Tag: Reason

40 Years of Trillion-Dollar Debt

Mary Pat Campbell

Link:https://reason.com/2021/10/22/40-years-of-trillion-dollar-debt/?utm_medium=email

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It’s true, of course, that $1 trillion doesn’t buy what it used to. That amount in 1981 would purchase about $3 trillion worth of stuff today. The best way to measure the national debt over long periods of time is to compare it to America’s gross domestic product (GDP), a rough estimate of the size of the country’s economy in a given year.

In the early 1980s, for example, even as the gross national debt exceeded $1 trillion for the first time, the national debt was less than 40 percent of GDP. The national debt is now equivalent to the country’s GDP and is on pace to be nearly 200 percent of GDP by the middle of the century, as this chart from Brian Riedl, a deficit hawk and former Republican Senate staffer now working at the Manhattan Institute, helpfully illustrates:

Author(s): Eric Boehm

Publication Date: 22 Oct 2021

Publication Site: Reason

Private equity investments continue to pose challenges for public pension plans

Mary Pat Campbell

Link:https://reason.org/commentary/private-equity-investments-continue-to-pose-challenges-for-public-pension-plans/

Excerpt:

Private equity investments lack transparency and are difficult to value. As opposed to publicly traded securities, limited partnerships used by private equity managers can’t provide frequent performance updates and, as a result, advise stakeholders after the end of each fiscal year. This leads to a lag in reporting important details. Moreover, shares of companies owned by private equity funds are not publicly traded, meaning that their values can only be estimated, which is subject to potential bias. Private equity firms are also not obligated by the law to publish their lists of assets in accordance with Securities and Exchange Commission rules. While this information can be found on Bloomberg Professional Terminal, it is not available to the general public. This lack of transparency should be concerning to employees and retirees who rely on these funds and taxpayers who contribute to them.    

For the Pennsylvania teacher system, the management fees associated with private equity investments that the plan had to pay over the past four years ($4.3 billion) are more than the total amount members paid into the plan during the same time ($4.2 billion). The pension plan recently announced that member contributions will have to be raised going forward because of long-term investment results below the plan’s benchmark. As a point of comparison, the New York State Teachers’ Retirement System, which has double the assets of PSERS, reported 36% less in total investment fees and expenses than PSERS.

Author(s): Jen Sidorova

Publication Date: 12 Oct 2021

Publication Site: Reason

The Racial Gap Among the Vaccinated Has Essentially Disappeared

Mary Pat Campbell

Link:https://reason.com/2021/10/14/the-racial-gap-among-the-vaccinated-has-essentially-disappeared/

Excerpt:

According to a new survey from the Kaiser Family Foundation, as the rate of U.S. adults who report having received at least one dose of the COVID-19 vaccines continues to climb, the rates among racial groups are now basically identical, comprising 71 percent of white adults, 70 percent of black adults, and 73 percent of Hispanic adults. President Joe Biden’s proposed mandate for all private-sector employees to be vaccinated has yet to take effect, so this is a good sign for the efficacy of general persuasion over a top-down mandate.

Author(s): Joe Lancaster

Publication Date: 14 Oct 2021

Publication Site: Reason

Banks and Trade Groups Reject Saule Omarova, Biden’s New Currency Comptroller Pick

Mary Pat Campbell

Link: https://reason.com/2021/10/07/banks-and-trade-groups-reject-saule-omarova-bidens-new-currency-comptroller-pick/?utm_medium=email

Excerpt:

Omarova’s most out-there academic ideas include directing the Federal Reserve to handle consumer deposits, taking that power away from banks. “Having Americans park their money at the Fed would allow the central bank to more directly and efficiently pull the levers of monetary policy by enabling it to credit individual citizens’ accounts when there’s a need to stimulate the economy,” notes Politico.

Rob Nichols, president of the American Bankers Association, has said such policies would “effectively nationalize America’s community banks,” according to The New York Times. Omarova “wants to eliminate the banks she’s being appointed to regulate,” agrees the Wall Street Journal editorial board. Groups representing both big and small banks, including the American Bankers Association, the Consumer Bankers Association, and the Independent Community Bankers of America, have reached out to more moderate Democrats to lodge their opposition to the pick—a ballsy move, given that she may end up passing down the rules that these associations’ members must later comply with.

Author(s): Liz Wolfe

Publication Date: 7 Oct 2021

Publication Site: Reason

Has the Pandemic Finally Peaked in the U.S.?

