It’s playoff baseball time here in Texas—go ‘Stros! But baseball fans know everything depends on the umpires—as the great Bill Klem said, when asked whether a ball was fair or foul, “It ain’t nothing until I call it.”

It’s time for us to call fair and foul on the Texas Legislature; there were some homeruns, some wild pitches and even some unforced errors. And ultimately, it’s the taxpayers who either win or lose.

To begin with, lawmakers did well in remembering the taxpayer by maintaining a Conservative Texas Budget (CTB), which sets a maximum appropriations threshold based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation), and passing a stronger spending limit.

There was concern with Congress sending Texas $16.3 billion in mostly discretionary funding through the American Rescue Plan (ARPA). During the recently ended third special session, the Legislature appropriated $13.3 billion of it, with a positive of leaving $3 billion for possible tax relief later.

Another winning play is that the Legislature followed most of the Foundation’s recommendations for ARPA funds.

It sustained the CTB and used the funds for only one-time expenditures which will help avoid any fiscal cliffs like some claimed Texas had after Obama’s one-time “stimulus” funds in 2009. Legislators appropriately used $7.2 billion—about half of ARPA funds—for debt payment and replenishment of the state’s depleted unemployment trust fund after the shutdown recession to avoid a massive payroll tax hike on employers. And they ensured transparency and accountability by requiring that the uses of these funds be posted on a government website and put in a separate account, respectively.

While those actions benefited taxpayers, a botched play was in not providing substantial, broad-based property tax relief.

This could have been done, as there were surplus funds of $6 billion in general revenue and $3 billion in ARPA funds. All legislators needed to do was use surplus funds to reduce school district maintenance and operations property taxes, thereby continuing the path toward eliminating property taxes by 2033.

Instead, lawmakers raised the homestead exemption for school district property taxes by $15,000 to $40,000, funded by about $450 million in general revenue annually. And even this won’t happen unless voters approve this constitutional amendment in May 2022. If passed, more than 5 million homeowners would benefit from average savings of $176—excluding other higher local property taxes. So, no relief for business owners, landlords, apartment owners, renters, and those with secondary properties.

This compromise followed proposals in the Senate that would have provided at least $2 billion in general revenue to lower school district property taxes for everyone and in the House that would have provided $3 billion in ARPA funds for checks to only those with a homestead.

Clearly, the Senate’s version would have been broad-based, even though more could have been added to it. Combining it with HB 90 in the House that would have provided structural reform to eliminate property taxes over time, which died in House calendars, could have provided extraordinary relief. Instead, it appears that lobbyists for the public ed establishment pushed against this pro-taxpayer effort, resulting in little-to-no relief through the increase in the homestead exemption.

A huge unforced error was the wasteful spending of ARPA funds.

The decision to allocate $325 million in ARPA funds to support $3.3 billion in tuition revenue bonds for construction at higher education institutions is at the top of the fouls list. While tuition and student debt continue to rise, the quality of education is declining, and universities are already receiving billions of dollars, this provision is ill-advised.

It’s unfortunate that instead of providing tax relief these funds went to projects like student housing enhancements for the Marine Science Institute at the University of Texas at Austin and $100 million to two state university systems for institutional enhancements.

However, not all state legislators sought to rubber stamp additional funds to a declining higher education system. Rep. Matt Schaefer (R-Tyler) proposed an amendment that sought to connect the amount of money institutions can receive based on the rate of tuition increase. Unfortunately, the amendment didn’t pass, ending an opportunity to curb the fiscal bloat that plagues Texas universities, students, and taxpayers.

Putting this year’s legislative game in perspective there were many hits but also some strikeouts, especially on major property tax relief. But taxpayers did get relief from less government spending than what was available.

The Legislature left about $20 billion in total revenue, including $6 billion in general revenue, and $12 billion in the rainy day fund and $3 billion in ARPA funds on the table. Texas should return much if not all of these surplus funds to struggling taxpayers so they can recover from the shutdown recession, withstand the stagflation by the Biden administration, and actually own their property.

But as with baseball, there’s always next season.

Commentary

​Given Texas’s commitment to lower taxes and limited government, it’s not surprising that the economy here is booming. Allowing people and businesses to keep more of their hard-earned money is the not-so-secret reason Texas often leads the country in job creation, economic growth, and inbound domestic migration.

Unfortunately, Democrats in Washington are trying to enact a reckless $5 trillion spending bill that would also raise taxes by the most in at least fifty years while leaving a mountain of debt. This could be a crushing blow for the American economy, and Texas could be one of the states hardest hit.

Indeed, research from the Texas Public Policy Foundation shows that Biden’s “Build Back Better” plan could cost the U.S. economy a conservatively estimated 5.3 million jobs compared with baseline growth over the next decade—and 467,000 of those jobs would be lost in Texas. This should come as no surprise to anyone as Democrats are not only trying to raise taxes broadly on individuals and job creators, but are also taking aim at specific industries they don’t like. That’s bad news for Texas.

In their bid to end the use of fossil fuels, Democrats would hit oil and gas producers with punitive fee increases and potential tax changes that would make reliable energy production less competitive. This will directly impact Texas families, as 2.5 million Texans have jobs that are directly or indirectly supported by the oil and gas industry. And these additional government-mandated burdens will drive up prices on gasoline and fuel, as well as other everyday prices like food and clothing.

Americans deserve a healthy economy, not more burdensome tax measures and policies that will make the inflation situation worse.

Thankfully, a small but significant group of moderate Democrats, including South Texas Reps. Filemon Vela, Vicente Gonzalez, and Henry Cuellar have publicly expressed concerns with the reckless spending bill. These members wrote to Speaker Pelosi in late September and asked Democrat leaders to “reconsider some of the revenue raising provisions of this otherwise sound and critical effort,” and said they’re concerned about provisions that would “jeopardize U.S. energy independence, harm American jobs, raise energy costs, and increase global emissions.”

Their concerns are valid, and they are certainly correct that the Build Back Better plan would hurt American workers. However, despite their letter, in August these three representatives voted to allow the $5 trillion bill to move through the legislative process. If they truly have concerns about this disastrous bill—as they have publicly stated—then they should have voted “no” and forced Speaker Pelosi to hit the brakes. But it’s not too late. With a razor-thin Democrat majority in the House, these three members of Congress could flex their collective muscle and end this assault on Texans and all Americans.

Absent the political courage of these or other Democrats in Congress, Biden and Democrats will enact job-killing policies that place a heavy burden on taxpayers of nearly all income levels. For instance, if Biden gets his way and raises the corporate tax rate from 21 percent to 28 percent, $100 billion of this tax hike will be shouldered by taxpayers making $100,000 or less according to calculations by National Taxpayers Union. Despite his claim that only the wealthy will pay higher taxes, Congress’s Joint Committee on Taxation says that under Biden’s plan, people making just $30,000 and above will pay higher taxes starting in 2027.

Small businesses could also face higher tax burdens as Biden would increase their tax rates and place new restrictions on their ability to utilize the 20% tax deduction that was created in the Tax Cuts and Jobs Act. That’s just the tip of the iceberg: Biden’s plan also involves tax hikes on investors, property owners, and even cigarette and vape users—tax hikes that would further break his pledge to not raise taxes on anyone making less than $400,000 a year.

The country is still recovering from the COVID-related shutdowns and dealing with economic problems like inflation that have taken a heavy toll on families across the country. After spending trillions of dollars over the past eighteen months, Congress shouldn’t be considering a costly tax-and-spend plan that would jeopardize the American recovery. Instead, members like those in south Texas should find ways to get our fiscal house in order by reducing spending. Killing this bill would be a good start.

Commentary

Texas and football go hand-in-hand. There is nothing like the two-minute drill at the end of a game with increased adrenaline pushing you on to victory. Texas lawmakers are likely feeling a similar jolt in an effort to appropriate the remaining $16 billion of the $40 billion that Congress sent to Texas in the American Rescue Plan Act (ARPA) earlier this year.

The Legislature has done a good job so far this year in keeping a responsible budget, but these federal funds could tempt lawmakers to spike the football early—allocating ARPA money that doesn’t help the Texas taxpayer while putting the nation further into debt. In fact, a responsible approach would lead Texas to reject these funds, given the state has a large budget surplus, though there’s likely no political will to do so.

Let’s return to the first quarter of the game.

The Legislature passed the 2022-23 state budget well below TPPF’s Conservative Texas Budget (CTB), which sets a maximum threshold on the budget based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation). And lawmakers parked $12 billion in the state’s rainy day fund.

This approach maintained the overall strategy that the Legislature has been operating under for the last four budgets. By staying within the CTB maximum threshold, and passing into law a stronger spending limit this year, lawmakers pledged to keep more money in taxpayers’ pocket.

Now the state is in the fourth quarter and is determining how to allocate the ARPA funds, which are your taxpayer dollars. The nearly $16 billion offers plenty of opportunity—both good and bad—for  lawmakers to spend hard-earned taxpayer dollars.

The game plans in the Texas Senate with SB 8 and the House with HB 145 are largely the same, with just a $350 million difference. Most items appear to abide by the restrictions on the use of funds outlined by the U.S. Treasury’s interim guidance. So far, so good. But about $500 million is being set aside for university construction in both bills, which doesn’t count as infrastructure (the feds define infrastructure as sewer, water, and broadband). How is this a good use of taxpayer dollars?

In their current plans, both start strong with over $7.2 billion designated to pay the outstanding debt owed to the U.S. Treasury’s Unemployment Trust Fund and to replenish most of what was in the fund pre-shutdown. This is essential because without paying, this there would be a huge spike in employer taxes that support this fund. But we would recommend $7.8 billion for full funding to provide a better cushion.

