Breaking The Laffer Curve With Biden/Harris’ Insane Tax Proposals

Pretty soon we will all be working for the government doing manual labor. Except for politicians and large donors, of course.

On Tuesday, it was announced that Presidential candidate Kamala Harris would be supporting President Joe Biden’s tax proposals for 2025, which include a 44.6% capital gains rate and a 25% tax on unrealized gains.

Having used up all of the rest of the batshit, insane, counterintuitive economic dirty tricks left in the “we’ll literally do anything but cut spending” bag, the Biden administration began pushing this tax idea in April 2024 when I first wrote about it. Unrealized gains taxation could be the most destructive idea for our country since prohibition, I joked at the time.

As part of its budget proposal for the 2025 fiscal year, the Biden administration was trying to raise an addition $4.3 trillion over 10 years in the worst way possible: imposing a minimum tax equal to 25 percent of a taxpayer’s taxable income and unrealized capital gains less the sum of their regular tax, for taxpayers with wealth over $100 million.

Biden/Harris pushes taxes way beyond the revenue maximing point, down to the point of deminishing revenues and economic growth. Here is the Laffer Curve.

Putting aside the fact that this high-risk idea only amounts to a pittance, $430 billion per year, the introduction of taxing unrealized gains could be one of the worst slippery slopes we ever dare to roll our country’s economy down.

We could save $1 trillion just by not sending $100 billion a year to other nations for starters.

A tax on unrealized capital gains means that individuals are penalized for owning appreciating assets, regardless of whether they have realized any actual income from selling them.

If you purchased a stock for $100 this year, for example, and it increased to $110 next year, you would pay the assigned tax rate on the $10 capital gain. You didn’t sell the asset, so you don’t realize the $10 appreciation, but must pay the tax regardless.

Taxing unrealized capital gains contradicts the basic principles of fairness and property rights essential for a free and prosperous society. Taxation, if we’re going to have it on income, should be based on actual income earned, not on paper gains that may never materialize.

mplementing such a tax not only deeply infringes upon personal liberty and private property rights — but I can’t help but think about how it also sets a destructive wrecking ball rolling down a slippery slope for the first time in our nation’s history.

And, given the precarious state of our nation’s finances, it doesn’t seem like the best time to start spitballing about new risky ideas that may or may not catch on only because they sound like they are addressing the problem of a widening wealth gap that Federal Reserve policies created and continue to exacerbate to begin with.

If the administration really wanted to address the problem of wealth inequality, it would be setting its sights on the central bank that sacrificed price stability so it could spray trillions of dollars in “stimulus” toward financial assets, while cutting American families paltry checks of just $600, during COVID. When I did the math during COVID, the total amount spent to bail out the country.

Why do we trust any Democrat politiician? I certainly don’t!

Taxing unrealized gains would risk mass sale of US assets and therRich fleeing.

Economic Vertigo! US Interest Payments Expected To Keep Rising Under Marxist Harris (And Why The Fed MUST Try To Lower Interest Rates)

After watching the Democrat hate fest last night (Aka, the Democrat National Convention), I was not shocked that the DNC platform looked like a playbook to destroy the US economy. High taxes, endless spending, more regulations, etc. Not a word about the staggering side of the US debt load … with Harris’ economic plan projected to add a whopping $25 trillon in debt to the already massive $35+ trillion debt load.

And not a mention that US interest payments on the national debt already exceeds defense spending. And is booming!

Of course, Harris’s economic vision is a continutation of Biden’s disastrous visions (which are Obama’s vision of US obliteration). Most politicians in Congress are millionaires (including Bernie Sanders) and won’t suffer from their insane “progressive” policies. Watching last night’s DNC hatefest was like watching nasty 2nd graders having a party.

Of course, the drove of anti-American, anti-properity speakers spewing venom (I hate Hillary’s flat-tone speaking style) like Hillary, Jaime Raskin (aka, Rasputin), AOC, etc. all failed to acknowledge to acknowledge the already monstrous size of the US debt ($35+ trillion) or the massive size of the unfunded promises ($218+ TRILLION). Of course not.

The handle the staggering interest payments that will crowd out other spending, The Federal Reserve will be forced to lower rates.

