The Myth of Alan Greenspan as the ‘Maestro’

The longtime Fed Chairman had many successes but he fed the credit mania that led to the 2008 financial panic

WSJ editorial. Excerpts:

"The bad turn came in the 2000s after 9/11 and the dot-com bust. Influenced by then Fed Governor Ben Bernanke, Greenspan became preoccupied with the risk of deflation. In June 2003 Greenspan cut the fed funds rate to 1% and kept it there for a year, though the second Bush tax cut had passed Congress in May and the economy had begun to surge.

Greenspan tightened money slowly after that, despite rising oil and other commodity prices. Thus was born the great credit mania of the mid-2000s. These columns warned consistently in that era that the Fed was too easy for too long, and Greenspan let us know in often contentious phone calls that he didn’t like our then-lonely warnings.

Only in 2005 did Greenspan finally say publicly that housing prices had become “frothy.” But by then the credit mania and housing bubble were already long building."

"Congress pressed Fannie Mae and Freddie Mac to guarantee subprime mortgages and “liar loans.” To his credit, Greenspan in the 2000s was an ally of the George W. Bush White House in pressing Congress to shore up the capital standards of Fannie and Freddie."

"Greenspan never admitted the failure of monetary policy or of the regulators at the time who had allowed Citigroup and other banks to create the off-balance-sheet vehicles that failed." 

Chuck Schumer’s Chip Shortage

A Micron plant in New York is years behind schedule for all the reasons you’d expect

WSJ editorial. Excerpt:

"Consider Micron’s massive fabricator project in upstate New York, which it announced in October 2022. “With the CHIPS and Science bill I wrote and championed as the fuse, Micron’s $100 billion investment in Upstate New York will fundamentally transform the region into a global hub for manufacturing,” New York Sen. Chuck Schumer boasted."

"The 2022 Chips Act provided some $53 billion, plus a 25% investment tax credit, to subsidize U.S. chip-making."

"Congress in 2024 passed a law exempting some semiconductor projects from the National Environmental Policy Act’s stringent environmental reviews. But the exemptions don’t apply to Micron’s project."

"it includes hundreds of acres of wetlands and forestland that are nesting areas for endangered bats. This makes permitting and building more complicated. Trees can only be chopped down when bats aren’t nesting—i.e., from November to March."

"Construction was supposed to start two years ago, but tree clearing didn’t begin until this past January"

"environmental impact statement numbered more than 700 pages" 

The Trump Administration Gets Civil Rights Back on Track

With ‘disparate impact’ theory, the EEOC long ago departed from its mission to prevent discrimination

By Jason L. Riley. Excerpts:

"Hubert Humphrey, the liberal Democrat from Minnesota who shepherded the bill through the Senate, insisted the act didn’t “provide that any preferential treatment in employment shall be given to Negroes or to any other persons or groups.” If anyone can find “any language which provides that an employer will have to hire on the basis of percentage or quota related to color, race, religion, or national origin,” he said, “I will start eating the pages one after another, because it is not in there.”"

"Supporters noted repeatedly that Title VII’s language was unambiguous. Racial discrimination on the part of the employer had to be intentional and couldn’t be inferred from disproportionate outcomes in the hiring and promotion of minorities."

"within three years EEOC staffers began redefining “discrimination,” sidestepping the statutory language of the bill and ignoring the legislative history. They determined that statistical disparities could be used as evidence of hiring bias and that employers could be held liable for racial imbalance in the workplace, even if it was unintentional. Alfred Blumrosen, the EEOC’s first compliance chief and one of the people who drafted its initial disparate-impact guidance, later admitted that the agency’s power didn’t “flow from any clear congressional grant of authority” and that it “required a reading of the statute contrary to the plain meaning.”" 

"the EEOC’s rogue actions were endorsed by an activist judiciary. In Griggs v. Duke Power Co. (1971), the Supreme Court said hiring practices that were “neutral on their face, and even neutral in terms of intent” could be unlawful if they resulted in racial imbalances. The decision gave employers an incentive to use racial preferences in hiring to avoid being sued for discrimination." 

Zohran Mamdani, Slumlord

He wants to build more public housing when there’s no natural gas in many current buildings

WSJ editorial. Excerpts:

"New York Attorney General Letitia James, Brooklyn Borough President Antonio Reynoso and New York City Council member Crystal Hudson on Monday issued a press release condemning a months-long natural gas outage at a New York City Housing Authority (Nycha) complex in Brooklyn." 

"Perhaps the Democratic leaders could file a complaint with the city about this slumlord."

