Originally published at Marketplace.
Inflation numbers came in better than expected this week, and they’re the latest in several months of data showing that price growth has slowed down. Another way to look at inflation came out from the Congressional Budget Office this week, looking at the issue from the lens of purchasing power. The CBO found that if you look at the same basket of goods from pre-pandemic to 2023, on average, Americans need less of their income to buy the same set of stuff. But if that just feels a bit off to you, I get it. According to the Congressional Budget Office, purchasing power went up across all income groups because incomes grew faster than prices between 2019 and 2023. “That kind of goes against the common perception of what’s going on is that people are losing purchasing power over the last few years,” said Vance Ginn who is president of Ginn Economic Consulting and was a White House chief economist during the Trump administration. The CBO found, percentage-wise, folks in the highest income bracket spent less of their income on common expenses — down 6.3%, thank you stock market. Folks in the lower income brackets weren’t so lucky. They saw only a two percent drop in how much they spent on basics, thanks to higher wages. But for people in the middle, it was even less noticeable. “And that’s why I think they’ve been, kind of, not being able to be as prosperous as some of the others during this period,” said Ginn. Plus these numbers reflect averages, not people’s individual experiences. And that’s where narratives really come into play, especially in an election year. “We did go through a period of about 18 months of very elevated inflation. But it’s also true that prices today are rising roughly in line with previous historical experience,” said Michael Linden, a Senior Policy Fellow at the Washington Center for Equitable Growth. And in campaign ads and in stump speeches we’ll probably end up hearing versions of both inflation stories, amplified in whichever direction benefits the candidate talking. “And I think that the American people are going to have to decide when they hear about inflation, which of those two things is more important to them,” said Linden. And whose narrative about the economy you choose to believe.
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Originally published at Kansas Policy Institute.
The death of HB 2663 in Kansas, which aimed to create new Sales Tax and Revenue (STAR) Bonds and Tax Increment Financing (TIF) districts for financing new sports stadiums, has reignited critical debate about the role of public funding in private projects. The bill also provided 100% financing for 30 years to attract the Kansas City Chiefs or Royals to new stadiums on the Kansas side of the KC Metro area. This follows after 58% of Jackson County voters wisely rejected a $2 billion subsidy for similar developments, highlighting a disconnection between rent seekers and the electorate’s preferences. These initiatives exemplify a deeper issue with economic development strategies that lean heavily on corporate welfare, undermining the principles of free-market capitalism that has long-supporting abundant prosperity. While Kansas ranks just 26th in its state business tax climate according to the Tax Foundation and 27th in economic outlook according to the American Legislative Exchange Council, picking winners and losers is the wrong approach. Stadium subsidies are intended to attract teams, showcasing the immediate allure of new facilities and jobs—the ‘seen’ effects. Yet, the ‘unseen’ consequences, including diverting substantial public funds from better uses and imposing long-term fiscal burdens on taxpayers, are far more concerning. Instead of acting as a neutral facilitator of economic activity, governments too often play favorites through these tax incentives, leading to market distortions and cronyism. The implications are significant: businesses spend more time lobbying for these financial boosts than focusing on consumer-driven growth and innovation. Milton Friedman famously criticized such government spending, stating, “There is nothing so permanent as a temporary government program.” In this context, the subsidies intended to be a short-term boost can lead to prolonged financial strain on public resources. Historically, STAR Bonds have fallen short of their promise to boost the commercial, entertainment, and tourism sectors. Despite using them for over two decades, these bonds have not elevated consumption in Kansas’s tourist-related sectors above the national average. Over a decade, tourist-related spending has notably declined, falling 20 percentage points below what might be expected compared to other states. This stark underperformance underscores the inefficacy of STAR Bonds in stimulating genuine economic growth. Moreover, the promise of job creation through such subsidies is often misleading. An analysis by the Kansas Policy Institute of Wichita’s Riverwalk and K-96/Greenwich STAR Bonds demonstrated that these projects did not spawn new employment but merely shifted jobs within the eastern side of Wichita, let alone the state. This job redistribution, rather than creation, suggests that such fiscal tools are not just ineffectual but harmful, as they concentrate development in ways that don’t align with the broader community interests. As manifested in STAR Bonds, corporate welfare fundamentally distorts the free market. It prompts businesses to seek profitability through government aid rather than market-driven innovation and efficiency. This misallocates precious resources and dampens the entrepreneurial spirit, crucial for real economic progress. Of course, many Kansans support the Royals or the Chiefs. These sports teams are part of the community and should be celebrated. And yet, they’re private businesses, and subsidizing their operations from the paychecks of someone in Edwardsville or Ellis County hardly seems appropriate. No matter how much you may cheer for Salvador Perez hitting a homer or Patrick Mahomes throwing another touchdown, these subsidies are no different than spending your paycheck to entire a battery factory in The Sunflower State. Milton Friedman argued that the government’s role should not be to determine economic winners and losers but to facilitate a stable environment that supports voluntary exchanges and organic growth. Therefore, policies should aim to reduce government expenditure, lower tax burdens, and ease regulations that impede business operations, fostering a climate where businesses can thrive on their merit. Moreover, funding these projects involves increased taxes or reallocating municipal funds, burdening local economies. The long-term financial commitments can lead to higher taxes elsewhere or cuts in essential services. Studies, such as those by the Brookings Institution, consistently show that stadium subsidies do not significantly increase local tax revenues or long-term employment growth. Instead, they often serve as handouts to billionaires at the expense of ordinary taxpayers. Despite its setbacks, the rejection of HB 2663 should be viewed as a protective measure against the continuation of flawed economic policies. It affirms commitment to market efficiencies over flashy, unproductive government expenditures. Policymakers must focus on long-term, sustainable strategies that benefit the wider population. With a special session looming, the idea of legislative-enacted, taxpayer-subsidized stadiums could still be alive in 2024. It’s troubling that while HB 2663 never got traction, the legislature actively removed oversight from some state incentive programs. Kansas must continue challenging economically unsound proposals and advocate for policies that lower business costs through reduced government spending, lower taxes, and less regulation. By promoting a more free-market environment, the state will ensure long-term economic health and prosperity for all Kansans, not just a select few. Don’t miss the latest economic news in 9 minutes:
