There are TWO taxes that are hitting people making under $400,000 per year. First, the INFLATION tax coming from Biden’s/Congresses spending binge, The Fed printing gobs of money, and insane regulations.
Biden and his mouthpieces like Karine Jean Pierre (KJP) claim that Biden inherited inflation from Trump. FALSE. Inflation was only 1.3% YoY in December 2020. Inflation was 3.5% YoY in March 2024, an increase of 166% over Trump’s final month in office. THAT is one heck of an inflation tax.
In House testimony, Treasury Secretary Janet Yellen (falsely) claimed that Biden’s massive tax increase won’t hit middle class households. That is a plain lie. the Tax Foundation said that someone who’s married, two kids, making $85,000 would pay $1,700 more in taxes. A married couple with two children making $165,000 annually would pay $2,450.50 more than in the previous year, while a family with three kids pulling in $200,000 per year will shell out almost $7,500 more per year.
So much for Biden’s “No one making under $400,000 will pay and additional penny of tax.” Between the inflation tax and Biden letting Trump’s Tax Cuts and Jobs Act’s (TCJA) expire, people making under $400,000 per year will get scalded. All so Biden/Congress can keep spending on Ukraine, fund endless wars, and buy countries cooperation with the US.
Yellen: Mortgage rates have been so low for so long that it’s created a lock-in effect where people don’t want to sell their homes to buy new ones for fear of losing their attractive rates.
That’s made it “almost impossible” for first-time homebuyers to enter the housing market, U.S. Treasury Secretary Janet Yellen said during her testimony before the House Ways and Means Committee.
Now hold on a minute, Janet. YOU were the one that kept rates too low for too long as Federal Reserve Chair.
What was her record on mortgage rates? Yellen kept the Fed target rate (upper bound) at 25 basis points under Obama/Biden until December 2015, so only one rate hike under Obama/Biden. Then came the election of Donald Trump in November 2016. Then Yellen raised The Fed target rate 4 times after Trump was elected.
Mortgage rates fell to 3.78% by November 2017, so Yellen helped keep mortgage rates low. But mortgage rates soared after Trump’s election to 4.22% by the end of her term.
There are other reasons why first-time homeownership is so difficult, like local NIMBY (not in my back yard) policies and the absolutely lousy labor market.
She added that Biden’s massive tax increase won’t hit middle class households (other than the massive INFLATION tax that was levied by Biden). That is a plain lie. the Tax Foundation says that someone who’s married, two kids, making $85,000 would pay $1,700 more in taxes. A married couple with two children making $165,000 annually would pay $2,450.50 more than in the previous year, while a family with three kids pulling in $200,000 per year will shell out almost $7,500 more per year.
So much for Biden’s “No one making under $400,000 will pay and additional penny of tax.”
On the flip-side of that – and echoing the market-worrying ECI data earlier this week – Unit Labor Costs soared 4.7% in Q1 (well above the 4.0% expected and the 0.4% rise in Q4)…
Source: Bloomberg
So wage inflation is confirmed – rising at the fastest pace in a year – as all the gains we have been told to expect from AI just aren’t there in the data.
While quarterly productivity figures are quite volatile, a sustained slowdown represents another hurdle for the Federal Reserve’s inflation fight. With interest rates expected to stay at a two-decade high for awhile longer, business investment in equipment will likely continue to be a weak factor in overall economic growth.
Today’s data corroborates other data that showed gross domestic product cooled in the first quarter while employment costs rose by the most in a year. As a result, inflation is proving stubborn, supporting the Fed’s pivot to a more hawkish stance that will keep interest rates higher for longer than anticipated.
Of course, Fed Chair Powell told us yesterday that he “doesn’t see the stag or the flation” in US data…
Perhaps Cazadores tequila should be the official drink of the Biden Administration. It has the “stag” on the label and it is produced in Mexico … who Biden can’t (or won’t) stand up to.
