Trade Wars, Shallow Thinkers, Infield Cutters

Chaos managers are a special breed of leaders who seem to others as thriving on turmoil and disagreement. While some leaders are better than others in times of uncertainty, some find that creating turmoil first allows them to achieve over other ambitions. President Trump is helping America see what chaos management can bring.

This past week the President announced (sort of) that he will impose a 25% tariff on imported steel and 10% on imported aluminum. The stated rationale was national defense implying that current steel imports were hurting domestic steel producers so much that in war time America would be at a disadvantage.  While this is a serious concern, the facts do not support this claim. The US produces over 70% of the steel it consumes.  Further America imports steel from a variety of countries with Canada being the largest. Does this mean Canada represents a national security threat?

History books might be helpful for the Trump Administration. Trade wars too often lead to unintended and unforeseen blow back on the trade war initiator. Far worse, trade wars fuel nationalism and not so long after, shooting wars. And once a trade war begins, putting an end, without loss of face, becomes very difficult.

So, why would President Trump think for a minute about actions which could lead to a trade war?

IMO, I would offer three reasons

• Management by chaos. The President’s leadership skills are meager and it appears he prefers authoritarian styles. The Republican controlled Congress members are mostly in the pocket of wealthy special interests and consequently are handicapped in decision making, especially if it is for the good of the country. With little evidence of a unified Congressional alternative, “divide and conquer” is the theme of the day. There is no adult in the Oval Office.
• Shallow Thinking. The Trump Administration has been marked by extreme ideological urges. Repeal and replace Obamacare without any real replacement is an example. Offering lower cost health insurance which either insures far less Americans or offers Americans less insurance coverage, is not a thoroughly considered option. Reducing taxes when the nation’s budget is already unbalanced and simply cutting social welfare programs is surely politically unattainable. The result will be budget deficits twice as large as before. Sound like a plan well thought through?
• Infield Cutters. Shallow thinkers who are determined to make change often resort to “infield cutting”. Think of an athletic event like a 1500 meter race. In this scenario, one of the runners decides to cut across the track infield, shortening the runner’s distance say to 1000 meters, and crosses the finish line first. Cheating for sure, but winning as measure by crossing the finish line first. Hmmm. Doesn’t that sound like President Trump?

Actually, these three reasons are really enablers. Always lurking in the background of Trump initiatives is the search for a more basic reason, like a deal to make more money.

Could it be that President Trump and his close supporters see a chance to alter “world order” and step in, on the ground floor, and write new trading deals?  Hmmm, that does sound like our President.

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Questions About Guns

The big question this week is how long will the news media keep reporting on the Parkland, Florida mass school shooting and in particular whether any changes to gun laws will follow. Here are three questions and some observations.

The Second Amendment speaks to the “right to bear arms” but does not refer to what type of arms. Were the founding fathers speaking of single action, ball and cartridge muskets, or did they perceive the coming of bullets and the civil war lever action repeater rifles?

The Supreme Court construed the 2nd Amendment as the right of any citizen to possess a gun for personal protection in the home. The Supreme Court noted that Congress and States legislatures could pass reasonable controls clarifying what type of guns, and where beyond the home, guns could be used. The Court also stated that reasonable controls could also include suspending a citizens right to a fire arm if due process was served.

Question #1: Fully automative guns, both hand and long guns, are illegal to possess, why is it accepted that a military style AR-15 (and other similar brands) are ok?

Leading politicians, Governors, Representatives, and Senators (not to mention the President) are all citing the need to study this latest incident carefully. Most all these politicians sigh and confess that it is difficult to see what could have been done to have avoided the Parkland shootings. These pro-gun politicians allow that tougher background checks, while good, would not have prevented Nikolas Cruz from acquiring legally his AR-15, extra clips and unnecessarily large amount of ammunition (because the FBI did not act upon tips called in by concerned citizens).

Question #2: What is the logic that allows Cruz (age 19) to legally buy an AR-15 when Cruz could not by a hand gun nor buy beer?

Probably the most often heard statement when a pro-gun politicians is asked about simply banning assault weapons is that most AR-15 owners are law abiding citizens and why should they have to surrender their 2nd Amendment rights? These politicians then follow with they support stronger background checks as long as the Federal checks do not inconvenience those lawfully seeking a weapon.

