Posts tagged ‘flow down’

Flim Flam Man

I believe it was Abraham Lincoln who said, “You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all of the people all of the time.” Enter President DFF. That 32% base is some of the people all of the time. Back in 2016 he was approaching that all of the people some of the time, but his all was still not a majority of voters. But now I think reality, who like Mother Nature, is a bitch, is going to demonstrate to the flim-flam man and his party that you can’t fool all of the people all of the time.

Remember on Monday when President DFF went to somewhere where like in the State of the Union took credit for the high stock market (while stock prices were plunging), the amazing jobless rate, rising wages from the tax cut, and his new infrastructure plan? Wow, what a man, except it is all flim-flam. Let’s start with rising wages. He trotted out some anecdote who had got a raise and all is wonderful. Okay, I am about facts and data and here is a fact check from the Washington Post:

Egged on by the White House, corporate America has spent the past few weeks touting how it is sharing its big Trump tax cut with employees in the form of bonuses and pay increases — an apparent validation of the trickle-down approach to economics espoused by the president and his Republican allies.

But when we look at the numbers, we see the opposite: The nation’s workers are getting woefully little, at least relatively speaking. Peeking beyond the PR, our analysis finds that major corporations are planning to spend more than 30 times what they are putting in the wallets of employees on buying back their own stock — a practice solely meant to lift the fortunes of shareholders.

To get a sense of how the pie is being divided, we collaborated with Emre Gomec of the Academic-Industry Research Network to tally the sums of commitments from the 44 companies in the S&P 500 stock index that, according to Americans for Tax Reform, are giving their employees a bonus or a raise because of the new law. When you add it all up, you get about $5.2 billion — $3.7 billion in one-time bonuses and an estimated $1.5 billion in annual wage increases.

But that total pales in comparison with the $157.6 billion in stock buybacks announced by 34 S&P 500 companies since early December, when the tax bill passed the Senate. Companies typically purchase their own shares in a bid to bump up the price — a move that tends to please Wall Street and swells the compensation of chief executives, who are paid largely in stock.

Oh and let us not disregard what has not been tallied yet on the expenditures from the tax savings in automation. But it gets better. President DFF said the following in his speech last Monday: “Something that I’ve been talking about for two years — campaigning, and everyone said, ‘You’ll never do it’ — after years of wage stagnation, wages — so what happened two days ago and a month ago — wages are now, for the first time in many years, rising. In fact, more companies are pursuing pay increases right now than at any time in the last long period of time — they actually say, ’in the 21st century.’ Can you imagine that? It’s amazing what people with some good ideas can do. It’s amazing what we’ve all done together.”

Except again it is a big lie. Again from the Washington Post:

According to The Fact Checker’s database of Trumpian claims, the president in his first year eight times falsely suggested that wages were finally rising because of his policies. He also made a similar claim in the State of the Union address.

But there is little dispute among economists that wage growth — after being essentially being flat for years — started to pick up again in 2014, after reaching a post-Great Recession low. In other words, Trump is simply blowing smoke when he claims that when he was campaigning that people thought it was impossible for wages to rise again. Wages were already increasing, though the increases were lower than what would be expected in a mature recovery and the impact was uneven, as shown by this chart from the Hamilton Project at the Brookings Institution.

For the purposes of this fact check, real wage growth for most workers in 2017, Trump’s first year as president, actually lagged the last four years of Barack Obama’s term. “Real wage growth in 2017 for production nonsupervisory workers in 2017 was 0.2 percent, the lowest since 2012,” Shambaugh said. “For the bulk of workers, purchasing power did not rise very much in 2017.”

Okay, let’s move on to the wonderful infrastructure bill that I have told you before is a sham. First he gave away all the money we needed to infrastructure improvements in the Great Tax Gut. Now here is the plan as it now looks, again from the Washington Post:

Despite calling for a $1.5 trillion boost in infrastructure spending, Trump is proposing just $200 billion in federal funding. The remaining $1.3 trillion is expected to come from a combination of state and local governments and the private sector. Yet in most places with the greatest need for new infrastructure, cash-strapped governments won’t be able to pay for it without raising taxes. Meanwhile, the private equity firms and foreign sovereign wealth funds that are likely fill the void will undoubtedly demand guaranteed returns in the form of, say, new tolls. The reliance on private investment also creates, as Paul Krugman writes, the potential for “an orgy of crony capitalism.”

You know, toll roads everywhere and instead of taxes to pay for it, you will just get bills for flushing your toilet. And we won’t own any of it. The ultimate flim-flam man can full some of the people some of the time and all of the people some of the time, but he can’t fool all the people all of the time and when they finally feel all this in their pocket book, well then things will change. Reality, facts, and data are a bitch.