Housing in the US is simply unaffordable, particularly after HUD levied new regulation rising the cost of new housing up to $31,000. Wait for this to kick into the data for mortgage demand!
Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 26, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was14 percent lower than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 1 percent lower than the same week one year ago.
MBS returns are weak and volatile.
How is the Biden Regime making homeownership more affordable? They aren’t. The are using regulations, to drive the cost of new housing way up. New HUD energy rules will raise the cost of home construction by imposing stricter building codes. The National Association of Home Builders says the energy rules can add as much as $31,000 to the price of a new home. Payback time is 90 years (how long it will take the recoup the initial investment).
Under Biden’s “leadership” we are all addicted to gov. But at least Ukraine and Zelenskyy will be getting a guaranteed 10 years of financial support from the US … while E Palestine Ohio and Maui remain destroyed.
Janet Yellen, world class propagandist (US version of Baghdad Bob) and US Treasury Secretary under Biden, was so wrong about inflation. Instead of being “transitory”, turns out to be seemingly permanent.
Today’s Case-Shiller home price report was released for February. The National Home Price index was up 6.4% year-over-year. But look at the explosion of M2 Money and home prices. Hmm.
If we look at home prices and M2 Money on a year-over-year (YoY) basis, we can see the surge in money printing with COVID and the corresponding surge in home prices. As M2 Money growth slowed, the Case-Shiller National HPI slowed as well … until The Fed slowed the declined in M2 Money growth resulting in rising home price growth again.
So, The Fed will likely have to keep on printing. You can see Janet Yellen dancing to the thought of printing more money.
New Orders also remain negative (but did improve) and prices continue to rise (though at a slower pace). Labor market measures suggested flat employment and slightly shorter workweeks (hours worked index remained negative for a seventh month in a row) this month.
However, wit that said, wage pressure picked up dramatically this week to a seven-month high…
Source: Bloomberg
However, as always, we glean the most informative perspective from the respondents completed surveys where the pessimism shines through…
The business and political environment is terrible.
Business has not been this slow since COVID, and I’m worried.
Consumer confidence for consumer goods has noticeably worsened.
Customer orders have dropped. The indication is the economy is hurting spending in our area specifically. Customer uncertainty is worsening.
I keep thinking we’ll hit bottom and either level out or turn up, but we keep pushing those hopes out a month, and another month, and another.
There has been a decrease in new orders for three weeks now. Currently, we think this will come around, but we get more concerned as time goes on.
Industrial manufacturing is showing signs of positivity due to the possibility of an interest rate decrease. Please do it. Manufacturing is really hurting.
High prices remain problem for many businesses:
Inflationary pressures on raw materials and construction costs are driving up the cost of public projects. This is causing states to delay or scramble for funding for projects that have long lead times.
Business is generally good, but we’re starting to see more customer resistance to prices. Our costs have increased dramatically over the last two years, and we have customers asking to hold prices to last year’s level, which we just can’t do. We continue to make capital investments to improve productivity and reduce unit labor cost.
And finally, many are fearful of another four years of Bidenomics:
Political instability and politicization have hampered growth.We are entering stagflation.
Fewer governmental regulations would lower our cost of doing business. An example is the 332 report, which we must fill out for the U.S. government; it has no value for us, just expense.
Business is extremely slow, and we see no signs of improvement.We think it will stay slow until after the presidential election, after which, we will either have four more years of slow business or an improving economy.
Joe Biden could barely eat his dinner at the White House Correspondents’ Dinner. And we think he is calling the shots in The White House?? Oh well. Perhaps it is Treasury Secretary Janet Yellen or Klaus Schwab of the World Economic Forum.
In any case, Treasury bond issuance in 2024 is expected to hit $1.9 TRILLION. Surpassing levels seen even during the 2008 financial crisis.
And with inflation, the US personal saving rate is near the lowest level since Obama (2010).
And with the core inflation rate still higher than anytime since 2010, households are paying more for … everything depleting their savings.
