Sunday, December 31, 2017

Paul Krugman Explains Why Small Cities Fail

Small cities in the US started out as centers for the agriculture industry.  Since agriculture has become more productive, they don't provide enough jobs to prevent small cites from collapsing.  Some small cities, like Rochester, NY, survived and prospered for some time because new businesses were formed that prospered for awhile after the decline of its agricultural base.  It has struggled since the decline of Eastman Kodak and Xerox which were central to its economy.  Large cities typically have more businesses so they are not as dependent upon the survival of a particular business activity.  They are typically located near educational institutions which seed new business formations or they have other geographical advantages such as nice weather or access to transportation centers.

Krugman concludes that the demise of small cities had little to do with globalization. They were primarily affected by changes in the agriculture industry.  He does not discuss the decline of large cities like Detroit which were dependent upon the auto industry which suffered from foreign competition.  More generally, he does not offer explanations for the shifting of our economy from a manufacturing base to a services economy.

What Would You Do If You Had Hired Donald Trump?

Suppose that a corporation hired Donald Trump because they were impressed by his success in the real estate business.  Things have not gone as well as they had hoped so the directors invite him to a meeting to discuss the erosion of his support among customers and the management team.  The directors would realize that they had made a mistake and they would have to fire him in order to save the corporation from ruin.  Ezra Klein reviews Trump's interview with a NYT reporter and concludes that he is not fit to occupy his job as our president.  Unfortunately, Trump was given a four year contract and he cannot be fired for poor performance. Republican members of Congress, and some who voted for him, may search for reasons to defend his presidency.  After all, he sold a tax plan that Republicans love, and he has used his position to put an arch conservative on the Supreme Court.  On the other hand, there are more important things that a president has to do.  Its pretty clear from this interview that Donald Trump is a clear and present danger to most Americans and to the rest of the world.  He believes that he is the greatest president in our history, and he finds a way to twist everything that happens on his watch to substantiate his self image.

I reached a similar position in the post below.  I was tempted to believe that most of his lies were intended for the poorly informed members of his political base.  The NYT interview was ostensibly about the number of lies that he told in a 30 minute interview.  Its really more serious than that. Donald Trump is both  incompetent and delusional.  He claims that he wants to defend America against the enemies that he imagines.  He spends much of his time defending himself from the media which exposes his weaknesses.  He turns on Fox News, which is part of his psychological support system, to convince himself that he is really as great as he believes himself to be. 

Saturday, December 30, 2017

Why Trump's 30 Minute Interview With NYT Is Very Troubling

Donald Trump's interview with the NYT produced 24 lies or misleading statements about a number of topics.  We are accustomed to Trump's tweets, which are primarily intended for his base, that are less than truthful. Its hard to understand why Trump would attempt to mislead a NYT reporter.  He must know that the reporter will fact check the statements that he makes and that they will not filter down to his base.  Trump must really believe some of the statements that he made, and some of his comments indicate a profound lack of understanding about important topics like trade deficits.  In either case, it is very troubling. Trump has a deep need to interpret events in a way that bolsters his ego.  He is also ignorant about important matters. We can't expect him to make good judgements about important matters that every president faces.  We can no longer dismiss his comments simply as red meat for his political base which he understands very well.  His narcissism and ignorance is malignant.

Thursday, December 21, 2017

UN Votes To Condemn Trump's Decision To Declare Jerusalem As Capital Of Israel

Donald Trump made a decision that appealed to his donors and parts of his political base. It also cemented his connection to the conservative government in Israel.  It was less popular at the UN. 138 voted to condemn the decision; 9 supported his decision and 35 nations abstained.  The US ambassador to the UN was not pleased with the vote.  Both she and Trump warned the UN membership not to condemn Trump's political decision.  Their warnings were unheeded.  Trump's America First policy seems to mean that Trump will do whatever it takes to please his base.  He has no interest in providing US leadership at the UN.  They don't vote in US elections and they don't donate funds to Republican campaigns.

Trump Takes Credit For Repealing Obamacare With Tax Bill

In a moment of honesty, which he had been told to avoid, Donald Trump could not resist the temptation to brag.  During his victory speech he said that the tax bill also repealed Obamacare.  That was not one of his lies.  The tax bill repealed the individual mandate which is the glue that held Obamacare together.  Insurance premiums will increase dramatically and analysts estimate that 13 million Americans will not be able to afford to purchase health insurance on the exchanges.  Republicans accomplished with the tax bill what they could not get done with their failed attempt pass a healthcare bill that would have ended Obamacare and also disrupted our entire healthcare industry which accounts for 17% of the US economy.  Republicans stripped the individual mandate out of the tax bill because it also eliminated government subsidies to low income citizens which allowed them to purchase insurance.  Eliminating the subsidies helped to fund the corporate tax cuts which were the primary focus of the tax bill.  Trump, in another moment of honesty in his victory speech, also declared that the tax bill was not primarily designed to benefit the middle class.  He boasted that the primary purpose of the tax bill was to cut corporate taxes.  Republicans sold bill as a middle class bill under the assumption, which most economists do not accept, that corporate tax cuts will end up benefiting the middle class by stimulating economic growth which would increase jobs and wages for the middle class.

Trump's inability to resist boasting about his achievement will give Democrats lots of ammunition to use against Republicans in the 2018 elections. The huckster could not resist bragging about the product that he was really selling to his base.  The tax bill is all about cutting taxes for Republican donors and repealing Obamacare.  Trump made it available on video for Democrats to package into their campaigns.

Tuesday, December 19, 2017

A Weak Response To A Big Problem From David Brooks

David Brooks, like his counterpart at the NYT, wants to believe in reform conservatism.  He realizes that the Republican Party, under Trump, has not been good for most of the people who voted for Trump's populist agenda.  He runs through a list of conservative thinkers at conservative think tanks who have advocated policies that address many of problems that have been ignored by Trump and most Republican members of Congress.  He also argues that the Republican tax plan, which eliminates many tax deductions to help fund large tax cuts for businesses is a good thing and that it is wrongly criticized by his liberal friends.  He argues that corporate tax cuts are needed to make US corporations competitive with foreign corporations that have lower tax rates.  The good guys in his article are the reform conservatives who have had little impact on conservatives in Congress.  They are not visible to most Americans either.  In other words, he offers nothing practical in response to policies that don't help most Americans and which may be harmful to the economy and to our national interest.  Corporate profits and stock prices are at all time highs.  There is little reason to believe that they need lower taxes to be competitive in international markets.  There are good reasons to believe that cutting important tax deductions, in order to fund corporate tax cuts, will be counter-productive.

The Republican tax plan reduces the deduction for state and local taxes to help fund the corporate tax cuts.  The deduction is capped at $10,000.  Households in states and localities with deductions above that level will pay higher taxes to the federal government and they will be less willing to pay state and local taxes without the deduction.  States and localities spend most of their tax receipts on education.  It will be more difficult for states and localities to maintain funding for public universities and public schools as the net cost increases for many state and local taxpayers. In order to increase economic mobility we should be doing the opposite.  One of Brooks' conservative reform ideas is to increase access to education for low income citizens.  That will not happen as states and localities face a higher hurdle to fund education.

The Republican Party under Trump is doing what it has typically done since the 1980's.  Brooks understands this. He knows that they want to cut taxes for their donors, and he also understands that their policy proposals will not serve the interests of the populists who elected Trump. He claims that ignoring their interests will make them less well off and that will make them more likely to vote for Republicans.  Trump supporters, and many low income Republicans, have consistently been suckered by the hucksters who tell them that cutting taxes for the rich is good for them. GOP donors are willing to pay for their campaign promises.  The reform conservatives have no voice in the Republican Party.

