In the News: Inflation

Posted on February 15, 2022 | Comments Off on In the News: Inflation

I’m quoted in a Washington Times article about today’s Producer Price Index release:

Ryan Young, a senior fellow at the libertarian Competitive Enterprise Institute, said the Fed should consider acting even sooner than March.

“The Fed is waiting too long to act,” Mr. Young said. “It has said it will wind down its bond-buying program and raise the federal funds rate starting in March. These are the right things to do, but they should have started months ago.”

With the producer price index rising at an annualized 9.7%, well above inflation’s annualized 7.5% pace, he added that “things are likely to get worse before they get better.”

“The Producer Price Index is a leading indicator, which means it is a sign of things to come,” Mr. Young said. “While we are unlikely to reach Carter-era stagflation territory, we are getting uncomfortably close.”

Read the whole article here.

Comments Off on In the News: Inflation

Posted in Economics, Media Appearances, Monetary Theory

Tagged

This Week in Ridiculous Regulations

Posted on February 14, 2022 | Comments Off on This Week in Ridiculous Regulations

Inflation reached an annualized rate of 7.5 percent, with prices going up 0.6 percent just in January. This is highest reading in 40 years. Meanwhile, agencies issued new regulations ranging from powerline vegetation to natural gas containers.

On to the data:

  • Agencies issued 68 final regulations last week, after 62 the previous week.
  • That’s the equivalent of a new regulation every two hours and 28 minutes.
  • With 371 final regulations so far in 2022, agencies are on pace to issue 3,312 final regulations this year.
  • For comparison, there were 3,257 new final regulations in 2021, President Biden’s first year, and 3,218 in 2020, President Trump’s final year.
  • Agencies issued 44 proposed regulations in the Federal Register last week, after 75 the previous week.
  • With 251 proposed regulations so far in 2022, agencies are on pace to issue 2,259 proposed regulations this year.
  • For comparison, there were 2,094 new proposed regulations in 2021, and 2,102 in 2020.
  • Agencies published 442 notices last week, after 483 notices the previous week.
  • With 2,555 notices so far in 2022, agencies are on pace to issue 22,813 notices this year.
  • For comparison, there were 20,018 notices in 2021. 2020’s total was 22,480.
  • Last week, 1,378 new pages were added to the Federal Register, after 1,993 pages the previous week.
  • The average Federal Register issue in 2022 contains 291 pages.
  • With 8,138 pages so far, the 2022 Federal Register is on pace for 72,661 pages.
  • For comparison, the 2021 Federal Register totals 74,352 pages, and 2020’s is 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are three such rules so far in 2021, one from the last week.
  • This is on pace for 27 economically significant regulations in 2022.
  • For comparison, there were 26 economically significant rules in 2021, and five in 2020.
  • The total cost of 2022’s economically significant regulations so far is $187 million. However, only one of the three such rules issued this year gives the required cost estimates, so this figure is incomplete.
  • For comparison, the running cost tally for 2021’s economically significant rules ranges from $13.54 billion to $19.36 billion. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • There are 31 new regulations meeting the broader definition of “significant” so far in 2022. This is on pace for 277 significant rules for the year.
  • For comparison, there were 387 such new regulations in 2021, and 79 in 2020.
  • So far in 2022, 111 new regulations affect small businesses, on pace for 991. Eleven of them are significant, on pace for 98.
  • For comparison, 912 new rules in 2021 affected small businesses, with 101 of them classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Comments Off on This Week in Ridiculous Regulations

Posted in regulation

New Export-Import Bank President Has Opportunities for Reform

Posted on February 10, 2022 | Comments Off on New Export-Import Bank President Has Opportunities for Reform

Reta Jo Lewis is about to become the next president of the Export-Import Bank. The Senate confirmed her nomination yesterday. Called Ex-Im for short, the bank seeks to boost U.S. exports by guaranteeing loans for buyers of U.S. aircraft and other goods. In many years, Boeing has been the beneficiary of as much as half of Ex-Im’s business. Around Washington, Ex-Im is informally known as the Bank of Boeing.

