Top of the News: The sober business of putting the brakes on Washington state’s fiscal troubles — a drag on the entire economy — is rapidly becoming the Olympia Laff Riot. Sales taxes, cigarette taxes and closing “loopholes and exemptions” (do the august solons mean Boeing?) is the plan.
Lawmakers, of course, are working in an environment where for 30 years Americans have been conditioned to think all taxes are bad and taxes must only be cut. So nibbling around the edges is apparently all that can happen. Sales taxes are especially regressive, hitting lower-income people at a time when their plight has been aggravated by the worst unemployment since the Great Depression. And why do I fear some of these tightened loopholes will most affect blue-collar sectors?
In a more ideal world, this would be the time for a serious discussion about the appropriate revenue structure needed to both sustain a diverse, complex and urbanized state, while maintaining its high-quality economy. This would include the Great Reset reality check: No new bubble is going to prevent sustained unemployment and economic and social ills. That discussion won’t happen. Nor will Washingtonians discuss an income tax (!!). I would say, let the YOU SOCIALIST! comments begin, but, as with the destructive Prop. 13 in California, many liberals quietly like the status quo, too.
The Midweek Briefing: Sales of new houses plunged in January — no surprise to readers of this blog, which has consistently urged caution about the green-shoot hunt in this sector. It’s a record low and erases all of last year’s gains. Nor are we out of the woods on foreclosures. According to RealtyTrac, a record 2.8 million properties received at least one foreclosure notice last year. This year, the prediction is that 4.5 million could face foreclosure. The “shadow inventory” of houses in foreclosure but being held back for sale by lenders could be as high as 7 million. Mortgages under water: 11 million.
— Death and taxes may be a certainty, but even the latter isn’t proving recession proof. H&R Block shares nosedived today as investors realized that unemployed Americans need less tax help. Bloomberg reported that Block’s total tax returns prepared fell 6.3 percent though Feb. 15 vs. a year earlier.
— Alaska Airlines will begin offering Aircell’s Gogo in-flight Internet service. “With Gogo, Alaska Airlines passengers will be able to browse the Web; access online music, games, podcasts and webcasts; send and receive e-mail; and connect to virtual private networks while flying,” the airline said. Runway Girl Mary Kirby offered an interesting back story on the competition for Alaska’s service and why the airline moved quickly.
— Nouriel Roubini sees little real tightening in China, despite some official moves to ease off the asset and property bubble there. Still, he expects the country’s leadership will be forced by inflation to tghten monetary policy. Credit? A slow rise in interest rates but lending is still expected to grow by 20 percent (!) this year, vs. 30 percent last year. Meanwhile, the Wall Street Journal reports that American bank lending fell at its worst rate since 1942.
— Lessons for the U.S. from Canada’s Martin Prosperity Institute, which studied the economy expanding effects of high-speed rail.
Today’s Econ Haiku:
Government health care
Who would want that commie plot?
Worked for Dick Cheney