Thursday, October 27, 2016

The Transformation Of America's Two Major Political Parties

One group of Americans believes that things were better in the the 1950's than they are today.  Another group believes the opposite.  Things are better today than they were in the 1950's.  The first group represents the core of the Republican Party.  Most Americans in the second group identify with the Democratic Party.  The great transformation between the two political parties began in the turmoil of the 1960's and early 70's.  The Republican Party recruited socially conservative white voters who were repelled by student activism and the cultural changes adopted by that generation.  That turned off college educated young people who once formed the core of the Republican Party.  Over time the majority of college educated Americans have become Democrats.  This article describes the details of that transformation and the implications for each of them.  It also explains how our nation's politics reached the level of polarization that we witnessing today.  Donald Trump was not accident; his rise in the Republican Party was written in the wind decades ago. 

Tuesday, October 25, 2016

Clinton's Tax Plan Hits The Top 1% Very Hard

Hillary Clinton has proposed several government spending programs that will make things better for ordinary citizens.  She will pay for those programs by raising taxes on the top 1%.  Those earning over $3 million will get hit the hardest.  The additional funding supplied by those who can most afford it will allow Clinton to provide needed benefits to citizens who have seen their incomes stagnate over the last 30 years.  Donald Trump's tax plan is just the opposite of Clinton's plan.  Those who earn over $3 million would receive the most benefit from his proposed tax cuts.  Moreover, his tax cuts would substantially increase the ratio of US debt to GDP over the medium term.  Economists do not accept his claim that lower taxes on the rich would stimulate enough economic growth to pay for the tax cuts.

The next question, of course, is whether Clinton will be able to get her tax policies approved by Congress.  Republicans depend upon support from misinformed or uninformed low income citizens to protect the interests of the super rich.

Why The Republican Party Will Continue To Produce Donald Trumps

This article in the Washington Post explains how Donald Trump won the GOP primaries and why the Republican Party will continue to produce Donald Trumps.  It describes the extent of misinformation in Donald Trump's base of supporters and it argues that the Republican Party did nothing to discourage the far right media outlets that produced the Trump base.  It helped them to win elections and to delegitimize Democratic leaders, including President Obama, but it paved the way for a candidate like Donald Trump to assume the leadership of the Party.  It will continue to face new Donald Trumps unless "it drains the swamp" of the far right media that misinforms its base.  The Republican propaganda machine has become its worse enemy.  It has also contributed to the dysfunction of our government.  It has demonized moderate Republicans along with liberal Democrats.  The Republican House of Representatives is engaged in a civil war between its own membership and it spends much of its time "investigating" its political opponents in and out of government.

Monday, October 24, 2016

Donald Trump's Political Party Will Survive The Election

Paul Krugman understands that Trump will probably lose the presidential election but he argues that Trump's political party will still be in business.  Trump put an ugly face on the Republican Party but his base is the core of the GOP.  Many Republicans will reject that conclusion but they will have a hard time explaining why Trump soundly defeated Jeb Bush, Marco Rubio, Ted Cruz and the rest of the pack in the Republican primaries.  Secondly, few of the Republican candidates running for the House or the Senate have denounced Donald Trump.  Some of them claim that they must support Trump because he is running as a Republican.  The real reason is that they can't afford to lose the support of Republicans who support Donald Trump.  There is no Republican Party without the Trump base.  They have had a coming out party during Trump's campaigns. There aren't enough country club Republicans to win elections.  A recent poll of Republicans found that they like Donald Trump more that Paul Ryan who continues to promote the country club fiscal policies that have defined the GOP since Ronald Reagan. 

Saturday, October 22, 2016

Wither Thou Goest Donald Trump?

There has been a lot of speculation about Trump's future after he loses the election.  One possibility is that Trump remains politically active by taking over the Republican Party.  Breitbart News would play a key role in such an effort.  Breitbart's CEO Stephen Bannon is also the head of the Trump campaign.  Bannon has been waging war with Paul Ryan who is the Republican Party's highest ranked elected official.  He accuses Ryan of being more supportive of Hillary Clinton than he has been about Donald Trump's candidacy.  His intent is to undermine Ryan's support from far right conservatives in the House of Representatives.  Replacing Ryan with a member of the "Freedom Party" wing of the Republican House might be step in that direction.  Sean Hannity, who has a big following among Fox News adherents,  has also been attacking Ryan.  A coalition of far right news media could play a central role in driving a wedge between the Republican Party leadership and Republicans who might consider Trump as their leader.  In any case, Bannon and Trump will pursue a variety of schemes to leverage millions of Trump supporters to their advantage after the failed election.

