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.

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Hand In The Cookie (Tax) Jar?

This past weekend, Republican talking heads shared with Americans their absolute guarantee that Republicans would work “hard” trying to deliver middle class tax cuts. Americans found out that not every tax return was the same and so officials such as Steven Mnuchen, Treasury Secretary, and Gary Cohn, Chief Economic Advisor simply could not predict that every middle class American would receive a tax cut.

These leaders did emphasize that corporate tax relief would bust open the dam holding back job creation and that was a good thing they said. Interestingly the leaders were silent over whether there would be cookies for America’s wealthiest in their Christmas basket. A drop in the top bracket from 39 1/2% to 35% should reward these wealthy Americans handsomely.

One of the cute features of the Republican tax reform would be the elimination of deductions for State and local taxes along with mortgage interest deductions. (Surprisingly, it just happens that “blue” States use these deductions more than “red” States).

In the concept stage, Republicans had thought lower tax brackets and larger personal deductions would offset State, local, and mortgage deductions and allow the middle class to see a tax savings. Ironically, at this time the details (you know where the devil lives) are not set and Republicans are unable to categorically say one way or the other. Just as with the repeal and replace Obamacare, Republicans are beginning to realize how bad the “optics” will look if the middle class gets nothing and the wealthy get a lot.

Regrettably, truly simplifying the tax code and adjusting corporate taxes more in line with global competition could be useful efforts. The big money funding so many Republican legislators, however, does not think that way unless they get their cut first and right off the top.

As it stands now, the “repeal and replace” fiasco will make Republicans look good compared to how they are setting out to “reform” the tax code.

Taxes Anyone?

The President and the Republican controlled Congress are ready to move onto what they are really interested in and have been too worried about incidental blow back to confront. Their focus is on how to deliver significant tax reduction for their many supporters who have shelled out the billions to get the GOP crowd elected. One might sayits “pay back” time.

So, why the reluctance?

Republicans realize that if they do not handle the messaging parts extremely well the public will wake up and see what a one sided deal Republicans are offering. With this new awareness, voters might put the screws to a few GOP Senators and Representatives. And, if enough GOP Senators cave, Americans will see a repeat of repeal and replace. Hmmm.

Is this a legitimate concern?

The President has announced the tax reform will be a huge break for the hard working middle class and the wealthy, like him, will get little, maybe nothing. Doesn’t that make you want to sign up right away? Hmmm, but does the President have a track record of telling the truth on important matters? Or for anything?

Like healthcare, the Republican plan lacks any input from public hearings, assessments from reputable think tanks, or the public existence of any plan details. But this lack of information has not inhibited Republican spokespersons from explaining why the tax reform is necessary and in America’s best interest.

The tax reform, the President says, is about stimulating the economy and creating jobs. Why? Entitlements are projected to increase the size of our yearly Federal deficit and unless the economy grows faster than the current 1.5-2%, the increase in tax revenues will not keep up, the deficit will grow, and the $20 trillion debt will get bigger.

This is a reasonable and logical argument which deserves a fair review. Admittedly, one has a perceived debt problem and the answer is to lower taxes.  Hmmm.

The first problem is there is no evidence this works based upon previous attempts at supply side economics. Most corporations and wealthy individuals take the tax cuts and say thank you and do not reinvest.  With interest rates currently so low, any sensible business person would borrow and invest if there was a reasonable prospect that there were customers.

 

Second, with 4% unemployment now, where are the workers going to come from and where are they going to suddenly find the skills need to expand the economy. Are all the new to be employed going to work at Starbucks or Walmart?

 

Third, global macro forces can unexpectedly influence US economic performance. Add to this the current US hostile trade negotiations, what are the chances that other countries will want to trade with the US?   A global slowdown, if not a recession, is a distinct possibility.

Are Congress leaders telling us everything?

Not withstanding the sincerity of some supply side economists, Congress is regrettably tied to huge campaign election costs. At one end of this rope is the Senator or Representative and at the other end is a special interest or wealthy donor. What one must acknowledge is that the rope is both real and susceptible to being cut. If cut, the Congress member can say goodbye to his seat. Under these circumstance there should be no surprise that items like eliminating the AMT, lowering corporate taxes from 35% to 20% while still allowing pass through earnings, and reducing the top bracket from 39.5% will be in the final bill. These provisions represent payback for the billions already advanced in general elections.

The ‘free lunch” theorists will offer assurances that the tax code can be cut, Americans will flock back to work as new jobs are created, and the economy will blossom while the Federal Debt shrinks. If this could happen, it truly would be a great tax reform, but what if it doesn’t happen this way?

The first signal will be the deficit increases faster than currently projected. Americans will be advised to be patient and next quarter these stimulations will take affect.