The next strong play in both plans is to allocate $3.7 billion for public safety and criminal justice. These funds appear to be allocated to swap with general revenue funds already appropriated in the current budget cycle for border security and wall thereby not further growing spending. This could also free funds up later for property tax relief. This allocation provides serious relief to taxpayers as the state has been subsidizing the border crisis for the rest of the country because of the inept leadership on this issue in Washington.

These strong plays follow two-thirds of the Foundation’s winning strategy for ARPA funds. The third one is necessary to get Texas across the goal line—property tax relief.

Burdensome local property taxes continue to climb, forcing some Texans to delay major life decisions like marriage and home ownership. Using the rest of the ARPA funds to add to the at least $2 billion in SB 1 to reduce school district M&O property taxes for the 2022-23 school year would help lower tax bills at a time when many taxpayers are suffering from the effects of the shutdowns. This combination of plays along with HB 90 and other moves could eliminate property taxes by 2033. Three states have already started cutting taxes using ARPA funds so Texas shouldn’t delay.

In addition to using ARPA funds for the plays above to move the down the field, the Legislature should use best practices with these funds for transparency and accountability for taxpayers. Any use of ARPA funds must be for only one-time expenditures, which will help avoid a fiscal cliff like that after Obama’s one-time “stimulus” funds in 2009 dried up. ARPA funds should also be separated from Texas’ base budget. And lawmakers should post the allocation and distribution of funds on a website.

The Legislature is in the final two minutes of the fourth quarter. This is where champions are made. Let’s ensure Texas taxpayers win the day with a responsible game plan, rather than irresponsibly spending ARPA fund.

Commentary: www.texaspolicy.com/remember-the-taxpayers/

Congress is attempting to force through massive tax, spending, and debt hikes that would fundamentally transform America into something it is not and cannot afford.
Key points:

• President Biden and congressional Democrats seek to spend another $6.2 trillion over the next decade, spread across at least two bills that comprise their “Build Back Better” plan.
• This plan includes heavy taxing, spending, and debt, which contributes to reducing growth rates for GDP, employment, income, and capital stock.
• Compared to baseline growth over the next decade, this plan will result in estimated dynamic economic effects of 5.3 million fewer jobs, $3.7 trillion less in GDP, $1.2 trillion less in income, and $4.5 trillion in new debt.
• These taxes threaten to reverse the economic recovery, with families having less income and more debt.

​The growth of the economy, as measured by Montana’s population growth plus inflation, provides a measuring stick for fiscal responsibility by accounting for potential changes in economic conditions indicating the demand for government services and the cost of providing them. This benchmark also helps account for more people and higher wages, which, combined, provide resources for taxpayers’ ability to pay to fund government expenditures.
Montana leaders have pointed to the growth of population growth plus inflation as the fairest measure for government growth.

Paper

www.texaspolicy.com/reconciliation-bill-is-an-assault-on-marriage-and-families/​Marriage is already tough enough; fewer and fewer Americans are even attempting it, and while divorce rates are down slightly, that may only be a temporary side effect of the pandemic. Yet the evidence is clear—marriage is the not-so-secret ingredient for success in life, for men, women and especially for children.

But marriage is about to become even harder. Congress’ massive reconciliation bill, clocking in at more than $5 trillion, is riddled with provisions that undermine society’s most fundamental institution—the family. From multiple marriage penalties to taxes that will prevent parents from passing businesses and farms down to their children, to lower household incomes paired with higher prices (financial stress is still the primary cause of divorce), the bill makes marriage more expensive and even cost-prohibitive in some cases.

We’ve long known that fiscal policies can have a big effect on marriage rates. Chief among these policies are welfare programs.

“A safety net marginally reduces the costs of single parenthood, nonmarital childbearing, and divorce,” a U.S. Congress Joint Economic Committee report said in 2020. “It also can create a significant tax on marriage because the addition of a spouse with income typically reduces safety net benefits, and if he has only modest earnings or unsteady employment, the trade-off may not be worthwhile.”

But Congress and the Biden administration are doubling down on such policies. If the reconciliation bill passes, marriage will be even less advantageous to couples and to children.

Let’s look at a few examples of how.

First, multiple marriage penalties are found in the bill. A marriage penalty occurs when tax liability for a couple increases after the wedding because of differences in tax bracket thresholds, deduction limitations, and other aspects of the tax code. Some couples could find nearly all of one spouse’s income now subject to a higher tax rate. Marriage penalties in the proposed structure can total $130,200 annually in higher taxes.

Estate taxes are another way the reconciliation bill chips away at a family’s opportunities. Family businesses and family farms will be severely penalized upon the death of a parent. The federal estate tax, also known as the death tax, currently applies only to estates valued over $11.7 million, with the top marginal rate at 40%. Democrats would lower the exemption by $8.2 million and increase the top marginal rate to 65% while also introducing a tax on unrealized capital gains. The total tax rate on an estate can easily climb over 70%, even on relatively modest estates.

One former Democratic senator says hiking the estate tax is a mistake. “I’m trying to sound the alarm, both economically and politically, for Democrats that this is not a path to walk,” says Heidi Heitcamp of North Dakota. “The disruption that it would create for small family business and farmers and family assets is not worth the pain.”

The bill will also result in fewer jobs and lower household incomes. Our analysis shows that the “Build Back Better” plan (as the Democrats are now euphemistically calling it) will reduce employment by the equivalent of 5.3 million full-time jobs.

And it will reduce incomes. Despite the Biden administration’s repeated promise to not raise taxes on those earning less than $400,000 a year, there are many implicit and even explicit tax increases on that group. Aside from the bottom quintile, those who earn under roughly $20,000 a year, all income groups will see their after-tax incomes decline as a result of the Democrats’ tax agenda, through a combination of direct and indirect taxation, as well as reduced income from lower economic growth.

Combined with runaway inflation due to the Democrats’ love of modern monetary theory, the pressures on married couples and other families will only intensify.

As historian Will Durant pointed out, “The family is the nucleus of civilization.” It’s our most basic institution. We can’t build back better on top of its ruins. Congress must reject the reconciliation bill.

Commentary

​America is back at the brink—Congress has borrowed as much as it can legally, and House Speaker Nancy Pelosi says if it doesn’t raise the debt ceiling, the U.S. will be forced into default.

But the truth is that the full faith and credit of the U.S. is at stake because of excessive spending in Washington. Republicans should demand changes that rein in spending, the real danger to our economy, made much, much worse by the Democrats’ latest $5 trillion for part of the so-called “Build Back Better” plan allocated to “human infrastructure” spending (the reconciliation bill).

As our friend Stephen Moore highlights, the Democrats own this crisis—and in the last six months, they’ve proposed $11 trillion of spending. Their spending, especially as outlined in the reconciliation bill, would further bankrupt the U.S. and fundamentally transform our nation—and not for the better.

From its privileged perspective over on K Street in D.C., the Washington Post opines that “this is not Ronald Reagan’s Republican Party.” It cites past debt ceiling battles and claims that congressional Republicans “are inviting economic calamity.”

It’s true that Republicans have raised the debt ceiling in the past. But in key instances, such as the 1985 Gramm-Rudman-Hollings Act (under Reagan himself), raising the ceiling was accompanied by a plan to reduce the deficit. Deficit hawks leveraged the debt ceiling vote to force the big spenders in Congress to face the facts—deficits add up, as our current $28.8 trillion national debt shows. They haven’t achieved this every time—there have been far too many “clean” debt ceiling bills that included no reforms—but enough to show us the way now.

That’s why it’s unreasonable for Speaker Pelosi to suddenly rediscover bipartisanship, as she calls for Congress to “come together” to enable her profligate spending. The GOP members of Congress who watched her rip up President Trump’s speech in 2020 know that the Speaker Pelosi of 2021 will not even listen to their concerns about the ceaseless printing of money at the Federal Reserve, about the inflation pressing us all, or about the future generations who will have to pay all of this back.

What should Republicans do? Stand fast. Be firm. Don’t bend. And support reforms that save America. The Democrats don’t have a great track record on their apocalyptic warnings, so the GOP shouldn’t fall for this one. There are three possible outcomes here, and the biggest disaster would be Republican acquiescence.

First, the Democrats can raise the debt ceiling themselves—they have the votes, in theory. They might have to convince their saner members, such as Sen. Joe Manchin of West Virginia, but with Vice President Kamala Harris breaking a tie, they would have the 51 votes they need.

From a GOP perspective, this would have advantages. As my colleague Wesley Coopersmith points out, Democrats would then completely own the deficit, and every dollar they make rain on their pet projects would weigh against President Biden’s legacy.

A second possible outcome is what Sen. Machin could force—a “strategic pause” of the reconciliation bill. As Sen. Manchin points out, “making budgetary decisions under artificial political deadlines never leads to good policy or sound decisions.” The political calculus is changing, and Democrats in leadership know this. In these circumstances, a pause can sometimes be as good as a “no.”

The third outcome would be Republicans caving to the pressure from Speaker Pelosi and Senate Majority Leader Chuck Schumer, voting to increase the debt ceiling and thereby taking some ownership in not only the higher debt limit, but also the massive spending it will enable.

So let the Democrats fight it out themselves. In the meantime, Republicans should sign on to our Responsible American Budget—a key cure for what’s wrong in Washington right now.

Irresponsible government spending damages the productive private sector through redistribution of resources, higher taxes, higher price inflation, and higher interest rates, reducing Americans’ real incomes, job opportunities, and prosperity.

At the state level, Texas has addressed runaway spending with the Conservative Texas Budget. Its main premise is that government shouldn’t grow any faster than the average taxpayer’s ability to pay for it. To provide a bright line marking the limit, we use a proven, simple formula: population growth plus inflation.