Unlike most other agencies, Ex-Im’s charter expires every so often. If Congress does not reauthorize it, it will close. The last two reauthorization rounds were contentious, with members of both parties calling out Ex-Im on grounds of corporate welfare and ineffectiveness. Ex-Im’s charter lapsed for a good part of 2014 and 2015, mostly closing the agency. It was only allowed to administer its existing portfolio, and was unable to take on new projects. These can exceed $20 billion per year when the agency is at full strength.

During Ex-Im’s shutdown, Boeing, the company most heavily affected, was easily able to find other financing options for its foreign buyers, and posted record profits. Ex-Im has remained open since, survived another reauthorization battle in 2019, and is due for its next reauthorization in 2027.

CEI has a long track record of favoring Ex-Im’s closure. See, for example, my 2014 paper giving 10 reasons to close Ex-Im, and op-eds for American Banker, the Washington Examiner, and Inside Sources, among other outlets.

Since 2027 is a ways off, incoming Ex-Im President Lewis may be interested instead in my paper about ways to reform Ex-Im. There are several ideas she can pursue during her term as Ex-Im’s president and board chairman:

  • Ex-Im should be required to use the same accounting standards as other federal agencies. This would prevent funny business that Ex-Im has used in the past to show a profit while actually losing money.
  • Ex-Im should have a 10 percent cap on how much of its business can benefit a single firm. This would prevent its capture by companies such as Boeing.
  • Ex-Im should remove its quota for green projects so it can choose projects on the merits.
  • Finally, Ex-Im’s in-house definition of “small business” includes companies with up to 1,500 employees. This definition needs to be made more realistic, so its quota of small business projects actually goes to small businesses.

The best Ex-Im reform is to end it. But that will have to wait until 2027.

Comments Off on New Export-Import Bank President Has Opportunities for Reform

Posted in Economics, Export-Import Bank, Trade

On the Radio: Economic Recovery

Posted on February 10, 2022 | Comments Off on On the Radio: Economic Recovery

Earlier this week I appeared on the Vermont-based Common Sense Radio with Bill Sayre. We talked about the latest economic indicators, the economic recovery from COVID, and other issues. If I see a link to the audio, I’ll post it here.

Comments Off on On the Radio: Economic Recovery

Posted in Business Cycles, Economics, Media Appearances

Inflation Rise Should Trigger Response by Fed, Congress, President

Posted on February 10, 2022 | Comments Off on Inflation Rise Should Trigger Response by Fed, Congress, President

This press statement was originally posted on cei.org.

Inflation is on the rise again, hitting the highest mark in 40 years, according to government figures. CEI Senior Fellow Ryan Young says the Fed, Congress, and President Biden have specific action items that would help get inflation in check:

“Inflation is up yet again, now to a 7.5 percent annual pace. That means the money supply grew 7.5 percent faster than did goods and services over the last year. The Fed can get them back in sync if Congress and President Biden let it. That means keeping political activists off the Fed’s board and not pressuring the Fed to keep money loose during an election year. That is one bipartisan tradition that must stop.

“While Congress is mostly powerless over the money supply—or should be—there is still plenty it can do. Cutting it out with the trillion-dollar spending deficits would be a good start. So would enabling more economic production by removing tariffs and other trade barriers that are clogging supply networks and loosening labor, permit, and licensing regulations that block people from pursuing better opportunities.”

Comments Off on Inflation Rise Should Trigger Response by Fed, Congress, President

Posted in Economics, Monetary Theory

Tagged

Steel Tariffs against Japan Lifted, Kind of

Posted on February 9, 2022 | Comments Off on Steel Tariffs against Japan Lifted, Kind of

President Biden is taking a small step toward tariff relief. Japan’s first 1.25 million metric tons per year of steel exports to the U.S. will now be tariff-free. This amount is roughly equal to its average steel exports to America over the last several years. Exports beyond that will still face tariffs of 25 percent.