It’s The Economy Stupid Again

I have written before that our current metric for success is a tape measure used to measure our money pile. Everything from success as a human being to our confidence in our future is based upon money. And in the world we live in, in some cases, at least our own security, that is the world we have built. But even at Davos, they are starting to worry:

Just days ahead of the confab, Larry Fink, chief executive of the $6 trillion-plus asset management firm BlackRock and prototypical Davos attendee, made clear his own doubts about our economic future. “Popular frustration and apprehension about the future simultaneously have reached new heights. We are seeing the paradox of high returns and high anxiety,” Fink declared in his annual letter to thousands of top business leaders. Noting the low wage growth, dimming retirement prospects and other financial pressures that squeeze too many across the globe, he said, “I believe that these trends are a major source of the anxiety and polarization that we see across the world today.”

Fink made some recommendations: “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

The BlackRock letter suggests that the current economic system, which has come to prioritize corporate gains and private growth above all, sees trouble ahead and is looking for ways to save itself. That animating worry is visible in the titles of sessions on the Davos schedule (Day 1 panels: “How Is Rentier Capitalism Aggravating Inequality?” and “Why Is Our World Fractured?”). And the same realization has threaded the pronouncements of the other industry and political leaders in attendance.

I found this discussion enlightening and hopeful. We see stock market gains everywhere and yet we are fearful. Said another way which I have been hammering at now for years, the economic inequality created by “rents” only benefits a few and cuts out the rest. A big argument against capitalism is its pure selfishness. I got mine screw you. That was in fact seen as a benefit that drove competition, innovation, and new jobs, except it doesn’t any more. That is where the concept of rents comes in. “Rent refers not to the monthly check you send your landlord but to the excess payment made to any factor of production (land, labor, or capital) due to scarcity.”

Scarcity can be created in many ways, but the one that is most troubling is by government. If corporations capture government and then have them rewrite the rules to favor certain industries or rents (without creating jobs or innovation), we have a transfer of wealth to the wealthy, less and less competition, and no real growth in jobs. While the stock market is at record highs and the GDP is looking good, ask yourself as Mr. Fink did, why is there so much unrest and apprehension about the future. It is not being shared, it is based mostly on rents, and most of us barely see any benefit.

I am reading an interesting book right now, The Captured Economy: How the Rich Enrich Themselves, Slow Down the Growth, And Increase Inequality, which argues that the problem is not too much competition, but not enough. The rules have been rewritten to increase the value of rents, while hindering others entry into the market to take advantage of innovation and change to create jobs and wealth for everyone. It is an interesting argument because it takes on both conservative and liberal approaches to growing the economy. I think (I am still in the first third of the book) that the argument is flow down works if the economy was not rigged by government controlled by the wealthy to redirect the flow down to themselves.

The authors clearly recognized that government has a role to play in the government, but it is fraught with the ability of those who have money to rig the system, as they have.  They point to the slowdown in growth and the fact that this economy does not act like any before to make their point. They point out the conservative idea that many rules and regulations favor those already in the market place and shut out others.  Monopolies simply grow.  They argue that it is capitalism that is the engine of wealth, but it is one we all have to be able to play in.

I have called this leveling the playing field.  It will be interesting to see if they recognize that while capitalism is a great way to spark innovation (if we get rid of a lot of intellectual property and monopolies), in some areas, its model just does not work, like healthcare insurance.  It will be interesting to see where they go with social programs like social security (guaranteed retirement), single payer healthcare, and access to higher education for all.  These and investments in infrastructure in my mind allow for human capital to then take advantage of a more competitive and open market place.  Well you see where my prejudices lies.  I will update you when I have read more.

It would be really interesting if we could take the ideas of both sides and apply them within a framework where they really did work.

It’s Always About the Money

No, today is not about our “stable genius” who is neither.  Just as an aside, most of us know we are way smarter than he is (don’t equate being a successful salesman and crook with being smart, i.e. acquiring money) because we know we would never be smart enough for the job of president.  But that is again a sign of how we use the acquisition of wealth as a sign of intelligence and success.  Seeing and listening to most of the billionaires that back President DFF, their one identifying characteristic is not intelligence, but an outlook on life and facts through the lens of greed and selfishness.  Maybe a dash of lack of compassion for their fellow-man necessary to their greed and selfishness.

But I get side tracked.  Look at Iran today and the real root cause of the unrest there is their financial insecurity as their expectations have not matched reality (and the failure of many of their financial institutions).  What got them out in the streets is not the Bill of Rights, but money or the lack thereof.  What will get Americans into the streets and probably finally end President DFF’s reign will not be that he is destroying the Constitution or a danger to our national security, but when the economy turns south as it inevitably will.

Money has become the currency of freedom and choice.  Maybe it always has been.  Think about the roots of the economic inequality we see today.  Money equates power and that power provides the method to acquire more money and tilt the playing field in your direction. And you can never have enough.  Money in a capitalist society like ours is security.  And hence we measure everything from success to intelligence in terms of money.

One off shoot of that is how many (dumb) Americans feel confident in President DFF because we now have a “businessman” with the reins of government.  A Trump fool commented the other day to look at the job growth under trump.  The economy is humming and Wall Street has never been higher according to them as a measure of his success.  If that were measures of our feelings of security (and it is for the 1%) then Trump is all set for a second term.

