1) Argentina Voters Reject Socialism – Could America Be Next?
Don’t cry for Argentina. Whoop it up. Strike up the band.
In the biggest election sonic boom in a major country since Trump sent Hillary to the canvas, Javier Milei, a free-market and openly libertarian economist who entered politics three years ago, bested Sergio Massa, the economy minister in the Peronist government who has presided over the hyperinflation that sent the poverty rate in Argentina to more than 40%.
As we mentioned in previous Hotlines, the Argentine Peso almost literally wasn’t worth the paper it was written on. The WSJ labeled the economic climate in Argentina today as “the worst crisis in a generation.”
This is a BIG, BIG, deal. Finally, the Argentines have solidly rejected the Peronistas who first took power in 1946 and brought socialism, despair, and poverty to Buenos Aires. (We never could understand how Evita Peron was lionized by the left in South America and incredibly in the U.S. Juan and Evita Peron gave sanctuary to the Nazis after WW2, massively increased welfare, and socialized the economy.)
CTUP fellow John Fund reminds us that “a century ago Argentina was one of the six wealthiest countries in the world. Now it ranks 66th, below Mexico and just above Russia.”
Meanwhile, Milei has promised to massively cut the bloated budget in Buenos Aires and has brought chainsaws to his rallies.
One report has found that only 6.2 million Argentines work in the formal private sector and pay taxes to support the almost 20 million people who are public workers, pensioners, or recipients of public subsidies.
Milei Promises to Take a Chain Saw to the Argentina Budget
The country has 46 million people and the only ones who have gotten rich are connected with the corruption of the government and a litany of self-serving politicians – many of whom have ended up in jail, including former president Christina Kirchner who was convicted on charges of stealing $1 billion. She makes Joe and Hunter Biden look like petty thieves.
If any of the mess that Argentina finds itself in sounds familiar, it should. The Argentines had the courage to support a radical course correction as they opted for far less government and far more freedom.
Could it happen here in the USA in 2024?
One year ago it took 6 Pesos to buy a U.S. dollar. Now it costs nearly 400 pesos to buy a dollar.
2) Trump Business Tax Cut Caused Investment and Wages to Rise – with Virtually No Revenue Loss
It turns out the Trump tax cut was a towering policy home run, not just flying over the fences, but out of the ballpark into the parking lot. The economic incentive effects were larger than even WE or the Trump Administration anticipated. That’s the conclusion of a new National Bureau of Economics Research study.
There’s a good summary of the technical study by our friend Bruce Thompson published in Real Clear Markets.
The study examined 12,000 corporate tax returns... The authors found that the corporate tax changes increased domestic investment by 20% in the two years after the bill was enacted, with most of the boost in capital investment coming from the lower corporate tax rate and bonus depreciation...
The study estimates that the corporate tax changes will increase the U.S. domestic corporate capital stock by 7.4% over the long run. The increased capital stock leads to increased worker productivity, resulting in increased real wages over the long run.
Even with this ironclad evidence of benefits far exceeding costs, the Democrats STILL want to raise the corporate tax rate and the capital gains and dividend rates. Apparently, when it comes to tax policy, they have no interest in following the science.
3) How Many Biden Student Loan Bailouts Went to the Rich?
A new report from the Government Accountability Office (GAO), has found that the Biden Administration had virtually no income verification for its student loan forgiveness program.
GAO found that if the Supreme Court had given the green light, the Biden Administration was going to wipe out student loan debt for 12 million borrowers – even though it had only requested income documentation from 790,000 of them.
This scandalous revelation has us wondering. How many of the millions of student loans that have ALREADY been forgiven by Biden at a price tag of tens of billions of dollars went to high-income deadbeats who didn’t pay their loans? Congress should do a deep dive into this.
The fact that the Feds never checked incomes for this program only confirms that these loan write-offs have never been about equity or fairness, but buying votes.
4) Chicago Will Try to Expand Affordable Housing By Imposing a New Tax on Housing
In our “you can’t make this s%#* up” category, at the urging of new mayor Brandon Johnson, the Chicago City Council put an increased real estate transfer tax on the March 2024 ballot.
The “mansion tax” would impact home sales of more than $1 million with a graduated rate between 2 and 3%. When he was running for mayor earlier this year Johnson had pledged not to raise the high property taxes in the city. It took him all of six months to break that promise.
The tax will apply to commercial property owners, whose property values are already plummeting thanks to issues like skyrocketing crime and vandalism in the city.
This is supposed to pay for affordable housing, which raises the question of how raising taxes on housing lowers the price. Maybe the mayor thinks that millionaires will flee the city and these mansions can be converted into low-income housing. That will improve the neighborhoods.
Los Angeles voters imposed a similar tax on high-end real estate in 2022 and it’s been a disaster. LA officials forecast the new tax would raise $672 million for homeless services since it started in April, but it’s generated only $100 million during its first six months.
5) Extra! Extra! New York Times Finally Declares School Closures a Disaster
Here's a quote of the day, from Saturday's New York Times:
"The school closures... may prove to be the most damaging disruption in the history of American education. It also set student progress in math and reading back by two decades and widened the achievement gap that separates poor and wealthy children."
Maybe we should sue the Times for plagiarism – although there may be a statute of limitations since we warned of this THREE YEARS AGO and then showed the evidence over and over. Nice to see them finally come around to reality, but will anyone at the NYT be fired for being the chief media cheerleader for school closures? There was no apology we could see in the article.