Keeping America Great Is The Way Forward

Donald Trump's failed presidential campaign was a failure on many fronts.  However, he understood that many Americans believed that our best days were behind us and that "government elites" were part of the problem.  He told his supporters that he would make major changes in government policies that would stimulate the economy and create jobs; especially for workers who lost them to lower cost foreign workers.  A vote for him would be a vote against the Obama Administration that was responsible for all of our problems.  His economic policies which he barely understood, and could not explain in any detail, were routinely criticized by most economists.  His support was based upon a blind faith his leadership ability and his pledge to address real problems that had been ignored by "government elites".

Instead of paying attention to a political novice who understands little about government, and almost nothing about the strengths and weaknesses of our economy, we can learn a lot about our economy, and how to make it work better for more Americans,  by reading this article in The Economist by President Obama.  I doubt that we have ever had a president who understood the global economy, and the changes that are needed to make it work better for more people,  than President Obama.  He understands the strengths and weaknesses of our market system and he makes a good case for a more active government that can make a difference in our lives.  He has been hampered by market fundamentalists who are much like religious fundamentalists in the strength of the strength of their convictions.  They refuse to believe that government policies kept the Great Recession from turning into another Great Depression, and they will remain a problem even after Donald Trump has disappeared into the sunset.

Thursday, October 20, 2016

How Should We Respond To Trump Supporters?

Dani Rodrik is critical of the typical response by progressives to the problems perceived by voters who believe in Donald Trump.  Progressives, according to Rodrik, propose specific policies in response to the concerns of Trump supporters and they don't understand why that does not satisfy them.  Rodrik argues that Trump's supporters have been taught to believe that government is the problem and they don't trust government.  Rodrik claims that progressives have the more difficult problem of demonstrating that government is not corrupt and that it promotes their welfare.  Conservatives have sold them on an idea about government and it will take time for progressives to counter what has taken many years for conservatives to achieve.

Rodrik may correct in his analysis but Trump's supporters get most of their information from sources that are unfriendly to government.  They believe that the mainstream media and other sources of information, that even include scientists, are part of a broad based conspiracy against them. They don't even trust "establishment" Republicans.

Saturday, October 15, 2016

The Skills Delusion And Why Labor Demand Is Weak

This article explains why weak labor demand is unrelated to the supply of skills.  We simply don't need as many workers to satisfy the demand for products and services.  One of the reasons for this mismatch is that many of our most valuable corporations produce software products.  Unlike many other industries they can ramp up output without adding a proportional number of workers.  They are not labor intensive industries.  We really don't have a shortage of workers with the knowledge and background demanded by these industries.  Consequently, our focus on educating more people to participate in high tech industries is the wrong approach to the problem of weak labor demand.  Education has a vital role to play in developed countries but its focus is misdirected.  The liberal arts should play a more important role in education than vocational education.  We can never have too many literate and well informed citizens.

Friday, October 14, 2016

Which Republican Party Will Survive?

Donald Trump has captured a substantial core of the Republican Party.  He will lose the election but he has already prepared his base for the defeat.  He has been blaming his eventual defeat on conspiracies against him for several months.  We all know the conspiracies: the election is rigged; the media is biased; the establishment is against him etc. etc.  The only important question remaining after the election is what will Trump do after he loses.  He may try to take over what remains of the Party that has been called Republican for over one hundred years. He may start a new political party, or he may compete with Fox News for the heart and soul of white nationalists and evangelicals.  The implication is that Donald Trump will determine the fate of the Republican Party.  It can't win elections without the millions of voters who have fallen in love with The Donald.  It may be hard for the party to bring them back under its tent without losing credibility with its base of moderate conservatives who believe in its core principles of limited government, low taxes, free trade and a strong military.  That big tent no longer exists.  The market for Trump's supporters has changed.