On one hand, tariff reductions are good, and this week’s action mostly does away with tariffs on Japanese steel. On the other hand, good policy is simple, and this adds complexity. Regulators, producers, and buyers will have to spend resources tracking tonnage to avoid potential tariffs. The tariff on growth hurts steel-using industries still dealing with supply shortages and price increases. Steel tariffs against most of the world will also remain in place, including against allies. One of President Trump’s most harmful policies remains mostly intact. His tariffs, which are now also Biden’s tariffs, cost the average household more than $1,000 per year.

President Trump initially enacted 25 percent steel tariffs allegedly for national security reasons. Allies such as Canada, Europe, and Japan took issue with being labeled national security threats, which is still a source of diplomatic friction. But the national security justification is pretty obviously a fig leaf.

In order to raise tariffs without congressional authorization, President Trump cited Section 232 of the 1962 Trade Expansion Act, which requires the president to justify tariff increases on national security. But saying doesn’t make it so.

While President Biden deserves praise for this week’s minor tariff relief, it isn’t enough. He should lift all remaining Section 232 tariffs. But even that isn’t enough. The long-term fix is structural. Congress needs to repeal Section 232 outright, so neither Biden nor any future president can abuse his or her powers ever again. The 1974 Trade Act contains similar clauses in its Sections 201 and 301, which Trump used to unilaterally raise tariffs against Europe and China. Those should also be repealed. Taxing power properly belongs to Congress. The separation of powers is an important principle. While it is important for long-lasting trade reform, it is important to many other issues as well.

For more on institution-level trade reform, see my paper, “Repeal #NeverNeeded Trade Barriers.”

Comments Off on Steel Tariffs against Japan Lifted, Kind of

Posted in Economics, Trade

This Week in Ridiculous Regulations

Posted on February 7, 2022 | Comments Off on This Week in Ridiculous Regulations

The U.S. government’s debt reached $30 trillion last week. Antitrust target Facebook lost users last quarter for the first time in its history, while its competitors gained users. Meanwhile, agencies issued new rules ranging from snails to art in architecture.

On to the data:

  • Agencies issued 62 final regulations last week, after 65 the previous week.
  • That’s the equivalent of a new regulation every two hours and 43 minutes.
  • With 303 final regulations so far in 2022, agencies are on pace to issue 3,156 final regulations this year.
  • For comparison, there were 3,257 new final regulations in 2021, President Biden’s first year, and 3,218 in 2020, President Trump’s final year.
  • Agencies issued 75 proposed regulations in the Federal Register last week, after 40 the previous week.
  • With 207 proposed regulations so far in 2022, agencies are on pace to issue 2,156 proposed regulations this year.
  • For comparison, there were 2,094 new proposed regulations in 2021, and 2,102 in 2020.
  • Agencies published 483 notices last week, after 354 notices the previous week.
  • With 2,113 notices so far in 2022, agencies are on pace to issue 22,010 notices this year.
  • For comparison, there were 20,018 notices in 2021. 2020’s total was 22,480.
  • Last week, 1,993 new pages were added to the Federal Register, after 1,341 pages the previous week.
  • The average Federal Register issue in 2022 contains 282 pages.
  • With 6,757 pages so far, the 2022 Federal Register is on pace for 70,385 pages.
  • For comparison, the 2021 Federal Register totals 74,352 pages, and 2020’s is 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week.
  • That is on pace for 16 economically significant regulations in 2022.
  • For comparison, there were 26 economically significant rules in 2021 and five in 2020.
  • Since neither of 2022’s economically significant regulations give the required cost estimate, we cannot yet provide a total estimate for their combined cost.
  • For comparison, the running cost tally for 2021’s economically significant rules ranges from $13.54 billion to $19.36 billion. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • There are 29 new regulations meeting the broader definition of “significant” so far in 2022. This is on pace for 302 significant rules for the year.
  • For comparison, there were 387 such new regulations” in 2021, and 79 in 2020.
  • So far in 2022, 85 new regulations affect small businesses, on pace for 885. Ten of them are significant, on pace for 104.
  • For comparison, 912 new rules in 2021 affected small businesses, with 101 of them classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Comments Off on This Week in Ridiculous Regulations

