Last week, the Texas Association of Business, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, U.S. Chamber of Commerce, and American Bankers Association sued to block the Consumer Financial Protection Bureau’s (CFPB) final rule to lower the credit card late fees cap to $8.
 
This lawsuit challenges the Biden Administration's terrible price control idea that would hurt Texans. Given the entities that sued to block this rule and the effect on Texans, the case should continue in Texas instead of moving it elsewhere as the CFPB would like.
 
Credit card late fees, what some call “junk fees,” are the cost of someone paying their bill late. Nothing is free, so there’s a charge for paying late, as it also influences the expected cash flow of credit card companies. It’s not a price gouging scheme; it’s simply a way to take the risk of giving credit to those in need while keeping cash flow for profitability.
 
This is not only important for businesses, but it also provides an incentive for people to pay their bill online. Without a market-based credit card fee, the cost will be on those who need credit the most as they won’t be able to get it or pay much higher interest rates.  
 
The Wall Street Journal Editorial Board wrote: “Even the CFPB acknowledges, the lower penalty may cause more borrowers to pay late, and as a result incur higher ‘interest charges, penalty rates, credit reporting, and the loss of a grace period.”
 
Many Texans depend on credit card access to pay their living expenses. There are more than 3 lines of credit per user in Texas. More than 3 million small businesses also rely on access to credit to grow and expand. Some card issuers most impacted by this rule, including Citi, Chase, and Synchrony, have extensive operations in Texas.
 
JCPenney, based in Plano, offers one of the country's most popular co-branded credit cards through its partnership with Synchrony. The retailer, which employs more than 2,000 Texans, is just a few years removed from bankruptcy and stands to lose big if this misguided rule is allowed to stand. Reports indicate late fees account for 14 to 30 percent of department store credit card revenue.
 
Given the current state of credit card delinquencies at a 10-year high, the CFPB’s rule would exacerbate an already dire situation. This would have far-reaching effects on our community and economy, particularly as consumers and small businesses increasingly rely on credit to navigate lower inflation-adjusted average weekly earnings by 4.2% since January 2021.
 
Most of the plaintiffs in this lawsuit are local organizations that recognize the importance of defending and preserving access to credit. Texas is the rightful venue for this battle. 

Originally published at Washington Times. 

In President Biden‘s recent State of the Union address, he painted a rosy economic picture, touting what he called “Bidenomics” as the driving force behind what he claims is a robust economy. He pointed to a low unemployment rate, the absence of a recession, and a lower inflation rate as evidence of success.

Reality, however, tells a different story. And Mr. Biden’s recently released irresponsible budget sends the federal government and America further toward bankruptcy.

Despite the president’s assertions, the economy and inflation remain top concerns for most Americans. The disconnect between the headlines and the lives of ordinary citizens underscores the profound challenges facing the nation’s economic landscape.

This sense of malaise can be directly attributed to the flawed principles underlying Bidenomics, as outlined in his latest budget.

These include excessive spending, taxation and regulation. Each is destructive, but together, they are catastrophic. The result has been stagflation and less household employment in four of the last five months. There have also been lower inflation-adjusted average weekly earnings by 4.2% since January 2021, when Mr. Biden took office.

Rather than fostering economic growth and prosperity, Bidenomics has stifled innovation, investment and job creation.

At its core, Bidenomics represents a misguided attempt to address complex economic issues through heavy-handed government intervention. While the administration may tout short-term gains, the long-term consequences of such policies are far-reaching and unaffordable.

The reality is that excessive government spending has led to unsustainable levels of debt, burdening future generations with the consequences of fiscal irresponsibility. Similarly, excessive taxation is stifling entrepreneurship and dampening economic activity, limiting opportunities for individuals and businesses alike. Excessive regulation serves only to hamper innovation and drive up costs, exacerbating the challenges facing working families.

Unfortunately, Mr. Biden’s latest budget proposal doubles down on these bad policies. Even with rosy assumptions of tax collections being a higher share of economic output over time as the tax hikes will reduce growth and, therefore, lower taxes as a share of gross domestic product, the budget continues massive deficits every year. This will result in higher interest rates, higher inflation, more investment

​These results have been highlighted in economic theory by economists such as Alberto Alesina and John B. Taylor. Their research has found that raising taxes doesn’t help close budget deficits because of the reduction in growth from higher taxes in a dynamic economy. The way forward should be cutting or at least better-limiting government spending — the ultimate burden of government on taxpayers.