Thursday, December 14, 2017

How Trump Lies About His Impact On The Economy

One of the ways in which Trump lies or misleads us about the economy is that he changes his mind about important economic indicators.  For example, during the Obama administration he claimed that the low unemployment rate was meaningless because the statistic itself was faulty.  Now he brags about the low unemployment rate that his policies created.  The same thing is true about the performance of the stock market.  He claimed that presidents have no impact on stock prices when stock prices rose during the Obama administration.  Of course, now he takes credit for the performance of the stock market. When the stock market falls he will deny any relationship between his policies and falling stock prices.  If Trump managed a football team he would probably change the point system so that his team did well no matter how it performed.

For those who are interested in how the economy has performed under Obama and Trump, using the usual statistics,  this article contains the relevant data.

Tuesday, December 12, 2017

David Brooks Equates Trumpism With Radicalism On The Left

David Brooks makes a good case against the radicalism we see among Trump and many of his followers.  They oppose our institutions and they are not swayed by evidence that is inconsistent with their opinions.  That has made Brooks very uncomfortable because he no longer has a political party to promote.  Unfortunately, Brooks had to invoke false equivalence to make his case against Trump's phony populism and his promises to drain the swamp in Washington.  Since there is an absence of left wing radicalism on the left today, Brooks took us back to 1972 when he helped to create a conservative response to left wing radicals like Saul Alinsky.  Bernie Sanders is no Saul Alinsky and he lost the Democratic primary to a center left Hillary Clinton.  Frankly, the absence of  Democratic policy proposals to deal with the real problems faced by many Americans opened the door for Trump to offer radical promises that he has long forgotten.

HIger Education Bill Proposed By Betsy Devos Assists For Profit Colleges In Scams

Donald Trump's for-profit college defrauded students.  Trump University was shut down and he had to pay a $25 million fine for promising jobs to students upon graduation without appropriate training.  Trump University and other for-profit colleges took advantage of student loans backed up by a government guarantee.  The government ended up paying for defaulted loans by students who were not provided with the skills required for employment.  The Obama administration tried to fix that problem by holding the for-profit colleges accountable for a portion of the defaulted loans.  Betsy Devos, who is the new head of education in the Trump administration is an advocate for private for-profit schools.  Her proposal eliminates many of the Obama rules that were established to protect students from places like Trump University.  Her plan also eliminates the use of credit hours as a key metric in the awarding of degrees.  That would allow for-profit schools an opportunity to award degrees to students without any save guards on graduation requirements. 

Trump Adminstration Sets A New Record

It didn't take Trump long to break another important record.  He promised to "drain the swamp"
in Washington during his successful political campaign.  That is what the public wanted but he has given them something else.  A recent poll by a bipartisan organization found the 44% of the public believes that the Trump administration is corrupt.  He has filled the swamp instead of draining it. Ordinarily, the public views Congress as our most corrupt institution.  Trump beat Congress on that metric by 6%.  That has happened despite the poor performance of the Republican Congress on healthcare reform and their unpopular tax reform bill.  Trump defeated a very strong competitor on the corruption metric.  Perhaps we have to give the public more credit for perception than they deserved when they put Trump in the White House to clean up the government in Washington.

Pulp Fiction From The US Treasury Department To Sell Tax Plan

The Treasury Secretary rolled out a one page summary of a study that was never done by his department to sell the Republican tax plan to their base.  Economists generally agree that the US economy will grow by 1.9% annually  over the next ten years.  If that forecast is correct the tax cuts, mainly for US corporations, will increase the national debt by $2 trillion.  Consequently, Steve Mnuchin's one page defense of the tax plan assumes that the economy will grow by 2.9% annually because the tax cuts,  deregulation and infrastructure investments will stimulate the economy enough to pay for the tax cuts.

The editors of the NYT and the Washington Post can't believe that Steve Mnuchin would defend a 400 page tax plan with a one page summary of a plan that does not exist, while the CBO, the Tax Policy Center and other organizations, which government typically uses to assess policy proposals disagree with Mnuchin's fictional analysis of the tax plan.  That is especially true when the deregulation and infrastructure spending included in his analysis do not exist.  They are simply Trump administration talking points.  The answer to the questions raised in the editorials is unfortunate but pretty simple.  Its because Mnuchin, the Republican Congress and the Trump administration don't believe that its base requires more than the one page summary by Mnuchin.  GOP donors don't care about budget deficits; they just want their taxes cut.  The rest of the GOP base gets most of their information from Fox News and other sources that enjoy selling magic solutions to them.  It does not matter to Republicans that the majority of Americans don't like the tax plan.  They expect that small tax cuts, that are supposed to expire after a few years, will appease most of the public.  Of course, if those tax cuts do not expire according to plan,  the federal debt will balloon and then the Republican Congress can justify cutting Medicare, Medicaid, Social Security and other popular social welfare programs to demonstrate their fake concern for fiscal responsibility.

Joseph Stigliz,  a Nobel Laureate in economics,  explains why this is the worst tax proposal that he has ever seen in a short video. 

Monday, December 11, 2017

Why Tax Cuts Are The Wrong Medicine For US Economy

Larry Summers argues that the US economy is on a "sugar high" and that the medium term outlook cannot be improved by tax cuts.  They will be bad for the economy.

Trump points to the 24% rise in US stock prices but they are not the result of government policies.  They are driven by corporate profits.  That is part of our "sugar high" the rise in stock prices have boosted spending.  Moreover, growth in the US is lower than growth in much of Europe and Asia.  Investment has not been pouring into Trump's economy.  The dollar has dropped in value relative to the Euro and the Yen. 

Given that we are experiencing a "sugar high" what is our medium term outlook?  According to Summers it is not very good.  We have a low unemployment rate so there is no room to boost GDP by increasing the supply of labor.  The path to higher growth must come from an increase in productivity.  However, our major corporations are flush with cash and interest rates are very low.  Apparently, they don't see an opportunity to increase their investment rates.  Consequently, the public sector must expand in order to increase the productivity rate.  It would also help if we could grow the economy in a more equal fashion.  Instead inequality has been on the rise and we are making the tax system more regressive. 

Simpson and Bowles pointed out that US tax revenue should not fall below 21% of GDP to insure a healthy economy.  The Trump tax cuts reduce that healthy ratio to 17% of GDP.  There will be less room for public investments and productivity growth in that kind of fiscal environment.

Sunday, December 10, 2017

Fake News Can Be Hopful And Humorous

This video, set to the tune of the hit song from a James Bond movie, shows how easy it is to create fake news.  Its also very funny.  The title of the video is also a clever take off from a well known beer ad.

Friday, December 8, 2017

Democrats Should Ignore Low Information White Men And Sweep The Woman Vote

Jennifer Rubin is one of the conservative intellectuals on the Post who has been repelled by Trump's takeover of her political party.  Democrats have been brainstorming about how they can recapture the white males in the Rust Belt who jumped parties to elect Trump.  She argues that they would be more successful recruiting suburban women who voted for Trump.  She explains why they would find more switchable women taking yoga lessons than they might get from men in the Rust Belt who never expected Trump to do much more for them than other politicians have done.  She also provides some excellent messages that Democrats might use to sell themselves to women.  For example, it makes a lot of sense to explain how Trump's tax plan will make college more expensive for their children, or how it will make grad school more, and why Medicaid won't fund senior care for their parents, than it does to critique technical issues in the plan.

Donald Trump Has Over Achieved In One Area Beyond Dispute

A professor at that University of Virginia did a research project on lying behavior.  This is the only study that I have ever read on this subject. It is not a mainstream topic in academic psychological research. However, it does offer some unexpected insights.  For example, it classified lies into reasonable categories and it described norms on the frequency of lies within each category.  This article describes Donald Trump's lying behavior relative to the norms that it found in the general population.  Donald Trump has no peer as a liar.  He lies "bigly" compared to the general population and he excels in one particular category of lying.  A large percent of his lies were intended to harm others.  Most of our lies are intended to protect ourselves, or simply to get along with others.  Donald Trump has managed to convince a small percentage of Americans that he is truthful.  After all, we all tend to believe what we want to believe, and Donald Trump excels at telling a small percent of our population what they want to believe.  Of course some of his supporters could care less about whether he is lying or telling the truth.  They only care whether his lies serve their purposes.  That was good enough to put him into the White House.  We will have to see how long he prevails given his defenders in the media who earn their living serving the same market that Trump has targeted.  Some in their target market belong to places like Mar-A-Lago but most of them just want someone to tell them the lies that want to hear.

