How are we going to pay for all this shit?

[Why_Yes_I_Do]

1st of all, I would defer to TC over me on any day of the week and twice on Sundays. 2nd, your prowess on money math and macro stuff, leaves me in the shadows.

I'll read the full article later (thx). I would start out with: What does a $500,000 home in Houston and California have in common? Nothing! For $500K in Houston, you likely get a pretty fabulous place (much like Speedy got in G'town recently). In California, it is likely a 1920's 1 bed, 1 bath fixer (a Tiny Trashy home).

Total tax burden is a better comparison between 2 States, as opposed to just property tax. California has a high overall tax burden. I suspect they have a tax on how much tax you pay ;-) Texas has historically had a high property tax rate, but low on other things (no income tax). Good news is that this past year, Texas lowered property taxes substantially, especially the school district tax. While I think there are other reforms to be had, my property taxes went down nicely. Though Texas has a cap on increase on property tax at 10% YoY, plus a freeze on increase once you hit 65 yrs old.

As mentioned previously, new homes are possible in Texas. In California? Not so much. There is a weird wrinkle in the "greater" G'town area ATM. For comparable size homes, the prices are pretty close for a 40 year old house, that needs some fixing between G'town and Austin. For the same base price, you can get a brand spanking new home (never lived in) between G'town and Cedar Park, with master planned new parks, schools, pools etc., etc. all with a 2 year warranty.

Obviously, loads of "other" dynamics at play. EX: G'town has been the fastest growing city for towns over 50K population for a few years. Remains to be seen the impacts after a few more years. However, when there is new construction going on, there is also new construction going on for roads and services. Think new stores and shopping etc. In other words, a lot of new investments ($$$) being poured in to the area.

Sos I axe ya: You want a fabulous new joint with new everything inside/outside and down the street or ya wanna Tiny Trashy joint?

Originally Posted by Tiny

WYID, I'm a babe in the woods compared to you and TC on the subject of real estate, but thought this might be of interest to you, about house prices in California. It's from this week's Economist and is relevant to both "How are we going to pay for all this shit," and "How are we going to pay for our houses."

As it stands, the overall tax burden on Californians is the fifth-highest in the country, according to the Tax Foundation, a think-tank. The one area where the state’s tax revenues are low—absurdly so—is on property because of a law, passed by popular vote in 1978, which has led to homes being assessed well below their market value. That in turn contributes to inflated housing prices in California, pushing yet more people away from the state.

The average property tax rate in Houston is 2.13% versus 0.75% in California. Say you pay $500,000 for a house and own it for 30 years, and there's no increase or decrease in property values. If it's in California, you'll pay $112,500 in property tax over the next 3 years, versus $319,500 in Houston. The total cost of acquisition plus taxes is $612,500 for California and $819,500 for Houston. So their argument is people in California can/will pay more for a house because the taxes are lower. If they're right, it goes a little of the way towards explaining your graph.

One fulcrum that could dramatically alter California’s fortunes is the property market. Housing has become more unaffordable throughout America over the past decade but California continues to claim the dubious crown as the least affordable big state. The price-to-income ratio for buying homes is 12 in San Jose and 11.3 in San Francisco, double the national median, according to researchers at Harvard University. The root cause is a lack of new housing. Mr Newsom is well aware of this and has sought to kick-start construction. Since 2017 lawmakers have passed more than 100 separate pieces of legislation to make it easier to build homes. But the results have been dismal so far. Construction permits have plateaued at about 110,000 housing units per year, far short of what California needs.

Instead, the property sector stands as an example of how California often ties itself in regulatory knots. The state has sped up its notoriously cumbersome environmental reviews for housing, especially for affordable projects. Yet to benefit from this provision, companies must demonstrate that they are using highly skilled workers at prevailing wages—a requirement that in practice compels them to hire union contractors. Alexis Gevorgian, a developer, calculates that this can increase costs by as much as 40%, turning affordable housing into a guaranteed loss-making venture. “The expedited reviews themselves are useless unless you get a subsidy from the government,” Mr Gevorgian says. One of the things on the chopping block as California looks to close its budget deficit? About $1bn of funding for affordable housing, including subsidies for developers. California is no failed state. But it certainly is a struggling one.

The rest of the article is interesting. Unemployment in California is above 5%. Unlike the rest of the country, there are more people looking for work than there are unfilled jobs. People, especially the wealthy who are fed up with the taxes, are leaving the state. Income tax collection was down 25% last year. The deficit is on track to hit $78 billion, far higher than the state's earlier $38 billion projection.

