Friday, March 31, 2017

Why Trump's Secretary Of State Is Wise To Avoid Speaking To The Press

Donald Trump is foxy.  He criticized President Obama for letting the press know that he planned  an attack on an ISIS occupied city.  He claimed that Obama allowed ISIS to prepare for the attack.  He was too smart to provide advance warning to ISIS.  Of course, that assumes that ISIS was too stupid to otherwise prepare a defense for the city.  Trump's new secretary of state Rex Tillerson is also as foxy as Trump.  He claims that he does not allow the press to travel with him as he tours the globe because he does not want our enemies to know what our plans are.

A professor at the Fletcher School Of Law And Diplomacy once criticized Tillerson for taking that position with the press.  He now argues that it was a good idea. 

However, his reason for declaring it a good idea was not favorable to Tillerson.  He lists all of the mistakes that Tillerson has been making as he attempts to learn that his job is not like his job as the CEO of Exxon.  He then concludes that its best that his mistakes are less visible to the rest of the world.

Donald Trump Properly Understood Healhcare Policy In 2000

This is an interesting article.  The bulk of the article is about comparisons between the US healthcare system and the more efficient and less costly systems that provide universal access in other nations.  The US system provides a good example for other nations about what not to do.  Many of our politicians believe that there is no difference between purchasing a TV and purchasing healthcare.  They are married to a free market vision of healthcare that was destroyed by a Nobel Laureate free market economist many years ago.  Kenneth Arrow, who provided the critique, was one of the most highly regarded economists in the world.  However, his message has been ignored by politicians who use free market ideology to reject almost any kind of system subsidized by government.

Obamacare, which is built on a model developed by the conservative Heritage Foundation,  was designed as a compromise between free market advocates and those who would have preferred a single payer system like the Canadian system.  It allows consumers to purchase healthcare insurance in the health insurance market.  That was not enough of a compromise for most Republicans.  The government provided subsidies that enable low income citizens to purchase insurance policies and the government played a role in defining the benefits available on the market.  In order for any insurance market to work it was also necessary for the government to provide insurance companies with a risk pool of potential consumers that included healthy individuals who might otherwise not purchase insurance.  Without government mandates insurance companies would be forced to charge premiums that reflected the high costs of insuring a pool of high risk consumers.

Not too long ago, Donald Trump argued that the Canadian system provided a good model for a universal coverage system that was efficient and less costly:

“I’m a conservative on most issues but a liberal on this one. We should not hear so many stories of families ruined by healthcare expenses. . . . We must have universal healthcare. . . . The Canadian plan . . . helps Canadians live longer and healthier than Americans. There are fewer medical lawsuits, less loss of labor to sickness, and lower costs to companies paying for the medical care of their employees. . . . We need, as a nation, to reexamine the single-payer plan, as many individual states are doing.”

We all know what happened to Trump's good idea.  He ended up with a plan cobbled together by Paul Ryan that he could not sell to Republicans were even more conservative than Paul Ryan. Trump would have been able to sell the Canadian plan to Democrats but not to Republicans who cater to the interests of the insurance industry and to a free market system of healthcare insurers.

Thursday, March 30, 2017

Can We Survive An Ignorant Demagogue?

Donald Trump exploited the concerns that many Americans have about their economic situation and many of the cultural value issues that Republicans have exploited since Richard Nixon's Southern Strategy.  He demonstrated that he is an effective demagogue.  He made many Americans believe that he would improve their lives as he reshaped the government to serve the interests of his billionaire supporters.  He was better at this game than most Republicans who have been at that game for a long time.  This article describes the complex set of issues that we, and other nations, face today and asks whether an ignorant demagogue will make matters worse.  Trump has failed the intelligence test that we give to our elected officials.  He is not only ignorant about the issues that he must deal with; he is ignorant about his ignorance.  He is totally unprepared to manage the national and international issues that are omnipresent today.  He is also totally unprincipled.  His only principle is self interest.

We are stuck with the demagogue that we elected for the time being.  Our challenge is to find a way to deal with the problems, that are well described in this article, while Trump is working hard to make them worse.  We have seldom had a problem like this in our recent history.  The well informed members of our society, who are fully aware of Trump's weaknesses, must become more actively involved in politics. We have to put continuous pressure on the political system at all levels.  A good start would be to examine Trumps spending proposals in this article and ask what you can do to about them.  It would also be helpful if you can let your friends in Europe, who are dealing a similar problem, have a better understanding of how this happened in our country.

Senate Intelligence Committee Takes On Investigation Of Russian Influence

The chair of the House Intelligence Committee has shown that his job is to cover up any connections between the Trump campaign and Russian interventions in the campaign.  The Senate is set to make a real effort of doing this job.  Thus far, it has been more bipartisan than the House committee which was chaired by a member of Trump's transition team.  Senior senate Republicans like John McCain will support the investigation.

Will Jerad Kushner Make The US Government More Efficient?

The Donald has given his son-in-law Jerod Kushner the task making government more efficient.  Previous presidents have had some success in the use of digital technology to increase government efficiency.  However,  they have done so by putting experienced people in charge of the process.  Jerad Kushner is inexperienced both in business and in government.  Unlike his predecessors, who could focus on that job, Kushner has been loaded up with multiple assignments by his father-in-law.  More importantly, Kushner's efforts to improve government efficiency are in conflict with Steve Bannon's goal of deconstructing government.  Bannon prefers anarchy to a more efficient use of government resources.  Kushner's real job is probably a cover for reducing the role of government and perhaps the privatization of government functions.  "Making government more efficient" is similar to The Donald's slogan of "Making America Great Again".  It's a way of giving a nice sounding name to a nefarious intention. 

Wednesday, March 29, 2017

Why Trump Has Little Control Over Freedom Caucus In GOP House

During the presidential election campaign Paul Ryan stated that he could not support The Donald after the video illustrating his behavior towards women was made public.  Trump quickly brought Ryan back on his side.  All he had to do was make a negative tweet about Ryan and Trump's base let Ryan know what the score was.  He needed Trump's support to get reelected. 

The Freedom Caucus voted against the Ryan/Trump healthcare bill.  That made it impossible to get enough Republican votes to pass the bill.  Unlike Ryan, who lives in a competitive district, the members of the Freedom Caucus do not have to worry about a negative Trump tweet.  Their districts have been gerrymandered so that they do not have to worry about getting reelected or facing a more conservative opponent in a GOP primary.  For example, the head of the Freedom Caucus faced no opposition in his election campaign.  The conservative Democrat who represented the district chose not to run against the Republican after his district was gerrymandered.  The liberals in Ashville, who elected the Democrat, were splint into two districts to dilute their power.  The district was made ultra conservative through gerrymandering.  Control or the state legislatures, which have the power to redraw district lines, have made the majority of House districts noncompetitive.  There are no seats in the House more immune from competition than the seats held by members of the Freedom Caucus. Neither Ryan, who is the Speaker of the House, or President Trump have the power to prevent the Freedom Caucus from blocking the passage of bills that don't meet the rigid beliefs that unite its members.  That is why Trump made an effort to bring Democrats over to his side so that a bill could be passed.  Republican control of the House makes it possible to block Democratic initiatives but it does not enable the GOP to pass bills that are not supported by the Freedom Caucus.


Trump's Attack On Global Warming Accord Is Part Of His Nationalist Ideology

Trump has taken his first steps to attack the EPA and the US commitment to the Paris Accord.  His actions have been cheered by the fossil fuel industry but this article explains the connection between his "America First" campaign and Trump's policies on the environment.  The fight against global warming cannot not be accomplished by any nation acting alone because all nations emit carbon into the air.  Trump has adopted a nationalistic approach to solving all of our problems.  He opposes trade agreements, NATO, the UN and almost all international organizations.   His attack against our efforts to mitigate global warming is totally consistent with his nationalism.  Far right nationalist groups in Europe have taken a similar stance on global warming.