💸New CPI inflation report shows a 3.4% increase over the last year, while real average weekly earnings have dropped 4.4% since Biden took office. The Fed must act faster to cut its balance sheet, as I discussed on Fox Business with Cavuto. #Bidenomics #Inflation 📈Biden's tariff practices are a tax hike on those earning less than $400K, despite promises. Join me on the Sean Hannity Show, Lars Larson Show, and NTD News where I discussed the high costs and the failure of Bidenomics. #Tariffs 📚Government schools in Texas are fully funded, NOT UNDERFUNDED like some are saying! Despite declining enrollment and failing test scores, progressives still push for more funding. It's time for universal ESAs to empower parents and lower property taxes. #SchoolChoice 💬 Like, subscribe, and share my take on key economic issues every week. For more info, subscribe to my newsletter at vanceginn.substack.com and check out vanceginn.com. Government Spending Is The Problem The late, great economist Milton Friedman said, "The real problem is government spending." This is true as spending comes before taxes or regulations. In fact, if people didn't form a government or politicians didn’t create new programs, then there would be no need for government spending and no need for taxes. And if there was no government spending nor taxes to fund spending then there would be no one to create or enforce regulations. While this might sound like a utopian paradise, which I agree, there are essential limited roles for governments outlined in constitutions and laws. Of course, most governments are doing much more than providing limited roles that preserve life, liberty, and property. This is why I have long been working diligently for more than a decade to get a strong fiscal rule of a spending limit enacted by federal, state, and local governments promptly under my calling to "let people prosper," as effectively limiting government supports more liberty and therefore more opportunities to flourish. Fortunately, there have been multiple state think tanks that have championed this sound budgeting approach through what they've called either the Responsible, Conservative, or Sustainable State Budget. And recently I worked with Americans for Tax Reform to publish the Sustainable Budget Project, which provides spending comparisons and other valuable information for every state. Don't miss the latest updates as of April 2024. This groundbreaking approach was outlined recently in my co-authored op-ed with Grover Norquest of ATR in the Wall Street Journal. When Did This Budget Approach Begin? I started this approach in 2013 with my former colleagues at the Texas Public Policy Foundation with work on the Conservative Texas Budget. The approach is a fiscal rule based on an appropriations limit that covers as much of the budget as possible, ideally the entire budget, with a maximum amount based on the rate of population growth plus inflation and a supermajority (two-thirds) vote to exceed it. A version of this approach was started in Colorado in 1992 with their taxpayer's bill of rights (TABOR), which was championed by key folks like Dr. Barry Poulson and others. (picture below is from a road sign in Texas) Why Population Growth Plus Inflation? While there are many measures to use for a spending growth limit, the rate of population growth plus inflation provides the best reasonable measure of the average taxpayer's ability to pay for government spending without excessively crowding out their productive activities. It is important to look at this from the taxpayer’s perspective rather than the appropriator’s view given taxpayers fund every dollar that appropriators redistribute from the private sector. Population growth plus inflation is also a stable metric reducing uncertainty for taxpayers (and appropriators) and essentially freezes inflation-adjusted per capita government spending over time. The research in this space is clear that the best fiscal rule is a spending limit using the rate of population growth plus inflation, not gross state product, personal income, or other growth rates. In fact, population growth plus inflation typically grows slower than these other rates so that more money stays in the productive private sector where it belongs. To get technical for a moment, personal income growth and gross state product growth are essentially population growth plus inflation plus productivity growth. There's no reasonable consideration that government is more productive over time, so that term would be zero leaving population growth plus inflation. And if you consider the productivity growth in the private sector, then more money should be in that sector at the margin for the greatest rate of return, leaving just population growth plus inflation. Population growth plus inflation becomes the best measure to use no matter how you look at it. Given the high inflation rate more recently, it is wise to use the average growth rate of population growth plus inflation over a number of years to smooth out the increased volatility (ATR's Sustainable Budget Project uses the average rate over the three years prior to a session year). And this rate of population growth plus inflation should be a ceiling and not a target as governments should be appropriating less than this limit. Ideally, governments should freeze or cut government spending at all levels of government to provide more room for tax relief, less regulation, and more money in taxpayers' pockets. Overview of Conservative Texas Budget Approach Figure 1 shows how the growth in Texas’ biennial budget was cut by one-fourth after the creation of the Conservative Texas Budget in 2014 that first influenced the 2015 Legislature when crafting the 2016-17 budget along with changes in the state’s governor (Gov. Greg Abbott), lieutenant governor (Lt. Gov. Dan Patrick), and some legislators. The 8.9% average growth rate of appropriations since then was below the 9.5% biennial average rate of population growth plus inflation since then, which this was drive substantially higher after the latest 2024-25 budget that is well above this key metric (before this biennial budget the growth rate was 5.2% compared with 9.4% in the rate of population growth plus inflation). This approach was mostly put into state law in Texas in 2021 with Senate Bill 1336, as the state already has a spending limit in the constitution. The bill improved the limit to cover all general revenue ("consolidated general revenue") or 55% of the total budget rather than just 45% previously, base the growth limit on the rate of population growth times inflation instead of personal income growth, and raise the vote from a simple majority to three-fifths of both chambers to exceed it instead of a simple majority. There are improvements that should be made to this recent statutory spending limit change in Texas, such as adding it to the constitution and improving the growth rate to population growth plus inflation instead of population growth times inflation calculated by (1+pop)*(1+inf). But this limit is now one of the strongest in the nation as historically the gold standard for a spending limit of the Colorado's Taxpayer Bill of Rights (TABOR) has been watered down over the years by their courts and legislators, as it currently covers just 43% of the budget instead of the original 67%. My Work On The Federal Budget In The White House From June 2019 to May 2020, I took a hiatus from state policy work to serve Americans as the associate director for economic policy ("chief economist") at the White House's Office of Management and Budget. There I learned much about the federal budget, the appropriations process, and the economic assumptions which are used to provide the upcoming 10-year budget projections. In the President's FY 2021 budget, we found $4.6 trillion in fiscal savings and I was able to include the need for a fiscal rule which rarely happens (pic of President Trump's last budget). Sustainable Budget Work With Other States and ATR When I returned to the Texas Public Policy Foundation in May 2020, as I wanted to get back to a place with some sense of freedom during the COVID-19 pandemic and to be closer to family, I started an effort to work on this sound budgeting approach with other state think tanks. This contributed to me working with many fantastic people who are trying to restrain government spending in their states and the federal levels. Here are the latest data on the federal and state budgets as part of ATR's Sustainable Budget Project. From 2014 to 2023, the following happened: Federal spending shot up by 81.7%, nearly four times faster than the 23.1% increase in the rate of population growth plus inflation.
