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The top stories on government finance, accounting and transparency
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The Center Square – Illinois Experts weigh in on giving federal aid to states like Illinois By Kevin Bessler, includes “The organization Truth in Accounting hosted a webinar titled ‘Federal aid to the states ... with strings?’ on Tuesday. … ‘If you are going to provide relief for lost revenues, do that based upon what revenues they had before and what losses they have from there,’ Weinberg said.”
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Milwaukee Journal Sentinel Time will tell whether staggering debt will eventually lead to crisis Op-ed by Tom Saler, includes “The thing about tipping points is that you never quite know where they are until you, well, tip. Since the current debt super-cycle began in the early 1980s, economists and investors alike have fretted — intermittently, at least — over the size of the federal budget deficit … Robert Louis Stevenson once cautioned that ‘sooner or later, we all wake up to a breakfast of consequences.’ Nice line, but is it true for an economy built on staggering sums of fiat money?”
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Charles & Agnes Kazarian Foundation Citizens’ Wealth Glossary: 2020 Includes “… the debt and cash deficit framework is both chronically flawed and massively value destructive in part because it enables corruption and mismanagement. In point of fact, for massive and highly complex organizations (unlike households or small businesses), cash-based fiscal balances (i.e., cash deficits) provide vastly more flexibility to create fiscal illusions than do numbers calculated in accordance with international accounting standards.”
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American Institute for Economic Research The Fed’s liquidity confusion By Thomas Hogan, includes “The Fed is responsible for ensuring that the supply of money is equal to the total amount demanded. It is not responsible, however, for ensuring that each company and municipal government has sufficient cash to meet its obligations. … Powell misapplied the term ‘liquidity’ in support of the Fed’s nonbank lending facilities, such as the misnamed Municipal Liquidity Facility (MLF). … What Chair Powell calls ‘liquidity’ is really credit allocation. The Fed is not merely providing liquidity to the financial system. It is distorting the allocation of credit by lending to some entities and not to others.”
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| STATE AND LOCAL
Juneau Empire (Alaska) Stay the course, bond debt isn’t the answer Op-ed by Jerry Nankervis, includes “Right now, there is a push from the mayor’s Economic Stabilization Task Force to increase the City and Borough of Juneau bond debt to help the economy during this time of economic crisis. Increasing our debt is exactly the opposite of what should be done. … Rather than increase tax liability and pass that liability on to multi-generations of Juneau citizens, the CBJ should minimize our debt.”
NJ Spotlight (New Jersey) NJ speeds ahead with plan to borrow up to $9.9 billion without asking voters By John Reitmeyer, includes “A revamped version of emergency borrowing legislation that would allow Gov. Phil Murphy’s administration to borrow nearly $10 billion without voter approval easily cleared its first committee hurdle Tuesday. … But sponsors acknowledged during Tuesday’s hearing that the borrowing issue will likely be tied up in court for months since Republicans have vowed to sue to block any borrowing done to finance deficit spending on the grounds that it would violate the state Constitution.”
New Jersey Business & Industry Association NJBIA testimony regarding concerns with Emergency Bond Act By Christopher Emigholz, includes “Borrowing definitely has a place in government fiscal policy, but NJBIA and taxpayers have many concerns about its improper and/or excessive use that could hurt New Jersey’s affordability and competitiveness for generations to come … New Jersey was already challenged with affordability and regional competitiveness issues before the COVID-19 pandemic, and it is important to get this right to ensure that we do not compound what our business community has long struggled with as we start to shift to recovery.”
The Center Square – Illinois Illinois ranks 9th highest in WalletHub study of 2020 tax burdens Includes “Illinois came in ninth highest in a new study by the WalletHub website that examines the level of tax burdens imposed by the 50 states, based on three key tax measurements. Residents of Illinois paid 9.62 percent of their total personal income toward property taxes, individual state income taxes, and sales and excise taxes.”
FEDERAL / NATIONAL
City Journal Seeing the bill By Chris Pope, subtitled “Will greater price transparency make hospital care cheaper?” Includes “Hospital billing arrangements in the United States often seem designed to cause the maximum possible confusion, frustration, and irritation. Prices get negotiated secretly between hospitals and insurers and vary enormously and unpredictably; patients typically have little sense of what procedures will cost until long afterward. …”
Financial Advisor Social Security’s funding crisis has arrived By A. Gary Shilling, includes “… The increased woes from the pandemic may finally force Washington to act, as costs will probably balloon to the point that the fiction of a self-funding Trust Fund is abandoned and Social Security benefits are paid directly by the Treasury. That would eliminate any protections Social Security has from politics, but concerns about the resulting jump in the federal budget deficit would mount.”
Levy Economics Institute of Bard College The ‘Kansas City’ approach to Modern Money Theory By L. Randall Wray, includes “The birth of modern money theory (MMT) can be traced to an online discussion group of the 1990s, Post Keynesian Thought (PKT). Warren Mosler, a hedge fund manager, joined PKT in January 1996. He had drafted a paper, Soft Currency Economics (Mosler 1996). Within the first few weeks he laid out the basic principles of the analysis of a sovereign currency: taxes create a demand for the sovereign’s currency, bond sales by the sovereign are not really a borrowing operation but rather are used to drain excess reserves from the banking system, the sovereign cannot run out of its own currency, and government ought to provide jobs at minimum wages to fight unemployment.”
FROM THE VAULTS
Institute for New Economic Thinking Bankers think they have an ethical duty to steal from taxpayers Interview of Edward Kane by Lynn Parramore in 2015, includes “… There is a lot of unorganized anger towards the banking industry around the world. Ordinary citizens have suffered from inappropriate risk-taking that happened during the boom before that 2007-2009 crisis. They are angry and they have a foggy idea that somehow the bankers did this. … If it isn’t refocused and this game keeps being played for a generation or two, then I think society will begin to see a lot of civil unrest. …”
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