Columnist.
Now that Donald Trump has locked up the Republican nomination, we can look more closely at his policy proposals. In April, when the two candidates were still battling for the Republican nomination, I compared Donald Trump's tax plan to Ted Cruz's plan. Now the important question is how does Trump's plan compare with Hillary Clinton's or a possible third party candidate's plan? Importantly, Trump has indicated recently that he might propose a different tax plan than what he originally proposed, saying so to both ABC and NBC. If he sticks with the principles of his original tax plan, but seeks smaller cuts in tax rates, his revised plan would be better by being more consistent with fiscal responsibility.
As Donald Trump and Ted Cruz battle to become the Republican nominee for president, it is time to closely consider their policies. Although both propose cutting taxes, the details of their plans are very different. Ted Cruz is proposing a drastic revision of the tax code that would replace the progressive income tax with a flat tax. Donald Trump's proposal, though it would lower the top tax rate, preserves higher rates on the rich. In terms of sound principles that should guide discussions of future tax policy, Cruz's proposal is better than Trump's.
Arguing that no full-time worker should be paid so little as to live in poverty, Bernie Sanders supports increasing the minimum wage to $15 per hour by 2020. This is part of his plan for reducing income inequality in the United States. Unfortunately, raising the minimum wage, especially by such a large amount, will *reduce* the incomes of many low-wage workers by making fewer jobs available.
Pennsylvania Governor Tom Wolf has finally announced that he will allow the budget passed by the legislature for the 2015-16 fiscal year to become law. It is now time for the legislature to consider the 2016-17 budget proposal, since the legislature must decide on that budget by June 30. Disagreements about tax and spending policy last year resulted in the longest budget impasse in the state in 60 years. But coming up with a budget that is balanced and politically acceptable to the Republican legislature and the Democratic governor may be even more difficult this year.
The first two weeks of January 2016 were the worst beginning of a year ever for the stock market. If the month had not ended with a big market rebound, it would have been even worse. Some people blame the Federal Reserve and its interest rate hike in December. While economic fundamentals indeed did not justify the Fed decision to raise interest rates, the rate hike is not the reason for the market's poor performance. Rather, the recent declines should be understood as part of a deflation in asset prices that were too high because of five years of quantitative easing by the Federal Reserve that began in 2008.
Yesterday my wife paid $1.99 per gallon for gasoline, a price lower than almost anyone expected a few years ago. From 2010 to early 2014, oil prices were fairly steady at close to $100 per barrel. Beginning in June 2014, oil prices began falling, recently falling below $30 per barrel. It is not clear how low oil might go.
After much debate and considerable delay, the House of Representatives has finally passed a highway funding bill. A big question that delayed the bill's passage was whether the federal fuel tax would be increased to fully cover planned spending from the highway trust fund. Since it was crafted by the Republican majority that opposed tax increases, the legislation did not increase the tax on gasoline or diesel fuel. Instead, the bill pays for much of the difference between projected expenditures and fuel tax revenues by draining $59 billion from the capital of the Federal Reserve. As the former head of the Congressional budget office Alice Rivlin points out, this is "a new low in budgetary gimmickry."