With Biden and Congress spending like drunken sailors on shore leave, and no end in sight, this will eventually explode. Ukraine, foreign aid, no border security, virtually no money for Maui fire, E. Palestine Ohio is still a wreck, etc. They always have money for someone else. And if Trump is elected in November, watch CNN and MSNBC and Biden/Congress blame Trump.
Commodities are a way to protect yourself against the government and their insane spending and debt.
My point? Gold keeps rising!
The leading foreign holder of US debt is Japan, which is following the insane path as the US and resembles a banana republic.
Former Fed chair under Obama and current Treasury Secretary Janet Yellen under Biden is Doctor Wonderful. NOT!!
I don’t know what Biden thinks is so funny. Maybe it is because House “Majority” Leader Mike Johnson (RINO-LA) gave Biden and Schumer everything they wanted (Ukraine, Israel funding but nada for security our borders). Life is good when you are stupid and mean-spiritied like Joe Biden!
Biden is so vain: capped teeth, hair plugs, constant tan, face lifts, etc.
Then the numbers spiraled out of control. Yet Biden/Congress keep shoveling money to Ukraine and leave our borders unsecured.
Washington’s fiscal situation has drastically changed since then; total debt has surpassed $34 trillion, the annual budget shortfall exceeds $1 trillion, and interest costs have topped $1 trillion.
David Walker, the former comptroller general of the United States and a Main Street Economics advisory board member, is unsurprised.
Seventeen years ago, Mr. Walker rang fiscal alarm bells. Like Ross Perot before him, he took his case to the American people and delivered the cold, hard truth: The government’s books are unsustainable, and interest charges on the mounting debt will swallow a significant portion of federal revenues.
During this time, the former head of the Government Accountability Office (GAO) appeared on a widely viewed episode of “60 Minutes,” toured the country to spotlight worrisome trends in the U.S. government’s budget (he did this again in 2012), and attempted to convince lawmakers of the unsustainable fiscal path.
He also penned a 2009 book titled “Comeback America: Turning the Country Around and Restoring Fiscal Responsibility.”
Given the treasure trove of budgetary numbers coming out of the nation’s capital almost daily, such as nearly half of income tax revenues being dedicated to interest payments, Mr. Walker’s warnings have not been heeded nearly two decades later.
According to the Congressional Budget Office’s long-term outlooks, the national debt will eye $50 trillion by 2034, fueled by around $17 trillion in cumulative deficits. As a percentage of GDP, debt held by the public and the deficit will reach 166 percent and 8.5 percent by 2054, respectively, the CBO forecasts.
“Washington has become addicted to spending, deficits, and debt, and they’re charging the credit card and planning to send the bill to younger and future generations of Americans,” Mr. Walker told The Epoch Times.
“That’s irresponsible. It’s unethical, and it’s immoral, and it needs to stop.”
Is the United States past the point of no return?
“Only God knows when the tipping point is going to occur, and God’s not telling us,” he said.
He combs through various metrics to gauge the situation.
One of these is the debt-to-GDP ratio, which is presently at about 122 percent. Outside of the coronavirus pandemic, this is a record high.
Mandatory spending as a percentage of the federal budget is another metric. It currently stands at around 73 percent.
Another one is interest as a percentage of the budget, which is close to 15 percent.
For Mr. Walker, it is not only raw numbers but what the trends are displaying, which requires a deep dive into demographics.
“We have an aging society with longer lifespans, relatively fewer workers, supporting more retirees, and a skills gap,” he noted.
Last year, two notable developments happened: a majority of Baby Boomers were at least 65, and the birth rate tumbled to the lowest in a century.
This will metastasize into a costly burden for the federal government, particularly Social Security.
The Peter G. Peterson Foundation estimates that the current worker-to-beneficiary ratio is 2.8-to-1, down from 5.1-to-1 in 1960. By 2035, the Social Security Administration projects the ratio will further slide to 2.3-to-1.
