Saule Omarova, Joe Biden’s nominee for comptroller of the currency in the Treasury Department, went to Moscow State University on a Lenin Scholarship and wrote a thesis on “Karl Marx’s Economic Analysis and the Theory of Revolution in ‘The Capital.’” Omarova has yet to provide the Senate banking committee with readable copies and the Biden nominee recently indulged a fascinating dodge.

Omarova wants the government to take ownership of financial firms and attributes this view to the late British Prime Minister Margaret Thatcher. Trouble is, the Thatcher government wanted to privatize inefficient state industries and had to temporarily retain a stake in those industries as it shifted them to private ownership.

The Congressional Budget Office released its estimate of the costs of H.R. 5376, a.k.a. the “Build Back Better” Act. According to the CBO’s budget math, the much smaller spending bill that we talked about a few months ago doesn’t cost $0 as President Biden claimed it would. In fact, it doesn’t cost anywhere close to $0. Despite that, the U.S. House of Representatives voted to pass the spending bill.

Rather than trying to describe how much it does cost in both new spending and taxes, it’s easier to show you. The chart below reveals how much new spending and taxes the CBO expects from the shrunken bill over each of the next 10 years.

With Thanksgiving upon us once again, we offer a reminder of the economic lesson that made our first Thanksgiving possible:

The Pilgrims’ Real Thanksgiving Lesson
by Benjamin Powell

Feast and football. That’s what many of us think about at Thanksgiving. Most people identify the origin of the holiday with the Pilgrims’ first bountiful harvest. But few understand how the Pilgrims actually solved their chronic food shortages.

Many people believe that after suffering through a severe winter, the Pilgrims’ food shortages were resolved the following spring when the Native Americans taught them to plant corn and a Thanksgiving celebration resulted. In fact, the pilgrims continued to face chronic food shortages for three years until the harvest of 1623. Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.

“President Calls for Inquiry into the Price of Gas” reads a frontpage headline in November 18’s Wall Street Journal. President Biden apparently wants Americans to believe that the major producers and distributors of fossil fuel energy (“Big Oil”) are responsible for recent price increases at the pump and looming sticker shock on home heating bills. 

As President Reagan might have said, “there he goes again”. Seeking to duck responsibility for his own policy actions, Biden has asked Federal Trade Commission chairperson Lina Kahn, appointed for her relentless hostility to Big Tech, to launch an investigation into whether U.S. energy companies have conspired or engaged in other unlawful behavior to profit at the expense of consumers of gasoline, diesel fuel, and heating oil.

Deliberative democracy is a noble ideal that politics reduces to romantic fiction. Deliberations rarely produce unanimous agreement due to the divergent interests of politicians and their constituencies. The upshot is that policy issues, both great and small, often are resolved by narrow majority votes. As the jurist and legal scholar Robert Bork noted, even scant majorities rule for no better reason than that they are majorities.

Whether a policy decision requires a simple majority (i.e., 50 percent plus one of the votes cast), or else a super-majority of some degree, should depend—at the very least—upon the significance of the policy under consideration; i.e., a vote to commemorate Groundhog Day surely is of less significance than a vote to transform American society. Regrettably, the choice of degree is itself a policy issue that typically eludes unanimous consent. That choice often follows tradition; in other instances it turns ad hoc on the whim of interested politicians. A variety of ideally objective voting schemes have been proposed by economists and political theorists (e.g., variations on “Wicksellian unanimity”), but none so far has gained widespread traction. This failure is attributable partly to the impracticality of the schemes proposed, and partly to the fact that they constrain the felicitous degree of flexibility that politicians, judges, and bureaucrats presently enjoy.

If you happen to visit New York City soon, get tickets for “The Lehman Trilogy”, the three-and-a-half-hour play that traces the story of three generations of the family that founded the company whose collapse in 2008 symbolized and fueled the world-wide financial disaster. 

Originally written in Italian by Stefano Massini and adapted to English by Ben Power, the play is directed by Sam Mendes and masterfully acted by three British actors (Simon Russell Beale, Adam Godley and Adrian Lester) who alternate between acting out and narrating the story, and incarnate many different characters. It takes place in a rotating glass set that portrays an investment banking office surrounded videos that transports us to the various geographical locations and time periods that span the century-and-a-half epic.

As Katy Grimes of the California Globe notes, some 20 months after Gov. Gavin Newsom locked down the state, San Francisco city and county still do not allow the public to attend public hearings in person. The rule proved no barrier to a November 6 wedding of Ivy Getty at San Francisco City hall, with a host of notables in attendance and officiated by House Speaker Nancy Pelosi. 

According to a November 8 Vogue feature, the attendees included California Gov. Gavin Newsom, who was photographed sans mask last year at the upscale French Laundry. In one of the wedding photos, Newsom wears a mask but many others do not. If embattled Californians saw the proceedings a blatant double standard it would be hard to blame them, and they also have cause to be puzzled. 

Many Beacon readers will be aware that the current rate of inflation, measured by the government’s Consumer Price Index, is 6.2%, measured from October 2020 to October 2021. Jerome Powell, Chair of the Federal Reserve Bank’s Board of Governors, says this inflation is transitory. Yet he also says we could be seeing high inflation rates into next summer.

Federal Reserve officials either are deliberately downplaying the current inflationary environment, or have a poor understanding of the forces behind it. In an earlier Beacon post, I linked to this article in which John Williams, President of the Federal Reserve Bank of New York, forecast that he expected inflation to be 3% in 2021, falling to 2% in 2022. How can the experts who engineer our monetary policy be so wrong?

House Democrats want to double federal tobacco taxes to help pay for President Joe Biden’s proposed $3.5 trillion reconciliation bill. While increases would add an estimated $96 billion to revenues, Democrats have failed to explain how the tax hikes wouldn’t be a direct attack against the very group of Americans that presidential candidate Joe Biden swore not to harm. 

Notwithstanding, supporters of the bill are busy promoting more altruistic reasons for the proposal, explaining that the higher taxes would cut Americans’ cigarette smoking. Despite supporters’ best efforts, however, the reality is that increasing taxes on tobacco wouldn’t help people live healthier lives. Instead, it would go directly against the Food and Drug Administration’s own strategy for harm-reduction by treating all tobacco products as one and the same, while helping to grow, not “tame,” the robust U.S. illicit cigarette trade.  

My fellow blogger Craig Eyermann did a good job of discussing some shortcomings of Biden’s expenditure plan, so I won’t enter into that debate. Rather, I want to consider the claim that the plan pays for itself. This article quotes President Biden as saying about the plan’s cost, “We pay for everything we spend. It’s going to be zero. Zero.”

How can a plan that proposes to spend trillions of dollars cost nothing? The Orwellian answer from the president is that the plan includes tax increases claimed to match its expenditures.

To further confuse things, in that same article the president says “It’s reducing taxes, not increasing taxes.” Let’s set aside the obvious question about how increases in spending and cuts in taxes can, on net, cost nothing. Any expenditure entails a cost.