DIY Economic News for 2018: Some Suggestions and Sources

The gripe noting the emphasis (or narrow focus) on stock market “news” is a recurring one on this blog, but perhaps it’s high time to suggest some sources which will provide a more comprehensive picture than merely stock market numbers and unemployment figures.  Here are a few for your viewing pleasure:

Labor Information:  What we get on television broadcasts and from most print media are national numbers, however this obfuscates the point that not all parts of the country are experiencing employment (and unemployment) in the same way.   To find out more about state and local employment there’s information available from the Bureau of Labor Statistics at this page. Nevada, for example, is in the western region in the BLS categorization of various statistics, and more specifically as the national unemployment rate is 3.9% nationally (October 2017) the Clark County rate is 5.1%.(pdf)  Although employment in the construction sector is up in Clark County, NV, the rate is altogether to close to that of Cleveland, OH  which was 5.2% (pdf)  Unlike Clark County, which saw a decrease in unemployment, Cleveland actually ticked up from 2016’s 5.1% to 5.2%.   Using the handy interactive from the BLS link give will allow a person to see differences within a state, such as the 5.1% unemployment rate in Las Vegas and the 3.9% unemployment rate in the Reno area. (pdf)

A summary of state unemployment rates is available from the Bureau of Labor Statistics. As of November 2017 the lowest unemployment rate in the country is in Hawaii (2.0%) and the highest unemployment rate belongs to Alaska which has a rate of 7.2%.

The BLS also provides employment projections (for the next 10 years) complete with a graphic illustrating the fastest growing occupations.  Presidential climate change denial notwithstanding, we should observe that the two fastest growing occupations are solar photovoltaic  installers (105.3% increase) and wind turbine technicians (96.1% increase).

A few recommended bookmarks:  AFL-CIO website;  UAW website; SEIU website;  Nevadans will want to keep up with Culinary Worker’s news;  the Communications Workers of America is also highly informative.   Labor Notes is also recommended.

Income Information:  For those who don’t have FRED bookmarked — please do, you’ll be pleased with yourself for doing so.  One of the many topics covered and charted is median household income.   A person can also find information about the Income GINI Ratio for Households (by race), and Real Mean Personal Income.   It would be difficult to imagine what information Isn’t available from FRED.

Once in a blue moon the media reports on the release of the Beige Book from the Board of Governors of the Federal Reserve.  It is a compilation of anecdotal reports from each of the Federal Reserve districts, and is useful for those wanting to drill down into regional economic conditions.  It’s published eight times per year, with the next release due out on January 17, 2018.

The St. Louis Fed provides FRED, and the New York Federal Reserve is the go-to place for information about debt, from student to household.  See their Center for Microeconomic Data.  The NY Fed has its own blog, also informative on a variety of topics.   Readers might like to start with the NY Fed’s report on political polarization and consumer expectations.

There’s FRED, the Beige Book, and the NY Fed, and then there’s the Census Bureau, which tracks income inequality.

There are thousands of more sources and links which will prove helpful to those interested in economic trends, and this is by NO means a comprehensive list.  However, I do hope these links will indicate to any reader that there is a wide variety of sources describing our economy going well beyond the narrow focus on stock market numbers and unemployment statistics!

A Wish List For 2018

There are several things I would like to see in the coming year.  The following, a not so modest list of them:

