Photo Credit: Martin Falbisoner
By Phil Kerpen
Wouldn't it be nice not to wait days for checks to clear and funds to become available? Yes, and beyond the convenience for individuals it would be enormously beneficial for the U.S. economy, which lags behind Europe in real-time payments. For some cash-starved small businesses, funds clearing immediately can make the difference between workers being on the job or sitting at home.
So we should all be pleased that an effective real-time payments system is being developed and deployed in the United States. About 60 percent of all deposit accounts in the country are already connected to the commercially developed system called The Clearing House (TCH), which expects to cover about 90 percent of all U.S. banks by the end of the year.
But we should be dismayed that shortly after the Federal Reserve studied the issue and recommended that the banks develop a private sector real-time payment system, the Fed announced that it would itself build and deploy a system to compete with the private market. The regulator will also be a competitor, creating an inherently unfair playing field, and the systems are unlikely to be interoperable. Smaller banks will likely choose to participate in only one given the fixed costs involved, and that means a balkanized, bifurcated real-time payments system in which the sending and receiving account in many transactions will have to default to older, slower payment methods.
Worse, the Fed's system, dubbed FedNow but more accurately described by the Wall Street Journal as Chairman Jay Powell's Public Option, will take at least five years to develop, which will almost certainly slow adoption by banks that choose to wait for the Fed's system. That means the benefits of real-time payments will be delayed for years for many businesses and individuals.
Moreover, there is no lack of competition in the private sector that might justify the Fed stepping in as an operator. While TCH is poised to become widely accepted, it faces intense competition from existing private sector alternatives including Zelle, Mastercard Send, and Visa Direct.
As leading free market economists told the Fed earlier this year: "Generally, central banks and governments should not interfere in the payments market by operating their own services. Over the long term, government competition with the private sector will distort the market, stifle innovation, and ultimately harm services to banks and consumers. "
Nonetheless, the Fed is moving forward with its plan, which is presently open to the public for comment. Fed Governor Lael Brainard leaned heavily in her August announcement on the fact that 350 commenters supported the proposal, so it might be helpful if thousands of citizens now weighed in against it.
We've set up a simple form to facilitate comments toward that end on www.AmericanCommitmentFoundation.org.
Unfortunately, it is possible that the Fed – perhaps the most powerful and least accountable entity in the entire Federal government – will disregard skeptical public comments. And unless President Trump and the Senate can agree – after...
By Jon Decker
Many would agree that our political climate is more divided than ever before in our lives. One doesn't need to flip far through the channels to see how polarized Americans are on many different issues, and at times it can feel like we can't reach consensus on anything. Thankfully, for those hoping for Congress to accomplish something in a congenial, bipartisan fashion this year that will make a positive change in people's lives – recent legislation introduced by Representative Steve Scalise (R-LA) and Representative Anna Eshoo (D-CA) has the potential to do exactly that.
The Scalise-Eshoo "Modern Television Act of 2019" would save consumers money and decrease the number of television blackouts Americans face. This legislation repeals onerous cable regulations (dating back almost 30 years ago) that led to all-too-frequent blackouts for consumers attempting to view their desired television programs. Recent analysis shows that 2019 is will be the worst year ever for television blackouts, which serves as a strong call to action in an age of rapidly advancing technology. There has to be a better way to deliver content.
On this issue we find ourselves in unusual right-left agreement with Gigi Sohn, former adviser to Obama FCC chairman Tom Wheeler and our longtime opponent in the net neutrality wars, who said:
“The Modern Television Act of 2019 will ensure that Americans will no longer have to worry about losing access to marquee TV events like the Super Bowl, the Oscars and the Olympics because of retransmission consent battles between broadcasters and subscription TV providers."
It's about time.
Americans across the political spectrum are united by the frustrating experience of being faced with television blackouts.
The unfortunate status quo also inhibits the ability of cable companies to offer more competitive services against online streaming competitors such as Youtube or Roku.
Congress and President Trump should act expeditiously to enact this legislation and unlock lower prices and greater program selection for viewers. Let's hope that politicians will continue to work together in a bipartisan fashion to reduce this small but annoying inconvenience in our lives.
By Phil Kerpen
Recent comments by President Trump have thrown some cold water on hopes that he will soon order the IRS to index the capital gains tax, ending the taxation of phantom, inflationary gains.
"I've studied indexing for a long time and I think it will be perceived - if I do it - as somewhat elitist. I don't want to do that," President Trump recently told a gaggle of reporters at the White House.
Does that mean the president now disagrees with his top economic adviser, Larry Kudlow, who has doggedly pursued capital gains indexing for years? Does it mean advocates of the policy change should move on to something else?
The president's reluctance is directly related to dishonest headlines from the New York Times and elsewhere that frame indexing as a tax cut for the rich. The president is not concerned about the substance of the policy or his legal authority to implement it but rather the perception – the politics of it.
If there was any doubt that the president is still very much considering this big, beautiful tax cut that Nancy Pelosi can't stop, he put that to rest with a new trial balloon tweet just a week after his public comments. Trump asked if capital gains indexing was "An idea liked by many?," with a retweet of Steve Forbes linking to an article endorsing the idea written by Senator Ted Cruz and Americans for Tax Reform President Grover Norquist.
President Trump is conducting a live focus group on the issue. He wants to know whether the media frame about "another tax cut for the rich" prevails among his supporters and the general public.
So we need to engage that argument and defeat it. Fortunately the facts are on our side.
IRS data show 26 million tax returns paid capital gains tax in 2016, 80 percent of whom made less than $200,000 and 56% made less than $100,000. And that understates how widespread the benefits would be because the majority of American households own long-lived assets like homes, mutual funds, and stocks that they will sell someday, representing years and possibly decades of accumulated value. The year they sell they will be "rich" according to income – but only for that one year. Taxing years or decades of inflation because a family looks rich on paper for that one year is wrong.
As Norquist noted in another recent article, the widespread benefits of indexing would be especially beneficial to Trump's base: "The present capital gains tax is particularly brutal to older Americans who bought a home, built a small business or invested in the stock market before the hyperinflation of the late 1970s... Those damaged most? Older voters. Rural voters. Midwest voters. Homeowners. Self-employed small-business men and women. A.k.a.: Trump voters in swing states. Inflation is a larger part of the capital gains taxes they pay."
Democrats are howling at the thought of President Trump...