If you listen carefully, pro-gun supporters might accept some toughening of background checks (but not national gun registration list), accept the idea of mental health screening (but no government capability to link gun ownership to some future mental health condition), and at the end of the day, believe guns in the hands of good people is the best defense to guns in the hands of bad people (more guns is the answer to Parkland).

Does this sound disingenuous?

Question #3: If the conclusion to this open discussion does not include further restrictions on availability of guns (e.g. assault weapon ban, restriction on clip size, age and training criteria before guns could be owned), why should we not expect another “Parkland” or “Las Vegas” type mass shooting again soon?

When our politicians discuss publicly guns and gun control, they present a disquieting image which screams their words are insincere.  Some try the “wise man” approach (our society is very complex and the restrictions being suggested will not eliminate gun violence and seem very unfair to law abiding citizens), while others dismiss the subject as inevitable (guns don’t kill, people kill).

Comment: How can our youth not become further disenchanted with government and our elected leaders?

Unfit From Any Angle

The current crowd that comprises the Republican Party’s Congressional members are unfit to govern. So tell me something that I didn’t know already. Hmmm.

Throughout the Obama years, Republican leaders postured time and again about Obama Administrations incompetence. Republicans pointed to the slow growing US economy, the size of Federal Deficits, and the ruinous impact the Affordable Care Act was having upon jobs were rallying calls. Despite all evidence to the contrary, the Republican message never the less kept reinforcing the dooms day outlook.

From the day former President Obama took office, while the US economy was steadily slipping into the dangerous territory between recession and depression, the Obama Administration pushed for a balanced approach between Keynesian economic stimulation and “doing the right thing” legislation.

The 2008 economic decline bottomed out and the Affordable Care Act came into law providing healthcare for millions more. General Motors was saved from itself, consumer protection measures were put in place, and human rights enforcement became the Justice Department’s focus.

The Economy grew around 2-2.5%, unemployment steadily decreased, while America’s GDP growth lead the pack of developed countries. In foreign policy, the Obama Administration proposed that the Middle East policies should not cloud or block America’s view that an emerging super power China must be dealt with. Also, Iran and North Korea both were subject to diplomatic efforts aimed at controlling those countries’ nuclear programs while also recognizing the limits of military force. And, climate realities were met straight on with the US announcing it would join the Paris Climate Agreement in hopes of a global effort to confront global warming.

During President Trump’s first year, the past 8 years have been “denied”. The President has appointed, and the Republican controlled Congress has confirmed, Cabinet Secretaries who were either unqualified or were avowed opponents of each Department’s goals. Turning the Asylum over to the inmates would summarize the executive branch.

Important trade alliances were cast aside and the “what does this mean” slogan America First was substituted. America First is sure fired, naive call which is certain to result in less international cooperation. But the best was yet to come.

The Congress tried it best to repeal and replace Obamacare only to find that strong grass roots support for the Affordable Care Act existed and a repeal threaten the electoral viability of Republican Congress Members. Disappointed but not deterred, the Congress moved on to “tax reform” which in short order emerged as “tax cuts”.

The rush for tax cuts was strange since most business people would ask what would be the spending plan against which levying taxes could logically be set. Republican leaders and spokespersons, however, tried to frame the tax cuts as a means to grow the economy faster and magically paying for themselves.

The tax cuts passed with Republican votes and America woke up to the news that these tax cuts would add another $1.5 trillion to the deficit. Republicans then touted the GDP growth rate as already accelerating, (a near impossibility due to any recent cause and effect).

Republicans claimed that economic growth was now 3% and heading north. Republicans did not say that other modern countries were also experiencing economic growth and relatively speaking, the US was growing no faster than its major trading partners.

Even worse was the recognition that when the US economy heats up, the risk of inflation increases too. So the perfect storm is forming.

Inflation is around the corner, unemployment is near bottom (so where are the workers going to come from to man the heated economy), Republicans’ anal Mexican policies are severely restricting much needed labor, and after 10 years of expansion, sooner or later a real contraction must take over.

But there is more.

This week Democrats and Republicans compromised, not on prudent budget cuts, but instead on fiscally irresponsible, unpaid government spending. This compromise resulted from a basic inability to set national priorities and in order for one group (like Defense spenders) to get their funding, they had to go allow with Democrat favored domestic policies.