1. I’d like to see the commercial media, print and broadcast, dismantle its long nurtured cottage industry employed in Clinton Bashing.  This has been an on-going activity for the last two and a half decades at least, and I’m finding it tiresome.  I am sure the chattering classes find it amusing to resurrect and inject their old talking points; and there’s a certain comfort in returning to old themes, much like one’s favorite blanket on the bed or pillow on the couch.  However, the plethora of Clinton columns a year past the last election, only indicates to me that Secretary Clinton is living rent free in several editorial heads.  Perhaps, it seems as though they couldn’t live with her, and now they can’t live without her.
2. It would be pleasing to wake up some fine morning to discover a news broadcast in which the various travel and singular expenditures of the present administration are explored in some detail.  I recall an old bit of wisdom from the sheriff’s department about people who get caught criminal littering: One could be an accident, Two is an indication of trouble, and Three times and it’s deliberate.  Thus we’ve had a Health and Human Services secretary resign, which should have been a message to others — but, we now know the Secretary of the Treasury indulged in excessively expensive travel, followed by a Secretary of the Interior doing likewise. Were this not enough, we have a director of the EPA indulging in what gives every appearance of being truly excessive “security” expenditures.  What does he have to hide?
3. A little patience is required for my third item: A thorough and accurate report from the Special Counsel.  Perhaps Trump’s opponents are hoping for too much, and his followers are hoping for an exoneration which is not to be.  Whether the President* himself was entangled in a web of deception and conspiracy is relevant but not, I think, the core of the matter.  The important point is that a hostile government, the Russians, sought to interfere, did interfere, and continues to interfere in our democratic institutions and practices.  The more important point is what we, as a nation, intend to do about it. This leads to my 4th wish.
4. I wish for personal, professional, and tangential issues to be separated from the essential process of addressing Russian interference.  This will take more than beseeching private Internet corporations to “do their duty.”  Further, it will take more than a narrow focus on whether or not that interference had an appreciable effect on the 2016 election.  We need to know what the Russians did, how they did it, and what we can do to prevent “it” in future election cycles.  We need state and local election officials who are aware of the nature of Russian (and other) attempts at interference, who have the resources both in terms of funding and expertise to prevent meddling.  We need federal officials who will take this threat seriously and who will engage with state and local officials to be of assistance in these efforts. What we don’t need is a sham commission rehashing old conspiracy theories about “illegals” voting and fraudulent voting myths. What we do need is a task force with components from the Department of Justice, Homeland Security, and the Intelligence Community to take foreign interjections seriously, investigate them thoroughly, and to make thoughtful, rational, suggestions for protecting our most basic freedom — the right to vote.
5. We need the improvement and enaction of the Voting Rights Act.  Nothing is so central to our Republic, nothing so necessary to the health of our Democracy.
6. We need a rational statement of what constitutes citizenship, and it’s not the legal fiction including a corporation.  The decision in Citizens United is a major problem for our system of government.  No, my friends, corporations are not people.  They may have property rights, and rights pertaining to their organization and operations, but they are not people — as in We The People.
7. Wouldn’t it be fine to end 2018 with a new attitude toward rules and regulations. Corporate propaganda has generalized anything commercial interests don’t like into “burdensome regulations.”  However, there are some burdens we should bear with a sense of civic pride.  No, we do not wish our rivers to be polluted and our forests unnecessarily despoiled for profit. Nor do we want our elders placed in care to be ignored, mocked, and mistreated.  Nor do we want to eat contaminated food, or drink contaminated liquids. Nor do we want employers to allow, perhaps even encourage, unsafe working conditions.  Too often the generalizations have been presented to us as ‘fact,’ without a challenge from public quarters asserting the rationale for the rules in the first place.  Those challenges deserve more publicity than they are currently receiving.
8. Although it’s an election year, wouldn’t it be beneficial if we were to receive more information about POLICY than POLITICS?  The failure to emphasize what a candidate is offering and to focus instead on poll numbers and other electoral data means that politicians are allowed to speak in broad, and often meaningless, generalities.  In this circumstance a politician becomes little more than a human megaphone, his or her popularity based on the cheaper expedient of polling than on a serious consideration of what is on offer.   Granted there have always been demagogues among us — but we really don’t have to encourage them.

And so ends this little list.  We can only hope.

Thank You: A List for 2017

As youngsters we were admonished to acknowledge gifts during the holiday season, and not to delay thanking Auntie for bestowing such “creative and unique” items.  That said, this isn’t an obligatory thank you — it’s a Thanks! with a capital letter to those who’ve been an inspiration this year.

 

Thanks to the ladies of the Women’s March!  Prior to that event I’d contacted my Senators and Representatives, but never with any regularity, and certainly never with multiple phone calls in any given month.  The idea of sending post cards hadn’t occurred to me.  I listened to the speakers advise more contact, more persistent contact, more urgent contact — and I bought some postcards.  I also bought a small pocket notebook.  I recorded my calls and post cards in the notebook — at first just to keep track of the topics, and then it became a habit.  The little notebook is half filled now, and I even had to add a piece of ribbon tied on as a bookmark to keep track of my place.  Perhaps I’m gaining a reputation as a pain with a couple of members of the 115th Congress. I don’t care.  They won’t be able to say they’ve not heard from anyone about protecting DACA, or the ACA, or the Consumer Finance Protection Bureau, or the EPA, or women’s reproductive rights, or the rights of workers to organize.   My new year’s prediction is that the little notebook will be filled by this time next year — at least I sincerely hope so.

Thanks to the people who attended town hall meetings!  Those who are dependent on the individual health insurance market to secure health plans need our assistance.  Those on employer  group plans need to know that the provisions of the ACA will require  they have real insurance, as opposed to junk policies with outrageous co-pays, high deductibles and limited benefits.  Those who buy policies need to know mental health treatment is on par with physical health needs, and immunizations are essential services.  And, since as they say “it takes two to tango,” everyone is in the pool — men and women, meaning maternity care is also essential.  To those people who put real faces on real problems — Thank You.  To those people who supported the people testifying to those very real issues — Thank You.

Thanks to the organizers of Indivisible!  Should I run out of ideas on a given day concerning what to say and to  whom to say it, there’s Indivisible online to assist me.  I appreciate the tweets and notices from Nevada Indivisible groups, Indivisible Lake Tahoe, Indivisible Reno, and Indivisible Las Vegas.  You are doing good work, and it’s appreciated.