Result: American taxpayers could have been spared more than $2.5 trillion in taxes and debt just in 2023 if federal and state governments had grown no faster than the rate of population growth plus inflation during the previous decade. And this would be even more if we considered the cumulative savings over the period. My hope is that if we can get enough state think tanks to promote this budgeting approach, get this approach put into constitutions and statutes, and use it to limit local government spending as well, there will be plenty of momentum to provide sustainable, substantial tax relief and eventually impose a fiscal rule of a spending limit on the federal budget. This is an uphill battle but I believe it is necessary to preserve liberty and provide more opportunities to let people prosper. Sustainable State Budget Revolution Across The Country Below are the states (in alphabetical order) and state think tanks which I'm helping and information on how this process is going in those states. Here's an overview of this budgeting approach in Louisiana that can be applied elsewhere. I update these periodically, successful versus not successful budgeting attempts being 20-7 so far.
If you're interested in doing this in your state, please reach out to me. P.S. Good write-up on this issue here by Grover Norquist and I at WSJ, Dan Mitchell at International Liberty, and The Economist. Originally published at Daily Caller.
The Biden administration’s heavy regulation of America’s banking industry hinders economic growth and raises consumer costs. As FDIC Chair Martin Gruenberg faces scrutiny over the agency’s toxic workplace culture, lawmakers have a prime opportunity to address the broader issue of overregulation. Instead of focusing solely on internal misconduct, Congress should seize this moment to reduce the oppressive regulatory framework burdening financial institutions and the economy. The current banking regulatory environment is burdensome and counterproductive. Tens of thousands of pages of rules and guidance dictate banking operations and are treated as legally binding by U.S. regulators. Multiple agencies, including the Federal Reserve, FDIC, OCC, and CFPB often overlap and contradict each other, leading to confusion and inefficiency. This excessive regulation is an administrative burden and a significant barrier to economic prosperity. The Biden administration’s regulatory overreach is evident in the extensive presence of government examiners within banks. These examiners enforce ad hoc mandates that effectively dictate business decisions, and failure to comply can result in secret, unappealable ratings downgrades. This system creates a chilling effect, stifling innovation and growth. The annual stress tests conducted by the Federal Reserve impose the highest bank capital requirements globally. However, these tests rely on opaque models and unrealistic scenarios and are never subjected to public scrutiny. This significantly impacts how banks operate and adds to the regulatory burden. The lack of transparency undermines the credibility of regulatory agencies and results in unnecessary costs for banks, which are often passed along to consumers. Furthermore, the politicization of agencies such as the CFPB, FDIC, and OCC exacerbates the problem. These agencies increasingly pursue regulatory agendas through public relations stunts and policy announcements from the White House rather than through transparent processes. The predominantly progressive leanings of regulatory staff further bias outcomes against the banking industry, contributing to an environment in which financial institutions are unfairly targeted and overburdened with compliance costs. The economic consequences of this regulatory overreach are profound. As compliance costs soar, assets are migrating away from traditional banks, despite banks having access to deposits and being able to provide low-cost credit. This mainly affects community, mid-sized, and regional banks, which struggle with the high compliance costs of holding a banking charter. For all banks, high capital requirements and intense supervision increase the cost of lending, significantly impacting small businesses and low- to moderate-income individuals. This limits access to credit and slows economic growth. Reducing these excessive regulations would lead to significant gains in economic activity, highlighting the substantial benefits of reducing overregulation. The Biden administration’s excessively complex regulations, oppressive oversight, and politicized agenda stifle innovation, raise consumer costs, and hinder economic growth. Given these glaring issues, Congress should streamline regulations, increase transparency by requiring regulatory agencies to publish their models and scenarios for public comment, and ensure regulatory agencies operate independently of political influence. This would provide regulatory relief for community, mid-sized, and regional banks to enhance competition and access to credit. By reining these excesses in, Congress can unshackle the economy and promote a more competitive, dynamic financial sector that benefits all Americans. The potential rewards — a more prosperous, innovative, and dynamic America — make this a fight worth undertaking. Exploring School Choice and The Parent Revolution with Dr. Corey A. DeAngelis | LPP Ep. 965/14/2024 🎧 Join me on the Let People Prosper Show as I dive into a crucial discussion with Dr. Corey A. DeAngelis, a top voice in educational freedom and senior fellow at the American Federation for Children.
