The Red Line

The federal revenue surge won’t last

By Red Jahncke on May. 13, 2013

There were many happy faces in Washington on Friday with the Treasury Department’s announcement of robust tax revenues for April. Individual income-tax receipts surged to $240 billion for the month, taking the total for 2013 to $483 billion. This is far greater than the $393 in tax revenues the federal government collected for the first four months of 2012. The increase far surpassed the Congressional Budget Office projections in February.

The influx surprised the CBO and many other observers, but it shouldn’t have. Neither should the dramatic drop that is likely to follow, though policy makers will be tempted to behave as if the revenue flood will continue.

Breaking up banks is easy when they aren’t failing

By Red Jahncke on Jan. 6, 2013

If we decide to break up the big banks, can we actually do it?

The first and most obvious proof that we can lies in the 2010 bank-regulation law, the Dodd-Frank Act, which requires America’s too-big-to-fail banks to submit plans — so-called living wills — outlining how they can be dismantled if they get into trouble. So these banks have already provided breakup blueprints.

All that is required is to remove the conditionality and change the timing: Break them up now, not when and if. And what could be easier than doing so according to their own instructions, and so, once and for all, eliminate the systemic risk posed by the biggest and riskiest banks?

Germany, not Greece, should exit the Euro

By Red Jahncke on Jun. 10, 2012

All the debate about the pros and cons of a Greek exit from the euro area is missing the point: A German exit might be better for all concerned.

Unless Europe’s leaders take some kind of radical action, such as adopting and executing some of the many reform ideas they have floated, the currency union is headed for disintegration.

Column of the Day

Debt Isn’t a Crisis

By Chris Powell, Columnist, Journal Inquirer, May 17, 2023 - Posted on May. 17, 2023

The other day Treasury Secretary Janet Yellen warned that the refusal by Republicans in Congress to raise the debt ceiling would cause a “constitutional crisis” that might cripple the economy and financial system as the government ran out of money and defaulted on some of its bonds.

May 17, 2023 - Scroll down for second part of two-part column

Nonsense. Because it retains the power of money creation, the federal government can never run out of money. It can create money to infinity. The government prefers not to create money so frankly, since it might be inflationary, but the government has the power.

● Read in Journal Inquirer - 2nd of two-part column
● Read here on The Red Line

Republicans Are Right to Demand a ‘Dirty’ Debt Limit Bill

By Brian Riedl, Sr. Fellow, Manahttan Inst., Daily Beast, May 14, 2023 - Posted on May. 16, 2023

President Biden portrays House Republicans as hostage-takers for demanding that deficit savings accompany any debt limit increase. He maintains that “clean” debt limit bills reflect typical Washington practice.

May 14, 2023

The president's position is the one that actually represents the departure from Washington norms and precedents.

For decades, the debt limit served as a legitimate tool for both Republicans and Democrats to address budget deficits. Indeed, of the eight largest deficit-reduction laws since 1985, all eight were attached to debt limit bills.

● Read in Daily Beast
● Read here on The Red Line