Amid these challenges, America also needs a return to optimism and flourishing.

This includes leadership that inspires confidence, fosters innovation, and empowers people to pursue their dreams. We need out-of-the-box policies prioritizing economic freedom and individual opportunity, allowing the entrepreneurial spirit to thrive and driving growth and prosperity.

More specifically, this means reducing the burden of government intervention through lower spending and taxes, streamlining regulations, and fostering an environment where entrepreneurship can thrive. By embracing fiscal sustainability and making tough choices, we can ensure the long-term stability and prosperity of our nation.

In short, while Mr. Biden tries to spin a positive narrative about the economy, the facts speak for themselves. We cannot afford Bidenomics, no matter the headlines, what was touted in the State of the Union address, or the latest budget.

The stakes are too high, and the consequences too grave, to ignore the reality of our economic situation. We need leadership that is willing to confront the hard truths and enact policies that prioritize the well-being of all Americans, fostering an environment where optimism and flourishing can thrive.

Originally published at James Madison Institute.

​America’s Antitrust laws have been essential to the legal landscape for over a century. They were designed to protect competition and consumer welfare. However, the Biden administration’s onslaught on competition through flawed antitrust efforts has threatened consumer welfare and profitability. This is especially true for “Big Tech” companies that generate substantial consumer welfare and billions of dollars in economic activity. 

While these efforts are purportedly aimed at safeguarding the interests of consumers, they pose a major threat to free-market capitalism and, thereby, the nation’s prosperity. Understanding the origins of antitrust laws illuminates why current antitrust accusations are far from their original purpose. 

Antitrust laws trace back to the Sherman Anti-Trust Act’s enactment in 1890. The landmark legislation was aimed to curb anticompetitive practices. Section 1 prohibits contracts in restraint of trade, regardless of the size of the firms participating. Section 2 prohibits monopolization or the abuse of monopoly power by firms with substantial market shares. Further reinforcement came with the Clayton Act in 1914, which focused on preventing mergers that could substantially lessen competition or tend to create a monopoly.

However, applying antitrust laws lacked consistency and often yielded ambiguous results, especially during the mid-20th century. 

Fast forward to the 1970s, legal scholars proposed a paradigm shift. Figures like Aaron Director, Robert Bork, and others delved into the legislative history of the Sherman Act, concluding that its primary purpose was to protect consumers from the harm caused by cartels without undermining economic efficiency.

This approach laid the foundation for what we now call the consumer welfare standard, a critical development in antitrust enforcement. 

In the late 1970s, the U.S. Supreme Court recognized this standard in several cases, asserting that business conduct raising antitrust concerns must be evaluated based on demonstrable economic effects. This standard has since guided antitrust law, emphasizing a simple question: does the conduct make consumers better or worse off? If the conduct improves or does not harm consumers, the conduct is allowed; otherwise, the government can intervene. 

The consumer welfare standard is a seemingly straightforward approach that has been a guiding light to antitrust cases. But it has failed to hold those currently at the Federal Trade Commission (FTC) and Department of Justice accountable for their excessive efforts.

In recent years, calls to wield antitrust laws to address the conduct of prominent technology companies like Amazon and Google, which some pejoratively call “Big Tech,” have gained momentum. However, these movements are misguided and pose significant risks to the principles of free-market capitalism. 

Expanding the enforcement powers of antitrust agencies, as advocated by some on the left and right, revives an old “big is bad” approach reminiscent of a bygone era when antitrust enforcement was highly politicized. Instead of fostering competition, such a progressive approach undermines the competitive market process. This destroys the instrumental activity that provides innovation, affordable prices, and high-quality goods and services, all critical for human flourishing.

This lawsuit purports to challenge Amazon’s management of its online marketplace, alleging that sellers are forced to charge high prices and lose profit by using Amazon’s add-on services and advertisements. The FTC contends that these choices are obligatory and accuses Amazon of operating as a monopoly, leading to higher prices for lower-quality products.

Numerous surveys and studies reveal that consumers are pleased with Amazon’s services, so this attack against the consumer welfare standard does not appear to be about what is best for customers despite the claims of progressive antitrust enforcers. Moreover, consumers have the agency to take their dollars elsewhere, as Amazon is hardly the only online seller. 