 

The second signal will be income inequality continues to grow, possibly even faster.

 

The third signal will be a desire from many conservatives and deficit hawks to cut government programs like Medicare, Medicaid, and Social Security (but not Defense) because America can’t afford to spend with its deficit and debt so high.

 

Sadly, the fourth signal, if history repeats, will be the initiation of a war requiring Americans to turn their attention from domestic issues to supporting our flag and troops overseas.

Belatedly, Americans will realize that the “free lunch” was served only to the very wealthy while the rest of America had to pick up the bill.

The size and shape of tax reform should be know soon and at that time, the predictions of this post can be judged. The best outcome, IMO, will be that in pursuit of greed, GOP Congress Members will choke on this ambitious reform, and consequently, this reform fails to pass into law. With Republicans in control of both house failure is a long shot but hope still shines eternal.

Head To Tail Thinking, Oops, And Wrong Again

President Trump joined Senators Cotton and Perdue at the White House in announcing his support for a change in US immigration law. The proposed legislation would sharply reduce the total number of immigrants allowed to enter each year and completely alter the mix of immigrants. The President boasted that this plan would dramatically improve US economic competitiveness and quickly put even more countries in the US rear view mirror. Hmmm.

The essence of the proposed legislation was to reduce the total number of immigrants, and to select immigrants based upon economic, educational, and sought after skills (a meritocratic policy). Current US immigration policy favors family and friends of current immigrants without regard to any special qualifications. So what’s wrong with this approach since most of the rest of modern wealthy countries use a system similar to what Senator Cotton and Perdue have suggested?

The President offered a clue when he said the lucky immigrants would have to already speak english. Of course there is nothing wrong with welcoming immigrants who speak english but farm laborers and hospitality workers (maids, janitorial, etc) most often speak Spanish or some Eastern European tongue.  The President was more interested in looking to bolster his white only, english only view of America.

That is not what is really wrong with this proposal. Rather, it is the total number of immigrants (guest workers) is set far below what the economy needs. While trying to bump up programmers and other technical employees is a good idea, shorting the manpower needed to harvest crops or process foods or keep hotels clean will not lead to a desired outcome.

The absence of any mention of “comprehensive immigration reform” confirms that the President is far from serious about immigration. But the President is serious about using whatever dog whistles he can find which communicate to his political base the same message, “I care about you and the other side doesn’t”.

Dog whistles are effective political tools. These euphemisms and half baked policy statements mislead the base and set the stage for a crashing disappointment when these policies come home to roost.

Repeal, Not Replace, Hmmm

The Senate Republican effort to pass “repeal and replace” legislation which would be the successor to Obamacare, ended yesterday with whimper. Pundits have said there were as many as 15 Republican Senators who would have voted against the bill but until yesterday there were only two announced. Following a meeting with President Trump, two more Senators (Jerry Moran and Mike Lee) announced they could not support the Republican Senate bill.

End of story?

Not quite. Senate Leader Mitch McConnell announced he would offer a “repeal” only alternative and expected Republican Senators to pass this bill as they had in 2015. The “repeal” only option has a two year delayed implementation ostensibly designed to allow time for the Senate to find a compromise which could pass.

Does unbelievable come to mind?

What does anyone think is so hard about passing a repeal only bill? Admittedly, passing a replace bill does bring into focus what various factions within the Republican Party and the public think about healthcare. Since there is no consensus (without paying a price at the polls), Republicans will have a tough time finding common replacement ground.

Hmmm.  So why try repeal only?

The fundamental and unstated issue, the elephant in the room so to speak, is whether Republicans think healthcare is a right and they are searching for the most cost effective way to deliver, or whether Republicans see healthcare as a privilege and are seeking the least costly manner to provide minimal coverage and still be able to boast to voters that they are for healthcare.

Hmmm.

An old adage teaches when you are stuck in a hole, the first rule is stop digging.

Republicans are showing in bright, red, white and blue colors that as a Party they are not aligned on principles. Even more so, Republicans are showing that both the President and the Republican controlled Congress, while able to be verbally effusive, are still unfit to lead.

Close To Greatness

Republicans are running the ship. The GOP controls the Presidency and both Houses of Congress. What more could any party want if they wished to leave their imprint upon America. Each day, however, Americans are observing a President and a Congress aim at greatness but suddenly swerve away, missing the mark by a mile.

• The “Healthcare” train went off the tracks quickly. Instead of focusing on premium and drug costs, the GOP struck up the “repeal and replace” band only to find they possessed no consensus on “replace”. The one attempt at attacking cost was instead diverted to bait and switch. The GOP offered to sell “stripped down” policies, as if they were Obamacare quality, for lower price. That was their version of cost reduction. Would you buy a car with no passenger or back seat (just the open space) just because the price was slightly lower?
• Even more obvious as a ripe target is the cost of prescription drugs. What other country in the world makes drugs and sells these patented compounds in other countries for less than they sell the exact same materials in the US? The GOP could have seemed genuinely interested in the well being of Americans had they not taken the “repeal and replace” course.

