not higher taxes.

States like Florida are beginning to explore similar pro-growth approaches, recognizing that affordability and competitiveness depend on limiting government’s footprint—not expanding it.

The Bottom Line

Property taxes are not a law of nature. They are a policy choice.

Texas can lead by choosing a better path—one that respects ownership, restores affordability, and lets families keep more of what they earn.

Eliminating property taxes won’t solve every problem overnight, but it would remove one of the biggest obstacles standing between Texans and prosperity.

The question isn’t whether we can afford to do this.

It’s whether we can afford not to.

Originally posted at The Daily Economy. 

​For much of the last half-century, California benefited from a powerful first-mover advantage. Dense networks of talent, capital, and research institutions allowed the state to absorb policy mistakes that would have crippled competitors. High spending and taxes, restrictive housing rules, and regulatory complexity were treated as nuisances rather than binding constraints, because growth could outstrip their costs.

That margin of error has narrowed dramatically.

What California is now experiencing is not a cyclical tech downturn or a post-pandemic anomaly. It is a measurable, policy-driven decline in relative competitiveness. The most important evidence is not that tech employment has fallen in absolute terms, but that California’s share of national tech employment has been shrinking, while other states gain ground.

Markets are responding to incentives exactly as economic theory predicts.

Employment Share, Not Headlines, Tells the Story

According to Bureau of Labor Statistics Current Employment Statistics data, California’s technology employment growth has underperformed national trends for several years, including during periods when tech hiring stabilized or rebounded elsewhere, and recently has been declining. California’s share of US tech jobs is falling from roughly 19 percent pre-2020 to closer to 16 percent in recent years, a nontrivial shift for an industry this large.

This is a classic example of relative decline. California still employs more tech workers than any other state, but it is no longer where the marginal job is being created.

Commercial real estate data corroborate the employment figures. Office vacancy rates across Silicon Valley remain elevated well beyond what remote work alone would explain. Bay Area office markets have not recovered in the way peer regions have. Persistent vacancies signal not just a shift to hybrid work, but geographic reallocation of firms and labor.

Migration as a Labor Market Signal

Labor mobility reinforces the same conclusion. US Census state-to-state migration data show continued net domestic outmigration from California, particularly among working-age adults. While international immigration partially offsets population losses, domestic migration is more relevant for employer location decisions, especially in high-skill sectors.

Economic theory predicts that firms follow labor when relocation costs are low and regulatory frictions are high. California now faces both: high regulatory frictions at home and increasingly credible substitutes elsewhere.

Founding Versus Scaling: A Crucial Distinction

California still dominates early-stage venture capital totals, as shown in venture investment data. This is often cited as evidence that concerns about the state’s competitiveness are overstated. That interpretation conflates firm formation with firm expansion.

Founding activity reflects legacy advantages such as universities, networks, and capital concentration. Scaling decisions reflect marginal costs. Increasingly, firms are choosing to incorporate or raise seed funding in California while expanding headcount in lower-cost, lower-regulation states.

From an economic standpoint, this is predictable. Scaling in California exposes firms to the nation’s highest marginal income tax rates, comparatively punitive capital gains taxation, rigid labor mandates, slow permitting processes, and volatile regulatory expectations. These costs rise nonlinearly as firms grow.

AI Regulation as a Binding Constraint

Artificial intelligence policy may become the clearest illustration of California’s regulatory overreach.

A recent CalMatters analysis documents how California lawmakers have pursued some of the most expansive state-level AI regulations in the country. These proposals extend liability, mandate preemptive risk assessments, and impose compliance obligations before alleged harms are empirically demonstrated or even defined.

From an economic perspective, this approach treats innovation as a presumptive externality rather than a productivity-enhancing input.

AI is widely understood as a general-purpose technology. Research shows that such technologies generate broad, economy-wide productivity gains, not sector-specific benefits. Overregulating AI therefore depresses expected returns not only in software, but across healthcare, logistics, manufacturing, finance, and education.

California’s AI regulatory framework has drawn federal scrutiny, which is instructive. As noted in CalMatters, state-level AI mandates were referenced in Trump’s recent presidential executive order, citing concerns over fragmented and inconsistent state regulation. Regardless of political framing, the economic concern is straightforward: regulatory fragmentation raises fixed costs and discourages upscaling.

Regulation, Market Structure, and Incumbency

California’s regulatory posture also has implications for market structure. Extensive empirical literature shows that high fixed compliance costs reduce entry and increase concentration. The OECD’s work on regulation and competition consistently finds that heavier regulatory burdens favor large incumbents at the expense of startups and challengers.

This dynamic undermines the very competition that drives innovation. Europe’s experience with digital (over)regulation offers a cautionary parallel, acknowledged even in European Commission competitiveness reports. California risks reproducing that outcome domestically, exporting innovation to other states rather than other continents.

Costs Complete the Incentive Structure

AI regulation is best understood as the marginal constraint layered atop an already expensive environment. California has the highest top marginal income tax rate in the United States, and taxes capital gains as income. Housing scarcity, documented extensively by UC Berkeley’s Terner Center, raises labor costs without increasing real purchasing power. Energy prices remain among the nation’s highest, as shown by EIA electricity price data.

In combination, these policies alter the expected return on investment at the margin. States like Texas and Florida offer credible alternatives: no personal income tax, faster permitting, lower housing costs, and a lighter regulatory touch. 
Firms do not need ideological motivation to relocate. The incentive structure does the work.

Opportunity Costs and Distributional Effects

The economic cost of tech job relocation extends beyond headline employment figures. When tech employment relocates, these spillovers disappear as well. The distributional consequences are regressive. High-skill workers are mobile. Lower-income workers tied to local economies are much less so. Policies that suppress growth (even under the banner of equity) often hurt the poor most.

A Predictable Outcome

Unless California changes course, the trajectory is clear. AI firms will incorporate elsewhere. Venture capital will follow labor. Scaling will increasingly occur in states that treat innovation as an asset rather than a liability.

California will remain an important source of ideas. It will be a diminishing source of jobs. Markets are not ideological. They respond to incentives. On that front, the verdict is already in.