The Responsible American Budget would use this success as a model to help save America. Because high taxes and debt are always and everywhere a government spending phenomenon, this proposal is a valuable step toward limiting the footprint of government, allowing Americans more opportunities to flourish.

Commentary

​At least in baseball, you’re out after the third strike. Baseball is merciful. The Texas Legislature, not so much. At least the fourth legislative session—the third special—gives lawmakers a chance to appropriate money sent to the state by Congress through the $1.9 trillion American Rescue Plan Act (ARPA) of 2021.

The Legislature has kept spending in check so far this year, but these funds present a new temptation. Lawmakers must resist—and spend the ARPA money wisely.

They’re off to a good start.

The Legislature passed the 2022-23 state budget well below TPPF’s Conservative Texas Budget (CTB), which sets a maximum threshold on the budget based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation). And lawmakers left $12 billion in the state’s rainy day fund.

Staying fiscally conservative while meeting the needs of taxpayers is nothing new for Texas. The last four budgets since 2015 passed by lawmakers have averaged growth under the CTB limit, helping keep more money in taxpayers’ pocket.

Let’s keep that going with the ARPA money. Here are some priorities Texas legislators should consider.

ARPA funds by Congress to state and local governments in Texas totaled $41 billion, with $25.2 billion either already released or allocated for specific purposes. Nearly $16 billion in more flexible funding will head to the state in one payment because Texas’s unemployment rate is more than 2 percentage points above the pre-pandemic rate. This part is 13% of the state’s annual budget for legislators to determine what’s best for Texans.

Remember, this is a one-time payment. It’s not an excuse to irresponsibly add nearly $16 billion in additional appropriations in the next biennium. Given that this is allocated wisely, we will exclude this amount from the CTB limit so that the budget is not inflated for excess spending later while catching ongoing spending in the next budget cycle if necessary.

We should use the majority of this to pay off our outstanding balance with the U.S. Treasury’s Unemployment Trust Fund. Texas holds the third largest balance, behind only New York and California. We’re $6 billion in the hole and we need to replenish $2 billion in credit the state had prior to the pandemic. The outstanding balance continues to accrue interest, costing Texans millions of dollars that could otherwise be used elsewhere.

Depending on the amount needed, we should use about $5 billion in ARPA funds directly or those swapped out with state general revenue to complete the border wall—providing relief to Texas taxpayers who have been paying for the rising cost of the crisis along the border for the rest of the nation.

And with burdensome local property taxes continuing to climb, we should be finding ways to eliminate them as quickly as possible. A good way would be to add what was done in 2019 and maintained in the 2021 regular session by using the remaining amount to compress school district M&O property taxes in the 2022-23 school year for additional tax relief.

Adding what could be billions more in surplus funds after appropriations in the second special session, including $100 million in property tax relief to some Texans,  there’s an opportunity to provide even more compression so that Texans receive a lower property tax bill.

Since property taxes are technically local taxes, this could be a way to navigate around the unwise restrictions imposed by Washington.

To ensure accountability and transparency within the Legislature, the flexible ARPA funds should be separated from the base budget to avoid it being buried within future appropriations.

This would limit any possibility of a repeat from Democrats who argued there were “cuts” to education following Obama’s one-time “stimulus” funds. Regardless of whether these measures are taken, all related ARPA spending should be posted on the Comptroller’s or Legislative Budget Board’s website.

There are other good ideas on how to use ARPA funds, but they may be restricted due to federal regulations—which is why there should be more clarity from the Treasury.

This fourth session gives lawmakers the opportunity to allocate the ARPA funds; they should be spent wisely.

Commentary

​Texas owes $7 billion to the U.S. Treasury’s Unemployment Trust Fund.

Lawmakers here in Texas can pay off that balance entirely, without any interest charges, and without using any state funds. The only catch is that the Texas Legislature and governor would need to do so by Sept. 6, so that’s unlikely—but they can keep the cost low if they take action soon.

Unemployment insurance is a surprisingly complicated, convoluted program.

Few people understand how it works, who pays for it, how benefits are calculated for the unemployed, or who even qualifies for benefits. Congress has added even more complexities and confusion to the program over the last year and a half with bonuses, extensions, and more. There are also substantial differences between states.

While the full details of the entire unemployment insurance program could fill a textbook, here are the basics.

Businesses pay payroll taxes which finance a trust fund for each state held at the U.S. Department of the Treasury. The program is overseen by the U.S. Department of Labor. States then use this trust fund to help pay their unemployment claims. As states’ balances in the trust fund rise and fall, the individual states adjust their business tax rates to try and maintain an adequate volume of funds with the U.S. Treasury.

If a state’s account runs dry, as can happen in a severe recession, the Treasury will loan the necessary funds to that state at a variable interest rate. The state must then repay the borrowed funds, along with the interest charged to its account. Furthermore, the state must also replenish the previous balance with additional funds.

The government-imposed shutdowns over much of the last 18 months, along with other misguided policies, created sky-high unemployment in many states, including Texas. Unemployment claims skyrocketed and this quickly depleted the state’s $2 billion trust fund account. After those savings were expended, Texas had to borrow billions of dollars from the Treasury to continue paying claims.

The Lone Star State has the third largest outstanding balance with the Treasury. New York, despite having fewer people, managed to dig itself an even deeper hole, racking up more than $10 billion of red ink in its ledger with the Treasury at the time of this writing. California is in even worse shape, by a large margin. The Golden State owes a massive $25 billion to the Unemployment Trust Fund.

Fortunately, the Texan economy has improved, and the state has not borrowed additional funds from the Treasury for months. With the bleeding stopped, it is now time to address the $7 billion hole along with replenishing the $2 billion credit that the state had with the Unemployment Trust Fund before the pandemic. That is a grand total of $9 billion which should be allocated to this problem.

In normal times, Texas would have no choice but to drastically increase taxes on businesses to raise the needed revenue to cover this hole. But these are not normal times.

Congress has allocated $41 billion for Texas as part of the American Relief Plan Act (ARPA) and the Treasury Department has issued guidance to the states that the funds can sent to the Unemployment Trust Fund. Texas has the money to fund this problem—state lawmakers only need to appropriate the ARPA funds.

Time is of the essence because the Treasury has temporarily waived all interest on outstanding balances with the Unemployment Trust Fund, but that is set to end Sept. 6. Even a low interest rate will still create millions of dollars in interest charges because the state’s balance is in the billions of dollars.

While the second called Special Session just ended, the upcoming third called Special Session is when the Legislature should immediately allocate the roughly $9 billion out of the almost $16 billion in the flexible ARPA funds available.

Delaying this payment past Sept. 6 will unfortunately cost taxpayers millions of dollars, which could otherwise go to tax cuts, roads, or education.

Texas is one of 14 state accounts with an outstanding Unemployment Trust Fund balance that together total more than $56 billion. West Virginia has repaid its balance with the Treasury and so will not pay any interest. Texas lawmakers can save their constituents millions of dollars in interest charges, but only if they act quickly.

While Sept. 6 will likely come and go without payment (though maybe action at the federal level could delay it further), this bill is coming due and Texas should plan accordingly.

Commentary

​The national debt is rapidly nearing $29 trillion, which is 25% more than our entire economy, and is orders of magnitude higher if you consider unfunded liabilities of Social Security and Medicare. This threatens life as we know it and must be addressed now.

Since the start of 2020, the debt has increased by $5.2 trillion. And President Joe Biden has called for $6 trillion in new spending along with massive tax hikes that will hinder growth and add trillions more in debt. The most recent spending plans are the $1.2 trillion “infrastructure” bill, which is really a green-energy boondoggle, and the at least $3.5 trillion reconciliation package that has been described as “human infrastructure,” which greatly expands the welfare state.

This expansion of the welfare state is far more than President Franklin Delano Roosevelt’s New Deal or President Lyndon B. Johnson’s Great Society. Although these initiatives likely had good intentions, the results were a disaster with the former driving the Great Depression deeper and longer and the latter contributing to greater dependency and rising structural deficits.

President Biden’s Green New Deal would fundamentally transform America into something it is not, nor can it afford to be. Many progressives argue that the federal government can continue to deficit spend without consequence. While we expect this from progressives, where are the conservatives?

Both political parties share the blame for the rising burden of government that comes from excessive government spending.

For example, 19 Senate Republicans voted for the $1.2 trillion “infrastructure” bill that spends than 10% on conventional infrastructure such as roads and bridges.

The political calculus of this maneuver by Republicans is awful and troubling as Americans need elected officials to take fiscal responsibility seriously now. A great example is that by President Calvin Coolidge, who believed in the morality of a limited government and was the ultimate budget hawk.

Coolidge, along with his predecessor, President Warren Harding, made cutting government spending a priority. When Harding assumed office, he was confronted with the Depression of 1920-1921 and his response was to fight it by removing government obstacles of excessive spending and taxing, which helped get the U.S. out of that situation in a hurry. After Harding’s death, Coolidge continued Harding’s pro-growth fiscal conservatism as Coolidge regarded “a good budget as among the noblest monuments of virtue.”

For Coolidge, keeping a balanced budget with spending restraint and reasonable tax rates was not just sound economic policy but moral and constitutional, as it supported increased economic prosperity along with preserving life, liberty, and the pursuit of happiness.

Under President Coolidge, federal spending decreased by 0.4%, from $3.14 billion in 1923 to $3.13 billion in 1928. This means the budget declined by even more in inflation-adjusted terms and resulted in spending as a share of GDP declining from 3.7% to 3%, which compares with the astronomical $6.6 trillion for nearly one-third of GDP in 2020. As a result of cutting spending, Coolidge was able to lower the top income tax rate to 25% in 1926, as he noted that “You can’t increase prosperity by taxing success.”