Davd Brooks Explains How He Lost His Political Home

David Brooks represented a political party that many thoughtful people, like himself and his NYT readers, could respect.  There were a core of ideas for which the Republican Party stood.  The Democratic Party embraced a different set of ideas, but the two parties could come together much of the time and do what was best for the nation.  Compromise was not a mortal sin.  That is no longer possible today because the Republican Party has lost its soul.  That was inevitable under a leader who exploited populism to satisfy his insatiable need for power and adoration.  Excellence is hierarchical, it can't be populist.  Donald Trump has no ideas, moral principles, or competence beyond hucksterism.  He has taken the Republican Party down to the level of his political base.  They only look upward in anger and despair.  They want to punish excellence and those who do not belong to their tribe.  Donald Trump has led the Republican Party downward and it has followed him gladly in pursuit of political advantage and personal gain.  They will welcome Roy Moore into the Senate in order to gain one more vote for a tax bill, or another seat on the Supreme Court or an opportunity to destroy what remains of President Obama's legacy.  David Brooks cannot join them in their downward spiral into the moral abyss they have chosen to pursue.  He is not alone.  Many of his colleagues and friends can only watch their chosen political party disintegrate with every Trump tweet or policy proposal.  They are all carefully designed to maintain his hold on his political base which has become the electoral foundation of the Republican Party.  Our position as a global leader is sinking with Trump and his followers in a political party without a soul, and without a moral compass by which to lead. Our former allies can only watch in despair as Trump and his political party descend into the abyss.  Many of them are like David Brooks and many other former Republican intellectuals.  Donald Trump and  his Republican allies have destroyed in one year a system of governance that took decades to develop.  It can only get worse as David Brooks and others like him abandon the Titanic.

Wednesday, December 6, 2017

How A "Reform Conservative" Can Live With Terrible Tax Plan

Ross Douthat, like his counterpart David Brooks,  supported Marco Rubio in the GOP primaries.  Trump clobbered "little Marco" in the primaries and "reform conservatism" died with him.  Douthat and Brooks have not been comfortable with Trumpism.  This op-ed by Douthat typifies the struggle that "reform conservatives" are having under Trumpism.  He tries as hard as he can to defend a deeply flawed Republican tax plan.  His first step is to admit that it is not a populist tax plan.  It is heavily weighted towards Republican donors and does nothing for struggling Americans who voted for Trump.  He counters this by supporting the corporate tax cuts, and the parts of the tax plan that raises taxes on upper class liberals in blue states.  Apparently, the plan would be fine if it had included one of the "reform conservative" proposals by Rubio to increase child tax credits for low income families.

I must admit that I do not have the brain power to follow Douthat's argument that minor changes in the tax plan would turn it into an a victory for reform conservatism, whatever that is. It is much easier to understand Trumpism and its architect Steve Bannon.  They have no interest "reform conservatism" they want to engineer an autocracy, led by Trump, with Bannon playing the role of chief propagandist who aligns Trumpism with its far right counterparts in Europe and with Republican's in Congress who only care about winning elections orchestrated by Bannon and featuring Donald Trump as its fearless leader.

Steve Bannon Assumes Leadership Of The New Republican Party

Donald Trump won the GOP primary, and the presidential election, by following Steve Bannon's strategy of attacking the GOP "establishment" and politically correct Democrats.  Bannon is still attacking the GOP establishment and working with Trump to build the GOP base around voters like those in Alabama.  Trump and Bannon support Roy Moore in the Alabama senate race.  Bannon is currently attacking Mitt Romney, for coming out against Roy Moore in the election.  He claims that Romney "hid behind his religion" to avoid serving in the Vietnam war.  Trump's base in Alabama does not respect Romney's Mormon faith and they don't like draft dodgers.  Trump, of course, dodged the draft during the Vietnam war by claiming a medical deferment due to bone spurs in his feet. Bannon understands that the new Republican Party is based upon voters who believe what they want to believe and that his job is to tell them what to believe.  He was forced out of his job in the White House but he has taken a leadership position in Trump's Republican Party as the head of Breitbart News which is leading the Alt Right movement in the US.  The Republican Party that Romney once led is dead.  It is dependent upon the electorate that Bannon is developing, and on billionaire donors who fund Republican campaigns so that they can capture the government.

Tuesday, December 5, 2017

Robert Mueller Is Following Trump's Money

Mueller's investigation has taken a new turn that Trump will not like.  He asked Deutsche Bank, which holds more than $300 million of Trump's debt,  for information on Trump's finances with the bank.  We don't know what Mueller will learn that might be damaging to Trump but we do know that Trump has worked very hard to keep his financial information private.  Moreover, Mueller did not request that information for no reason.  He must have uncovered information about Trump's finances that raises questions about any reliance he might have on Russian sources funded through Deutsche Bank.  One thing is certain.  Trump will respond with a twitter stream even more vigorous than we have seen about other issues.  There is a reason why Trump is our only recent president who would not release his tax returns.

The Republican Party Is Paying A Big Price For Giving Up Moral Principles

The Republican Party once offered a home to conservative intellectuals who had platforms on the Washington Post and the New York Times.  They tended to support Republican policies and they also provided criticisms of the Democratic Party.  Jennifer Rubin is one of many conservative intellectuals who have moved from providing intellectual cover for Republicans to being a critic of the party.  She can longer tolerate the moral depravity of her former political party.  By supporting Donald Trump and Roy Moore, who is a serial sex predator, in order to get a terrible tax bill passed, Neil Gorsuch on the Supreme Court, and the authority to deregulate the government, they  have debased our democracy and the principles that have united our nation.  Even if Trump goes away the people who supported Trump and Moore will still be around.  That would be true even if Trump turned out to be more competent than he has demonstrated.  Her favorite political party has been corrupted.

She is not alone in her criticism of the Republican Party.  Two intellectuals from the conservative American Enterprise Institute wrote a book eleven years ago in which they criticized the performance of the Republican Party and the Democratic Party in Congress.  They argued that the government was not functioning and they suggested how it might function properly.  They no longer believe that story. In this article they argue that the Republican Party rationalizes and enables Donald Trump.  However, the decline of the Republican Party began in the 1990's.  That is when the party began to demonize Congress and argue that government itself is the problem.  They refused to support their Republican President during the financial crisis by voting against his TARP plan that kept the financial system from collapsing and worsening the Great Recession.  After the election of Obama their sole purpose was to block every initiative that he proposed.  It became a mortal sin and a sign of weakness to compromise with Obama.  The birther movement took this a step further into racism and Trump began his career by exploiting that movement.

The News media also lined up to support the Republican Party's alliance with the far right.  Talk radio, Fox News and Steve Bannon's Breitbart News built its audience on hostility to the establishment and political correctness.  That is where the Republican Party is today with reliance on a far right group of donors and a political base built upon hostility.  We no longer have a system in which a responsible Republican Party can balance the ideology of the Democratic Party.  We have system in which the Republican Party no longer recognizes the legitimacy of the Democratic Party. It would prefer a one party system that requires an autocrat like Trump to provide its leadership.

American Spending By Income Level

This study shows how American households spend their incomes as a function of income level.  There is a huge difference in spending between the top 20% of households with income above $177,851 and the bottom 20% of households with incomes below $10,916.  Most of the spending in each income category is on Housing, Transportation and Food.  However, low income households spend a much higher percent of their income on housing (40%) and most of it is on rent payments.  High income households spend a lower percent of their income on housing (29.9%) but a much higher percent own their homes. They also spend a significant share of their income on insurance and retirement savings.  Low income households spend almost nothing on these categories which makes them much more economically vulnerable.