California's anti-free market policies seem to be catching up with it.

https://www.economist.com/united-sta...-easy-solution

[Tiny]

Originally Posted by Why_Yes_I_Do

Sos I axe ya: You want a fabulous new joint with new everything inside/outside and down the street or ya wanna Tiny Trashy joint?

I want a fabulous new joint with new everything inside/outside and down the street!

Interesting and informative reply WYID, thanks for taking the time to write it.

So in Texas we have lower taxes, much cheaper housing, and a higher standard of living. And no Californians! Maybe some transplants, but that's OK, because they saw fit to move to God's country.

Originally Posted by eyecu2

It was my understanding that the pricing of Real estate was part n parcel of the laws of supply and demand. So, not sure that a change in POTUS is the change that would trickle into inventory or demand, as much as a change in loan rates would have a direct impact.

As to the 2024 election and the next 5 years, I agree, 100%! In the longer term, I could see Democratic-controlled government pushing up housing prices more than Republican government. See the Economist excerpt above about environmental reviews, regulatory hurdles and union labor in blue California.

[Why_Yes_I_Do]

RE: See the Economist excerpt above about environmental reviews, regulatory hurdles and union labor in blue California.

I tried No can do. I don't want to subscribe to read it.

Originally Posted by Tiny

I want a fabulous new joint with new everything inside/outside and down the street!

Interesting and informative reply WYID, thanks for taking the time to write it.

So in Texas we have lower taxes, much cheaper housing, and a higher standard of living. And no Californians! Maybe some transplants, but that's OK, because they saw fit to move to God's country.

As to the 2024 election and the next 5 years, I agree, 100%! In the longer term, I could see Democratic-controlled government pushing up housing prices more than Republican government. See the Economist excerpt above about environmental reviews, regulatory hurdles and union labor in blue California.

I'm still trying to figure out how to respond to ECU2. Too many fallacies in the post to easily wrestle it to the ground. While I am not a "joiner", I'm also not a quitter - so maybe I'll cobble something up later.

[Tiny]

Originally Posted by Why_Yes_I_Do

RE: See the Economist excerpt above about environmental reviews, regulatory hurdles and union labor in blue California

I tried No can do. I don't want to subscribe to read it.I'm still trying to figure out how to respond to ECU2. Too many fallacies in the post to easily wrestle it to the ground. While I am not a "joiner", I'm also not a quitter - so maybe I'll cobble something up later.

It's in the second excerpt in the post. See bold text below. Apparently the lawmakers are trying their best to cut the red tape, but they just can't help fucking it up. I bet the permitting and environmental hurdles are still a lot worse than Texas.

Since 2017 lawmakers have passed more than 100 separate pieces of legislation to make it easier to build homes. But the results have been dismal so far. Construction permits have plateaued at about 110,000 housing units per year, far short of what California needs.

Instead, the property sector stands as an example of how California often ties itself in regulatory knots. The state has sped up its notoriously cumbersome environmental reviews for housing, especially for affordable projects. Yet to benefit from this provision, companies must demonstrate that they are using highly skilled workers at prevailing wages—a requirement that in practice compels them to hire union contractors. Alexis Gevorgian, a developer, calculates that this can increase costs by as much as 40%, turning affordable housing into a guaranteed loss-making venture. “The expedited reviews themselves are useless unless you get a subsidy from the government,” Mr Gevorgian says. One of the things on the chopping block as California looks to close its budget deficit? About $1bn of funding for affordable housing, including subsidies for developers. California is no failed state. But it certainly is a struggling one.

[Why_Yes_I_Do]

I totally read what you posted and have decent understanding of Cali vs Texas generally, but also basic tax and real estate wise. In short they've been proper fooking themselves with green agenda commie schtuff for a long time.

Notwithstanding geography which brings along a whole other cadre of inconveniences - earth quakes, wild fires, mudslides (think building codes and permiting nightmares) not to leave out basic topology. Most of populated Komifornia live in valley next to the ocean. As such, it limits the foot print available to easily habitate. Their high speed trains to nowhere are legendary boondoggles and, let's be honest - the traffic sucks King Cong butt. EX: I s'pose you saw where a chunk of the 101 washed away this week It will eventually buff out. Ya. Sure. You betcha.