The spending restraint, tax cuts, and faster economic growth helped the federal government run a budget surplus every year for a cumulative cut in the national debt over those seven years of $6.1 billion. As a result of Coolidge’s fiscal conservatism, the nation experienced the Roaring ‘20s because free-market capitalism was allowed to work much more than today.

“The very fact that the federal government has been able to cut down expenditures, decrease its indebtedness and reduce its taxes indicates how great is the accomplishment which you have made on behalf of the people of the nation,” noted Coolidge.

Although the budget has changed since Coolidge was in office, Amity Shlaes, noted historian and Coolidge biographer, wrote that “the pressure to expand programs was as strong [then] as it is today.”

Policymakers should follow Coolidge’s example and reduce spending. States such as Texas and Iowa have also proved that fiscal conservatism works, so the federal government should now do the same. The Texas Public Policy Foundation’s Responsible American Budget provides a blueprint to restoring fiscal sanity in Washington.

Excessive government spending and the national debt cannot be ignored. If America doesn’t change course quick, there will be catastrophic results for Americans and Western Civilization. This is not just dangerous; it is un-American and something that will keep us from leaving a legacy to be proud of.

We need Calvin Coolidge’s fiscal conservatism more than ever.

Commentary

​Let’s call it the Salton Principle: Renaming a product may make marketing easier, but it doesn’t fundamentally change the product.

Who would buy a Salton Grill? We didn’t—and neither did you. But when it was rebranded as the George Foreman Lean Mean Fat-Reducing Grilling Machine, the little countertop grill showed up in homes (and dorm rooms) across America. It was the “hottest new product in years.”

U.S. Senate Democrats didn’t relabel their bloated something-for-every-constituency budget bill “Lean, Mean and Fat-Reducing,” but they may as well have. They now call it the “human infrastructure” plan, costing roughly $5 trillion over a decade. They also labeled their process of forcing through unrelated and unpopular items—from amnesty for illegal immigrants to elements of the Green New Deal—as “budget reconciliation,” co-opting the process and the term in ways that were never intended.

Here’s the truth: The Democrats’ human infrastructure reconciliation bill will greatly expand the role of the federal government in everyone’s lives—for generations to come—and will lead to the combination of economic stagnation and inflation we haven’t seen since the “stagflation” crisis of the 1970s.

Ultimately, American families will have less of everything—except dependence on the federal government, which is not the system of capitalism that has supported our increased freedom and prosperity.

This comes after an unimaginable spending spree so far by Congress. Even before the Senate passed the $1.2 trillion “infrastructure” bill, Congress previously  authorized almost $6 trillion in new spending, allegedly due to COVID-19, and executive actions by the Trump and Biden administrations had authorized almost $1 trillion more. As a result, the federal deficit tripled to $3.1 trillion in 2020 and could be worse this year.

What’s in the reconciliation bill? While we don’t know the exact details until Democrats finish writing the text in mid-September, here’s a rough estimate based on the budget resolution that comes before it. This estimate is from the Senate Budget Committee’s ranking member:

$4.2 trillion in new spending over 10 years, but excluding budget gimmicks this amount could be north of $5 trillion.
Of that sum, $3.5 trillion is mandatory That means it likely never goes away.
$263 billion in discretionary spending.
$390 billion in increased interest on the debt (roughly the size of Israel’s the entire GDP).
National debt held by the public soars to $40 trillion (119% of GDP) by 2031.
Total debt (subject to limit) soars to $45 trillion (134% of GDP) by 2031.
There are tax hikes, of course. As the New York Post reports, “The bill would hike taxes on businesses and incomes over $400,000 while also making the state and local tax (SALT) deduction cap more generous, in effect lowering taxes for some residents of high-tax jurisdictions like New York.”

But there’s so much more in the bill.

Under the guise of “reconciliation” (which is a process that supposed to be used only for truly budget-related items), the Senate is passing a slew of new initiatives—a grab-bag of progressive priorities. Many Democrats are still pushing for an amnesty program, administered perhaps through green cards, to be part of the Reconciliation bill. And the draft resolution includes such things as “free” preschool for all 3- and 4-year-olds and two “free” years of community college for all. But, of course, nothing is free, as these expenditures will come at a high price tag to taxpayers.

There are multiple elements of the Green New Deal, as well as an expansion of Medicare, Medicaid, and Obamacare.

This vision for America is not the vision Americans have for themselves—stepped up levels of dependency on the government, higher taxes and more burdensome regulations, and less opportunity for working class families to get ahead. This is now what America is supposed to be.

Rebranding doesn’t always work, but Salton’s name change on its little grill got the attention of other appliance makers. Pretty soon, there was an Evander Holyfield Real Deal Grill (among other would-be competitors). But the George Foreman Grill has remained the undisputed champ.

The Democrats, fresh off their own success with the “infrastructure” bill in the Senate, hope for another win with the reconciliation bill. But there’s still time for fiscal sanity that works toward true infrastructure—roads and bridges—and that keeps the federal budget well below the Foundation’s Responsible American Budget.

Republicans—and any responsible Democrats who wish to join them—must work to stop the insanity before the costly repercussions of further inflation, likely stagflation, and a debt crisis put Americans in a world of hurt that no name change can cover up.

Commentary

President Biden and Congressional Democrats have proposed roughly $6 trillion in new spending over a decade of hard-earned taxpayer dollars. To put this into perspective, this exceeds the economic output of every country except the U.S. and China, matches the $6 trillion authorized for COVID-related items since the pandemic—with nearly $1.5 trillion unspent—and exceeds the annual federal baseline budget of $4.8 trillion.
To put it bluntly, this reckless spending will destroy America’s fiscal and economic institutions by pushing us toward insolvency, dependency, and insanity.
The first proposal that the Senate, with some Republican support, recently passed a motion to proceed on is a mostly a progressive wish list of spending. It’s $1.2 trillion on “infrastructure,” with an unfunded $550 billion of it being new spending as the rest are funds previously authorized but not yet spent.
But it has just $110 billion, or less than 10%, for what’s historically been considered infrastructure—roads and bridges. The other 90% is to fund mass transit waste, green energy nonsense, and more items that the states or the private sector could do.
This first proposal should die or at least be cut down to actual infrastructure projects.
The second proposal is a reconciliation package deemed as “human infrastructure” at an astronomical cost of likely $5 trillion over a decade (with little backing documentation on what human infrastructure is).
This proposal will not only dramatically expand the federal government’s role in everyday American life but will contribute to stagflation not seen since the 1970s. It would fundamentally expand people’s dependency on the federal government and destroy the potential of Americans.
Here’s how it spends money we don’t have and turns America into something she is not.
Authorizing Runaway Government Spending

• Congress has already authorized almost $6 trillion in new spending, allegedly due to Covid-19, and executive actions by the Trump and Biden administration has authorized almost $1 trillion
• As a result, the federal deficit tripled to $3.1 trillion in 2020 and is expected to be in the same ballpark this year.
• Instead, we need less spending in the short term and a spending limit imposed based on the Foundation’s Responsible American Budget.

Raising Taxes

• Raising taxes on corporations and investment by $3.5 trillion will decrease our global competitiveness, decrease investment in America and result in less economic growth, fewer jobs, slower wage growth, and higher taxes on many Americans. Despite Biden’s promise to not raise taxes on those earning less than $400,000 a year, this proposal will raise their burden both directly and indirectly, especially for low-income earners.
• These taxes disincentivize saving and investment so much that some tax increases will result in less tax receipts.
• Instead, faster economic growth, more job creation, and faster wage growth can be achieved by reducing taxes and spending.

Driving Higher Inflation

• The general level of prices (CPI) rose 4% over the last year—the largest 12-month increase since August 2008. Meanwhile, real wages fell 1.7% indicating that consumers are worse off.
• More government spending when the Federal Reserve has already doubled its balance sheet and is purchasing over a trillion dollars a year in Treasury bonds will exacerbate existing inflationary pressures and make things even worse.
• Instead, there should be strict fiscal and monetary rules to return to policy normalcy.

Disincentivizing Work

• Much of the newly printed money has subsidized the unemployed, giving the average family of four more than $109,000 in government assistance through September 2021.
• In 19 states, a family of four can currently receive the equivalent of over $100,000 in salary with no one working. Some in Congress want to further expand these handouts and make them permanent, but this will redistribute more from the private sector and trap many people in a cycle of dependency.
• Instead, we must stop disincentivizing work by not extending the federal enhanced unemployment payments and by not making permanent the enhanced child tax credit.

Interfering with Health Care

• The package imposes socialist price controls on prescription drugs which will reduce the number of new drugs introduced into the U.S. market.
• Congress already expanded costly Obamacare subsidies in the last 18 months and expanded Medicaid through emergency powers, and now it plans to expand Medicare. That’s despite Medicare Part A being on track to become insolvent by around 2024.
• Instead, we should increase price transparency, remove unnecessary regulations on prescription drugs, and use alternatives like direct primary care to provide better health outcomes at a lower cost.

Pushing the Green New Deal

• The plan aims to cut total U.S. carbon emissions in half by 2030 and to have 80% of the nation’s electricity come from zero-emission energy sources.
• Fossil fuels currently provide 60% of U.S. electricity, with another 20% coming from nuclear. Completely eliminating fossil fuels from electricity generation by 2030 would reduce global temperatures in 2100 by an immeasurable 042 degrees Celsius.
• Instead, these efforts should be trashed, and an all-of-the-above energy production strategy should be supported that removes obstacles to innovation and adaption.