Mary Pat Campbell

Link: https://reason.com/2021/09/23/has-the-pandemic-finally-peaked-in-the-u-s/?utm_medium=email

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Will COVID-19 cases and deaths surge again this winter? The combined just-released results of 9 models applied to four different scenarios at COVID-19 Modeling Hub project that diagnosed cases could—using the projections of the more hopeful models—drop to around 9,000 cases per day by March. The scenarios range from the most hopeful, with childhood COVID-19 vaccinations and no new viral variant, to one with no child vaccinations and a new variant.

……

University of North Carolina epidemiologist Justin Lessler, who helps run the hub, tells NPR that the most likely scenario is that children do get vaccinated and no super-spreading variant emerges.

The good news is that about 55 percent of all Americans (181 million) are now fully vaccinated (64 percent of those age 12 and up). Given that unreported COVID-19 cases are generally thought to be considerably higher than the 42 million diagnosed cases, that suggests perhaps around 100 million Americans have developed natural immunity to the virus.

Author(s): Ronald Bailey

Publication Date: 23 Sept 2021

Publication Site: Reason

Washington State’s Tax Revolt

Mary Pat Campbell

Link: https://www.city-journal.org/cities-balk-at-washington-state-capital-gains-tax

Excerpt:

Five Washington communities—Spokane, Yakima, Spokane Valley, Granger, and Battle Ground—have passed resolutions in recent weeks pledging to outlaw income taxes at the local level if the state adopts income or capital gains taxes. More jurisdictions are promising to follow suit. Local officials are intent on sending the state a message. “Small businesses are the backbone of our local, regional, state, and national economy and it is imperative that the city not put unnecessary hurdles in the way of their success,” Battle Ground’s resolution declared. “Citizens want good government that is fiscally responsible,” Republican state representative Chris Corry argued at a hearing in Yakima. “Putting an income tax ban locally shows a commitment to being fiscally responsible.”

Washington lacks an income tax thanks to a 1932 state Supreme Court ruling that interpreted the state constitution as prohibiting the levy. Over the years, voters have rejected ten attempts to amend the constitution to institute an income tax. The last vote was in 2010, when nearly 65 percent of voters gave a thumbs-down to a ballot initiative heavily supported by the state’s public-sector unions and Bill Gates Sr. (Then-Microsoft CEO Steve Ballmer and Amazon founder Jeff Bezos helped lead the opposition.)

Author(s): Steven Malanga

Publication Date: 16 August 2021

Publication Site: Reason

California Lawmakers Unanimously Approve the State’s First Basic Income Program

Mary Pat Campbell

Link: https://reason.com/2021/07/16/california-lawmakers-unanimously-approve-the-states-first-basic-income-program/

Excerpt:

On Thursday, the California legislature unanimously passed a budget trailer bill that will create the state’s first guaranteed income pilot program.

Under the lawmakers’ plan, the state’s Department of Social Services (DSS) will get $35 million to dole out in grants to cities and counties that will then set up local basic income schemes. Grants will be prioritized for programs focusing on “pregnant individuals” and young adults 21 or older who’ve aged out of extended foster care programs.

State Sen. Dave Cortese (D–San Jose) said in a press release Thursday that participants of these pilot programs could end up receiving monthly payments of as much as $1,000 each.

Author(s): CHRISTIAN BRITSCHGI

Publication Date: 16 July 2021

Publication Site: Reason

Public Pension Plans Need to Put a Year of Good Investment Returns In Perspective

Mary Pat Campbell
Public Pension Plans Need to Put a Year of Good Investment Returns In Perspective

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For the last 20 years, state and local pension plans’ assumed rates of return have been far too optimistic. The distributions of average (geometric mean) assumed investment returns and actual returns from 2001 to 2020 demonstrate this. The figure below shows the distribution of the average assumed investment return rate versus actual investment returns for 200 of the largest state and local pension plans in the United States. The median assumed rate of return over the last 20 years was 7.7 percent per year, the median actual rate of investment return for these public pension plans was 5.7 percent.

This two percent difference helps to explain the nearly 30 percent drop in the average pension plan funded ratio over the same period. In recent years, many pension plans lowered their assumed rates of return.

Author(s): Truong Bui, Jordan Campbell

Publication Date: 30 June 2021

Publication Site: Reason Foundation

These States Lead the Way on Pension Reform

Mary Pat Campbell

Link: https://www.wsj.com/articles/these-states-lead-the-way-on-pension-reform-11624038916

Excerpt:

Arizona and Michigan have enacted more than a dozen substantive pension reform bills over the past five years. Credit-rating agencies and national retirement experts have cited Arizona’s public-safety pension reforms. Moody’s Investors Service gave Michigan’s teacher retirement reform a “credit positive” review because the state and participating local governments “will no longer carry the entire burden of investment performance risk for new employee pensions.”