So I would say this: If you have to rely on a government subsidy to afford a place to live - you are already proper fooked to begin with. There is an old saying that I just made up: The thing worse than slavery (beholden to one employer for basic subsistence) is when you are a slave owed by two masters (beholden to one employer AND beholden to the government for basic subsistence)

Originally Posted by Tiny

It's in the second excerpt in the post. See bold text below. Apparently the lawmakers are trying their best to cut the red tape, but they just can't help fucking it up. I bet the permitting and environmental hurdles are still a lot worse than Texas.

Since 2017 lawmakers have passed more than 100 separate pieces of legislation to make it easier to build homes. But the results have been dismal so far. Construction permits have plateaued at about 110,000 housing units per year, far short of what California needs.

Instead, the property sector stands as an example of how California often ties itself in regulatory knots. The state has sped up its notoriously cumbersome environmental reviews for housing, especially for affordable projects. Yet to benefit from this provision, companies must demonstrate that they are using highly skilled workers at prevailing wages—a requirement that in practice compels them to hire union contractors. Alexis Gevorgian, a developer, calculates that this can increase costs by as much as 40%, turning affordable housing into a guaranteed loss-making venture. “The expedited reviews themselves are useless unless you get a subsidy from the government,” Mr Gevorgian says. One of the things on the chopping block as California looks to close its budget deficit? About $1bn of funding for affordable housing, including subsidies for developers. California is no failed state. But it certainly is a struggling one.

[SpeedRacerXXX]

Originally Posted by Why_Yes_I_Do

The big question often is: Why would you sell a mortgage at say 3% and turn around and pick one up at 7+%?

And that is the primary reason why the real estate market is still in the doldrums. The fed is predicted to be lowering the interest rate in the near future, possibly 3 times this year. Of course, Trump, who wanted to see the interest rate at zero when he was in office, is now complaining about the fed lowering the rate with an election coming in November. Pure politics.

[Tiny]

Originally Posted by Why_Yes_I_Do

Notwithstanding geography which brings along a whole other cadre of inconveniences - earth quakes, wild fires, mudslides (think building codes and permiting nightmares) not to leave out basic topology. Most of populated Komifornia live in valley next to the ocean. As such, it limits the foot print available to easily habitate. Their high speed trains to nowhere are legendary boondoggles and, let's be honest - the traffic sucks King Cong butt. EX: I s'pose you saw where a chunk of the 101 washed away this week It will eventually buff out. Ya. Sure. You betcha.

Good analysis of some more reasons why the prices of houses are so high in California, and more proof that GOD BLESSED TEXAS, relatively speaking.

[Why_Yes_I_Do]

Originally Posted by SpeedRacerXXX

And that is the primary reason why the real estate market is still in the doldrums. The fed is predicted to be lowering the interest rate in the near future, possibly 3 times this year. ...

Wait! Whut?!? I thought someone told me the inflation thing was a hoax. No. Wait! It was transitory. Yeah that's the ticket! T-r-a-n-s-i-t-o-y.

Rates contribute. Shuttering a robust economy contributes. Borrowing other peoples money to give to other people contributes. Paying off young voter's student debt for worthless degrees with borrowed other peoples money contributes. Importing a million or so illegal aliens and supporting them contributes. Countless and unaccountable dollars by the billions, tossed over to corrupt governments contributes. (and we aren't even talking about the colonialism of other peoples wars) A whole lot of things contribute. All the carping, yet no one ever says it was entirely predictable, based upon the preceding factors. Go figure!

But rest easy, Nancy Pelosi's hubby is kill'n it in the stock market.

[Tiny]

Originally Posted by Why_Yes_I_Do

I now know that I agree with me that this should probably have been posted in the How are we going to pay for all this shit? thread. It's a great thread except for all those annoying pop-up ads for The Church of Tiny, grovelling for $$.

But to loosely answer, I need to summon up The Ben Bernake <hocus pocus>, from an interview he did on May 17, 2022 In short, the Federal Reserve seems hell bent on running around, holding a limited arsenal of dull knives, whereas Dimon is a money manager, of some repute, who is focused on making money, no matter how stupid the world economics are. I see him as a bird watcher, noticing a flock of Black Swans migrating overhead, full well knowing that one or two are likely to land in his swimming pool.

LOL! The bold text.

[Tiny]

Yesterday, President Biden said, "We're in a situation where we're better situated than we were when we took office where inflation was skyrocketing." He appeared to be speaking from notes -- I don't think that was off the cuff.