“Free” Community College

• Tuition at community colleges is relatively low and programs like federal Pell Grants are already available to those who cannot immediately afford the tuition.
• Subsidizing community colleges further will only make these schools more inefficient, just as federal funding for other tertiary schools has caused their costs to explode, especially at the administrative level.
• Instead, students should find paths that best meet their unique needs and that meet the skills demanded by employers. This includes career and technical education along with apprenticeships that typically don’t burden students with debt without job opportunities.

Ultimately, these big-government, green-energy boondoggle, dependency-inducing, tax-and-spend proposals coming out of D.C. should be rejected; They will weaken families, destroy jobs, and hurt our future. Instead, Congress should focus on removing obstacles hindering opportunities for Americans to flourish.

Commentary

​Every dollar the government spends comes from taxpayers. The late economist Milton Friedman said, “The burden of government is not measured by how much it taxes, but by how much it spends.”

Taxes should only fund limited government at the least economic harm, which Texas does well by depending mostly on sales taxes—though local property taxes also impose a hefty toll.

Therefore, to keep state taxes lower than otherwise so Texans can reach their full potential, sound fiscal policy must begin with spending restraint, which the Foundation’s Conservative Texas Budget has helped achieve.

But that fiscal restraint in Texas was limited from at least 2004 to 2015. The average growth of the six two-year budgets then was 12% compared with just 7.3% in population growth plus inflation, which measures the average taxpayer’s ability to pay for government. This excessive spending compounded over time, resulting in even higher taxes and less prosperity than otherwise.

A clear break in the state’s budget happened in 2015. The average biennial growth of the four budgets since then for 2016 to 2023 has been 4.8% (less than half of the prior six) compared with population growth plus inflation of 6.2%. And the 87th Legislature finally passed a stronger spending limit in SB 1336 sponsored by Sen. Kelly Hancock and Rep. Greg Bonnen.

Texas is now leading. How?

One answer is new leadership. After the 2014 election of Gov. Greg Abbott and Lt. Gov. Dan Patrick, the Republican-led Texas Legislature had a mandate for fiscal conservatism. Consider how in 2015 the state passed a budget for 2016-17 below population growth plus inflation along with a historic $4 billion in tax relief. That fiscal restraint continued over much of the next three budgets providing opportunities for $5 billion in property tax relief in 2019 with a 7-cent compression to the school district maintenance and operations property tax rate.

Another answer is that even before the 2014 election, the Foundation had created the Conservative Texas Budget (CTB) as a clear and achievable standard for lawmakers.

The CTB sets a maximum threshold on the total budget based on population growth plus inflation over the last two fiscal years before the regular session. We release it early to provide a limit for state agencies to have available for their legislative appropriation requests and then for legislators to use during the appropriations process. Then there’s keeping it on the minds of legislators and taxpayers through testimonies, commentaries, and more, so that Texans can keep more of their money.

The real reason for Texas’s fiscal success is the internal and external institutional pressures around the Texas Capitol and across the state. That’s why Texas is leading in sound fiscal policy.

The latest 2022-23 CTB set a maximum threshold of $246.8 billion on the state’s budget based on a 5% increase in population growth plus inflation. Surprisingly, because even though they had more revenue to appropriate, both chambers’ introduced budget versions were below the CTB, with the House’s version being exactly $246.8 billion.

Ultimately, the state budget passed by the Legislature and after Gov. Abbott’s vetoes was $4.8 billion below the CTB at $242 billion (a 3% increase above 2020-21 appropriations for an apples-to-apples comparison), excluding the $6.1 billion.

In this total budget, education ($93.5 billion) and health care ($86.7 billion) consume 73%. Compared with 2020-21 appropriations, the combined net increase in these two large areas of the budget were essentially flat. But in general, these are rising at a rapid rate and need structural changes. There was also $1 billion toward SB 321, the result of an effort that made the Employees Retirement System a cash-balance plan for new employees, which is a good step toward a defined-contribution system.

Because the regular session was “incomplete,” Gov. Abbott called a special session. Then Comptroller Glenn Hegar announced that with faster economic growth and tax collections, there is now an expected $7.85 billion surplus for the 2022-23 biennium, with $12 billion expected in the rainy day fund.

This means that whenever the Democrats return to work, the Legislature will likely appropriate some of that surplus. To help lower property tax bills now, which is what Texans want, at least $5 billion should go to property tax relief along with charting a path to eliminating nearly half of the property tax burden.  These appropriations, excluding property tax relief, will raise the budget closer to the CTB but will likely remain below it.

If that’s the case, the average growth over the last four budgets would be about 1-percentage point below population growth plus inflation. This extraordinary feat along with the stronger spending limit in Texas will help uphold fiscal responsibility to make up for earlier excesses. Still, there’s room to improve, as less spending can result in less taxing—so we can keep Texas Texan.

Commentary

​At $6 trillion, President Joe Biden’s first budget calls for an unprecedented level of federal spending. Republican members of Congress who criticize the president’s plan are understandably reminded by Democrats that the GOP did not do much to resist—and even contributed to—excessive government spending during President Donald Trump’s time in office. During those four years, rampant spending led to nearly $8 trillion in more federal debt, though this included pandemic-related funding approved with bipartisan support. Still, this represents a 40% jump in mortgaging the future of ourselves, our kids, and our grandkids. It’s time for responsible budgeting at every level of government.

Republicans in Washington don’t have much of a leg to stand on when it comes to criticizing the profligacy of congressional Democrats and the Biden administration. But Republicans in many state capitals across the country, however, do. That’s because Republican governors and lawmakers in several states are getting government spending under control by passing conservative budgets which remain below population growth plus inflation. North Carolina is among the most prominent examples of this phenomenon—but is not the only one.

Since Republicans took control of the North Carolina General Assembly for the first time in a century a decade ago, they have kept growth in state spending on a conservative budget trajectory that keeps government growth within the average taxpayer’s ability to fund it. Since 2013, North Carolina state spending has grown by an average of 2.24% annually, which is below the population growth plus inflation rate of 2.58%.

By keeping the rise in state spending below a conservative budget limit for so many years, North Carolina lawmakers have been able to return billions of dollars to taxpayers over the past decade while realizing repeated budget surpluses. The income tax rate reduction approved nearly a decade ago continues to pay dividends for taxpayers and it may soon be improved upon. North Carolina lawmakers — led by Republican Senators Paul Newton, Bill Rabon, and Warren Daniel — proposed new legislation in April, which was approved with bipartisan support in the North Carolina Senate on June 9, that would enact the next round of income tax rate reduction.

“We have large cash reserves and we have yet another budget surplus for the sixth and seventh years,” Senator Paul Newton, Finance Committee Co-Chairman, said at a May 25 press conference. “The Republican philosophy, when government takes too much money from the people, is to give it back in the form of tax relief. In our view, it’s never, never the government’s money, it’s the people’s money. So we are proposing yet another tax cut because we believe people spend their money better than government does.”

By continuing to pass conservative budgets, North Carolina lawmakers have made the Tar Heel State one where lawmakers are leading by example, demonstrating for federal lawmakers that government spending restraint is both achievable and politically advantageous. Other states where lawmakers are also passing conservative budgets include Tennessee, Texas, Florida, Montana, and Iowa.

In neighboring Tennessee, lawmakers needed to make sure their new budget, enacted earlier this spring, stayed below $42.8 billion so as to pass a conservative budget. The new state budget signed into law by Governor Bill Lee (R) spends a total of $42.6 billion. By only increasing the state budget by 2.08% year over year, Tennessee lawmakers, like their counterparts in North Carolina and other states, have made sure that state spending does not exceed the average taxpayer’s ability to pay for it, thereby mitigating the threat of future tax increases or budget adjustments.

Tennessee isn’t the only no-income-tax state where lawmakers are doing of good job of keeping government spending in check. Texas is also leading by example. Not only have Texas lawmakers once again approved a new conservative budget, they used the 2021 session to approve legislation, Senate Bill 1336, that will strengthen the state’s spending cap, ensuring fiscal responsibility for years to come. Likewise, a constitutional amendment introduced by North Carolina legislators in April, referred to as the Taxpayer Bill of Rights, if enacted, would implement a similar state spending limit in North Carolina.

North Carolina lawmakers are now working to enact a new conservative budget that provides further tax relief. Those who want to continue the sustainable budgeting of recent years received good news in early June as legislative leaders from both chambers of the General Assembly announced a consensus spending figure that, if the new budget does not exceed it, would have state spending continue to grow slower than the combined rate of population growth plus inflation. More recently, the North Carolina Senate unveiled its version of the budget, which, in addition to spending less than the figure agreed to with the House in early June, cuts the personal income tax rate from 5.25% to 3.99% while phasing out the corporate income tax by 2028. That budget was approved with a bipartisan, veto-proof majority in the North Carolina Senate on June 24.

“We are pleased to see that the fiscal restraint the General Assembly has shown over the last ten years will continue,” said Brian Balfour, senior vice president of research at the John Locke Foundation, a Raleigh-based think tank. “It’s a strategy we would like to see added to the state constitution in the Taxpayer Bill of Rights.”

Based on federal spending trends and the new proposals coming out of Congress, it may seem like no one in Washington is interested in reining in the growth of government spending and ballooning federal debt. Yet lawmakers in states across the country, including North Carolina, Tennessee, and Texas, the world’s ninth-largest economy, are showing that government spending can be brought under control. There needs to be more lawmakers willing to do so.

North Carolinians are fortunate to have leadership in the General Assembly with such courage and will, who are showing the nation what conservative budgeting looks like. In doing so, they are benefitting North Carolina taxpayers while providing a model for lawmakers in other states and in Washington to emulate.