Not surprisingly, since high income households have more money to spend,  they spend much more money on every category.   The ratio of high income household spending to low income spending  in each category is amazing.  They spend 30 times what low income households spend on insurance and retirement, but they also spend 6 times more than low income households on alcoholic beverages.  They even spend more on tobacco products which is the category with the lowest spending ratio.  They live in completely different worlds.

Saturday, December 2, 2017

What Are The Implications of Flynn's Plea Deal With Mueller

There has been a lot of speculation about Flynn's bargain with the Special Counsel.  This article provides a good framework for understanding Flynn's deal and how it might be used by Mueller.  Its pretty clear that Mueller would not have made the deal with Flynn unless he was given something in return from Flynn that would be pertinent to his investigation.  We don't know what Flynn can tell us about those above him in the White House.  But we do know that he did not operate as a lone wolf.  We also know that there were not many people who outranked him in the inner circle, and that his position as national security adviser gave him access to data and discussions that are only available at his level.  Trump did not go out of his way to terminate the FBI investigation of Flynn because he likes Flynn.  What just happened is just what he wanted to avoid.  Mueller will now interview Trump's inner circle and they will have to be careful in their answers to his questions because they are aware of information that Flynn may have provided to Mueller.

This editorial in the NYT takes an even stronger position on Flynn's cooperation with the Mueller investigation.  Obstruction of justice charge has been strengthened and Flynn may even testify that Trump was involved in his illegal discussions with Russian officials.

Friday, December 1, 2017

Michael Flynn Agrees To Plea Deal With Mueller

Flynn will plead guilty to a charge of lying to the FBI and his son, who was also under investigation will not be charged with any crime by Mueller.  No information has been released about what Flynn agreed to reveal to Mueller under the deal.  Coincidentally, Trump has asked several Republican senators to put a stop to the Mueller investigation.

Paul Krugman Describes The Pack of Lies Behind GOP Tax Plan

A friend, who happens to be a Republican,  gave me a call while he was watching some of Senate debate on the tax bill.  He asked me how they could vote on bill that they have not read.  The answer is simple: they are compelled to pass a tax bill that they do not understand because they believe that it is good politics to do so.  Their donors are demanding tax cuts and they have a need to demonstrate their ability to govern.  Paul Krugman describes the ignorance and lying at the foundation of the GOP tax proposal.  Its not just Trump.  The Republican Party is perfectly at home selling tax cuts for their friends.  However, there are some Republican senators who portray themselves as fiscal conservatives.  Its hard for them to pass a bill that would add a trillion dollars to the national debt.  Trump's Secretary of the Treasury told them that a study by his department proved that the tax cuts would stimulate economic growth and not increase the national debt.  He was not able to share the study with them because it does not exist.  He has been lying about the study in his speeches defending the tax cuts for weeks.  Unfortunately, lying in support of the tax cuts runs deep.  A group of economists,  most of whom are connected to the conservative Hoover Institute think tank, published a letter in the WSJ making a similar claim.  Their letter was based upon supportive research that they intentionally distorted.  There are a number of conservative think tanks, supported by tax free dollars, that provide a friendly home for economists with the right values.

The non-partisan Tax Policy Center just released its study of the tax bill and concluded that it would add at least a trillion dollars to the national debt over ten years.  That might bother some of the fiscal conservative pretenders in the Republican senate.  However, its unlikely that any of them will stand up to the brotherhood which is intent upon passing the tax bill.  There will be some tinkering with the bill to make it appear to be more fiscally conservative, and they will be able to demonstrate their fiscal conservatism to their constituents.

Unfortunately, the tax bill is not only fiscally irresponsible, it goes well beyond rewarding its donors.  It punishes its enemies as well.  Blue states are punished by the bill and it attacks universities who produce voters that tend to be more liberal than most Republicans.  The bill is also bad for the middle class.  It raises taxes for households with income under $70,000 over time in order to pay for tax cuts to its friends who enjoy life at Mar a Lago.  In addition to raising taxes for the middle class it provides the justification for cuts in popular entitlement programs as federal debt rises as a result of the tax cuts.  Its not just Trump.  The Republican Party has become rotten at the core.

Thursday, November 30, 2017

Rex Tillerson May Be Replaced As Secretary of State

Signals are coming from the White House that Trump plans to replace Rex Tillerson with Mike Pompeo who Trump had put in charge of the CIA. Tom Cotton, a senator from Arizona, is rumored as the replacement for Pompeo in the CIA.  Pompeo and Cotton have demonstrated loyalty to Trump that ha beens much stronger than that of Tillerson who mistakenly believed that he was in charge of the State Department.  There is only one boss in the Trump administration.  He runs the government much like he ran his businesses.  He had no board of directors or stockholders to appease.  Neither Congress or the judiciary can expect to limit Trump's ability to run the government as he ran his businesses.

Rex Tillerson spent 41 years at Exxon Mobile where he worked his way up to the CEO position.  His first impulse as our new Secretary of State was to do what many CEO's do after reaching that pinnacle. He decided to reorganize the department and reduce the headcount.  Apparently, he believed that increasing the efficiency of the organization was his top priority.  Trump could care less about efficiency.  He only cares about personal loyalty to his greatness.  Tillerson mistakenly believed that he was in charge and that it was OK to be critical of Trump.  Pompeo will not make that mistake.

Its sad to witness the humiliation of Tillerson by the master of humiliation.  He will return to private life with a big scar that will last forever.  On the other hand, he will not be missed by many State Department professionals.  They did not respond well to a rookie boss with no experience in government.  Pompeo may not be a better leader at State but he understands who is really the boss.  He will shape the department to serve the Donald.

Tom Cotton as the head of the CIA creates another problem.  The CIA is supposed to be an apolitical organization.  The appointment of a Republican senator, loyal to Trump, is out of character for the CIA.  He will be viewed suspiciously by career employees in the CIA.  

The Self Destruction Of US Democracy

There has been a clear increase in the risk to democracy in the US.  This article provides a good description of the fault lines in our system of governance.  It took Trump only one year to weaken a system that took hundreds of years to develop.  Given the position of the US in the western world, the problems that Trump has created in the US have been exported to other nations.  Unfortunately, the Republican congress is willing to grant Trump the freedom to do whatever he pleases as long as he helps to sell policies which please their donors to the electorate. The Mueller investigation may uncover damaging evidence that can be used to defuse Trump, but our only real hope is to elect candidates to Congress who place the national interest above political party interest.  Three more years of Trump, with a Republican Congress behind him, may put an end to our experiment with democracy.

It is perhaps too easy to blame Trump for all of the problems with our system of governance. The fact that he was able to win the GOP nomination and the presidential election was a signal that something serious had gone wrong with our system.  Now it appears that Trump will succeed in selling a tax plan, designed to benefit Republican donors, and himself, as a plan designed to benefit less advantaged citizens. Our government established the FDA to make it more difficult to sell snake oil as a remedy for common health problems.  Trump is an expert selling snake oil that increases his power, and we don't have the equivalent of the FDA to deter him.  The press has done what it can to expose the snake oil but Trump, with some help from his friends, has been somewhat successful in convincing many Americans that the media are selling snake oil.  The fundamental requirement in any democratic system is a well informed public.  A public that is unable to discriminate between snake oil and effective medications will not enjoy the benefits of a democratic system for very long.  Snake oil is not only ineffective, it is deadly.

Tuesday, November 28, 2017

How To Sell A Tax Plan For Corporations As A Middle Class Tax Cut

The Republican tax plan provides corporations with large permanent tax cuts.  The plan also provides temporary tax cuts to the middle class that disappear over a ten year period.  The middle class tax cuts have to be temporary so that the Republican Senate can pass the plan without any votes from Democrats. Senate rules allow the tax plan to pass with a simple majority as long as the plan does not increase the federal debt by by more than $1.5 trillion over a ten year period.  They only need 50 votes from the 52 Republican senators to get a simple majority since the Vice President can cast a vote to provide a 51 vote majority.