Well, that's complete B.S. When Biden took office in January, 2021, YoY CPI inflation was 1.4%. In February, it was 1.7%. Then in March he and Congressional Democrats passed the American Rescue Plan. The government sent out $1400 checks to most American men, women and children in March. The March CPI number was 2.6%. By June inflation was running 5% per year. Compare to 1.9% for the EU, -0.5% for Japan, and 1.1% for China.

So all that Biden money not only ran up the national debt, but it also kicked off inflation in the USA earlier than the rest of the world. Ace Democratic Party economists Larry Summers and Jason Furman, who advised Clinton and Obama, shouted from the rooftops that excessive stimulus was going to have that effect. But to no avail, as Biden's progressive advisors who came over from Elizabeth Warren's team weren't listening.

I wonder if Biden actually believed what he said yesterday. Or was it just spin (that is, a lie) in response to the CPI figures for the last two months, which came in at 0.4%/month.

[adav8s28]

Originally Posted by Tiny

Then in March he and Congressional Democrats passed the American Rescue Plan. The government sent out $1400 checks to most American men, women and children in March.

The $1400 check that was sent out, was a Trump idea that Trump could not follow through on because Sen McConnell blocked it. Sleepy Joe and Kamala got it done with the help from the voters in the state of Georgia, Ha Ha. To qualify for that $1400, your taxable gross income had to be less than $75,000 for a single person and you had to have filed a tax return with the IRS in the previous tax year. Did children of a qualified person or couple get a full $1400?

That check which was Trumps idea in the first place was not the main cause of inflation. The main reasons for inflation were two things: Supply chain problems caused by Trump mishandling the Pandemic and Putin invading the Ukraine. Super unleaded (93% octane) shot up to $5.25 a gallon in north Dallas after Putin invaded the Ukraine. The price of 93 octane went all the way down to $3.20 a gallon. Now it's back up to $3.75. So, price of gas has come down from it's high point. Just go look at a Gas Buddy chart.

Trumps tax cut for the 1% caused the Federal Budget deficit to go up. The deficit has decreased under Biden & Harris.


https://www.thebalancemoney.com/us-d...y-year-3306306

[eccieuser9500]

Even though I don't get all this shit, at least this thread is a good read.

Before I need to really go to sleep.

[eccieuser9500]

Originally Posted by Why_Yes_I_Do

Wait! Whut?!? I thought someone told me the inflation thing was a hoax. No. Wait! It was transitory. Yeah that's the ticket! T-r-a-n-s-i-t-o-y.

Rates contribute. Shuttering a robust economy contributes. Borrowing other peoples money to give to other people contributes. Paying off young voter's student debt for worthless degrees with borrowed other peoples money contributes. Importing a million or so illegal aliens and supporting them contributes. Countless and unaccountable dollars by the billions, tossed over to corrupt governments contributes. (and we aren't even talking about the colonialism of other peoples wars) A whole lot of things contribute. All the carping, yet no one ever says it was entirely predictable, based upon the preceding factors. Go figure!

But rest easy, Nancy Pelosi's hubby is kill'n it in the stock market.

For weeks, yes, weeks, that word was all over NPR. Yes NPR. I didn't get it then. And I don't care about it now.

Just thought it was funny with the "spelling-it-out" of transitory.

That's all. Please continue. Keep Tiny's thread going. So I can save on sleeping medications.

[Tiny]

Originally Posted by adav8s28

The $1400 check that was sent out, was a Trump idea that Trump could not follow through on because Sen McConnell blocked it. Sleepy Joe and Kamala got it done with the help from the voters in the state of Georgia, Ha Ha. To qualify for that $1400, your taxable gross income had to be less than $75,000 for a single person and you had to have filed a tax return with the IRS in the previous tax year. Did children of a qualified person or couple get a full $1400?

That check which was Trumps idea in the first place was not the main cause of inflation. The main reasons for inflation were two things: Supply chain problems caused by Trump mishandling the Pandemic and Putin invading the Ukraine. Super unleaded (93% octane) shot up to $5.25 a gallon in north Dallas after Putin invaded the Ukraine. The price of 93 octane went all the way down to $3.20 a gallon. Now it's back up to $3.75. So, price of gas has come down from it's high point. Just go look at a Gas Buddy chart.

Trumps tax cut for the 1% caused the Federal Budget deficit to go up. The deficit has decreased under Biden & Harris.


https://www.thebalancemoney.com/us-d...y-year-3306306

Originally Posted by eccieuser9500

That's all. Please continue. Keep Tiny's thread going. So I can save on sleeping medications.

