Originally published at NBC News with my quote below.
President Donald Trump has repeatedly criticized the nation’s trade deficit, which the Commerce Department reported Wednesday reached a new record high. But the same Commerce report showed the value of American exports had also hit a new record, indicating there’s still strong demand for U.S. goods and services abroad. A trade deficit simply means a country is importing more than it is exporting. As the Congressional Research Service reported in 2018, Trump’s fixation on reversing the deficit “contrasts with the views of most economists.” Maintaining a deficit usually says little about the state of a country’s economy. The U.S. trade deficit reflects strong domestic growth and consumption, especially relative to the weaker economic performance seen in many parts of the world, including most other Western developed countries. “Trade helps us to be better off,” said Vance Ginn, an economist and adviser in Trump’s first term. Whether it is sourcing goods that the U.S. no longer produces or which can be produced more cheaply elsewhere, large American import levels reflect strong demand from consumers for stuff — and the U.S. economy as a whole generally benefits from this arrangement, Ginn said. Countries with large trade surpluses, such as China, Russia and Saudi Arabia, tend to be heavy exporters of natural resources with relatively lower rates of domestic consumption. Trump has indicated he may prefer the U.S. to more closely resemble this group of nations. In his executive order last week laying out his new administration’s trade priorities, “investigating the causes of our country’s large and persistent annual trade deficits in goods” was the first item listed. Asked what Canada and Mexico needed to do to avoid sweeping new 25% tariffs, Trump said Sunday, “They have to balance out their trade, number one. We have deficits with almost every country — not every country, but almost — and we’re going to change it.” Because Americans tend to buy more and save less than those ib other countries, a deficit persists. Economists are nearly unanimous that Trump’s call for tariffs to reverse the deficit would raise costs for U.S. consumers — and the president himself recently acknowledged their imposition would likely lead to “pain” for some time. Trump often cites William McKinley, a former U.S. president who, as a congressman, helped implement massive trade duties, as his lodestar for how he believes the U.S. economy should be run. McKinley was indeed successful in raising large sums of money for the U.S. government several decades before the first national income tax was implemented. However, by the time McKinley was sworn in as president in 1897, the country’s transition from an agrarian to an industrialized economy had accelerated, and he ultimately abandoned the use of tariffs in favor of reciprocal trade agreements. There may have been a point in the 1980s and 1990s when America’s widening trade deficit began to cause problems again. In testimony before the U.S. Senate in 1998, Robert Scott, an economist with the left-leaning Economic Policy Institute, said trade imbalances had likely contributed to 2 million manufacturing job losses between 1979 and 1994, with hundreds of thousands resulting from the 1992 North American Free Trade Agreement alone — a pact Trump repeatedly criticized before replacing it with the United States-Mexico-Canada-Agreement in 2018. His latest volley of tariffs would contravene that very deal, which is up for review in the middle of next year. Along with the lost jobs was the effect on wages, Scott said. Since 1979, Americans’ inflation-adjusted earnings have risen only by 12%, even as the size of the overall U.S. economy has grown exponentially during the same period. Wealth inequality, too, accelerated during this time. The Wall Street Journal’s right-leaning editorial board has noted the “contradictions” of Trump’s economic policies. “Mr. Trump likes tariffs and wants more of them, but he also wants a weaker dollar to promote U.S. exports, and the two desires are in conflict,” it said this week. Most economists, left and right, believe that at this point, it would be extremely difficult to bring back a meaningful number of manufacturing roles — and that those that still exist currently benefit from lower trade barriers and, in some cases, recent federal programs designed to prop up key industries like semiconductor manufacturing. “It would be better if Mr. Trump and his crew dropped the strong dollar-weak dollar chatter and focused on a stable dollar,” the Journal’s editorial board wrote. “That’s what inflation-weary Americans elected the President to do.”
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Watch my interview in NTD News on 1/31/2025.
Don't miss my interview today on NTD News about Nvidia's $600 billion decline in market cap due to increased competition from DeepSeek.
We need more market competition, which will help advance the AI revolution and improve prosperity. Despite cooling inflation, consumer sentiment is still low as its impact continues to weigh on households.
Vance Ginn, president of Ginn Economic Consulting and former chief economist of the Office of Management and Budget, spoke to NTD about the future of the American economy in the next four years. Here's the post by NTD News: https://www.ntd.com/congress-must-act-to-cut-government-spending-economist_1034926.html If More Money Isn’t The Answer, What Will Truly Fix The Education System: Lars Larson Show12/17/2024 Listen here to my interview on The Lars Larson Show.