Americans will have the GOP to thank for

• expensive healthcare
• rising inflation
• no tools left to stimulate the economy (taxes have already been cut and interest rates are still low) when inevitably the economy slows and slips into a recession.
• Trading partners will take care of themselves first (as instructed) taking away a consumer of our goods and services.
• Federal Debt interest rate costs will begin to choke out other spending.
• A darkening view of the utility (not mention the honesty) of elected officials will occur to more Americans.
• The American Dream and the necessary “can do” spirit will be stunted.

In real life, most Americans do not have the experience or the time to understand what their Republican elected leaders have put in play.  America First sounds good, and who is not in favor of lower taxes.  For unexplained reason, for profit insurance companies standing between Americans and their doctors sounds better than Government (as in all other modern healthcare systems around the world).

There are many reasons Republican Congress Members are unfit.  Most likely the corrosive effect of money is at the root.  Wealthy individuals have organized and fueled ideologues to frame issues and mold public opinion.  Money speaks, lots of money speaks louder.

The Republican Party has found ballot box success parroting these wealth back conservative think tanks.  Americans are about to find out from real experience, Republicans are unfit to govern.

Governance Gone

With the Senate passage of the GOP tax reform bill Saturday evening/Sunday morning, any semblance of a political party worthy to hold the reins of government vanished. The current Republican crowd in control of both houses of Congress resembles more a mob than a deliberative body. What is even worse is that the Republican majority clearly do not care what others think or who may be severely disadvantaged by tax reform.

Was this rough shod action new to the Senate?

Not long ago, Republicans were closing in on “repeal and replace” legislation which would impact 1/3rd of our national economy and could take away coverage for our most at risk Americans.

• Were there any hearings?
• Were their any requests for public comments?
• Were there any efforts made by Congress to educate the public ahead of time on what changes were actually in the bill?

The answer to all these questions was no.

The tax reform bill’s passage was even worse.

• Bill preparation is private,
• Sloganeering replacing printed copies of the proposed legislation,
• Horse trading (often just promises and not changes in the law) to get 50 vote Republican majority,
• The final copy of the 500 page bill issued two hours prior to the actually Senate vote

These reckless behaviors demonstrated absolute “zero” Republican interest in governance and 100% recognition of what they owed the moneyed interests who bankrolled their individual campaigns.

When Americans go to the polls, most think they are exercising their Constitutional right (and duty) to select those who will run the Government in a way that recognizes (and balances) all Americans’ best interest. On December 2, 2017, Americans learned that

• the Republican majority in Congress has no interest in all Americans,
• no interest in a transparent and interactive process,
• and a thorough willingness to do what ever is necessary to meet the needs of their wealthy campaign donors.

Reading Election Tea Leaves

Today is the morning after. Yesterday an off year election was held which featured two high profile governorships at stake. Democrats won both (Virginia and New Jersey) and surprisingly across the country, Democrats picked up previously Republican held offices. What was behind this Democrat resurgence?

Money was not a factor even though there was plenty of money spent. Performance in office did not seem to be a factor either, both governor’s races were open since the incumbents were term limited and could not run. So what provided the spark for Democrats?

Some pundits are saying yesterday’s races represented a repudiation of President Trump and his policies. Interestingly, Republican spokespersons disagreed and claimed instead that voters were dissatisfied with the lack of legislative action on the President’s campaign promises.

In other words, had Congress passed the Affordable Care Act “repeal and replace”, and pushed through a huge Middle Class tax reform, then voters would have rewarded the Party with victories. Hmmm.

Reality, however, is more likely different. According to news reports, women played a big role in Republican candidates’ defeat. Women came out to vote and did so in what might be record numbers. Overall voter turn out was unusually high for an off year election across the country.

Rather than conclude Republicans lost key elections because the White House and the Republican controlled Congress did not accomplish what they promised in 2016, it might be wiser to think Republicans lost because of the mean spirited, wrong headed ways the President and Republican controlled Congress conducted themselves.

Trying to cheapen healthcare many women depend upon, backing away from the Paris Climate agreement potential leaving a more severely damaged world for our children, and attempting to pass a tax cut which blatantly passes out billions to the very wealthy and puts the tab on our children and their children charge account (the Federal Debt) has not been missed by a growing number of voters.

Voters, especially women voters, see what’s going on, and are beginning to recognize that  the outlook is not promising in the Trump/GOP teapot.

