About a trillion of that is unused covid stimulus, on the Treasury account. And about a trillion traces back to corporate cash, mainly the big tech firms who got the investment money. The external funds have started to exit the dash for cash and dropped a half trillion from the height.
The corporate cash is mainly stock market, skewed to big tech, due to the online nature of the shutdown. We are, or were, back to 2018. Except now we have a second lock down.
The rest of the panic is about municipalities, few of whom have the credit ability to get through this up and down. In 2018 we had the usual budget constraints, and n 2021 I expect the same. The only real change is the one time cost of covid, large, and the usual regularly scheduled tax battle, almost a replica of 2011.
Anyone who thinks Biden and Yellen can go on a stimulus spree is going to be mistaken. Nothing happens during tax battles. This will be a long and nasty tax battle at the Swamp. The genie does not go back the same way. Along with the tax battle is that Fed tax, now expected to be two percent. That is a great complicator. Retail sales taxes will be slow to recover.
Each quarter Treasury write two checks to each state, one according to districts and one per state. The split, ratio and amount decided once per year. Emergency variants allowed however the negotiations go.
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