The Republican Strategy For Mid-Term Elections Is Not About Policy

The Republican Party passed a tax bill that primarily benefited wealthy voters.  They intended to run their election campaign on the tax bill by arguing that it was designed to help the middle class.  That strategy has worked for many years.  The GOP has learned that it is not working this year.  They have moved to a new strategy.  The Congressional Leadership Fund (CLF),  has raised $100 million to spend on the mid-term elections.  This article describes the thrust of their ad campaign.  They have switched to misleading and false personal attacks on Democratic candidates. 

Paul Ryan has used his position as the House majority leader to raise funds for the CLF.  He is retiring from a Republican Congress this November that he had led on the traditional GOP policies of cutting taxes for the rich which increased the federal budget deficit.  He then proposed cuts in social welfare programs to pay for the tax cuts.  His last goodbye from his leadership position is to bless the CLF strategy that worked for Donald Trump.  The basic idea is to get voters at GOP rallies to shout "lock them up" at Republican rallies.

Is There Enough Resistance To Trump?

By now we all know what has been printed in numerous articles about Trump before he was elected and after he took over the White House.  Bob Woodward's pulled most of them into a single book that describes how many White House officials have attempted to prevent Trump from doing more damage than he would have done without their resistance.  Donald Trump is not much different than the Trump who ran the Trump Organization.  This article argues that the resistance to Trump may have prevented Trump from doing more damage than he might otherwise have done but that was not enough.  Trump continues to attack our institutions and divide our nation every day that he is control of the White House.  He is not fit to be in the position that he holds and Republican leaders have done little to contain him.  They put party loyalty over our national interest.

They Came To Honor McCain And Bury The Republican Party

Donald Trump has taken command of the Republican Party by capturing a substantial portion of the Republican base.  They can't win primary elections if Trump turns his base against candidates that do not bow down before him.  They also depend upon votes from Trump's base in general elections.  They can't win general elections either without a big turnout from dedicated Trumpians.  Trump's dominance of the Republican Party was put on full display by the senator from South Carolina who once had a backbone with support from John McCain.  The new Lindsey Graham appeared on Fox News to demonstrate his loyalty to his new boss.  He only needed to study Trump's tweets to answer the questions that he was asked.  Three Republican leaders were invited to speak at the ceremony for John McCain.  Trump, of course, was not invited to attend, or to speak at the ceremony, however, the three Republican leaders who spoke at the ceremony have aligned themselves, and the Republican Party, with the demagogue who controls a substantial portion of the Republican base as well as many of the major donors to Republican campaigns.  The Republican Party exists only in name.  It is not your father's Republican Party; it is Donald Trump's party. 

What Would Happen If Trump Really Shot A Person On Fifth Avenue?

I returned home from a trip to Europe just in time to read Tom Friedman's description of how Trump's people would deal with the murder.  Trump once claimed that his base would stick with him even if he did shoot a person on Fifth Avenue in NYC.  Of course, Trump would not really shoot anyone on Fifth Avenue, but Friedman described how Fox News,  Republicans in Congress and other Trumpians might handle the event.  His description was meant to be funny but it was also meant to be serious.  We have probably come  to place where truth does not exist and institutions that were designed to protect our democracy are under a serious attack elsewhere in the western world.  Trump's role model is Vladimir Putin and Trump would love to run the US like Putin runs Russia. Friedman argues that the "Russianification" of the US is underway and that it will be difficult to stop that process.  Unfortunately, the only way to stop that process is to defeat Republicans in the coming elections.  The Republican Party appears to be perfectly happy with the destruction of our democracy as long as they can retain their jobs in Congress.  A one party system is what they have been after for a long time.  Trump has given them the opportunity to make that happen.  Many old fashioned Republicans may not believe this but Friedman describes how Republican leaders are moving into the Trump camp.  Republican donors are happily funding the process.  They will do very well operating as oligarchs under the Trump political party.

Who Benefitted From Trump Tax Cuts?

Trump gave the Republican Party what it really wanted after he was elected.  The GOP's priority has always been tax cuts for their wealthy donors.  Trump gave it to them in spades.  Corporations got huge tax cuts that they mostly used to buyback their own stocks.  That was great for corporate executives and large stock investors because it led to higher stock prices.  However, it was sold to the public as a way to increase corporate capital investment.  That would expand the economy and raise wages for ordinary Americans who don't own large amounts of corporate stock.  That did not happen.  Real wages, corrected for price inflation, have not grown as promised despite a fully employed labor market.