Was The National Enquirer Nunes' Information Source?

The chair of House Intelligence Committee announced that incidental information about Trump and his surrogates may have come from legal surveillance activities.  He has not shared the sources of this information with members of  the committee which he chairs.  Curiously, the tabloid which can be found at any supermarket during checkout,  published a very similar story two days before Nunes made his "breathtaking" discovery.  This would not be the first time that reports by fake new sources have been used to the defend Trump tweets.  The president and Nunes have access to all of the data collected by US intelligence agencies.  Fake news sites and tabloids like the National Enquirer may be their preferred sources of information for good reasons.  They provide cover for The Donald.  By the way, Trump is no stranger to the tabloids.  He used to provide information about his romantic and business successes to the tabloids well before he entered politics.  He has always been a publicity hound.

Fake News Can Lead To Criminal Charges

Two anti-abortion activists, who became heroes in the conservative movement, were charged with 15 felonies in California.  They created false identities to secretly record conversations with employees of Planned Parenthood.  The Attorney General in California stated that the protection of privacy is one of the most important protections provided by our legal system.  The duo has also been accused of making false claims about unethical use of aborted fetuses by Planned Parenthood.  A judge in Texas ruled that charges against Planned Parenthood, based upon edited videos by the activists, did not provide a scintilla of evidence that Planned Parenthood had violated any laws or medical ethics.  One of the experts defending the duo is an orthopedic surgeon.  The surgeon may be Tom Price who Trump appointed to his cabinet.  Planned Parenthood was defunded in the failed healthcare bill promoted by the Trump Administration.  Trump successfully campaigned for the votes of anti-abortionists.  Tom Price, defunding Planned Parenthood, and the nomination of a Supreme Court justice sympathetic to laws against abortion, is part of Trump's payback to those voters.  It is doubtful that Trump has any personal views on this issue.  It"s just routine politics for him.  It's all about winning and making the best deal for Trump.

Is Trump A Chinese Agent?

Trump has an obvious relationship with the nation that helped him win the US presidency.  Russia's economy is based on selling oil and gas to the rest of the world.  Trump has aligned himself with the fossil fuel industry in the US.  He is taking steps to protect the value of fossil fuel reserves held by Russian and US firms.  He claims that his actions will even revive the coal industry which is unable to compete with cheap gas.  Tom Friedman argues that Trump is making a bad bet.  He got in bed with Russia but he has put China in the position of leading the world toward the future.  It has assumed the  position as the architect of trade policy in Asia because Trump made a campaign promise to withdraw from a trade agreement that would have put the US trade architecture in a position to shape the terms of trade in Asia.  Trump's embrace of the fossil fuel industry has also allowed China to assume the leadership position in the clean energy industries which are producing more jobs than the fossil fuel industry.  Moreover, his "America First" campaign has led to a decline in one of our most valuable imports.  We are attracting fewer of the brightest scientists to our shores as a result.  The most progressive state in the US is California.  Trump was crushed in California for a good reason.  It represents the future more than the red states and small towns that fell in love with Trump's story of a glorious past. Making "America First", on Trump's terms,  is a blueprint for enabling China to assume our place in the future according to Tom Friedman.

Tuesday, March 28, 2017

David Brooks Is Not Optimistic About GOP Tax Reform

Paul Ryan and The Donald tried to pass a healthcare bill that nobody liked.  When the bill ran into trouble with the Freedom Caucus, Ryan threw in a few changes to win their support.  That did not work either.  The Donald learned that healthcare reform is complicated.  He is now moving to tax reform.  David Brooks provides an overview on tax reform.  Trump campaigned as a populist but Paul Ryan, and the rest of the Republican Party, are stuck in the past.  They continue to believe that cutting taxes for the rich will stimulate the economy and make everyone happy.  Ryan's tax plan is as anti-populist as the failed healthcare plan.  Brooks believes that Trump will learn that tax policy, like healthcare policy, is complicated.  Ryan/Trump hope that they can pass a tax reform bill early this summer and get a big win.  They are more likely to suffer another big loss.  That is not a good way to get ready for the 2018 election.

Paul Ryan has taken the position that he is the policy guy for the Republican Party.  He had the press believing this for many years by proposing policies that would reduce the federal budget deficit by making huge cuts in popular entitlement programs.  The NYT used to be in that camp.  The NYT editors have finally learned that Ryan is an empty suit.  Trump once argued that Ryan's policy plans cost Romney the 2012 election.  He changed the game by campaigning on a platform that protected popular entitlements like Social Security and Medicare.  That helped him to win the GOP primaries.  Trump is now stuck with the policy guru in the House. Unfortunately Ryan is stuck in the 1980's.

Monday, March 27, 2017

The Public Rejects Trump/Bannon Idiology As It Beomes More Visible

Steve Bannon wants to put an end to the administrative state; he also has been advocate for aggressive policies against illegal immigrants and limiting immigrants from Muslim states.  Advocating those policies helped Trump to win the election {with support from Russia}.  Bannon's ideology is now being enforced by Trump's actions on illegal immigrants and by radical changes he has made or proposed in the federal government.  Polls show that much of what Trump is doing, or plans to do, has been very unpopular with most Americans.  The core that he depended upon to win the election is shrinking as his ideas become more visible in reality.  He has become the least popular president, during the normal honeymoon period presidents typically enjoy, in US history.  His lies and incompetence are difficult to hide.

Anti Corruption Protests In Russia

Apparently, many Russians have learned about the Russian oligarchs who are really part of Putin's regime.  They are among the richest people in the world and many of them have laundered their money by purchasing real estate in foreign countries.  London has been a popular destination and so has NYC and Trump's holdings in Florida.  Trump may want to use his presidency to inflate his asset holdings and protect them from taxation as the oligarchs have done.  In any case, the Russian protests were widespread and the largest protests since those in 2011-2012 that Putin attributes to Hillary Clinton when she was Secretary of State.  The protesters were arrested in Moscow because they did not have a proper permit.  Its hard to imagine how such a pretense would work in the US, but I suspect that Trump would welcome that kind of power if he could obtain it.  My guess is that his administration is on a downward spiral due to his lying and incompetence.  He has been unable to control the media as Putin does in Russia.  The Washington Post has a new slogan which states that "Democracy ends in darkness"  in response to Trump's attacks on responsible journalism.  Trump won't win that battle in the US.  Many of his supporters prefer fake news sites but their positions are not based upon reason.  Consequently, they cannot be modified by reason.  Reasonable Americans still get their information from respectable news media.  Some of them have even shifted away from the false equivalency doctrine which the media had followed.  They felt an obligation to an give equal weight to Trump's lies as they did to more reliable new sources.  The protesters in Russia can only dream of that kind of world.

Fox News Tweets False And Silly Trump Alert

Fox News is by far Trumps most important propaganda arm.  It tweeted that Trump was working in the White House last week end.  Apparently, the alert was to counter concerns that Trump was spending week ends at his resort in Florida playing golf.  There are at least two problems with Fox tweet.  In the first place, it is hardly the kind of information that would warrant an alert from any source of real news.  Moreover, it was not entirely true. Trump played golf at a Trump course in Virginia over the weekend.  He may have hoped to meet some of his populist supporters on the golf course.

The more important news about Trump is that unlike almost every Republican he is really a Keynesian at heart.  His plan to cut taxes and increase investments in infrastructure and the military is a classical Keynesian method of stimulating the economy.  Republicans obstructed Obama's efforts to stimulate the economy following the financial crisis.  They only support Keynesian economic policies when a Republican is in the White House.  Ronald Reagan used the same approach to stimulating the economy during the "Reagan Miracle".

The bad news is that Trump's failure to pass his healthcare bill may affect his plans to stimulate the economy with huge tax cuts and spending on infrastructure.  The stock market had been expanding because investors anticipated a Keynesian stimulus to the economy.  That expansion may be ending.  from the highs that enjoyed while investors believed that Trump would be successful in his use of Keynesian economic stimuli.