Of course, Democrats will wheel out “economists” like Robert Reich who say that the debt doesn’t matter.

Too Much Debt? Harris Proposing $1.7 Trillion In Spending Despite The US Begin $35+ Trillion In Debt And $218+ Trillion In Unfunded Liabilities (National Assets Of $213 Trillion Less Than Unfunded Liabilities Of $218+ Trillion)

Too much debt? Kamala Harris doesn’t think so. She is proposing economic policies costing $1. 7 trillion without sufficicent offsets. Harris is putting the US on the path to default, following numerous other badly managed nations, like Ukraine and Greece. And much of Latin America.

The US is already at $35+ trillion with unfunded liabilties totalling $218+ trillion. Of course, the Biden Administration is attempting to cut Medicare for seniors and raise the price while handing out unlimited benefits to illegal immigrants.

In July, Ukraine avoided defaulting on $20 billion in loans by reaching a preliminary agreement with private creditors.

.Given the financial burden of war, the country suspended interest payments on international debt over the last two years, which was set to expire on August 1, 2024.

Without this new debt restructuring, this default would have ranked among the 10 largest in recent history. The last time Ukraine defaulted on its debt was in 2015, after Russia’s invasion of Crimea.

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows the largest sovereign debt defaults since 1983, based on data from Moody’s via Aswath Damodaran.

The Top 10 Sovereign Debt Defaults

Below, we show the biggest sovereign debt defaults between 1983 and 2022:

Greece’s $264.2 billion default in 2012 stands as the largest overall, unfolding when the country was mired in recession for the fifth consecutive year.

The country defaulted again just nine months later, making it the fourth-largest ever. Leading up to the crash, Greece ran significant deficits despite being one of the fastest-growing countries in Europe. Furthermore, in 2009, the newly elected prime minister revealed that the country was $410 billion in debt—substantially more than previous estimates.

With the second-highest default recorded, Argentina failed to repay interest on $82.3 billion in foreign debt in 2001. Like Greece, it is a repeat offender, defaulting numerous times since independence in 1816. Today, Argentina is the largest debtor to the International Monetary Fund, despite being Latin America’s third-largest economy.

Following next in line is Russia’s 1998 default on $72.7 billion in loans, coinciding with a currency crisis that erased more than two-thirds of the ruble’s value in a matter of weeks. That year, several other countries including Venezuela, Pakistan, and Ukraine defaulted on their debts after the Asian Financial Crisis of 1997 spurred instability in global financial markets.

Just as 1998 saw a wave of defaults, 2020 was a year marked by major debt upheavals. Due to the pandemic and collapsing oil prices, it was a record year for sovereign defaults, reaching seven in total. Among these, Lebanon, Ecuador, and Argentina saw the largest defaults amid deepening fiscal pressures.

Harris is just another free-spending politician who will eventually lead the US into default. But at least Harris/Walz exude joy.

At least Harris/Walz haven’t adopted (stolen) the phrase “Work makes one free”.

Kama Kameleon! Fed Loses Record Amount, Bankrupty Filings (Chap 11) Highest In 13 Years, Foreign Investors Pulling Out Of China

Kama Kameleon.

Kamala Harris, despite being VP for almost 4 years, is going to annouce her plans for taming inflation. Why doesn’t she do it now?? What Harris can’t control is The Federal Reserve that is losing money at breakneck speed.

Here is The Fed’s balance sheet.

I shudder to think what Harris will propose to solve the highest bankrupty (Chap 11) rate in 13 years. Probably more Bidenomics (big wealth transfers to large corporations/donors).

Meanwhile, foreigns pulled a record amount of funds from ailing China.

Kamala Harris will say anything to get elected, then fall back on her Communist agenda.

Ten Thousand Commandments! Biden/Harris Regulations Cost Families $15,000+ (17% Of Household Income) … And More To Come! (Yellen Wants $78 TRILLION To Combat Climate Change)

Regulate! Regulate! Dance to THEIR music!

According to the Competitive Enterprise Institute, Biden/Harris heaped droves of regulations on American families in the amount of $15,000 per family.

Here is a breakdown of the annual cost of regulations:

And “China” Kamala (ChiKam) plans even MORE regulations!

