RUSSIA Running Out of Reserves as Gold & Forex Levels Fall & Costs of Ukraine War Increase

RUSSIA Running Out of Reserves as Gold & Forex Levels Fall & Costs of Ukraine War Increase

$7.5 Billion in Government Cash Only Built 8 E.V. Chargers in 2.5 Years

“In 2021, the Infrastructure Investment and Jobs Act included $7.5 billion to build 500,000 public charging stations for electric vehicles (E.V.s) across the country in an effort to boost a switch to the use of clean energy.
As Reason reported in December, not one charger funded by the program had yet come online. Now, six months later, the number of functional charging stations has ticked up to eight.”

“Why so little progress? Alexander Laska of the center-left Third Way think tank told Autoweek’s Jim Motavalli that the federal cash “comes with dozens of rules and requirements around everything from reliability to interoperability, to where stations can be located, to what certifications the workers installing the chargers need to have.” Laska says the regulations “are largely a good thing—we want drivers to have a seamless, convenient, reliable charging experience—but navigating all of that does add to the timeline.”
A spokesperson with the National Electric Vehicle Infrastructure (NEVI) program, which administers $5 billion of the $7.5 billion total, further told Motavalli that the delay is because “we want to get it right.””

The National Debt Is Making Us Poorer

“At its current trajectory, the rising national debt—and the increasing burden of making interest payments on it—will reduce Americans’ future income growth by 12 percent over the next 30 years, the CBO projects in a new report. That means the average person will earn about $5,000 less annually than they would in a scenario where the debt was not growing.

“This is the result of crowding out, whereby a higher national debt reduces private investment and slows income growth,” explain the number crunchers at the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for reducing the federal deficit. “With additional debt, income growth would slow further.””

Trump’s Tough Immigration Talk Comes With a High Price Tag

“”If reelected, Donald Trump has said he’s willing to build migrant detention camps and deploy the U.S. military to deport the more than 11 million undocumented immigrants in this country,” Kristen Welker asked of Sen. Marco Rubio (R–Fla.) on NBC News’s Meet the Press. “It would be the largest deportation operation in American history. Do you support that plan?”
“Yes, we are going to have to do something,” responded Rubio after arguing that the number of undocumented migrants is much higher. “Unfortunately, we’re going to have to do something dramatic to remove people from this country that are here illegally, especially people we know nothing about.”

A son of Cuban immigrants and, at one time, strongly critical of Trump’s proposal to end birthright citizenship and otherwise restrict immigration, Rubio’s turnaround matches the direction of his party, which takes a hard line on the issue. But if Trump plans “the largest deportation operation in American history”—his own words, adopted by Welker—we can assume that such a big-government scheme will come with matching costs. That’s exactly what number crunchers predict.”

“”The costs of the former president’s plan to deport the more than 14 million unauthorized immigrants in the U.S. today could easily reach more than $1 trillion over 10 years, before taking into account the labor costs necessary for such a project or the unforeseen consequences of reducing the labor supply by such drastic amounts over a short period of time,” MarketWatch’s Chris Matthews reported this week of the results of a Penn Wharton Budget Model (PWBM) analysis.

Trump’s plan is still taking shape, though the former and perhaps future president has proposed using both the military and local law enforcement to eject migrants in this country illegally. If that policy was put into effect, “the removal of one million immigrants would cost the federal government between $40 billion and $50 billion over 10 years, and up to $100 billion if those immigrants were higher-paid workers,” Matthews wrote of PWBM’s finding.

Matthews notes that immigration hawks like Steven Camarota, director of research at the Center for Immigration Studies (CIS), predict as many as one million deportations per year under tough enforcement. That’s quite a reach, considering that deportations peaked at an average of 383,307 per year under former President Barack Obama. A dramatically higher target means rapidly accumulating costs, with the trillion-dollar price potentially reached after a decade.”

“”Under current law, unauthorized workers…generally do not qualify for federal benefits,” PWBM economists point in a separate analysis. They add that “more deportations, though, leads to less economic growth.” As a result, according to PWBM, with the implementation of restrictive policies, “GDP in 2050 will be four percent lower relative to no additional deportations.”

AAF predicted that with deportations, “the labor force would shrink by 6.4 percent and, as a result, in 20 years the U.S. GDP would be almost 6 percent lower than it would be without fully enforcing current law.”

In 2017, the Center for Migrant Studies cautioned that with a mass deportation program, “gross domestic product (GDP) would be reduced by 1.4 percent in the first year, and cumulative GDP would be reduced by $4.7 trillion over 10 years.”

