March 23, 2023

It is government budget season and things are not looking good for those who care about public services and intelligent public supports for the economy.

The mood is tax cuts for the wealthy, reduction in funding for front-line services, and cash give-aways to corporations in the hope that they create a job or two.

• Ontario releases their budget today.
• Quebec released their budget yesterday.

There is lots to not like since a tonne of it is just profit subsidy through promises of funding if investment comes to Quebec. Instead of investing in Quebec, the government has decided to beg capital for investment money while pointing at a pile of cash.

On the other side, it is cuts to the health system to and supporting privatization to, in their words,

[make] the health care system more efficient and more flexible for the public

But, even finance does not think it is a good budget.

• tax rate reduction in the lowest two income brackets (equal to C$814 for those earning more than $98,000 a year.
• Increase to the tax holiday for companies that make large investments focused on electric vehicle battery manufacturing.
• Paying down public debt slowly. It is about 37% of GDP. The target si 30% by 2038.
• If not for the tax cuts, the government could do so by 2033.
• The tax breaks for new investments are expected to support about 100 projects and cost C$373 million over a five-year period.

Girard’s use of the Generations Fund to pay for tax cuts is a bad idea because the fund has historically generated returns above 6%, much higher than Quebec’s cost of borrowing. “The government decided to take the most expensive way of financing.” (BN)

We blather on and on about the problems at the theoretical level of neoclassical economic (mainly that it doesn't make sense even theoretically). But yesterday the neoclassicals at the Federal Reserve in the USA were perplexed and perplexing.

The USA finds itself in a place that cannot be explained by their theory. Their response is to ignore those parts of the economy and only talk about the one thing that they want to: interest rates and how they are too low.

Yes, yes. There is a (slow moving) banking crisis. Yes, there is no indication wages and spending are driving inflation. Yes, there is an indication that we are already in a recession. Yes, "inflation" seems to be coming down slowly. Sure, wages are stagnant.

But, the only thing they can think about is their one lever and the string it is pushing on.

For bank failures, even that is something akin to rates for the Fed:

“you can think of [as] being the equivalent of a rate hike, or perhaps more than that” (Powell)

The predictions for the economy yesterday also did not take into account what most people can see: the economy is rather suddenly not looking even as good as last week—you know, when it wasn't looking very good.

It was good of them to admit that they have no idea what the bank failures mean for the economy or if there will be more of them or have any ideas what, if anything, they should do about them failing.

I think it is time some folks called "time" on the whole listening to bankers thing. When bankers themselves continually admit they don't know what is going on and have no analysis that explains anything, one does wonder why they hold such sway.

• Per- and polyfluoroalkyl substances (PFAS)

They are either in or a byproduct of production of basically everything "modern" capitalist life gives us.

And, they are in all of us as well. Recent studies have shown (here is a shocker) having these chemicals around is having a negative effect on human health. And the health of all the other living things on this planet.

Governments have recently had internal environmental policy folks win battles to push for regulation and clean-up of PFAS. Regulations include implementing testing and filtering of PFAS in fresh water distribution systems.

The other part is to try to regulated the use of the environment as a dumping ground during production. This is where there has been an increase in push-back from industry.

Chip manufacturers—yes, the ones the USA and everyone want to give billions of profit subsidies to—are among the loudest critics.

The USA is ahead on regulation:

More than 30 US states this year are considering legislation to address PFAS, according to Safer States, an environmental advocacy group. Bills in California and Maine passed in 2022 and 2021, respectively. (FT)

Canada, one of the leading laggards recently in the regulation of anything bad for people is still looking into it and just starting to think about filtering our drinking water.

Really, the Canadian government is dragging its feet with a consultation process that ends after the 2023 federal budget. Consultation process that started in 2021.

In the USA, the anti-Regulation group is called "Sustainable PFAS Action Network". The microchip company Intel is a major backer of the group.

It turns out that many industries are learning from the Oil and Gas sector's approach to spinning lies and pushing against species-saving regulation.