Thursday, October 13, 2016

The Washington Post Allows Donald Trump To Explain Why He Should Not Be President

The Washington Post is one of America's top newspapers.  It has taken a unique approach in this editorial to make its case against Donald Trump.  It has published a series of Trump videos that lets the Donald explain why he is uniquely unqualified to be the President of the United States.

The Post also argued the we should not elect Hillary Clinton because Trump is unfit to be our president.  It offers a balanced view of Hillary Clinton's record to explain why she would make an excellent president.

What Is Left Of The Republican Party After Trump?

The Republican Party once provided a home for ordinary Americans who had a conservative bent of mind.  This article describes how the rise of Donald Trump has exposed the GOP game plan.  Its economic policies always benefited its wealthy clients but it needed votes from working class Americans to win election.  The seeds that it planted among less favored citizens have grown into a Frankenstein Monster that has been captured by Donald Trump who has made the monster visible to the GOP's more moderate base.  It is now a two headed monster that risks losing the Trump base in order to retain its moderate conservative base.  College Republican clubs have rejected Donald Trump's candidacy.  Students at Liberty University have criticized its president who defended Donald Trump.  They wrote that Donald Trump is the worst candidate in the history of the US.  Liberty University is an evangelical Christian school that ordinarily supports Republican candidates.  The GOP may lose its base of support among better educated young conservatives.

How Can The Democrats Revive The Middle Class?

This article describes the decline of middle class income and offers two approaches that the Democratic Party might use to reverse the decline.  The first approach presented by Brookings is fairly traditional and it is likely to be resisted by Republicans.  The second suggestion would be more difficult for Republicans to oppose.  It describes several ways in which competition has been reduced in the US economy.  It argues that the lack of competition has made the economy less dynamic and it has benefited the owners and managers of large corporations while depressing wages and mobility.

Wednesday, October 12, 2016

The Religious Right Makes A Pact With The Devil

The religious right has decided to defend the morality of Donald Trump despite behavior that would be regarded as immoral if it were associated with a member of the "Godless Party" other wise known as the Democratic Party.  These are not stupid people.  They have become more powerful by becoming a part of the Republican Party.  Politicians now have to cater to them.  They play a critical role in keeping their flock in line with Republican ideology. 

Trump's True Believers Have Not Given Up

Trump supporters at a recent Trump rally in Pennsylvania are undeterred by recent disclosures that have led many Republicans to abandon his candidacy.  They are not atypical.  He sold them a bill of goods and they believe the excuses from Trump and from the media that they choose to consume.  They live in an information cocoon that is loaded with conspiracy theories which includes the belief that our major new sources are biased.  This started with Fox News, which portrayed the mainstream media as biased and fed them what they want to hear.  Fox News is now only a part of far right "news" industry that shares a common objective of misinforming the public.  Our political system will have to live with this "news" industry and the political polarization that it has helped to create.  Our political system has become less trustworthy and its not easy to determine how this will play out for the Republican Party.  A large share of the Republican base has been captured by Trump and his supporters in the far right media.  Its not certain that they will remain loyal Republicans unless the Republican Party becomes more like the Trump segment of its base.

What's The New Normal For US Growth Rate?

The Federal Reserve Bank of San Francisco examined the main factors that determine the US economic growth rate and concluded that the new normal will below 2%.  The slow growth rate is the result of slow growth in the labor force,  a plateau in human capital growth caused by growth in higher education, and slow productivity growth.  The report describes some of the tools that government might use to promote a higher growth rate but implementation would require a functioning government that was interested in governing.  It is wishful thinking to believe that this will happen.  Our current presidential election indicates how polarized the US has become as a nation. 

Tuesday, October 11, 2016

Presidential Politics And The Economy

In the last presidential debate Donald Trump argued that the economy would expand if he became the president.  Hillary Clinton made two claims.  She cited the booming economy during her husband's administration and tried to take credit for the expansion.  She also proposed changes in fiscal policy that will expand the economy.  Trump's claim was based upon traditional GOP hype and another claim that Republicans typically reject.  In the first instance, he argued that cutting taxes for the rich and easing regulation would expand the economy.  In the second case, he claimed that the economy would grow by placing tariffs on imports which would reduce the US trade deficit.  Both candidates attempted to connect economic performance to whoever resides in the White House.  The quote below is closer to the real connection between the White House and economic performance:

