The New Civil War In The Republican Party

Steve Bannon and his alt-right media organization Breitbart News are leading an effort to take over the Republican Party.  It is one of several fringe organizations that have found a home in the GOP.  It is like the Tea Party and the Libertarian Party in that respect.  While it shares many of their concerns, under Steve Bannon it will emphasize white nationalism and its connections to economic populism. The focus of this article is on the 2018 elections. They were encouraged by the GOP primary in Alabama. Their candidate spent $200,000 in its primary campaign and defeated the candidate supported by the Senate leadership who spent $10 million on his campaign.  He was also supported by Donald Trump's lukewarm endorsement. Both of the candidates claimed allegiance to Trump. Bannon's organization intends to sponsor candidates who will oppose incumbent Republicans in GOP primaries.  They will feed off of the GOP failure to repeal Obamacare and run candidates who will attack the GOP leadership in Congress.  That is a winning strategy for them in two ways.  It will drive incumbent candidates further right or it will replace them with their own candidates. 

The civil war within the GOP may provide Democrats with a better opportunity to win some seats in the 2018 election.  That does not bother Bannon's organization.  His goal is to take over the Republican Party.  He hoped to accomplish that by putting Trump in the White House.  Trump was not able to promote Bannon's objectives because he depended upon the GOP Congress to repeal Obamacare.  Bannon's goal would be to put Trump in charge of his brand of Republicanism.  Trump cares little about GOP orthodoxy.  He would be perfectly happy in a White House which had Bannon supporters in Congress.  He keeps selling economic populism to his base while yielding to Republicans who have no interest in economic populism. 

Its not clear about how this civil war will turn out.  Its not even clear why a billionaire who supported Trump, and has contributed to many GOP campaigns, is backing Steve Bannon. However, this will not be good for the Republican Party.  It has been difficult for the Republican Congress to deal with their current divisions.  That last thing that they need is more division within their ranks.

How Trump's Tax Plan Distributes Cuts By Income Class

The non-partisan Tax Policy Center  did an analysis of the tax plan that Trump is selling as a plan to benefit the middle class.  He also claimed that he would not benefit from the plan.  Most of the benefit from the tax cuts go to the top 1%.  It would also increase the federal debt by $2.4 trillion.  Paul Ryan loves this kind of plan and he will try to sell it Congress.  His plans typically include an assumption that the tax cuts will pay for themselves (Which is false) by growing the economy.  The huge increase in federal debt will not exist in his analysis.  It is assumed away by growth that will not happen.

Watch Donald Trump Elicit A Boo About John McCain During Alabama Speech

This article is by a Republican who grew up in the South who cannot understand how we got to this point.  A draft dodger works up his audiences to boo a war hero.  We have a lot of work ahead of us.

What Should We Take Away From Ken Burns' Lessons About Vietnam?

I have only seen a couple of the Vietnam episodes.  I have copied the entire series to view at my leisure.  Ken Burns was asked many questions in this interview.  The series ended with the Beatles singing "Let It Be".  He tried to explain why he ended the series with that song by the Beatles.  The quote below, from the end of the interview, caused me to think about the point that Burns wanted to make.  I have having been having a hard time dealing with the current threats to our system of governance.  At times it seems like the impossible dream that our founders had at the beginning our journey as a nation has been lost.  I am trying to replace cynicism with skepticism about our nation and our democracy.  It has not been easy.  I keep reading the quote below from the Burns interview:

And we’ve tried in some way, in a little tiny bailiwick, to say, you know, here’s the alternative to that kind of cynicism — a kind of healthy skepticism. We’ve put all of the facts to an extraordinary test, both a scholarly one, an artistic one, a human one, in the course of doing it and we’re very confident that it will hold up. But also mindful that it will also provoke in people on both ends of the spectrum really negative reactions, because they want to see things only one way and will adhere to that binary sense that they are right and everybody else is wrong.

 Donald Trump is our current Vietnam.  Hopefully, my concerns  about our system which enabled my fellow citizens to put Trump in the White House will not lead to cynicism.  A healthy skepticism may be more productive.  We have a better understanding of the disease but it will take a lot of work to develop a cure.

Trump's Billion Dollar Lie About His Tax Plan

Donald Trump gave a speech in Indiana to sell his tax plan to his Vice President's home crowd.  He insists, contrary to all analyses of his proposal is that his plan was designed to benefit the middle class.  To support that claim he told the audience that he, and billionaires like him,  would not get any benefit from his proposed changes in the tax system.  That lie was easy to disprove (like most of the lies that he tells every day).  This NYT article examines the only copy that we have of Trump's tax returns.  It shows that he would reduce his income tax by $31 million by eliminating the Alternative Minimum Tax.  The big change in the tax code, and the biggest lie, is the elimination of the estate tax. Most Americans don't know much about the tax code and Trump assumes that he can lie about the estate tax.  He has a good reason to lie because eliminating the estate tax would provide Trump with a billion dollar benefit.  He defends the elimination of the estate tax, which Republicans call the "death tax", by arguing that it prevents small business and farmers from passing on their hard earned assets to their heirs.  What he doesn't say is the there is no estate tax on the first $11 million of a household's assets.  Only a small fraction of Americans have to pay the estate tax because the great majority of small business people, and small farmers, don't have assets above $11 million in their estates. Donald Trump and many of those who fund Republican campaigns do have estates valued above $11 million.  Forbes estimated Trump's assets at around $2.6 BILLION several years.  The estate tax would reduce his estate by $1 billion.  Trump did not dispute the Forbes estimate of his assets. In fact, he complained that his assets were greater than their estimate and that he should have a higher spot on the Forbes list of the richest Americans.