We unpack his latest book, "The Parent Revolution: Rescuing Your Kids from the Radicals Ruining Our Schools." Don't miss out as Dr. DeAngelis sheds light on: 👉 The current landscape of school choice in the U.S. 👉 Why school choice is essential and the challenges it faces. 👉 What the future holds for school choice and education savings accounts. 🔗 Follow @DeAngelisCorey on X for more updates! 💬 Like, subscribe, and share to support vital conversations about educational freedom. For more deep dives and updates, subscribe to my newsletter at vanceginn.substack.com and check out vanceginn.com for more resources. #EducationReform #SchoolChoice #ParentRevolution Originally published at AIER.
In The Parent Revolution, Corey A. DeAngelis offers a compelling narrative that champions the transformative power of universal school choice in reshaping the American educational landscape. His detailed exposition on how school choice, especially through education savings accounts (ESAs), can fundamentally alter the trajectory of education makes this book an essential read for anyone interested in educational improvement, economic freedom, and societal betterment. Historical Context and Evolution DeAngelis pays homage to Milton Friedman, the intellectual progenitor of the school choice movement, and masterfully traces the evolution from Friedman’s voucher system to today’s more sophisticated ESAs. These accounts are not merely funds but keys to unlocking individual potential. By enabling parents’ direct financial control over their children’s education, ESAs facilitate a customized educational experience that can adapt to each student’s unique needs and aspirations. This paradigm shift from institutional funding to individual empowerment is more than a policy adjustment; It is a reclamation of educational agency. While my ideal situation would be for politicians and bureaucrats not to be involved in schooling or education, this seems unlikely in the short term, given some form of taxpayer-funded K-12 schooling is in the constitution of every state. We can, however, limit government involvement in education as much as possible. ESAs provide that path so parents are empowered to avoid a monopolistic government school system in favor of a more competitive market for education to meet their kids’ needs, whether that be government schools, private schools, homeschool, co-ops, tutoring, or something else. In short, we should “fund students, not systems,” as DeAngelis loves to say, and empower parents, not politicians and bureaucrats. Empirical Evidence and Societal Benefits DeAngelis uses abundant evidence to support the effectiveness of ESAs, detailing how states that have implemented these policies witness improved educational outcomes and broad societal improvements. In Arizona and Florida, for instance, where ESAs have been widely adopted, there has been a notable increase in student achievement and parental satisfaction. Moreover, he points to research indicating that school choice initiatives can reduce crime rates and support faster economic growth, underscoring the far-reaching impacts of educational freedom. Real-world examples and testimonials from families benefiting from ESAs add a poignant layer to his argument. These narratives are powerful, illustrating the flexibility of ESAs and their capacity to meet diverse educational needs — from specialized programs for the disabled to accelerated learning for the gifted. DeAngelis offers a scathing critique of the current public education system, which he rightly calls the “government school system,” focusing particularly on the disproportionate influence of teachers’ unions. He argues that they often prioritize adults’ interests over students’ educational needs, hindering reform and innovation. This critique highlights the entrenched resistance to school choice and positions ESAs as a solution for educational inefficiency and bureaucratic inertia. Moreover, he discusses the misallocation of resources in government schooling, where too much funding is absorbed by administrative overheads rather than being directed into classrooms. He advocates for a more efficient use of educational funds, where money follows the student rather than being tethered to potentially underperforming institutions. This book is not just an academic treatise but a practical guide for navigating and influencing the complex landscape of educational reform. It is a manifesto for those who believe in the power of education to elevate society and a toolkit for those ready to take part in this crucial endeavor. “The Parent Revolution” serves as a call to arms, providing readers with actionable steps for advocating school choice. DeAngelis outlines strategies for grassroots organizing, legislative engagement, and public persuasion, empowering readers to translate passive agreement into active participation in the educational reform movement. His vision extends beyond immediate educational outcomes. He envisages a society where educational freedom catalyzes lifelong benefits, preparing students not just for tests, but for life. His advocacy for ESAs is framed within a broader narrative of individual liberty and market efficiency. “The Parent Revolution” is a profoundly influential book that offers a clear, economically sound, and morally compelling case for universal school choice across America and the world. It is an indispensable resource for anyone interested in the intersection of education, economics, and policy. DeAngelis advocates for significant education reform and provides a detailed roadmap. His book reaffirms the critical role of choice and competition in improving education, making it a must-read for anyone interested in empowering parents and improving students’ educational outcomes. The key is, of course, to: “Fund students, not systems.” Watch interview at NTD News.
Vance Ginn, president of Ginn Economic Consulting and former chief economist for the White House Office of Management and Budget, offers his analysis of the latest U.S.-China policy after the Biden administration recently announced a 100 percent tariff on Chinese electric vehicles. Listen to the interview with Sean Hannity here.
Vance Ginn, former Chief Economist for the OMB, currently founder and president of Ginn Economic Consulting and host of the Let People Prosper Podcast and EJ Antoni, a Public Finance Economist at the Heritage Foundation, discuss Biden’s dismal economy. Just yesterday while speaking in Wisconsin, Biden did everything he could to convince the audience that things are actually going really well. Originally published at The Center Square.