Russian Influence Corrupts Government But It May Not Be Illegal

Anne Applebaum describes the methods by which Russian oligarchs who are not technically part of the Russian government, have been exerting influence on Trump and his associates.  Most of what we know about this is not illegal but its very clear that it has influenced Trump's government.  Corruption is as useful to Russia as illegal activities such as those they employ to spread misinformation through the social media.  Trump's senior strategy adviser, Steven Bannon, understands fake news reporting very well.  He is closely connected to Breitbart News which he managed.  Breitbart operates in Europe as well as in the US.

Senate Intelligence Committee To Question Trump's Son In Law

Jared Kushner, who is Trump's son-in-law and now a senior member of Trump's staff, had an undisclosed meeting with the head of Russia's state development bank.  The meeting was arranged by the Russian ambassador.  The Russian development bank has suffered from US sanctions.  Mr. Kushner has a large real estate project that has been seeking loans from international banks.  Kushner had not reported this meeting to White House officials because he did not believe that it was important.  The ties between the Trump team and Russia are stronger than many had imagined.

Trump's War On Science And The Future

Trump's budget proposal is pretty simple to understand.  He increased the defense budget substantially.  He did so because he promised to make fearful Americans safe again.  He also assumes that military weapons are our best defense against terrorism which is really based on ideological warfare.  In any case, its not possible to increase the defense budget without cutting non-defense spending.  Consequently, he has made huge cuts in the science budget.  Most of the basic research in America is funded by the federal government.  This article shows how Trump's budget will reduce basic research conducted by the National Instituted Of Health (NIH).  That will not affect our nation during Trump's term in office because it takes time for basic research to filter down into practical applications such as new drugs and medical devices that will improve the future health of our nation. Similarly, Trump has decimated the Environmental Protection Agency (EPA) budget.  The quality of the air that we breath and the water that we drink will decline, at no cost to Trump,  but we will be less healthy as a result.  The EPA has also been at the forefront of our efforts to deal with global warming.  Trump gets some immediate impact from cutting the EPA budget because energy companies will produce more fossil fuels.  That makes him popular in oil producing states and in coal mining states.  On the other hand, the environment we leave to our children and grandchildren will suffer and the cost of dealing with effects of global warming will be passed on to future generations.  This article suggests that Trump is cutting the EPA budget because he does not believe in global warming.  I have a different explanation.  Trump does not believe in anything that that does not affect him personally and in the present.  He is not driven by ideology.  He uses ideology to defend decisions that have an immediate impact on his current goals.  One of Trump's mega financial supporters is also opposed to the EPA.

Trump's actions will probably stimulate the economy in the short term.  However, our economy is based upon our leadership in science.  The major assets of our largest and most competitive firms consists of intellectual properties such as patents, copyrights and trademarks.  That has been accomplished by our ability to attract brilliant students from across the globe to our universities and fund their research with federal grants.  Those who graduate from these programs are at the leading edge of new business development that will contribute to future generations.  Trump[ has no interest in our future welfare.

Sunday, March 26, 2017

Did Trump Throw Paul Ryan Under The Bus?

The Donald did not blame Ryan for the failure to replace Obamacare with new healthcare plan.  He praised him on TV for working hard on the bill and he did his best to place the blame on Democrats for not supporting the bill.  The Donald then turned around and tweeted to his followers that they should watch a Fox News show which placed the blame on Paul Ryan.  Of course,  The Donald was held blameless.  It was all Ryan's fault.  Apparently, Trump's support for Ryan lasted about as long as it took the press to find fault with The Donald's inability to sell the bill to the Republicans in the House.  Trump was blamed for not understanding the details of the bill enough to properly sell or modify the bill so that Republicans would vote for the bill.  He played the role of the deal maker who did not know the product well enough to sell it to a divided Republican House.

The failure to pass the bill was largely the result of Trump's inexperience and incompetence.  In the first place he left the details of the bill in Paul Ryan's hands.  Ryan produced a bill that was consistent with his ideology as well as that of the Republican elite that Trump pretended to run against in his campaign.  It cut taxes for the rich and paid for the tax cuts by cutting benefits and access to healthcare for those who believed that The Donald really cared about their welfare.  Only 17% of the public supported the bill.  It was also strongly criticized by almost every organization responsible for delivering healthcare to our citizens.  Clearly, The Donald should have understood the product that Ryan produced before he staked his reputation on its passage.  Apparently, he had little input into the development of the bill.  He must have believed that any bill that repealed Obamacare would be accepted by House Republicans.

Ryan did work hard to sell the bill to a deeply divided Republican Party.  The members of the Freedom Caucus were strongly in favor of repealing Obamacare.  They hated anything that had Obama's name on it.  More importantly, they are also libertarians who oppose government entitlement programs in general.  They were encouraged to oppose the bill by the libertarian Koch brothers who promised to fund their political campaigns.  Ryan attempted to mollify the Freedom Caucus by making changes to the bill that made a bad bill even worse.  That made it more difficult for moderate Republicans to support the bill.  They did not want to approve a bill that was certain to be used against them in the 2018 election.  The Donald tried to woo the Freedom caucus members but he lost more moderate Republicans than he gained from his efforts to win support from the Freedom Caucus.  The Republican House was united in its desire to repeal Obamacare; it passed more than 60 repeal bills that were certain to be defeated in the Senate or vetoed while Obama was in the White House.  They are good at opposing Democratic bills but they are too divided to craft a healthcare bill that could pass the smell test.

The Donald failed on his promise to repeal Obamacare and replace it with a "great plan" that would insure more Americans and lower their costs.  He attempted to sell an inferior plan that even Republicans could not support.  His reputation as the great deal maker has been badly damaged.  It will be even further damaged by statements that he made following his loss.  He forgot that he is our president and that he responsible for what happens to Americans who depend upon Obamacare for their health insurance.  He said that Obamacare would implode and Democrats would have to take the blame for its failure because they would not vote for a plan that he could not sell to his own party.  President Obama told him that the ACA was not perfect and that it could be improved.  If Trump lets the plan implode it will be his fault. However, he is such a sore loser that he may even try to make it fail.  The IRS enforces the mandate in the plan that makes it possible for insurers to sell to a market that includes healthy as well less healthy customers.  The IRS reports to The Donald.  We will have to see  whether our small handed president is even more small minded than we imagine. 

Saturday, March 25, 2017

Tax Reform Is Next For Trump/Ryan But Loss On Healthcare Bill Creates Problems

To a large extent politics is about how much money is raised by taxation, who will pay the taxes, and how the tax revenues will be spent.  Obamacare is partially financed by taxes on households with high incomes.  Repealing Obamacare would have increased the after tax income of rich households by 14%.  That, of course, was one of the Republican motivations for repealing Obamacare.  Large cuts in Medicaid, which is an important part of Obamacare, were used to pay for the tax cuts.  In other words, Trump's "populist" healthcare plan was a form of reverse Robinhood.  The poor recipients of Medicaid would have lost benefits so that the after tax income of the rich would increase by 14%.  Actually, the Trump/Ryan plan would have cut federal spending on healthcare by more than the lost revenue from the rich.  That places a constraint on the tax cuts, primarily for the rich, that will be proposed by the Trump Administration.  If the tax cuts are greater than cuts in federal spending they will add to the federal budget deficit.  The Senate can only pass a tax bill with a simple majority if it does not increase the federal budget deficit.  Therefore, Democrats could defeat the bill by using the filibuster which can only be overcome if Democrats support the tax proposal.