The principles that drive capitalism are rooted in competition; when competition is stifled, consumers and entrepreneurs lose.

Another example of abusing antitrust is the Department of Justice’s (DOJ) lawsuit against Google. 

The suit contends that Google has dominated the market as the default browser on popular devices through monopolistic means and must be stopped. However, Google is the default browser via legal marketing tactics, which the consumer can easily change, as numerous search engine options can be implemented on any device. 

Therefore, the case fails to meet the standard of a solid antitrust law violation of making consumers worse off. Consumers still have many options when selecting a default browser, but most choose Google because they like it best. 

This lawsuit is emblematic of a broader issue – applying antitrust laws to preserve competition. Antitrust laws should protect consumers by evaluating whether they are better or worse off due to a company’s actions. It should not be a mechanism to stifle competition to level the playing field. Enforcing such laws without considering the diverse preferences of consumers is a disservice to the very principles on which capitalism–and antitrust laws–were founded.

If we’re going to have antitrust laws rather than just letting market forces work, the consumer welfare standard is an essential framework for evaluating antitrust cases. 

It ensures that the focus remains on improving people’s lives rather than manipulating the market based on antitrust enforcers’ interests or political persuasions. This standard can help keep regulators from blocking innovation and economic growth by limiting their ability to pick winners and losers.

While concerns about the size of large tech companies and their censorship practices may be warranted, granting more power and discretion to government bureaucrats is not the solution. Expanding antitrust laws and enforcement powers will lead to politicized enforcement, often aimed at serving the interests of big government, with a disregard for the effects on consumers and the broader economy. 

Such a big-government approach would curtail entrepreneurship, freedom of speech, job creation, investment, and economic prosperity.

Proposals to create new antitrust laws are unlikely to address concerns related to censorship and bias in tech companies. Instead, they will usher in uncertainty as legal standards evolve, causing companies to settle such cases to avoid costly legal battles. Such settlements may not necessarily benefit consumers or the economy and will drive up entry costs, creating a high barrier for startups.

At a time of elevated inflation, the labor market faces challenges, and the economy is in turmoil. Pursuing lawsuits against successful companies diverts resources from critical issues and misuses taxpayer money.

The time is now to refocus on what genuinely matters, acknowledge the limitations of government intervention in regulating markets, and allow the principles of free-market capitalism to flourish. This approach should recognize that dispersed, decentralized information through people in markets is much better than through central planning. 

Free-market capitalism is not the enemy but the best path to prosperity and freedom. We would be wise to have more of it, not destruction by the radical Biden administration.

Originally published at American Institute for Economic Research.​

Recent headlines for the January jobs report indicate a robust economy. But a more thorough look reveals challenges for Americans.

One recent headline proclaimed “Voters are finally noticing that Bidenomics is working.” But just 30 percent of Americans think the economy is doing well. When asked who would handle the economy better, people give former president Donald Trump a 22-point advantage over President Biden.

Challenges include increasing part-time employment in recent months, declining household employment in three of the last four months for a net decline of 398,000 job holders, mounting public debt burdens, and declining real wages, which have fallen by 4.4 percent since January 2021. 

Why these results? Bidenomics is based on costly Keynesian boom-and-bust policies. With so much whiplash, it’s no wonder people are conflicted about the economy.

In the latest jobs report for January, a net increase of 353,000 nonfarm jobs from the establishment survey appears robust, as it was well above the consensus estimate of 185,000 new jobs. But let’s dig deeper. 

Last month, household employment declined by 31,000, contradicting the headlines. The divergence of jobs added between the household survey and the establishment survey has widened since March 2022. This period coincides with declining real gross domestic product in the first and second quarters of 2022 (usually that’s deemed a recession, but it hasn’t been yet). Indexing these two employment levels to 100 in January 2021, they were essentially the same until March 2022, but nonfarm employment was 2.5 percent higher in January 2024.

While this divergence mystifies some, a primary reason is how the surveys are conducted. 

The establishment survey reports the answers from businesses and the household survey from individual citizens. The establishment survey often counts the same person working in multiple jobs, while the household survey counts each person employed. This likely explains much of the divergence, as many people work multiple jobs to make ends meet. The surge in part-time employment and more discouraged workers underscores the fragility of the labor market.