Iowa Gov. Kim Reynolds and the Republican-led Legislature have emphasized conservative budgeting as a central priority. Such prudence in budgeting is the cornerstone of fiscal conservatism, and the recent passage of the FY 2025 budget in Iowa highlights a commitment to fiscal restraint, albeit less stringent than in previous sessions. The newly approved $8.9 billion FY 2025 General Fund budget marks a 4.7 percent increase from the previous fiscal year's $8.5 billion, demonstrating moderate fiscal growth. Historically, spending has been recommended to align with the combined rates of population growth and inflation. Based on this formula, the FY 2024 budget of $8.5 billion should ideally have capped the FY 2025 spending at $8.8 billion. Adhering to such metrics ensures that the budget reflects the average taxpayer's ability to fund it, a fundamental principle that should guide all budgetary decisions. This year, however, the legislature has ventured slightly beyond this benchmark, underscoring the careful balance between fiscal responsibility and the needs of a growing state. To provide substantial relief to individual taxpayers, the legislature has implemented a significant income tax cut, which accelerates the implementation of a 3.8 percent flat tax in 2025. This measure is projected to save taxpayers over $1 billion. The tax relief directly benefits Iowans, putting more money back into their pockets and supporting more economic growth. Despite concerns from critics who argue that such fiscal strategies could undermine public services, the FY 2025 budget demonstrates that the government is not retrenching but rather growing at a deliberate pace. Education remains a top priority, accounting for 56 percent of the budget. When combined with the allocations to the Department of Human Health Services (DHHS), these two areas consume a significant 81 percent of the General Fund. While this concentration of funds reflects the importance placed on these sectors, it also highlights the challenges of allocating resources to other critical areas, such as public safety and the judicial system, which have only seen modest increases. The practice of conservative budgeting is further evidenced by the state's adherence to its legal spending cap, which allows up to 99 percent of projected revenue to be used. In contrast, the FY 2025 budget only commits 92 percent of these projections, reinforcing Iowa's fiscal discipline. This cautious approach is proving effective, as evidenced by the substantial budget surpluses recorded in recent years, including a $1.8 billion surplus in FY 2023, with similar surpluses anticipated for FY 2024 and FY 2025. Looking ahead, legislators must remain vigilant to ensure that conservative budgeting principles continue to guide fiscal policy. State Sen. Jason Schultz rightly points out the interdependence of tax policy and spending, “Both Republicans and Democrats need to realize that tax policy is affected by spending. And when you start seeing spending creeping up for annual, year after year, new good ideas, you can’t have good tax policy.” Strengthening Iowa's 99 percent spending limitation would provide a robust mechanism to curb future expenditure desires. This could be done by changing the law and enshrining it in the Constitution to bind spending increases to no more than the rate of population growth plus inflation. Iowa’s fiscal approach starkly contrasts the situations unfolding in neighboring states like Minnesota and Illinois or others such as New York and California. Higher spending and taxes in these progressive states contribute to economic challenges and drive more people away. The message is clear: unsustainable increases in spending can lead to severe consequences. Iowa's success in maintaining fiscal discipline through conservative budgeting and responsible tax policies is a testament to the effectiveness of this approach. Iowa’s unwavering commitment to conservative budgeting and responsible tax policies is the cornerstone of its fiscal strategy, ensuring the state remains a model of stability and prosperity. By striking a balance between providing essential services and fostering economic growth, Iowa sets a commendable example of how sustainable fiscal policies can safeguard a state’s financial health and support the well-being of its citizens. Dive into this week's hot economic topics in just 12 minutes on "This Week's Economy"! 🕒
I tackle big questions: 🌍 Are humans driving climate change? 📊 What's the latest in the U.S. labor market? 🌟 How are Texas and Louisiana setting examples of prosperity? Don’t just listen—engage! Share your thoughts, rate me, and leave a review. For in-depth insights and show notes, subscribe to my Substack at vanceginn.substack.com or visit vanceginn.com. #economy #SocialSecurity #Medicare #ClimateChange My Path from Rockstar to Entrepreneur Economist with John Hendrickson | Let People Prosper Bonus Ep5/8/2024 Check out this bonus episode of the Let People Prosper Show. My good friend, John Hendrickson of Iowans for Tax Relief Foundation, who has been a previous guest on my show, interviews me for one of his graduate courses about my role as an entrepreneur. We had a great discussion about how I got to where I am today, my faith, and the failures that have led to my success as an entrepreneur.
I hope you’ll watch it as I share my testimony and insights as a rockstar to an economist. Don’t forget to subscribe and share it. Texas stands as one of the most vibrant and attractive states in the United States, celebrated not only for its robust job market but also as a top destination for new residents. Its economic success and allure are largely due to the free-market model, which has fueled growth and innovation. However, even in such a thriving environment, the electricity market presents significant challenges that must be addressed to ensure continued prosperity. To keep up with its growth, Texas must refine its energy strategies, emphasizing market-driven solutions rather than increased government intervention.