Republicans have also sold their party to the public as the fiscally responsible party.  They claim that Democrats are fiscally irresponsible because they tend to raise taxes in order to provide expensive social welfare benefits to "the wrong kind of citizens".  That discourages them from working and it also forces the government to borrow money to pay for the expensive social welfare programs.  However, it turns out that the Trump tax cuts were fiscally irresponsible.  Trump increased spending, primarily on defense, as the corporate contribution to federal tax revenue plummeted.  Not surprisingly, government borrowing has skyrocketed and federal budget deficits have risen dramatically.  Trump has responded by claiming that "debt is good".  He became a billionaire by borrowing millions to fund his business investments.  His government, however, has not borrowed money to fund investments.  It has been forced to borrow money in order to fund tax cuts for its wealthy donors.

The Trump administration has also deviated from Republican ideology in another way.  It has always supported free trade.  Trump has turned this around by using tariffs as a weapon to reduce US trade deficits.  We are still waiting to see the impact that this will have on the US and the global economy. The role of the dollar in international transactions plays a powerful role. The dollar has been increasing in value relative the foreign currencies.  That will make US exports more expensive and imports less expensive. Trump even argued that the revenue that we receive from tariffs will help to pay for his tax cuts.  No serious economist believes that will happen.  But he understands that his base not does include many voters who understand economics.  

How Trump Turns Defeat Into Victory

Dana Milbank provides an excellent list of losses that Trump reports as victories.  Its a good thing that Trump is not in charge of keeping score in sporting events.  His teams would never lose.  Milbank's article is informative for most readers of the Washington Post.  On the other hand, Trump will continue to win victories with his base as long as he tells them what they want to hear.  Unfortunately for Trump, and for his political party,  many Republicans, and most Independents, don't trust him to keep score.

Is Apple The Future Of Capitalism?

This article provides an excellent description of Apple's financial strategy.  It also explains why Apple is in a position to effectively deploy a financial strategy that is the envy of many corporations.  The implication is that Apple is not the future of capitalism.  Most corporations are not in a position to deploy its financial strategy.  On the other hand,  Apple may have deployed an ideal financial strategy that sets the gold standard for corporations.

One of the key ingredients of Apple's financial strategy is its focus on cash flow which is greater than its high profits.  It does not borrow money to finance its operations like most businesses.  It passes this burden onto its suppliers.  They carry the inventory for Apple's hardware products and Apple pays them after 100 days of the receipt of an invoice.  That helps to create a highly positive cash flow that other firms might envy.  Apple also receives cash quickly from sales through its retail stores and from its many subscription services. Apple does borrow money, but it is used to finance the return of capital to its shareholders.  Most of that that comes from share buybacks. 

A large number of corporations have borrowed money to buyback their stock and to pay dividends to their shareholders.  That may be good for executives who are compensated with stock options.  On the other hand, they may under invest in assets and R&D that may have a negative impact on their growth rate.

Tom Friedman Explains Why The International System Is At Risk

Tom Friedman reports from Italy where he has learned about the risks that we face in Europe and elsewhere.  He argues that Italy's new government came to power because of a very serious mistake by NATO.  A dictator was removed from Libya, but NATO did nothing to restore order in Lybia.  Consequently, there is no effective government in Libya. Instead it is run by a number of competing tribes.  As a result,  Italy has been overwhelmed by an unmanageable number of immigrants.  The second largest segment of Lybia's economy is moving immigrants to Europe via Italy.  Moreover, that situation has been made worse by the refusal of some governments to accept immigrants flowing into Europe via Italy.   Italians are unhappy with the flow of immigrants and they also blame the EU for not assuming more of the responsibility for accepting the immigrants.  Anti EU, and anti-immigration sentiments opened the door for the right wing coalition government in Italy.

Italy is only one of the problems that Friedman is concerned about.  Russia, of course has been active in supporting Brexit in the UK and it has fueled discontent with the EU by supporting nationalist political parties that have also taken advantage of popular concerns about the flow of immigrants and refugees from troubled nations outside of Europe.  Donald Trump's rise to power in the US has also been harmful.  He has been critical of the EU and NATO.  He imagines that he can create a new world order in which he negotiates better deals between thFriee US and individual nations. 