Federal regulation’s total compliance costs and economic effects are at least $2.117 trillion annually in Ten Thousand Commandments’ estimate, and almost certainly higher.
An October 2023 National Association of Manufacturers (NAM) report models regulatory compliance at $3.079 trillion annually.
US households pay on average $15,788 annually in a hidden regulatory tax, which consumes 17 percent of income and 22 percent of household expenses.
These outlays exceed expenditures on health care, food, transportation, entertainment, apparel, services, and savings. Only the costs of housing, which stand at $24,298 annually, exceed regulation.
The higher NAM figure implies $22,962 per household, or 31 percent of the household expense budget.
The regulatory tax of $2.117 trillion rivals individual income tax costs estimated at $2.328 trillion for 2023 and stands at nearly four times the corporate income tax of $546 billion.
The NAM cost figure of $3.1 trillion annually would exceed the sum of both ($2.9 trillion).
If it were a country, US regulation would be the world’s 10th-largest economy, ranking behind Canada and ahead of Italy.
If we exclude the US economy from the list, the US regulation economy would be the ninth largest, still behind Canada and ahead of Italy.
The 10.34 billion hours Washington says it took to complete federal paperwork in 2022, according to the Information Collection Budget, translate to the equivalent of 14,883 human lifetimes.
The tally of final rules for 2023 stood at 3,018, which is the second-lowest count since at least 1976.
On the other hand, the Federal Register containing those rules surged to 89,368 pages, the second-highest tally on record and a 12 percent rise over 2022.
Although we have fewer new rules, they appear to be broader in scope.
During calendar year 2023, agencies issued 3,018 rules, whereas Congress enacted 68 laws. Thus, agencies issued 44 rules for every law enacted by Congress.
This Unconstitutionality Index—the ratio of regulations issued by agencies to laws passed by Congress and signed by the president—underlines how much agency lawmaking has replaced that of elected officials. The average ratio over the past 10 years is 23 rules for every law.
Since the Federal Register first began itemizing final rules in 1976, 217,565 have been issued. Since 1993, when the first edition of Ten Thousand Commandments appeared, agencies have issued 120,475 final rules.
A 2023 draft consolidated version of the White House Report to Congress on the Benefits and Costs of Federal Regulations caught up on fiscal years 2020–2022. The report for 2023 has still not been released.
A total of only 31 “major” rules had both benefits and costs quantified, and these add $13 billion to the annual regulatory cost bill; another 56 rules with costs but not benefits quantified add another $46 billion to annual costs.
Employing our lower estimate, regulatory burdens of $2.1 trillion amount to nearly 8 percent of US gross domestic product (GDP), reported by the Commerce Department at $27.36 trillion in 2023.
The NAM regulatory figure implies 11 percent of GDP.
Regulatory costs stand at over 60 percent of the level of corporate pretax profits of $3.523 trillion.
The NAM figure would take that to over 80 percent.
When regulatory costs of $2.1 trillion are combined with federal outlays of $6.135 trillion, the federal government’s share of the $27.36 trillion economy reaches at least 30 percent. State and local spending and regulation add to these costs.
Until April 2023, a subset of each year’s 3,000-plus rules was deemed economically significant, referring to annual economic effects of $100 million or more. Biden’s Executive Order 14094 (“Modernizing Regulatory Review”) eliminated that category and initiated a higher $200 million Section 3(f)(1) Significant category.
In the year-end 2023 edition of the twice-yearly Unified Agenda of Federal Regulatory and Deregulatory Actions, 69 federal departments, agencies, and commissions present 3,599 regulatory actions flowing through the pipeline as follows:
2,524 rules in the active (prerule, proposed, final) phase
431 recently completed rules
644 long-term rules
Of the 3,599 regulations in the fall 2023 Unified Agenda’s pipeline, 304 are Section 3(f)(1) Significant category rules (which implies at least $60 billion in economic impact), as follows:
233 rules in the active (prerule, proposed, final) phase
41 completed rules
30 long-term rules
Despite his own higher $200 million threshold, high-significance rules in the Biden pipeline outnumber the Bush, Obama, and Trump years when the lower $100 million threshold applied.
Major rules as defined in the Congressional Review Act leave a $100 million threshold intact despite Biden’s executive order. The Government Accountability Office database contains 76 finalized major rules for 2023. The Biden average exceeds those of Bush, Obama, and Trump.
Final rules affecting small business appear to be mounting and could generate calls for reform. Biden’s three years have averaged 870 rules annually in the Federal Register affecting small business, compared with 694 and 701 for Obama and Trump, respectively.
Of the 3,599 rules and regulations in the fall 2023 Unified Agenda pipeline, 690 affect small businesses; of those, 370 required an official “regulatory flexibility analysis.”
Biden-era mandates affect state and local governments at heights not seen in over a decade. Rules in the Unified Agenda pipeline affecting state governments stand at 507, while rules affecting local governments stand at 349.
The five most active rule-producing executive branch entities in the Unified Agenda—the departments of the Interior, the Treasury, Transportation, Commerce, and Health and Human Services—account for 1,497 rules, or 42 percent of all rules in the pipeline. The five most active independent agencies account for another 318 rules.
From the nation’s founding through 2022, more than 15,635 executive orders have been issued. Biden issued 24 executive orders in 2023, well below his peak 77 of 2021. Biden’s presidential memoranda continue to outstrip the average of recent predecessors.
Public notices in the Federal Register always exceed 22,000 annually, with uncounted guidance documents and other proclamations that hold potential regulatory effect among them, whereas other guidance documents issued do not appear in the Federal Register at all. In 2023, 23,197 notices were issued. There have been 714,563 public notices since 1994 and over a million since the 1970s.