Thanks to the professionals working on the Special Counsel’s investigation!  I understand those investigators aren’t the total solution to the problem of foreign interference in our elections.  However, they are a key facet of the issue and they’ve endured enough flack from partisan hacks for a lifetime already.  They can’t tell us how to protect our election systems in the future, nor can they tell us what actions our state and local officials can take to prevent future assaults — but they can, and I’m sure will, give us an accurate picture of anything prosecutable.  Their efforts are appreciated.

Thanks to the independent members of the press and media!  There are reporters and broadcasters who are not allowing lies and mischaracterizations from the current administration to go unchallenged.   Not all editors are spiking stories about corruption, maladministration, and mismanagement.  Not all reporters are playing the role of stenographer for government issued blather.  Now, more than ever before in my lifetime, we need FACTS.  Good old fashioned FACTS, and good old fashioned news — the kind wherein we learn not only who is supporting a particular policy, but what the implications of the policy proposals are in real life.

Thus, the little notebook continues to sit beside the phone, the post cards are at the ready, and there’s no shortage of topics upon which to comment.  For this, I say THANKS.

Merry Christmas 2017: DB’s little homily for the season

Merry Christmas and a Very Happy New Year to one and all.  This year’s image is of Pope Francis kissing the image of the Christ child, and it seems fitting for this particular season.  He could be any grown man, in any place (not necessarily beside a manger scene) welcoming into this world a small boy whose parents had to flee the land of his birth because of persecution.

“And after they were departed, behold an angel of the Lord appeared in sleep to Joseph, saying: Arise, and take the child and his mother, and fly into Egypt: and be there until I shall tell thee. For it will come to pass that Herod will seek the child to destroy him.” Matthew 2:13

And what do we have in common with this Palestinian Jewish family, mother, father, and very young son?

Chronicles 29:15 tells us:

“For we are sojourners before thee, and strangers, as were all our fathers. Our days upon earth are as a shadow, and there is no stay.”

That would be “WE,” all of us. No matter our language, our culture, our ethnicity, or our race. We are all traveling in this shadow land — we don’t get to be here forever.  We don’t get to choose our fellow sojourners.   Our relationship with our fellow travelers?  Mark 12:31 is explicit: “Thou shalt love thy neighbour as thyself.”

Not more than oneself, and certainly not less than oneself, but just as oneself.  Too many people have strangled the term “pro-life” until it means little more than “forced birth,” forgetting the larger meaning — yes, children are adorable — but so are the parents who come to this country seeking safety for those little ones, ones who dream of better lives and more prosperous times.  How can we be diminished by our fellow sojourners if we are all on this shadowland road together?

How do we love our neighbors and fellow strangers unless we wish for them good health, for opportunities to prosper, for education and training for their children?  Rabbi Judah reminded us that “Whoever does not teach his son a trade or profession teaches him to be a thief.” (Babylonian Talmud, Kiddushin 29a) They are all our sons and daughters.

Newborns don’t see race, ethnicity, wealth or poverty.  They are learning.  As the Holy Father expresses his love for the image of the child in the stable, how do we express our love for all the children born in all the world to all the mothers and fathers?  What will we teach them?

The Incredible Tax Bill

For once the President* found the precise word.  The recently enacted tax bill is incredible, and so is the President*.

There are some elements of the tax plan which, indeed, are genuinely incredible.  Here are a few —

 The tax plan is predicated on what amounts to economic mythology/ideology, and it is NOT grounded in empirical evidence.  Trickle Down economics is and has always been a theory in search of some evidence, and not a result of the collection and analysis of actual economic data.  The following summation is as good a point at any to discuss the reality of this manufactured ideology:

“The harsh reality is that while this story has been told for – sometimes very eloquently for 30 years, now – we can look back to President Reagan’s tax cuts in 1981. There’s never been a documented case in which it actually worked. The problem is that every time we’ve enacted tax cuts in the last 30 years that have been based on this premise, we’ve had to backpedal as a nation. We’ve had to undo them. Sometimes, as in the case of the Bush tax cuts of 2001, it’s taken a decade of pitched battle for Congress to realize in a bipartisan way that they really had just dug the hole too deep.”

The tax plan benefits approximately 83% of the nation’s income earners, and does little to help the remainder.

“By 2027, more than half of all Americans — 53 percent — would pay more in taxes under the tax bill agreed to by House and Senate Republicans, a new analysis by the Tax Policy Center finds. That year, 82.8 percent of the bill’s benefit would go to the top 1 percent, up from 62.1 under the Senate bill.”

And even in the first years of the bill’s implementation, when it’s an across-the-board tax cut, the benefits of the law would be heavily concentrated among the upper-middle and upper-class Americans, with nearly two-thirds of the benefit going to the richest fifth of Americans in 2018.”

