Timothy Meads at Townhall picks three books to better understand the world leading off with supply-side giant George Gilder’s Life After Google as “the book to understand what the technology of the future looks like, and how you can take advantage of it today. Gilder brilliantly explains how the blockchain technology behind Bitcoin and other cryptocurrencies will free us all from the tyranny” … calling it a “must read” book.
Richard M. Reinsch, II, at National Affairs, challenges the critics of capitalism both left and right (calling out economic nationalist Oren Cass) with a gritty Schumpeterian analysis of the nature of progress,
by Phil Kerpen
From The Federalist:
Republicans and Democrats finally stopped squabbling long enough to spend an estimated $2 trillion on what they claim is emergency coronavirus relief. Here’s the good, the bad, and the ugly of the bill.
1. Payroll Tax Deferral
Employer-side payroll tax payments are suspended through the end of the year, to be paid half by year-end 2021 and half by year-end 2022. This will increase business liquidity by about $700 billion.
While I would have preferred a cut to a deferral, this will significantly lessen the near-term tax burden on business payrolls, encouraging businesses to retain and restore jobs. (Treasury has already announced a deferral of corporate income taxes under existing authorities.)
2. More Federal Reserve Money
The Federal Reserve’s new lending facility is funded with up to $425 billion, which will be levered to provide up to $4 trillion in liquidity to distressed businesses.
3. Net Operating Losses
Five-year carryback for tax years 2018, 2019, and 2020, for corporations and pass-through businesses as well. This will allow this year large expected losses to be carried back for substantial refunds.
4. Qualified Investment Property Fix
Fixes the so-called “retail glitch” for qualified investment property (QIP), allowing investments in QIP improvement to commercial buildings—flooring, lighting, fixtures, etc.—to qualify for bonus depreciation. The glitch forced a 39-year recovery for such investments, and fixing it has been a top priority of restaurants and retailers.
5. Exemption for Distillers to Produce Hand Sanitizer
Distillers were made exempt from alcohol excise taxes for the alcohol used to produce hand sanitizer.
6. Sick Pay Tax Credits Made Advanceable
This solves the biggest flaw in last week’s Nancy Pelosi-Steven Mnuchin bill, which mandates paid sick leave and required businesses to pay the costs up front and be reimbursed months later, even though they are already in a severe cash crunch.
1. Four Months of Full-Pay Unemployment
Four months of an additional $600 per week on top of standard state unemployment benefits. This repeats and worsens the principal policy error of the Obama recession – enhanced unemployment benefits that undercut work incentives, contract the active labor force, and undermine economic growth. Four months exceeds any reasonable expectation of how long shutdown orders will be in place, and paying more for non-work than for work will discourage a significant portion of the workforce from returning to work before the extra benefit end.
2. Unrelated Spending Larded Into the Bill
- Corporation for Public Broadcasting: $75 million
- National Endowment for the Arts: $75 million
- National Endowment for the Humanities: $75 million
- Institute of Museum and Library Services: $50 million
- The Kennedy Center: $25 million
- National Oceanic and Atmospheric Administration (NOAA): $20 million
- Legal Services Corporation: $50 million
- Internal Revenue Service: $250 million
- House of Representatives salaries and expenses: $25 million
3. Mandatory Neutrality in Union Organizing Drives
This is a huge giveaway to union bosses by the backdoor. Medium-sized businesses (500-10,000 employees) cannot oppose any union organizing campaign for the duration of a federal loan.
4. Even Bigger Student Loan Subsidies
Employer-paid student loan payments are made tax-exempt, creating a tax preference for student loan payments over ordinary income. This is a down payment on a Democratic political agenda item, rewarding principally upper-middle-class professionals who chose to take on the long-term obligation of student loans.
5. No Funds for Topping Up Petroleum Reserve
Senate Minority Leader Chuck Schumer stripped out the funding for Strategic Petroleum Reserve purchases. Hard to see why we wouldn’t want to top it up at 20 bucks a barrel. Probably just to spite the president.
The economy remains substantially shut down, and no matter how much stimulus money is pushed out, it is impossible to buy products and services that nobody is producing. The severity of the present policy-induced contraction will depend on how rapidly a significant portion of the workforce can return to work.
Newsmax reports on Director Kudlow’s statement that “The economic cost to individuals is just too great. More testing is essential. We’re loading up with tests now. That will be a big help … we will have to make some difficult tradeoffs. I’m not disposed to get ahead of the story. I spoke to the president about this subject last night. We’ll look at a number of different things. Let’s give it another week.”
3) The Federal Reserve and Treasury should open a short term loan window to make credit available to cash-strapped businesses that have collateral, and have sought credit in the private sector first, so they can make payroll and avoid bankruptcy.
From National Review:
Deregulation has been one of the great Trump-administration success stories. So why does the Securities and Exchange Commission want more cumbersome rules that will restrict investor choices? A new 456-page SEC rule restricts the availability of a subset of Exchange Traded Funds (ETFs), specifically those that offer returns that are the inverse or a multiple — double or triple — of a reference index. Inverse funds go up when the market goes down — which has been handy lately. Leveraged funds track their indexes with a multiple of two or three.