Monday, December 11, 2017

Why Tax Cuts Are The Wrong Medicine For US Economy

Larry Summers argues that the US economy is on a "sugar high" and that the medium term outlook cannot be improved by tax cuts.  They will be bad for the economy.

Trump points to the 24% rise in US stock prices but they are not the result of government policies.  They are driven by corporate profits.  That is part of our "sugar high" the rise in stock prices have boosted spending.  Moreover, growth in the US is lower than growth in much of Europe and Asia.  Investment has not been pouring into Trump's economy.  The dollar has dropped in value relative to the Euro and the Yen. 

Given that we are experiencing a "sugar high" what is our medium term outlook?  According to Summers it is not very good.  We have a low unemployment rate so there is no room to boost GDP by increasing the supply of labor.  The path to higher growth must come from an increase in productivity.  However, our major corporations are flush with cash and interest rates are very low.  Apparently, they don't see an opportunity to increase their investment rates.  Consequently, the public sector must expand in order to increase the productivity rate.  It would also help if we could grow the economy in a more equal fashion.  Instead inequality has been on the rise and we are making the tax system more regressive. 

Simpson and Bowles pointed out that US tax revenue should not fall below 21% of GDP to insure a healthy economy.  The Trump tax cuts reduce that healthy ratio to 17% of GDP.  There will be less room for public investments and productivity growth in that kind of fiscal environment.

Sunday, December 10, 2017

Fake News Can Be Hopful And Humorous

This video, set to the tune of the hit song from a James Bond movie, shows how easy it is to create fake news.  Its also very funny.  The title of the video is also a clever take off from a well known beer ad.

Friday, December 8, 2017

Democrats Should Ignore Low Information White Men And Sweep The Woman Vote

Jennifer Rubin is one of the conservative intellectuals on the Post who has been repelled by Trump's takeover of her political party.  Democrats have been brainstorming about how they can recapture the white males in the Rust Belt who jumped parties to elect Trump.  She argues that they would be more successful recruiting suburban women who voted for Trump.  She explains why they would find more switchable women taking yoga lessons than they might get from men in the Rust Belt who never expected Trump to do much more for them than other politicians have done.  She also provides some excellent messages that Democrats might use to sell themselves to women.  For example, it makes a lot of sense to explain how Trump's tax plan will make college more expensive for their children, or how it will make grad school more, and why Medicaid won't fund senior care for their parents, than it does to critique technical issues in the plan.

Donald Trump Has Over Achieved In One Area Beyond Dispute

A professor at that University of Virginia did a research project on lying behavior.  This is the only study that I have ever read on this subject. It is not a mainstream topic in academic psychological research. However, it does offer some unexpected insights.  For example, it classified lies into reasonable categories and it described norms on the frequency of lies within each category.  This article describes Donald Trump's lying behavior relative to the norms that it found in the general population.  Donald Trump has no peer as a liar.  He lies "bigly" compared to the general population and he excels in one particular category of lying.  A large percent of his lies were intended to harm others.  Most of our lies are intended to protect ourselves, or simply to get along with others.  Donald Trump has managed to convince a small percentage of Americans that he is truthful.  After all, we all tend to believe what we want to believe, and Donald Trump excels at telling a small percent of our population what they want to believe.  Of course some of his supporters could care less about whether he is lying or telling the truth.  They only care whether his lies serve their purposes.  That was good enough to put him into the White House.  We will have to see how long he prevails given his defenders in the media who earn their living serving the same market that Trump has targeted.  Some in their target market belong to places like Mar-A-Lago but most of them just want someone to tell them the lies that want to hear.