Some senate Republicans have issues with the tax plan.  Some are deficit hawks who object to any increase in the national debt.  Others would like to make a few other changes to please their constituents.  There is a lot of pressure on Republicans to pass any tax plan prior to the mid-term elections in order to demonstrate their ability to govern. However, the plan is not very popular with many voters who view the plan as a gift to corporations.  Democrats should have an easy time making that point in the mid-term elections.  The economics profession has many issues with the plan that raise important questions about GOP efforts to sell it as a plan for the middle class.  The odds are that some kind of bad plan will get passed.  We will have to see whether Democrats have the ability to convince voters that they cannot trust the GOP to look after their interests.

Trump's War Against The Free Press Supports Autocracy Everywhere

In Trump's mind the free press is his enemy.  He praises Fox News whose target market includes Trump's base, and he has been working hard to convince Americans that CNN and the major news media are sources of fake news.  Its easy to understand Trump's efforts to discredit the media at personal level.  Trump has an insatiable desire for praise and adulation.  He gets that from Fox News.  He does not get that from the mainstream media.  Even worse, the media does not pull any punches when they cover him and his administration.  They violate another of Trump's psychological needs.  He can't tolerate criticism, and he has no use for an objective coverage his policy proposals.  Whatever Trump claims is the truth as long as it serves his purposes.  He frequently alters his opinions on almost any topic when a "new truth" better serves his purposes.

This article reports on efforts to help Trump in his war against objective reporting.  A right wing organization tried to scam the Washington Post.  One of its stooges contacted a Washington Post reporter and claimed that Roy Moore had impregnated her and then forced her to have an abortion. That would have been a major story if it were true.  However, the reporter had several doubts about the woman's story and he did what good reporters in the "fake media" do.  He checked out the story and he found that it was fabricated.  He did not report her story and found that she was connected to a right wing organization that has a mission to prove that the mainstream media tell nothing but lies.

While Trump is unable to tolerate the free press in the US, he has taken his attack on the media to the international level.  CNN has an international audience and its reports and him and his administration has not been good for his self esteem.  Trump fired tweets at CNN's international reporting of "fake news".  His attack on CNN, however, goes beyond the damage that its reporting does to his self esteem.  His efforts to delegitimize objective media sources is consistent with efforts underway in many autocratic regimes to control the information that is provided to the public.  Trump is providing leadership to autocratic regimes everywhere.  One might be critical of government directed US news sources such as the Voice of America in places like Russia, but Trump is trying to discredit private sources of news like CNN which is primarily protected by its reputation for responsible journalism.  Trump understands this and that is why he doing what he can to attack their reputation.

Friday, November 24, 2017

Top Economists Agree About Two Outcomes From GOP Tax Plan

Republican politicians claim that their tax plan will stimulate economic growth.  They also claim that the tax cuts will stimulate enough growth to pay for the cuts.  A poll of 42 top economists shows that there is little support among economists for their claims.  They don't believe that the tax cuts will produce substantial economic growth, and they agree that the tax cuts will add substantially to the national debt.  That won't have much impact on Republican politicians, or on many of their followers.  The benefactors from the tax cuts don't really care about anything but a reduction in their taxes.  They are also the paymasters for their Republican supporters.  Furthermore, many low income Republicans don't really care much about what "elite intellectuals" have to say about tax policies.  They get most of their information from sources that are aligned with the Republican Party who claim that they offer "fair and balanced" news. They have a strange concept of fair and balanced news.  They exclude the views of top economists and they promote the views of paid hacks at conservative "think tanks" which are funded by the folks who benefit from the tax cuts.

The GOP tax plan also shows what Republicans really think about budget deficits and the national debt.  Budget deficits and increases in the national debt have been how they have paid for tax cuts in previous Republican administrations.  They prefer to pay for government by borrowing instead of taxing the income of wealthy Republicans. They also get to collect the interest on the debt by buying US treasuries.

Michael Flynn's Lawyers Have Stopped Communication With Trump's Lawyers

Michael Flynn's lawyers had been sharing information into his investigation by Mueller's team.  They informed Trump's legal team that they would no longer share information with them.  One of the implications of this decision by Flynn's legal team is that Flynn may be negotiating a deal with Mueller.  This is typical in these kinds of investigations.  Mueller may be offering Flynn more lenient treatment in exchange for information that he has about the Trump campaign.  Flynn may or may not reach a deal with Mueller but it would be significant if he chose to do so. Flynn has information about Trump and his campaign because of his position in the campaign.  Trump named Flynn as his national security chief after his election.  Trump also asked FBI Director James Comey to "go easy on Flynn".  Trump fired Comey after he refused to do so.

Why Paul Krugman Is Thankful But Worried About The Future

Paul Krugman was born during a period in which he was able to experience the promises of our democracy.  He probably would not have won a Noble Prize in economics if he were growing up in the America that developing today.  He lists the things that made it possible for him to live a good life and he describes the changes that are underway which will make it more difficult for others like him to have the same opportunities.  As you might imagine Trumpism is the enemy of middle class people like himself who has enjoyed the benefits of an open society that are being attacked by the Republican Party under Trump's leadership.  The majority of Republicans have come to believe that their culture and dominance is at risk because of intellectuals like Krugman and a  university system that promotes reason over blind faith and is supportive of an open society. The America that existing while Krugman was growing up is the enemy of the plutocracy that is working hard to destroy it through their sponsorship of willing Republican politicians and the private propaganda system that it has promoted.  Fox News, Breitbart News,  along with talk radio and the misuse of the social media, are their weapons of mass misinformation and the mass destruction of the social system that enabled Krugman to thrive.  We should keep his warnings in mind.  Social Democracy is the enemy of a rigid social economic hierarchy. The plutocracy is intent upon turning the clock back to earlier era in which the plutocracy had more control over our political and social system.  Communism used to be the enemy which they used to seek more power.  Since the demise of Communism, social democracy and liberalism is their new enemy.  Donald Trump told voters in Alabama to vote for Roy Moore because an accused pedophile was a better choice than a liberal democratic senator for Alabama.

Wednesday, November 22, 2017

Thankgiving Thank You's For Donald Trump

Sarah Huckabee Sanders humiliated the White House press corp by demanding that they give a Thanksgiving thank you before any of them could ask a question.  Dana Milbank was appalled by her demand from the supplicant reporters, but he thought that it might be a good idea to report his Thanksgiving thank you's for giving us Donald Trump.  We have  lot to be thankful for.  Its hard to imagine how lucky we are to have the boss that she protects in the White House.  Dana Milbank's thank you's are well taken.  I'm sure that more could be added to his list, but The Donald is sure to add more to Milbank's list.  I can't wait for him to report his Christmas list. Trump is a political hack who never stops giving.

Friday, November 17, 2017

Why Will The GOP Punish Most Of Our Citizens By Pushing Terrrible Policies?

The short answer to the question raised above is that Republicans propose bad policies because they believe that they can get away with it. However, they were unable to pass a healthcare bill, that most Americans did not like, only because a couple of Senators voted against the bill that required almost unanimous consent from Republican senators.  Now they hope to pass a terrible tax bill that most Americans don't like, or believe it to be unnecessary in a full employment economy.  Moreover, corporate profits and retained earnings are near an all time high.  Corporations don't need tax cuts to stimulate investment and create jobs.  Senator Lyndsey Graham provided the rationale for the Republican tax proposal which is designed to reward its wealthy donors.  He said that the financial contributions will stop if they don't pass the tax bill.  That reminds me of an email that I received from one of the members of a club to which I belong.  Most of the Republicans in the club were conflicted about voting for Donald Trump who they did not respect.  The rationale provided in the email was succinct and to the point.  Members should vote for Trump in order to get their taxes cut.  That was more important than any damage that Trump might do to our society and to our political system.  Apparently, that is what the Republican Party stands for today.  Cutting taxes for the wealthy, at the expense of public goods, is its dominant creed. 