Texas is rich in natural resources, capable of meeting the energy demands of its growing population if managed wisely. Among these, natural gas stands out as a particularly reliable source. In contrast to the intermittent nature of wind and solar power, natural gas provides consistent and robust energy supply, rain or shine, making it a cornerstone of Texas’ energy infrastructure. Despite these natural advantages, there has been a worrying shift towards greater government involvement in the energy sector, potentially undermining the very free-market principles that have driven Texas’ growth. This trend was exemplified by the recent legislative decision to pass SB 2627, establishing the Texas Energy Fund. While intended to support the state’s energy infrastructure, this initiative opens the door for problematic state interventions in the market. Approved by voters last November, the fund is slated to allocate $10 billion, with a substantial portion earmarked for state-controlled power projects and infrastructure developments outside the purview of the Energy Reliability Council of Texas (ERCOT). Such strategies risk taxpayer dollars and discourage the private sector investment crucial for spurring innovation and efficiency in the energy sector. Further compounding the issue is the engagement of large investment firms like BlackRock, which has expressed interest in exploiting the Texas Energy Fund. Historically detached from Texas’ core energy industries, these firms stand to benefit from state-directed initiatives at taxpayer expense. This involvement will centralize power, stifle competition, and suppress the innovation that is vital for a healthy market economy. Instead of continuing down this path, Texas needs a light-touch regulatory framework that promotes competition and fosters innovation through market forces. State policies should remove obstacles for private investment in energy production and distribution, ensuring a competitive market that drives down costs, improves service quality, and encourages technological advancements. The limitations of unreliable energy sources have been made starkly apparent each time Texans receive a conservation notice from ERCOT, with more likely coming this summer. A free-market approach, which minimizes government intervention and allows energy prices to reflect supply and demand, offers the best solution for managing Texas' energy resources efficiently. This strategy is about more than just maintaining an efficient energy grid; it’s about preserving the entrepreneurial spirit that defines Texas. By reducing government overreach and enhancing market dynamics, Texas can ensure that its energy sector remains as dynamic and resilient as its economy. Looking forward, Texas policymakers face a clear choice. They can embrace the principles of free-market capitalism and minimal government intervention across all sectors, not just energy. This path will secure Texas' leadership in economic growth and innovation, ensuring a reliable and affordable energy supply for future generations, which ought to include nuclear energy. By championing policies that reduce government involvement and promote market functionality, Texas can strengthen its infrastructure to support its growing population and sustain its status as a beacon of prosperity and freedom. Emphasizing market-driven solutions will enable Texas to meet the challenges of today and tomorrow, ensuring that the state remains a fantastic place to live, work, and raise a family. Texas has always been a leader, not a follower. By adhering to the principles that have shaped its past successes, Texas can ensure a bright and prosperous future, powered by innovation, competition, and the indomitable Texan spirit. Join me in this insightful episode of Let People Prosper as I dive into the economic implications of government regulations with Dr. James Broughel, a senior fellow at the Competitive Enterprise Institute.
We explore: - Which regulations pose the greatest economic burdens? - How crucial are cost-benefit analyses in regulatory practices? - Can some regulatory adjustments be "free lunches"? Don’t forget to like, subscribe, and share this episode to help spread valuable information. For more insights and bi-weekly episodes, subscribe to my newsletter at vanceginn.substack.com. Visit vanceginn.com for additional resources. Join me in this insightful episode of Let People Prosper as I dive into the economic implications of government regulations with Dr. James Broughel, a senior fellow at the Competitive Enterprise Institute.
We explore: - Which regulations pose the greatest economic burdens? - How crucial are cost-benefit analyses in regulatory practices? - Can some regulatory adjustments be "free lunches"? Don’t forget to like, subscribe, and share this episode to help spread valuable information. For more insights and bi-weekly episodes, subscribe to my newsletter at vanceginn.substack.com. Visit vanceginn.com for additional resources. Originally published at The Courier.
By John Hendrickson and Vance Ginn, Ph.D. Iowa Governor Kim Reynolds and the Republican-led Legislature have emphasized conservative budgeting as a central priority. Such prudence in budgeting is the cornerstone of fiscal conservatism, and the recent passage of the FY 2025 budget in Iowa showcases a commitment to fiscal restraint, albeit less stringent than in previous sessions. The newly approved $8.9 billion FY 2025 General Fund budget marks a 4.7 percent increase from the previous fiscal year's $8.5 billion, demonstrating moderate fiscal growth. Historically, spending has been recommended to align with the combined rates of population growth and inflation. Based on this formula, the FY 2024 budget of $8.5 billion should ideally have capped the FY 2025 spending at $8.8 billion. Adhering to such metrics ensures that the budget reflects the average taxpayer's ability to fund it, a fundamental principle that should guide all budgetary decisions. This year, however, the legislature has ventured slightly beyond this benchmark, underscoring the careful balance between fiscal responsibility and the needs of a growing state. To provide substantial relief to individual taxpayers, the legislature has implemented a significant income tax cut, reducing the flat tax rate to 3.8 percent. This measure is projected to save each taxpayer over $1 billion annually. The tax relief directly benefits Iowans, putting more money back into their pockets and supporting more economic growth. Despite concerns from critics who argue that such fiscal strategies could undermine public services, the FY 2025 budget demonstrates that the government is not retrenching but rather growing at a deliberate pace. Education remains a top priority, accounting for 56 percent of the budget. When combined with the allocations to the Department of Human Health Services (DHHS), these two areas consume a significant 81 percent of the General Fund. While this concentration of funds reflects the importance placed on these sectors, it also highlights the challenges of allocating resources to other critical areas, such as public safety and the judicial system, which have only seen modest increases. The practice of conservative budgeting is further evidenced by the state's adherence to its legal spending cap, which allows up to 99 percent of projected revenue to be used. In contrast, the FY 2025 budget only commits 92 percent of these projections, reinforcing Iowa's fiscal discipline. This cautious approach is proving effective, as evidenced by the substantial budget surpluses recorded in recent years, including a $1.8 billion surplus in FY 2023, with similar surpluses anticipated for FY 2024 and FY 2025. Looking ahead, legislators must remain vigilant to ensure that conservative budgeting principles continue to guide fiscal policy. State Senator Jason Schultz rightly points out the interdependence of tax policy and spending, “Both Republicans and Democrats