Let’s get realistic about this point.  Nevada has a total population of 2,998,039; with a median home owner value of $191,600.  The median household income is $53,094.  The per capita income is $27,253.   We’ve covered Nevada tax filers previously, with the following result:

1,350,730 Nevadans filed income tax returns in 2015.   27.21% of the Nevada filers reported adjusted gross income between $25,000 and $50,000.  13.5% of filers reported AGI between $50,000 and $75,000. 8.15% reported AGI between $75,000 and $100,000.  Another 10.22% reported an AGI between $100,000 and $200,000.  From this point on the percentage of filers by category drops, those reporting AGI between $200,000 and $500,000 were 2.48% of the filers; those reporting AGI between $500,000 and $1 million were 0.43%, and those reporting over $1 million AGI made up 0.26%.

It doesn’t take any form of complicated arithmetic to discover that giving tax breaks to the top tier income tax filers doesn’t apply to all that many people in the state of  Nevada (or anywhere else for that matter.)  While the definition of  “middle class” seems to vary, the most commonly accepted definition by income asserts  it is  those households  earning between $46,960 and $140,900 annually.  Nevada’s median income ($53,094) fits within that range.   The majority of the benefits included in the current tax scheme do NOT accrue to the majority of Nevada’s income tax filers.

And then there’s the CBO analysis:

“According to the CBO’s calculations, individuals in every tax bracket below $75,000 will experience a year in which they record a net loss — meaning they’ll pay more in taxes, experience diminished services, or both — by 2027.  The lowest income groups will face significant overall losses, and those making between $10,000 and $20,000 a year will face the biggest losses. The CBO estimates that in 2027, taxpayers from this bracket will see an overall loss equivalent to $788.10.”

If ever there was an example of Reverse Robin Hood, this tax scheme would serve nicely.  This is a middle class tax cut only if the middle class is defined in extremely illogical ways — as if $250,000 AGI was anywhere in the “middle.”

The tax plan make corporate tax cuts permanent and individual/family tax cuts temporary.  This is a recipe for disaster in 2027 when someone is asked to pony up the difference between realistic spending and unrealistic assumptions about economic growth.

The tax plan is underpinned by the assumption corporate tax cuts will yield increased wages and increased employment.   A common Republican argument of the moment is that our recovery from the last recession was sluggish, and tax cuts would have made it better.  Another argument could as easily be made:  The recovery was not as robust as it could have been because Republicans refused to enact the kinds of stimulus spending that would have both improved our national infrastructure and boosted consumer expenditures.  Republicans screamed “deficit spending” and “national debt” to the heavens, a tune they now seem to have forgotten as they vote in favor of a $1.4 trillion deficit.

The tax scheme also ignore the obvious.  How many times in this modest little blog have we said: There is ONE and ONLY  ONE reason for any firm to hire anyone at any time — a business only hires personnel when the staffing levels are insufficient to meet the demand for goods or services with an acceptable level of customer/client satisfaction. Regular readers should be able to recite this from memory by now.

We’ve also mused about other ways corporations spend their windfalls — mergers and acquisitions, increased dividends, stock buy-backs, increased investment in financial revenue streams, etc.  It’s not like wage increases and plant expansion are the only options.  In fact, for corporations, especially those for whom  ‘shareholder value” is the driving focus, increasing wages and capital expenditures is the last likely option.  Shareholders are focused on getting a maximum return on their investments and this is not enhanced by increasing labor costs.

The tax plan is riddled with benefits for the wealthy that defy common sense.  For example: Carried interest, increasing the estate tax exemption (Fun Fact: Of the 5,460 estates slated to pay the estate tax this year only 80 of them are small businesses or farms.)  More examples?  There’s the alternative minimum tax which was enacted  to address a concern which may be resurrected by this tax bill:

“Congress enacted the AMT in 1969 amid widespread outrage that many wealthy people paid little or nothing to Washington thanks to clever use of loopholes. But because income thresholds for being subject to the tax weren’t indexed to inflation (until 2012, which didn’t make up for the decades of lost ground), many middle-class people got sucked into paying it. ”

The tax plan is only part of an overall plan to Kill The Beast.  Or, make government so small it could be drowned in a bathtub?  Those who aren’t convinced by now that the next move by this Norquistian Congress is to go after Social Security, Medicare, and Medicaid haven’t been listening to GOP leadership.   Expect the drumbeat of commentary on “entitlements” to increase by leaps and bounds — We have a Huge Deficit! (Which they created) and now We have to cut government spending.  Remember: They are called entitlements because you are entitled to the benefits you’ve been paying for with your payroll taxes all along.

Pro Tip:  This assessment of voters was made in 2006, and not all that much has changed since –

“Regular voters also are older than those who are not registered. More than four-in-ten of those ages 50 and older (42%) are regular voters, about double the proportion of 18-29 year-olds (22%). Among those between the ages of 30 and 49, more than a third (35%) reliably go to the polls ­ a fact that is consistent with previous research that found voting is a habit acquired with age.”

Now, who is most likely to be quite concerned with saving Social Security and Medicare? There’s a reason  Social Security and Medicare form the third rail of American politics.

