282. How Election Agendas Miss Growth Message | This Week's Economy Ep. 76 📈

My take on the latest news without the noise.

Hello Friends!

Welcome back! Thank you for being a dedicated subscriber. Today, I discuss the key highlights from a free-market perspective that you don’t want to miss. Watch the episode on YouTube below or listen to it on Apple Podcast or Spotify.

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1. WILL THE FED CUT INTEREST RATES?

News: In his speech at Jackson Hole last Friday, Fed Chair Jerome Powell said it’s time to cut rates. This comes shortly before the Fed’s next meeting in mid-September.

My Take:

• The Federal Reserve's primary role is to manage inflation. The Fed should maintain the current federal funds rate since inflation is much higher than the 2% target average rate. Reducing the rate before inflation is brought under control could exacerbate inflationary pressures.

• Rather than lowering the federal funds rate, the Fed should reduce its large $7.1 trillion balance sheet. This could involve decreasing mortgage-backed securities (MBS) holdings and other debt instruments. Such a strategy could help tighten monetary conditions without further lowering interest rates.

• If the Fed adjusts the federal funds rate, it should be a modest decrease, no more than 25 basis points. This would bring the rate to a range of 5% to 5.25%, allowing for a cautious approach that balances moderating inflation and the risk it escalates higher.

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2. HARRIS’ ECONOMIC POLICY

News: As part of her economic policy plan to tackle inflation, Kamala Harris suggests price controls. This policy will likely make matters worse and distract from better solutions. She also proposes other policies on housing and tax credits.

My Take:

• Harris is tackling our economic issues all wrong. She’s attacking businesses through price controls, similar to those in Soviet Russia or China. This only raises prices for consumers. She’s picking winners and losers with housing policy and child tax credits, all of which are bad policies that require more government intervention. 

• The other factor is that she is already in office. She is making matters worse by increasing the regulatory burden on Americans. The Biden administration has increased the regulatory burden, passing it along to Americans like a tax. They have enacted 994 final rules, which have cost $1.69 trillion.

• It’s worth noting that President Trump is also supporting a Child Tax credit. Instead of picking some American households to benefit, the next president should lower all Americans taxes through extending the Tax Cuts and Jobs Act and other tax cuts tied to spending restraint.

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3. RFK, JR BACKS TRUMP FOR PRESIDENT

News: Robert F. Kennedy Jr. has suspended his campaign to endorse Trump for President, with a potential promised role for him in a Trump administration.

My Take:

• So far, the Trump administration has been shaping up to have a mix of political ideologies, with J.D. Vance as a running mate and a potential role for Robert F. Kennedy Jr. 

• Vance’s desire to increase government intervention in the economy, protectionist measures, and strengthen the monopoly of labor unions will lead us down the wrong path. These policies are opposed to the proven pro-growth policies that help people prosper.

• I agree with RFK Jr.’s insights on how lockdowns during COVID-19 hurt Americans. His role in the Trump administration in avoiding these would be positive. He also mentioned that he would have a relationship with Trump that allows him to argue publicly with him. Political leaders cordially challenging each other should be a welcome change.

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4. SCHOOL CHOICE NEEDED IN TEXAS

News: Despite poor student outcomes and major housing affordability issues in Austin, Texas, the school district is pushing for higher taxes and debt to fund increased spending. Data shows the large growth in administrative staff at public schools nationwide, showing school systems are a big job program for adults.

My Take:

• AISD has been losing student enrollment because its outcomes are abysmal, and people are fleeing the district because of housing unaffordability. These are a direct result of bad policies, such as spending too much, lack of schooling competition, and excessive zoning restrictions. 

• What if public education was more about student outcomes than a jobs program for administrative staff? Universal school choice would infuse more competition focused on directly improving student outcomes.

• Texas and other states should pass school choice legislation to reap the proven benefits of increased student performance, graduation rates, and overall satisfaction. Texas can ensure that all children have access to high-quality education, regardless of socioeconomic status by allowing families to select schools that best meet their needs through universal savings accounts.

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5. CITIES IN RED STATES SEE POPULATION BOOM

News: The five cities with the biggest population gains are all in red states with Right to Work, lower income taxes, and lower state or local tax burdens. In employment news, jobless claims rose more than predicted to 232,000, showing a cooling in labor conditions.

My Take:

• Red states like Florida and Texas excel due to their pro-growth policies—low taxes, fewer regulations, and a favorable environment for entrepreneurs and workers. These strategies consistently outperform the high-tax, heavily regulated environments of blue states like California and New York.

• A significant aspect of the economic success seen in many red states, including Texas, is their embrace of the state flat tax revolution. This movement, which simplifies tax codes and lowers rates, has been crucial in attracting businesses and encouraging investment.

• The latest jobless claim report showed that Texas had one of the most significant decreases in claims. Texas is doing a great job at attracting businesses and workers with its lower taxes and better cost of living. By championing policies that reduce government involvement and promote market activity, Texas can strengthen its infrastructure to support its growing population and sustain its status as a beacon of prosperity and freedom.

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6. TARIFFS ARE TAXES

News: A Reason article notes, “J.D. Vance thinks Donald Trump's tariffs actually worked: In a cable news segment this weekend, vice-presidential contender J.D. Vance defended his running mate's first-term tariff policies.”

My Take:

• Tariffs are taxes that hurt consumers and businesses at home and abroad by raising prices and disrupting supply chains. Whether initial or retaliatory, tariffs compound these costs, making them a poor tool for funding limited government.

• Instead, we should focus on expanding free trade, reducing excessive spending, taxes, and regulations, and enforcing strict fiscal and monetary policy rules. Doing so creates an environment where prosperity can flourish, benefiting everyone rather than stifling growth through progressive protectionism.

• Free trade with free-market capitalism supports the most abundant resources and the most prosperous people. We need more of it!

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Media Hits and Other:

This week, I’ve published pieces, given quotes, and completed interviews at:

• Fox Business with Neil Cavuto on inflation and the Fed.

  

• Texas Public Policy Foundation’s Parent Empowerment podcast with Mandy Drogin on the importance of school choice and school finance reform in Texas.

• NTD News on the failures of tariffs, among other topics.

• American Institute for Economic Research on the need for Texas to pass school choice.

• Real Clear Health on the cure for the healthcare affordability crisis.

Let People Prosper Show:

• Don't miss the latest Episode 111 of the Let People Prosper Show is an excellent discussion with Dr. Paul Tice about energy policy, especially on ESG, reliable power, and climate change. He is an adjunct professor of finance at the Leonard N. Stern School of Business at New York University, where he teaches mainly about the energy, infrastructure, and project finance markets. He also regularly contributes Op-Ed pieces on energy- and finance-related topics to The Wall Street Journal, The Hill, and other news media. He is the author of "The Race to Zero: How ESG Investing Will Crater the Global Financial System."

• This upcoming Tuesday’s Episode 112 of the Let People Prosper Show is a fantastic discussion with Dr. Abby Blanco about her new co-authored book with Dr.

  Chris Coyne
  (who was previously on the Show) titled How to Run Wars: A Confidential Playbook for the National Security Elite. She is an Associate Professor in Economics at the University of Tampa and received her PhD in Economics from George Mason University in Fairfax, Virginia. Her work surrounds issues related to U.S. defense policy and militarism.

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Conclusion

Thanks for joining me in Episode 76 of "This Week's Economy." For more insights, visit vanceginn.com and get a paid subscription to my Substack newsletter at vanceginn.substack.com today so you receive these insights in your inbox. God bless you, and let people prosper.