• The “Tax Reform” train, on a different track, seems destine for a similar miss. Anyone who prepares their own taxes knows full well how complicated a reasonably straight forward process can be. But “tax reform” is political code for “tax cuts”. And if you are wondering how much you might realize, don’t waste your time, the GOP tax cuts are about those who don’t need them, the wealthy.
• Infrastructure investment, like building roads, bridges, harbors, and airports, is a time proven method to improve productivity by modernizing shared means necessary for economic growth (read jobs). Infrastructure investment is also a popular method to just put people to work regardless of whether the work produces any economic return. Under certain circumstances, even just employing people can be a good thing.
• Not, apparently, with this Administration. Infrastructure investment means privatization and transferring more wealth from tax payers to private investors.
• Along these same lines, the growing crisis around student loan debt is viewed as another opportunity to use private enterprises to assist the financial needs of students seeking higher education… at a substantial profit.
• If training skills and higher education are needed to make workers more employable and more productive, then why would government add a layer of profit from loan administrators? Why would government treat student loans differently in bankruptcy cases than if someone bought too much house or too many cars?

Americans may have been frustrated with these situations in 2016, and decided Hillary Clinton and the Democrats were not the route to fixing them, hence Donald Trump became the 4 5th President and the Republican Party got control of both Houses of Congress. With seven months of this new Administration, Americans instead are seeing “greatness” by-passed in favor of wealth transfer from the average American to the wealthiest Americans. Hmmm.

The Smell Of Coffee

Six months does not make a year, and a year does not make a four year term. President Trump (and his advisors), however, are waking up to the reality of governing. Much of President Trump campaign’s boastful rhetoric have already been exposed as misguided myths. Too little time has passed to fairly pass judgement upon what President Trump has done or what he has not. A quick look is not encouraging, however.  Maybe his staff and advisors are saying “pass the coffer”.

On the domestic front, President Trump has continuously blustered about both creating and retaining American jobs. There is little evidence of either, and as important, his budget proposals have circled thousands of current Federal jobs for elimination. I wonder whether the President is using “new math”?

And just in case the Administration has not been looking, internet giants such as Amazon have been marching forward with “job eliminating” new efficiencies. If Trump’s advisors are honest with themselves they should marvel at how resilient the economy they inherited really was.

The Obamacare “repeal and replace” has not turned out to be a “walk in the park”, done, and mark that one off the list type of initiative. Funny but most Americans want the benefits of Obamacare. Further, once fact checked, Republican criticisms melt under a healthy dose of facts and transparency. And best of all, voters have seen what was always there. Republicans are only interested in the tax cut which will accrue for the wealthy. The specific American Health Care Act benefits, if enacted, will be the bare minimum necessary to pass the AHCA.

The campaign’s vitriolic immigration slogans have also been shot full of holes. The top priority Mexican border wall has gone no where after just about everyone involved has declined to endorse the efficacy of addition fencing. Congress has twice chosen not to appropriate money. And, more telling is that there are no indications that illegal immigration has increased.   Even more telling is that business leaders are calling for more temporary labor since they cannot find enough American citizens to fill jobs ranging from technology to agriculture to domestic occupations.

Foreign affairs, probably, best characterizes the Trump Administration ineptness. Trump’s shoot from the hip style has proven to be grossly ineffective. Foreign leaders who possess much less power (ships, soldiers, and planes), have learned to survive employing long term strategies and short term diplomacy. Countries such as Germany, France, Japan, China, and India have over the years cleverly closed large parts of their economies to American companies. These leaders are not going to concede these advantages to President Trump’s taunts and threats.

The President’s decision to withdraw from the TPP and the Paris Climate Accord, both actions were designed to appeal to Trump supporters domestically, simply convinced leaders around the world to say little, work together, and forget about the US until it regains its senses.

His claims of “bombing the S**t out of ISIS and quickly ending the conflict has been shown bogus, but what will he do with what follows ISIS? In Afghanistan, the Trump Administration appears on the verge of increasing troop strength with no known strategy for ending the conflict.

North Korea was to have melted away after President Trump became “buddy-buddy” with China’s President Xi. Today, after North Korea demonstrated ICBM capability President Trump looks to more people, simply a king with no clothes.

There is, of course, plenty of time for future world events to prove President Trump’s blustering prescient.  I wonder whether his staff will up their coffee intake in order to get a real grip on reality?