Well before Donald Trump came into power, Paul Ryan has been a deficit hawk.  Spending on entitlements like Social Security, Medicare and Medicaid is the largest part of the federal budget.  Entitlement programs transfer income from the rich to households with lower incomes.  Ryan can only cut taxes for the rich by cutting spending on entitlements.  Donald Trump campaigned on a promise not to cut spending on popular entitlements.  It will be interesting to see how Trump's promises hold out as he rolls out his tax proposal which will reduce federal revenue.

Does Trump Want To Be A Russian Oligarch?

This article was written during the presidential election campaign by a Washington Post columnist who is very familiar with Eastern Europe and Russian Oligarchy.  Trump's former campaign manager Paul Manafort was a highly paid consultant to the Ukraine president who was ousted from power and is now living in Russia.  His job was to use his connections in the US to help him maintain power in Ukraine. Many believe that he also helped Russian oligarchs launder their billions by a variety of means.  One method was to invest in real estate, including properties owned by the Trump Organization.  Trump was very familiar with the manner by which the oligarchs earned their fortunes; their business ventures were closely aligned with the Russian government.  Seeking the US presidency fed Trump's insatiable desire for approval, but it did not escape his attention that it might bolster the Trump brand and open up international opportunities for the Trump Organization.  Trump is clearly more interested in developing his power base than he is in the details of his policy proposals.  Anne Applebaum concludes this article by suggesting that Trump may want to use the power of government to enrich himself much like the Russian oligarchs that he seems to admire.

Applebaum wrote this article before Trump won the presidency.  Its now clear that his campaign was supported by Russian interventions into the campaign.  The FBI is now investigating possible cooperation between Trump surrogates and Russian officials who were active during the election cycle.  Paul Manafort and several other Trump associates had business relationships, and personal connections with Russian authorities.  We don't know if they colluded with Russians during the campaign but we have to ask ourselves why Trump was so closely connected to them.  He chose Paul Manafort, who had no experience in running a political campaign to be his campaign manager.  Manafort served in that capacity for six months.  Trump's surrogates are attempting to distance the campaign from Manafort now that he is under investigation.  However, we still don't know why Trump selected him as his campaign manager, and why Trump was connected with others who had business relationships with Russian officials.  The chair of the House Intelligence Committee, that is supposed to be investigating these connections, seems to be more interested in protecting Trump than he is in doing his job.  Its not clear that Republicans in Congress will do its job.  Senior Republicans like John McCain have called for a select committee to do the investigation.  That probably won't happen unless the public puts more pressure on Congress.

Friday, March 24, 2017

How Will Trump Affect Business Concentration And Inequality?

The quote below is a response form a Yale economist on antitrust policy under Donald Trump.  She believes that Trump will protect businesses which support his policies or him personally.  He will use antitrust against firms that do not support him or his policies.  She does not go beyond that opinion but that is a form of corporatism that was part of Mussolini's agenda in Italy.  Government aligned itself with supportive business interests.  It decreased competitive concentration and it increased anticompetitive concentration which tends to increase income inequality.

Q: President Trump has signaled before and after the election that he may block mergers and go after certain dominant companies. What kind of antitrust policies should we expect from him? Pro-business, pro-competition, or political antitrust?

I am concerned that there will not be one philosophy toward competition enforcement, but instead political antitrust: pro-competitive mergers are delayed or blocked if the parties do not offer jobs or favorable coverage of the President, and anticompetitive mergers are permitted because the parties do offer jobs or other support. This kind of antitrust enforcement would be bad for efficiency and bad for consumers. Such a policy would also generate a predictable pattern of transactions, that is, a wave of anticompetitive mergers that parties realize they can get approved in the current administration, and discouragement and delay of pro-competitive mergers.

David Brooks Destroys His Favorite Political Party

The Republican Party is in real trouble when its most respected opinion maker turns his guns against it.  David Brooks has never liked Donald Trump but his efforts to repeal Obamacare have put his incompetence and self interest on full display during his efforts to "make a deal" on healthcare reform.  Trump's campaign was based upon a false premise.  He argued that an outsider was needed to replace the elites in Washington who were not responsive to the people.  Brooks used the healthcare bill to show that the new elite in Washington is worse than the old elite.  The healthcare bill serves the interests of the new elite and especially the purely political motivations of Donald Trump. It takes something valuable away from the populists who supported Donald Trump in order to give a huge tax break to the super rich.  Donald Trump is described as a marketeer who understands nothing about the product he is selling, and the Republican Congress has happily become his tool.

David Brooks has used the GOP healthcare debacle to show how Trump is destroying the GOP in order to satisfy an unbounded ego.  He has turned the party's worse instincts into an instrument of self destruction.  During the Vietnam war Walter Cronkite, who was America's most popular TV news host, turned against the war.  President Johnson told his supporters that he lost the war when he lost Cronkite's support.  Hopefully,  David Brooks will help his friends in Washington to reject the virus that has infected the Republican Party. Even better,  Brooks may help many who voted for Trump to have a better perception of the monster they helped to create.

Thursday, March 23, 2017

Time Magizine Asks Whether Truth Is Dead

Time is one of our most popular news magazines.  The cover of its current issue contains only three words: "Is Truth Dead? " The story behind the cover is about Donald Trump's reliance on lies to win the presidency and in his use of "strategic falsehoods" during his presidency. We are familiar with many of Trump's lies and how he and his surrogates defend them.  However, it is unsettling to find them all together in a single article and to observe Trump's response to the interview conducted by the Time reporter.  Trump ended the interview by telling the reporter that he is the president and that the reporter is not the president.  In other words, that is how I became the president and you are just another flunky who does not understand what it takes to become the president.  Trump's lies have spawned the development of a new industry of fact checkers who report his "strategic falsehoods" but he usually finds a way to control the news cycle by tweeting a new lie to distract attention away from lies that he wants to suppress. That has worked pretty well for him so far but we don't have a society that is based on lies.  On the contrary, the truth usually replaces falsehoods and Trump will eventually pay a price for his deceptions. His team is in cover up mode just like we saw during Nixon's administration. The coverup shows that Trump has lots to hide.  He will make mistakes in the cover up and that may put an end to a criminal presidency

Chair Of House Intelligence Committee Shills For Trump

Devin Nunes, the GOP chairman of the House intelligence committee has consistently played down any hints that Trump's campaign was cooperating with the Russians who were conducting a cyber attack during the election.  Jennifer Rubin, a conservative columnist for the Washington Post, argues that Nunes cannot defend Trump and also chair the House committee that is supposed to be investigating Trump.  Nunes has been briefing the president on information that his committee has been reviewing. He also announced that Trump was truthful when he tweeted that members of Trump's campaign have been subject to data collection by intelligence agencies.  "Incidental" intelligence was discovered when members of his campaign had contacts with foreigners who were under surveillance by US intelligence agencies.  That, of course, is not what Trump claimed in his tweets about Obama ordering wiretaps of his phones.

The Democrats on the House intelligence committee were not informed about Nunes' contacts with Trump or his intention to publically reveal secret information collected by the intelligence committee.  Its unlikely that Democrats will continue to work with Nunes on the House committee's investigation.  They will defer to the Senate committee, which has been less partisan, but it appears that an independent prosecutor will be required.  Republicans in Congress are more interested in defending Trump than they are in protecting our country from spies.

Friday, March 17, 2017

David Brooks Wonders What Happened To Trump's Populism

Donald Trump's first pass at legislation and his budget proposal transfers money from the working class to the rich according to the NYT leading conservative journalist.  Brooks argues that Bannon was the populist in the Trump organization and that he has been pushed aside.  His propaganda helped to get Trump elected but now it is time to govern and the Republicans in Congress are promoting their traditional agenda.  In the meantime Trump is focused on proving that his small hands don't mean anything.  He is doing what he can to associate himself with manly programs that demonstrate his virility and power.  Apparently, he believes that is what his base wants from him.  Apparently, they don't really want to improve their standard of living like he promised them.  They want a real man in the White House.  Perhaps like the man that the Russians put in power.

