Universities Drop Entrance Test Scores: Harvard and Berkeley Lead Discrimination Against Asian

In 2019, the average SAT score among all test-takers was 1059 while the average score among Asian students was a much higher 1223. As a result of superior test performance, Asians, who account for only 5.6% of U.S. population, represent 21% of the Harvard student body and 35% of the U.C. Berkeley student population.

However, even this strong Asian representation at top universities hides the discrimination against Asians in their admission decisions resulting in the current case before the Supreme Court (Students for Fair Admissions, Inc. V. President and Fellows of Harvard College). In June 2021, the justices deferred a decision in this case while they await an opinion from the Justice Department under President Joe Biden. Under Donald Trump, the department sided with the Asian American plaintiffs.

In an effort to hide the overt discrimination, Harvard and more than 1,240 of the nation’s 2,330 bachelor’s degree granting schools, including Creighton University, have ditched required standardized test scores as an element of admission decisions. Joining the avalanche against standardized test scores, U.S. News and World Report ranked test-blind colleges in its 2021 ratings.

Unfortunately by dropping standardized test scores, universities more easily heighten discrimination against high-achieving Asian and Asian American students by relying on high school grades and other less comparable metrics rather than standardized test scores. The irony is that these test scores were introduced in the early 20th Century to reduce discrimination in college admission.

Affirming the importance of Asian’s superior test score performance, Asians have secured 50.1% of jobs in Silicon Valley’s tech sector which is ten times their share of the U.S. population. Importantly, nearby Stanford maintains its use of standardized test scores in admission decisions.

We non-Asian citizens must, instead of abolishing test scores, engage the real enemy, which is the dumbing down of America’s education which produces students with low standardized test scores. Ernie Goss https://tinyurl.com/mr386h6j

Manchin Saves Biden from His 3Bs: Build Back Better or Budget Buster Blunder?

Not since President Lyndon Baines Johnson’s 1960’s launch of his “War on Poverty” has an administration proposed such sweeping changes to the welfare state as Biden has in his 2021 with the “Build Back Better” (BBB) plan. Not surprisingly, LBJ and subsequent presidents pushed the federal debt for each U.S. resident from just over $1,600 in 1965 to almost $90,000 in 2021.

Despite Biden’s assertion that BBB would cost $0, the Congressional Budget Office (CBO), the official budget scorekeeper, estimated that even with budget gimmicks, BBB will expand the debt by $454.1 billion over the 2022-31 period.

BBB is on top of four major Trump and Biden 2020-21 stimulus programs and Federal Reserve (FED) expansion efforts.

These programs sprouted:

*A 2021 budget deficit of more than $2.77 trillion, the second highest on record. Primarily responsible for the ballooning deficit and debt were:

**2020’s $3.6 trillion stimulus,

**2021’s $1.9 trillion stimulus,

**and a yet-to-get rolling $1.2 trillion infrastructure program passed in 2021.

In order to support the spending packages, the FED purchased $4.5 trillion of U.S. Treasury bonds, and reduced short-term interest rates to 0% - ¼%. This had the impact of increasing the money supply by 37.5%, and boosting the annual inflation rate from less than 2% to over 6%.

Due to the massive 2020-21 overspending, the U.S. debt will exceed $30 trillion by the end of 2021 even before the rollout of the infrastructure program and BBB.

Who pays, or will pay, for this fiscal indulgence? There are those in the political class that assume that, due to ultra-low interest rates, and the FED money creation, this lavish party has no end. But as the Nixon Administration’s Chief Economic Advisor, Herb Stein, once said, “If something cannot go on forever, it will stop.”

Current interest payments on the federal debt average a bargain 1.77%. Should rates on the debt rise to the post-2000 average of 3.48%, each U.S. worker would have to belly-up approximately $3,200, or federal spending would have to be slashed by approximately $485 billion, or a combination of both poisons.

Senator Manchin of West Virginia, by stopping BBB in its tracks, has saved Biden from his Budget Buster Blunder.

State Misery Indices (Updated): New York Most Miserable (Again), Utah Least Miserable

In the 1970s, Economist Arthur Okun created the Misery Index to calculate how the average U.S. resident was suffering economically speaking. It was calculated by adding the unemployment rate to the annual inflation rate.

In the accompanying table, I calculate a State Misery Index by adding each state’s current Covid-19 deaths per capita to the state’s most recent percentage of job loss since one month prior to the pandemic, February 2020. In the table, lower rankings indicate higher degrees of misery in the state. As in the March 2021 Economic Trends Misery Index, New Yorkers, once again, ranked number one in terms of the highest degree of misery, while Utah residents experienced the lowest level of misery.

