33. Father's Day Gifts: Special Session & Inflation?
In this newsletter, I discuss the latest on the U.S. and TX economic & fiscal situations, likelihood of a special session in TX, increased inflation fears, and much more.
Hello Friend!
I hope you’ve had a prosperous week. One way to ensure this each week is to please subscribe to this weekly newsletter and share it with others who would enjoy it. As always, my motto: Free-market capitalism best lets people prosper!
Happy Father’s Day to all of you great fathers out there! There are too many kids who don’t have a dad for one reason or another, and I’m thankful for so many great ones out there. I certainly enjoyed time with my wife and boys over the weekend and every day. We’re continuing to live our dreams!
Recall that every moment with your family is priceless in the sense that it is difficult or even impossible to put a value on it. However, thinking like an economist, nothing is free because any scarce thing has a subjective value that is compared with alternatives (opportunity costs) and a cost (either direct or indirect through tradeoffs) to supply. This is what brings about the fact that people make rational decisions every day with the important signal of prices and profit-loss mechanisms. How do I know these are rational decisions, whereby your marginal benefit is greater than your marginal cost of acting, because as a social scientist I can only evaluate your action. A third party may say that the action is “irrational” but that is determined by a subjective third party who has a different set of desires, assumptions, and information available than the person making the decision to act. Milton Friedman clearly explained in his writings that nothing is free.
Now let’s get to the economic and fiscal situations in Texas and D.C.
TEXAS ECONOMIC AND FISCAL SITUATION
Gov. Greg Abbott recently signed the 2022-23 Texas budget. The initial appropriations for the total budget are well within the average taxpayer’s ability to pay for it, as measured by the rate of population growth plus inflation in TPPF’s Conservative Texas Budget. This further improves the biennial average of initial appropriations over the last four budgets to 1.4-percentage points BELOW the rate of population growth plus inflation since we started the CTB in 2015.
👏Good news for Texans! Updated 2022-23 #Texas Budget after @GregAbbott_TX's recent vetoes. texaspolicy.com/txbudget/ ✅Texas budget remains well below @TPPF's Conservative Texas Budget, resulting in the budget being below, on average, the CTB for four straight sessions! #txlege
And recall that much of our CTB was finally put into statute this session with his signing of the historic SB 1336 that strengthened the state’s spending limit. The growth of initial appropriations excludes the $410.2 million that Gov. Abbott vetoed in Article X, which appropriates funding for the legislative staff, state agencies, and other legislative-related offices after Democrats walked out on Texans on the last day to pass bills during the regular session.
Gov. Abbott has already indicated that he will call a special session this summer that will likely include Article X funding (which I’ll add back to the budget amount though it will remain more than $4 billion below the CTB), election integrity, bail reform, social media censorship, border wall, and possibly other items, with the hope of property tax cuts (burden is TOO HIGH). My guess is that we should know something in the coming days of when it will start, with some suggesting July 12, but we shall see.
There was an improved jobs report for Texas for May 2021. I believe we will start to see a much-improved labor market after the new federal unemployment bonus of $1,200 per month expires on June 26, 2021.
Better #jobsreport for May in #Texas. Employment has increased for 12 of 13 months. Included 36,900 net new jobs in the private sector, now up 757,500 jobs (7.7%) over last May. But since pre-pandemic Feb 2020, private sector employs 371,800 fewer people. @GregAbbott_TX @TPPF
BREAKING: TX Labor Market: Unemp Rate DOWN to 6.5%. Total Nonfarm Employment UP 34.4K over the month in May. #texaslmi More: https://t.co/iW00jhBYCb See data: https://t.co/q7IsgIjcRj And here are some jobs that are NOT filled: https://t.co/dRL2cH3fu0 https://t.co/1hPlLmsjEm
Texas Workforce Commission @TXWorkforce
There was a major reform to the Texas Employees Retirement System (ERS) with SB 321 that better funds the current system’s unfunded liabilities while moving new employees to a cash balance plan. While I would rather the Legislature do more reforms and move to a defined-contribution plan for even less risk on taxpayers and more control of the accounts to employees, this is a good step in the right direction.
Here’s a good reminder of what options could be available with the $15.8 billion in ARPA funds that Congress sent Texas. Some of the lack of clarity from the U.S. Treasury’s initial guidance on May 10 should be clarified after the 60-day comment period.
Good piece on how unreliable sources of energy are hurting the electricity supply in Texas and California. Let’s end all assistance by taxpayers and let markets work.
U.S. ECONOMIC AND FISCAL SITUATION
Latest Ginn Economic Brief on the U.S. economic and fiscal situation. Check out this brief overview of the latest U.S. jobs report.
Check out my insight on today’s U.S. economic and fiscal situation. @TPPF #Congress texaspolicy.com/an-insiders-in… @RepublicanStudy @housebudgetGOP @BudgetGOP @JECRepublicans #txlege @FreedomWorks @Heritage @AFPhq
Here is the latest overview of the Responsible American Budget, which included one of my latest commentaries on the excessive spending by Congress is contributing to the Fed’s excessive money creation driving inflation up. Even the Fed is starting to see how this works…but don’t hold your breath.
How important are in-tact, two-parent families? VERY
Do we need more price transparency in healthcare? YES
Good discussion here on the need for monetary rules (and fiscal rules) by Alex Salter and Daniel Smith on David Beckworth’s Macro Musings podcast.
Don’t miss this recent piece in the WSJ by my TPPF colleague E.J. Antoni, PhD, and Casey Mulligan. Regarding this issue, Louisiana’s Gov. John Bel Edwards was the first and only Democrat governor so far to appropriately end the new federal unemployment bonus that is causing havoc on the labor market.
TEXAS OPEN, NOW OPEN AMERICA…
Here is a summary of the latest in the COVID-19 situation in Texas as of 6/20/2021. Given the evidence of the situation and questionable results of mandates and restrictions by governments at every level, Gov. Greg Abbott lifted the state restrictions on March 10, 2021 and local restrictions on May 21, 2021. More on TX DSHS data here.
‼️6/20/21 #Texas #COVID19 ✳️New cases & fatalities⬇️ ✳️CV19 hospitalizations/capacity=2.4% lowest since at least April 12, 2020 ✅State restrictions ended 102 days ago ✅Local restrictions ended 30 days ago ✅Every TSA<6.1% CV19 hospitalizations @TPPF #txlege @GregAbbott_TX
Today Texas reported: * 124 new confirmed Covid cases--the 3rd lowest number in 15 months. * the fewest Covid hospitalizations in 14 months * 1 fatality, which is the second lowest number in 15 months Great job, Texans!
Greg Abbott @GregAbbott_TX
Closing Thoughts
I just finished reading the book Maverick about the economist Thomas Sowell by Jason Riley, which my colleague Chuck DeVore recently had a great conversation with Riley about his book. Here is one of Sowell’s many key points.
My prayers this week are focused on the following verse:
Thank you for reading this newsletter and sharing it with your network. I pray that our children are blessed and that they will walk with integrity by following Jesus Christ. Many blessings to you and yours, and have a prosperous week.
Vance Ginn, Ph.D. | www.vanceginn.com | #LetPeopleProsper