Pension reform need not be partisan. After gaining input and buy-in from unions for police officers, firefighters and other public employees, New Mexico Gov. Michelle Lujan Grisham, a Democrat, overhauled her state’s public-employee pension plan for workers who aren’t teachers. “We must make changes now—the alternative is to saddle New Mexicans with unacceptable risk,” Ms. Grisham said, urging fellow Democrats to pass reforms. In 2018, Colorado legislators bridged their differences in a divided government to pass comprehensive reforms that increased employee and employer contributions, reduced cost-of-living adjustments, raised the retirement age, and expanded the use of defined-contribution plans for future employees to address the chronic structural underfunding of the state’s main public pension system.

Author(s): Leonard Gilroy, Steven Gassenberger

Publication Date: 18 June 2021

Publication Site: WSJ

A New Study Confirms That Reopening Texas ‘100 Percent’ Had No Discernible Impact on COVID-19 Cases or Deaths

Mary Pat Campbell
A New Study Confirms That Reopening Texas ‘100 Percent’ Had No Discernible Impact on COVID-19 Cases or Deaths

Excerpt:

More than two months later, the public health disaster predicted by Abbott’s critics has not materialized. A new analysis by three economists confirms that his decision had no discernible impact on COVID-19 cases or deaths in Texas.

“We find no evidence that the Texas reopening led to substantial changes in social mobility, including foot traffic at a wide set of business establishments in Texas,” Bentley University economist Dhaval Dave and his two co-authors report in a National Bureau of Economic Research working paper. “We find no evidence that the Texas reopening affected the rate of new COVID-19 cases during the five weeks following the reopening.” They say their findings “underscore the limits of late-pandemic era COVID-19 reopening policies to alter private behavior.”

Dave, San Diego State University economist Joseph Sabia, and SDSU graduate research fellow Samuel Safford looked at smartphone mobility data from SafeGraph and COVID-19 data collected by The New York Times. They compared trends in Texas before and after Abbott’s order took effect on March 10 to trends in a composite of data from other states that retained their COVID-19 restrictions but were otherwise similar.

Author(s): Jacob Sullum

Publication Date: 21 May 2021

Publication Site: Reason

The Gender Gap in Pandemic Job Losses Has Been Wildly Exaggerated

Mary Pat Campbell
The Gender Gap in Pandemic Job Losses Has Been Wildly Exaggerated

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“Labor force participation—defined as all civilians working full or part time, as well as those who are unemployed but looking for work—fell dramatically for both genders between March and April 2020,” noted Gallup. In April 2020, men’s labor force participation was at 97.8 percent of its February 2020 level and women’s labor force participation was 96.9 percent of its February 2020 level—a gender gap of just 0.9* percentage points.

By February 2021, labor force participation for both sexes had ticked back up somewhat. And while women were still seeing a less full recovery, the gap was again less than one percentage point. Compared to February 2020, men’s February 2021 labor force participation was 2.2 percent smaller and women’s was 3.1 percent smaller.

That’s not nothing—“the gap in labor force changes amounts to roughly 493,000 more women than men being absent from the labor force since the pandemic began,” Gallup pointed out in early March. But it’s also not evidence that women have been uniquely devastated by pandemic-related job losses, especially when—contra previous economic downturns—many of the circumstances that initially created the job losses will remedy quickly as life returns to a more normal pace.

Author(s): Elizabeth Nolan Brown

Publication Date: 11 May 2021

Publication Site: Reason

Bernie Sanders Is (Mostly) Right About the SALT Deduction

Mary Pat Campbell
Bernie Sanders Is (Mostly) Right About the SALT Deduction

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“I want to tell you this: If I become majority leader, one of the first things I will do is we will eliminate it forever,” Schumer said during a July 14 press conference on Long Island. “It will be dead, gone, and buried.”

“It” in this case was the cap on the state and local tax (SALT) deduction, which was imposed as part of the 2017 federal tax reform bill passed by Republicans and signed by President Donald Trump. As a result of that law, Americans are allowed to deduct a maximum of $10,000 in state and local tax payments from their federally taxable income; previously the deduction was uncapped, and it overwhelmingly benefitted the richest households while shifting their federal tax burden to everyone else.

…..

Sen. Bernie Sanders (I–Vt.) is correct to point out, as he did in an interview with Axios this week, that the SALT cap creates a serious optics problem for Democrats. Sanders says he will oppose Schumer’s effort to attach the SALT cap repeal to the transportation bill because “it sends a terrible, terrible message when you have Republicans telling us that this is a tax break for the rich.”

Author(s): Eric Boehm

Publication Date: 11 May 2021

Publication Site: Reason