1) How Is the Government Like the Energizer Bunny?
It just keeps growing and growing and growing.
The headline 2.8% number for the third quarter of 2024 GDP was solid. But when you look underneath the hood it wasn't nearly the triumph that the media has reported.
Government purchases grew at 5% or twice the pace of the private sector's 2.5%. This is a travesty – not a victory.
Also worrisome is that the most important component of GDP – investment – crawled ahead at 0.3%. The winter is coming and no one is planting.
Our economist, E.J. Antoni, notes that government consumption expenditures (which exclude things like transfer payments) have grown faster than consumer spending now in 8 of the last 9 quarters. And almost $3.3 trillion of annual personal consumption expenditures are a result of government transfer payments as of the third quarter.
Additionally, the federal debt increased by almost twice as much as the increase in GDP, providing yet further evidence that what appears in the statistics as economic growth is actually the government expanding its debt load to $35 trillion.
This is modern monetary theory on steroids. Does anyone think this is going to have a happy ending?
2) Will Louisiana Be the Tenth No Income Tax State?
Our 501 (c)(4) partner organization, Unleash Prosperity Now (UPN), has been helping state legislators and governors devise a plan to eliminate their state income tax. Mississippi Governor Tate Reeves wants to put his state's tax on a glide path to zero. Georgia Governor Brian Kemp signed a significant income tax cut this year and promises more. Same with North Dakota Governor Doug Burgum.
Louisiana Governor Jeff Landry may beat them to it. He has called a special session of the legislature to set the income tax on a path to repeal by 2030. UPN will be headed to Baton Rouge in the weeks ahead to help make it happen.
Landry's proposed Phase One would eliminate income tax for anyone earning less than $12,000 and set a flat rate of 3% for all income above that. He would also repeal the corporate income tax and eliminate the tax on prescription drugs.
He would replace the revenue with the economic growth lower taxes would bring and by reducing the mind-boggling 223 exemptions to the state sales tax. He would start by taxing lobbying, dog grooming, and car washes.
Our own research at Unleash Prosperity finds that the states with no income tax are growing as much as twice as fast as the high-income tax states.
We can't think of a state that needs faster economic and job growth more than Louisiana.
Remember when the Labour Party made solemn promises not to raise taxes if they took charge?
They seemed so sincere that even WE fell for the head fake.
Well, never mind.
Britain's Labour government has only been in charge for a few months and they've released their first budget. It's an anti-growth disaster. Capital gains and inheritance taxes along with national insurance levies are all going up. The minimum wage is set for an increase of up to 16%. In mind-bending language, it claims that it must raise taxes to avoid "austerity." That's a contradiction in terms.
Even the government's own Office for Budget Responsibility (OBR) warns that millions of working people will suffer from the $52 billion in tax hikes through lost wage increases and lower income. Its borrowing binge will drive up inflation and keep interest rates high.
Labour claims that it hasn't broken its campaign pledge not to raise taxes on "working people" because the burden will fall on employers and the wealthy.
But the OBR contradicts that: "We assume that firms pass on most but not all of their higher tax costs to employees." That's a pretty solid assumption.
The Labour tax hikes push Britain's national tax burden to 38.2%, the highest since just after World War Two.
Our other economic superstar, Casey Mulligan, hit it out of the park on Wednesday with his piece co-authored in the WSJ with former Trump chief economist, Kevin Hassett.
The piece shows the far superior trends on the economy under the Trump Administration than under Biden's. Somehow the Nobel prize-winning economists who keep touting Bidenomics are so caught up in politics that they forgot their Econ 101.
Here's a brief excerpt:
Four years ago, we published a study with Tim Fitzgerald and Cody Kallen comparing the economic effects of Mr. Biden's agenda with Mr. Trump's...The scenario closest to the policy changes made over the past four years focused on expanded health-insurance benefits, a range of green energy policies and a return of the other regulatory policies to what they were under Barack Obama.
The nearby chart shows what actually happened to inflation-adjusted real employee compensation per person 16 or older...Although we don't know for sure what would have happened if Mr. Trump had begun a second term in 2021, our chart shows a linear trend from the first quarter of 2017 through the fourth quarter of 2019. The trend is a good model of what happened after the second full quarter of the pandemic into late 2021.
Here is the chart, which should be familiar to HOTLINE readers:
How the Nobelists can conclude that Biden admin policies are superior to Trump's is beyond our pay grade.
Apropos of our item 1 above about the runaway train of government spending, Shark Tank investor legend Kevin "Mr. Wonderful" O'Leary agrees: Let Elon Musk fix it.
The biggest business in America is the federal government. It's a business. There's no question. It's growing bigger every day. Who has the executional skills and the track record to even look at this problem? Regardless of what elements are going to be cut, he doesn't have a plan yet. There's no other individual like Elon Musk...
We've got to go find $2 trillion. We've got to go find $5 trillion. We've got to figure out how to solve this problem. We need every idea.... The concept is, RELEASE THE HOUNDS, let them in there, and then come back with a shopping list of ideas, and let's debate it. Why not? We need to find some savings. We know the government's fat.