Though average weekly earnings increased by 3 percent in January over a year prior, this is below inflation of 3.1 percent. Real average weekly earnings had increased for seven months before falling last month. And there had been declines in year-over-year average weekly earnings for 24 of the prior 25 months before June 2023. These real wages are down 4.4 percent since Biden took office in January 2021.

As purchasing power declines, mounting debts become more urgent. 

Total US household debt has reached unprecedented levels, with credit card debt soaring by 14.5 percent over the last year to a staggering $1.13 trillion in the fourth quarter of 2023. Such substantial growth in debt raises concerns about the current (unsustainable?) consumption trends, business investment, and a looming financial crisis.

The surge in mortgage rates to over seven percent for the first time since December and rising home prices exacerbate housing affordability challenges, particularly for aspiring homeowners. An integral component of what some consider the “American Dream,” housing affordability is a major factor discouraging Americans. 

The euphoria surrounding the January 2024 jobs report is misplaced. Policymakers should heed these warning signs and enact meaningful reforms to address root causes. 

Biden’s policy approach undergirds most of these difficulties. Bidenomics focuses on his Build Back Better agenda that picks winners and losers by redistributing taxpayer money for supposed economic gains through large deficit spending. 

We haven’t seen an agenda of this magnitude since LBJ’s Great Society in the 1960s or possibly since FDR’s New Deal in the 1930s. Both were damaging, as the Great Society dramatically expanded the size and scope of government, contributing to the Great Inflation in the 1970s, and the New Deal contributed to a longer and harsher Great Depression.

Just since January 2021, Congress passed the following major spending bills upon request of the Biden administration: 

• $2 trillion American Rescue Plan Act in March 2021
• $1 trillion Infrastructure Investment and Jobs Act in November 2021
• $280 billion CHIPS and Science Act in August 2022
• $1 trillion Inflation Reduction Act in August 2022

​These four bills will add nearly $4.3 trillion to the national debt. But at least another $2.5 trillion will be added to the national debt for student loan forgiveness schemes, SNAP expansions, net interest increases, Ukraine funding, PACT Act, and more. In total over the past three years, excessive spending will lead to more than $7 trillion added to the national debt, which now totals $34 trillion — a 21 percent increase since 2021. There seems to be no end to soaring debt with the recent discussions of more taxpayer money to Ukraine, Israel, the border, and the “bipartisan tax deal,” collectively adding at least another $700 billion to the debt over a decade.

Record debts accrued by households and by the federal government (paid by households) are not signs of a robust economy. This will likely worsen before it improves, as household savings dry up. And with interest rates likely to stay higher for longer because of persistent inflation, debts will crowd out household finances and the federal budget.

The Federal Reserve has monetized much of this increased national debt over the last few years by ballooning its balance sheet from $4 trillion to $9 trillion and back down to a still-bloated $7.6 trillion. This helps explain persistent inflation, massive misallocation of resources, and costly malinvestments across the economy, keeping the economy afloat yet fragile. 

Excessive deficit spending weighs heavily on future generations, saddling them with unsustainable debt levels they have no voice in. Today, everyone owes about $100,000, and taxpayers owe $165,000, toward the national debt. Of course, these amounts don’t include the hundreds of trillions of dollars in unfunded liabilities for the quickly-going-bankrupt welfare programs of Social Security and Medicare. 

Future generations will be on the hook for even more national debt if Bidenomics continues and Congress doesn’t reduce government spending now. This is why the national debt is the biggest national crisis for America. We’re robbing current and future generations of their hopes and dreams.

Fortunately, there’s a better path forward if politicians have the willpower. This path should be chosen before we reap the major costs of a bigger crisis. I’ve recently outlined what this should look like at AIER. 

In short, we need a fiscal rule of a spending limit covering the entire budget based on a maximum rate of population growth plus inflation. There should also be a monetary rule that ideally reduces and caps the Fed’s current balance sheet to at least where it was before the lockdowns. My work with Americans for Tax Reform shows that had the federal government used this spending limit over the last 20 years, the debt would have increased by just $700 billion instead of the actual $20.2 trillion. That’s much more manageable and would point us in a more sustainable fiscal and monetary direction. 