A final point.  The Republicans have given away their cards.  When Democrats called for increased spending on health programs, Republicans pointed to the deficit. When Democrats called for increased infrastructure spending, Republicans pointed to the deficit.  Now, the deficit (all $1.4 trillion of it) is the responsibility of the Republicans.  They’ve given away the revenue.  Now the Democrats have the Tax the Corporations card in hand.  And who among the GOP wants to run on a platform of saving those cash-hoarding multi-national corporations?  Good luck with that.

The Amazing Invisible Infrastructure Plan

On December 7, 2017  the White House said it was going to release its infrastructure plan in January 2018.   As usual from this administration it’s vague:

“The president aims to release a detailed document of principles, rather than a drafted bill, for upgrading roads, bridges, airports and other public works before the Jan. 30 State of the Union address, said the administration official, who spoke on condition of anonymity because the details aren’t public. Naysayers should wait until they see the details and how the legislative process unfolds, the official said.”

And, there’s a kicker:

The guiding principle of the plan is to shift responsibility for funding from the federal government to states and localities — which own or control most assets — by providing incentives for them to generate their own sustainable funding sources and work with the private sector.

Now, how do we translate “generate their own sustainable funding sources?”   The easiest way is to say “privatization.”   As in work with private corporations for the construction of toll roads, toll bridges, increased airport fees, and other forms of “sustainable funding sources?”

This notion is buttressed by the President’s budget.   In the aftermath of the Washington Train Wreck the President was probably ill-advised to tout his infrastructure “plan,”

“For that matter, if Trump wants to talk about his interest in this issue, perhaps we can start with his White House budget plan, which called for slashing federal aid to U.S. rail systems, including a dramatic cut in grants for Amtrak routes.

“As for the president calling on policymakers to “quickly” approve the White House infrastructure plan, now seems like a good time to point out that it does not currently exist.  In early April, Trump boasted, “[W]e’re going to have a very big infrastructure plan. And bill. And it’s going to come soon. And I think we’ll have support from Democrats and Republicans.” That was eight months ago. There’s still no plan.”

So, this week we have a middle class tax cut that doesn’t help the middle class nearly as much as it assists corporations and wealthy Americans.   And, now we have an infrastructure “plan” which doesn’t fund infrastructure.  Oh well, what we seem to have is an administration remarkably unwilling to govern and a Congress equally uninterested in representing their constituents.

What Big Victory?

There’s a steady drum beat of pundits and politicians telling me the passage of the TaxScam is a great, wonderful, awesome, fabulous, stupendous, magnificent piece  of legislative action.   Okay, I am certainly not the brightest bulb in the great chandelier, but I’m no dim candle either, and I can tell the difference between tax reform and a tax heist giveaway, handout, bequest, benefaction, and contribution to the top income earners when I see it.  Further, I am truly tired of pounding out the fact-of-life:  Trickle Down Economics is a HOAX.

What the Congress is voting on today isn’t a tax reform bill, it is purely and simply the enaction of economic mythology and political ideology.  There is much economic theorizing asserting the efficacy of tax cuts toward encouraging economic growth, but the numbers (those pesky facts) haven’t substantiated the claim, and the recent example of Kansas offers a real time look at some very dismal prospects.

Making the tax system more rational isn’t best served by a code that includes the Corker Kickback, exceptions for private airplanes,  golf courses, and doesn’t incorporate provisions for exempting state and local taxes.   And, we’ve covered the Carried Interest issue before.   The advice from the EPI back in January 2014 still holds:

“These investment advisors and hedge fund managers can take advantage of this tax structure because they are often compensated through a scheme that, in part, pays them according to the returns on the fund. The industry standard for hedge fund managers is “two and twenty,” which is shorthand for an “overhead” fee of 2% of capital under management plus carried interest (often called a “carry”) of 20% of the returns on the fund. Thus a $100 million fund earning 20% would pay its fund manager $2 million for overhead and $4 million in carry. The carry portion of their compensation is treated under the tax code as capital gains for the fund manager and is taxable at the much lower capital gains tax rate of 15%.” [EPI] (emphasis added)

However, rest assured Nevada’s Republican members of the 15th Congress will vote in favor of retaining the carried interest loophole, and other egregious portions of the Trump Family Property and Legacy Protection Act.  Paris Hilton’s wealth will be preserved.  And for this we may now expect an onslaught on “spending” as in Republican attempts to dismantle Social Security, Medicare, and Medicaid.

As the Republicans hiss out “entitlements” as if the word was a synonym for undeserved welfare, most Americans are quite aware they’ve been paying into Social Security — yes,  to restate the obvious, people are entitled to receive their Social Security benefits — they’ve been paying for them all along.

The point will come when the GOP will cry out, “Oh, we have to cut government spending, because Social Security is going broke! Medicare is out of control.  Medicaid will bankrupt the nation — look at the national debt!”   Really — the way to fix these issues is to re-visit and revise the mess made in the 15th Congress, repeal the TaxScam, and do some revisions targeted at helping middle income Americans.

