Does anyone still have their Whip Inflation Now (WIN) buttons? If so, toss them in favor of MIN buttons, soon to be the new collectable.
WIN is So Passee
Whip Inflation Now (WIN) was a 1974 attempt to spur a grassroots movement to combat inflation in the US, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. The campaign was later described as “one of the biggest government public relations blunders ever”.
People who supported the mandatory and voluntary measures were encouraged to wear “WIN” buttons, perhaps in hope of evoking in peacetime the kind of solidarity and voluntarism symbolized by the V-campaign during World War II.
Forget WIN, It’s Now MIN
Here’s the latest evolution in mandatory and voluntary measures.
Fourteen Kamala Harris Economic Proposals
- New $10,000 tax credit for first-time home buyers.
- As much as $25,000 in down-payment assistance for first-time home buyers whose parents don’t own a home.
- $25,000 in down-payment assistance to working families who paid their rent on time for two years and are buying their first home, regardless of whether they are first-generation buyers.
- Federal ban on alleged corporate price gouging on groceries
- Caps on rent increases
- No tax on tips
- 3 million new housing units
- Tax incentive for companies that build homes for first-time buyers
- Restore the child tax credit of up to $3,600 a child
- New $6,000 child tax credit for the first year of a child’s life
- More Covid stimulus for small businesses
- Elimination of medical debt for millions of Americans
- $40 billion to help local governments develop innovative solutions to the lack of housing supply.
- Ban the use of property-management software that has allegedly been used by landlords to fix apartment rent prices at buildings across the U.S.
The above list compiled from the Wall Street Journal article Harris to Call for Expanded Child Tax Credit, 3 Million New Housing Units
Mercy! What a Disastrous Plan
Team Trump foolishly started the No Tax on Tips idea and is in favor of expanding child tax credits as well.
Lesson of the Day
Dear Team Trump, when you start foolish economic proposals to buy votes, without even saying how you will pay for them, don’t be surprised when Democrats embrace the ideas and expand them much further.
See points 6, 9, and 10.
Homebuying Math
- There are approximately 131,528,000 households as of June 2024.
- The home ownership rate is 65.7 percent.
- The number of rental households is 131.528 million * (1.00 – 0.657) = 45,114,104.
- If everyone became a homeowner at the maximum handout, the cost would be $1.13 trillion. (They won’t. Assume 10 million might want to).
- If 3,000,000 (the new homebuilding proposal) took the maximum handout, the price tag would only be $75,000,000,000.
- If 10 million are on board, the cost would be $250,000,000,000
So, expect the price this boondoggle to cost $75 billion minimum up to $250 billion.
But then we would need to subsidize construction of 10 million homes instead of 3 million homes.
What About the Cost of Homes?
Much More Than This
If three million or more households rapidly try to buy a home, the median price would rise by much more than $25,000 especially on the starter home end.
Restoring the Child Tax Credit
Restoring the child tax credit would cost about $78 billion annually starting 2027 (lead chart).
In addition to restoring the child tax credit, Harris proposes an additional child tax credit of $6,000 per child.
In 2023, there were 3,591,328 births. The cost of the addition would be $22 billion per year assuming a small increase in births due to immigration.
Child tax credit total cost is about $1 Trillion over 10 years. It’s even more if you count interest on debt.
Vance Foolishness
Vance wants a $5,000 child tax credit, $1,400 more than Kamala Harris. If restoration would cost $78 billion at $3,600 per child then the Vance proposal would cost $108 billion per year.
Way to go Republicans (Not).
I am sure Harris will embrace Vance’s idea, so we may as well up her cost proposal right now.
Tax on Tips
Trump started this foolishness but Harris embraced it. Heck she even expanded it by adding minimum wage hikes.
The two ideas could collectively raise the deficit by $100 billion to $200 billion over 10 years, according to an estimate from the Committee for a Responsible Federal Budget.
That’s with honest accounting.
The CRFB says that In practice, exempting tip income from taxation would lead workers and employers to reclassify ordinary income as tip income where possible and could lead to a larger shift toward lower base pay and higher tipped income, more broadly.
OK Vance, is your final bid $108 billion per year or do you care to counter Harris?
What About Groceries?
There is massive gouging according to the above chart.
Excuse me, I meant to say the above chart shows massive economic illiteracy, not massive gouging.
Producer prices rose (PPI), costs to grocery stores rose, and grocery stores raised prices leading to a rise in the CPI.
What About Tariffs?
Trump wants a 60 percent hike in tariffs on China and 10 percent across the board.
Tariffs are a tax hike either on US importers (if they eat the cost) or on consumers if they don’t.
In practice, about 90 percent will be passed on to consumers, and that means prices will go up especially at places like Amazon and Walmart.
But it won’t do a damn bit of good because the cost per job created (if any jobs at all), will be enormous.
Furthermore, it is economic idiocy to believe tariffs can or will replace income taxes. But that is what Trump believes (which means nearly all the MAGA supporters believe that as well).
Where does Harris stand?
She may as well embrace this too, or alternatively attack Trump’s idea as economic nonsense. Either idea might work, and the latter would be accurate for a change.
What About Energy?
Energy is one place you can openly cheer Trump.
The Biden/Harris plan has been an inflationary disaster and Trump will put an end to it.
MIN Now!
I am not sure if MIN should stand for More Inflation Now, or Maximize Inflation Now.
Both parties are on board, to varying degrees but with substantial overlap.
Neither party seems the least bit interested in reducing the deficit. They are more interested in competitive free money vote buying tactics.
Recession Implications
For the near term, a recession will help cool inflation. A recession will also aid Trump especially if unemployment rises substantially.
July 25, 2024: “All Hell Breaks Loose” In the Next Few Months as Recession Bites
August 2: Unemployment Rate Jumps, Jobs Rise Only 114,000 with More Negative Revisions
August 2: 2024: The McKelvey (Sahm) Unemployment Rate Recession Rule Just Triggered
August 15, 2024: Industrial Production Declines 0.6 Percent on Top of Big Negative Revisions
It seems to me that all hell breaking loose.
Enjoy the transitory fall in the rate of increase in inflation. But get those MIN buttons ready. You will need them no matter who wins.
MIN is truly a bipartisan effort.