Together, fiscal and monetary rules that rein in government will help reduce the roles that politicians and bureaucrats have in our lives so we can achieve our unique American dreams. If not, we will have wasted many dreams on Bidenomics that can make things look good on the surface, but cause rot underneath.

Originally published at Daily Caller. ​

Soaring health care spending continues to spiral up, tightening the financial noose on households and government coffers. Families are forced to make difficult choices between paying for essential medical care and meeting basic needs while the federal government struggles to rein in spending amid mounting debt.

These soaring health care costs must be addressed with market-based approaches before it’s too late.


When the Affordable Care Act (ACA) was passed in 2010, it was heralded as the panacea for reining in healthcare costs. However, the law’s complex regulations and mandates have contributed to administrative bloat and increased overhead costs, ultimately driving up premiums and out-of-pocket patient expenses.

Unfortunately, since then, subsequent politicians have failed to correct course. In 2024, federal spending on Medicare, Medicaid, and ACA subsidies will likely exceed the discretionary budget, posing a significant threat to long-term fiscal sustainability.

Compulsory spending on health coverage in the private sector infringes upon household earnings. This exacerbates economic challenges for families whose purchasing power is already reduced, as inflation-adjusted average weekly earnings are down 3.1 percent since Jan. 2021. 


Moreover, the growing burden of health care spending poses a significant threat to long-term fiscal sustainability, as rising debt levels raise concerns about future economic prosperity.

The Congressional Budget Office (CBO) recently released its annual Budget and Economic Update, painting a grim budget picture. The trajectory is alarming, with expenditures expected to be $6.4 trillion this fiscal year before soaring to a staggering $10.1 trillion by 2034. Also, net interest spending is poised to balloon from $1 trillion to $1.6 trillion by 2034. 

These projections underscore the urgent need for meaningful reforms to rein in healthcare costs and put the federal budget on a more sustainable path.


To address these challenges, policymakers must prioritize fiscal responsibility and adopt measures to remove government as much as possible from healthcare. This would help to quickly get healthcare back to a relationship between a doctor and patient. Today, too many middle layers rob time between the doctor and patient and raise healthcare prices. 

Policymakers should make market-based reforms. It won’t be done overnight, so there will need to be some steps to get there. 

It would be great if just making healthcare prices transparent would solve the problem. But the healthcare system is much more dysfunctional than that, unfortunately. 


Many reimbursement rates are set between doctors and private insurance companies or government programs like Medicaid and Medicare. Those reimbursement rates are so different depending on which entity is negotiating that the prices won’t tell us much, other than how screwed up the system is, but we already know that. 

A market-based approach should remove obstacles on the demand and supply sides of the market. 

This should include ending the tax exclusion for employer-sponsored health insurance. There’s a long history of this exclusion, which started during WWII. But while it had good intentions, the result has been a major distortion to the healthcare market. There should also be consideration of a voucher program for Medicare and block grants to states for Medicaid with limited growth each year. These would help reduce the moral hazard and over-subsidization on the demand side. 

On the supply side, the federal and state governments should remove rules that restrict the supply of doctor offices by removing certificate of need laws. They can also boost the supply of physicians by reducing or eliminating occupational licenses.

Unleashing supply and imposing market forces on demand will result in more innovative, affordable, and accessible care for everyone. 

The resulting reduction in government spending and improved timely access to quality care can help support more prosperity. This would reduce the need for people on government safety net programs. It would also help mitigate higher prices, alleviate strain on household budget burdens, and safeguard the nation’s economic future. 

These steps will require difficult choices and bipartisan cooperation at the federal and state levels, but the stakes are too high to ignore the issue any longer.

Originally published at Econlib.

Amid a heated election year, the teachings of economist Friedrich Hayek provide a guiding beacon, urging us to transcend partisan lines and champion free-market capitalism that benefits everyone. 

I recently interviewed Dr. Bruce Caldwell of Duke University about his book, Hayek: A Life, 1899-1950, who helped shed light on Hayek’s views on pressing issues today. As we navigate the complex landscape of governance, we should heed Hayek’s call for market-based approaches, especially with trade and immigration, where the clash of political ideologies often obscures the path to rational decision-making.

​​Hayek’s teachings underscore the need for policy approaches prioritizing broader economic health rather than conforming to the whims of political affiliations or interest groups. He did not advocate for simplistic labels like “left and right” but viewed political thought as a triangle, with socialism, conservatism, and liberalism representing the three points. He favored liberalism, in the classical sense.

