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Wednesday, October 31, 2018

Deficit Forecast Puts Economy at Crossroads

Reports the Wall Street Journal (Oct., 30, print edition p. A2):
The Treasury said Monday it expects net marketable debt to total $425 billion in the fourth quarter, which would bring total debt issuance in 2018 to $1.338 trillion, compared with $546 billion in 2017. That would be the highest annual debt issuance since $1.586 trillion in 2010, when the U.S. economy was still crawling out of a recession.

Monday, October 29, 2018

EU Tax Grab Goes More Totalitarian

I recently explained that the so-called tax scandal of the century really was nothing more than the expectable consequences of bad government regulations and unbearable taxes. While media keeps their spotlight on this non-event, a real European tax scandal is unfolding right before our very eyes.

In an October 23 document, the EU Commission – the executive branch of the European Union – published a document that, explains EUObserver, calls for unionwide tax powers and further crackdown on so-called “tax avoidance”:

Sunday, October 21, 2018

The Price for Economic Redistribution

In the midst of a brimming economic growth cycle, with good GDP growth, solid employment and tax revenue flooding government coffers, there should be little to worry about. Yet as I explained the other day, President Trump is on a fast track to outpacing Obama in terms of federal spending. Over his two terms, Obama averaged four percent annual spending growth; if the current OMB forecast holds true, Trump will sign budgets that grow spending by 4.6 percent per year.

Next to Bill Clinton, Trump looks like a liberal spender on steroids: throughout his two terms, Clinton held the line at an average of just above 3.1 percent per year. 

And these are current-price figures. 

Thursday, October 18, 2018

Guess Who Caused the Cum-Ex Tax Scandal?

In the last 24 hours, several European media outlets have boasted breaking news about the tax scandal of the century. A German journalist network is credited with uncovering gigantic "tax fraud" involving banks from several European countries, and at least one American bank. 

The trumpets of public outcry are already hard at work to create an image of greedy banks robbing grandma of her pension and her grandchild of his education. One German media outlet calls the banks "Steuerräubern", tax robbers.

In reality, this "cum-ex" scandal (the term referring to a specific stock trade practice) has a hardly-surprising origin: a burdensome tax on stock dividends, and stupid, bureaucratic regulations attached to it.

Congress Should Import the Swiss Debt Brake

The Trump economy is moving forward, with new GDP numbers being released on Friday next week. With a 2.9-percent annual growth rate in the second quarter, we should expect a third quarter above three percent. In fact, if this is the case we could see the first calendar-year GDP growth rate above three percent since 2005.

Yes, 2005:

Monday, October 8, 2018

The Welfare State Worsens Recession Outlook

The U.S. economy continues to do comparatively well, but there is more chatter in the background about a looming global recession. It began this summer, partly as a result of the speculations about a trade war between the United States and China. Recently, the tightening of monetary policy has been suggested to increase the recession risk.  

Tuesday, October 2, 2018

How to Read GDP Growth Numbers

Last week I once again pointed to the problems associated with using annualized GDP growth numbers instead of annual numbers. The article I discussed was penned by Cato Institute Senior Fellow Michael Tanner, a sharp guy who writes well and is almost always right on the mark (and he wrote a stellar foreword to my book Industrial Poverty - his contribution alone is worth the book's price). 

The other day someone sent me a link to Tanner's article, drawing on his numbers to make a policy point. This motivated me to revisit the issue.