Thursday, July 26, 2018

Why Will The US Budget Deficit Hit $1 Trillion?

If a business suffers a steep decline in revenue it must find a way to increase its revenue or borrow money.  The US Treasury faces that problem today.  It made huge cuts to corporate taxes and it made other changes in corporate expense accounting which has been great for corporate profits and for shareholders.  However, the tax cuts have not produced the economic growth that was supposed to compensate for the corporate tax cuts as promised by the Trump administration.  Some in the administration still argue that the economic growth it promised is still coming.  On the other hand, several economic forecasters don't believe that will happen.  They expect US budget deficits will continue to grow in response to the huge drop in corporate tax payments.

A Simple Explanation For Trump's Lies

This article describes several of Trump's most recent lies.  The lies are so obvious that they cannot be defended by "alternative facts".  The reason the Trump makes such frequent use of lies is not hard to explain.  He lies about almost everything because a lie is not a lie if his base believes it.  However, Trump faces a problem that is beginning to affect many of his true believers.  Recent polls show that Trump's base of true believers in shrinking.  It is becoming harder and harder for Fox News to convince its market of true believers that obvious lies are not truthful.

Facebook Suffers 24% Drop In Stock Price

Facebook lost $150 billion in market value yesterday.  The shares fell 24% after Facebook's revenue growth did not meet investor expectations.  It reported $13.23 billion in revenue for the  quarter and profit of $5.1 billion but its stock price had been bolstered by Google's report of accelerating revenue growth.  They are in the same market for advertising revenues on their social media platforms.  However,  Facebook lost 3 million users in Europe and user growth in the US and Canada was flat for the quarter.  Facebook expects user growth on several of its other social media platforms but they do not generate the advertising revenues that are produced by Facebook which has suffered from reported abuses of Facebook by Russia and others who have used the platform to spread fake news.  In addition to declining revenue growth, Facebook has been forced to increase its workforce to reduce the abuses of its platform that have been widely reported.

How Trump's Trade War Is Crushing Farm Communities

Rural Americans love Donald Trump.  They voted him into office because rural farm communities have been dying a slow death.  This article describes how Trump's tariff policies are accelerating the death of rural farm communities in the Mid-West.  The Trump administration has provided a $12 billion subsidy to farmers who have been suffering from the loss of export markets.  That may help Republicans in the mid-term election but it won't help farm communities over the longer term.  Other nations have already taken over the export markets that the farmers have depended upon.  Small farmers will be unable to survive and pass on their farms to family members.  Large corporate farms will buy their farms at auction and the communities that supported the small farmers will erode rapidly.  The corporate farms will not use the small community banks that are a pillar of the community and other services that supported the community will evaporate because the market for their services will be too small. 

Unfortunately for the small farmers and many farm communities in the Mid-West Trump does not understand how his tariffs are doing the opposite of what he had promised.  He understands how to run a political campaign that is based upon promises that cannot be realized but he has unleashed a devil for the voters that put him in the White House.  They cannot survive on promises or on federal subsidies. 

Wednesday, July 25, 2018

The Wall Street Journal Has Abandoned Trump's Trade War

WSJ editorial staff has a long history of supporting Republican economic policies and Republican presidents.  After this editorial on his $12 billion payout to farmers, who have lost access to foreign markets in response to US tariffs on imports,  he may have lost the WSJ.  We have an extremely efficient agricultural industry that produces more food than we can consume in the US.  It has depended upon exports to sell off its excess production.  The losses faced by farmers in the Mid-West will be harmful to Republicans in the mid-term elections.  Consequently, the Trump administration provided a $12 billion subsidy to the affected farmers.  A Trump administration official referred to the $12 billion subsidy as "rounding error" in the federal budget.  The affected farmers don't want subsidies, they want to export their products.  The WSJ doesn't like government subsidies either, it would like the  market to operate without government intervention.

The editorial staff of the WSJ will not support US tariffs and the abandonment of free trade by the Trump administration.  It may face of the risk of joining rest of the mainstream media that Trump refers to as "fake news".  The Republican Party has had a long term relationship with the WSJ that it will not like to lose.  It is a major source of ideas and input to the business community that typically votes for Republicans.  The GOP may become dependent on Fox News to support its policies.

Monday, July 23, 2018

How Maria Butina Became A Trump Republican

The Justice Department accused Maria Butina of being a Russian spy.  This article describes how she aligned herself with the NRA and the Christian Right to serve Russian interests in the US.  Russian interests align well with Trump's form of nationalism in the US.
                    In documents filed in Butina’s case, the U.S. Department of Justice wrote: "Moscow seeks to create wedges that reduce trust and confidence in democratic processes, degrade democratization efforts, weaken U.S. partnerships with European allies, undermine Western sanctions, encourage anti-US political views, and counter efforts to bring Ukraine and other former Soviet states into European institutions."

