This Friday the Labor Department will release the Jobs Report for May. The monthly Jobs Report is based on data from a survey of 60,000 households and from a separate survey of business establishments. The Bureau of Labor Statistics uses the data to estimate the unemployment rate and the number of jobs added to the economy in the just ended month. They also revise the estimates made for the prior two months to take into account more complete information.
Last month's report for April was an estimated gain of 233,000 jobs, but March was only 85,000 additional jobs. It takes over 150,000 additional jobs per month to absorb the growth in the labor force as young workers enter the work force and older workers retire. We can hope that the progress seen in April will continue in May and beyond.
When the jobs report is released on Friday morning, there will be instant analysis on Wall Street and again on the Sunday talk shows. Pundits will discuss the political and economic implications of whatever the outcome turns out to be. As a student of the economy, this is all interesting to me. But sometimes we need to step back from the instant moment to gain perspective. The graph below illustrates my point. more >>
This was the horrible week in which millions of Americans paid their taxes to the ever increasing and intrusive federal government. This year, the tax burden has grown with Tax Freedom Day appearing on April 24, meaning that Americans will spend approximately one third of the year working for government before they can provide for their families.
Taxes are certainly oppressive in this country. Compared to last year, tax revenue increased 4.3% to $1.478 trillion in the first 6½ months of the 2015 fiscal year. Even worse, the insatiable federal government continues to spend money with reckless abandon. Through April 1 of this year, the budget deficit was an astounding $439 billion, a significant increase from 2014.
Not only are taxes and deficits increasing, but the actual size of the federal tax code is exploding. When the income tax was created in 1913, the tax code was only 400 pages. It increased to 26,000 pages by 1984 and has tripled in size in the last 30 years. Since the implementation of Obamacare in 2010, the federal tax code has increased another 3,300 pages, resulting in more rules and regulations for Americans to decipher. Today, the federal tax code is over 74,000 pages of bureaucratic nonsense, making it impossible for the average American to complete their own tax return. It is no surprise that 94% of Americans need professional assistance in finishing their tax return. more >>
It is tax week 2015. If you completed your tax return on time and wrote that check you'd much rather leave in your account, why not pour yourself a cup of coffee (or maybe a bottle of antacid relief) and plop yourself down in your favorite easy chair and sit a spell. You deserve it. While relaxing, why not take a minute to entertain yourself and learn how your hard-earned money was spent.
Now-retired Sen. Tom Coburn's (R-Okla.) "Wastebook 2014" reports the government spent $856,000 to teach mountain lions how to run on a treadmill, $171,000 to teach monkeys how to gamble and $387,000 to give rabbits massages. It spent $331,000 to see if spouses are more likely to stab "significant other" voodoo dolls when hungry, $15,000 to attract Colorado young people to the symphony by funding the creation of "Classically Cannabis: The High Note Series." While we're on that high note, the IRS paid $4.2 billion in tax refunds to identity thieves and the Defense Department paid $1 billion to destroy $16 billion in unneeded military-grade ammunition.
"Waste Watch," a publication released by Rep. Steve Russell (R-Okla.) discovered things like $456,669 million was spent on a firing range in Afghanistan that "melted" away after it rained. Another expenditure you probably missed in 2014, was a $100 million "bailout" the State Department discretely transferred to the Afghanistan government without much explanation. An example of how cracked the system is, in 2013, the State Department paid $207,297 to Humpty Dumpty Institute to fly young Iraqi filmmakers to Los Angeles to show them how filmmaking is done, resulting in the production of an anti-American film. more >>
In 2008, many conservatives opposed the bank bailout. Why send $700 billion of hardworking Americans' taxpayer dollars to banks that had failed? Some of us argued it was unfair. Some of us argued it was unnecessary. But among the strongest arguments we made was the moral-hazard argument. Bailing out reckless behavior today will only encourage reckless behavior in the future.
I continue to believe we were right to worry about the bad lesson the bank bailout would teach financial institutions. But in hindsight, we should have also focused on what it would teach others. All across the United States, in high school study halls and college dorm rooms, more than a few young Americans were watching Congress, the President, and Wall Street.
Any parent with children knows that when they are watching what you do, they are learning from what you do. If you swear, they will learn to swear. If you cut corners, they will learn to cut corners. The young learn the habits of the old – for better or worse. more >>
There's an old saying that all politics is local. If that is the case, it should follow that local politicians should be among the best informed, armed with iron-clad facts as they weigh in on issues that affect not only their areas, but the nation as a whole. The U.S. Conference of Mayors, however, has generated some confusion recently by throwing their support behind the embattled Export-Import Bank of the United States – apparently on the strength of some questionable data.
The group has supported the bank in the past and passed a resolution in favor of renewing Ex-Im's charter last June as the debate over the it's reauthorization raged in Congress. At that point, politicians from both parties along with a number of groups and individuals outside government were questioning the necessity of this eighty-year-old institution to the American people.
The bank is supposed to provide funding to facilitate deals between U.S. and foreign companies so that American products can be exported overseas. In practice, this has often translated into a government institution picking winners and losers. Ten large corporations, for instance, end up receiving more than half of Ex-Im's total funding. One of these, Boeing, received more than $8 billion by itself. more >>
A temporary timeout was called this week in the on-going Greek debt tragedy. Euro-zone officials and Greek politicians agreed on Friday to a four month extension of the default deadline to give themselves more time to find a solution to the intractable problem that the Greek government owes more debt than it can pay back. This exercise in can-kicking spurred me to read the 1977 book, Democracy in Deficit, by Nobel Laureate James M. Buchanan and Richard E. Wagner. I'm interested in their insights into how western democracies have gotten themselves into so much debt, and if they see a possible path out of the woods. I'm only five chapters into the book, with seven to go. But already, the authors have revealed the complete change in the mindset of western society wrought by the economic ideas of Lord Keynes.
Buchanan and Wagner describe the mindset of the public, including government officials, prior to the ascendancy of Keynesian economics. They call it the Old-Time Fiscal Religion, an appropriate description for the commonly held and faithfully adhered to principles of public finance, prior to the Keynesian revolution. As they briefly describe the old "fiscal constitution", it had three main principles.
First, frugality in public finance was considered a virtue, and profligacy was not. Calvin Coolidge was our last truly frugal President, although President Eisenhower might qualify as frugal (there were three years of budget surplus in his eight years in office) when compared to the record of Presidents since he left office. more >>