need to realize that tax policy is affected by spending. And when you start seeing spending creeping up for annual, year after year, new good ideas, you can’t have good tax policy.” Strengthening Iowa's 99 percent spending limitation would provide a robust mechanism to curb future expenditure desires. This could be done by changing the law and enshrining it in the Constitution to bind spending increases to no more than the rate of population growth plus inflation. Iowa’s fiscal approach starkly contrasts the situations unfolding in neighboring states like Minnesota and Illinois or others such as New York and California. Higher spending and taxes in these progressive states contribute to economic challenges and drive more people away. The message is clear: unsustainable increases in spending can lead to severe consequences. Iowa's success in maintaining fiscal discipline through conservative budgeting and responsible tax policies is a testament to the effectiveness of this approach. Iowa’s unwavering commitment to conservative budgeting and responsible tax policies is the cornerstone of its fiscal strategy, ensuring the state remains a model of stability and prosperity. By striking a balance between providing essential services and fostering economic growth, Iowa sets a commendable example of how sustainable fiscal policies can safeguard a state’s financial health and support the well-being of its citizens. John Hendrickson serves as policy director of Iowans for Tax Relief Foundation, and Vance Ginn, Ph.D., is a contributing scholar at ITR Foundation and former chief economist at the Office of Management and Budget, 2019-20. In the 10-minute “This Week’s Economy” episode, I discuss the following (and more!):
- Why did the Fed pause again? - How do investors help the housing market? - How are states’ economies doing? Please share, rate, and review this episode. Check out my Substack newsletter with show notes and more at vanceginn.substack.com or vanceginn.com. My Interview of Dr. Deane Waldman: Fireside Chat on Why Price Transparency Won’t Work (But could...)5/3/2024 Watch this interview that I did with Dr. Deane Waldman on the costs and benefits of mandating price transparency by hospitals and whether it will result in anything productive at the Third National Health Care Transparency & No Surprise Act Summit, This interview was aired at https://www.hctransparencysummit.com/.
The document below is the syllabus for a course that I teach on free-market economics and the importance of institutions. Please provide feedback. Thanks! “Parents know best for their kids. Not politicians, bureaucrats, CEOs, or anyone else. Sure, many parenting don’t make the ‘correct’ choices, as I make many mistakes, but government one-size-fits-none policies will make the situation much worse.”
—Vance Ginn, former Chief Economist for the White House Office of Management & Budget under President Donald Trump. Originally published at Texans for Fiscal Responsibility.
Navigating Economic Challenges: A Call for Pro-Growth Policies in America As we navigate the complexities of the U.S. economy, the recent data from March 2024 underscores a pivotal truth: we must return to free-market principles that foster abundant prosperity. Amidst current economic fluctuations, it’s crucial that American policy strongly pivots towards nurturing a market-driven economy. With its potential for innovation and efficiency, this approach challenges the status quo of governmental overreach and champions policies that propel, rather than impede, prosperity. This is a beacon of hope for a brighter economic future. Labor Market Dynamics: A Complex Outlook The labor market presents a complex picture. The latest data from March 2024 reveals an increase of 303,000 net nonfarm jobs, a significant portion of which 71,000 were in the government sector. This disproportionate job creation in the government sector, particularly in healthcare and education, is a cause for concern as it hampers productive private-sector activity, thereby impeding economic growth. Adding to the complexity of the labor market, household employment has seen a decline in four of the last six months, resulting in a net decrease of 84,000 jobs over that period. Despite the low unemployment rate of about 3.5%, the labor force participation rate remains subdued at 62.7%. This is a clear indication that many individuals are still not part of the labor force, artificially keeping the unemployment rate low and masking deeper economic issues. Moreover, part-time employment increased by 600,000 last month while full-time employment declined by 100,000, continuing an ongoing trend. These labor market data signal weaknesses, even as the headlines claim they are strong. Economic Growth and Inflationary Pressures Real GDP growth for the first quarter of 2024 was well below expectations at just a 1.6% annualized growth rate. When excluding government expenditures, the real private sector growth was a mere 1.4%, revealing the fragility of an economy buoyed by flawed government actions. This tepid growth underscores the limited effectiveness of fiscal “stimulus” absent of genuine market-driven expansions. Inflation continues as a significant concern, with the Consumer Price Index (CPI) for March 2024 rising by 3.5% year-over-year. This increase, alongside real average hourly earnings declining by about 4% since January 2021, exacerbates the economic pressures on American households. This situation advances the urgency for pro-growth policies to support sustainable economic growth. Charting a Pro-Growth Path for America The persistent high inflation suggests that this issue will likely endure longer than many anticipate. The Federal Reserve’s slow pace in reducing its bloated balance sheet implies that interest rates will remain elevated for an extended period, contributing to slower growth and stagflation until the bubble bursts and the recession hits. To effectively address these challenges, it is essential to advocate for reduced government spending, fewer regulations, and lower taxes. Implementing stringent monetary guidelines and adopting fiscal policies that align spending with economic benchmarks, such as population growth and inflation, would significantly stabilize and potentially reduce the national debt burden. The U.S. needs a fiscal rule like the Responsible American Budget (RAB) to control this fiscal and monetary crisis. This was recently released as part of Americans for Tax Reform’s Sustainable Budget Project and the Republican Study Committee’s Budget, highlighting this approach’s federal, state, and local benefits. If Congress had followed this approach from 2004 to 2023, instead of a $20.2 trillion national debt increase, it could have increased by just $700 billion for a $19.5 trillion improvement for taxpayers. To top this off, the Federal Reserve should follow a monetary rule so that the costly discretion stops creating booms and busts. Conclusion The current economic situation demands a firm shift towards policies that remove government intervention and support more economic growth. These strategies represent policy imperatives and moral obligations, unlocking the potential of the American economy and ensuring a prosperous future. Aligning policies with economic realities is crucial for fostering sustainable growth and prosperity, creating an environment where businesses can thrive, and individuals find more avenues out of poverty. By reducing the role of government and giving more space to the entrepreneurial spirit, we can ensure that our economy not only grows but does so in a way that benefits the broadest number of people. Let’s advocate for a return to policies that have proven time and again to be the bedrock of prosperous societies: those that trust the market, empower individuals, and reduce the coercive role of politicians and bureaucrats in economic affairs. Originally published by American Institute for Economic Research.
