May 24, 2025

The "Big Beautiful Bill" -- Climate And Energy Provisions

May 24, 2025/ Francis Menton

On Thursday (May 22) the House of Representatives passed, by a narrow margin of 215-214, what is referred to as the “Big Beautiful Bill” — a massive compendium of taxing and spending measures that can now seek to avoid the filibuster in the Senate on grounds of being a “budget reconciliation.” The BBB is well over a thousand pages long (go here for full text), and covers a huge range of subjects.
Most summaries of the BBB that I have seen never get to the important subject of subsidies for so-called “green” energy — wind turbines, solar arrays, grid-scale batteries, hydrogen production, and so forth.
That is understandable given the large number of important issues covered in the bill. However, the green energy subsidies are a gigantic issue. They consist of generous tax credits for wind and solar facilities that have been around for a long time, plus a barrage of subsidies and handouts created by the so-called Inflation Reduction Act of 2022.
In a post that I wrote at the time of enactment of the IRA, I linked to an analysis that estimated the green energy handouts of just the IRA alone at approximately $370 billion (although I noted that the IRA handouts were un-capped and could end up being far more than that).

May 16, 2025

Cutting Federal Spending: The Case Of Food Stamps

May 16, 2025/ Francis Menton

Down in the swamps of Washington, D.C., our Congress is said to be hard at work hammering out a budget for the coming fiscal year. With a crisis of massive deficits looming, supposedly they are going to come up with some major areas where government spending can be cut.
One of the areas under consideration for significant cuts is the program formally known as the “Supplemental Nutrition Assistance Program,” or SNAP, and informally known as “food stamps.”
According to the latest data from the Department of Agriculture, as of February 2025 the SNAP program had some 42+ million “participation persons,” with the cost of the program running at just under $8 billion per month, which is close to $100 billion per year.
Is it possible to achieve meaningful savings in this program?

April 15, 2025

April 15, 2025/ Francis Menton

Back on February 14, I had a post titled “How Much Of This Has Been Paid For By The U.S. Taxpayer?” The post asked that question about a sample of issues held dear by the Left: migrant caravans, services in the U.S. to illegal aliens, DEI and climate alarm.
Over the intervening weeks it has become clear that the general answer is “a lot of it,” but the details will be slow to emerge. For example, you can go to the website of DOGE and get an endless list of hundreds of contracts and grants that have been reduced or canceled. But they all seem to have legitimate headlines or titles, even if they were wasteful.
How much of this money was getting diverted to an NGO, and from there to another NGO and then another until it ended up funding migrant caravans or pro-Palestinian propaganda or some other such cause. There is very little indication.

March 07, 2025

March 07, 2025/ Francis Menton

My last post on Tuesday has inspired a spirited debate in the comments about how federal spending should properly be accounted for in GDP. What is the right answer? After reading the comments, it occurs to me that there are several more points to make.
For those criticizing or disagreeing with my post — led by prolific commenter Richard Greene — the main theme has been that many large categories of federal spending make an obvious positive contribution to the economy. Examples given include the Defense Department, teachers/education, and national parks.
Surely excluding those kinds of things entirely from GDP accounting would provide at least as deceptive an indicator of the true size of the economy as including them at full cost value. And if those kinds of things, and many others, are not included at full cost value, what is the alternative? Some flat percentage discount could be applied, but there is no obvious constant level of discount that would be appropriate for all categories of spending; and reasonable people could disagree on varying levels of discount for different categories. Maybe defense should even be included at a premium!
My answer to this critique was at least suggested in the prior post. . . .

March 04, 2025

March 04, 2025/ Francis Menton

A recurring theme at this blog over the years has been the rank dishonesty of many of our government’s economic statistics.
Rather than being neutral indicators of the state of the country and its economy, the most important government statistics have been crafted and manipulated to maximize their usefulness to advocates for increases in the size of government and in government spending. Here is a particularly detailed post on this subject from back in December 2016.
The two main areas of focus here have been the statistics on GDP and on poverty. Both of those come from the Commerce Department.
In the case of GDP, the biggest issue is that government spending on goods and services is counted as a 100-cents-on-the-dollar addition to GDP. That means that the most wasteful spending gives an apparent but false boost to the economy; and even more importantly, that any cut to government spending, no matter how wasteful the spending may have been, gets portrayed as a hit to the economy and a harbinger of recession.
For today, I’ll consider the GDP statistics.

November 18, 2024

November 18, 2024/ Francis Menton

If you believe the messaging of the Trump transition, big cuts in U.S. government spending are coming. Announced cabinet appointments include several who are opponents of the mission of the agencies they will soon be heading. A new Department of Government Efficiency is to be created, headed by Elon Musk and Vivek Ramaswamy, with instructions to take an ax to wasteful programs.
But, assuming that some big cuts actually get implemented, you know what inevitably comes next: Because all government spending is (foolishly) counted as a 100% addition to GDP, the cuts first get recorded as a decline in GDP. Economists on the left (e.g., Krugman) then immediately scream that the cuts have failed, the country has gone into recession, and the people are suffering.
In recent U.S. experience, the Republicans have never had the political fortitude to stay the course.
But let’s look at the latest news from Argentina.