We will have to wait and see how Trump's base reacts as many of the federal programs that helped them out financially disappear.  Trump may appease them by getting rid of feminine programs that support the arts and humanity and nerdy programs that promote science and medical research.  They could be as poorly informed as Trump believes, but they may not really like Paul Ryan who seems to be running the show in the House and they may find out that they really don't want to shrink the government as much as Republican libertarians do.  Captain Chaos is going to have his small hands full if he continues on this path.

Thursday, March 16, 2017

So This Is The President Of The United States

Thanks to 50,000 votes out of 13,000,000 cast in Wisconsin, Michigan and Pennsylvania this is who we have placed in the White House.  He was interviewed by Tucker Carlson on Fox News who was really trying to help him as he usually does on his conservative show.  He was not successful.  Trump cannot put two thoughts together in this interview.  He even admits that he got his information on the supposed wiretaps by Obama from watching cable news.  His tweets are almost always taken from the media.  All of the US intelligence agencies report to the president.  They could have told him that Obama did not order wiretaps.  He does not seem to use the intelligence agencies to inform him about any issues.  His incoherence was evident during his successful primary and general election campaigns.  Its a black spot in our election system that a failed human being like Trump won either of those elections. 

Trump's Copy Cat Populist Loses Badly In Dutch Election

Europeans paid a lot of attention to the Dutch election to see how the populist candidate would perform after the election of The Donald in the US.  He did not benefit from the US election result.  In fact, he lost a lot of support.  He had won 15.5% of the vote in 2010; he won only 10.1% in this election.  That was part of the good news in the election.  The bad news is that the electorate in the Netherlands is more splintered.  The top three parties won 85% of the vote in 1986; they won only 45% of the vote in this election.  It will be much harder to govern a more divided nation.

What Federal Agencies Budget's Will Be Cut To Pay For $54 Billion Defense Increase?

Trump's budget will make fearful Americans safer but it will also require Americans to give up a lot of things that have made life better for most of us.  Say goodbye to Sesame Street and Public Radio and forget about protecting the environment.  Trump's American will spend more on defense than the combined defense spending by much of the world's large nations.  According to Trump we will have to give up some things to get what he believes we really need.  His belief about what we really need was determined before he really spent any time analyzing the federal budget.  Many of his cabinet appointees were opponents of the agencies that they are now running.  For example, the head of the Environmental Protection Agency does not believe in a relationship between carbon emissions and global warming.

Tump's Leaked Tax Return And Trump's Tax Reform Plan

The leak of Trump's tax return revealed the importance of the alternative minimum tax (AMT).  Trump's effective tax rate was 25% because of the AMT;  it limited his ability to take full advantage of the $100 million business loss that was deducted from his gross income.  The AMT was much higher than his full tax would have been with the $100 million deduction.  The deduction was part of a billion dollar loss that he declared when his casino business went bankrupt. That was a gift that he has been able to use partially every year until it is fully used up.

Guess what has been eliminated in Trump's tax reform proposal?  I thought that you would never ask.  Trump's tax reform proposal eliminates the AMT.  It will be hard for Trump to convince most Americans that eliminating the AMT is good for them. Most of his populist supporters have never heard of the AMT.  On the other hand, the handful of Trump supporters who fund GOP campaigns are very familiar with the AMT.  They will be clapping their hands for Trump's "populist" tax reform plan.

Tuesday, March 14, 2017

Trumpcare Versus Obamacare: Fact and Fiction

For readers who want a better understanding of the details in Trumpcare, so that they can compare it to Obamacare,  this article written by a top economist is well worth reading.  It provides the numbers as well as the false claims made by Trump surrogates on the TV talk shows.  Unfortunately, many of Trump's supporters don't read the NYT.  If the bill gets approved in the Senate, which is unlikely, they will learn a lesson about Trump's concern for their welfare the hard way.  Millions of them will be unable to afford healthcare insurance.  Trump loved them when they voted for him and when they attended his rallies.  Trump's love is hard to hang onto.  He ignores the losers after he wins the deals that he negotiated.  He wrote a book about this: "The Art Of The Deal".

This article complements the post below by provided actual facts versus alternative facts.

Trump's "Populist" Healthcare Plan Is Populism For The Rich

Trump promised to make healthcare better than Obamacare and available to everyone.  His plan is a Republican plan at its worse.  It is a tax cut for the rich in disguise.  Obamacare was able to provide subsidies, so that low income Americans could afford to purchase health insurance, by including a tax on high income Americans.  Trump eliminated that tax from his "populist" plan.  Consequently, his healthcare plan was forced to reduce government subsidies for the poor.  Trump's healthcare plan also satisfies one of Paul Ryan's dreams as a Republican deficit hawk.  It allows him to reduce the federal budget deficit.  It does this by huge cuts to funding for Medicaid which was an integral part of Obamacare.  The Trump plan is a home run for Paul Ryan and most Republicans.  It cuts taxes for the rich and it reduces the federal budget with one mighty swat.  However, even that was not enough for many Republicans.  The plan still includes subsidies for the poor.  They will not support any plan that includes government subsidies.  They preach a gospel of an insurance market free from government interference in the market.  They call themselves the "Freedom Caucus" for a peculiar reason.  They want the market to decide who can purchase health insurance.  Of course, the market had already decided that prior to the passage of Obamacare.  Low income Americans were not able to purchase health insurance in the "good old days' before Obamacare.  They were "free to choose" not to purchase health insurance.  

Consequently, one of the outcomes of the Trump plan is that millions of Americans will not be able to afford healthcare insurance because of reduced subsidies, and because it eliminates the mandate which requires everyone to purchase health insurance.  The mandate, which many freedom loving Republicans hated, helped to keep insurance premiums lower than they would be without the mandate.  Premiums will rise without the mandate because of an integral feature of any kind of insurance.  That is, those who have fewer insurance claims help to pay for those who have higher claims. Premiums, especially for higher cost older Americans will have to increase.

It should not be surprising that millions of low income Americans will either be without health insurance or they will be forced to purchase lower cost policies with high deductibles.  Low income Americans as well as healthcare providers will be forced to make difficult adjustments under Trump's plan.  The American Medical Association, the American Hospital Association, as well as the American Association for Retired People have strongly opposed Trump's plan which provides populism for the rich in order to decrease the access to affordable health care.

One might wonder how Trump and his supporters in the Republican Party will defend the plan.  George Orwell told us how this is done in his great novel 1984 which has become popular under the Trump regime.  The first defense is to argue that the bipartisan Congressional Budget Office (CBO) has not scored the plan properly.  Trump praised the CBO when it pointed out issues in Obamacare but he and his surrogates began an attack on the CBO before the results of the scoring were released.  Trump and his Republican supporters have invented "alternative facts" as they have been forced to do on many occasions under the Trump regime.  However, one of their most sinister defenses has been to distort language much like Orwell predicted.  For example, Trump's healthcare plan does not reduce the availability of health insurance; it also does not reduce access to health insurance.  Even better it increases freedom of choice.  This defense assumes that health insurance is consumed like any other consumer product.  For example, a Mercedes Benz is available to every consumer and all consumer have access to a Mercedes.  They are also free to choose a Mercedes if that is what they want. However, we all know that the pricing system is a rationing system.  The high price of the Mercedes limits its purchase to those who earn enough to purchase it.  There is no reason to subsidize the purchase of health insurance as long as we assume, like Republicans do, that healthcare is just another product like a Mercedes. Therefore, it should be rationed by the pricing system.

Sunday, March 12, 2017

Populisms In The Netherlands And In US Are Similar But Different

The Dutch election next week is getting a lot of attention because a candidate, who some compare to Donald Trump, has exploited a populist trend to rise to the top of the polls.  Dutch populism is described in this article.  Many liberals oppose Muslim fundamentalism because it is conservative.  Conservatives are more concerned about Muslim immigration because it is one of many factors that they associate with the loss of national identity along with globalization and the perceived loss of national sovereignty because of the European Union.  Dutch populists would like to turn the clock back to some imaginary era that was more traditional.  They share that sentiment with many populists in the US who are concerned about multiculturalism and the loss of traditional values that they associate with the past.

