Saturday, September 8, 2018

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.

Thursday, September 6, 2018

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.

Saturday, September 1, 2018

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. 

Wednesday, August 29, 2018

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.

Monday, August 13, 2018

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.  

Thursday, August 9, 2018

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.

Wednesday, August 8, 2018

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.