Month: August 2022

According to Penn Wharton, the distribution of benefits from President Biden's student loan forgiveness program looks like this:

About three-quarters of the benefit goes to working and middle-class families. One-quarter goes to the upper middle class.

Because it's paid for out of the general fund, which is mostly individual income tax receipts, the loan forgiveness program is funded almost entirely by the top quintile. The cost amounts to roughly $50 billion per year, or about 0.8% of the entire federal budget.

The latest from Texas:

A federal judge in Texas on Thursday struck down a state law barring adults under 21 from carrying handguns, ruling that the age limit violated the Second Amendment. U.S. District Judge Mark T. Pittman said the Constitution didn’t put an age restriction on the right to bear arms, meaning adults 18 to 20 shouldn’t be prevented from carrying handguns outside the home.

Even the lunatics who run Texas didn't want teens carrying handguns around, but a Texas court told them that this was too damn sensible. There was just no good reason not to let teenagers pack all the heat they want.

So even Texas now has to live with the crackpottery of the courts they've created. I guess that's fully deserved, but still. Who will rid us of these turbulent jurists?

The PCE inflation rate for July was released today and it showed that inflation has slowed almost to zero:

The change from June was -0.8% at an annualized rate. The change in core PCE was +1.0%. As usual, since these are volatile numbers, the trendline gives the best indication of what's really going on.

On a year-over-year basis, the PCE inflation rate was 6.3% and the core PCE inflation rate was 4.6%.

Consumer spending remained pretty flat last month. Adjusted for inflation, consumer spending has increased only about 0.6% over the past six months.

This is a bit of Queen Anne's Lace along the road to Laguna Beach.

The Bureau of Economic Analysis reports today that corporate profits in the second quarter were up 8.1% compared to 2021. That's true as far as it goes, but nominal thinking doesn't get you very far. Like all of us, corporations are affected by inflation, and when you account for that profits were down 0.4%:

In better news, GDP growth in the second quarter was revised upward a bit. If you use an average of GDP and GDI, economic growth is now estimated at 0.1% in the first quarter and 0.4% in the second quarter. No negative growth quarters at all!

In the New York Times today, Maia Szalavitz writes about how Seattle finally tackled chronic homelessness. A few years ago Lisa Daugaard, a lawyer, developed a program called LEAD:

Instead of re-incarcerating homeless people who typically already have long histories of minor arrests, police departments that participate in LEAD refer them to case management services. The program has an overall philosophy of harm reduction, which, in addition to securing shelter, focuses on improving health, rather than mandating abstinence from drugs and other risky behaviors. LEAD originated as a collaboration of public defenders, the police and prosecutors, who put aside differences to work on solutions.

LEAD worked, but during the pandemic shelters were closed and police stopped arresting people for minor crimes. So Daugaard decided to try something new:

With federal pandemic funds becoming available and desperate hotel owners newly open to being paid to house nontraditional guests, she said she saw “our chance to show that there is another way.”

Ms. Daugaard and her colleagues created a program now known as JustCare. JustCare staff members, rather than police officers, would respond to urgent calls about encampments. After building trust with ‌‌local homeless people, the workers would move them into housing without strict abstinence requirements and then help clean up the site. The police would be contacted only as a last resort.

The common element of both programs is an emphasis on getting people into shelter, not obsessing over behavioral rules or addictions to drugs or alcohol. Addicts would rather have drugs than housing, so insisting that they get clean in return for housing accomplishes nothing except to keep them on the streets.

There's a lesson here for homeless initiatives everywhere. Obviously, one thing you need is actual shelter, and public resistance makes that hard to build. But if you overcome that obstacle, you also need to get people off the street and into your shiny new shelters. The way to do that is to build trust and to let people live the way they want. That doesn't sound attractive to a lot of people, but it works.

This was my last picture taken in Rome. It's a shot of the Naidi fountain (near the Termini train station) taken at sunset. It was a tough picture to take! I had to position myself in the middle of the street, so I was dodging cars while my camera was acting up and mostly not working. Occasionally, if I took a single picture at just the right moment after starting up the camera, it would work. I had to do this over and over just to get half a dozen shots. But I got them!