But let me burst a few bubbles.  Let’s take on the businessman assumption first.  A successful business man makes money (see, the ultimate metric for success and intelligence) and increases the value of the company for shareholders.  He does it in a way that out does his competition, not work with them.  In fact, as we watch the big guys, they do things that try to stifle their rivals.  It is called microeconomics and monopolies.  But the country’s success is based upon how we do in the aggregate, all businesses, not just one or two big ones.  It is called macroeconomics.  A business person is one who is least equipped to understand and facilitate that.  The competition is the enemy in their little minds and you can see that in President DFF’s idea about winners and losers.

Second on job growth, all we are seeing is a continuation of the job growth curve that was established under Obama.  We seem to forget (clouded by the security of our money today) that Republicans wrecked the economy and under Obama, both the stock market rebounded in giant leaps, but employment under Obama actually rose faster than it is under Trump.  To say it another way, all the “great business man” has done is not upset the Wall Street apple cart yet.  And that is a big yet.

And on that Wall Street thing, yes, if you own stocks and your income is dividend driven, happy days are here again, but what of the workers?  Is that wealth flowing down?  Are wages rising at the same rate as profits?  We still use the wealth of Wall Street to measure our wellbeing when the reality for most working Americans is that it has no measurable effect.  Sure if it crashed there would be an impact, but the wild profit taking on the ballooning price of shares may just be a troubling sign that a correction is coming.  Some measure.

So the key to upending both the Republicans and Trump is about money.  When enough Americans feel the pinch, only then will they go to the streets.  They may say it is about our Constitution or our rights, but it is their feeling that they are losing their security (read money in our society) under these nitwits.  I don’t mean to demean the Women’s march because it really did give us hope.  I am simply saying that until enough Americans feel their security threatened through their financial security, nothing really changes.

Here is the problem with all that.  Economies grow and contract.  Cycles are the universal accepted norm in a capitalist society.  Our approach to smoothing out these so we don’t have the Great Depression or the recent Great Recession was regulation (Glass Segal) coupled with monetary policy (interest rates and the supply of money), and thanks to the great economist John Maynard Keynes, government spending when private enterprise has rolled up into a fetal ball.  The later one is almost dead because Republicans are loath to spend on anything except themselves (tax cuts).

But they still happen and they have little to do with who is in office, only how we try to respond to them.  Thus, we swing back and forth between Democratic or Republican control of our government seeking security meaning a roaring economy that serves us all.  Sadly, we are focusing on the wrong thing, money instead of security because we equate the two.  Note that both parties have become “the party of business” as though this will solve anything.  Republicans are the Party of the big businesses, and Democrats got lost in entrepreneur politics to save us.  It offered no solution for middle America except move and get and education, neither realistic for the middle aged industrial worker. And neither solution, Democratic or Republican will ever solve the underlying problem, real security in a capitalist world.

Think about it.  In recent history we careened from George H. Bush to Bill Clinton to George W. Bush to Barack Obama, and now to President DFF, and when you step back, none of them solved the underlying problem of security and a better life for our children.  Economic inequality just kept increasing. All the solutions proposed simply tinkered with the existing system that favors the wealthy, one more compassionate than the other, but still tied to the big banks and Wall Street as the measure of success.

There is a glimmer of hope.  Bernie got it.  It’s not about the money, it is about the security.  Many European countries get it. Sure capitalism is the engine of prosperity, but not uncontrolled.  Uncontrolled it damages everything around us while it produces money for the few. It is simply a tool and one of many.  Let capitalism be capitalism constrained only when it hurts us (economically, socially, or environmentally), but then more fairly share the profits toward building security and a better tomorrow.  That would be a guaranteed healthcare system, retirement system, safety net, and advanced education.  That would be infrastructure investments for our future that allows that constrained capitalism to grow and prosper, not for the few, but for all of us. That would be a government who invests in R&D, and takes science and data seriously.  That would be a complete rewiring of our economy.

Our economic system is presently wired to increase economic inequality, which then produces a distribution of power to affect that economic system unevenly in favor of those that have. The gross economic inequality we see today drives so many of our problems like unaffordable cities, politics controlled by money, stagnation of wages, and the lack of inertia to change the system.  Racism whose power to hurt comes from the economic disadvantages of those it is used against gets nullified.  It goes on and on.  Right now the Republicans, in their belief that fewer restrictions on a system already grossly unfair to us will work better for all of us, are in charge. See the latest tax bill and its consequences for who it really helps.

Soon the reckoning will occur and the Democrats will have the government again.  But if we fail to recognize that it is about security and how government can establish that baseline security for all of us, that levels the playing field where the truly exceptional can be exceptional, we will just keep pinging back and forth between parties while our future just gets dimmer and dimmer.  That is really what it is all about.  We don’t need to just throw out the Republicans in 2018, but to throw out those Democrats who are still too wedded to the old system.  Yeah, change, real change, is very, very hard.