What Will We Remember About The Trump Administration?

This article by a Republican is the most damning critique of the Trump administration that I have read.  A fish rots from its head and the head of this administration has no peer in our recent history for rottenness.  It starts and ends with Trump and his band of loyalists, including members of his family.  The following quote from the article sums it up nicely.  Eventually the administration will be toppled by the accumulation of lies that are being uncovered.

Many of the people who should be supplying the moral values required by self-government have corrupted themselves. The Trump administration will be remembered for many things. The widespread, infectious corruption of institutions and individuals may be its most damning legacy.
Hopefully we will have learned enough from the corruption of our political system to make the essential corrections.

Thursday, November 16, 2017

GOP Tax Cuts Are The Prelude To "Starving The Beast"

The GOP tax cuts will add at least $1.5 trillion to the federal debt over 10 years.  However, gimmicks in the GOP tax plan may add $2 trillion to the federal debt balance.  Guess what comes next?  OK you guessed it.  Republicans will use the ballooning federal debt level to "starve the beast".  They will become advocates for fiscal austerity just as they have in the past when Democrats were in the White House.  It won't be long before Republicans will be looking for cuts in mandatory spending which is short for cuts in Medicare and Social Security.  In other words, the tax cuts will provide the justification for "starving the beast" which is the way that Republicans refer to government.

Populism has been on the rise in Europe as well as in the US.  Globalization has been economically and socially harmful to many citizens who have been affected by the ability of multinational corporations to source capital and labor from the least expensive location.  Corporate profits and stock prices are at all time highs, but wages and occupational security have declined.  The implication is that we need stronger and more effective governments to deal with the impacts of globalization.  Starving the beast is the last thing that governments should be doing if they want to maintain the benefits of democracy, personal freedom and national sovereignty in the face of globalization. The Republican Party is living in the dark ages that existed before FDR responded to the Great Depression by implementing the New Deal against opposition from Republicans who believed that the labor market would fix itself.

US Treasury Secretary Gets Rewarded For Taking The Job

Steven Mnuchin made millions as an investor.  Many wondered why he would take the low paying job as US Treasury Secretary.  The photo below may provide one of the answers to the question.  Mnuchin is pictured with his trophy wife showing off newly printed dollars with his name affixed as the US Treasury Secretary.  Mnuchin doesn't need a big salary he just needs some fame to impress his wife.  He will get another chance for fame if the GOP passes a terrible tax bill that Mnuchin has been promoting in his new job as Treasury Secretary.

The Hidden $500 Billion Cost In The GOP Tax Plan

The GOP tax plan is full of gimmicks to hide the real cost ($515 billion) of the tax cuts that is providing primarily to its donors.  The increase in federal debt over 10 years cannot exceed $1.5 trillion under Senate rules which enable the bill to pass with a simple majority.  That is, it won't need a single Democratic vote to be passed into law.  The first gimmick that they have used for decades is to assume that tax cuts will be paid for by the economic growth stimulated by the tax cuts.  This article describes the gimmicks used to disguise an additional $515 billion increase in federal debt.

The first gimmick is to provide tax cuts to the middle class which disappear by law after five years. It is a present to middle class voters which actually results in a tax increase after five years.  The second gimmick is to provide tax cuts for its donors which are  are supposed to disappear after five years. Of course, they never disappear because the GOP will never support tax increases for its donors.  Its no wonder that the GOP manages to pass tax bills for its donors by pretending that their tax bill is a present to the middle class.  The gimmicks are never discussed on Fox News and other propaganda outlets.  The "fake news" media like the Washington Post and the NYT provide analyses of tax bills but most voters don't don't subscribe to them.

Wednesday, November 15, 2017

Republicans Use Tax Bill To Effectively Repeal Obamacare

The Republican tax bill eliminates the mandate in Obamacare which requires all Americans to apply for health insurance with government subsidies who cannot afford the premium.  The CBO determined that eliminating the mandate would increase health insurance premiums because fewer healthy individuals would purchase insurance and the risk pool would increase the risk to insurers.  That would cause 13 million Americans to lose healthcare coverage because they could not afford the higher premiums.  The loss of healthcare insurance, subsidized by government, would save the government $338 billion over ten years.  The savings will be use to help pay for the tax cuts that go primarily to wealthy Americans.  The Republicans would rather eliminate the inheritance tax on estates over $11 million than provide health insurance for 13 million Americans.  To make matters worse, they continue to sell their tax plan as a way to make life better for the middle class.  They have no conscience.

Republican Tax Plan Takes Us Back To 20th Century

Much of the debate about the GOP tax plan is about the maldistribution of the tax cuts and the choices made to pay for the tax cuts by the elimination of deductions that are harmful to middle income families.  Those criticisms are warranted.  This critique of the tax plan, however, takes aim at the effort to modernize the business tax.  Everyone agrees that the changes need to made in the business tax.  Instead of modernizing the business tax it takes us back to the good old days before globalization and the growth of the digital economy.  In their rush to get a tax plan passed prior to the 2018 elections they have cobbled together a plan that achieves few of its economic objectives.  Instead of making US corporations more competitive in the global economy, it will make them and the US economy less competitive.  Tax policies are complex and it is difficult to make changes without producing unintended consequences.  The rush to pass a bill for political reasons is full of unintended consequences which are well described in this article.  This is what happens when members of Congress are focused on the next election and the appeals of lobbyists.  It is a plan without a vision of future.

Tuesday, November 14, 2017

How Republican Tax Plan Restores Hereditary Plutocracy

Tax policy reveals the values of the political party that designs the policy.  Paul Krugman describes the ways in which Republican proposals runs counter to the values of our founding fathers.  They immigrated from a system in England in which wealth and social position were passed on from one generation to the next.  In France a revolution was directed at its system maintaining its hierarchical system of economic and social position.  The Republican tax plan makes it easier for wealthy families to pass on their assets to future generations and it makes it more difficult for those without great wealth to move up the economic and social ladder.

In order to pass a tax plan without any votes from Democrats, the Republican tax plan must find a way to raise taxes so that its plan does not add more than $1.5 trillion to budget deficit during a ten year period.  That is done my reducing or eliminating tax deductions that help low income families pay for college among other things.  For example, they will no longer be able to deduct the interest on student loans that help them to pay for college.  The Republican plan also eliminates the tax on estates exceeding $11 million for households with a husband and wife.  The Republicans sell this tax cut by claiming that it allows farmers and small businesses to pass their assets to future generations.  The number of small farmers and small businesses with assets above $11 million is minuscule.  On the other hand,  billionaires will be  able to pass on  their assets to their heirs, who will have no need to work for a living, when the estate tax is eliminated.

The other way to cut taxes and stay within the $1.5 trillion deficit increase over 10 years is to cut federal spending.  Of course, the favorite targets for Republican spending cuts are programs that benefit lower income Americans.  They love to play the role of fiscal conservatives when budget deficits increase by proposing cuts to popular entitlement programs like Medicare, Medicaid and Social Security.  Trump ran against cutting these programs during his campaign but he will do nothing to prevent current and future Republicans from cutting them in the future so that they can cut taxes today for their donors.  They have been playing that game for generations and it seems to work.  Tax policies are important for the super rich and they appreciate changes that reduce their tax burden.  The great majority of Americans do not caste their votes based upon an examination of tax and spending policies.  Hucksters like Paul Ryan and Donald Trump are good at justifying tax cuts for the rich.  They tell them lies that seem to have worked for decades.