Friedman is also concerned about demographics.  The population of Africa, which is larger than the population of the EU, will double in size while the population of the EU is shrinking,  Unless governments in Africa become more able to deal with their economic and social problems there will be more pressure on developed nations to deal with the flow of immigrants and refugees from Africa. Friedman is also worried about the consequences of our inability to deal with global warming.  He did not have much to say in this article about global warming because he did not want to ruin you dinner, lunch and breakfast with bad news.  I suspect that his enjoyment of the great food in Italy has also been diminished by his concerns about our future.

Apple And Other Social Media Platforms Remove Alex Jones

Apple removed Alex Jones from several of its platforms; Facebook and others followed suit.  Its about time that the social media took some responsibility for providing a megaphone to conspiracy theorists like Alex Jones.  Apple justified its action by claiming that Jones violated its rule about distributing hate mail.  Conservatives reacted as one might expect.  They claimed that the social media violated Jones' right to free speech.  In other words, publishing fake conspiracy theories that have been harmful to others is protected by the Constitution.  That is utter nonsense.  Newspapers and  other media outlets are not required to provide a platform that liars like Jones can use to become rich.  Conservative media like Brietbart News and Fox News are obviously selective about whose views they make available to their  conservative market.  Moreover, only a small subset of conservatives follow Alex Jones.  It makes no sense to view the Jones decision as a battle between conservatives and liberals.  It should make most conservatives happy that they are not defined by predators like Alex Jones.

Why Its Hard To Prevent Disinformation Programs On Social Media

Russian disinformation campaigns continue to make extensive use of the social media to divide our nation and to weaken democratic institutions in the US and elsewhere.  This article illustrates one the problems that make it hard to block Russian disinformation programs.  Twitter was aware of several Russian disinformation programs and they shut them down.  Many of those programs were also operating on Facebook but they were not blocked by Facebook.  That is because security personnel at Facebook claim that it is too difficult to precisely determine whether the Russian Twitter operators were  identical to similar operators on Facebook.  In other words, Facebook, and perhaps other social media firms, do not have the technical ability to do their job.  Security executives at Facebook also claim that that they have an obligation to promote free speech.  That concern seems to override the importance of protecting their users from disinformation campaigns. 

This will be an ongoing "arms race" between the social media platforms and the Russians in charge of the disinformation programs.  The Russians have demonstrated the ability disguise their operations faster than the social media can identify them.  The Russians may have a more powerful incentive to win that battle than the social media firms.  The payoff from their disinformation programs is large relative to the expense.  That is not true for the social media firms which have a very different incentive system.

Facebook and the other social media firms are actually in the advertising business.  Their revenue comes from advertisers.  Moreover, the price that they charge for ad placements is directly related to the size of their user base and the amount of activity within their user base.  Provocative placements get more attention than mundane placements.  Its also the case that providing security from disinformation operations is an added expense for the social media firms.  These are some of the reasons why Facebook suffered the largest stock market decrease on one day after they reported their quarterly results.  They reported a large decline in their user base and their profit margin declined as they added thousands of employees to their security force.  Facebook was a much more attractive investment before it became a vehicle for disinformation campaigns. Its defense of free speech is also spurious.  Newspapers make most of their money from advertising.  However, they don't permit everyone to publish unedited articles and they even monitor the comments on their opinion pages.  Protecting free speech on Facebook and other social media is less important than enabling disinformation programs that go well beyond meddling in our elections.  The more general goal of the Russian disinformation campaigns is to exploit cultural and racial issues that divide our society and weaken our democratic institutions.  That extends as well to the "world order" that we have created since WW ll.  They found the perfect tool in Donald Trump.

Why Will The US Budget Deficit Hit $1 Trillion?

If a business suffers a steep decline in revenue it must find a way to increase its revenue or borrow money.  The US Treasury faces that problem today.  It made huge cuts to corporate taxes and it made other changes in corporate expense accounting which has been great for corporate profits and for shareholders.  However, the tax cuts have not produced the economic growth that was supposed to compensate for the corporate tax cuts as promised by the Trump administration.  Some in the administration still argue that the economic growth it promised is still coming.  On the other hand, several economic forecasters don't believe that will happen.  They expect US budget deficits will continue to grow in response to the huge drop in corporate tax payments.

A Simple Explanation For Trump's Lies

This article describes several of Trump's most recent lies.  The lies are so obvious that they cannot be defended by "alternative facts".  The reason the Trump makes such frequent use of lies is not hard to explain.  He lies about almost everything because a lie is not a lie if his base believes it.  However, Trump faces a problem that is beginning to affect many of his true believers.  Recent polls show that Trump's base of true believers in shrinking.  It is becoming harder and harder for Fox News to convince its market of true believers that obvious lies are not truthful.