Its not easy to define national identity in the Netherlands because regional identity is more salient than a national identity.  Secularism is more common around Amsterdam and the coastal region but there are political and cultural divisions between protestant and Catholic regions of the county .  The Dutch soccer team is perhaps one of the few sources of national identity.  There are regional political and cultural differences in the US as well.  It is easier to see the political and cultural differences in both nations than it is to locate national identities in either country.  On the other hand, populism in the US and in The Netherlands share one thing in common.  There is a strong resentment in both countries against cosmopolitan elites who do not share their values, and who look down on those below them in social and economic status.

The populist resentment in the US, that won the election for Donald Trump, is reflected in the powerful changes in the white vote.  In 1984 Ronald Reagan swept the general election.  In particular, he won 24% of white voters with a college education and he won 32% of the votes from white voters without a college degree.  That trend reversed itself by 1992.  The Democratic and Republican share of the white vote for college and non college educated voters was close to equal in 1992.  Since 1992 the Republican share of college educated white voters has declined.  The Republican margin was only 4% for McCain in 2008 and for Trump in 2016.  The Republican margin of the non-college educated white voters has increased dramatically since 1992.  Donald Trump won 39% of the votes from white voters without a college degree in the 2016 election.  He did better than Ronald Reagan did in 1984 when he became a Republican hero by capturing the vote of blue collar workers who normally supported the Democratic Party.  Trump's margin over Clinton among college educated white voters was only 4%.  The populist trend in the US is defined by the resentment of non-college educated voters who have not done well economically.  Donald Trump  captured their vote by attacking the elite political class which has not listened to them, and also by inflaming their concerns about national identity and their position in a multicultural nation.

While the Dutch and many Americans have fallen under the spell of populism,  the impact is much greater politically in the US.  There are numerous political parties in The Netherlands,  The Dutch populist will win a lot of votes but he will have to participate in a coalition of political parties that will dilute his influence.  Donald Trump has become the leader of the Republican Party which controls Congress as well as the White House.  He has a radical agenda for the US and the power to make major changes in the most powerful nation in the world.  The entire world will be watching anxiously for changes in the US political system and in Trumps international policies.

Friday, March 10, 2017

The Republican Healthcare Plan Does Not Pass The Smell Test

The Republican Party has put itself in a terrible position.  It promised to replace the ACA with a better plan.  It struggled to put a plan together that many Republicans in the Freedom Caucus hate. They call it Obamacare 2.0.  Donald Trump was forced to persuade the GOP holdouts in the House to pass a bill that it can send to the Senate for passage.  Paul Krugman describes the terrible plan that he calls Obamacare 0.5  because it is modeled badly after the ACA.  It has been built upon the three pillars in the ACA, but each of the pillars has been weakened. Moreover, it has cut the taxes in the ACA that helped to fund the subsidies that enabled Americans with low incomes to purchase health insurance.  That creates another serious problem that could make running our government even worse.

The bipartisan Congressional Budget Office (CBO) typically scores bills so that we understand how they will affect the federal budget.  Cutting taxes that helped to pay for the ACA will create a big hole in the budget. Republicans like to market their party as the fiscally conservative party.  So how did the GOP deal with the deficit problem caused by the tax cuts.  They sent to bill to the Senate without waiting the plan to be scored by the CBO.  This is clearly consistent with the way in which the Trump administration operates.  We don't need bipartisan technocrats in the CBO to inform politicians about the budget implications in proposed bills.  Trump does not care about budgets.  He is in a rush to tell his base that he delivered on a promise.

The Democrats have to make a decision when the plan is debated in the Senate.  They could get some help from GOP senators that hate the plan and send it back to the House.  The ACA will live on until the GOP can produce a better plan.  The Democrats can also let Republicans in the Senate approve the plan and let the GOP live with the consequences of a plan that has been opposed by the AMA; the AARP and the Hospital Association.  Some Republicans may want  the Democrats to kill the bill.   Then they can continue to undermine the ACA so that it is unable to do what it was intended to do.  They can then argue that ACA failed because it was a bad plan.  They will then avoid the chaos created the Republican plan.

David Brooks Explains How Healthcare Debacle Ends Old Era Of Politics

David Brooks is a very smart conservative who has historically supported the Republican Party.  He has come to understand the real political problems that we face and he argues that Trump exploited those problems in a negative fashion.  That is, he told his supporters what was wrong and they agreed with him.  Now that he is in office he has shown that he has no positive plan to offer to his troubled supporters.  That has become apparent in his efforts to replace Obamacare with something better.

Trump's problems begin with issues inside of the Republican Party.  The GOP has been fighting against government intervention in the healthcare market since the Kennedy administration.  When Obama pushed the ACA through Congress it helped to energize the political reaction that spawned the "Tea Party" which is now called the Freedom Caucus in the House.  The agenda of the Freedom Caucus is summed up easily.  It wants to cut federal taxes so that government cannot fund programs like the ACA.  To make matters worse, the ACA raised taxes on wealthy Americans in order to pay for the subsidies that enabled low income citizens to purchase health insurance.  Its no wonder that repealing the ACA has been at the top the Republican agenda since it was passed into law.

Brooks does not stop with his critique of the GOP.  He argues that Obama spent much of his political capital on passing the healthcare bill against total opposition from the GOP.  If Obama had been more aware of the economic issues faced by many Americans he might have promoted programs that would have defused the issues that Trump later exploited.  (Brooks did not mention the fact that Obama also  had the financial crisis and a recession on his plate that the GOP did not want to fix)

Brooks goes on to declare that Republicans can't rely upon the nostrums that became part of the GOP gospel in the Reagan Era.  Supply side economics is dead and government needs to be more powerful in order to preserve our system of government.

The political debate in the old era was big government versus small government and the state versus the market system.  Brooks argues that we need a stronger state to provide the safety net that our citizens need.  Moreover, we can't preserve our market system without a stronger state.

Trump's election made the social issues that he exploited more apparent to the conservative David Brooks.  He has observed the mess Republican's are making as they try to repeal the ACA and replace it with a better solution.  The Republican Party is fatally splintered between its Freedom Party members and Paul Ryan who is a hold over from the Reagan era.  Trump pushed the House to pass a flawed replacement plan that will not be passed by the Senate.  The Republican Party is unable to govern.  The result will be chaos. Its hard to know how the response to chaos will turn out.  The Republican Party is a creature of the past and Trump will not be able to make good on the promises that he made during his campaign.  He has no understanding of the policies that he promoted and he has no idea about how to run our government.

Thursday, March 9, 2017

Super Star Firms Explain Large Share Of Drop In Wages To Labor

Super Star firms, which have captured a large share of their market, explain much of declining share of wages going to labor.  They are able to produce higher levels of revenues and profits with a smaller number of workers.  They pay their workers well but there are fewer of them to pay.  Firms like google, Facebook, Amazon etc. are able to grow revenues and profits at faster rate than they grow their labor forces.  More ordinary firms have to increase their workforce in order to increase their output and profits.

That trend also applies to individual super stars whose value increases in relation to the level of media coverage which amplifies their exposure.  Greater exposure equals greater star power.

How Is Trump's Party Different From The Former Republican Party And Democratic Party?

Hillary Clinton's campaign was based upon demographic trends and cultural values.  She campaigned hard to win minority votes and the votes of college educated Americans.  The Democratic Party has relied on demographic trends which show that the non-white segment of the population is growing faster than the white population.  Donald Trump's campaign targeted non college educated whites.  Many of them had voted for Obama, but Trump did much better with this group than Romney had done in 2012 when he won 25% of the white vote. Trump won 39% more of the non college educated white vote than Clinton.  Trump's margin over Clinton among college educated whites was only 4%.  The Trump/Republican share of college educated white voters has been declining, while its share of non-college whites has skyrocketed; they are 55% of his base. 