I don’t want to suggest that presidents are irrelevant to markets and the economy; their actions can and do affect interest rates, and commodity and equity prices. A well-designed stimulus can help blunt the harm of a recession, while policy blunders such as waging unnecessary wars as in Vietnam or Iraq can and will affect markets. But during the ordinary course of business, a president isn't usually an especially important market-moving agent.
This article does a nice job of explaining the connections between presidential politics and economic performance.  Clinton proposed an increase on government spending that might expand an economy in recession.  The economic boom during her husband's administration was unrelated to his economic policies. Changes in the market created created the boom.  Trump's claim that cutting taxes for the rich and easing regulation has not proven to be a good recipe for economic growth.  Putting tariffs on imports has typically caused economic contractions.  On the other hand, he regarded it as a good way to convince citizens who have not benefited from globalization to vote for him.

The bottom line is that voters should not pay much attention to claims made by presidential candidates about how they will create jobs and grow the economy.  They learn more important things about the candidates during election campaigns.  Trump's campaign has collapsed because he has been exposed during the election cycle.

Monday, October 10, 2016

Warren Buffet Releases His Tax Return to Challenge Trump Lies About Taxes

Donald Trump claims that he cannot release his tax returns because he is under an IRS audit.  He also claimed that Warren Buffet took huge tax deductions just as he has done.  Warren Buffet released data on his tax return to dispute Trump's false claims and to make another point about taxation.

Buffet's tax return is under an IRS audit but he released his return just as Trump would be able to do.  Buffet's adjusted gross income was $11.563 million and his tax rate was around 16%.  His tax rate is lower than his secretary's tax rate and Buffet believes that this is unfair.  Buffet also gave $2.85 billion to charities.  Only a fraction of his donation to charity is tax deductible under IRS law which limits charitable donation deductions.  Trump claims that he donates to charities but he has offered no data to prove his claim.  Trump does have a foundation that bears his name to which he no longer makes contributions.  His foundation has been closed down by 41 State Attorney Generals because it does not satisfy the legal requirements for a tax exempt foundation.   Trump also defended tax deductions of close to $1 billion that he claimed in 1995 that can be carried forward for 15 years to reduce his taxes by claiming the Warren Buffet does the same thing.  Buffet's tax return does not include similar loss carry forward deductions from his income.  Moreover, Buffet stated that he has never used loss carry forwards to reduce his taxable income.

Trump assumed that he could lie about Buffet's taxes because his returns are not publically available.  Buffet released his tax return to provide just another example of Trump's dishonesty.

Has Global Economy Entered Dangerous And Unexplored Territory?

Larry Summers explains why the global economy is in dangerous and unexplored territory.  He rejects the idea that we are experiencing the lingering effects of the financial crisis.  Rather, the financial crisis and slow economic growth are the result of lingering structural changes in the global economy.  In other words, this is not a low spot in a typical business cycle.  Ordinarily, central banks can lower interest rates and reverse a bad business cycle. This has not worked.  Interest rates are close to zero and global growth is still stalled.  The central banks are out of fuel and something else is required to address the structural changes in the global economy.

Summers argues that there are excess savings in the global economy and not enough investment to absorb the savings.  He believes that we have to reject austerity economics in favor of investment economics.  Governments should invest in infrastructure and other activities to absorb the excess savings. If governments fail to act we will continue to see a rise in dangerous forms of populism and a loss of confidence in democratic leadership.  Bad economic performance breeds bad politics.

Slow economic growth is a dangerous problem and it is worsened by rising income inequality.  Most of the gains from the growth that has taken place have gone to a sliver of the population.  That only fuels populism and it contributes to slow economic growth.  Summers concludes by arguing that we have to move from a global economy based upon opportunities for the movement of capital to a global economy that expands opportunities for labor.

If Summers is correct,  we are entering into an unexplored period in which traditional ideas no longer work and in which traditional leadership will continue to be questioned. Global economic and political disintegration will not be far behind.

Friday, October 7, 2016

How Does Trump Get The 270 Electoral College Votes To Become President

This electoral college map illustrates the best path for Trump to win the 270 electoral college votes need to win the election.  It gives Clinton 268 votes in states where she has a firm advantage.  Trump must win North Carolina, Ohio, Florida, Nevada and New Hampshire to win the election.  If he loses any of these states, which is highly likely, Clinton is our next president.