Note: Republicans believe self-servingly that the best way to help everyone and grow the prosperity for all (that is not the same as growing the economy) is an unrestrained market place.  That is their whole flow down approach to the economy.  Make me rich you will be too.  It is also informed by the view of mankind where there is a level playing field out there so if you are suffering you deserve it.  Then throw in that they are basically fearful people, resist change, and underlying all of it is I got mine, fuck you (selfishness breed by fear), and you get a world viewed through lenses that filter out reality.  Of course it is hidden underneath hammocks for the poor and removing regulation and freeing the market place will make us all better off.

But the market place already operates by rules or their would not be a market place, just chaos.  And the important thing for you to note here is that those rules favor the wealthy.  So when you hear don’t regulate the market place, it is smoke and mirrors for don’t change the rules that favor me.  It really is that simple.

Econ 101 for Republicans

Republican economic theory (theology?) relies on two beliefs or tenants. The first is that if you cut taxes there will be new investment by businesses and corporations, and with that, jobs and wage growth. The second is that this increased economic activity will actually grow the treasury’s coffers, paying for themselves. This effect when applied to the impacts of a tax cut is called dynamic scoring. See, the tax cut will cost x, but the result will be y additional income to the treasury or so the theory goes. The first one could be true in certain circumstances and the second one is demonstrably false. But that is what their whole approach to the economy is made up of. Oh sure fewer regulations, but that is really a subset of the first tenant and when you add the secondary costs, like damage to environment, death and dismemberment, and loss of rights for workers, the cost are usually more than the benefits.

Let’s go after the first tenant, cutting taxes creates jobs and stimulates the economy. Well there are times when that actually helps, not as much as actual increases in government spending (a tax cut has the same effect on balance sheet of the Treasury as increased government spending), but it helps and it can be faster than government spending. Economic theory and practice have shown us that after a recession or even during one, with high unemployment, making money available to corporations and businesses in the form of a tax cut does stimulate growth. It is a tool Republicans favor because they don’t believe in direct government spending in things we need like infrastructure and R&D, and want to give it to corporations and businesses (and people) to decide for themselves.

Two things you need to ask yourself here. First are we coming out of a recession, and how high is unemployment? The answer which conservative economist Bruce Bartlett gave us the other day was neither apply as corporations are already awash in record profits, and the unemployment numbers tell us we are almost at full employment. Second, one thing we know for sure is money given to the middle and lower classes is generally spent, while money given to wealthy is much less effective. Where was the emphasis in the current tax bill? Oh, the wealthy. There are great debates about whether direct spending by government is far more effective in these times to create real demand through jobs and wages. But we have some empirical data from Governor Brownback and the Kansas experience where they slashed taxes, little change in jobs or wages, and the state went into massive debt, defunding education to help balance the books.

The bottom line on the first tenant, is that if used judiciously at the appropriate time in the economy (not now) it might help. But considering the infrastructures needs across the country, the money would have a much higher multiplication factor (return on investment; every $1 spent creates say $1.5 of increased activity in the economy), and we would create jobs, higher wages, and invest in our future. The money they are going to spend paying off their wealthy donors, in other words, is going into a big hole.

Okay, tenant number two, that cutting taxes pays for itself (dynamic scoring) is fairly straight forward, it has never worked. Oh sure there might me some increased revenue if the tax cuts were properly targeted to the middle class, but nowhere near the income to make up for the spending. “Assessing the House version of the plan and accounting for the economic growth its tax cuts would induce, the analysts found that growth would offset only about 12 percent of the plan’s cost over the first decade. After an initial economic boost, bigger deficits and rising interest rates would drag on the economy.” Here is another well research source that can find no pay for itself effect in Vanity Fair. But hey, get it from the non-partisan Joint Committee on Taxation and note they still used very optimistic growth rates.

So there you have it. Or as conservative economist Bruce Bartlett said, “…virtually everything Republicans say about taxes today is hogwash.” So we are going to take a big hit. Get ready. And what is next? This from Paul Ryan in the NYT this morning:

Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.”

That’s right. When the numbers don’t add up and the Treasury starts going in the red, they will all of a sudden care about the deficit again and go after the programs that we need most. Maybe that was their game all along. We are in for hard times ahead, but as I told my son who works in the school district in San Diego and is afraid the new tax bill that eliminated his tax deduction for interest on loans and cut the deduction for state and local taxes that school districts depend on could bankrupt him, Conservatism is like cancer. The treatment to cure it if it can be cured almost kills us. That is where we are at. The great Kansas Experiment has moved to the national stage, and we will see the same results. Think you might get out and vote in 2018?

And a Chicken in Every Pot!!!

I am listening to the DIC (Dotard in Charge) talk about his tax cut plan and lie through his teeth about he or his wealthy friends not getting big breaks.  I am thinking he must really think we are stupid, and then I look at Alabama’s nomination of a right wing nut (more religion in government (whose religion?), and outlaw gays) to run as their GOP candidate, and maybe he is right.  But let us just stick with the tax “reform” plan.

First question you might want to ask is how do we pay for all this cutting?  One, if he were rational, would start from the understanding of what we need to invest in future, add that to our current obligations and figure out how much money we want to have coming in.  Now this would include what is a reasonable debt (based upon % of GDP) and how to pay for programs in the future.  Then understanding our income needs, we could look are reforming the tax code to simplify, and decrease/increase where it makes sense.