DC bureaucrats are out of control. Treasury Secretary Yellen calls for $78 TRILLION to tackle climate change. So to quote The Carpenters, they’ve only just begun to regulate.

Getting Out Of Dodge! May’s Active Housing Inventory Explodes +27.5% YoY (Denver UP 75.2% YoY)

Gimme two steps to sell my house. Are people getting out of dodge?? Calfornia Gpvernor “Greasy Gavin” Newsom sold his Sacramento home and moved to Marin County for better schools. Sacrramento active housing inventory is up 65.6% YoY.

Active housing inventory in May is up 27.5% YoY nationally, with Denver leading at 75.2% YoY. I highlight Columbus Ohio at +32.9% since that is where I live.

While the government may be able to fake BLS and CPI data to gloss over the fact that 5.5% rates have already likely driven the nation into a deep recession, independent data on the housing market is showing a decades-long shortage in inventory starting to rebound.

A new report from Construction Coverage has revealed where the largest increases in real estate inventory in the U.S. are taking place.

The report notes that the current housing shortage—which is now estimated to be between four million and seven million homes—can trace its beginnings to long before the COVID-19 pandemic. In the 10 years following the Great Recession, the United States constructed fewer new homes than in any other decade since the 1960s.

They write that the lack of housing affects certain areas more severely than others. Researchers ranked locations based on the percentage change in the average monthly housing inventory—the total number of active listings plus pending sales at the end of the month—between Q1 2023 and Q1 2024.

Data from a national level showed that U.S. housing inventory decreased from more than two million in 2012 to a low of approximately 630,000 at the start of 2022.

Over the same period, months’ supply—a measure of how long it would take existing inventory to sell if no new homes came on the market—plummeted from a national high of 7.5 months to a historic low of 1.1 months, the report adds.

It also noted that inventory has rebounded slightly since early 2022: throughout the first quarter of 2024, the national inventory hovered around 970,000 homes for sale, marking a 4.0% year-over-year increase.

Despite this uptick, existing inventory would sustain the current sales pace for just 2.9 months—a marginal increase from the 2.8 months’ supply recorded last year.

The report broke down trends by cities and states, finding that as of the first quarter of 2024, states with the lowest levels of supply are concentrated in and around the Midwest (such as Kansas with 1.5 months of supply) and the Northeast (including Rhode Island with 1.8 months of supply).

However, Washington also stands out for having some of the lowest levels of available housing nationally, with just 1.9 months of supply.

In contrast, several states in the South, led by Florida (5.2 months of supply), along with Hawaii (5.2 months) and Montana (5.1 months), present notably more favorable conditions for buyers.

Among the nation’s largest cities, Denver, El Paso, and Dallas recorded the largest year-over-year increases in housing inventory. At the opposite end of the spectrum, Las Vegas, Raleigh, and Chicago recorded the biggest declines.