Patrick Gleason is vice president of Americans for Tax Reform, a taxpayer advocacy organization founded in 1985 at the request of President Ronald Reagan, and is a senior fellow at the Beacon Center of Tennessee, a Nashville-based think tank. Vance Ginn, Ph.D., is chief economist at the Texas Public Policy Foundation based in Austin, Texas, and he is the former chief economist of the White House’s Office of Management and Budget during the Trump administration.

https://www.texaspolicy.com/north-carolina-is-leading-by-example-with-conservative-budgeting/

​Peanut butter and jelly. Fred Astaire and Ginger Rogers. Budget limits and budget cuts. Some things just pair perfectly together.

Here at the Texas Public Policy Foundation, I’m sometimes asked why my focus lately has been on budget limits—as seen in our Conservative Texas Budget (the model for which has been adopted by other states) and our Responsible American Budget. Both of these set hard maximum limits for what can be considered as conservative, “no government growth” budgets.

A state or national budget should grow less than the simple formula of population growth plus inflation. Beyond that, budget writers truly are increasing the size and scope of government, which crowds out the average American’s opportunities to prosper.

But why am I not talking more about budget cuts, I’ve been asked. I am! If I had my way, the federal budget would be about a quarter of its size. The actual budget proposal I worked on during my year at the White House (for FY 2021) proposed a record of $4.6 trillion in less national debt over a decade, made most of the Trump tax cuts permanent, and would have balanced the budget over time.

The truth is that budget limits and budget cuts aren’t mutually exclusive—they’re a perfect pairing. Budget limits tell budget writers, “This much, and no further.” Budget cuts are an opportunity for those writers to demonstrate real fiscal conservatism by reducing the size and scope of government.

And over time, budget limits will cut the budget as a share of the nation’s Gross Domestic Product (GDP), because the GDP tends to grow faster than population-plus-inflation.

At the national level, the U.S. budget picture would be much improved if the federal government had spent no more than population-plus-inflation since 2000. Instead of increasing our national debt by $16.2 trillion in that time, we would instead have seen a surplus of $2.6 trillion.

Budget cuts—which could have been achieved by, say, sticking with the welfare reforms enacted in 1996—would make that picture even brighter.

Here’s what we know: Irresponsible government spending damages the productive private sector through redistribution of resources, higher taxes, higher price inflation, and higher interest rates, reducing Americans’ real incomes, job opportunities, and prosperity.

Budget limits and budget cuts are both ways to attack government spending—from different directions. Both are useful; both are needed. Supporting budget limits doesn’t mean supporting more spending; limits and cuts can be embraced at the same time and for the same purpose—to allow more Americans the freedom to prosper.

Full article 

​This table provides a comparison of initial appropriations for the 2020-21 budget from the Legislative Budget Board’s (LBB) Fiscal Size-Up and for the 2022-23 budget as noted in the conference committee report for SB 1 General Appropriations Act. We compare the budget with the Foundation’s Conservative Texas Budget (CTB) limits based on on a 5% increase in population growth plus inflation.

We exclude from the 2020-21 budget the $8.3 billion in mostly federal funds for one-time Hurricane Harvey recovery expenses and the $5 billion in general revenue funds for a 7-cent tax rate compression of school district M&O property taxes in HB 3 from the 2019 session. Likewise, we exclude from the 2022-23 budget the $6.1 billion in general revenue funds to maintain last session’s property tax relief—which without this allocation would result in a 7-cent tax rate hike in those property taxes and likely more spending. And we will exclude one-time distributions of federal funds related to the pandemic. Not including these types of one-time funds is necessary for budget transparency and for not inappropriately inflating the baseline budget allowing excessive appropriations later. We also exclude the $410.2 million in all funds for Article X that Gov. Greg Abbott vetoed, and he will likely include in a special session.

The 2022-23 Texas budget is well below the CTB limits in state funds and all funds, and leaves $11.6 billion in the rainy day fund. Excluding the $6.1 billion to stop a massive property tax hike, general revenue funds decline by 3.1% and state funds are up by only 0.7%. Including it, state funds are about $725 million below the CTB. And all funds, which is the full footprint of the taxpayer’s burden to fund state government appropriations, is up 3% to $242 billion, which compared with population growth plus inflation is 2-percentage points lower and $4.8 billion less.

The growth of initial appropriations, on average, has now been well below the average taxpayer’s ability to pay for them over the last four budgets, which was directly after the Foundation created the CTB in 2015.

The Texas Legislature’s practice of fiscal restraint while meeting the needs of the state is good news for Texans. And much of the CTB was passed into statute as the Legislature strengthened the state’s spending limit by expanding the base to all general revenue funds and changed the growth limit to population growth times inflation while increasing the threshold to exceed it to a three-fifths majority in each chamber. After the Foundation has worked toward this statutory change for multiple sessions, this is a huge feat that will have long-lasting benefits to Texans.

We encourage Gov. Greg Abbott to build on these policy wins and more by providing paths for more fiscal gains—such as substantial property tax reductions and improved local revenue limitations—in a special session.

Full article with figures.

Price inflation in May 2021 was up 5% over May of 2020. At this pace, the general level of prices will double in less than 15 years. The last time inflation was running this high was in 2008, when gasoline first breached $4 a gallon. And inflation expectations for the next year have reached a record high.

But what did we expect when the government created trillions of dollars and forced people to stay home from work? The Federal Reserve’s balance sheet has exploded by 100% to more than $8 trillion since last year; it was the perfect recipe for inflation with more money supplied than goods and services available to buy.

There have been red flags for months, with businesses announcing that they are raising prices.

Proctor & Gamble manufactures hundreds of products across dozens of brands from diapers to detergents. General Mills makes various foodstuffs from cereals to soups and pastries to pizzas. Hormel also sells various food products. Whirlpool manufactures appliances. Texas’s own Kimberly-Clark makes tissues and paper towels, among other products. Tempur Sealy sells bedding.

Americans use or consume products from these businesses every day, and those companies are all raising their prices, which hurts consumers’ purchasing power. Grocery stores and restaurants across the country have been raising prices as well.

But why these sudden price increases? Businesses are facing higher costs. Commodity prices are climbing quickly, as are wages due to labor shortages.

The contention that current inflation numbers are skewed because of “base-effects” from the early months of the pandemic is incomplete. The consumer price index (CPI) in May 2020 (the lowest point of pandemic-era prices) was just 1% below the CPI’s then-record high in February 2020, which has been eclipsed since August 2020. So, the base-effects argument does not explain a 5% annual increase.

Inflation is a tax, pure and simple, but not an explicit tax. Instead, it robs you of your purchasing power subtly and silently so that most people are none the wiser. It is not accomplished expressly through legislation, but through the sophisticated maneuvers of the Fed, giving inflation an air of mystery.

In reality, there is nothing mysterious about inflation. When the Fed creates money faster than the economy grows, then prices will tend to rise. That is why there is also no end in sight to this inflationary wave. The Fed continues to target historically low interest rates by creating money every month at an annual pace of more than $1.4 trillion, far faster than the economy is growing. The result is real wealth being taken from you—taxation without representation.

Nevertheless, it is surprisingly easy to stop inflation.

Ending inflation only requires the Fed to cease flooding the economy with money. If the Fed slows its money creation, though, then Congress cannot use inflation to finance the nation’s deficits, which seems to be Congress’s favorite way to spend.

Conversely, if Congress were to achieve a balanced budget through sound fiscal policy, then the Fed could return to its original mission of price stability, and not worry about backstopping massive federal deficits with newly created money.

This could be more quickly be achieved by implementing the Texas Public Policy Foundation’s Responsible American Budget, which sets a total budget limit at no more than the average taxpayer’s ability to pay for it as measured by population growth plus inflation. While this would not completely solve the problem of inflation, a journey of a thousand miles begins with a single step, and this will point the country in the right direction.

We must not let the best be the enemy of the good; something must be done sooner rather than later to stop the current runaway spending in Congress.

For example: Senators in Congress have recently reached a tentative bipartisan “infrastructure” deal to spend another $579 billion without raising taxes—or more accurately, without explicitly raising taxes. The spending will be financed with bonds purchased by the Fed, which means through the implicit tax of inflation. That $579 billion will still be collected, but not through so obvious a mechanism as the IRS.

No, inflation is too subtle, silent, and sophisticated for that.

​Full article

Sound fiscal policy must begin with spending restraint. Gov. Kim Reynolds and the Republican-led Iowa Legislature continued to follow pro-growth fiscal conservatism during the most recently concluded session.

The Legislature passed an $8.1 billion FY 2022 state budget, which provided an estimated $1 billion in tax relief to taxpayers instead of growing government. This brings the budget well under the average taxpayer’s ability to pay for it, as measured by the Tax Education Foundation’s Conservative Iowa Budget, which sets a maximum threshold based on population growth plus inflation.

This budget is $290.7 million more than the FY 2021 budget. The $8.1 billion budget is over $4 million more than what Reynolds initially proposed. Nevertheless, Iowa’s fiscal house is in good standing.

The budget spends 97.66% of projected revenues for FY 2022, leaving a projected $385.8 million surplus. There is plenty of money available for a rainy day, including a combined $817.9 million in the Cash Reserve Fund and the Economic Emergency Fund and $316.4 million in the Taxpayer Relief Fund.

Reynolds and conservatives are criticized by many progressives and liberals who argue that areas of the state budget are underfunded, especially public education and health care (DHS), which includes Medicaid. However, this does not mean that spending has declined.