Obviously, there’s a range of costs projected for a policy shift to mass deportations of undocumented migrants. That’s because it has never been tried on the scale envisioned by Trump and his supporters. In fact, if Rubio is correct that the real number of people in the country in defiance of the law is “upwards of 20, 25, maybe 30 million,” deportations will have to be that much more aggressive, with an even higher price tag to match.”

Biden’s big bet hits reality

“Less than 17 percent of the $1.1 trillion those laws provided for direct investments on climate, energy and infrastructure has been spent as of April, nearly two years after Biden signed the last of the statutes.”

“Trump has said he should have the power to refuse to spend congressionally appropriated money he considers wasteful, despite a 1974 law that says otherwise. This raises the prospect that he could attempt to pare Biden-era funding even if it’s at an advanced stage of distribution.”

With Rising Debt, the U.S. Federal Government Is in Bad Company

“”Households who buy government debt reduce their savings in productive private investments,” Kent Smetters and Marcos Dinerstein wrote in 2021 for the Penn Wharton Budget Model. “As the spending is unproductive, the economy is poorer and total savings is lower due to capital crowd out.”
“Government spending redirects real resources in the economy and can crowd out private capital formation,” they add. “An additional $1 trillion debt this year could decrease GDP by as much as 0.28 percent in 2050.”

If you take that insight and apply it to a world of governments on a collective borrowing spree, you end up with a hobbled global economy where prosperity becomes increasingly elusive.

“Medium-term growth rates are projected to continue declining on the back of mediocre productivity growth, weaker demographics, feeble investment and continued scarring from the pandemic,” note IMF’s Adrian, Gaspar, and Gourinchas. “Projections for growth five years ahead have fallen to the lowest level in decades.”

Heavy government borrowing also creates risk for the financial sector by putting banks at the mercy of massive debtors of uncertain creditworthiness. “The more banks hold of their countries’ sovereign debt, the more exposed their balance sheet is to the sovereign’s fiscal fragility,” note the IMF analysts.

Heavily indebted governments also reduce their ability to act as backstops in case of financial crisis as they become the likeliest causes of crises of the future. As they continue to borrow, they reduce the likelihood that productive private economic activity will grow them out of their financial problems.

“Higher government debt implies more state interference in the economy and higher taxes in the future,” The Economist points out in its interactive overview of global government debt. Also, add the editors, rising debt “creates a recurring popularity test for individual governments” which often goes poorly in terms of fiscal responsibility because paying outstanding bills isn’t popular with voters.”

The Real Student Loan Crisis Isn’t From Undergraduate Degrees

“There are real problems with America’s student loan system. But they mostly involve people who take on debt to pay for expensive graduate degrees.
Those problems are rooted in a little-known 2005 law that eliminated a cap on the amount of federal student loan debt that graduate students were allowed to take on. In the following decade and a half, the amount students borrowed for graduate school climbed.

Students weren’t just borrowing to pay for high-quality graduate programs. Some of the graduate programs that saw students take on the largest debt burdens were those that provided the least value in terms of quality instruction or earnings.

Graduate students, in other words, weren’t just taking on more debt. They were taking on more debt for less lucrative degrees, offered by programs eager to absorb federal loan dollars. Even as undergraduate degrees largely held their value, a bevy of newly subsidized graduate degrees have lured students into expensive programs of dubious quality.”

The Fiscal Hawks Were Right About Debt and Interest Rates

“While some nations tremble at the thought of high indebtedness, we Americans bask in the warm, comforting glow of $34 trillion in government IOUs. Why worry about a debt crisis when everyone wants to buy U.S. debt?
Those of us who advocate fiscal prudence have been asked that question repeatedly in the past 15 years. We would point to the host of unfunded liabilities looming in our future. They would respond by pointing to the trend of declining interest rates over time. Low rates, they said, meant we should be able to handle interest payments on outstanding debt while growing the economy with smart investments. Indeed, thanks to low interest rates, payments on federal government debt as a share of GDP dropped from more than 3 percent in the early 1990s to 1.5 percent in 2021. Debt seemed cheap and manageable, so why worry?

As the 10-year Treasury rate hit 5 percent this year, with interest payments on the debt rapidly increasing and bondholders’ interest in buying U.S. debt declining, it’s tempting for us fiscal hawks to simply say, “We told you so.” But it’s more productive to understand how we ended up in this quagmire, in hopes of avoiding similar mistakes in the future.”