Listen here!
On this episode of the podcast, Vance Ginn, former Trump White House economic advisor, dives into the pressing economic challenges facing the new Trump administration and offers solutions rooted in pro-growth policies. Ginn outlines strategies to curb inflation and address the staggering $36 trillion national debt, emphasizing the need to cut government spending, implement tax reform, deregulate industries, and pursue free trade agreements. The former Office of Management and Budget Chief Economist also evaluates the impact of Trump’s plans to impose new tariffs, the effectiveness of Trump-era tax cuts, and the Department of Government Efficiency's role in reducing wasteful spending. Ginn makes a bold case for eliminating the federal minimum wage to foster competition and create new jobs. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info. The U.S. labor market rebounded in November as the economy added 227,000 new jobs, according to the Bureau of Labor Statistics’ monthly report. The economy recovered from the labor strife and economic fallout from two devastating hurricanes, though some of the indicators within the jobs report are mixed. NTD spoke with Vance Ginn, president of Ginn Economic Consulting and the former chief economist at the Office of Management and Budget from 2019–2020 during the previous Trump administration, on December 6, 2024: https://www.ntd.com/former-white-house-economist-skeptical-jobs-news-is-all-positive_1033130.html.
Don’t miss my interview on NTD News about excessive government spending and how Trump and DOGE could make an impact.
Originally interviewed at KTRH News.
One of the big items during the Trump whirlwind campaign, was the president-elect's promise to lower prices, and ease inflation. But can we really expect it to happen? And how long will it take? "I think you will start to see many more of the things that you buy on a daily basis, at least start to stabilize" said Texas based economist, Dr. Vance Ginn, "And that will help out many Americans across the economy." But how long will it be before we actually see results? "I don't think it will happen overnight" Ginn told KTRH, "But I would guess that within a couple of months you would start to see some changes within the cost of living across the country." If you remember, the economy and inflation were at some of the lowest levels in our nation's history during Trump's first term, a term that Dr. Ginn served in the White House's Office of Management and Budget (OMB). "When the Trump administration starts on January 20th, in the first 100 days there's going to be a lot of cuts in regulations and other things that will reduce the cost of doing business, and then that will also help to reduce prices across the economy" noted Ginn. Wasteful government spending will also be a key cut. In the meantime, 61% of Americans now say they are living paycheck to paycheck. Listen to my interview here.
Write-up on my interview here: Young people are still trying to achieve the American dream of purchasing their first home but it's become increasingly more difficult in recent years. It's not as easy today to buy a home. Many people are living in apartments or townhomes instead of houses and some may also have a roommate or two to save money in an era of higher costs for housing. Texas-based Economist Vance Ginn calls it more of an American dream instead of the American dream because it's a different dream for everyone and young people are having to scale back their dreams of ending up in a bigger home. "Folks who are just starting in their careers and trying to find a house have had to downsize those aspirations on how big of a house they can get," he said. The high housing costs are a result of multiple things happening at the federal level but also at local levels too. Ginn said excessive government spending and the Federal Reserve printing too much money have been a recipe for this disaster. "There's a lot of local zoning regulations and other things that are hindering the supply of new homes being built," said Ginn. "This has contributed to housing unaffordability across the country." Former President Donald Trump has also said that government overspending as well as the mass amounts of illegal aliens coming into the country over the last four years have caused the demand for housing and prices to skyrocket. Ginn said that approach of deporting illegal aliens can help the situation but it doesn't fully address the supply issue. Vice President Kamala Harris has proposed building around three million new homes over the next few years and providing up to $25,000 in down-payment assistance to first-time buyers. Ginn said that would only increase the already high demand and the price of housing even more and the main focus should instead be on reducing inflation and federal spending. "Cutting government spending and reducing the debt will contribute to less inflation so that people can afford things like housing and food," Ginn said. North Dakota voters could end property taxes — and pour ‘gas on the spark’ of a growing tax revolt10/21/2024
Originally published at Market Watch.