Want To Be A Sucker?

How can any sensible person turn away from lower taxes? Freedom Partners Action Fund, an organ of the Koch Brothers network, is spending real money on television ads which appeal directly to “middle class” families and implore them to contact their Congress Member and demand Congress pass the pending tax cut bill. Is this Democracy in action or a side show “shill operation”?

Would you believe these ads are both?

The Koch Brothers have the money (political spending is an exercise of free speech the Supreme Court has said) so it would seem this is democracy in action. On the other hand, Freedom Partners Action Fund does not reveal how much the Kochs or other wealthy Americans will receive in tax cuts. Current estimates indicate, as expect, the sun will really shine on the very rich.

It would appear that tax cuts will offer “crumbs” to some Americans and a full course, top shelf repast to the top 1%. So, in addition to fairness, the “shill” is betting that many Americans will be “suckers” and not recognize this tax cut bill does not pay for itself.  Remember the consequences of those who think there are “free lunches”. Hmmm.

The US already has an unbalanced budget and a Federal Debt approaching $20 trillion. This tax plan is minimally estimated to add another $1-2 trillion. Republicans, however, are undaunted and promise to cut other government spending, for example entitlements. Hmmm.

Cutting entitlements like Medicare, Medicaid, and Social Security won’t impact the Kochs or for that matter other top 1% earners. Entitlement benefits impact the other end of the wealth spectrum including the “average American”.

It would appear that Freedom Partners Action Fund, Congress, and the Trump Administration are playing the average American as a sucker. Hmmm.

The Other Side Of The Coin

House Republicans have just released their proposed tax code rewrite. Experts are rushing to digest the proposal and perform the difficult task of assessing how this Republican bill will impact Americans. Wait, wait… if you are wealthy, you do not need to worry. This Republican plan will treat you well and provide opportunities for clever tax advisors to find new ways to save you tax payments.

The bill provides most (but not all) the gifts the rich have been expecting. The top bracket of 39.5% remains although the income threshold has been raised to $1,000,000 allegedly in deference to the “gift to the wealthy” optics.  Carried interest, estate tax elimination, and reduction of corporate taxes (35% to 20%) for private owner businesses will provide the wealthy with plenty of tax relief opportunities while the tax burden is shifted to lower income Americans.  And, for those unfortunate Americans earning $500,000 to $999,999, you will just have to pay in a lower bracket.

The deal is not set yet. Republicans from high tax States will argue for sweeteners in the restoration of State and local tax deductions and full credit for mortgage interest. Lobbyists representing all sorts of industries will go into full court press to preserve other deductions and credits. It is entirely possible that this attempt at tax code changes will stall or fail outright.

But it is entirely possible that this proposal or something substantially the same will pass. What then?

For sure it is maddening that very wealthy people like the Koch Brothers and Robert Mercer will pay less taxes.  It is maddening that as a consequence, the tax burden will shift to less wealthy people (like the Middle Class), or the cost of this tax cut will flow to the national debt, or both.

But that is not the real damage that this tax code change will bring.

A coin has two sides. On one side, heads, is the smiling faces of Americans paying less in taxes. The other side, tails, however, means there will be less government revenue to cover already approved government spending. Let there be no mistake, with lower tax revenues there must be less government spending sooner or later.

Republicans will be quick to assert that there are all sorts of waste and corruption in government spending. Why, Republicans will point out that there are able bodied Americans drawing social security disability benefits who could be working. And look at Medicaid excesses associated with the Affordable Care Act. And, with their faces now reddened, Republicans will bluster about spending in all sorts of other areas. Surely, cutting wasted money can be made.

Maybe. The problem usually boils down to which programs are viewed as wasted spending and what justification makes those expenditures “wasted”.

For example, Republicans have attacked the Affordable Care Act (train wreck, a jobs disaster) even though there were some 20 million more Americans insured with Obamacare than before. And, what have Republicans offered? Their best proposals offer less coverage and insure 10-15 million fewer Americans.

So, when it comes time to submit “post tax cut” Federal Budgets, what makes anyone think Republicans won’t feel that reducing programs which benefit all but the rich will be perfect targets?

The theme which comes up time and again is that there are no free lunches. Republicans are breathlessly trying to sell this tax code change as great for the middle class and the key to unlocking our economy, and best of all, there will be no cost to average Americans.

Really?