Republicans and Democrats
President Joe Biden has claimed that he has acted fiscally responsibly, telling a crowd at a North America’s Building Trades Unions event on April 24 that he cut the national debt. (Insert a TV laugh track here). President Biden has repeatedly touted this claim over the last 18 months, although he has added close to $7 trillion to the national debt since taking office in 2021.
While Republicans have griped over the current administration’s spending endeavors, experts assert that the GOP has also contributed trillions of dollars to the debt pile. One of the GOP-led expansionist initiatives was Medicare Part D under former President George W. Bush.
This program, which was designed to utilize private health care plans to offer drug coverage to Medicare beneficiaries, added $8 trillion in new unfunded obligations. Mr. Walker accepted that “the politicians were totally out of touch with fiscal reality,” considering that Medicare was already underfunded by $19 trillion.
Put simply, both parties have been fiscally irresponsible, and now the bills are coming due.
Mr. Walker purported that politicians suffer from myopia as they are too focused on the next election and, as a result, fearful of making tough decisions. They also experience tunnel vision, he says, meaning they only concentrate on one issue at a time “without understanding the interdependency” and “the collateral effect.”
Self-interest is another malady infecting both sides of the aisle as they aim to keep their jobs and ensure their party stays in power.
“We’ve lost our sense of stewardship,” he said.
“Stewardship is not just generating results today, not just leaving things better off when you leave them when you came, but better positioned for the future,” Mr. Walker explained. “We’ve lost that sense. We need to regain it if we want our future to be better than our past.”
He identified Rep. Jody Arrington (R-Texas), who chairs the House Budget Committee, as one of the few lawmakers to realize the fiscal issues by committing to the Fiscal Commission Act and supporting a constitutional amendment that would limit government growth and stabilize the debt-to-GDP ratio.
“There are others, but there’s not enough,” Mr. Walker said.
Earlier this year, the House Budget Committee advanced the Fiscal Commission Act of 2024 out of committee with bipartisan support.
The bill would establish a 16-member panel featuring six Republicans, six Democrats, and four outside experts without voting power. The group would explore strategies to balance the budget as soon as possible and assess mechanisms to enhance the long-term solvency of various entitlement programs, especially Social Security and Medicare.
Despite some consternation from several Democrats, the bipartisan push received applause, including from the Committee for a Responsible Federal Budget.
“The federal debt is on an unsustainable course, and lawmakers have been unable or unwilling to correct it,” the organization stated. “A fiscal commission would bring Members of both parties and chambers together to facilitate a conversation over how to solve these problems, without pre-prescribing any particular solution (or a solution at all).”
Hope and Change
Whether the United States can improve its fiscal trajectories remains to be seen.
Mr. Walker is hopeful about some of the legislative efforts coming out of the nation’s capital. The country is beginning to face the consequences of years of fiscal mismanagement, making it harder to sell its debt to the rest of the world.
In recent months, many Treasury auctions have led to lackluster demand among domestic and foreign investors. Market watchers have warned that global financial markets might share Fitch and Moody’s concerns about America’s fiscal deterioration.
But when discussing trillions of dollars, percentages, GDP, and servicing costs, how can the average person, worried about paying his mortgage or replacing a broken-down refrigerator, grasp or even be concerned with these trends?
According to Mr. Walker, you tap into their “head and heart.”
“You have to help them understand that we’re already seeing some of the implications of fiscal irresponsibility,” he said, adding that the causes of the Roman Empire’s demise are familiar to what is transpiring in the United States today: fiscal irresponsibility, a decline in moral values, an overextended military, and an inability to control its borders.
However, while it is vital to translate these gigantic numbers into terms the layman can understand, experts also need to “hit their heart.”
“Do they love their country? Do they love their kids, and do they love their grandkids?” he said. “We’re mortgaging their future at record rates.”
Ever worse, politicians have promised $215 TRILLION in unfunded entitlements to the bottom 99%. When this all explodes, who will be left standing to make good on these promises??
Confounded Interest - Anthony B. Sanders 
You must be logged in to post a comment.