Supporters of Measure 4 say it would repeal the 'most egregious and least moral of all the taxes.' Critics say it would 'create chaos.' Many homeowners across the U.S. aren't happy with property-tax bills that have climbed alongside a pricier real-estate market. But voters in North Dakota have a chance to act on that discontent next month by repealing property taxes and barring counties, towns and other local governments from levying them. If the ballot measure passes, North Dakota would become the first U.S. state to end property taxes. Its passage could also add muscle to the push to eliminate the tax elsewhere, property-tax skeptics say. The idea has been floated in states like Texas, Nebraska and Michigan, while lawmakers in the Great Plains and Mountain West states say big reforms are needed quickly. Property taxes are the "most egregious and least moral of all the taxes," according to Rick Becker, chair of the organization that put Measure 4 on the North Dakota state ballot. The ballot measure would repeal residential, commercial and agricultural property taxes, he noted. These taxes uses opaque formulas to make homeowners keep paying for property they already own, he said. They're also based on the "unrealized" paper value of a home, he added. For Becker, a "yes" vote is a win inside the state and beyond. "Once that happens, the light turns on for so many people. As soon as a state steps outside that box, the other states see how possible that is," Becker said. "The sky didn't fall, and maybe we should give it a try." On the other hand, Chad Oban, who chairs Keep It Local, a coalition opposing the ballot measure, argued that property taxes need fixes - but not a "sledgehammer approach." The group's members include utility companies, farmers, educators, business groups and law enforcement. "I think we're going to defeat Measure 4," said Oban. "But I do think if it passes, there will be a lot of other states doing something similarly, or feeling like there's a political appetite." However, "if North Dakota - ruby-red North Dakota - thinks it's a bridge too far," it could make others reconsider their bids to bury the tax, Oban noted. The measure leaves it to state legislators to figure out where money comes from next for schools, parks and roads, he said. "It will create chaos, frankly, if it passes." Four in 10 North Dakota voters say they oppose the ballot initiative and 28% say they'll vote for it, according to a late-September poll of 500 voters commissioned by the North Dakota Monitor, a state news outlet. One-third of voters hadn't made up their minds, the poll said. Same proposal, rising property-tax frustration North Dakota voters easily rejected a 2012 proposal to end the state's property taxes. But the current proposal is coming at a time when voters are more frustrated, Becker and Oban both said. Municipalities across the country collected $363.3 billion in property taxes from single-family homes last year, according to Attom, a real-estate data-analytics company - a nearly 7% annual increase. The average property-tax bill climbed 4%, to more than $4,000, Attom said. Nationally, homeowners faced an effective tax rate of 0.87% on their home's estimated market value, per Attom data. North Dakotans paid a higher-than-average rate, at 0.99%, but still far less than residents of top-taxing states like Illinois, New Jersey and Connecticut. Seven in 10 people (69%) say their property taxes are too high, slightly more than the 67% who say their federal income taxes are too steep, according to a poll conducted in December 2023 by the University of Chicago Harris School of Public Policy and the Associated Press NORC Center for Public Affairs Research. Six in 10 people say their property-tax bill is unfair, the survey said. Though property-tax bills have climbed on the back of higher assessed values, people feel they aren't getting the same increase in services, said Jared Walczak, vice president of state projects at the Tax Foundation, a center-right think tank. Even when municipalities hold their property-tax rates steady, they are still collecting more tax revenue from rising property values, he noted. "To some degree, it's been opportunistic," he said. "That's why it's rubbed so many homeowners the wrong way." Read more: My property-tax bill spiked 40%. I fought the city - and won. Can I get tax write-offs for my time and costs? Property-tax ire isn't new, Walczak added. California voters famously capped property-tax hikes with the Proposition 13 ballot measure way back in 1978. States also have all sorts of tax breaks geared toward property-tax relief, especially for senior citizens. Talk of repealing property taxes has long occurred at the margins, Walczak said. "It's one thing to have this ongoing low murmur; it's another thing to have it start to bubble up to the surface," he said. "That seems to be where we are going now." Still, while