Facebook Suffers 24% Drop In Stock Price

Facebook lost $150 billion in market value yesterday.  The shares fell 24% after Facebook's revenue growth did not meet investor expectations.  It reported $13.23 billion in revenue for the  quarter and profit of $5.1 billion but its stock price had been bolstered by Google's report of accelerating revenue growth.  They are in the same market for advertising revenues on their social media platforms.  However,  Facebook lost 3 million users in Europe and user growth in the US and Canada was flat for the quarter.  Facebook expects user growth on several of its other social media platforms but they do not generate the advertising revenues that are produced by Facebook which has suffered from reported abuses of Facebook by Russia and others who have used the platform to spread fake news.  In addition to declining revenue growth, Facebook has been forced to increase its workforce to reduce the abuses of its platform that have been widely reported.

How Trump's Trade War Is Crushing Farm Communities

Rural Americans love Donald Trump.  They voted him into office because rural farm communities have been dying a slow death.  This article describes how Trump's tariff policies are accelerating the death of rural farm communities in the Mid-West.  The Trump administration has provided a $12 billion subsidy to farmers who have been suffering from the loss of export markets.  That may help Republicans in the mid-term election but it won't help farm communities over the longer term.  Other nations have already taken over the export markets that the farmers have depended upon.  Small farmers will be unable to survive and pass on their farms to family members.  Large corporate farms will buy their farms at auction and the communities that supported the small farmers will erode rapidly.  The corporate farms will not use the small community banks that are a pillar of the community and other services that supported the community will evaporate because the market for their services will be too small. 

Unfortunately for the small farmers and many farm communities in the Mid-West Trump does not understand how his tariffs are doing the opposite of what he had promised.  He understands how to run a political campaign that is based upon promises that cannot be realized but he has unleashed a devil for the voters that put him in the White House.  They cannot survive on promises or on federal subsidies. 

The Wall Street Journal Has Abandoned Trump's Trade War

WSJ editorial staff has a long history of supporting Republican economic policies and Republican presidents.  After this editorial on his $12 billion payout to farmers, who have lost access to foreign markets in response to US tariffs on imports,  he may have lost the WSJ.  We have an extremely efficient agricultural industry that produces more food than we can consume in the US.  It has depended upon exports to sell off its excess production.  The losses faced by farmers in the Mid-West will be harmful to Republicans in the mid-term elections.  Consequently, the Trump administration provided a $12 billion subsidy to the affected farmers.  A Trump administration official referred to the $12 billion subsidy as "rounding error" in the federal budget.  The affected farmers don't want subsidies, they want to export their products.  The WSJ doesn't like government subsidies either, it would like the  market to operate without government intervention.

The editorial staff of the WSJ will not support US tariffs and the abandonment of free trade by the Trump administration.  It may face of the risk of joining rest of the mainstream media that Trump refers to as "fake news".  The Republican Party has had a long term relationship with the WSJ that it will not like to lose.  It is a major source of ideas and input to the business community that typically votes for Republicans.  The GOP may become dependent on Fox News to support its policies.

How Maria Butina Became A Trump Republican

The Justice Department accused Maria Butina of being a Russian spy.  This article describes how she aligned herself with the NRA and the Christian Right to serve Russian interests in the US.  Russian interests align well with Trump's form of nationalism in the US.

                    In documents filed in Butina’s case, the U.S. Department of Justice wrote: "Moscow seeks to create wedges that reduce trust and confidence in democratic processes, degrade democratization efforts, weaken U.S. partnerships with European allies, undermine Western sanctions, encourage anti-US political views, and counter efforts to bring Ukraine and other former Soviet states into European institutions."

The Fundamental Contradiction In Trump's Economic Policy

Trump cut corporate and individual taxes to stimulate the economy.  This is a common use of fiscal policy to stimulate economic growth during a recession.  Lower corporate taxes encourages businesses to increase capital spending which stimulates the economy.  Cutting personal taxes also encourages consumer spending.  Capital spending and consumer spending are two of the major components of GDP.  Trump also understand that trade deficits shrink GDP.  He has been using tariffs to reduce imports in order to shrink US trade deficits.  What Trump does not understand is that there is a fundamental contradiction in his economic policies.