Now we could argue about expanding Social Security by allowing the tax not to be capped at a certain income level.  We could argue about Medicare for all and how to pay for it with a trade-off of higher taxes versus no private insurance bills.  But we are not doing that, we are cutting, cutting, cutting, and what of the deficit.  Oh wait,  I forgot, tax cuts pay for themselves except of course, they don’t.  So the first question to be asked is how does this devastate the deficit.  I happen to be one who thinks a reasonable debt is okay and necessary, but make no mistake, they guys who want a balanced budget don’t give a shit about the debt when it comes to tax cuts, and will cut programs like healthcare (Medicare and Medicaid), education, R&D, infrastructure spending, and Social Security to keep their cuts.

Now, it is true that some pay way to much in taxes.  They are the ones who really need a tax cut, and they have no power.  Those that have power have already massaged the system.  You don’t really think that while we have the highest corporate tax rate, they actually pay that right?  Of course they don’t because they have gamed the system with their money and the gaming continues with the DIC out there lying through his teeth.  So let’s see the details and see what this really costs us, but unless they can pass this with 50 votes, it is probably dead meat.

In many ways one has to ask, what is the strategic plan of Republicans and how does this fit into a vision of  a great tomorrow.  It doesn’, and it is repeal and replace and cut taxes and the devil is in the details.  It assumes as always that government is bad, regulations are bad, and markets should be free to solve all problems.  It has never worked and this is more of their nonsense.  But hey! who does not want a free ride?  That is what America has become.

An Upside Down World

Trump voters are about to see what they bought themselves.  The Republican mainstream, the nut jobs in Congress, want to gut Social Security and Medicare.  They want to do it in the name of tax cuts for the wealthy.  The Donald, to separate himself from that mob, promised his voters he would protect Social Security and Medicare.  But did you actually pay attention to who he is putting in his Cabinet?  Both will definitely be on the chopping block.  Here is what the NYT said, which I also found wildly off the mark on Social Security:

Republicans say that benefit cuts are needed to save Social Security from insolvency in 2034, when the system is projected to be able to pay only about three-fourths of its promised benefits. It is indeed important to avert that outcome, but benefit cuts alone would force all of the needed adjustments onto recipients.

…A prudent approach to reform would target the causes of the system’s shortfall with a mix of modest benefit cuts and modest tax increases. It would make sense, for instance, to trim the benefits of recipients who were high earners during their work lives, because, in general, high earners live longer than low earners and thus draw their relatively higher benefits for a longer period of time. Another sensible reform would be to bring more tax revenue into the system by raising the level of wages subject to Social Security taxes, currently $118,500. In recent decades, the wage cap has not kept pace with the income gains of high earners; if it had, it would be about $250,000 today.

Yet I firmly believe we have to expand Social Security and make Medicare for everyone.  Expensive? Yes. Can we afford it?  Depends on whether you believe we are in this all together or not.  Again, I firmly believe that we are entering a world economy where retirement plans are few and far between.  That to be economically viable you are going to have to change jobs many times and continue to learn and grow your entire life.  A safety net is the one thing that will let that happen and it is already meager compared to European countries and we are talking about making it smaller?  It is small thinking.  We can afford it if we do something about the gross economic inequality we live with.  But Republicans want to increase that economic inequality by further cutting taxes for the wealthy and cutting everything else.  Donald seems to be aligned with this conservative economic theory on steroids.

I am not a casual observer here.  I depend on my Social Security, already reduced (doubly) because I have military time (11 years) for which I earned Social Security, and a federal retirement pension which was reduced when I received Social Security.  Thank you Ronald Reagan.  If I would have done the same thing in two civilian jobs, I would not suffer the almost half reduction in my retirement and Social Security.  So I am not unprejudiced here.  But think about it.  Most Corporations don’t offer retirement like they used to, and so it is on you to save enough and then your savings are at the whim of Wall Street.  Oh, and enter economic inequality.  Most middle Americans don’t have disposable income they can really save if they are raising a family and more and more of the pie in terms of disposable income is going to the wealthy regardless of productivity gains of the workers.

Now Trump and the boys and girls from the Republican Party want to make that even worse.  It will be interesting four years from now when all those rubes who got sucked into voting for Donald Trump realize he was their worst enemy, or will they?  They were stupid enough to buy into wild claims of what he would do for them that are not even close to being within the realm of reality, so will they still be in La La Land when they see things get worse, not better?  With Republicans everywhere will they still not put the blame where it belongs?

Here is what I think.  The Republicans believe in flow down, or at least pretend they do because then taking from everyone else is justified in their minds as somehow making things better for everyone.  But of course it doesn’t and as economic inequality grows, and Americans have less and less to support the markets necessary to produce larger and larger profits for corporations, corporations have to look elsewhere for profits.  That has already happened as many corporations are international in the sense they sell across a global market and continue to move to where they can further suppress wages and not have to follow basic regulations for the health and welfare of their workers or the environment they live in.  That is the driving force of corporations when their sole goal is to maximize profit for their shareholders.  It makes them resent government.  Welcome to the Republican Party.