"Nycha says it needs $78 billion to bring every apartment up to standard. That’s $439,275 per unit"

"Mr. Mamdani last month proposed that the agency finance new housing projects"

"His plan would require construction workers on these projects to be paid at least $40 an hour in wages and benefits. Such wage mandates are why it cost Nycha $1,973 per apartment to install LED lights"

"Washington already covers two-thirds of Nycha’s operating budget" 

Trump Can Restore Standards to Federal Hiring

Restoring the civil-service exam would bring fairer selection and a more competent workforce

By Charles Murray. Excerpts:

"the testing component is a joke. About 25% of government job applicants take no test at all. The other 75% take the USA Hire Standard Assessment, which assesses a variety of cognitive skills. Applicants take the test online wherever they prefer and use their own unmonitored devices."

"With many candidates to choose from, no feasible enforcement mechanism can prevent hiring officials from choosing applicants they prefer because of their politics, sex, ethnicity or any other personal reason"

"84% of civil servants who donated to the 2024 presidential campaign donated to Kamala Harris, and 99% of political donations by the Servi, which represents federal workers, support Democrats"

"If the federal government could administer proctored tests in the 1950s, it can do so now." 

The Surprising Truth About Reagan’s Tax Cut

It widened the deficit—not by cutting the top rate, but purely by relieving families from automatic increases through bracket creep

By Phil Gramm and Michael Solon. Excerpts:

"Since the top 40% of income earners in America pay some 90% of income taxes, reductions in tax rates would be expected to give a larger dollar-value tax cut to people who pay the most taxes. But data from both the Internal Revenue Service and the Joint Committee on Taxation show that when Reagan took office in 1981, the top fifth of income earners paid 64% of all federal income tax, the next-highest fifth paid 21%, and the bottom three-fifths paid 15%."

"By 1985, the 1981 tax cuts, including inflation indexing of the tax brackets, had been fully implemented. The share of the individual income-tax burden had increased to 67% for the top fifth and dropped to 19% for the next fifth and 14% for the bottom 60%. By 1988, Reagan’s last year in office (and after the 1986 tax reforms), the figures were 71%, 17% and 12%.

Incredibly, by 2022, the top fifth paid 88% of income taxes, the next fifth 13% and the middle fifth 4%. That adds up to 105%, but the arithmetic works because the bottom 40% received checks from the Treasury thanks to refundable credits like the earned-income tax credit, on net paying them a total of 5% of all income-tax collections."

"Federal revenue as a share of gross domestic product grew twice as fast from 1973 through 1980 as it had grown to that point in the postwar period—reaching 19.1% in 1980, a peacetime record. Bracket creep had become bracket gallop."

"In the 1970s inflation-adjusted social welfare spending—entitlements and means-tested welfare programs—nearly tripled, but much of the cost never showed up in the federal deficit."

"both political parties supported major tax cuts in 1981"

"When inflation plunged to 3.2% in 1983, a year for which CBO had projected a 9% inflation rate, bracket-creep revenues collapsed and the deficit soared to 5.9% of GDP. By 1985 income-tax rates had been cut by a quarter, and the tax brackets had been indexed to eliminate bracket creep. The economy was in its third year of rapid growth."

"The day Reagan left office, the American economy was one-third bigger than when he arrived. Tax rates had been cut and tax brackets indexed to eliminate bracket creep. Nondefense spending was 2.5% of GDP less than it had been the day Reagan took office, and defense spending was 0.9% bigger."

"the entire increase in the deficit during the Reagan presidency resulted from the abolition of bracket creep which by definition doesn’t help anyone rich enough to be already paying the top rate"

"Even though the level of general prosperity has improved dramatically since 1988, sending real per capita income up by 80%, real means-tested welfare spending has more than quadrupled" 

Chronicle of Cuba’s Ruin Foretold

Little has changed since a leftist writer described the disaster on the island in 1970

By Mary Anastasia O’Grady. Excerpts:

"The basic creature comforts she (Alma Guillermoprieto) had taken for granted in New York, where she lived before departing to teach dance in Havana in 1970, were hard to come by"

"Cuban blackouts and brownouts date back decades. Even when fuel was readily available, a decrepit electrical grid caused regular power outages and daily life was consumed by the search for necessities."

"the ruling elite’s corrupt military conglomerate (Gaesa) controls the hard currency that comes into the country."

"Even the government isn’t allowed to audit those accounts."

"Fidel Castro had seized private property, instituted price controls, ended judicial certainty and imprisoned, executed or exiled the island’s most valuable human capital."

"The confiscation of farms, haciendas and ranches triggered an immediate contraction of the food supply. By 1960 there was a meat shortage"

"Per capita consumption of meat in 1958 was 112 pounds per year. The collectivization of the cattle industry created such disruption that not even a meager ration of 0.75 pounds of meat per week (39 pounds per year) could be met. This also applied to dairy products such as milk, butter, and cheese.”"

"in Castro’s utopia some pigs were more equal than others. Foreign guests of the regime enjoyed a privileged diet of fruits, vegetables and cheeses while in the school cafeteria she and her students met with “starch, grease and gruel.”"

"In June 2005 the national electricity system (SEN) was working at half capacity and blackouts lasted from 7 to 12 hours daily"