In terms of employment, Hawaii experienced the greatest job misery with a loss of 13.0% of non-farm jobs, while Utah suffered the least job misery with a job shortfall of 3.0%.

In terms of Covid-19 death misery, Mississippi suffered the greatest misery with the Covid-19 death rate at 3.4 deaths per 1,000 in population, while Vermont suffered the least Covid-19 death misery at 0.6 deaths per 1,000 population.

Surprisingly, the 25 states with the greatest degree of misery had a higher full vaccination rate of 56.3%, or slightly lower than the full vaccination rate of 57.3% for the 26 least miserable states.

Estimated correlation coefficients reveal that there is a negative correlation between vaccination rates and Covid-19 death rates (i.e. higher vaccination rates, lower Covid-19 deaths), and that there is a positive correlation between vaccination rates and job losses (i.e. higher vaccination rates, higher job losses). Ernie Goss

“ONLY 4 OF 10 U.S. HOUSEHOLDS PAID 2020 FEDERAL INCOME TAXES: BURDEN FELL ON WORKERS MAKING OVER $75,000,” Ernie Goss

More than six out of ten U.S households paid no federal income taxes in 2020 due to declines in income, and boosts in government subsidies that wiped out tax liabilities.

According to the Urban-Brookings Tax Policy Center, 106.8 million households escaped the federal income tax. This was up from 75.9 million in 2019. Brookings estimates the number of families owing no federal income taxes for 2021 will decline only slightly to 101.7 million, or 57.1%, owing a net $0.00.

And contrary to President’s Biden’s claim that high income workers are not paying their fair share, and should pay more, the data show the opposite. According to the Tax Policy Center, the top 20% of taxpayers paid 78% of federal income taxes in 2020, up from 68% in 2019. Furthermore, the top 1% of taxpayers paid 28% of taxes in 2020, up from 25% in 2019. And the trend over the decades has not been kind to families experiencing improving income levels by requiring them to pay a rapidly rising share of the federal income tax burden.

For example, in 1979, the top one-fifth of income earners paid a tax rate which was approximately three times that of the bottom one-fifth of income earners. But 38 years later, the top one-fifth of income earners paid 20 times the tax rate of the bottom quintile of tax payers.

Did shifting more of the income tax burden on to high income earners reduce income inequality over the period? Emphatically not!

Between 1979 and 2019, the degree of income inequality, as measured by the U.S. Census Bureau’s Gini Coefficient, increased from 0.404 to 0.484 (a higher index indicates greater income inequality). But more importantly, not only has shifting the burden of income taxes from low to high income households failed to reduce income inequality, it has reduced the incentive to increase earnings via higher education/training, higher hours worked, or other work activities linked to income that benefit both the household and society.

Accordingly, President Biden should reconsider his economic plan which punishes high income workers with a greater share of income tax burdens.

Ernie Goss

The Six-Month President: From Ford to Biden

White House press secretary Jen Psaki recently celebrated the Biden Administration’s first six months in office by extravagantly declaring that “……the president has acted to get America back on track by addressing the crises facing this nation.” Continuing, she modestly declared that he had “rebuilt the economy.” But how does Biden’s first six months actually compare to that of his 7 predecessors?

In the table below I rank each of the U.S. presidents beginning in 1975 to today according to growth in the overall economy, jobs and in inflation adjusted wages for the first 6 months of their presidency. Also to gauge whether each president got “America bank on track,” I compare each’s growth rate to the last 6 months of their predecessor.

GDP growth estimates listed in Table 1 indicate that President Carter experienced the top first 6 months with President Biden occupying a very close second. However, GDP growth under Biden suffered the largest negative turnaround with GDP declining by 5.6% between the last 6 months of Trump and the first 6 months of Biden.

Job growth estimates listed in Table 1 indicate that Biden experienced the top 6 month beginning with Carter capturing a close second. Additionally, Biden’s job growth was second only to Carter in terms of increases over the previous 6 months of the Trump by 0.59%.

Average inflation adjusted wage growth estimates listed in Table 1 show that Biden suffered the worst experience in the first six months among the 7 presidents with Trump experiencing the top average inflation adjusted wage expansion in the first 6 months of occupying the White House.

Despite the fact the president lacks even modest control over national economic measures in the first six months, pundits and the median continue to gauge and compare the president’s effectiveness by economic metrics over which it is argued that he and his predecessors have had little control. On these measures, President Biden has clearly not “rebuilt the economy.”