But there is a law of diminishing returns and they are driving themselves out of business if they don’t share their profits with their workers so there is a growing pool of consumers.  Government has been the only force that was able to rein them in and ensure that outcome and now we have put a businessman and his cronies in charge and we will have economic inequality on steroids.  Will the rubes figure this out?

I don’t know, but as sure as they became disenchanted with the establishment and brought into change, and  that will make things worse for them, they will become disenchanted with this snake oil salesman if he doesn’t get us in a war first.  The real question is will they finally understand their plight and pay attention, not to promises, but to policies that make sense?  Will a party arise that is willing to tell them the truth about the future and have a plan to meet it?  So far what we have seen is that has not happened.  Rubes are rubes, and the Democrats can’t find their ass with both hands.  Just maybe when this four years is over the shock will be enough.

Less Than Four Weeks

The election will be in four weeks after almost 2 years of brutal campaigning, smearing, and lying.  We have had a dysfunctional government and if the American people don’t wake up to the fact that the Republicans have made it dysfunctional , aided and abetted by our media, we are destined to decline further.  I had a dinner party discussion the other night where one participant told me the problem was everyone was too partisan*.  It is another form of both sides do it.  It is also the road to no solution.  I pointed out to him the work of Ornstein and Mann, two legislative scholars on both sides of the partisan divide, that firmly shows how the right went so far right that compromise was no longer on the table.  Think he will read it?  Me neither.

That is the world we live in today.  Republicans are shocked, shocked, shocked I tell you about Donald Trump.  I wasn’t surprised.  Were you surprised?  He lies 24/7 and it is documented.  See Politifact.  He is a racist (although that appeals to some), and his xenophobia and nativism is based on either his lies or the fact that he doesn’t know he has his facts wrong. Most of the problems he identifies don’t exist but play well in the blame game. His misogyny has been well documented long before the Trump on a Bus incident.  His statements regarding the rule of law, our Constitutional system, and foreign policy indicated a gross ignorance of basic knowledge about our government and foreign policy.  AND YET THE REPUBLICANS EMBRACED HIM. THEY CRAVENLY ENDORSED HIM.

I don’t think you have to go any further than that to show where the problem is.  Now when News at Five has his salacious remarks on audio so that denial is no longer effective with those in an alternate reality, where their deal with the devil is now so evident, they say we withdraw our endorsement.  We are honorable people.  Really, this is not new or news.  This is who he was from the get-go.  Now there are some Republicans who are not un-endorsing him like Marco Rubio and you begin to see how craven the Party really is.  “I would rather go with a racist, misogynist, ignorant fool than alienate his base and loose my slight chance to win my election.”  Got any further questions on where this Party has gone?

Now I want you to focus on some mainstreet thinking by Thomas Friedman this morning, some of it right, and some of it flawed:

For starters, this version of the Republican Party has to die. I don’t say that as a partisan. I say that as a citizen who believes that America needs a healthy center-right party that offers more market-based solutions to problems; keeps the pressure on for deregulation, freer trade and smaller government; and is willing to compromise. But today’s version of the G.O.P. is not such a problem-solving party.

We have known that ever since the G.O.P. speaker of the House John Boehner quit, not because he couldn’t work with President Obama but because roughly a quarter of House Republicans, the so-called Freedom Caucus, were simply not interested in governing and had made his job impossible.

…For the sake of the country, this version of the Republican Party has to be fractured, with the extreme far right going off with the likes of Donald Trump, the Tea Party, Ted Cruz — along with all the right-wing TV and radio gasbags who thrive on chaos — leaving behind a moderate center-right bloc, which, one hopes, one day would become the new G.O.P. But it will need to nurture a new base, one inspired by a Jack Kemp spirit of conservative innovation, not by Trump dog whistles of anger, xenophobia and racial enmity.

Dead on sort of. The problem clearly lies within the Freedom caucus. Those Jack Kemp spirit of conservative innovation Republicans co-opted themselves or became moderate Democrats. Then he says the following which indicates his lack of understanding of where Trump came from, the failure of the conservatives to have answers for Trump’s more populist base:

The bigger Clinton’s margin of victory, the less dependent she’d be, I hope, on the left wing of her party, and the more likely she’d work with Republicans, as she vowed during the last debate, by “finding common ground, because you have to be able to get along with people to get things done in Washington.”

…The nightmare scenario — ruling out, God forbid, a Trump victory — is that Clinton wins with a slim majority and the G.O.P. holds the House and the Senate. The Democratic left would have a stranglehold on Clinton while Trump, who would start his own TV network and movement, would keep the Republican base in a state of permanent anger, intimidating every Republican lawmaker who contemplated compromise. If that happens, America will be adrift.

