Friday, April 28, 2017

David Brooks Tells Us Not To Worry About Trump

David Brooks is not a Trump fan by any means, but he no longer worries about him.  Trump is really not presidential material but Brooks has decided that he is not dangerous.  In a sense he is too incompetent to be dangerous.  He also has no real ideas.  He moves from one idea to another because he is willing to do almost anything just to make a deal that will put him in the spotlight for a TV moment.  His economic policies are nothing more than conventional Republican ideas warmed up from their 1984 origin in the Reagan administration.

I think that Brooks was most worried about Steve Bannon's influence which seems to have disappeared.  Brooks is no longer concerned about Trump's revolutionary potential.  Trump will not provide American leadership to the right wing populists who are a threat in Europe.  That went away with Bannon.

Since we no longer have to worry about a Trump inspired revolution we can rest more easily.  We just have to live with a shallow president for the next few years.  Brooks is now willing to live with a TV personality in the White House who us unlikely to do any real damage, or anything good during his occupation.  I wish I were more certain about that outcome.  There are too many things that can go wrong in an unsettled world to rest easily with Trump in the White House and with a Republican congress that hopes to take advantage of the presidency.  When the blind are leading the blind we are not well prepared to deal with many of the domestic and international problems that are likely to arise.

Thursday, April 27, 2017

Le Pen Borrows From Trump's Strategy To Increase Her Chance To Win

Le Pen is behind in the polls by 20%.  Most of the candidates that did not qualify for the run off election have endorsed her opponent.  The exception is the left wing candidate.  He is like the Bernie Sanders of the US election.  Many Democrats who supported Sanders in the primary campaign chose not to vote in the general election or they voted for a third part candidate.  That may have been enough to enable Trump to narrowly win three blue states that allowed him to get enough electoral college votes to win the election.  That is probably the  only way that Le Pen can win the election.  That is reflected in her campaign speeches.  She is telling left wing voters to stay home.

Trump's Base Will Not Benefit From His Tax Plan

Trump is bragging about his tax plan like he brags about lots of things.  He claims that he is proposing the biggest tax cut in history.  His plan would cut taxes substantially but it won't help most of the people who voted for him.  He offers a few crumbs to some modest income households, but his plan is designed to help people like him.  The plan eliminates the alternative minimum tax which raised his tax rate in 2005 as well as others in his tax bracket.  It eliminates the estate tax, which only affects couples with estates above $11 million,  and he reduces the top corporate tax rate from 35% to 15%.  Some types of corporations are actually taxed at that rate but the effective corporate tax rate is around 18%. They are able to deduct lots of expenses from their gross income.  More than half of our large corporations pay no corporate taxes.

Trump's tax plan will also drastically reduce federal tax revenues.  His advisers argue that the tax cuts will stimulate the economy which will pay for the tax cuts.  That is shear speculation.  Most economists believe that tax cuts have only a modest effect on economic growth.

Trump will do what he usually does to sell his tax plan.  He will lie to his base. He arguing that the tax cuts will create jobs.  That won't happen, but his base tends to believe his lies.  Moreover, his tax plan will reduce federal tax revenues and cause the government to borrow money if it wants to continue funding social welfare programs that protect many of his supporters.  That will cause federal debt to increase dramatically.  Trump promised to reduce federal debt, that he blamed on Obama, during his campaign.  He could care less about that promise.  Some Republicans will use the increase in debt to justify cuts in social welfare spending.  However, most of them only worry about federal debt when a Democrat is in the White House.  We can't expect Republicans in congress to vote against Trump's tax plan.

Wednesday, April 26, 2017

Globalization Versus De-Industrialization As Populist Issues In The UK.

Globalization has been frequently cited as one of the major causes of unemployment.  It has also been used as one of the major factors in the Brexit vote in the UK.  This study argues that deindustrialization in the UK began in the 1950's ,well before the apex of globalization.  It shows that industrial output in several manufacturing industries has not substantially declined.  However,  the number of workers needed to produce the output has declined dramatically.  The loss of manufacturing jobs is primarily the result of productivity growth in manufacturing.  That is even true in Germany which has a trade surplus in manufactured products.  It takes fewer workers to manufacture the indstrial output in Germany.

The major problem with the loss of manufacturing jobs is that low skilled workers were paid well compared  to the wages available to low skilled workers in  many of the service industries such as retail.  High skill workers in many service industries have done very well.  This does not mean that high wage manufacturing jobs have not been lost to lower wage locations.  It argues that productivity growth and new technologies have been a major factor in deindustrialization and the subsequent shift that we have seen in the labor market.

Monday, April 24, 2017

How Have We Done Under Trump?

Jennifer Rubin is one of the Washington Post's conservative columnists.  She sums up the first 100 days of his presidency as follows:

As bad as Trump has been — in our book he’s been just as bad as we anticipated — democracy is faring better than we feared. Unfortunately, Republicans in Congress, again with some noticeable exceptions, have demonstrated they have neither the ability nor the will to check the president. They’d better step up to the plate soon or voters will conclude the only way to prevent further damage to the Republic is to vote for Democrats in 2018.
 She backs up the summary with a well written set of details to support her summation. Its hard to imagine Trump's future in government when highly respected conservatives like Jennifer Rubin, David Brooks and George Will have lost respect for him.  Party loyalty in Congress among Republicans who put Party over country is the only thing that he has left. 

Tear Down That Trump Wall

Ronald Reagan famously demanded that the Berlin Wall should be torn down.  Now Republicans and Democrats are telling The Donald not to build the wall that he promised his low brow followers during the election.  He told his followers that Mexico would pay for the wall but Mexico said no to The Donald.  The Republicans don't want to pay for an unnecessary wall either.  They want to move on to more important issues.  The Donald refuses to listen to anyone on this topic.  He needs to boast about an accomplishment to mark his first 100 days in office.  He has a "campaign rally" coming up in Pennsylvania and he has nothing to brag about.  That is probably because he has not figured out how to stop campaigning and start governing like a real president.  Does he really believe that his base in Pennsylvania really cares about his promise to build wall in a part of the country they have never been? 

Voodoo Economics Never Dies In The Republican Party

Donald Trump is not really a Republican.  He has no fixed ideas about anything.  He will support any idea as long as he can declare victory.  However, he won the election as a Republican.  He has a Republican congress and he is surrounded by Republicans in the White House.  Consequently, his policies are based upon an economic idea that George H. Bush called voodoo economics.  Some call it zombie economics because, just like a zombie, it never dies.  It doesn't die because the Republican Party has two contradictory goals.  It wants to cut taxes for its super rich donors but it also tries to sell itself as the fiscally conservative party.  That means that it cannot run large federal budget deficits.  Consequently, it argues it can reduce federal tax revenues and still pay the bills without borrowing money.  It can do this because the tax cuts will stimulate the economy and actually increase federal tax revenues.  The problem with this idea is that it has never worked in the past.  Its a zombie idea because it continues to live in the Republican Party.  Trump's treasury secretary just invoked voodoo economics to defend his tax plan.  He can cut taxes for the super rich without increasing the federal budget deficit.  Trump, of course, doesn't understand any of this.  He just wants to cut taxes and make everyone happy.  Moreover, Trump's business model is based upon carrying large amounts of debt.  Real estate developers call that leverage.  He could care less about federal budget deficits.