Imagine a small business owner navigating the complexities of trying to be profitable, as most small businesses close in the first two years, and to provide a reasonable work-life balance for their employees. Enter the “Thirty-Two Hour Workweek Act,” proposed by Senator Bernie Sanders, which seeks to mandate a reduction from 40 to 32 hours at the same pay. While well-intentioned, this bill simplifies the nuanced balance of modern work environments and threatens the flexibility crucial to businesses and workers. The Act proposes to amend the Fair Labor Standards Act of 1938. Sanders suggests this change will fairly distribute productivity gains, decrease stress, and improve life quality. However, this sweeping reform would harm sectors where extended hours are essential due to operational demands or competitive pressures. It would also hurt the needs of workers and their families. Current data from the Bureau of Labor Statistics show that the average workweek for full-time private sector employees is about 34 hours per week. This means employers and workers are already negotiating work arrangements that deviate from the traditional 40-hour workweek based on mutual needs and economic conditions. The BLS table below shows the different average weekly hours by major industry. In sectors like healthcare or manufacturing, where longer shifts are common, limiting hours might reduce employees’ earnings if they are willing to work more. With their thin profit margins, small businesses could face severe challenges, potentially leading to job cuts, reduced services, or even closures, especially in rural or disadvantaged areas. Only leisure and hospitality and other services industries have average hours at or below 32 hours. Those are typically lower-skilled, lower-paid jobs, with many working part-time for various reasons. This flexibility in the private sector allows employers to manage labor costs effectively and workers to adjust their schedules for optimal work-life balance. The proposed 32-hour workweek represents a significant opportunity cost, not only in economic terms but also in worker and employer liberty. America faces a worker shortage, with job openings exceeding the number of unemployed individuals. Reducing work hours could exacerbate this issue, particularly as many Americans juggle multiple or part-time jobs to make ends meet. This policy would add another layer of complexity and constraint in a market that requires more flexibility, not less. This act would disproportionately affect small businesses, which typically operate with tighter profit margins and may find the increased labor costs unsustainable. These businesses might be forced to reduce their workforce, cut back services, or, worst cases, shut down altogether. The impact on employment could be profound, especially in rural or economically disadvantaged areas where small businesses are often major employers. Compensatory flexibility, where businesses adjust other aspects of employment such as benefits or job duties to offset mandated costs, could mean that workers end up with less flexible schedules, reduced benefits, or increased job demands as employers strive to maintain profitability. Total earnings, including pay and benefits, are much higher than average weekly pay, so a government mandate like this would worsen the situation. Looking globally, countries like France have long experimented with reduced work hours (the 35-hour workweek). The results have been mixed, with some reports suggesting a negligible impact on employment and others indicating increased stress for workers who have to compress the same amount of work into fewer hours. These mixed outcomes underscore the risks of applying such policies universally without considering industry-specific and cultural contexts. These costs would further exacerbate the connection between people and work by many across the country. Work is also a moral issue, we bear responsibility to “be fruitful and multiply.” Moreover, work brings dignity, value, productivity, and the best path out of poverty. David Bahnsen’s latest book Full-Time Work and the Meaning of Life highlights these virtues of work and how government interventions in the labor market destroy many of its benefits. Rather than imposing hour restrictions or other government mandates, politicians at the federal, state, and local levels, as appropriate, should remove government barriers to work and let the market work. These policies that would benefit workers include reducing or eliminating most occupational licenses, reducing or eliminating minimum wages, and ending the tax exclusion of employer-sponsored health insurance. These pro-growth policies would allow for more dynamic labor market movements, and spending less and cutting taxes would leave workers with more earnings to support flexible work choices. Also, many companies are already voluntarily innovating with remote work, flexible hours, and four-day work weeks without government mandates. These changes are often driven by the competitive need to attract and retain the best workers and the recognition that happy, well-balanced employees are more productive. Improving work-life balance is commendable, but the “Thirty-Two Hour Workweek Act” would hinder rather than help. By championing policies that limit government intervention thereby supporting work flexibility and innovation, we can foster a labor market that thrives and adapts organically, benefiting all sectors of the economy and ensuring that both employers and workers enjoy true freedom in crafting their work lives. Don’t miss my talk with guest Dr. Josh Rauh, Ormond Family Professor of Finance at Stanford’s Graduate School of Business, senior fellow at the Hoover Institution, and former principal chief economist at the White House’s Council of Economic Advisors.
Key topics discussed include: - Which of the pandemic-related government programs worked? - What's up with excessive federal spending? - Is the Laffer curve still relevant? Please like, subscribe, and share this episode. Subscribe to my Substack newsletter at vanceginn.substack.com for bi-weekly episodes and insights. For more content, visit vanceginn.com. In the 15-minute “This Week’s Economy” episode, I discuss the following (and more!):
- What will happen with TikTok because Congress passed a bill banning it? - How would increasing government create a more “justly ordered society”? - Why are red states leading the way in job creation? - What should Texas and other states do with “surplus” money? Please share, rate, and review this episode. Check out my Substack newsletter with show notes and more at vanceginn.substack.com or at vanceginn.com. |
Vance Ginn, Ph.D.
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