there are good justifications to reform the tax, "none of this is a good reason to repeal the property tax," Walczak said. Karla Wagner, executive director of the organization AxMiTax, led an effort in Michigan this year to get a property-tax repeal on the ballot. The first-time attempt didn't gather enough signatures, but Wagner said her organization would try again. The taxes are salt on the wound when people are already stretched thin, according to Wagner. "Pickleball courts or someone's home - which is more important? Stop spending our money foolishly. Stop taking our homes away when we can't afford our bill," she said, referring to the state's tax-foreclosure laws. If they catch on, repeals are "going to spread like wildfire," Wagner said. Approval of the ballot measure in North Dakota, she added, would be "the gas on the spark." How Measure 4 might play out Measure 4 would "require the state to provide replacement payments" to the local government entities at "no less than the current real property-tax levies," according to the ballot measure's text. It could cost the state's coffers $3.15 billion over a two-year window, according to the measure. The projected aftermath of Measure 4 is a good reason to vote "no," according to North Dakota Gov. Doug Burgum, a Republican. "What you will do is, you will cause someone else to pick up the tab. That's what this whole thing is about. It's about, who's going to pay for it? It doesn't lower the cost of delivering anything in our state," Burgum said in August, according to the radio news outlet Prairie Public. Burgum's office did not respond to a request for comment. Becker, a Republican former lawmaker who served 10 years in the state's House of Representatives, said the state can afford the change with better decisions on its own budget. It's on counties, towns and cities to figure out how to pay for costs above what the state covers, he noted. One idea is establishing formulas for residents and businesses to pay their share of those costs. In response to critics who say the measure would take away local control over spending decisions, Becker said the approach keeps local residents in control - just not with a tax pegged to a property's assessed value. He added that, by design, the specifics of legislative next steps aren't part of the state constitutional measure; those are for elected lawmakers to decide. Vance Ginn, an economist in Texas, said state and local governments should find a way to move past property taxes, which he views as an "immoral form of taxation." Spending guardrails and changes to sales taxes could be part of the answer, according to Ginn, president of an economic consulting firm whose clients include conservative-leaning think tanks like Americans for Tax Reform. Ginn said he supports Measure 4 generally, but is concerned there "isn't a tangible path forward." If the vote fails, it's a lesson that crystal-clear funding alternatives need to accompany future repeal attempts, he added. Nevertheless, "what North Dakota is doing is helping to drive the narrative for the need to do something about property taxes," Ginn said. As Walczak sees it, turning to other taxes as a replacement would hurt "far more than a property tax does now." He's waiting to see what happens with the North Dakota vote, and what could come next. "It's likely to turn out very poorly - but it could be hard to reverse," he said. -Andrew Keshner This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 10-21-24 0600ET Copyright (c) 2024 Dow Jones & Company, Inc. Originally posted at American Enterprise Institute and by Kevin Kosar. Regular readers know that I am worried about the federal budget. The nation is $35 trillion in debt and neither party in Congress has a shown real interest in staunching the flood of red ink or fixing the 50-year old congressional budget process. America spends more on interest on the national debt than on national defense and Medicare.
Last month, former Rep. Tom Reed (R-NY) reminded us that the current budget process does not force Congress to consider revenue and spending issues in tandem when it is budgeting. So, unsurprisingly, elected officials are happy to enact tax cuts while increasing spending. This fiscal insanity cannot continue forever. Social Security benefits will be cut if Congress does not do something. And who knows, maybe financiers and foreign nations will decide they just do not want to keep purchasing so many U.S. government bonds, and a debt crisis will erupt. My chat with Dr. Vance Ginn, who worked at the Office of Management and Budget and hosts the Let People Prosper show and podcast, reminded me of two truths:
To date, neither party’s candidate for president shows any interest in leading on budget issues. In fact, each of them has proposed policy plans that would increase the deficit and debt, which is dispiriting. Originally posted at The Sentinel.