From 2013 to 2020, Iowa’s budget has grown 1.6 times faster than population growth plus inflation. Last year’s budget (FY 2021), which passed during the pandemic, was considered a “status quo” budget, with spending only slightly higher than the previous year. This is hardly austerity-style budgeting and only in government can slowing the growth of spending be considered a “cut.”

Public education (pre-k-12, community colleges and higher education) and health care consume 79.9% of the budget. In FY 1995, both were just 47.2% of total spending, so their share of spending is up nearly 70% since then. State aid to schools continues to be the largest appropriation at $3.4 billion, and added with funding to other payments to public education, is 54% of the budget. The health care budget is more than $2 billion.

The growing cost of both public education and health care should concern policymakers. The rapid increase in spending on these programs is on autopilot and is crowding out other budget priorities along with the private sector through higher taxes. Structural reforms to these programs are needed.

Spending restraint is the cornerstone for sound fiscal policy, and thereby helps keep taxes in check. A priority for the governor was making Iowa’s tax code and economy more competitive, while the Legislature provided much needed tax relief.

In part, this tax reform repealed the state’s stringent income tax triggers, which will allow the top rate to fall to 6.5% in 2023. This will provide greater tax certainty and create an opportunity for future tax rate reductions. Also, Iowa’s obsolete inheritance tax will be phased-out over a five-year period. The county mental health property tax levy will be phased out, as well.

As a result of prudent spending, the Iowa Legislature can consider further tax reform during the next legislative session. Tax reform in Iowa is far from complete and both individual and corporate tax rates need to be lowered and ultimately eliminated.

If policymakers want to seriously reduce tax rates, allowing for more money to stay with families, and make the tax code more competitive with other states, spending must be prioritized and limited.

Spending discipline is vital, and the Iowa Code limits spending to 99% of projected revenues. Strengthening the spending limitation by placing it in the state Constitution and limiting spending to population growth plus inflation, as outlined in the Conservative Iowa Budget, would better match the average taxpayer’s ability to pay for it every session.

The actions by Gov. Reynolds and the Iowa Legislature offer a clear contrast to President Joe Biden (and Democrats in Washington), who in his first 100 days in office has passed or proposed $6 trillion in new spending.

Fortunately, Iowa provides an example of responsible budgeting to federal policymakers and state legislators to provide more opportunity for people to flourish.

Full article 

Texans will benefit from the policy wins achieved in the 87th Texas Legislature. Among other things, lawmakers:

Passed a Conservative Texas Budget
Strengthened spending limits
Maintained property tax relief
Improved taxpayer protections
Reduced regulatory barriers

The Texas budget, SB 1, came in below the Conservative Texas Budget—in fact, it is about $5 billion below the ceiling the Texas Public Policy Foundation set after excluding the $6.1 billion to maintain the property tax relief from last session. Great credit is due for Senator Jane Nelson and Representative Greg Bonnen because Texans simply cannot afford to pay for out-of-control spending.

Fortunately, measures to address future spending were addressed, too. SB 1336 by Senator Kelly Hancock was sent to the Governor’s desk. This makes much of the Conservative Texas Budget statute by limiting lawmakers from increasing the budget by more than population growth and inflation.

Following the 2019 Session, many local governments sought to bypass the 3.5% limit on property tax growth by taking on more debt in the form of certificates of obligation. This debt would then be passed on to taxpayers. HB 1869 by Representative Dustin Burrows clarifies the definition of debt and reduces this practice for taxing entities.

Local governments also sought to use the “disaster” loophole in 2020 to raise property taxes by 8%. Senator Paul Bettencourt filed SB 1427 which clarifies the types of disasters that can be used to bypass the 3.5% property tax rate limit—COVID-19 was NOT one of the disasters.

Additional bills that expanded on property tax reforms from the 2019 Session were SB 1438 and SB 1449 by Senator Paul Bettencourt. The first would clarify tax rate adjustments and the second would raise the income threshold from personal property from $500 to $2,500 which cuts taxes for small businesses.

On the regulatory side, there were several wins like HB 1560 by Representative Craig Goldman which cuts back on occupational licenses and cuts regulations. HB 139 by Representative Brad Buckley provides license reciprocity for military members, veterans, and their spouses so they will not be forced to go through a new licensing process for an occupation when they move to Texas from another state. Finally, there was SB 424 by Senator Juan “Chuy” Hinojosa which reduces regulatory penalties against small businesses for first time violations.

​Full article

​President Biden finally released his FY22 budget proposal on a Friday afternoon before a long Memorial Day weekend. This was good timing for the White House because it helps hide how irresponsible his budget is for America. But Americans know better, and his budget should be rejected and replaced with one that follows a responsible, pro-growth path forward.

During my year as the chief economist of the White House’s OMB during the Trump administration, I helped determine the economic assumptions and other key decisions in the President’s last FY21 budget. We advocated for a path toward more free market capitalism-supporting robust economic assumptions.

This policy forecast included faster economic growth resulting from making almost all of the Trump tax cuts permanent, further deregulations, and fiscal restraint of nearly $5 trillion in savings over a decade to balance the budget and to support opportunities for Americans. The path built on what was already working—an agenda that helped America reach a record low poverty rate and a record high in real median household income in 2019.

As someone who has worked at a think tank in Austin, Texas for years, I’ve seen the gains made by the Texas Model—no personal income tax and relatively lower government spending, taxing, and regulations, which contributes to more economic freedom, lower cost-of-living, and greater human flourishing compared to most states. Alternatively, California has taken a different approach—with now the second-highest personal income tax rate, stricter regulations, and substantially more spending that crowds out economic activity and destroys prosperity.

Given our system of federalism that was designed to produce a laboratory of competition among states, we can clearly see that the Texas Model works well over time, compared to states like California.

The Trump administration learned from the more fiscally responsible states, and used the Texas approach when it came to criminal justice reform, deregulation, lower taxes and proposed spending restraint, which resulted in substantial, tangible economic gains. Unfortunately, the Biden administration is following the folly of the big-government California model—which demonstrably doesn’t work.

There are at least three ways that President Biden’s first budget is irresponsible. First, Biden’s $6 trillion budget sends us down the road toward socialism.

The increase in the budget from the pre-pandemic baseline FY20 budget of $4.81 trillion shows that Biden’s budget is 25% higher. If Biden’s budget was limited to the average taxpayer’s ability to pay for it, as measured by population growth plus inflation of 1.37% in the Foundation’s Responsible American Budget, then taxpayers would foot the bill for a maximum of $4.88 trillion. The president’s budget is $1 trillion, or 23%, more than this metric, meaning that his budget proposal takes ownership of more means of production throughout economy and livelihoods (which is the definition of socialism).

The excess spending continues over time as the budget expands by $69 trillion over a decade, increasing the national debt by 50% or by $14.5 trillion, and results in the debt owed by each American rising by 50%, to about $120,000. The American Jobs Plan would add $529 billion and the American Families Plan adds $270 billion. These expansions of government are really anti-jobs, anti-families, and anti-American, as this is a road without a good destination.

Second, the Biden budget makes flawed economic assumptions.

As someone who helped determine the economic assumptions in President Trump’s final budget, I understand how there are many variables underlying the president’s budget. It’s not an exact science, but it’s important to do your due diligence.

An unlikely economic assumption in Biden’s budget is that real gross domestic product keeps increasing over time, despite the substantial tax hikes of more than $3 trillion. Additionally, the administration is acknowledging its proposals are more about socially engineering society to its preferred outcomes rather than achieving more economic prosperity. Economic growth in his budget is just 3.2% in 2022 and just 2% in 2023 after rampant government spending, with less growth thereafter. These growth rates are substantially less than the post-WWII average of 3% and lower than the three pre-pandemic Trump years. In short, the economic assumptions are weak even given a Keynesian view that government spending drives more growth, which I don’t share.

And even those growth rates are optimistic as higher taxes slow growth, just as substantially higher debt from the excessive spending does. Higher debt means either interest rates will have to rise as more debt is issued or the Federal Reserve will have to continue monetizing it and bring about inflation, which also contributes to higher interest rates.

Currently, inflation is about 4% (at an annualized rate), and will likely stay that high. It could even increase with the large increases in the money supply and the continued purchases by the Fed of $120 billion in Treasury securities monthly. Again, Biden’s budget fails again as it assumes inflation is only 1.8% in 2021 and plateaus at 2.3% starting in 2025, which is unlikely given the situation.

Meanwhile, the 10-year Treasury note rate is about 1.6%, but the proposed budget has it at only 1.2% for this year and rising to only 2.8% by 2031. With $14.5 trillion added to the debt (including net interest rising from $345 billion to $883 billion in 2031) and the probable higher inflation that will need to be subdued with less money creation and resulting higher interest rates, we could see much higher interest rates than what his budget assumes. This would result in even less economic growth than what’s in Biden’s budget, thereby increasing the number on welfare programs, which will itself drive up government spending. This will also influence other budget items.

Assuming lower interest rates in the Trump budget made more sense, given we were putting the budget on a path toward balancing over time. But the Biden budget maintains deficits of more than $1.3 trillion every year, with the deficit-to-GDP ratio only going down to 4.2% in 2029, which is well above the historical rate of 3%.

This brings us to the third way that Biden’s budget is irresponsible: It mortgages ours and our kids’ and grandkids’ futures.

Irresponsible government spending causing massive deficits along with rising net interest over time will cost us more and reduce opportunities for good-paying jobs, affordable credit, and a lower cost-of-living. It will also raise interest rates, resulting in lower real incomes and fewer job opportunities.