Some suggestions:

Enact tax cuts 80+% of the benefits go to working middle and lower income Americans who will actually go out and spend the benefits on washing machines, cars, groceries, rent or home mortgages, and who support our economy.

Close the carried interest loophole.  It was never a good idea and it certainly isn’t now.

Enact tax reforms that address the modern economy — not the horse and buggy days.  Support solar, wind, and alternative energy sources and research.  One of the fastest growing jobs in the US today is “wind turbine technician.”  Continuing to subsidize fossil fuels is tantamount to protecting the buggy whip factory owners.   Just to hammer the point a bit further:  “Increases in Job Opportunities:”  Solar Photovoltaic installers  — 105% increase; Wind Turbine Technicians — 98%; Home health aides — 47%; Personal Care aides — 37%; Physician Assistants — 37%; Nurse Practitioners — 36%; and interestingly enough Bicycle Repair Specialists — 29%.

Forget the territorial tax regime — all that does is incentivize corporations to move their operations overseas.

This would be a start.  There’s nothing simple about a tax code — there never was and there never will be.  Piling up stacks of paper to illustrate the density of the code isn’t instructive, all it demonstrates is that we have an extremely complex economy.  We use taxation as a lever to encourage or discourage certain decisions.   In this instance we are encouraging the behavior of hedge fund managers (notoriously short term thinkers) and multi-national corporations.  This didn’t work so well in 2007-2008 and it surpasses all reason why anyone would think a repetition would have any different result.

But we can count on Senator Dean Heller and Representative Mark Amodei to march right in line with the GOP leadership…straight into the next bubble, the next crisis, and the next recession — only this time the resources of the federal government will be depleted in the face of adversity.  In slightly less modest terms, it’s a recipe for more debt which will eventually lead to the necessity of incurring even more debt.

And they’re still coming after Social Security and Medicare.  Be prepared.

Representative Government?

Not that popular polling is always the best way to govern, but the current capacity of the Republican controlled federal government to ignore public opinion is amazing.  For example, the Republican tax plan has a 26% approval rating [PR] 91% of Democrats, and perhaps more importantly, 61% of independent voters disapprove of the plan.  66% of Republicans approve of the plan, but we have to remember 37% of the American public identifies with the GOP. [HP]

While we’re remembering the horror at the Sandy Hook Elementary School five years ago (and not forgetting the massacre at the Las Vegas music concert) we know that 32% of Republicans, 83% of Democrats, and 62% of independents support stronger guns laws in this country. Overall support for stricter control of firearms stands at 60%. [PR]

The FCC decision to eliminate the net neutrality rules, some of which go back to the less than golden age of dial up, isn’t popular either.  Polling found that 83% of registered voters disliked the idea, 75% of whom were Republican and 89% of Democrats.  86% of registered voters who were independent didn’t like the idea either.   However, the FCC marched on with a 17% approval rating for its new “light touch” policy.

It seems that whenever the President* starts feeling the heat from Congressional, popular, or media sources he retreats to his anti-immigration rhetoric.  The Wall seems either literally or metaphorically important to him, but it isn’t all that much in the eyes of the nation he’s supposed to be leading.  36% of registered voters support The Wall, while 62% oppose it. [PR]   Voters were given three choices about Dreamers, stay and apply for citizenship, stay but not as citizens, or leave the country.  The December Marist poll found 58% supporting the stay/citizenship option, 23% supported stay but not as citizens, and only 15% supported deportation.   As of the week of December 6th the Quinnipiac Poll found 77% supporting the stay/citizenship application option, 7% supported the stay with no citizenship option, and only 12% supporting the deportation option.

It’s been a while since we’ve seen polling about Vladimir Putin, the other half of the Trump-Putin bromance.  There was some polling done last Summer which might be instructive.  Last July only 15% of Americans had a positive feeling about Putin, and as of late June 2017 approximately 50% of Americans felt the President* was too friendly with the Russian leader. [PR]

A person might think that a leader who isn’t stone deaf to public sentiment or stonewalling to protect his self image might want to consider how best to reach toward a broader audience, and to cultivate something more than a 32% approval rating.  Apparently that consideration isn’t getting much traction in the current White House.

Nor does it seem like the first session of the 115th Congress is paying much attention either.  In fact, it looks like the GOP is doing the drafting of the Democratic Platform for 2018 — Net Neutrality, DACA, common sense gun regulation, immigration reform, and real tax reform for working Americans.  The 32% President and his 37% party are perhaps doing the best they can to elevate the Democratic Party in the mid term elections?

Nevada and the Tax Scam: Debts Debts and More Debts

The Bureau of Economic Analysis has some important numbers for the state of Nevada.  As of September 26, 2017 the agency reports Nevada’s per capita personal income was $43,567 ranking 32nd in the US and 88% of the national average.  However, the numbers don’t signify as much as they could without looking at the trends in which they occur.