Trump's campaign won the non-college white vote by a huge margin with a simple strategy: He did whatever he could to elevate the level of anger and fear in that segment while appealing to white resentment about perceived minority privileges; losing jobs to low wage immigrants and low wage labor in nations that export to the US; he also won almost all of the votes from white evangelicals.  The Democratic Party will have a difficult time winning future general elections as long as Trump's Party wins 39% more of the non-college educated white vote.  The major risk that Trump's Party, or the new Republican Party, faces is that he will not deliver on his promise to grow the economy and provide better paying jobs to that segment. His new healthcare plan is also a mess. The odds are that he will not deliver as promised to that group. He has sold them a ticket to hell.  He will have to find ways to blame Democrats for his failure. He will also take advantage of likely terrorism in the US and elsewhere to inflame fear and hatred in his base.  He will portray himself as the only candidate powerful enough to protect our nation.  He will continue to claim that the Democratic Party is too weak to protect us from terrorism. 

Wednesday, March 8, 2017

Why The Republican Plan To Replace ACA Is In Trouble

Replacing the ACA has been a big problem for Republicans as they attempt to make good on their promise to repeal the ACA.  They have inherited a very difficult problem for which there is no easy answer that they are willing to consider.  There are a lot of issues that they face, but two issues dominate any attempt to deal with healthcare.  The first issue is that any solution involves a redistribution of income.  The second issue is that we have the most inefficient and costly healthcare system in the Western world.  Changing the system is bound to be opposed by parties that benefit from the inefficiencies and high prices.

There are two redistribution problems.  The government must use funds raised by our tax system to provide subsidies to citizens who cannot afford to purchase insurance.  That requires decisions about whose taxes will be used to fund the bill and to whom the subsidies will be provided.  Much of the debate within the GOP is about the redistribution decisions.  The other redistribution issue is that insurance is essentially a system of redistribution.  Healthy people who do not need healthcare pay premiums to fund healthcare for individuals who have health problems.  There is no way to have an insurance system that does otherwise.

The healthcare system has adapted to our current system.  For example, hospitals have reorganized their management systems in response to rules that are part of the ACA.  They have also made investments that were based upon the volume of healthcare that they expect to provide.  Any changes to ACA that affect the rules that hospitals have developed to conform to ACA, or any changes that reduce the demand for hospital services will create havoc in our hospital system.

The Republican Party taught its base to hate ACA and it has promised its base to repeal ACA. Trump has promised that it will be replaced by a system that will provide healthcare to everyone and be less expensive.  They are living to regret their promises.  They have inherited a huge problem that they can only worsen at great political cost.

Tony Blair's Message For Americans About Brexit and Trumpism

Tony Blair gave a speech about the consequences of Britain's vote to leave the EU.  He listed the reasons why a small majority of its citizens voted to leave  the EU in order to "Make Britain Great Again".  They are the same reasons why a small majority in the US elected Donald Trump.  Blair argued that Britain and the US will be worse off because of the populist vote.  He acknowledges the impact of globalization on many citizens and the weak response to those problems by politicians.  However, he argues that the international system, and the values that underlie the system,  is what has produced prosperity in western nations without wars driven by nationalism.  We should focus on fixing the problems in that system rather than dismantling it in favor of a system in which each nation attempts to win against every other nation.  That, of course, is what Donald Trump has promised to Americans.  He is the great deal maker and he favors a system in which he can deal individually with every other nation and win the deal.  That is not a bad way for a real estate developer to behave but it is the wrong way to run a nation in a complex international system.  We should be focused on making capitalism more fair to those who have been left out.  Cowboy capitalism is the problem and not the solution.

After reading Tony Blair's speech, and comparing it with the Democratic response to Donald Trump's address to Congress, it helps me to understand how Trump won the election.  He was probably the worse presidential candidate in our recent history.  He beat a weak group of candidates in the GOP primary and the Democratic Party did not have a candidate with Tony Blair's ability to beat him in the general election.  I don't see a Tony Blair in either political party.

Tuesday, March 7, 2017

Where Alternative Facts Fail

Trump has learned that he can lie about anything and his core base will accept his alternative facts.  That allows him to blackmail Republicans in areas where Trump is very popular.  They all worry about what might happen to them after negative tweet from The Donald.  This article from Yahoo Finance provides links to many of the alternative facts that Trump tweets to his devotees.  More importantly, it argues that there is a place where alternative facts will not work.  The market is data driven and it usually corrects itself in response to facts. The economy will not grow and replace lost jobs for his base just because he tells them to believe in his magic.  They will only get new or better jobs if they have the skills that businesses are demanding.  His supporters who are doing nothing to make themselves more employable will soon learn that reducing the number of immigrants, or taxing imports, is the wrong kind of magic.  When they fail to get the jobs that they are waiting for, Trump will do what he always does.  He will find somebody else to blame.  He is a master at the blame game and his base, which is information poor, will join him in the blame game.

Trump's Fiscal Policy Is NOT For HIs Base

Trump has been generous to his base in typical Republican fashion.  He promises to make them safer from the fears that he has amplified.  He does that through his immigration policies and by an increase in military spending.  He also attack's liberals by spreading conspiracy theories and telling his base he will get rid of them by "draining the swamp".  He better hope that that keeps them happy.
His fiscal policy is not for his base.  It is heavily skewed towards the donor class that has always been the beneficiary of Republican fiscal policies.  The donor class gets the tax cuts that they expect from Republicans in return for their generosity.  Trump's base gets to cheer for Trump as he takes on their enemies with verbal assaults against liberal social and cultural policies.

Trump's tax policy is pretty easy to understand.  He will cut taxes for everyone, but 50% of the tax cuts are targeted from the top 1%.  The bottom 99% will have to share the other 50% of his tax cuts.

One might ask how Trump can cut taxes primarily for the rich, and increase military spending by $54 billion without producing budget deficits and increasing our debt to GDP ratio?  The answer to that question is easy.  Just pull out Ronald Reagan's fairy tale that is readily believed because it gets repeated constantly by Republican politicians.  The tax cuts will stimulate economic growth and faster economic growth will increase tax revenue.  There is no need to worry about budget deficits. Few of his supporters know that Reagan's tax cuts produced huge budget deficits as did George W. Bush's tax cuts.  

When the Trump tax cuts fail to produce the promised growth in GDP there is a fall back policy.  Trump will get government off of our backs by cutting spending on non-military programs that are helpful to low income families that include a large part of his base. His base will have to wait for Trump's trade policies to return the manufacturing jobs that have been lost.  That will be accomplished by eliminating trade plans like NAFTA,  TPP and the WTO.  The only problem with that plan is that manufacturing jobs began their decline well before those trade policies were implemented.  Eliminating them does not deal with the most of the other reasons for the loss of manufacturing jobs.  Automation and the increase in global competition for manufactured products, as the rest of the world caught up to the US, are a major factor in the loss of manufacturing jobs. Trump will have to feed his base more fear and give them more to cheer about from his attacks on their dreaded enemy: liberalism.  That might work as long as Trump gets his base to avoid getting their information from the liberal media.  Breitbart News and talk radio may do the job.

Monday, March 6, 2017

Trump's Blindness On Trade Works Because Many Others Are Blind

Trump's appointees responsible for trade policy just released a report which argues that US trade policies such as NAFTA and WTO are responsible for the large loss of manufacturing jobs.  Trump won the election by convincing enough supporters in the rust belt that their jobs would return if those policies were reversed.  There is a lot of evidence against that claim.