Fortunately, we know that the pre-pandemic policy approach taken by President Trump supported record levels of human flourishing. Congress should have done a better job of reining in government spending, and the administration could have touted spending restraint more. But even then, the growth in spending wasn’t at the level proposed by Biden. If Congress had controlled its spending, then the deficit, interest rates, inflation, and trade deficits would likely have been lower. Those goals are still worth pursuing.

That’s why TPPF created the Responsible American Budget, which is supported by many policymakers, economists, and thought leaders. It sets a maximum threshold for the federal budget every year based on the average taxpayer’s ability to pay for it (based on population growth plus inflation). This is supported by research on fiscal rules that have worked well in other countries and states, including Texas, Montana, Iowa, and Alaska.

By rejecting President Biden’s irresponsible budget proposal and instead incorporating the RAB in the budget process, Congress could enact a budget that meets the needs of the country without excessively burdening American families. The budget is already far too big; its size and scope are well above what our Founding Fathers imagined, which is why fat should be cut and the budget growth should be limited to the RAB, which will leave more money with families and allow entrepreneurs to build on the success of free-market capitalism.

Join us in ending the days of fiscal insanity in D.C. and replacing it with fiscal responsibility.

Full article

The very popular narrative is that Republicans only care about budget deficits and the spiraling national debt when Democrats are in charge. Writing in the Washington Post’s “The Fix” column, J.M. Rieger says that “Republican mea culpas on the national debt follow years of demands for spending cuts to reduce the debt.”

But I was there in the Trump White House, in the Office of Management and Budget. The truth is that the President’s FY 2021 federal budget proposed a record of $4.6 trillion in less national debt over a decade, made most of the Trump tax cuts permanent, and would have balanced the budget over time.

In my work since then at the Texas Public Policy Foundation, we have helped other states move toward our model of a Conservative Texas Budget, and now—working with the Republican Study Committee and many others—we’re doing the same for the gargantuan federal budget. The proposed path to bring fiscal sanity back to Washington, D.C. is the Responsible American Budget.

Here’s what we know: Irresponsible government spending damages the productive private sector through redistribution of resources, higher taxes, higher price inflation, and higher interest rates, reducing Americans’ real incomes, job opportunities, and prosperity.

At the state level, Texas has addressed this with the Conservative Texas Budget. Its main premise is that government shouldn’t grow any faster than the average taxpayer’s ability to pay for it. To provide a bright line marking the limit, we use a proven, simple formula: population growth plus inflation.

This simple formula provides a view of the budget from the taxpayers’ perspective, which is essential given the government has no money but rather collects taxes from us to fund limited roles given to the federal government.

By combining the fact that Texas has an increase of about 1,000 new Texans per day and Texans’ wages are correlated with price inflation, more people and higher wages can support more government provisions, as necessary. This doesn’t mean that government must grow by this simple formula but rather this is the maximum growth each year to avoid further burdening Texans.

As Milton Friedman noted, “the true burden of government is not how much it taxes, but by how much it spends.” Any growth in government spending that exceeds our simple formula represents the kind of growth that means a heavier burden on taxpayers.

That kind of expansion is bad for working families, who pay a larger portion of their income in state and local taxes. In Texas, we have successfully kept the state’s budget below the CTB limits, on average, for the last three legislative sessions, and look to do so again during the current session.

While there have been several attempts to reduce the excessive growth of federal spending in the U.S., these attempts have had limited success, if any, as indicated by the $28 trillion—and quickly rising—national debt and its $350 billion—and skyrocketing—interest payments.

And despite the attempts by the Trump administration to rein in excessive government spending, Congress wasn’t interested and ran up massive spending that led to annual deficits. And then any movement toward reducing it was negated by the COVID-19 pandemic and ensuing fiscal profligacy. It led to appropriations outside of the normal federal budget process of at least $6 trillion over a decade during the Trump and Biden administrations. While some of these appropriations may have been necessary, it clearly made the fiscal path substantially worse.

In addition, the Biden administration has proposed the American Jobs Plan and the American Families Plan that would increase spending by more than $4 trillion over a decade, bringing this administration’s passed or proposed spending to $6 trillion in just the first 100 days.

Clearly, it’s time for fiscal sanity.

Based on the fiscal problems facing the U.S., the federal government needs an annual budget benchmark. We offer such a benchmark in the form of the Responsible American Budget (RAB). The RAB provides a maximum threshold to freeze real (inflation-adjusted) per capita spending, which is simply a limit based on population growth plus inflation.

What would this look like? According to our calculations, a RAB for fiscal year 2022 would be no higher than $4.88 trillion, representing a 1.37% increase over FY 2021, excluding the extraordinary pandemic-related expenditures to not inappropriately inflate the baseline budget to allow for excessive spending later.

The costly effects of these fiscal and subsequent monetary policy excesses challenge Americans’ opportunities to improve their communities’ as well as their future by owning a business, having the dignity of work, saving for a rainy day, and donating to institutions throughout civil society.

​The RAB’s spending restraint and its fiscal benefits would allow for a more inclusive institutional framework that supports more freedom for people to choose their destiny and more opportunities to flourish.

https://thecannononline.com/deficits-were-always-bad-the-responsible-american-budget-addresses-excessive-spending/

Irresponsible government spending damages the productive private sector through redistribution of resources, higher taxes, higher price inflation, and higher interest rates, reducing Americans’ real incomes, job opportunities, and prosperity.
While there have been multiple attempts to reduce the excessive growth of federal spending in the U.S., these attempts have had limited success, if any, as noted by the $28 trillion—and quickly rising—national debt and its $350 billion—and skyrocketing—interest payments.

There is debate about whether deficits matter, and these days many from across the political spectrum suggest that they do not; they are partially correct. The part of fiscal policy that matters to our daily lives is government spending, which is the fundamental source of higher taxes, more regulations, higher debt, and more crowding out of the productive private sector.

Given these challenges, the time is now to address excessive government spending, and we need to promote sound fiscal rules that make the budget tangible for Americans to understand and to hold elected officials accountable for excessive spending. A bold way to do this is provided by the Foundation’s Responsible American Budget.

Read paper here.

​The economic policies of the Biden administration—Bidenomics—is conspicuously marked by lofty rhetoric, grand promises, and the best of intentions. It espouses helping the poorest among us, along with amorphous but attractive values like “fairness.” But the results of these policies do not live up to their intentions. Here are just a few examples.

The American Relief Plan does not provide relief for Americans. Instead, it threatens states’ sovereignty and prevents Americans from receiving tax relief.

The American Jobs Plan does not create jobs, but green-energy flimflams. It stifles real job creation through perverse incentives and burdensome regulations. The expansion of unemployment payments is contributing to 6 million fewer jobs, because many people are making more on unemployment than they did while working.

The American Family Plan does not strengthen families, but government dependency. It weakens families by making people reliant on federal programs instead of each other. It also provides health care subsidies without accounting for income, meaning that the very wealthy can receive taxpayer-subsidized health insurance.

The idea of fairness has taken a conspicuous role in the current administration’s agenda, yet its proposed tax changes will result in lower wages, fewer jobs, and less savings, burdens which will fall disproportionately on low-income households.



Inside this Trojan Horse of fairness, Bidenomics seeks higher marginal tax rates on wages, dividends, and corporate income, along with higher death taxes, taxes on unrealized capital gains, taxes on retirement savings, and more.

Infrastructure is a key pillar of Bidenomics, but not the infrastructure you’re probably thinking of. The administration’s proposal allocates only a few percent of its infrastructure dollars to roads, bridges, electrical grids, water and sewer mains, etc. It pours money into green-energy boondoggles, and even seeks to bulldoze highways in perfect condition if they are too close to minority neighborhoods, among other outlandish plans.

To pay for record-breaking spending, Bidenomics relies on funding from the federal reserve, a surefire way to produce inflation. Nothing in this life is free, and we are witnessing those trillions of dollars in government spending fuel rising prices. Inflation is decreasing real wages, particularly among low- and moderate-income households. The very people whom these policies are supposed to help are instead being undermined economically.

If these policies worked only half as well as the names of the bills imply, economic growth would be breaking records, and no one would remain in poverty. Instead, these policies are holding back the recovery like a choke collar, and welfare rolls are swelling. Real private GDP is still about $200 billion below Q4-2019 levels, despite pouring previously unimagined quantities of money into the economy.

We should not be surprised by these results; the policies of Bidenomics—higher marginal tax rates, more government spending and regulation, excessive money creation—have been tried before and found wanting. Nevertheless, many so-called experts continue to push this agenda.

The experts were expecting almost a million jobs in the last jobs report, but we saw only a quarter of that. The experts were expecting 3.6% inflation, but we saw 4.2%. The experts were expecting Keynesianism to revive the economy, but we are seeing the economy sputter. When it comes to Bidenomics, the experts seem to be always wrong but never in doubt.

An activist in economist’s clothing favorably characterized Bidenomics as “heads down, block out the noise, deliver timely help to the American people.” They have their “heads down” alright—like an ostrich with its head in the sand, oblivious to empirical evidence all around. And what is characterized as “noise” is not irrelevant distraction, but the practical feedback that should inform policy decisions. Lastly, the “timely help” is late to the game, with funds allocated in March not actually being spent or sent out to Americans until July.

It is reminiscent of the funding for “shovel-ready jobs” described in the 2009 rescue packages. Even former President Obama admitted that the funds he authorized took years to be spent, arriving far too late to achieve their stated objective.

While some economic policies, good and bad, take years to bear fruit, we are seeing the effects of Bidenomics sooner rather than later. Those effects do not at all match the goals and intentions of the policies, so we must judge according to effects, not the intentions. As the aphorism says, you shall know a tree by its fruit.

To learn more about Bidenomics, click here.
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https://thecannononline.com/bidenomics-a-lesson-in-intentions-vs-results/