1) Warsh and the Fed's Regain of Function

Our advice to incoming Fed Chairman Kevin Warsh is to move quickly on two institutional changes when he takes over the reins in a few months.

First, clean house. Start by cutting the bureaucracy by 30%, a number he has suggested.

The Fed board doesn't need 3,000 bureaucrats and hundreds of PhD economists, given all the mistakes it's made in recent years. They could have just as easily created 9% inflation with half that many people.

He will need to act quickly because the Empire is already conspiring to strike back.

Krishna Guha, a former New York Fed official, warned in the Financial Times that if Warsh tries "this restructuring plan in the spirit of Maga regime change, it will maximize resistance and opposition from the vast majority of the others in the system."

Kevin: know thine enemy.

Second, he's exactly correct that adding trillions of dollars to the Fed's now $6.5 trillion balance sheet "was the worst Fed mistake in 45 years." Speeding up the sale of these stranded assets would help to bring inflation down while boosting affordability.

2) Democrats Agenda for Virginia: Tax, Tax, Tax, and then Tax Some More

Democrats won a sweeping election in Virginia, and as we noted last week, they now control all the levers of power.  As a reward to voters, they have proposed raising nearly every conceivable tax. (A dog grooming tax? Really?) Here's the updated list of proposals tracked by WJLA News:

• Additional local sales tax in all Virginia counties and cities

• New personal property tax on electric leaf blowers and electric landscaping equipment

• Large employer tax

• Gun and ammunition tax

• New income tax brackets

• Delivery tax, which would hit Amazon, Uber Eats, FedEx, and UPS orders in Northern Virginia

• Investment income tax

• Event tax

• Storage facility tax

• Gym membership tax

• Dog walking tax

• Dog grooming tax

• Counseling tax [for those distressed by all the new taxes?]

• Digital personal property tax

• New car taxes and highway use fees

• Increase in the hotel tax in Arlington

• Statewide speed cameras (not a tax, but more fines for drivers)

• Vehicle repair tax

• Home repair tax

• Dry cleaning tax

3) Quote of the Day

If you want to understand WHY the Virginia Dems support all these taxes, here's a very cogent explanation (if you're smart enough to follow it) from Scott Surovell, leader of the Virginia Senate Democrats:

We could just tell localities like Fairfax County you need to pay more for Metro to keep the cost of Metro down so the fares don't become totally unaffordable. And what that means is that Fairfax County would have to raise its real estate tax, which is currently the highest tax in all of Northern Virginia - thirty percent higher real estate tax than Loudoun County. They'd have to raise it even further to pay Metro. Or we could come up with some other tax sources, of things that are sort of linked to Metro, and tax tourists, for example, things like hotel stays, where we could tax parking, which also, to some extent taxes tourists or other people that don't live in the county. You come up with some other taxing sources to pay for it, so that the homeowners aren't the only ones paying. And so that's what we're trying to figure out right now.

Editor’s note: We have a wild and crazy idea: Why not just cut Metro's expenditures?

4) The Grim Reaper and Taxes

The folks at the Family Business Coalition reminded us of one of the most beneficial features of the Big Beautiful Tax Bill that kicked in at the start of the year.

As a result of Trump's signature on that bill:

• the majority of family businesses across the country have been shielded from the death tax.

• the enhanced exemption thresholds of $15 million for an individual and $30 million for a couple have been made permanent.

• the exemption levels are indexed for inflation.

Recall that in 2001 the exempt amount was just $675,000 (about the cost of a medium-sized home) and the rate was 55%.

This is the least burdensome estate tax law in at least 25 years.  But for larger estates, the tax rate of 40% is still a menace.

And for what? The chart below shows that the tax does far more damage than the revenue generated, which is one percent of all federal receipts. The country would be much better off without it.

5) Welcome to the Latest Green New Deal Gambit

The climate change fanatics never give up.  

Here's their latest scheme as reported by Inside Climate News:

The proposed Illinois law would tax fossil fuel companies for causing floods and hurricanes and snowstorms - because that NEVER used to happen.

The bill's author, State Rep. Robyn Gabel, said: "The costs with climate change are going to be extravagant, and are going to end up on the backs of the taxpayers, as the oil companies continue to walk away with huge profits. Polluting companies should be responsible for the damage they cause."

Similar bills have been introduced in Rhode Island, Maine, and DC. New York and Vermont have already passed their versions.

These are simply disguised energy taxes that are passed on to blue state households that have a car or heat their homes. Then these same lawmakers complain about an affordability crisis.

6) Meet Virginia’s New Governor

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