Davd Brooks Explains How He Lost His Political Home

David Brooks represented a political party that many thoughtful people, like himself and his NYT readers, could respect.  There were a core of ideas for which the Republican Party stood.  The Democratic Party embraced a different set of ideas, but the two parties could come together much of the time and do what was best for the nation.  Compromise was not a mortal sin.  That is no longer possible today because the Republican Party has lost its soul.  That was inevitable under a leader who exploited populism to satisfy his insatiable need for power and adoration.  Excellence is hierarchical, it can't be populist.  Donald Trump has no ideas, moral principles, or competence beyond hucksterism.  He has taken the Republican Party down to the level of his political base.  They only look upward in anger and despair.  They want to punish excellence and those who do not belong to their tribe.  Donald Trump has led the Republican Party downward and it has followed him gladly in pursuit of political advantage and personal gain.  They will welcome Roy Moore into the Senate in order to gain one more vote for a tax bill, or another seat on the Supreme Court or an opportunity to destroy what remains of President Obama's legacy.  David Brooks cannot join them in their downward spiral into the moral abyss they have chosen to pursue.  He is not alone.  Many of his colleagues and friends can only watch their chosen political party disintegrate with every Trump tweet or policy proposal.  They are all carefully designed to maintain his hold on his political base which has become the electoral foundation of the Republican Party.  Our position as a global leader is sinking with Trump and his followers in a political party without a soul, and without a moral compass by which to lead. Our former allies can only watch in despair as Trump and his political party descend into the abyss.  Many of them are like David Brooks and many other former Republican intellectuals.  Donald Trump and  his Republican allies have destroyed in one year a system of governance that took decades to develop.  It can only get worse as David Brooks and others like him abandon the Titanic.

Wednesday, December 6, 2017

How A "Reform Conservative" Can Live With Terrible Tax Plan

Ross Douthat, like his counterpart David Brooks,  supported Marco Rubio in the GOP primaries.  Trump clobbered "little Marco" in the primaries and "reform conservatism" died with him.  Douthat and Brooks have not been comfortable with Trumpism.  This op-ed by Douthat typifies the struggle that "reform conservatives" are having under Trumpism.  He tries as hard as he can to defend a deeply flawed Republican tax plan.  His first step is to admit that it is not a populist tax plan.  It is heavily weighted towards Republican donors and does nothing for struggling Americans who voted for Trump.  He counters this by supporting the corporate tax cuts, and the parts of the tax plan that raises taxes on upper class liberals in blue states.  Apparently, the plan would be fine if it had included one of the "reform conservative" proposals by Rubio to increase child tax credits for low income families.

I must admit that I do not have the brain power to follow Douthat's argument that minor changes in the tax plan would turn it into an a victory for reform conservatism, whatever that is. It is much easier to understand Trumpism and its architect Steve Bannon.  They have no interest "reform conservatism" they want to engineer an autocracy, led by Trump, with Bannon playing the role of chief propagandist who aligns Trumpism with its far right counterparts in Europe and with Republican's in Congress who only care about winning elections orchestrated by Bannon and featuring Donald Trump as its fearless leader.

Steve Bannon Assumes Leadership Of The New Republican Party

Donald Trump won the GOP primary, and the presidential election, by following Steve Bannon's strategy of attacking the GOP "establishment" and politically correct Democrats.  Bannon is still attacking the GOP establishment and working with Trump to build the GOP base around voters like those in Alabama.  Trump and Bannon support Roy Moore in the Alabama senate race.  Bannon is currently attacking Mitt Romney, for coming out against Roy Moore in the election.  He claims that Romney "hid behind his religion" to avoid serving in the Vietnam war.  Trump's base in Alabama does not respect Romney's Mormon faith and they don't like draft dodgers.  Trump, of course, dodged the draft during the Vietnam war by claiming a medical deferment due to bone spurs in his feet. Bannon understands that the new Republican Party is based upon voters who believe what they want to believe and that his job is to tell them what to believe.  He was forced out of his job in the White House but he has taken a leadership position in Trump's Republican Party as the head of Breitbart News which is leading the Alt Right movement in the US.  The Republican Party that Romney once led is dead.  It is dependent upon the electorate that Bannon is developing, and on billionaire donors who fund Republican campaigns so that they can capture the government.