Hi Adav8s28,

Texas Contrarian, Lusty Lad and I have corrected your misconceptions already, but maybe it's worth another go, to put eccieuser to sleep. I'm not so worried about the cost of his medications, but the health effects of the drugs are bad, except for melatonin. Eccieuser, I'm going to get started with an online cognitive behavior program for the same problem -- will let you know if it helps. But maybe just re-reading this thread is a better way to go to sleep.

You are correct, Donald Trump and the House of Representatives, led by Nancy Pelosi, spent like drunken sailors. McConnell and Senate Republicans were the only thing holding them back. The $1400 payment was indeed strongly backed by Trump in the fourth quarter of 2020, when he was president. Trump, like many other politicians, has no problem buying votes.

The full $1400 stimulus payment per adult and child went to single filers making less than $75,000, single heads of household making less than $112,500, and married couples making less than $150,000. The payments phased out completely at slightly higher levels of income.

To answer your question, yes, the family or head of household got $1400 for each child, and for adult dependents too, like college students.

You are correct, the $1400 payments weren't the primary cause of the inflation we've experienced since Biden took office. There was also other stimulus provided by Biden and Congress, like extended unemployment benefits, exemption from taxation for certain government payments, tax credits to employers which offered paid sick leave and family leave, increased food stamp benefits, large grants to small businesses, a huge amount of money for state and local governments and schools, billions for rental and housing assistance, billions for pork for transportation, billions for agriculture, and billions for health care. And that's just what was included in the $1.9 trillion American Rescue Plan. There was also the $1.2 trillion infrastructure bill, the $300 billion chips bill, and the $800 billion Inflation Reduction Act, which Goldman Sachs thinks will actually cost a lot more. Now I imagine there were some good things in all this legislation. I for one am all for helping poor children for example. But we way overdid the spending, especially on the corporate pork in the later bills.

My biggest problem with all that is not inflation though. It's that we're going to have to pay it back.

Yes, problems in the supply chain and with logistics, and excess demand also affected inflation, but not initially. By June, 2021, mainly as a result of the American Resucue Plan, year-on-year prices had risen 5%, compared to -0.5% to 2% for our trading partners. And that came out of the hide of the working man. During the first 6 months of the Biden administration, inflation adjusted median weekly earnings dropped by about 3%. And they're still not back to where they were when Biden took office. That's why Americans rightfully aren't happy with Bidenomics. Yeah, as you pointed out, some bought big screen televisions with their stimulus checks. But we and our children and our children's children will pay for the profligacy as we deal with the national debt.

I believe Texas Contrarian has posted that personal savings were around $2.4 trillion higher than the usual level in the summer of 2021, as a result of all the stimulus. As the money's come back into the economy, it's had an unfavorable effect on inflation.

The tax cuts that took effect in January, 2018 did not favor the top 1%. The percentage cuts in marginal tax rates, being 1-(rate after cut/rate before cut), were higher for lower and middle income people. Most likely, as with the Bush tax cuts, the rates for the top 5% or so will go back up in 2026, while the cuts will be extended for other Americans. That's happened for other tax cuts too, and is probably part of the reason we have the most progressive tax system in the developed world. And it's emblematic of why we'll never be able to pay for a European social welfare state. Taxes won't be raised on the middle class or upper middle class, and the rich don't have enough money to pay for everything the social democrats want.

I will say though that the members of the top 1% who have businesses with disproportionately high labor costs and depreciation costs, like Trump, did get a decent tax cut.

Now did the tax cuts cause the deficit to go up? Well, yes, initially. Recall a long overdue corporate tax cut also went into effect in January of 2018. In 2018 and 2019 corporate tax revenues plummeted. However now they're going up gangbusters. I'm too lazy to look it up, but if you do a search for NBER under username Lusty Lad or Tiny, you'll find a link to a recent paper written by eminent economists that shows the corporate rate cut increasing total tax revenues in the long run, after about 4 years I think. The increased revenues are more from higher labor taxes, as dropping the corporate rate has made American business competitive again, and increased employment and wages.

And, with the exception of the corporate tax cuts, most of the cuts sunset. Rates go back to where they were on January 1, 2026, although, again, I believe they will be extended for all but upper income taxpayers, regardless of who's in power.

[eccieuser9500]

I only made it to "the payments phased out completely . . . ."

I wanted to understand. But my eyelids got too heavy.