And here we go with this week's promised announcement on student debt:

President Biden announced on Wednesday that he would cancel $10,000 in student loan debt for those earning less than $125,000 per year [or $250,000 per household], with an additional $10,000 for students who received Pell grants for low-income students.

So we've split the baby: $10,000 in forgiveness for nearly everyone and another $10,000 that's means tested for those who were poor when they were students.

That last is a little odd, since you'd think means testing would make more sense based on what people are making now. But I suppose it sends a signal that we want to make college cheaper at the time for low-income students. Whether anything will come of that in the future, who knows?

Biden's plan also continues the existing payment moratorium until after the election the end of the year, and caps the monthly payments people make if they're enrolled in an income-based repayment plan. The cap would be cut in half, from 10% of income to 5%.

And future students? Well, we still don't know about them. But I'll bet they're all hoping that their debt is forgiven someday too. I'm not sure what effect that will have on their present behavior.

The good news on inflation is that the core level is moderate and dropping. Energy inflation is also coming down thanks to dropping oil prices.

The bad news is that food inflation remains high and rising:

This chart shows the monthly change in inflation, annualized to a yearly level. Because this is a volatile measure, it's best to look at a trendline, and the trendline for core CPI seems to have peaked in early 2022 and has been trending lower ever since.

But no such luck with food. You barely even need a trendline to see what's going on here, but it's still best to look at one anyway. What it tells us is not just that the food inflation rate is high (13.1% in July) but it's continuing an upward trend. Even more than gasoline, food prices are what people see most often and react to most strongly. So all the news in the world about the core rate or the headline rate or even the declining price of gasoline can't wipe out the continuing shock of a visit to the supermarket for plain essentials: The cost of food in July was 11% higher than last year and 1.1% higher than last month (+13% at an annualized rate). Here's a sampling of food price increases from June to July:

Some stuff was flat or even lower in July: Bacon, milk, tomatoes, ham, and a few other items were down significantly. But eggs, flour, coffee, chicken, and other staples were up 30% or more. Those are annualized rates, but even if you divide them by 12 to get an idea of what people actually see on price stickers, these are still eye-watering price increases. And you see them month after month.

As long as food inflation stays high, the public perception of inflation will stay high and news outlets will continue to produce plenty of segments on inflation using masses of B-roll footage of supermarket aisles and clanging cash registers. That's just the way it is.

I was directed toward this blog post over at Hot Air, and I'm commenting on it more out of amusement than because it really matters. It's yet another screed about wokeness:

[New York] Governor Kathy Hochul signed a new law last week that is banning a significant number of words from any use in government documents or speech. All of the targeted words carry an implication of gender. One of the most prominent examples she pointed out was “salesman.”¹...So just in case you were thinking that the crazy train might be slowing down a bit, have no fear. It’s still running full steam ahead in the Empire State.

....In a separate bill, Hochul approved a measure banning the use of gendered terms when referring to office-holders in local legislative bodies. The prime example in that new law was an instruction to change “councilman” to “council member.”

....Part of this is being driven by the agenda of transgender culture, of course, but not all of it. There is clearly a much broader goal among progressives that would see the end of the recognition of the obvious (and wonderful) differences between men and women. I assume this has something to do with “fighting the patriarchy” or whatever the flavor of the week is among liberals today.

New York may be on a kick to replace gendered language in its statutes, but this is hardly an invention of the woke generation. It's been going on since at least the '70s, which is where we got terms like flight attendant, garbage collector, and firefighter.

As for "fighting the patriarchy," it may be enjoying a revival but it's also ancient. We were all talking about that back when I was in college. (And earlier, but I don't think my high school was enlightened enough to be fighting the patriarchy or much of anything else.)

Even they/them, although it's also enjoying a revival, is old stuff. And none of this is meant to end recognition of the differences between men and women. It's meant to make sure that job titles don't simply assume that certain jobs are by default populated only by men (fireman, salesman) or women (stewardess, seamstress).

Wokeness can certainly get out of hand. But gender neutrality is hardly a good example of this. It's been a goal of the feminist movement practically since the beginning, and it's made steady progress for more than 50 years. It's just common sense, not a plot by the deep progressive state.

¹For what it's worth, this law was aimed at changing the word "salesman" to "salesperson" in an old statute about realtors. That's it. Hardly a big deal.