His writings compel us to consider whether policies align with our principles and values. One example is trade protectionism, with tariffs enacted while president and pushed again by Donald Trump. Hayek’s book, The Road to Serfdom, cautioned against the pitfalls of protectionism and advocated for free-market principles that embrace competition in free trade. 

While protectionist measures like tariffs may appeal to certain political bases, they come at the expense of economic efficiency and growth. They ultimately cost us more for purchases and inhibit our choices as competition is artificially manipulated where it would otherwise organically select the best providers of resources. A Hayekian approach to trade involves understanding that dynamic economies thrive on diversity and exchanging goods and services across borders.

Another issue at the forefront of political debates that Hayek’s approach helps shed light on is immigration.  

He recognized that allowing the free movement of individuals fosters economic dynamism and innovation. Policies that restrict immigration solely for political gain risk stifling economic growth and impeding the exchange of ideas that fuels progress.

A Hayekian perspective on immigration advocates for policies that acknowledge the economic benefits of a diverse and dynamic workforce. Instead of succumbing to populist narratives that frame immigration as a threat, Hayek prompts us to view it as an opportunity. An influx of skilled and motivated individuals can contribute to a vibrant economy, filling gaps in the labor market and injecting fresh perspectives that drive entrepreneurship.

Too often, misinformation about immigration has led even conservatives to favor more government involvement in tightening borders and deportation. However, as Hayek outlined in his development of “the knowledge problem,” expecting a government of people with limited knowledge of the issue and tradeoffs from policy choices too often results in worse outcomes.  

The people in government do not and never will have all the answers. Instead, collecting everyone’s ideas in the market leads to having the most available knowledge and, therefore, better outcomes.

In short, government failures are worse than any perceived market failures. 

Taking a cue from Hayek, we should strive for more free trade agreements, especially with our allies, which means an end to all tariffs and other barriers. We should also enact market-based immigration policies that balance national security concerns with the economic advantages of attracting talent from diverse backgrounds. 

As we prepare to select our nation’s president for the next four years, Hayek’s teachings serve as a guidepost, urging us to prioritize people’s well-being over the allure of party-centric agendas.  Embracing a Hayekian perspective requires a willingness to critically evaluate policies based on their economic merit rather than their alignment with partisan ideologies. 

Only by doing so can we navigate the complex economic landscape and ensure a prosperous and dynamic future for all.

We must learn from history or be doomed to repeat it. This includes honestly assessing the economy in 2023 so that we have better information for making decisions in 2024. 

Starting with a bang on many people’s minds is housing affordability. 

The year commenced with a surge in the average 30-year fixed mortgage rate from 6.5% in January to nearly 8% in October but has declined recently to about 6.6%. These higher mortgage rates and record-high housing prices contributed to an unaffordable housing market. 

While existing home sales were up 0.8% in November, they are down 7.3% over the last year, indicating a struggling housing market for families that will unlikely improve much in 2024.

Another concern is costly inflation.

Rampant hikes in the cost of a typical basket of goods and services have meant less purchasing power for us. This contributes to making housing, food, education, and other expenses for that basket less comfortable or worse for many families. 

As of November 2023, the core consumption personal expenditures increase was 3.2% year-over-year. This price measure of a basket of goods and services excludes food and energy and is what the Federal Reserve prefers to watch. While core PCE inflation has moderated from close to 6% in 2022, the recent 3.2% inflation rate remains 60% higher than the Fed’s average inflation target of 2%. 

Although moderating inflation represents some relief for many Americans, the challenge is that average weekly earnings adjusted for core inflation declined in 23 of the last 35 months since January 2021. In total, these real average weekly earnings are down 0.8% since then, indicating why inflation is a top concern. 

An additional problem is debt.

Because earnings haven’t been keeping up with inflation, credit card debt soared to more than $1 trillion as people struggled to make ends meet, which is a bad sign for 2024. And many people have been going through their savings and retirement funds quickly.

What about jobs?

The White House recently celebrated “total job gains achieved under the Biden administration reached 14.1 million through November 2023.” But this metric becomes less impressive considering that 9.4 million of those jobs were just recovering jobs lost during the pandemic lockdowns. So, there have been 4.7 million new jobs added since January 2021, which is 134,000 per month. While this is positive, it is not record-breaking. 