After the end of the Korean War in 1953 to 1990,  manufacturing jobs fell from 32% of non-farming employment to 16%.  That was well before NAFTA and the WTO which enabled China to enter the international trade market.  Manufacturing jobs in Germany have also declined.  They fell by 50% from 1970 to 2015 despite government efforts to retain manufacturing jobs.

There are a lot of factors that have contributed to the loss of manufacturing jobs in addition to trade agreements.  Automation and other technologies have greatly reduced the need for manual labor (in manufacturing as well as services).  Moreover, a lot of the jobs lost in developed countries have been in low skilled manufacturing jobs that did not pay very well. Many of those jobs were in small towns that came out strong for Trump.

There is little doubt that the availability of lower cost labor in developing nations has contributed to job loss in developed countries.  However, it has enabled US firms to sell more products to those countries as living standards improved in those countries.  It has also made many products more available to US consumers because of lower prices.  To some extent lower prices compensate for lower wages in the US.

The major point of this article is not that globalization has proceeded without harm to many workers in developed countries.  The point is that eliminating trade agreements will not bring those jobs back to the US.  They were falling before the trade agreements that Trump plans to reverse.  Reversing the trade agreements may also cause our trading partners to take steps that are harmful to developed nations.  It would be helpful if governments in developed nations took steps to redistribute income from those who have reaped most of the benefits from trade to those who have been harmed by trade. That has been prevented by the influence that the benefactors have over the government.  Trump's cabinet is loaded with major campaign contributors whose taxes Trump plans to cut. 

FBI Director Implies That Trump Lied About Obama Wire Tap

The Director of the FBI asked the Justice Department to report that President Obama did not order a wire tap of Trump Tower during the presidential campaign.  The Justice Department has not yet rebuked the false claim by Trump.  However, the request by the Director of the FBI is very unusual.  It implies that the President of the United States lied when he claimed that his phone was tapped.

The FBI Director was compelled to call the president a liar because the FBI would have been responsible for implementing any order to tap Trump's phone.  Trump's false claim about an Obama wire tap shows that does not understand how the system works.  The president would have required a warrant to order the FBI to tap Trump's phone.  A warrant would only be issued if there was evidence of a crime by Trump.  Our new president must believe that he could order a wire tap on a US citizen without a warrant.  He seems to believe that a president can do whatever he pleases because he is above the law.  Perhaps that is the kind of authority that he is jealous about when it is used in an authoritarian society.

Trump's false tweet may have been a bad idea.  It raises concerns about what might have happening during his campaign that he wants to repress.  It could cause his Republican defenders to agree to an independent prosecutor to investigate the relationship between his campaign and Russians involved in cyber warfare during the campaign oes not understand how the system work

Sunday, March 5, 2017

Why The 21st Century Will Be Better Than You Think

The election of Donald Trump, the rise of right wing populism in Europe, and difficult to solve problems in much of the world have made many of us pessimistic about the future.  I must admit that the similarity between right wing populism today and the rise of fascism in Europe has worried me a lot.  This article reminds me of the real progress that we have made over the last few decades.  We may encounter some problems along the way with someone like Trump in the White House.  They will be short lived however according to a liberal optimist.  Trump's rise to power has been at the expense of the libertarian, anti-government ideology that has been a central tenet of Republicanism.  Many of Trump's attempts to turn his ideas into legislation will flounder in Congress.  Republicans are much better at opposing Democratic initiatives than they are governing.  They will really miss Obama because they could all agree opposing him.  They will have a hard time reaching agreement on most of the things that Trump has been selling to his base.  Paul Ryan is history and Trump is rapidly losing his credibility with young people and with most Americans.

We will have to see how things turn out but I felt much better after being reminded about the strength of our institutions and the strength of the core values that will make life difficult for Trump and his bedfellows

Saturday, March 4, 2017

Why Trumpism May Fail In Europe

Many believed that Donald Trump's victory would be positive for candidates in Europe who were selling his brand of populism.  The opposite may be true.  Trump has created another kind of reaction in several European nations.  His clownish behavior since taking office has made him very unpopular in Europe where he is often the subject of comedy shows.  The reporting on Russian cyber attacks and the use of fake news sites by Russia in the US has also taught politicians and governments in Europe how to deal with them.  Trump's victory may have made it easier for the center in Europe to holds its ground. 

Trump Is Trying To Run Our Government The Way He Ran His Small Business

Donald Trump operated his many businesses with a small cadre of loyalists and family members.  He used the bankruptcy laws to protect himself when any of his businesses got into trouble.  This article describes the way that Trump has been running the government since he took office.  He does not see any reasons to operate the huge federal government any differently than he ran his numerous small businesses.  He does not even let his cabinet ministers appoint their own top aides.  They must pass his loyalty test first.  Frankly, I don't believe that Trump could run any of our large corporations.  They are small relative to the government that he runs but they are operated very differently from the way Trump runs his small family business.  Any CEO who cannot effectively delegate the operation of business segments to experienced managers would not survive very long.  Moreover, most CEO's have to report to a corporate board.  Trump has never had to worry about satisfying a board of directors.

Trump Uses Twitter To Deflect Attention Away From His Problems

The Trump Administration has responded to a bad news cycle about his attorney general and a possible connection between his campaign and Russian cyber warfare during the campaign.  Trump is using Twitter to claim that President Obama used wiretaps on Trump Tower during the campaign.  Twitter is a great tool to use because his tweets do not have to provide supporting evidence.  Of course, when he is asked for evidence he can employ another well used tactic.  For example the alt-right fake news site Breitbart News, which was operated by Steven Bannon, who is one of Trump's senior advisers, reported the  Obama wire tap without any evidence.  Trump has done this in the past by using Fox News as a source for his claim that a terrorist attack took place in Sweden.  This is a marvelous tool.  Trump can use fake news as evidence to support his false tweets and he defends himself against journalists who question his false tweets by calling real journalism fake news.  Trump only gets away with this because his base wants to believe him.  On the other hand, he continues to lose support from independent voters and most well educated citizens.  That is a losing proposition over the long term.  He can't run the country by relying upon his relatively small base of true believers.  That will hit home hard when it becomes more apparent that he is unable to deliver on most of his campaign promises.  The President of the United States must show that he can turn ideas into legislation.  That can't be done with his favorite Twitter tool.

The Disappearing Public Corporation In The US

The number of publically listed corporations has been declining over the last decade.  In 1999 the number of US firms listed on one of the stock exchanges was relatively similar to the number of listings in other large nations.  Today the number of US listings is around half the rate of listings in comparative nations.  The decline in US publically traded firms is about equally explained by drops in initial public offerings (IPO), and by delistings as the result of mergers and acquisitions.  The decline in the number of public corporations creates some real concerns.  The three most salient concerns are discussed below.

At its peak very large public corporations employed very large numbers of well paid workers who also received health and pension benefits.  For example, AT&T employed almost one million workers; GM employed 800,000 and GE employed 400,000.  Since 2000 the new firms that went public have employed a much lower number of workers.  The median number of new jobs is 51 and most of the new listings are in low paying retail and food service firms.  There are a few exceptions like Google, but the trend is not encouraging.

Instead of solid long term employment with health and pension benefits, there are fewer jobs with health benefits, and pension plans are disappearing.  Most employers are replacing pension plans with 401k's which are optional for employees.  Unfortunately, many employees do not sign up for 401k's and most of them that do sign up are less sophisticated investors than pension fund managers.

Large publically held firms are more easily influenced by the federal government.  If a large firm in an industry is encouraged to take actions that promote public welfare other firms in the industry will follow.  The Securities and Exchange Committee also regulates publically held firms in many ways.  Firms that delist, or decide not to list on public exchanges are subject only to the state laws in which they have incorporated.  Consequently, they are less subject to government influence.

The changing nature of corporate structure plays a very important role in the operation of our economy.  It is not the kind of subject that attracts much attention from economists or from government policy makers.  The drop in corporate listings implies that the benefits from going public are lower than the costs associated with being a publically held firm.