Monday, October 3, 2016

Trump's Pep Talk At Rally In Pennsylvania

Trump spoke for over one hour at this rally.  He claims that he will make America Great Again.  He expressed lots of random thoughts, but he said nothing about what he would do to make things better for rural Americans and others who are unhappy about their economic situation and a culture that they don't understand.  Its hard to believe that we have come to this point in our democracy.  This man has been nominated by one of our two major political parties to be our next president.  Almost half of our electorate plan to vote for an incoherent narcissist who could not win a junior high school election for class president.

Sunday, October 2, 2016

An Interview With A Devoted Trump Supporter

A Washington Post journalist went to a small town in Western Pennsylvania which heavily supported Donald Trump in the GOP primaries.  Her interview with one of Trump's supporters provides some insights into the depth of Trump's support in this part of Pennsylvania.  The woman that she interviewed may have more extreme views than other Trump supporters in Western Pennsylvania but the source of the woman's information is not unusual.  She gets most of her information from right wing social media.  I knew that conspiracy theories were prominent in the right wing media but I was blown away by conspiracy theories that caused this woman to state that Obama should be murdered and that the White House should be fumigated after his death. Those who do not regularly get their information from the right wing social media may be as surprised as I was.

Trump's Economic "Plan" in a Nutshell

Few of Trump's supporters really care about Trump's economic plan.  They believe that he really will make America great again.  Some voters may want to understand Trump's economic plan but they don't want to wade through the economic jargon.  This article provides all of the information that they need to know.

Since 1980 cutting taxes for the rich has been central to Republican economic policies.  Trump's plan does not deviate from that pattern.  The tax cuts in his plan would reduce tax revenues by $2.6 trillion over 10 years.  Deficit reduction is only important to Republicans when a Democrat is in office.  On the other hand, Trump's economic plan has some magic that is supposed to pay for the tax cuts.  The first bit of magic comes from deregulation.  It assumes that deregulation will stimulate economic growth that will increase tax revenue.  That might work if the US economy was burdened by excessive regulation.  Regulation in the US is not high relative to other advanced economies.  Consequently, few economists believe in deregulation magic.  Reducing the US trade deficit is another magic bullet.  The trade deficit would be reduced by the use of tariffs that would spark a trade war.  Most economists think that trade wars reduce growth.  Consequently, no prominent economists have endorsed Trump's economic plan.  It was patched together by a few economists who have no reputation to protect.  The real magic in Trump's economic plan is that many of his hard core supporters believe that he has their interest in mind.  Trump's plan consists primarily of tax cuts for the super rich sprinkled with fairy dust that compensates for the loss of tax revenue.

Donald Trump Reported A $916 Milllion Loss On His 1995 Tax Return

If one wondered why The Donald does not want to release his tax returns this article explains why.  Our famous billionaire reported almost a billion dollar loss on his 1995 tax return.  The IRS allows tax losses to be carried forward so that they can be deducted from future income.  Trump could have earned $50 million per year for 18 years without having to pay any income tax.  It also allowed Trump to deduct his loss in 1995 from another source of income.  The banks that made loans to Trump, that he could not repay in full,  forgave a portion of Trump's debt.  The IRS considers that to be taxable income.  The Donald boasts about being a billionaire and a great business man.  He was so good in business that he lost almost a billion in 1995.  His creditors, and others who suffered losses from his bad business deals,  suffered while Trump lived like a king.  Federal tax laws allowed Trump to avoid paying future taxes on his income while  ordinary citizens do not have that luxury.  Trump has also released the tax policies that he would propose as our president.  His proposed changes to the tax code would make it easier for individuals in similar businesses to lower their tax bills.

Saturday, October 1, 2016

Pravda.NU Endorses Donald Trump

According to this article the Bush Administration and the Obama Administration have been a disaster.  Hillary Clinton is a continuation of the Obama Administration; therefore, she will be a disaster.  It will take a strong leader, who is not a weak politician, to clean up the mess in Washington.  Moreover, Donald Trump is the only candidate who has a plan to make life better for the black minority.  America needs a leader who dares to take on the US establishment.