“The 2016 PCPI reflected an increase of 1.0 percent from 2015. The 2015-2016 national change was 1.6 percent. In 2006, the PCPI of Nevada was $39,930 and ranked 15th in the United States. The 2006-2016 compound annual growth rate of PCPI was 0.9 percent. The compound annual growth rate for the nation was 2.6 percent.”

There are at least two things to unpack from this. First, it’s evident Nevada took a wallop from the Great Recession in the wake of the Housing Bubble and Wall Street Casino collapse. Secondly, Nevada’s per capita personal income isn’t growing at a pace which would make anyone too confident of increased disposable income for Nevada consumers.   In fact, it makes one think we’re going to be looking at increased levels of household indebtedness — again.

Another number to toss into this mix is the inflation rate, ranging in 2017 from about 1.6% to 2.7%.  And now we come to the inflated promises of the President* and the members of the 115th Congress who claim that their tax plan will “put more money into consumers’ pockets.”  Not. So. Fast.

It’s no secret the Tax Bill benefits those in the upper income brackets far more than it does those in the lower quintiles of the tax brackets.  Nor is it any surprise that the pass through benefits inserted into the bill are a windfall for a select group of businesses which in most circumstances don’t really qualify for the brand “small business.”  Therefore, it’s hard to visualize how this plan truly benefits the “average” Nevada taxpayer.

It’s even harder to see how the bill would create the kind of growth necessary for the bill to “pay for itself.”  The conclusion of the Tax Policy Center isn’t exactly comforting:

TPC has also released an analysis of the macroeconomic effects of the Tax Cuts and Jobs Act as passed by the Senate on December 2, 2017. We find the legislation would boost US gross domestic product (GDP) 0.7 percent in 2018, have little effect on GDP in 2027, and boost GDP 0.1 percent in 2037.

If you’re thinking this isn’t enough to boost the per capita personal income level in Nevada, except for a chosen few, you’re probably right on target. Nor is there much reason to believe the Growth Fairy will wave her wand more strenuously anywhere else in the country.  What do people do when wages and salaries don’t increase by all that much, inflation creeps up, and those people want to maintain their standards of living? The borrow.  And this is where DB starts jumping up and down again sounding alarms.

Look, for example, at the NY Fed Report from February 2017: (pdf)

Aggregate household debt balances increased substantially in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt remains just 0.8% below its 2008Q3 peak of $12.68 trillion, but is now 12.8% above the 2013Q2 trough.

Yes, this dry as dust account is saying that levels of household debt are perilously close to what they were just before the Bubble splattered all over our economy in 2008.  There are a couple of reasons not to panic — quite yet.  The level of debt delinquencies hasn’t approached the 2008 level, and we’re seeing fewer bankruptcy filings.  [CNN Money]  There are a few more dessicated sentences from the Fed of note:

“…while comparable in nominal aggregate size, the composition of current household debt is very different from that in 2008. We pointed out in a recent press briefing that debt balances are evolving; mortgages now have a much smaller share than in 2008, auto and student loans have increased in their share, and balances are increasingly shifting towards more creditworthy and older borrowers.”

Read: Mortgage debt is down, student and automobile debt is up. Banks are lending to older borrowers with better credit.  This situation is fine for the banks and those who invest in them, it isn’t exactly cause for young people to rejoice.

At the risk of sounding alarmist — we do need to watch the effects of those automobile loans on the financial sector because those loans (like the mortgages before them) are sold into secondary markets (securitized) and there are some initial warning signs.

One industry analysis doesn’t provide all the comfort I’d care to feel at the moment:

In fact, S&P Global Ratings has issued 881 upgrades and no defaults or downgrades on the subprime auto ABS deals it’s rated from 2004 to present. However, the company ran a stress test simulating what another financial crisis-like event would look like today and found that subprime losses would rise 1.67 times higher than S&P’s baseline expectations for the economy. So while the markets are stable, there are certainly economic factors to watch for.  “Yes, losses are going up from 2015 and 2016, and are even approaching recessionary levels,” Amy Martin, S&P’s senior director, told Auto Finance News. “But you have to look at it relative to what’s happening with the ratings, and the ratings are very stable.”

Yes, auto loans are up, increasing the transactions in the secondary market, but we should all relax because the ratings are stable? The last time we put our faith in the ratings agencies every investment bank on Wall Street fell into its own sink hole.

If I’m a little shaky on the subject of auto loans and their securitization, I’m even less enthusiastic about what’s been happening on the student loan front.  Again, from the NY Fed which as a good track record for keeping tabs on the student loan situation:

Interestingly, though the difference in default rates between two- and four-year private college students is not large (less than 5 percentage points at age thirty-three), this is not the case for public college students. Default rates for community college (two-year public college) students are nearly 25 percentage points higher than those for their counterparts in four-year public colleges. The chart below also shows that while for-profit students have the highest default rates, the default rates of community college students are not too different from those of for-profit students (36 percent versus 42 percent for two-year and 39 percent for four-year for-profit students, respectively, at age thirty‑three).