The weaker labor market in recent months indicates that 2024 could be tough for many workers.

Most people’s pocketbooks did not grow but diminished this year, and the job market similarly lags. But what about the nation’s overall growth? Hasn’t GDP soared? Not exactly. 

In the third quarter of 2023, the annualized real GDP growth hit 4.9%, which appears robust. But when you dig into the details, it’s more complicated. 

Government spending, which is a drag on the economy as it must take taxes from the private sector and distort market activities, threw in 0.99 percentage points. And private inventories, influenced by the whims of fluctuating interest rate expectations, chipped in 1.27 percentage points. When you exclude those contributions to consider stable real private GDP, there was just a 2.6% bump up.

This slower pace didn’t just pop out of nowhere. It’s been a saga since early 2022, when we hit a two-quarter decline in real gross domestic product, waving a big red flag for a recession. And when you consider the valuable metric of real gross domestic output, which is the average or real gross domestic product and real gross domestic income, the economy has declined in three out of the last seven quarters.

While these economic issues suggest stagflation triggered by misguided pandemic lockdowns and subsequent trillions of new money printing of deficit-spending, there may be some relief. 

The Fed’s slow correction to its bloated assets of $9 trillion at its peak to $7.7 trillion contributed to interest rates soaring since March 2022. But with Congress continuing to deficit spend of about $2 trillion per year and net interest payments soaring to $1 trillion per year, there are massive economic challenges ahead. 

These deficits will make it more difficult for the Fed to correctly normalize its assets quickly to get them back to at least the pre-pandemic $4 trillion. This is because the budget deficits would contribute to higher interest rates, so the Fed will likely monetize the debt more to help Congress avoid needed spending restraint.

While these truths are tough to swallow, many beacons of hope also emerged throughout the year that should be noted.

In 2023, a momentous shift unfolded with a transformative surge in educational choice. 

Twenty states expanded school choice, and a record-breaking 10 states passed some form of universal school choice, making 36% of American students eligible for a private choice program. 

Some states have been slow to increase educational freedom, but this revolution’s overall impact is historical. Recognizing that children are the cornerstone of our nation’s future and acknowledging that improved education is a pivotal predictor of their success, the catalyst for change is undeniably rooted in more universal school choice. 

The second bright light is the flat state tax revolution. 

Many states took bold steps to enhance their economic landscapes. Notably, prominent states like California and New York faced ongoing out-migration as individuals sought refuge from progressive policies, and less heralded states embraced free-market principles, propelling them onto the national stage. More conservative Florida and Texas continued to lead the way in places where people moved in 2023.

The third thing to cheer is a responsible movement toward a sustainable state budget revolution. 

Some states are pushing toward improving their spending limits to one that covers more of the budget, limits budget growth to no more than population growth plus inflation, and has a supermajority vote to bust the limit or raise taxes.

The synergy of these reforms demonstrates the power of federalism as states experiment with policies, revealing effective strategies and fostering a healthy laboratory of competition. We need lawmakers at the federal, state, and local governments to recognize what works and implement them. 

The trajectory in 2024 and beyond hinges on embracing free-market capitalism, which is the best path to let people prosper. This includes less government spending, less money printing, more school choice, and more tax relief. In short, less government. 

That’s how we get a more prosperous 2024. Happy New Year! 

Originally published at Econlib. ​

Originally published at Real Clear Policy.

​During the fourth Republican presidential candidate debate the four participating candidates were asked to name a past president who would serve as an inspiration for their administration. In his response, Governor Ron DeSantis stated that he would take inspiration from President Calvin Coolidge. Coolidge, stated DeSantis, is “one of the few presidents that got almost everything right.” Further, DeSantis argued that “Silent Cal” understood the federal government’s role and “the country was in great shape” under his administration.

To say that the federal budget process is broken is an understatement. The national debt continues to grow driven by out-of-control spending. The budget hawk within the Republican Party is an endangered species. Governor DeSantis is correct that the Republican Party needs to rediscover the principle of limited government. The best way to do this is to take inspiration from the Republican Party’s best known budget hawks and champions of limited government, Presidents Warren G. Harding, and Calvin Coolidge.

