Reason Roundup

California Fights Inflation by Sending People Free Money

Plus: A New Hampshire distiller fights invasive species by turning them into whiskey, a New York City law letting non-citizens vote is overturned, and more...

|

Gavin Newsom | CNP/AdMedia/Newscom
(CNP/AdMedia/Newscom)

California political leaders' latest plan to combat inflation involves flooding the state with free money. Late Sunday evening, Gov. Gavin Newsom, a Democrat, announced that he and the leaders of the state legislature had agreed to a budget deal that would send "inflation relief" checks of up to $1,050 to 23 million state residents.

"California's budget addresses the state's most pressing needs, and prioritizes getting dollars back into the pockets of millions of Californians who are grappling with global inflation and rising prices of everything from gas to groceries," said Newsom, Senate President pro Tempore Toni G. Atkins (D–San Diego) and Assembly Speaker Anthony Rendon (D–Lakewood) in a joint statement.

Every taxpayer earning less than $75,000, or joint-filers earning less than $150,000, will receive a $350 check, plus another $350 if they have children, reports CBS. A married couple with children would qualify for the maximum of $1,050. Higher-income people would receive smaller refunds.

The checks are the most advertised portion of a budget deal totaling some $300 billion. They help dispense with a $97 billion budget surplus buoyed by unexpectedly high tax returns from the highest-income Californians.

It should almost go without saying that giving out individual stimulus checks is more likely to exacerbate inflation than cure it. The $1.9 trillion American Rescue Plan, passed in March 2021, which included $1,400 stimulus checks, is estimated by one Federal Reserve Bank of San Francisco analysis to have raised inflation by 3 percentage points.

The rising prices that the checks are intended to address also mean that most of this stimulus money will be spent, increasing demand and therefore prices. That's particularly true given that lower-income households, which are more apt to spend any additional dollars they receive, will receive the largest payouts.

Meanwhile, these checks do nothing to address the loose monetary policies, supply chain issues, and limited global oil supply that are alternatively fingered as the causes of our nearly 9 percent inflation rate.

One reason the state is sending "inflation relief" checks to people is that it sort of has to. A provision of California's state constitution known as the Gann Limit, caps per capita spending growth at particular levels and requires government surpluses that exceed those limits be returned to taxpayers, spent on education, or redirected to exempt spending items like infrastructure.

The budget deal worked out by state leaders spends money on all of the above, with the checks being the headline item.

One possible libertarian defense of "inflation relief" checks is that, while they are a terrible solution to inflation, they at least are putting money in the hands of individuals to spend. The alternative is politicians will decide where the money goes, so surely, it's better to return people's unjustly confiscated earnings.

The trouble with that line of thinking, though, is that California is flush with cash because of higher-than-expected tax receipts from high-income earners. Those high-income earners will receive little or none of the benefits from these inflation relief checks.

Instead, it's largely a redistributive program for low- and middle-income people. While they receive the larger share of the benefits from the checks, they'll also be most proportionally harmed by any additional inflation the new spending causes.

One lesson politicians learned from the pandemic is that free money is popular. They're having a hard time letting go of it, despite its obvious consequences.

FREE MOVEMENT

The discovery of a truck full of dead migrants in Texas is a horrific reminder of the deadly toll of immigration restrictions. On Monday afternoon, officials in San Antonio, Texas reported that 46 people had been found dead in an 18-wheeler near Lackland Air Force Base. Another 16, including 12 adults and four children, were hospitalized from heat exhaustion.

The Texas Tribune captured some of the horror:

According to a law enforcement official, it appears people were trying to jump out of the tractor-trailer because some of the deceased were found along several blocks. The tractor-trailer had a refrigeration system, the official said, but it did not appear to be working. Many of the people found inside the vehicle appeared to have been sprinkled with steak seasoning, the official said, in perhaps an attempt to cover up the smell of people as the smugglers were transporting them.

Authorities said the truck's doors were partly open when they arrived; a body was outside the vehicle and the rest could be seen inside. The city's fire chief, Charles Hood, said the survivors did not appear to have access to water and were too weak to exit the truck on their own.

"We're not supposed to open up a truck and see stacks of bodies in there," Hood said. "None of us come to work imagining that."

Twelve adults and four children were taken to hospitals. They were hot to the touch and were suffering from heat exhaustion and heat stroke, but Hood said he was "very hopeful" that they would survive.

Texas Gov. Greg Abbott, a Republican, was quick to blame the deaths on President Joe Biden's alleged "open borders" policies.

The governor didn't explain why people would be traveling in the back of a deadly hot truck to the U.S. if the country did, in fact, have open borders.

FREE MARKETS

If you can't beat them, drink them. A New Hampshire distiller is combating an invasive green crab species by turning the little guys into a whiskey.

Reports the Associated Press:

Searching for a fresh flavor, Tamworth Distilling cast its eye to the sea. Distiller Matt Power said the company heard about the problems caused by the invasive green crabs from the University of New Hampshire Extension's Gabriela Bradt.

The crabs, which came over on ships from Europe in the mid-1800s and landed on Cape Cod, have taken the region by storm. These saucer-size crustaceans with a murky green color have decimated the area's marine ecosystem, outcompeting native species for food and shelter.

The crabs are caught off the coast of New Hampshire, boiled down into a broth, mixed with alcohol, and put through the distilling process. It takes about one pound of crabs to make a bottle of this whiskey.

QUICK HITS

  • The Great Stagnation is back. Federal regulators ordered the recall of solar-powered umbrellas (?) exclusively sold at Costco after 5 of them caught fire.
  • An Amtrak train derailed after colliding with a truck at a public crossing in Missouri, leaving three people dead and 50 injured. Federal Railroad Administration data show that there have been 40 accidents at highway-rail crossings so far this year, and another 15 on-track collisions.
  • A Russian strike on a Ukrainian mall has killed at least 20 people and injured another 59, according to Ukrainian officials. Another 40 are still missing.
  • A state judge overturned a New York City law that gave some 800,000 non-citizens in the city the right to vote in municipal elections, saying that the state constitution limits the franchise to U.S. citizens and that a referendum would be required to change that.
  • A ballot initiative enshrining the right to an abortion in California's constitution will go before voters in 2024. Those rights are already secured by statute. Democratic Gov. Gavin Newsom also signed an executive order restricting the sharing of patients' medical information with officials in states with stricter abortion laws.
  • Scottish officials push for a second independence vote.
  • Federal agents seized the phone of John Eastman, the lawyer who masterminded former President Donald Trump's effort to overturn the results of the 2020 election.
  • Speaking of inventive spirits, a D.C. distillery has released a Ruth Bader Ginsburg–inspired, pastrami-flavored Dissent gin. The proceeds from sales of the gin (should there be any) will go to supporting abortion access, reports Washingtonian.