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Trump’s Tough Stretch of News

Although he got in another lucrative weekend of golfing and socializing at his warm and sunny Mar-a-Lago resort, the last few days have not been kind to President Donald Trump. The team owned by his best friend in the National Football League was upset in the Super Bowl, the release of a much ballyhooed congressional memo did not completely vindicate him in the “Russia thing,” and suddenly the stock markets are in a swoon.
Trump will probably get over the Super Bowl soon enough, and maybe even score some political points against the winning players who have already announced they’ll skip a White House visit, but the ongoing “Russia thing” and the recent woes on Wall Street are more troublesome.
The president had hoped that a four page memo penned by the staff of die-hard Trump apologist and California Rep. Devin Nunes would persuade the American people to to demand an end to all the ongoing investigations into the “Russia thing,” and he got his wish with a certain portion of the public. All the right wing talk radio talkers and the rest of the die-hard Trump apologists relished the unsurprising revelation that the Federal Bureau of Investigation had used the “salacious and unverified” dossier of evidence compiled by a foreigner with money from the Democratic National Committee and the campaign of its presidential nominee Hillary Clinton to obtain an early warrant in the investigation from a Foreign Intelligence Surveillance Act court. Sean Hannity even found that sufficient reason to demand that special counsel Robert Mueller’s snooping around cease and the indictments he’s already obtained again Trump’s campaign manager another high-ranking campaign official be dropped and the guilty pleas he’s already forced from Trump’s former national security adviser and a campaign foreign policy advisor be rescinded.
Alas, the rest of the public was more skeptical and Hannity’s demands are unlikely to be met. The more Trump-skeptical media noted the memo acknowledged that the Federal Bureau of Investigation started snooping around when an Australian official tipped them off that a drunken Trump campaign foreign policy advisor had been boasting in a London Pub about all the dirt his candidate was getting from the Russians, that still-classified material other than the information compiled by a respected former British intelligence agent was also submitted to the court, and that in any case the warrants were reauthorized by other FISA courts based on the finding they were yielding important evidence. The notion of a “deep state” conspiracy against Trump to stage a “coup” with “fake news” was always a hard sell, given that it involves Republican-appointed FBI agents seeking warrants from the Republican-appointed judges on FISA courts that the Republicans established and just last week voted to renew, and the four pages that Nunes’ staffers penned didn’t make the case.
Nunes also admits that neither he nor his staffers actually read the classified case that the FBI made for its FISA warrants, and everyone who has is saying that the memo is misleading. That includes the FBI chief that Trump appointed, and the impeccably Republican South Carolina Rep. Trey Gowdy, who was a right wing talk radio hero just a couple of years ago for his dogged investigation of Clinton’s embarrassing role in the deadly Benghazi debacle. Gowdy was the only House Republican who got too look at the classified warrant application because Nunes had been forced to more or less recluse himself from the whole “Russia thing” after some embarrassing antics, and he told the media that “There is a Russia investigation without a dossier.” Listing off a number of reasons to snoop into the “Russia thing,” he accurately noted “To the extent the memo deals with the dossier and the FISA process, the dossier has nothing to do with the meeting at Trump Tower. The dossier has nothing to with an email sent by Cambridge Analytica. The dossier really has nothing to do with George Papadopoulos’ meeting in Great Britain. It also doesn’t have anything to do with obstruction of justice.”
Gowdy is one of several Republicans who aren’t seeking reelection, so be’s free to be so frank, but even some of his partisan colleagues who are hoping for another term are also distancing themselves from the Nunes memo. Several Republicans have signaled the support of a rebuttal memo penned by California Rep. Adam Schiff, who has seen the classified warrant application and seems a far smarter fellow than Nunes, and the “Russia thing” will surely linger.
Meanwhile the stock market has been plummeting, and for now that’s an even bigger problem for Trump.
By the sometimes perverse logic of the stock markets, the bad news is being driven by good news and might turn out in the long run to be good news. After an historically long run to record levels the markets are apparently worried the currently low unemployment rates and slight upticks in economy activity and long-forestalled wage increases will cause the Federal Reserve Board to slightly raise the rates on the historically inexpensively obtained money that has been fueling it, lest inflation rear its ugly head, and there’s a strong case to be made that a long-forestalled and much-needed market corrections is needed to forestall the inevitable next crash until after you’re dead. Trump will be hard-pressed, though, to make such a complicated argument.
Trump will quite plausibly claim that the recent stock market downturn is not his fault, but his critics will provably point out that he was always willing to take credit for the recent record highs. He “tweeted” about it 56 times, boasted about it in public pronouncements far more often, including that long-forgotten State of the Union speech he gave just a week or so ago, and for now he’s deprived of a favorite bragging point. He could turn on a dime and make the populist claim that he’ll gladly trade a workingman’s pay hike for some fat-cat investor’s coupon-clipping, and brag about how he prescient he was back in the campaign when he claimed the record stock market highs of President Barack Obama’s administration were just a great big bubble about to burst, but after all the boasts about those Wall Street records and given Trump’s limited vocabulary it’s a very complicated argument to make.
The sorts of people who do grasp such complicated economic arguments immediately recognize the Fed’s complicated role in all of this, and are probably aware that Trump has recently appointed its new chairman. The previous chairman was chairwoman Janet Yellen, who was generally well regarded by by all the smart people with the smart money for her open spigot policies in the early stages of recovery from the 2008 recession and gradual reductions during the slower-than-usual but longer-than-ever recovery that lasted through Trump’s first year.
It’s a longstanding presidential tradition to appoint a generally well-regarded Fed chairman to a second term regardless of the party that had made the first appointment, but Trump isn’t much for longstanding presidential traditions and to replace Yellen with his own guy. Of course Trump chose a guy, Jerome Powell, but he’s a former under secretary for domestic finance at the Treasury Department and is widely expected to be the same sort of apolitical number-crunching policy wonk as Yellen, and along with all the stock holders we’ll be eager to see how he responds. Trump is probably wondering, too, as it will be hard to blame Yellen for a downturn that began shortly after she was replaced by Trump.
Our hope is that the stock markets and the broader economy both continue to fitfully prosper, and our expectation is that if it does Trump will take credit for it, and that if it doesn’t he’ll accept no blame. We wish Trump well with that whole “Russia thing,” too, but we hope that truth will prevail and expect that the special counsel will find plenty of it.

