Corporate Tax Dodgers Don't Bother Congress

Another US multinational corporation just turned itself into an Irish corporation.  It took this step primarily to avoid US taxes.  Ireland is one of several nations which offers low corporate tax rates to encourage MNC's to relocate.  Johnson Controls inversion to Ireland is particularly egregious.  It benefited from the bailout of the auto industry and from the state of Michigan which helped it out during the automobile crisis.  Don't bother to ask your Republican congressman to do something about corporate inversions.  They will respond by criticizing corporate tax policy. Those policies may need some changes but they have done nothing about it.  They prefer to complain about high taxes.

Since Congress will do nothing to stop corporate inversions, its up to US citizens to take actions.  This article contains many suggestions that citizen groups and government agencies might use to make corporate inversions more painful for US MNC's. 

What Can President's Do Without Congress?

Democrats had a majority in the House and in the Senate during the first four years of the Obama presidency.  Republicans in the Senate used the filibuster effectively to block many of the administration's initiatives.  Republicans have had a majority in both branches of Congress during his second administration.  This put the Obama Administration in the position of limiting legislative initiatives by a right wing congressional majority.  There was little opportunity for the president to pass any legislation.  This raises a question about presidential authority.  That is, what can a president do to counter congressional opposition.  Elizabeth Warren offers her view on that question.

Warren's answer is simple.  The president has the authority to place strong leaders at the head of the government institutions that he controls.  In many cases he put weak leaders in charge of important institutions such as Justice and the SEC.  Warren argues that this enabled many corporate leaders to to break laws and escape effective punishment.  Corporate fines were imposed on organizations as penalties for criminal charges.  In some cases weak laws were partially responsible, but weak leadership at the top was clearly evident.  However, there were examples of government agencies with strong leaders who were able to do their jobs effectively.  The president has the important power of appointing effective leaders to key administrative positions.  That power should not be underestimated.

The 2016 election will be especially important because a Republican president will have a supportive Congress and an opportunity to appoint dangerous individuals to important positions in government.  Some argue that a Democratic president not be able to accomplish much with strong opposition from Congress.  We need a Democratic president to counter the Republican Congress but we also need a president who appoint strong leaders to key positions in government.

Battle Between Fox News And Donald Trump Is Bad News For GOP

Donald Trump decided not to participate in the next GOP debate that it will host.  Trump declared that the Fox host for the event is biased against him.  Fox defended its host and the debate will proceed without its star performer who "fired Fox".  This creates a much bigger problem than it would appear on the surface.  Fox News is the major source of information for "conservatives".  It has positioned itself against the so called mainstream media, which according to Fox, has a liberal bias.  Trump claims that Fox and the MSM are biased against him and his fans believe him.  That is damaging to Fox's market positioning as the source of unbiased news for conservatives.  Moreover, it will create real problems for Fox and the GOP if Trump wins the GOP nomination.  It will be hard for Fox to follow its normal procedure which is to support the GOP candidate and criticize the Democratic nominee in the general election.  If it takes a more neutral position in the general election many of its followers will regard it as part of the MSM.  The GOP will have also lost its primary source of propaganda.

What's Responsible For The Corporate Savings Glut?

Many of our largest corporations are sitting on huge piles of cash.  This article provides several explanations for the changes in corporate financial policy.  They used to borrow large sums from financial intermediators to finance investment.  Today they are able to finance investments with their own cash but they are not doing so. You can choose among the explanations, some are related, but none of them are positive.  The implication is that corporations don't see opportunities for investing their cash in the future.  Many are simply buying or merging with other large corporations.

The Rise And Fall Of American Growth

Paul Krugman reviews a book by Robert Gordon which argues against the techno optimist assumption that our best days are ahead of us.  Gordon uses the period from 1870 to 1940 as a benchmark for progress.  It is a stiff benchmark to surpass.  During that period we made real progress in how we lived and how we worked.  The typical household became equipped with electricity,  inside toilets and access to water without a well.  The automobile replaced the horse and carriage and modern travel had arrived.  The workplace also required less toil and effort to produce an income that made those innovations more broadly available.

Gordon realizes that the Internet and social media have been beneficial to many people but he argues that that the information technology revolution has already happened.  The techno optimists don't have a whole lot more to offer us.  The IT revolution is history and there are serious headwinds that will affect our future.  Inequality will continue to rise and we have reached a plateau in educational attainment.  That along with slow population growth leads Gordon to conclude that we have entered a period of slower economic growth and less real change in how we live and how we work.

Gordon did not have much to say about government but we are in deep trouble if our politics continues in its current direction.  A recent poll shows that Donald Trump has a good chance to become the GOP candidate, and that he is more electable than any Democrat.  David Brooks believes that this could be the end of the Republican Party.  His conservative mentor, William Buckley had a similar concern about right wing populism many years ago.  He was worried about the impact of the John Birch Society in the Republican Party.  The sons of one of the Birch Society founders has succeeded in organizing the Tea Party to do what the John Birch Society failed to accomplish. Its influence is strongly apparent in the GOP primary campaign, and in the takeover of state governments in many areas of the US.  Its hard predict what might happen to this movement if we are really in a period of slow economic growth and stagnant household income growth for most Americans.

Government Failure In Flint Michigan And Poison Water

The mayor of Flint Michigan has declared an emergency to deal with the contaminated drinking water that it is using.  This article explains how the residents of Flint were forced to drink bad water.  It was caused by a Governor who decided that governments should be operated as a business.  He came into politics after a career as the CEO of a personal computer firm that no longer exists.  Flint, like many cities in the Detroit area, got into financial trouble after the collapse of the auto industry.  The governor had the authority to take over the government of Flint during its financial crisis.  He sent one of his lieutenants to Flint to rearrange its finances.  Flint was buying water from Detroit and he decided that costs could be cut by using water from the Flint River.  The elected government of Flint had no power to alter that decision.  The EPA tested the water and declared that it was unsafe.  The governor rejected the EPA's analysis and continued to provide bad water to Flint's residents.  The EPA failed to use its authority to counter the governors decision.  The regional manager has been forced to resign.  Flint provides us with a terrible example of government failure and an example of market failure by a government operated like a business.  The residents of Flint are suffering from the consequences of operating government like a business and an EPA that backed away from a powerful governor.

Donald Trump As The Anti-Obama

All of the GOP candidates are appealing to the anti-Obama sentiment in their base.  They don't like his policies and each of the candidates offers an alternative to one or more of his policies.  They offer "conservative" alternatives to Obama's liberalism.  Donald Trump does not contrast his policies, which are seldom discussed, to Obama's policies.  He offers the GOP an anti-Obama personality.  Obama's campaign slogan was "Yes we can".  Trump is selling his base a totally different persona.  His message is "Yes I can".  In other words, he is the personal savior for his supporters.  They are less interested in policy.  They seem to want a new style of leadership.