Posted in regulation

U.S. Economy Added 467,000 Jobs in January 2022, Signaling No Need for Govt Meddling

Posted on February 4, 2022 | Comments Off on U.S. Economy Added 467,000 Jobs in January 2022, Signaling No Need for Govt Meddling

This press statement was originally posted on cei.org.

The good news jobs gain in January gives President Biden and Congress ample reason to step back and let businesses and workers chart a path to recovery, say CEI experts.

Statement by Ryan Young, CEI Senior Fellow:

“The latest job numbers give another reason why the America COMPETES Act is unnecessary. Even without the massive corporate subsidies in the bill, employers added 476,000 jobs to their payrolls. The fact that the jobless rate edged up from 3.9 percent to 4.0 percent is actually good news. That number only includes workers who are actively searching for jobs. So if it goes up even as the economy adds 476,000 jobs, that means labor force participation, which has been depressed for most of the pandemic, is going up. Congress did the right thing in scuttling the never-needed Build Back Better bill. With the national debt now over $30 trillion, the America COMPETES Act should also be scrapped.”

Statement by Sean Higgins, CEI Research Fellow:

“The Labor Department’s report Friday that U.S. employers added 467,000 jobs in January is further proof that the economy can recover if it is simply allowed to do so. Despite the gains, the unemployment rate remained stuck at 4 percent due mainly to the lingering consequences of the Covid-19 pandemic and its restrictions. The number of people who reported that they had been unable to work because their employer closed or lost business due to the pandemic was 6 million, nearly double the number for December, and 1.8 million people said the pandemic prevented them from looking for work, up from 1.1 million who reported that last month. Nothing more sophisticated than getting past the pandemic and removing the related restrictions is needed to get the economy back to full health.”

Comments Off on U.S. Economy Added 467,000 Jobs in January 2022, Signaling No Need for Govt Meddling

Posted in Economics, labor

The COMPETES Act Is a Bad Idea. Here’s What Congress Should Do Instead

Posted on February 3, 2022 | Comments Off on The COMPETES Act Is a Bad Idea. Here’s What Congress Should Do Instead

The 2,912-page America COMPETES Act (H.R. 4521; the backronym is for ‘‘America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength’’) is the latest in a series of spending bills intended to spark the economic recovery from the COVID-19 crisis and revive America’s manufacturing sector. The problem with this is that unemployment is down to 3.9 percent. GDP grew 5.7 percent last year, and has already made up the ground it lost at the height of the pandemic. Manufacturing output is already higher than it was when COVID hit, and is near the all-time record high set in 2018.

So that rationale is a no-go. But the COMPETES Act has another purpose: To counter China. The Chinese people are our friends, but the government in Beijing is not. President Xi Jinping’s consistent illiberalism is harming the Chinese people and China’s neighbors and trading partners.

The COMPETES Act seeks to counter Beijing’s illiberalism by imitating it. This is the same “but they do it, too” argument the Trump administration used to justify its trade war. The COMPETES Act’s copycat policies include tens of billions of dollars of corporate subsidies, stricter control of capital flows, and centrally planned innovation. Imitation is the sincerest form of flattery, which is why the American economy would be best served if Congress scrapped the COMPETES Act altogether.

Seen in this light, perhaps it is a good thing that much of the COMPETES Act’s text is a mish-mash of competition-unrelated wish-list items and campaign-season pork. These include coral research, climate change initiatives, and union organizing efforts. Of course, these are also bad policies.