And now comes the trap: While the administration and GOP controlled Congress make it harder for students to escape the clutches of student loan purveyors, the default rates are ominous.  Further, once in the student loan trap it becomes harder for younger people to become those “older creditworthy” souls to whom banks want to offer mortgages. The following assessment isn’t all that encouraging for the housing market:

“At any given age, holding debt is associated with a lower rate of homeownership, irrespective of degree type. While the homeownership gap between debt-holding and non-debt-holding bachelor’s-plus students remains relatively constant, that for associate degree students expands with age. Associate degree students who take on debt buy homes at almost the same rate as those who never went to college until they reach age twenty-five, when their homeownership rate rises above that of those who never went to college. At age thirty-three, the non-college-goers are almost 4 percentage points behind their peers who enrolled in associate degree programs and took on student debt, while lagging behind debt-free bachelor’s-plus students by 25 percentage points.”

The situation isn’t immediately indicative of economic peril BUT there are some points to remember.  While home-ownership is down (banks are looking for older more creditworthy borrowers) auto loans and student debt are up, and student indebtedness is linked to a reduction in home-ownership.  Meanwhile, the per capital personal income keeps slogging upward at a pace making garden snails look swift.   If you are wondering  from whence comes the fuel for the Growth Fairy — so am I.

Thus far the only elements I see emanating from this GOP controlled Congress are an untoward enthusiasm for giving tax breaks to those who need them the least, an equally unpropitious capacity to ignore trends in household indebtedness, coupled with an almost vexatious tendency to put the burdens on younger generations of Americans for whom education is increasingly costly.

If Nevadans are suspicious of Republican claims of “fiscal responsibility” it’s because they should be.

Competition: GOP announces US is losing when it’s in first place.

The President is on my TV again, telling me tax cuts for corporations and high income individuals will make “America competitive again.”  The unanswered questions: (1) Who says we aren’t competitive NOW? and (2) with WHOM?

Only those who haven’t been paying attention or have a vested interest in painting the US economy as “non-competitive” for the purpose of getting American families to bail out the big boys would have missed this item from USA Today in September 2017:

“The U.S. is the second-most competitive economy in the world, its highest ranking in eight years, the World Economic Forum said Tuesday as the country’s innovation edge and business optimism bolstered its standing.

Switzerland retained its No. 1 ranking, according to the forum’s global competitiveness report for 2017-18. Rounding out the top 10 behind the U.S. among 137 countries are Singapore, the Netherlands, Germany, Hong Kong, Sweden, the United Kingdom, Japan and Finland.

The U.S. moved up from third place last year. It lost its top status during the financial crisis and recession of 2007-09, and fell as low as No. 7 in 2012-2013 before steadily climbing the past few years.”

What’s keeping us at the top of the st?  Business acumen and  innovation. What’s a drag on the economy?  We’re about 19th in health and educational institutions, scratching for points in the categories of public trust and corporate ethics, and 83rd in macroeconomic environment — econ-speak for debt. [USAT] So, the Republicans have a wonderful plan to increase debts by $1.4 trillion?  And, this is going to “make us competitive?”

And with whom are we “competing?”  Is it Switzerland with a GDP of $297 billion? Singapore with a $659.8 billion GDP? Netherlands at $770.8 billion?  Or, Hong Kong at $320.9 billion?  Sweden at $511 billion? Finland at $236.79 billion?  These countries aren’t even close to the American GDP.

Germany is closer at $3.467 trillion GDP,  the UK’s GDP is $2.619 trillion, and Japan’s GDP is $4.939 trillion.  China is closer to the US in terms of GDP at $11.2 trillion.  The US GDP is $18.57 trillion.  If you’ve guessed the three largest economies on this planet are (1) USA (2) China, and (3) Japan you win the prize.  [World Bank]

It’s really hard to argue that the USA isn’t “competitive” when it’s winning the race.  The current GOP contention is rather like arguing the man and woman who won the New York Marathon weren’t “really competitive?”

However, this won’t stop the GOP from beating the drum and continually repeating the assertion that “we aren’t competitive” until they can get people to believe them.  It “feels” like we aren’t competing because manufacturing jobs have moved overseas — but there’s nothing in the GOP tax bill that prevents this, in fact territorial taxation schemes (such as the one in the tax bill) actually encourage overseas investment.  It “feels” like we aren’t competitive because wages have been stagnant — but giving most of the tax cut benefits to those who need them the least (corporations stuffed with cash, high income earners) isn’t going to address that problem either.

I’m waiting for some intrepid reporter to ask the Administration or some of its supporters like Senator Dean Heller and Representative Mark Amodei,  how is it that we are almost at the top of the World Economic Forum’s competitiveness chart, and at the top of the GDP statistics, and yet the GOP still says “we aren’t competitive?”