Sunday, July 22, 2018

The Fundamental Contradiction In Trump's Economic Policy

Trump cut corporate and individual taxes to stimulate the economy.  This is a common use of fiscal policy to stimulate economic growth during a recession.  Lower corporate taxes encourages businesses to increase capital spending which stimulates the economy.  Cutting personal taxes also encourages consumer spending.  Capital spending and consumer spending are two of the major components of GDP.  Trump also understand that trade deficits shrink GDP.  He has been using tariffs to reduce imports in order to shrink US trade deficits.  What Trump does not understand is that there is a fundamental contradiction in his economic policies.

One of the contradictions is that tax cuts reduce government revenue.  The government has been forced to pay for rising budget deficits by borrowing more money.  That increases the demand for dollars which raises the value of dollars relative to foreign currencies.  That makes US products less competitive in foreign markets which must be paid for in more expensive dollars.  Consequently, US exports have not grown fast enough to shrink the US Trade deficit. 

The other problem with Trump's policies is that the Federal Reserve uses monetary policies to set interest rates.  The Fed raises interest rates when it wants to slow the economy down in order to deal with the threat of price inflation.  It has been raising interest rates in slow steps and it plans to continue using monetary policy to push interest rates upward.  That has a depressing effect on economic growth because businesses and consumers will borrow less money as the cost of borrowing increases. 

Trump sold his tax cuts and his use of tariffs as a plan to stimulate economic growth.  That plan has not worked as well as he hoped because it has put pressure on budget deficits and it has made US exports more expensive.  He has been using his Twitter account to criticize the monetary policies that are controlled by the Federal Reserve.  This is consistent with his usual practices.  He never takes responsibility for decisions that don't work.  He is setting the stage to blame the Fed for the failure of his tax and tariff policies to stimulate economic growth.  Ordinarily, US presidents might dislike the monetary policies that are being implemented by the Fed.  However, the usually do not publically criticize the Fed which was set up to be independent from the government.  Trump is not a typical president.  His attacks on the Fed are just the beginning.  He will maintain that his policies were the greatest use of fiscal policy in US history.  The Fed will have to take responsibility for their failure.

Wednesday, July 18, 2018

George Will Is Not Happy With The Unfit Pretender In The White House

George Will is a nationally syndicated conservative columnist. His description of Donald Trump in today's Washington Post is not the kind of description that one expects from a conservative columnist who usually defends Republican policies.  George Will is only one of many conservative opinion leaders who has abandoned a man who is embarrassing to him and to our nation.  Fox News may be the only reliable major source of propaganda supporting Trump after George Will's exit. 

Tuesday, July 17, 2018

What It's Like Being Led By A Genius In America

Donald Trump has a very simple explanation for the problems that he believes we have in the US.  We have lots of problems because we are stupid.  Trump's cure for our stupidity is to rely upon his genius.  Dana Milbank lists all of the dumb things that Trump blames for our problems.  He then offers his genius to guide us towards deliverance.  Trump's son-in-law Jared Kushner supports Trump's claim to genius, but it may not be as strong as Trump would have liked.  Kushner stated that Trump is a political genius and he may be correct.  He has sold himself as a genius to his base.  More Republicans support Trump than they have for any previous US president with the exception of George W. Bush following 9-11.  Trump may pass Bush's record if he continues to put his genius on display by behaving like the narcissist that he is.  His base loves him when he is at his narcissist best like he was on his TV show.  They want him to fire everyone like he did on his TV show and run the country with his genius.

David Brooks Writes The Obituary For The US Aliance With EU

The president is not all knowing.  They depend upon members of their staff to inform and advice them.  Donald Trump is not that kind of president.  He does not need them because he is primarily driven by his self-interest.  Unfortunately, his self-interest is not aligned with the preservation of the US alliance with Europe and the liberal world order that was led by the US following WW ll.  Moreover, it is pretty clear that Putin has information about Trump that could destroy his presidency  which he hopes to transform into a dictatorship.  He ran his business empire as a dictator and he is extremely uncomfortable with the institutions that were put in place by our founders who understood many of the risks inherent in a democracy.  He spends more of his time in office nurturing his populist base with tweets and campaign rallies because that is his most valuable asset.  The Republican Congress is dependent upon that base and Trump uses it against Republicans who defy him.  The Republican Congress has no interest in acting as one of the checks and balances that was put in place to protect our system against demagogues.   Even worse, many Republican candidates for office are running their campaigns as mini Donald Trumps.  Trump is a featured speaker at their rallies.

David Brooks has been an influential conservative Republican for most of his life.  He has tried hard to make excuses for Trump's weaknesses and focus on some his strengths in many of the opinion pieces that he publishes in the NYT.  Trump's meeting with Putin was the last straw for David Brooks.  Trump ignored the conclusions of his intelligence agencies about Russian meddling in the 2016 election and accepted Putin's denial.  He claimed that he could not understand why Putin would help him to win the election.  David Brooks' obituary goes well beyond Donald Trump.  He describes the important role that European ideas and values played in the development of democracy in the US and the important role that the US has played in defending and nourishing its European heritage.  He argues that Trump exploited several of the flaws that have been harmful to the EU and to liberal ideals in the US.  He does not seem hopeful about our ability to deal with the monster that we created.