But there are plenty of things Congress should do instead:

  • Give the Federal Reserve the independence it needs to get inflation under control. It can do this by keeping out political activist appointees.
  • There are currently  more than 1 million federal regulatory restrictions that cost the economy nearly $2 trillion per year. These badly need to be addressed via structural reforms.
  • The national debt just hit $30 trillion, nearly a third more than America’s entire GDP. Congress should spend less.
  • Tariffs are clogging supply chains and raising prices on hundreds of billions of dollars of goods, above and beyond what inflation is doing. Congress and President Biden could lift most of these burdens immediately if they wanted to.
  • Nearly a quarter of jobs now require some kind of occupational license, up from about 1/20th of jobs 60 years ago. These licenses are often economic protectionism, and block opportunities for millions of workers and thousands of businesses.

These are all areas where Congress can help American businesses become more competitive and have real accomplishments to show off.

It is not enough to simply oppose bad bills such as the America COMPETES Act. Reformers should also have a positive agenda. In addition to the ideas listed above, my colleague Wayne Crews has his own list over at Forbes, and there is also the latest edition of CEI’s Agenda for Congress.

Comments Off on The COMPETES Act Is a Bad Idea. Here’s What Congress Should Do Instead

Posted in Competition, Economics, Spending, Stimulus

This Week in Ridiculous Regulations

Posted on January 31, 2022 | Comments Off on This Week in Ridiculous Regulations

GDP grew 5.7 percent during 2021, giving further evidence of a strong economic rebound from the COVID-19 pandemic. Even so, Congress is now considering the 2,912-page America COMPETES Act, which includes more than $52 billion of subsidies to private businesses and countless provisions unrelated to economic competitiveness. Justice Stephen Breyer announced his retirement from the Supreme Court. Meanwhile, agencies issued new rules ranging from school lunches to wood-burning heaters.

On to the data:

  • Agencies issued 65 final regulations last week, after 58 the previous week.
  • That’s the equivalent of a new regulation every two hours and eight minutes.
  • With 241 final regulations so far in 2022, agencies are on pace to issue 3,171 final regulations this year.
  • For comparison, there were 3,257 new final regulations in 2021, President Biden’s first year, and 3,218 in 2020, President Trump’s final year.
  • Agencies issued 40 proposed regulations in the Federal Register last week, after 29 the previous week.
  • With 132 proposed regulations so far in 2022, agencies are on pace to issue 1,737 proposed regulations this year.
  • For comparison, there were 2,094 new proposed regulations in 2021, and 2,102 in 2020.
  • Agencies published 354 notices last week, after 509 notices the previous week.
  • With 1,630 notices so far in 2022, agencies are on pace to issue 21,447 notices this year.
  • For comparison, there were 20,018 notices in 2021. 2020’s total was 22,480.
  • Last week, 1,341 new pages were added to the Federal Register, after 895 pages the previous week.
  • The average Federal Register issue in 2022 contains 244 pages.
  • With 4,762 pages so far, the 2022 Federal Register is on pace for 62,658 pages.
  • For comparison, the 2021 Federal Register totals 74,352 pages, and 2020’s is 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week.
  • This is on pace for 26 economically significant regulations in 2022.
  • For comparison, there were 26 economically significant rules in 2021, and five in 2020.
  • Since neither of 2022’s economically significant regulations give the required cost estimate, we cannot yet provide a total estimate for their combined cost.
  • For comparison, the running cost tally for 2021’s economically significant rules ranges from $13.54 billion to $19.36 billion. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • There are 24 new regulations meeting the broader definition of “significant” so far in 2022. This is on pace for 316 significant rules for the year.
  • For comparison, there were 387 such new regulations” in 2021, and 79 in 2020.
  • So far in 2022, 64 new regulations affect small businesses, on pace for 842. Seven of them are significant, on pace for 92.
  • For comparison, 912 new rules in 2021 affected small businesses, with 101 of them classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Comments Off on This Week in Ridiculous Regulations

Posted in regulation