Saturday, November 11, 2017

The New Face Of The Republican Party

This editorial describes sexual episodes by the Republican nominee for the US Senate which should disqualify him according to a small number of  Republican senators.  However, most of the article is about the reluctance of most Republican leaders to take that step.  They won't disqualify him unless the charges are proven to be true.  The implication is that a court of law must first determine that the charges made by numerous young woman are true.  The reluctance of Republican leaders is understandable.  Roy Moore's face appears on the header of the editorial.  His face represents the changes that are underway in Donald Trump's  GOP.  For most of my life the face of the GOP was that of successful businessmen and bankers.  Roy Moore represents the populist base of the GOP and the sections of our nation that form Trump's base.  They are committed to undermining the GOP "establishment" along with the influence of Washington on local affairs.  Donald Trump is more comfortable with successful businessmen, bankers and billionaires than he is with people like Roy Moore and his policies reflect their preferences.  However, he understands that he was elected by folks like Roy Moore.  The leaders of the GOP establishment realizes that it cannot remain in power without the folks who nominated Roy Moore and who probably elect him to the Senate.

Thursday, November 9, 2017

The Mercer Family, Steve Bannon, And Financing The GOP Revolution

Robert Mercer is the billionaire investor who has financed Steve Bannon's Brietbart News which has led the battle against the Republican establishment.  Mercer was forced to step down from his position as CEO of an investment fund because of backlash from his politics.  He was a big supporter of Ted Cruz, but he switched over to Trump after he won the GOP nomination.  Ted Cruz is the only Senate Republican who is not on Bannon's attack list against the GOP establishment.  There has been some speculation about Mercer's support for Bannon and Brietbart News.  Apparently, Mercer has transferred his ownership of Brietbart News to his daughter who has also been active in supporting Bannon's war against the GOP establishment.  The Mercer family along, with the Koch family, have been the most prominent billionaires using their money to determine the direction of Republican political policies.

US Commerce Secretary Is Only Worth $700 Million

Forbes magazine publishes a list of the 400 richest Americans each year.  Wilbur Ross, may have earned his position in Trump's cabinet because he has been listed as a billionaire.  Apparently, Ross has been padding his wealth for many years according to Forbes which has determined that he is not a billionaire.  Its understandable why Ross may have lied about his wealth because he manages money for other wealthy Americans.  Many wealthy Americans may believe that it makes sense to hire a billionaire to manage their wealth.  Forbes claims that Ross has lied about his assets for many years and it has removed him from its billionaire role call.  He is much like his boss who is on Forbes top 400 list.  Donald Trump is a billionaire but he has argued with Forbes about his position on its top 400 list.  He has consistently claimed that he is wealthier than Forbes has determined.  Perhaps The Donald can improve his position by capitalizing on his position in the White House.  Unlike most presidents, Trump and his family have been working hard to capitalize on his position in the White House.

The Senate Wants to Alter House Tax Bill To Make It Worse

The Republican Congress failed to pass an unpopular healthcare bill.  They only learned one message from that failure.  They learned that they must show that they can pass bills even if they are terrible bills that the majority of Americans dislike.  Now they are having the same problem trying to pass an unpopular tax bill.  The Senate wants to eliminate the deduction for state and local taxes which would raise taxes for upper middle class Americans in blue states who pay higher state and local taxes than citizens in red states.  It is opposed by senators in blue states but most of them are Democrats and the Senate can pass the bill without any Democratic votes under Senate rules as long as it does not add more than $1.5 trillion to the deficit after 10 years.

One would think that Republicans would try harder to pass bills that would be good for the nation.  Instead they have come to believe that they must pass terrible bills just to show that they are able to govern without an input from Democrats.  The following quote from a Senate Republican from a red state (Louisiana) expresses their ignorance perfectly.  This is the sad state of our political system in America.

“We’ve got to go pass this bill,” he added. “I’d rather drink weed killer than not pass this bill.”

Tuesday, November 7, 2017

The Social Visions That Explain Tax Policy In US

David Brooks describes the current Republican tax plan in terms of its social vision.  That is perhaps a much more philosophical way of explaining the current GOP tax plan.  It is a plan that rewards Republican donors and industries in red states.  It punishes donors and industries in blue states.  Brooks understands this but he took the opportunity to describe a tax plan that is more consistent with his social values.  That is an interesting exercise for an intellectual like Brooks but it has little to do with how tax policy gets done by our elected officials.

There Is A Simple Explanation For Mass Shootings And Deaths From Guns In US

President Trump, and many others, have explained mass shootings, and death from guns,  by blaming the mental health of the murderers or other social factors in the US.  There have been studies on this topic that contradict what our politicians and gun defenders claim.  The US has 4% of the worlds population but its citizens possess 42% of the worlds guns.  The correlation between gun possession in the US and the high incidence of mass shootings and gun related homicides provides the only explanation for this phenomenon.  The incidence of mental health problems in the US is not exceptional.  We look a lot like other nations in that respect.  The easy availability of guns in the US is the only factor that explains mass shootings and homicides by guns.  The probability of being robbed on the street in countries like England is equal to that of the US.  The only difference is that you are much more likely to be shot during a robbery in the US.  There are much fewer guns available to criminals in England. 

There have been mass shootings in other countries, such as Australia, but their response has been vry different.  They passed laws which designed to reduce access to guns by criminals.  That never happens in the US.  The gun lobby controls many of our politicians, and the public love affair with guns is much stronger in the US.  The citizens in other nations love to hunt with guns just as many of our citizens in the US.  The NRA and our politicians have successfully equated gun ownership with harmless hobbies such as hunting and target shooting.  They are not responsible for mass shootings and gun related homicides.  We make it too easy for dangerous people in the US to possess guns. 

A Tax Bill For The Lazy Rich

Donald Trump tells his base that his tax plan was designed to benefit them.  He understands, of course, that they understand few of the details in his tax plan.  However, he can't resist adding a little bit of spice to his fable.  He tells his true believers that his tax plan will not benefit rich people like himself.  Apparently, Trump is sacrificing himself in order to take better care of ordinary Americans. That, of course, is a winning strategy but it just another one of his big lies.  For example, eliminating the estate tax will not improve their lives, but it will be good for the heirs of households with estates worth more than $11 million.  There is no estate tax for household below that threshold.  Donald Trump's estate will be many times above $11 million.  Most of Trump's businesses are pass through businesses.  The profits of those businesses are taxed at 39% for individuals in Trump's tax bracket.  Under the new law the profits will be taxed at 25%.  There are some exceptions to that in his tax bill but it favors individuals who have a less active role in the business.  Trump, of course, cannot have an active role in each of his numerous business entities which will benefit from the new law.

Trump also wins big time from the elimination of the alternative minimum tax (AMT).  This was not discussed in this article but he has been forced to pay tens of millions in taxes because of the AMT.  Of course, he is not the only person who will benefit from the elimination of the AMT.  It was put in place to insure that high income households could not eliminate taxes by taking large deductions from their gross income.  Trump had to pay millions in the only tax return that has become public because of the AMT.

Donald Trump's Response To Mass Shooting In Texas Is Too Predictable

Its easy to predict how Donald Trump will respond to almost any question that he is asked.  The mass shooting in Texas provides a good example of his ignorance and his approach to almost every issue.  His political base believes that we would have fewer mass shootings if more of us were armed.  Is anyone surprised that Donald Trump fed them back their pet response to mass shootings?  Trump also put his ignorance on display by declaring that we have a new hero who used his gun to kill the murderer that he chased down.  He did the same thing after the Las Vegas mass murder.  In both cases the murderer took his own life.  There were no armed heroes in either case.  Trump understands his base very well.  That is the critical skill possessed by every effective demagogue.  However, it is a tragedy for our nation, and for many of our allies, that we have placed a demagogue in the White House. 

The New Gilded Age Is Even More Tragic Than The Last One

I have cut back on my blogs because most of the terrible things about Trump and our failing political system have already been said.  I wrote a few blogs about the Republican tax plan even though I understand that most of Trump's supporters are not interested enough in tax policy to bother their heads with the details.  They don't even care that he lies about almost everything.  That is what they expect from politicians.  I posted this article by Dana Milbank because it describes the tax writing process in Congress with a touch of humor and sadness.  It is going to be difficult to recover from the new normal in Congress and in much our country.  Many of our politicians, and their supporters, have lost their moral compass. 