The data is hardly a 2008-style collapse, but that doesn’t mean it isn’t noteworthy.

While the ‘turning of the tide’ still remains muted, the housing market is so large it rarely corrects swiftly. It’s important to notice, however, that rising inventory ticking higher – combined with mortgage rates now over 7% – could easily be telegraphing a correction in prices heading into 2025.

Did NAIOP Get The Memo? Moody’s Predicts 24% Of Office Towers Will Be Vacant By 2026 (Attendance In 10 Largest Business Districts Still Below 50% Of Pre-COVID Level)

Did NAIOP get the memo? NAIOP (National Association of Industrial and Office Properties) is a trade group comprised of commericial real estate developers and academics. Lobbying for more office space to be built despite overbuilding,

Another chink in the armor of the US economy (not the roaring economy Biden and Yellen keep screaming about). Overbuilding of office space, COVID shutdowns, remote working and urban crime. A recipe for office vacancy. Moody’s predicts 24% of office towers will be vacant by 2026!

During the first three months of 2023, U.S. office vacancy topped 20 percent for the first time in decades. In San Francisco, Dallas, and Houston, vacancy rates are as high as 25 percent. These figures understate the severity of the crisis because they only cover spaces that are no longer leased. Most office leases were signed before the pandemic and have yet to come up for renewal. Actual office use points to a further decrease in demand. Attendance in the 10 largest business districts is still below 50 percent of its pre-COVID level, as white-collar employees spend an estimated 28 percent of their workdays at home.

A new report from Moody’s offers yet another grim outlook that the commercial real estate downturn is nowhere near the bottom. Elevated interest rates and persistent remote and hybrid working trends could result in around 24% of all office towers standing vacant within the next two years. The office tower apocalypse will result in more depressed values that will only pressure landlords.

“Combining these insights, with our more than 40 years of historic office performance data, as well as future employment projections, our model indicates that the impact on office demand from work from home will be around 14% on average across a 63- month period, resulting in vacancy rates that peak in early 2026 at approximately 24% nationally,” Moody’s analysts Todd Metcalfe, Anthony Spinelli, and Thomas LaSalvia wrote in the report.

In a separate report, Tom LaSalvia, Moody’s head of CRE economics, wrote that the office vacancy rate’s move from 19.8% in the first quarter of this year to the expected 24% by 2026 could reduce revenue for office landlords by between $8 billion and $10 billion. Factor in lower rents and higher costs, this may translate into “property value destruction” in the range of a quarter-trillion dollars.

In addition to remote working trends, Moody’s analysts pointed out that the amount of office space per worker has been in a “general downward trend for decades.”

At the peak of the Dot-Com boom, office workers used an average of 190 sq ft. The figure has since slid to 155 sq ft in 2023.

“The argument for maintaining or even increasing remote work practices remains compelling for many businesses,” the analysts said, adding, “If productivity remains stable and costs can be reduced by forgoing physical office spaces, the rationale for mandating in-office attendance diminishes.”

Related research from the McKinsey Global Institute forecasts that office property values will plummet by $800 billion to $1.3 trillion by the decade’s end.

Moody’s expects vacancy rates to top out as office towers are demolished or converted to residential ones in the coming years.

“Right-sizing will continue over the next decade as the market shakes out less efficient space for flexible floorplans that support our relatively new working habits,” they said.

Earlier this year, Goldman analyst Jan Hatzius pointed out that a further 50% price decline would make office tower conversions financially sensible.

Meanwhile, in March, Goldman’s Vinay Viswanathan penned that “office mortgages are living on borrowed time.”

Office stress isn’t entirely done yet. The downturn is likely to persist through 2026.

Too Much Debt! US Government And Consumers Are Debt Crazed (US Debt Hits $34.8 TRILLION, Consumer Debt Hits $17.69 TRILLION, Unfunded Liabilities Hits $216 TRILLION)

Too much debt should be the theme song for the US! Both for consumers and the Feral government (not a typo!)

Consumer credit increased by +$6.403 billion in April, much softer than consensus estimate of +$10 billion … more notable, however, was March data, given initial read of +$6.274 billion was revised down to -$1.099 billion.