Trump and his fellow Republicans keep repeating the lie about the estate tax because most Americans no very little about inheritance taxes for a good reason; they don't have substantial assets to leave to their heirs.  They are unaware of the $11 million dollar deduction from their assets upon death.  Donald Trump understands this; he takes great advantage of his ability to use his "fog machine" to distract us from important issues and focus our attention on disputing each of them that we receive on a daily basis.  He did not become a billionaire without a good set of skills that hucksters require.

Trump's tax attorney said that Trump's second wife was more involved in his tax return than he was.  Trump hired a good attorney to keep his taxes down.  He is also getting a lot of help from his top economic advisors in selling their tax plan.  Trump's job is to leave most of the tricky chicanery to his economic team.  He is only the huckster that sells the plan to his loyal followers.  It can't be easily sold to people who are well informed about the tax code.

Why Tax Cuts Don't Typically Produce Growth

Bruce Bartlett was on the Ronald Reagan team that developed his economic plan.  It was a classic Keynesian plan that Republican's fight against when Democrats are in office.  That is, taxes were cut and government spending increased. That producing budget deficits.  The economy grew according to plan.  Unfortunately,  Republicans have created a myth about the positive effects of tax cuts that is with us today.  Bartlett explains why the Reagan plan was well suited for that period and he reminds us that Reagan raised taxes towards the end of his presidency in order to reduce the rising federal budget deficit.  Bartlett provides us with some important data that may be useful in countering the tax cut myth:

*  Growth in real GDP during the high tax period preceding Reagan was 37.2% versus 35.9% following the Reagan tax cuts in the 1980's

* The Fed set interest rates very high in the 1980's to deal with extremely high inflation rate.  The Fed cut interest rates by half after reversing the inflation rate.  Lower interest rates played a big role in producing GDP growth.

* Wage growth slowed down in the Reagan era.  The distribution of income shifted more than the growth in the economy following the Reagan tax cuts.

* One of the implications of the tax cuts myth is that increasing taxes would slow down GDP growth.  Clinton increased the top tax rate and real GDP growth under Clinton was 37.3% versus 35.9% in the 1980's

* Following Clinton, George W. Bush made deep cuts in the top tax rates.  Real GDP growth under Bush was only 19.5%

* Obama increased the top tax rate and the stock market expanded by 10,000 during his administration.

Bartlett concluded that tax cuts can be useful under certain economic conditions.  However, they should be done following the typical process that is time consuming but productive.  Forcing a cut in taxes by the current process that failed to produce a good healthcare bill is the wrong way to go,

Populists In The US Elected A President To Cut Taxes For Billionaires

The Donald campaigned as a populist who would make life better for lower income citizens.  He would drain the swamp in Washington and punish the elite establishment that has ignored the interests of ordinary Americans.  We have heard that story before and we should not be surprised by The Donald's tax plan.  He has rewarded his base with words about social values that his base loves to hear.  They love to hear how much he shares their social values but his tax plan does nothing for them.  In other words, it is a tax plan developed by the Republican elite that is designed to reward their richest donors.  The plan is not fully fleshed out, but the 400 wealthiest households in America would have their taxes cut by an average of $5.5 million.  Some crumbs will be dispersed to lower income Americans, but the plan was designed to reduce the tax burden of people just like Donald Trump.  Of course, the tax plan is not being sold as a gift to billionaires.  It is being sold as a way to stimulate economic growth and to create jobs.  If you think that you have heard that story before you are correct.  It is a fairy tale that Republicans have been promoting since Ronald Reagan.  Tax cuts for the rich have done little to spur economic growth and create jobs.  Unfortunately, too many Americans are willing to accept nice words from politicians in support of their cultural and social values in return for rewarding the rich with dollars.

The other problem with the tax plan is that federal tax receipts will be substantially reduced.  Republicans who pretend to worry about federal budget deficits when Democrats are in the White House have been silent about increasing federal budget deficits.  If asked, they will repeat the fairy tale about paying for the tax cuts with economic growth, but they hope that the question will not be asked.  They also won't tell you that large budget deficits provide a good argument for cutting programs like Social Security and Medicare.  They also won't tell you that reducing taxes for wealthy Americans redistributes the tax burden to middle class citizens.