First there are no Republicans to work with as evidenced by the last eight years.  As we learned in California when we put Republican in the permanent minority, they just obstruct.  Now our government works. There are plenty of moderate Democrats to argue for compromises for commen sense solutions with Progressives.  Republicans have no incentive to compromise and that is the lesson of the Obama years.  They can’t afford for more common sense and Progressive solutions to work because it demonstrates the bankruptcy of conservative philosophy, even moderate conservatives.

Here is the other thing he misses.  There is a straw man out there that Democrats just want bigger government and don’t believe in the market place.  I don’t know if that was ever true.  Democrats want government that works.  So big government or small government is not the metric.  Effective government is. And that is where conservatism goes basically wrong.  When small government is more important than effective government, we have lost our way. Sometimes big government is the answer and sometimes it is not.  Democrats are not against the free market, because there is no free market, but operates on rules and regulations that benefit somebody.  Democrats are for a free market that more equitably shares the benefits because we have learned, flow down equals economic inequality.  

When you consider the lessons we have learned, flow down** does not work and increases economic inequality, that the playing field is not level and government’s role is to make it more level, and a truly free market, meaning the government does not oversee the existing rules, leads to ever increasing risk taking and price gouging, conservatism as we know it falls apart.  That is where the White Mob came from.  They understand conservatism was not working for them.  That lesson is not going to go away.  So where Tom goes astray is to hope for a rejuvenated rational Republican Party.  It died when its ideas did not evolve.  And the fear that Democrats stifle the free enterprise system is just flat wrong.  But they do regulate it so that the playing field stays level.  

The only hopeful future we have is to sweep Republicans out of office and let progressives, balanced by more moderate Democrats take charge of the country.  And Tom, here is the real difference:  Progressives will try new ideas and if they don’t work, will make changes.  Our ideas are not a religion and they will evolve.  That is where conservatism failed.  Conservatism in its struggle to stay relevant when their ideas failed, created Donald Trump and rejuvenating a younger version will lead to the same result.

*This same individual took me to task my support for free college education.  He basically disagreed with the idea and his thinking went this way:  It is a business decision.  You must only take on the debt that your future job allows you to pay off.  He was a doctor.  I said what about teachers.  First he was apparently clueless that to get the necessary credentials could run up a $100,000 debt.  But still they made a bad business decision.  So I let it die, but really, no teachers, no anthropologists, no research scientists, because in most cases what they earn is not a good return on what their education costs.  In today’s world, college education is just an extension of high school, a necessary basic skills set to compete.

**Flow down is the belief that if the rich get richer, they invest their earnings in jobs and industry, creating more jobs and wealth.  It is the heart of cutting taxes for the wealthy.  It has not worked and economic inequality is greater than it has ever been in our history.

The Donald’s Economic Plan

Can you say bull shit and supply side economics?  Basically it was nothing new.  Cut taxes for the wealthy and the world will take off. Oh, and no mention of how to pay for it except the growth in the economy will pay for it.  Might I remind you that their own guy at the Government Accountability Office (GAO) said this was a fiction, tax cuts don’t pay for themselves.  Then of course was the lie about tax rates.  We are the number one tax payers in the world! NOT!  While our rates are the highest (35% for corporate federal and 6% state), none of the corporations pay those rates.

The United States actually rates 16th in world in effective tax rates on corporations (what they actually pay).  The reality is that companies generally don’t actually pay those rates due to tax credits, exemptions, and offshore havens.  The GAO found that among profitable companies in the United States, the average tax rate was 12.6% and two-thirds of American corporations have no tax liability.  In other words, to be kind it is a big lie.  Cutting taxes for the wealthy in a demand starved economy will do nothing.

Supply side economics, if you build it, they will come, was effective in the Eisenhower days when there was pent-up demand and savings to support it.  We live in a world where corporations are rolling in the dough and don’t invest it because they don’t see demand to support their investment.  We live in a different economic era and Republicans have not moved on.

It was nonsense, full of misinformation like the tax rates, and outright lies like Obamacare cost jobs which it did not.  Oh and let’s get rid of the Estate Tax so the wealthy which will have no impact on the economy except to increase once again economic inequality.  It is the same old Republican nonsense that has held us back and increases the root problem, economic inequality.  Oh, and none of it adds up because he borrowed Ryan’s magic asterisk, cutting taxes will return enough money to pay for it.  It was done under George Bush and created giant deficits.  In other words, the same old shit:  Supply side economics, flow down, and tax cuts for the wealthy with no way to pay for it.

Oh, and you see all those links above?  It is called critical thinking, believe nothing, ask questions, find out the facts.  Oh, and judge your sources appropriately.

Republican Denial

I have spent a lot of cyber ink in this space pointing out the Democrat’s denial about what the Bernie movement is telling them.  It is an important message for their very survival, but the Republican’s denial about Trump leaves the Democrat’s denial in its wake.  Here is what you hear these days from Republicans in shell shock about Trump:  “He will ruin the party and we need to replace him with anyone, preferrably Rubio, Cruz, or Kasich.”  I listened to one serious and earnest Republican delegate to the convention talk about how they could unbound themselves from voting for him to give them a replacement.  I question their arguments on this one, but the real denial is that one of the “other guys” would be acceptable.   

