House Budget Committee Seeks to Reform Emergency Spending as Senate Prepares to Raid Rainy Day Funds

by Romina Boccia and Dominik Lett, Cato at Liberty, July 24, 2024.

Excerpt:

The Senate is ready to raid the figurative emergency rainy day fund again. As we highlighted in a recent Debt Digest, Senate Appropriations Chair Patty Murray (D‑WA) and Vice Chair Susan Collins (R‑ME) have reportedly struck a deal to increase fiscal year (FY) 2025 discretionary spending by $34.5 billion by designating some ordinary spending as emergency funding. This is a common trick legislators employ to get around spending limits when sticking to a budget seems too politically difficult.

Over at the American Enterprise Institute, Jim Capretta has pointed out how Congress has already fully reversed all of the $1.3 trillion in 10-year savings from the June 2023 Fiscal Responsibility Act (as scored by the Penn Wharton Budget Model) when it included emergency designations in FY 2024 funding bills and passed the unpaid-for Ukraine-plus foreign aid bill.

 

Home-Based Businesses Win Relief From Regulators

by J.D. Tuccille, Reason, July 26, 2024.

Excerpt:

Recent years have seen a renewed surge in new small business start-ups after decades of slowing entrepreneurialism. Spurred by pandemic-era closures of large employers and in need of side hustles in the era of a higher cost of living, Americans are eager once again to be their own bosses. Standing in the way, though, are local regulations that often make it difficult to launch businesses out of private homes, where most startups are born. Fortunately, some localities are slowly getting out of the way. (italics in original)

 

The FTC Goes Evidence-Free

by Joel Zinberg, Wall Street Journal, July 23, 2024.

In this report, which addresses pharmacy benefit managers, the FTC argues that “amidst increasing vertical integration and concentration,” PBMs “may be profiting by inflating drug costs and squeezing Main Street pharmacies.” The qualifier “may” appears throughout the report, signaling a lack of empirical evidence and analysis to support its conclusions about PBMs. In fact, many studies, including several by the FTC itself, contradict those conclusions.

PBMs are private businesses that manage prescription drug benefits on behalf of insurance-plan sponsors. They negotiate with drug manufacturers and pharmacies. Manufacturers trade lower prices for formulary access and more sales. Pharmacies trade discounts and increased retailing requirements for favorable placement in plan networks and more customers. This selective contracting allows PBMs to obtain rebates and discounts that lower drug costs. It also allows them to encourage the use of drugs that are cheaper (such as generics), more effective, or both. While plan sponsors aren’t required to contract with PBMs, most do, suggesting they value PBMs’ services.

My own study for the Competitive Enterprise Institute, as well as studies by University of Chicago economist Casey Mulligan, found that PBMs foster competition that lowers drug costs. Mr. Mulligan estimates that PBMs produce at least $145 billion in annual value to society beyond their resource costs.

The whole op/ed is gated.

 

Effects of the Immigration Surge on the Federal Budget and the Economy

Congressional Budget Office, July 2024.

Excerpt:

The increase in immigration boosts federal revenues as well as mandatory spending and interest on the debt in CBO’s baseline projections, lowering deficits, on net, by $0.9 trillion over the 2024–2034 period (see Table 1).2  Some of the effects on the budget result from the increase in the number of people paying taxes and collecting federal benefits. Other budgetary effects stem from changes in the economy over that period that are brought on by the surge, including increases in interest rates and in the productivity of workers who are not part of the surge.

Venezuela: How Monetary Mismanagement Contributed to Maduro’s Weakness

by Daniel Raisbeck, Cato at Liberty, July 26, 2024.

Far less speculative are the root causes of Maduro’s current predicament. It is thus fitting to ask how the once-formidable Chavista regime, which was so certain of its grip on power that it attempted to export its revolution aggressively across the region, ended up with its back against the wall on its home turf, even in Hugo Chávez’s old regional strongholds. The following graphs, pertaining solely to inflation and currency devaluation, will provide some hints.