In a recently released report, the Kansas Department of Legislative Post Audit found that an economic development tool popular with cities across the state often do not work as intended. The department evaluated six “Tax Increment Financing” districts across the state to determine if they were working as designed. In 1976 the Kansas State Legislature authorized cities to create TIF districts. A TIF district, also known as a redevelopment district, is a defined area within a city that uses a tax increment to help fund development. When a city establishes a TIF district, the assessed valuation of all existing real property located in the district is effectively frozen at a base level. Any subsequent property tax revenue generated above the base level — either from increases to the value of existing property or from the added value of new property — is called the “tax increment.” The development can involve building houses or apartments, renovating retail space, cleaning up environmental contaminants, and more. The idea is to leverage future tax revenue from value increases to pay for development that might not otherwise have occurred. There are 114 TIF districts in the most populous cities in Kansas — most in Kansas City, Kansas and Wichita — and Post Audit picked six from across the state for study: - Melrose (Kansas City): this is an industrial (business and industry) district that was created in 2002. It was completed in 2022. - College Hill (Topeka): this is a mixed-use district (with a large residential component) that was created in 2006. At the time of the report, it was still active. - Douglas & Hillside (Wichita): this is a mixed-use district (with a large residential component) that was created in 2006. At the time of the report, it was still active. - Lambertz (Salina): this is a retail district that was created in 2007. It was completed in 2020. - Ken Mar (Wichita): this is a retail district that was created in 2008. At the time of the report, it was still active. - Valley View (Overland Park): this is a retail district that was created in 2010. At the time of the report, it was still active. Post Audit reviewed project documents and tax records to determine the construction and financing timelines for the selected TIF districts and found that three of the six TIF districts reviewed are not expected to pay off their TIF costs on time or have not generated enough revenue to cover these costs. All six of the TIF districts reviewed are on track to be at or below estimated costs, but most experienced delays in construction. Additionally, Post Audit said of the TIF districts they reviewed, cities have incurred between $1.6 and $7 million in direct costs and in at least four of the districts there are significant indirect costs because of and increase in crime. Moreover, it is difficult for the state to determine the efficacy of TIF districts as — while state law authorizes them — they are administered by local city governments. TIF districts don’t have the benefits many claim While Post Audit was at pains to note that six districts is too small a sample size to extrapolate results for all 144 state-wide, Economist Dr. Vance Ginn, a senior fellow at the Kansas Policy Institute — which owns the Sentinel — said in a recent post on the KPI website, that the issue is far more complicated than it might seem. “The reality of TIF projects is far more complicated, as audits frequently show delays in cost recovery and overestimated economic benefits,” Ginn wrote. “Worse, these government subsidies often crowd out private investment and leave taxpayers footing the bill for developments that may not deliver their promised benefits.” As an example, Ginn noted the College Hill district — audited by the department — in Topkea. “The audit for Topeka’s College Hill district revealed that the city is expected to use general funds to cover 40% of project costs — diverting resources from other essential services,” he wrote “This mismanagement highlights a fundamental problem with TIF districts: they often fail to deliver the economic benefits they promise while locking cities into long-term financial commitments.” Ginn, who was also the former chief economist in the White House Office of Management and Budget also noted that — while the audit was successful at quantifying direct costs to the cities, it “overlooked a more significant issue — the opportunity costs to taxpayers.” “What if the funds tied up in these TIF projects had remained in the hands of taxpayers instead?” Ginn asked in the column. “Instead of subsidizing developers, that money could have stayed in local pockets, allowing individuals to spend, save, or invest in ways that meet their needs and preferences. This missed opportunity for organic economic growth — driven by individual decisions rather than government intervention — should not be ignored.” Moreover, Ginn said, the direct costs noted by the audit do not include the additional interest on the debt accumulated when cities use bonds to finance their portion of the projects. “These costs ultimately fall on taxpayers, as cities must dip into general funds or raise taxes to cover the shortfalls,” Ginn wrote. “Worse, these funds could have been used for other purposes — like lowering taxes or investing in essential public services — if the city had avoided entering into these development deals in the first place.” Ultimately Ginn said, TIF districts are simply inefficient and expensive. “The audit of Kansas’s TIF districts reveals deep flaws in the management and outcomes of these projects,” he wrote. “Rather than continuing to gamble on subsidies that rarely deliver, policymakers should focus on spending less and putting more money back into the hands of taxpayers. The costs of TIF districts — direct and in terms of missed opportunities — are too great to ignore. “A more prosperous future lies in allowing individuals to drive economic growth through their choices rather than relying on government subsidies that pick winners and losers.” Originally published at KTRH Local Houston and Texas News
Will The Fed Repeat 1970's Policy Mistakes? By B.D. Hobbs Oct 9, 2024 Last month, the Federal Reserve lowered interest rates just in time for the election. But beyond November, many economists fear that we could be heading for a repeat of the same mistakes the Fed made in the 1970's. "Bad decisions then, seem to be reminiscent or very similar to what we are seeing today" said Texas based economist, Dr. Vance Ginn, "And my concern is, is that we may repeat those past failed mistakes of the 1970's and see inflation go up even higher because they're not taking the necessary steps to bring down inflation." So what are those bad decisions? Basically taking their foot off the brake, and hitting the gas too fast. "When they pushed back on the gas (in the 1970's) with all of this money creation throughout the economy, that pushed inflation back up" Ginn told KTRH, "In fact, inflation went up higher and then we had a double-dip recession after that." The reality is, we are at a critical moment for the economy. |
Vance Ginn, Ph.D.
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