Sunday, July 15, 2018

The Russian Organization That Is Responsible For Cyber-Warfare

Mueller indicted 24 Russians who managed the GRU organization that successfully interfered in the US election that put Donald Trump in the White House. The GRU is not even well known in Russia but It has been a critical part of Russian efforts to implement  foreign policy objectives for many years.  Intervention in the US elections has increased awareness of the GRU, but it has been actively involved in implementing Russian foreign policy elsewhere as well.  It encouraged Brexit in the UK and it was active in several recent European elections.  Closer to home, it has been active in Ukraine and in other former USSR republics that border Russia.  Russia has suffered huge losses in several wars from foreign powers that marched through its border states.  It is also not happy with NATO states that defend many of its border states.  Undermining NATO is also one its cyber- warfare objectives.  It is not surprising the Russia used cyber warfare in the US to elect  a president who is not a fan of NATO or the European Union.  Russia's economy is also based upon the export of gas and oil to energy hungry states.  Trump has been a key ally to the Russian economy by supporting the fossil fuel industries in the US and by removing the US from the Paris accord.  Putin helped to put a ally into the White House who shares many of his national interests. 

The Art Of Deception And Donald Trump

Most of us have learned a lot about Donald Trump by watching his performance on the world's greatest stage in the White House.  This video features the author of a book that describes the real Donald Trump.  It was written by a Pulitzer Prize winning journalist before Trump won the GOP primary and eventually the presidency.  He predicted that Trump would present the greatest threat to the Constitution in our recent history because he cannot tolerate bounds on his ability to do whatever he pleases.  He also predicted that he would fill his government with "yes men" because that is how he ran his businesses.  Both of these predictions have been borne out during his presidency.  He wanted to call his book "The Art Of Deception" because he believed that this was Trump's real skill.  The lawyers for his publisher nixed that title to avoid law suits that were sure to come from Trump. Unfortunately, we have learned that it is possible for a master of deception to win a presidential election in the US and that Trump has used this skill to capture an important segment of the voter base that the GOP has cultivated for decades.  Trump is now able to neutralize the Republican controlled congress by turning that base against GOP legislators who are not "yes men".

The video is well done and quite lengthy.  However,  there is more to learn about Trump in this video that will surprise even will informed Trump critics.  For example,  Trump has sold himself as a successful billionaire with a Midas touch.  He has certainly earned a lot of money but his financial success had more to do with the art of deception, and the threat of law suits, than to Trump's business acumen.  The book provides many examples of Trump businesses that were mismanaged because Trump did not really understand how to operate many of his businesses.  He made it worse by putting loyalists in key management positions as he has done during his presidency.  Many of Trump's businesses failed because poor management led to financial ruin.  The US government cannot go out of business like several of Trump's businesses.  However, the damage to our economy, and to our system of governance has been set in motion by many of Trump's policies.  Moreover, the two greatest threats to our existence are nuclear warfare and global warming.  Trump has increased the risk that we face from both of these catastrophes in less than two years in office.

Thursday, July 5, 2018

Who Wrote Trump's Best Selling Book?

Trump claims that he has written several best selling books.  The "Art Of The Deal" is by far his best selling book.  The writer who actually wrote the book for Trump has a different story to tell.  He said that Trump is incapable of even reading a book.  He went on to say that Trump did not write a single word in his best selling book.  One of Trump's biographers makes a similar claim.  Trump's tweets are not very helpful in supporting his boasts about his writing skill.  He frequently misspells simple words.  For example he wrote "pour" when he meant "pore" in a tweet intended to support his claims about writing skill.

Wednesday, July 4, 2018

All Time Global Heat Records Set While Trump Ignores Problem

This article describes the heat records that have been set across the globe.  While some of the individual records may not be due to global warming, the global pattern of heat records is a consequence of global warming.  This is only the beginning of what we can expect as emissions build up in our atmosphere.  Of course, Republicans led by a president who does not know the difference between the Celsius and Fahrenheit metrics, have placed a global warming denialist, who represented the oil industry interests in his home state of Oklahoma, in charge of dismantling the EPA.  Trump also warmed the hearts of fossil fuel donors to him and the Republican Party by removing the US from the Paris Accord.  He will "Make America Great Again" by doing what he can to destroy our planet.  That is consistent with his efforts to destroy democracy in the US and to lead the populist movement in Europe.  His legacy will be fixed if he can complete his destruction of democracy in the US and accelerate the destruction of our planet.  Unfortunately, his base of true believers will remain on his side.