President Harding assumed office in 1921 when the nation was suffering a severe economic depression. Hampering growth were high-income tax rates and a large national debt after World War I. Congress passed the Budget and Accounting Act of 1921 to reform the budget process, which also created the Bureau of the Budget (BOB) at the U.S. Treasury Department (later changed in 1970 to the Office of Management and Budget). President Harding’s chief economic policy was to rein in spending, reduce tax rates, and pay down debt. Harding, and later Coolidge, understood that any meaningful cuts in taxes and debt could not happen without reducing spending.

Harding selected Charles G. Dawes to serve as the first BOB Director. Dawes shared the Harding and Coolidge view of “economy in government.” In fulfilling Harding’s goal of reducing expenditures, Dawes understood the difficulty in cutting government spending as he described the task as similar to “having a toothpick with which to tunnel Pike’s Peak.”

To meet the objectives of spending relief, the Harding administration held a series of meetings under the Business Organization of the Government (BOG) to make its objectives known.

“The present administration is committed to a period of economy in government…There is not a menace in the world today like that of growing public indebtedness and mounting public expenditures…We want to reverse things,” explained Harding.

Not only was Harding successful in this first endeavor to reduce government expenditures, his efforts resulted in “over $1.5 billion less than actual expenditures for the year 1921.” Dawes stated: “One cannot successfully preach economy without practicing it. Of the appropriation of $225,000, we spent only $120,313.54 in the year’s work. We took our own medicine.”

Overall, Harding achieved a significant reduction in spending. “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922,” noted Jim Powell, a senior fellow at CATO Institute. Harding viewed a balanced budget as not only good for the economy, but also as a moral virtue.

Dawes’s successor was Herbert M. Lord, and just as with the Harding Administration, the BOG meetings were still held on a regular basis. President Coolidge and Director Lord met regularly to ensure their goal of cutting spending was achieved.

Coolidge emphasized the need to continue reducing expenditures and tax rates. He regarded “a good budget as among the most noblest monuments of virtue.” Coolidge noted that a purpose of government was “securing greater efficiency in government by the application of the principles of the constructive economy, in order that there may be a reduction of the burden of taxation now borne by the American people. The object sought is not merely a cutting down of public expenditures. That is only the means. Tax reduction is the end.”

“Government extravagance is not only contrary to the whole teaching of our Constitution but violates the fundamental conceptions and the very genius of American institutions,” stated Coolidge.

When Coolidge assumed office after the death of Harding in August 1923, the federal budget was $3.14 billion and by 1928 when he left, the budget was $2.96 billion.

Altogether, spending and taxes were cut in about half during the 1920s, leading to budget surpluses throughout the decade that helped cut the national debt.

The decade had started in depression and by 1923, the national economy was booming with low unemployment. Both Harding and Coolidge were committed to reining in spending, reducing tax rates, and paying down the national debt. Both also used the veto as a weapon to ensure that increased spending and other poor public policies were stopped.

The results of the Harding-Coolidge economic plan created one of the strongest periods of economic growth in American history. Unemployment remained low, the middle class was expanded, and the economy expanded. From 1920 to 1929 manufacturing output increased over 50 percent and the United States was a global leader in many key industries.

In our current era marked by dangerous debt levels and high inflation whoever becomes the Republican presidential nominee should take inspiration from Harding and Coolidge.

​Thank you for tuning into the 39th episode of “This Week’s Economy.”

Much information is packed into today’s newsletter, including my new podcast episode revealing the economic news you need to know in less than 14 minutes!

Today, I cover:

1) National:
-Why the new U.S. jobs report (my latest commentary) is not as strong as some say
-Inflation rates have moderated but still remain well above the Fed’s 2% rate target
-Federal Reserve paused again with its federal funds rate target in the range of 5.25-5.5%, supporting a boost in the stock market and likely lower mortgage rates

2) States:
-Sustainable Colorado Budget was released that I authored with Ben Murrey at Independence Institute, which provides a path forward for the Centennial state to return to its TABOR roots and buy down the income tax
-School choice challenges face Texas as many state leaders are against it, and they keep spending too much
-California’s deficit reaches crazy highs, proving why spending is the ultimate government burden

​3) Other:
-Don't miss my latest LPP episode with Jennifer Huddleston discussing problems with regulating technology, including AI
-One of my latest op-eds argues why China is not our biggest threat…what is?
-Argentina's new president makes significant strides that could set an example for the U.S.