As nearly everyone knows, overall inflation is about 20% under Biden. But energy costs have surged 30 to 40%. The left's war on energy has worked to make power more expensive. This was intentional.
But that's only half the story. Energy costs are much higher in most blue states. For example, gas prices at the pump are as much as $1 per gallon HIGHER in Washington and California.
Unfortunately, blue state policies are often a preview of what's coming nationally. So if the Green New Deal becomes the law of the land, energy costs are going to spike all over the country. You’ve been warned!
One of the best features of the 2017 Tax Cuts and Jobs Act (TCJA) was the doubling of the federal death tax exemption to $13.6 million. This is an evil tax that leads to the dissolution of family-owned businesses and discourages saving. But if the TCJA is allowed to expire at the end of next year, about two to three times more family farms and businesses will get hit by the tax. That's bad enough, but something much worse could be coming.
Elizabeth Warren has introduced a bill to spend about $500 billion on new housing subsidies, with a goal of building 3.2 million housing units and subsidizing first-time home buyers. The bill (the American Housing and Economic Mobility Act of 2024) includes slashing the estate tax exemption all the way down to $3.5 million, and raising the rates from a current flat 40% to rates ranging from 55% to 65%.
The chart below shows the U.S. already has one of the highest death taxes in the world and we would be the highest in the world under the Warren bill.
This policy would be an economic and moral catastrophe, but has been endorsed by Mark Zandi and may be a priority for progressives in the next Congress and administration.
Next week, the Nobel Prize winner in economics will be named.
By far the most influential economist in the world today (who has not won a Nobel Prize), is Arthur Laffer - of Laffer Curve fame. He changed the way the world thinks about tax policy and influenced many leaders across the globe – from Ronald Reagan to Margaret Thatcher to Jerry Brown to Donald Trump. There is no one in the world who even comes close to Laffer’s impact on economics.
Of course, we’re biased given that Arthur is our co-founder. But what is sad is that the Nobel committee doesn’t acknowledge the Laffer Curve, and they deny the simple truth that when you tax something, you get less of it. And when you cut tax rates, good things happen. Kennedy, Reagan, and Trump have proved that.
Amazingly, Paul Krugman has a Nobel, and he hasn’t said a single thing right in about 25 years.
At least Dr. Laffer will always have his Presidential Medal of Freedom.
Cities and states can no longer afford the unsustainable retirement promises made to millions of government workers over the last 50 years. Total unfunded liabilities of state and local public pensions are now at $1.59 trillion, almost the size of Italy's economy. Taxpayers are technically on the hook.
A new report from the Reason Foundation on Pension Solvency finds:
The total unfunded liabilities in 2023 was $1.59 trillion, with $1.41 trillion (88% of the total) held by state plans and $188 billion (12% of the total) held by local plans.
The national aggregate funded ratio in 2023 was 76% and the median funded ratio was 76%. The median state plan was 78% funded, while the median local plan was 70% funded.
Stress testing results indicate that a recession could double unfunded liabilities, rising from the forecasted $1.31 trillion in 2024 to $2.71 trillion in 2025.
So far this century, the average annual return on public pension investments has been 6.5%–well below what plans had assumed.
The obvious solution is to convert all pension plans from defined benefit to defined contribution plans – i.e., a 401k plan. Almost no private sector workers still have antiquated defined benefit plans – although the Longshoremen wanted a DB plan. Only government workers get these guaranteed benefits and taxpayers in states like California and New York are getting fleeced.
We mentioned in the HOTLINE last week that nuclear power is making a comeback as evidenced by the plans to reopen the Three Mile Island plant. A recent article published by Unleash Prosperity Co-Founder Stephen Moore (currently on leave of absence from UP) and Research Associate Jackson Avery, argues that given the strain on our electric grid system, nuclear power must be part of the energy mix. This is doubly urgent, given that the AI revolution uses about triple the amount of energy of prior generation data centers.
One exciting new development is the potential capacity to build Small Modular Reactors (SMRs) that can provide power for cities of say 100,000 population.
SMRs have the wattage output to power even the largest data center, reducing reliance on regional power grids, and are safer and smaller than traditional nuclear power plants. The Nuclear Regulatory Commission must start approving these clean and safe plants.