Look at it from the Republican point of view.  Although they deny it, or at least have not faced up to it, the White Mob that supports Trump is their creation.  They have happily backed lies and half truths about policy, along with code for racism and discrimination to stoke the White Mob’s excitement when it served their purpose.  Now here is simply a fact.  Republican economic policies are totally focused on the wealthy and in fact further undercut white middle class (well, anything below the 1%).  That has not been lost on the White Mob, hence their rejection of the “other guys” and the selection of Trump. So there are two things going on here, a creation of an uniformed and irrational base, and economic policies that do not address their problems.

The denial the Republicans refuse to face is that while the White Mob is racist and xenophobic, they are right about one thing, Republican economics has not worked for them.  It is a message similar to the one being given to the Democrats albeit from a more rational crowd, that politics as usual, and money in politics, has failed.  Republicans seem to want to double down on their economic ideas with a “traditional” Republican that the base has rejected.  So if they nominate one and throw Trump out, there will be real riots in Cleveland.  And if they don’t, and stay with Trump, they will lose and lose big, especially in down ballot races.  It is lose-lose and they have yet to look in the mirror.

The real issue is that they have no new ideas.  They strongly believe in conservatism which translates to small government, low taxes, and little regulation, and none of it relates to the world we live in.  Instead of small government we need smart government.  Instead of low taxes we need resonable taxes considering what we want government to do.  Instead of little regulation, we need smart regulations.  Republicans have never dealt with the fact that small government means cutting the very programs the White Mob depends on (and so do most of the other 99%).  It doesn’t address how we rebuild our infrastructure or create an economy for tomorrow.  They have never dealt with the fact that low taxes means wealth accumulation for the few and that flow down does not operate.  They have never dealt with the fact that every time they unleash the market place with few regulations, disasters follow.

So they are in giant denial.  They think they just need to restore a real Republican and things will go back to normal, but their normal is only okay for the 1%.  The White Mob is giving them a giant lesson in their politics of lies, distortion, xenophobia, and racism, along with a wake up call about who their economic ideas really appeal to.  In contrast, while Democrats are also in denial, their denial is about how they have been co-opted by the system to expect very little in the way of change and call it progress.  But at least the change they do fight for is to help the 99%.  It will be interesting to see how this all plays out over the next 4 1/2 months.  Happy Saturday

Lower Taxes and the Economy will Take Off

That is the basic Republican mantra now chanted by Donald Trump. And of course jobs will be created. Oh, and let’s not forget the giant bonus, with the growth in the economy, they pay for themselves with increased tax revenue.  Who wouldn’t want to do this? If this works, it’s genius. Except there is a problem.  It has never worked.  The rich got richer, the deficit got much bigger, and the jobs along with economic growth did not materialize (Business Insider).  But they did grow economic inequality. Yeah Team.

We have the Bush years and the present day example of Governor Brownback in Kansas (Prospect) to look at for evidence of massive tax cuts and job growth (Forbes).  In both cases deficits soared because the growth did not materialize and neither did the tax revenue.  Further evidence comes directly from the director of the nonpartisan Congressional Budget Office (CBO), who was appointed by GOP lawmakers earlier this year to do their “dynamic scoring” of budget proposals, and to their shock, he said at a press briefing that tax cuts don’t pay for themselves:

“No, the evidence is that tax cuts do not pay for themselves. And our models that we’re doing, our macroeconomic effects, show that.” (The Hill)

What’s a poor Republican to do?  His whole basis for free lunch economics does not stand up to scrutiny.  Well as the Prospect cited above points out, they don’t care about no stink’in evidence:

But the real source of the conservative support for tax cuts is moral, not practical. They believe that taxes are inherently immoral — the government stealing from you the fruits of your labor (or inheritance or wise investments, as the case may be) to enact its nefarious schemes. Taxes should therefore be as low as possible. Conservatives also tend to believe that progressive taxation is doubly immoral, since it takes more from the most virtuous among us.

So we now have two tax plans presented by two of the Republican candidates (Bush and Trump) and thanks to Vox here is their impact:

And neither are “revenue neutral.  Trump’s is estimated to cost $10.8 trillion in its first decade.  Bush’s tax plan would cost $3.6 trillion over 10 years.  Read deficit here deficit hawks. Yikes.

The reality is that we need more tax revenue, either from a growing economy (remember what happen under Clinton when he raised taxes and the economy continued to grow and deficits shrunk?) or from just raising taxes.   We need to pay for what we need while maintaining a reasonable debt.  And many of those things we need, like making education affordable, single payer health care, a secure retirement system, improved infrastructure, are the very things that will grow our economy for the future and make our debt smaller.  So we need a tax system that is fair, allows a fair gain for risk taking, yet makes sure that all of us share in its growth, while properly servicing our debt,

Certainly this means that one of things we will have to do is revise the tax code.  How we do that is grist for another blog, but beware of strangers bearing gifts.  As you can see from the above analysis, there is no free lunch, and Republicans are wolves in sheep’s clothing selling old failed policies as new ideas.  What else is new?  Happy Tuesday.