One of the contradictions is that tax cuts reduce government revenue.  The government has been forced to pay for rising budget deficits by borrowing more money.  That increases the demand for dollars which raises the value of dollars relative to foreign currencies.  That makes US products less competitive in foreign markets which must be paid for in more expensive dollars.  Consequently, US exports have not grown fast enough to shrink the US Trade deficit. 

The other problem with Trump's policies is that the Federal Reserve uses monetary policies to set interest rates.  The Fed raises interest rates when it wants to slow the economy down in order to deal with the threat of price inflation.  It has been raising interest rates in slow steps and it plans to continue using monetary policy to push interest rates upward.  That has a depressing effect on economic growth because businesses and consumers will borrow less money as the cost of borrowing increases. 

Trump sold his tax cuts and his use of tariffs as a plan to stimulate economic growth.  That plan has not worked as well as he hoped because it has put pressure on budget deficits and it has made US exports more expensive.  He has been using his Twitter account to criticize the monetary policies that are controlled by the Federal Reserve.  This is consistent with his usual practices.  He never takes responsibility for decisions that don't work.  He is setting the stage to blame the Fed for the failure of his tax and tariff policies to stimulate economic growth.  Ordinarily, US presidents might dislike the monetary policies that are being implemented by the Fed.  However, the usually do not publically criticize the Fed which was set up to be independent from the government.  Trump is not a typical president.  His attacks on the Fed are just the beginning.  He will maintain that his policies were the greatest use of fiscal policy in US history.  The Fed will have to take responsibility for their failure.

George Will Is Not Happy With The Unfit Pretender In The White House

George Will is a nationally syndicated conservative columnist. His description of Donald Trump in today's Washington Post is not the kind of description that one expects from a conservative columnist who usually defends Republican policies.  George Will is only one of many conservative opinion leaders who has abandoned a man who is embarrassing to him and to our nation.  Fox News may be the only reliable major source of propaganda supporting Trump after George Will's exit. 

What It's Like Being Led By A Genius In America

Donald Trump has a very simple explanation for the problems that he believes we have in the US.  We have lots of problems because we are stupid.  Trump's cure for our stupidity is to rely upon his genius.  Dana Milbank lists all of the dumb things that Trump blames for our problems.  He then offers his genius to guide us towards deliverance.  Trump's son-in-law Jared Kushner supports Trump's claim to genius, but it may not be as strong as Trump would have liked.  Kushner stated that Trump is a political genius and he may be correct.  He has sold himself as a genius to his base.  More Republicans support Trump than they have for any previous US president with the exception of George W. Bush following 9-11.  Trump may pass Bush's record if he continues to put his genius on display by behaving like the narcissist that he is.  His base loves him when he is at his narcissist best like he was on his TV show.  They want him to fire everyone like he did on his TV show and run the country with his genius.

David Brooks Writes The Obituary For The US Aliance With EU

The president is not all knowing.  They depend upon members of their staff to inform and advice them.  Donald Trump is not that kind of president.  He does not need them because he is primarily driven by his self-interest.  Unfortunately, his self-interest is not aligned with the preservation of the US alliance with Europe and the liberal world order that was led by the US following WW ll.  Moreover, it is pretty clear that Putin has information about Trump that could destroy his presidency  which he hopes to transform into a dictatorship.  He ran his business empire as a dictator and he is extremely uncomfortable with the institutions that were put in place by our founders who understood many of the risks inherent in a democracy.  He spends more of his time in office nurturing his populist base with tweets and campaign rallies because that is his most valuable asset.  The Republican Congress is dependent upon that base and Trump uses it against Republicans who defy him.  The Republican Congress has no interest in acting as one of the checks and balances that was put in place to protect our system against demagogues.   Even worse, many Republican candidates for office are running their campaigns as mini Donald Trumps.  Trump is a featured speaker at their rallies.

David Brooks has been an influential conservative Republican for most of his life.  He has tried hard to make excuses for Trump's weaknesses and focus on some his strengths in many of the opinion pieces that he publishes in the NYT.  Trump's meeting with Putin was the last straw for David Brooks.  Trump ignored the conclusions of his intelligence agencies about Russian meddling in the 2016 election and accepted Putin's denial.  He claimed that he could not understand why Putin would help him to win the election.  David Brooks' obituary goes well beyond Donald Trump.  He describes the important role that European ideas and values played in the development of democracy in the US and the important role that the US has played in defending and nourishing its European heritage.  He argues that Trump exploited several of the flaws that have been harmful to the EU and to liberal ideals in the US.  He does not seem hopeful about our ability to deal with the monster that we created.