Federal Government & Federal Reserve Supercharge the Economy: When & How Does It End?

The U.S. pandemic, beginning in early 2020, ushered in an unmatched flood of federal government overspending and record Federal Reserve (FED) stimulus.

With a compliant Congress, the Trump Administration increased an already bloated federal deficit by $1.22 trillion in one year. Not to be outdone, the Biden Administration expanded the deficit by more than $2.1 trillion in only six months. During this period of time, the FED slashed short term interest rates from 1.75% to 0.0% and purchased $4.3 trillion of federal debt and mortgage-backed securities in order to reduce long-term interest rates to record lows. During the pandemic, these actions increased the money supply by 28.1% and reduced the value of the U.S. dollar by 3.4%. So, what were some of the other outcomes?

Inflation and asset bubbles sprouted. The year-over-year consumer price index (CPI) climbed from a pre-pandemic 2.3% to the most recent reading of 5.5%, well above the FED’s pre-pandemic target of 2%. Additionally, the record high spending, low interest rates, and surging inflation have pushed investors into riskier bets. For example, in only 12 months, the Case-Shiller national home price index soared by 14.0%, the S&P stock index rocketed by 38.6%, bitcoin ballooned by 270.1%, and gold increased by 12.6%. Meantime, the overall U.S. economy barely nudged with the inflation-adjusted GDP actually down by 0.9%.

So, what’s the problem? The FED cannot sit idly by as inflation rips through the U.S. economy. Higher Inflation and interest rates will degrade U.S. stock prices forcing stocks to a more reasonable price to earnings ratio. Meanwhile, inflation will be supportive of cryptocurrency, gold and silver prices, even as higher interest rates moderate their gains.

Despite the evidence, the FED continues to plead their case that year-over-year CPI growth was just as high in July 2008. However, they fail to also acknowledge the FED’s short-term interest rate was 2.0% in July 2008 compared to today’s 0%.

Thus, there is currently much more FED stimulus for even higher inflation. To quote Eisenhower Administration economist Herb Stein, “If something can’t go on forever, it will stop.” So, what will stop or thwart these Goldilocks investment gains? Higher interest rates as early as Q4, 2021, that’s what!

Many economists, including yours truly, expect these out-sized gains to be flattened or even reversed when the FED begins raising long-term interest rates (tapering) as early as Q4, 2021. Strap on your financial seat belt-the economic landscape will get bumpy. Ernie Goss

Biden’s 'War on Work' Doubles LBJ’s 'War on Poverty': Who Pays for It? Today’s Youth!

Much like President Lyndon Baines Johnson’s 1964 launch of his “war on poverty,” President Biden, since his inauguration, has authorized $1.9 trillion in stimulus spending, and released his fiscal 2022 budget for $6.0 trillion in what could be termed his “war on work.”

In 1964, LBJ pushed the United States Congress to pass the Economic Opportunity Act, which opened the floodgate of 40 federal programs targeted against poverty. Much like LBJ’s explosive federal spending expansion, the New York Times portrayed Biden’s spending foray as "an attempt to expand the size and scope of federal engagement in Americans' daily lives." In his 4 years in office, LBJ advanced federal spending by 14% per year, and expanded welfare outlays by roughly $800 billion per year. Biden has almost doubled that growth in his first budget year alone by boosting federal spending by 26% compared to pre-pandemic levels.

Biden’s 2020 so-called stimulus spending of $1.9 trillion added $300 per week in unemployment pay on top of regular jobless benefits, plus $1,400 per individual in stimulus checks, and $3,000 per child in financial assistance (all discouraging work). In a recently completed study, Mulligan, Antoni, and Moore concluded that in 19 states, a household of four with two unemployed workers can receive $100,000 in equivalent pay without working (Committee to Unleash Prosperity, White Paper #8).

And who pays for this fiscal indulgence? Between 1964 and 1968, LBJ funded his War on Poverty by raising the nation’s federal deficit as a percent of GDP from 1.0% to 1.5%. Biden, to fund what is termed here as his War on Work, has proposed raising deficit spending as a percent of GDP from pre-pandemic 4.8% to approximately 9.9%, the highest since World War II.

Furthermore, Biden’s Plan would also push the debt held by the public (not counting internal debt) to 111.8% of GDP eclipsing the level suffered in the wake of World War II.

Ultimately the nation’s youth will pay for this overspending via either higher inflation, advancing interest rates and soaring taxes, or a combination of all three.

Ernie Goss