Wednesday, November 1, 2017

Trump Quickly Turns NYC Terrorist Attack Into A Political Weapon

The Donald took advantage of a terrorist attack in London to criticize the Prime Minister for not providing a more powerful police defense against terrorism.  If he were to follow the logic that he used to attack public officials in England for a terrorist attack he would have to blame himself for a terrorist attack which occurred under his watch.  Instead, The Donald did what he always does.  He used the NYC terrorist attack to falsely blame others for the attack.  He claims that if his tough vetting of immigrants had been in force the attack would not have happened.  This assumes that the terrorist was not radicalized while living in the US.  The Department of Homeland Security claims that many acts of terror are committed by homegrown radicals. 

Many acts of terrorism, like the recent shootings in Las Vegas, are committed by individuals who were born and raised in the US.  That was an act of terror that had nothing to do with foreign influence.  The administration did not blame blame weak law enforcement or easy access to weapons by a disturbed individuals for the Las Vegas shooting.  He took a different position on the NYC attack because he could use it for political purposes.  He is the only politician strong enough to protect Americans from hostile immigrants who are the only source of terror.

Monday, October 30, 2017

The Growth Of Global Rentier Capitalism And Poltical Discontent

A paper presented at the University of Chicago's Booth School of Business described the "vicious circle" of business concentration which has led to the development of rentier capitalism.  This was a process that started in the US, but has become a global phenomenon.  As the business sector becomes more concentrated it becomes more profitable.  That leads to greater political power which leads to even greater business concentration and more political power.

The study was based on data derived from the financial statements of publically traded corporations in 56 developed nations.  One measure of market concentration used in the study is the market capitalization of publically traded firms.  In 1995 the market capitalization of the top 100 firms was 31 times that of the bottom 2,000 firms.  By 2015 the market capitalization of the top 100 firms grew to 7,000 times the market cap of the bottom 2,000 firms.  That has not been accompanied by employment growth.  The market cap of the top 100 firms grew by a factor of four.  Employment growth was less than half of the growth in their market cap.

They measured economic rents by comparing profits with the return on assets.  Economic rent is the difference between the return on assets and profits.  Economic rent, or surplus profit, was 4% between 1995 and 2000.  It grew to 23% between 2009 and 2015.  Most of the growth in surplus profits or rent occurred in the top 100 firms.  Rents were 16% of total profits 1995-2000.  They were 40% of profits 2009-2015.

Hyper-globalization contributed to market concentration and the growth of economic rents.  The primary goal of corporate executives has been to increase shareholder value.  Much of their compensation is based upon the growth in earnings per share of stock.  That determines their bonuses and stock options constitute the bulk of their total compensation.  Over the last 30 years they have shaped trade and investment agreements; they have captured state regulators and they have increased their market power.  The power of nation states has declined in relation to the growth of market power that is concentrated in our largest global corporations.  That has contributed to much of the public discontent that we see in the US and in Europe.  It has also been a major source of growing income and wealth inequality.

Saturday, October 28, 2017

Meet Roy Moore Who Is Republican Nominee For Alabama Senate Seat

Jennifer Rubin has been one of the conservative voices on the Washington Post and a devout Republican.  She has been a Trump critic who has expected her party to temper his bad behavior.  The Republican nominee for the Senate, who is being supported by  Republican leaders, has caused her to give up hope.  She describes Roy Moore's background in this article and delivers her eulogy for her favorite political party.  She can no longer remain part of a party that shares the values of Trump and Roy Moore.  Our country is being defined a small segment of our society which forms Trump's base.  He will not give them what he has promised them, but Trump understands that his base is his most important asset.  No Republican can win an election without support from Trump's base which he has captured from them.  They were concerned that Trump would form a third party with his base after he lost the GOP primary or the general election.  Instead he has taken over the Republican Party after winning the nomination and the presidency. 

Friday, October 27, 2017

David Brooks Describes The Selling of The GOP Soul For A Tax Cut

The Republican Senate bowed down to its beloved leader and smugly told the TV news reporters that they were united over the possibility of passing a tax bill that rewarded their donors, which they pretended to be a victory for its populist base.  They also explained that they had to pass a tax cut bill to avoid being humiliated by Trump's base in the 2018 election cycle. They sold their soul in order to preserve their jobs. It did not occur to them that their jobs would not be the same as they were before Trump. They will no longer perform in the service of their nation or the Constitution. Trump will order them to do his bidding.  He has a weapon to use against any Republican who crosses him.  He will tell his base of true believers not to vote for any of them who refuse to obey his tweets. They have made Congress subservient to the executive branch.  It is no longer an equal branch of the government and a check on the power of the power of the president.

Thursday, October 26, 2017

Why Republican Leaders Should Not Decide To Die In The Dark

Ross Douthat is a remnant of the old Republican Party.  He is an intellectual who has used his platform on the NYT to defend conservative principles that once defined his political party.  Jeff Flake's decision not to fight against a Trump inspired primary challenge bothered him for two reasons.  Flake embraced all of the conservative ideals that Douthat has supported durng his career but he concluded that Republicans in Arizona would not vote for a candidate that was critical of Trump.  The other reason for Douthat's disappointment was that Flake decided to "die in the dark".  He believes that Republicans should not defiantly retire like Flake and Bob Coker.  Nor should they cravenly collaborate with Donald Trump.  The battle over the soul of the Republican Party should be fought in the light of a political campaign.  That would be better than dying in the dark as members of the British House of Lords decided to do in 1911 when it gave up the privilege of veto power over bills passed in the House of Commons.

Flake and Coker chose to resign because they understand the battle for the soul of the Republican Party.  The deck is stacked against conservative idealists.  For example, Steve Bannon is leading the Great American Alliance to purge establishment Republicans from the party.  Trump's campaign slogan was to "Make America Great Again".  It is not a coincidence that the name of his alliance resembles Trump's campaign slogan.  Bannon's organization is promoting primary candidates to run against Republican incumbents who are critical of Trump.  He is joined in this battle by alt-right organizations and media outlets which share his vision of Trumpism.  He is also supported by the Mercer family which is willing to share some of its billions to anoint Trump as the Czar of the Republican Party.

The battle for control of the Republican Party is not ideological.  It centers on emotion more than it does about political policies.  Trump continues to attack Obama and Hillary Clinton for a good reason.  His base shares a strong dislike for the Democratic Party.  Affective polarization is one of his weapons.  Loyalty to Trump as a person, and building hatred in his base against Democrats, is the foundation of Trumpism.  Some might argue that Trump's focus on his base will cause more traditional Republicans to leave the party.  Some might become independents but they won't vote for independent candidates or for Democrats.  John McCain selected Shara Palin as his Vice President candidate when he won the Republican nomination for president.  He chose Palin because most of the Republicans, that are now part of Trump's base, have an emotional attachment to her.  Palin's support in the Republican Party has never dropped below 67% despite her absence from government.

The Republican leadership in Congress does not like being attacked by Trump or by Bannon. However, they are more likely to "die in the dark" and to collaborate with Trump while he and Bannon complete the takeover the Republican Party.  After all, they may be able to pass a tax bill that benefits their large contributors with Trump in the White House.  The Koch Brothers are already spending millions against Democratic senators who face re-election in 2018.  The Koch Brother ads assume that Trump's tax policies will create jobs and raise wages just as Trump has falsely proclaimed.  Their ads claim that the Democratic candidate opposes job creation and wage growth.

Trump's takeover of the Republican Party is the first step in his effort to establish a more autocratic form of government in the US.  He has not experience running an organization over which he does not have complete control.  After he gains complete control of the Republican Party he will be better prepared to rid himself of the institutions that have been put in place to constrain presidential power.