Not to mention $13 trillion in mortgage debt (1-4 unit housing), but at least that is backed by property. Unlike The Feral government who borrows/prints with only a promise.

Consumer Debt Hits $17.69 TRILLION.

US national debt stands at $34.8+ trillion.

And growing awfully fast. Note that since the “pandamic”, debt as % of GDP has exceeded 100% and is projected to hit 166% by 2054. But look at the UNFUNDED LIABILITIES the need to be paid ($216+ TRILLION ($641.5k per citizen!). Pretty soon, we (the 99%) will be back on the chain gang paying for endless wars and government corruption. I wish Biden, Schumer, McConnell and other swamp creatures would consider all the spending the government is on the hook for rather than focus on spending that will help them get elected perpetually. There is no middle of the road anymore. The US is broke and has too much debt.

Of course, President Biden wants endless spending on wars (Ukraine, Israel, etc) and now wants an unlimited check to pay for the next pandemics. The Pretenders’ song “My City Was Gone” seems to be appropriate for the US as “My County Is Gone.”

Of course, some “economists” claim that the US can borrow/print unlimited amounts of money … until they can’t.

PBOC Earmarks $42 Billion for State Buying of Unsold Homes (BAD Central Planning Approach)

Don’t show Biden this story. Biden has never met a bad central planning scheme that he didn’t like and this one is TERRIBLE.

China’s struggling housing market is set to receive a boost from a new nationwide program funded by the People’s Bank of China to address oversupplied conditions. As a critical driver of the domestic economy, the nation’s housing market has been in a multi-year slump. This latest initiative by policymakers aims to stabilize the housing market and stimulate the broader economy.

Bloomberg reports that PBoC Deputy Governor Tao Ling announced the new 300 billion yuan ($41.5 billion) nationwide program of cheap funding to allow state-owned companies to purchase unsold homes.

Ling said the funding will be directed at 21 providers, including policy banks, state-owned commercial lenders, and joint-stock banks. A rate of 1.75% will be offered. The low-cost loans have a one-year term and can be rolled over four times.

The new program powerfully signals that policymakers are pushing for property policy easing and measures to balance the supply-heavy housing market, which casts a dark cloud over the world’s second-largest economy. This announcement appears to be a step in the right direction in a national-level policy.

Bloomberg first leaked the new rescue policies days earlier. We titled the note “Fiscal Bazooka: China Considers Buying Millions Of Homes To Save Property Market.”

Also, on Friday, policymakers eased mortgage rules and removed the mortgage rate floors for first and second homes. PBoC also lowered the minimum downpayment ratio for first-time homebuyers to 15%. The downpayment ratio for second-home purchases was lowered to 25%.

Chinese Vice Premier He Lifeng said that authorities in cities with excess home inventories should purchase unsold properties and convert them into affordable housing. He also urged local governments to repurpose inactive land parcels held by property developers to alleviate their financial troubles.

This was a very policy-heavy week to save the debt-stricken real estate market. Data showed that property investment and new home sales in April experienced larger contractions, while housing prices slid even further.

China’s ailing property sector is a drag on GDP.

Housing sales are tumbling.

And apartment and commercial property sales are sliding.

In markets, the CSI 300 Real Estate Index closed up 9%, with gains from April 24 totaling about 36%. Yet the latest gains in the property index are still 68% below the early 2018 peak.

The index’s weekly gain was the most since early December 2015.

It isn’t in a Communist countries’ DNA to let markets solve the problem … like letting prices correct no matter how painful that adjustment is. Biden and his “economic” advisor Jared Bernstein (not an economist but a public policy hack) would likely follow China’s idiotic solutions to the problem.

I debated Bernstein once at a Washington DC conference. He was arrogant but eventually confessed that he didn’t know anything about housing or mortgages. Nice economic advisor, Joe!

Surprise! Citi Economic Surprise Index Crashes To -7.30 (Home Prices UP 32% Under Biden, Mortgage Rates UP 160%)

Surprise! Just in time for the November election, this is a negative surprise that Biden doesn’t want to hear.

The Citi Economic Surprise index crashed to -7.30, the lowest since January 2023.

Under Biden’s leadership (hell, he and his family already own several mansions … on a Senator’s pay), home prices are up 32% under Biden and mortgage rates are up a staggering 160%.