— Bud Norman

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A Mixed Bag of Policy, Politics, and that Tax Bill

President Donald Trump at long last got a major piece of legislation to sign into law Wednesday, after the Republicans in congress rammed through a massive tax cut bill, but it remains to be seen if it will eventually count as a win. Trump and all those congressional Republicans are expecting the public will come to love the law, but for now it’s polling horribly and the Democrats are scoring the political points.
The bill runs more than 500 pages, and from our on-the-side-lines perspective it’s a rather mixed bag. Our guess is that the overall effect on the economy will be salutary, although not to the extent that the Republicans are hoping for, and that as usual the benefits won’t be equably distributed across the country, although not so inequitably as the Democrats are urging people to fear. Both parties should probably be hoping that it’s all largely forgotten by the time the next votes are cast in the mid-term elections.
The main feature of the bill is a slashing of the corporate tax rate from a world’s highest 35 percent to a more-typical-by-world-standards 21 percent, as  frankly and ill-advisedly admitted during a celebratory meeting with the congressional Republicans at the White House. Until then Trump had peddled the obvious fiction that the bill’s main feature is a big beautiful Christmas gift to America’s middle class, and he might come to wish he’d told the truth from the outset.
Although the Democrats were quite right to argue that few corporations pay that highest-in-the-world rate, it’s still true that all those deductions merely whittled that rate down and still left American corporations at a disadvantage in the competitive world market, and although it’s not likely to benefit the overall economy to the extent Republicans are hoping it won’t hurt and bit and will surely do some good. The stock markets had a slight downturn on Wednesday, but that’s because investors had already added in the anticipated passage of the bill during its recent record-setting runs, and we’ve no doubt there would have been a bloodbath of red if the bill hadn’t passed.
There’s a certain segment of the Democratic party and the more general left that resent anything that benefits corporations, but even such Democrats as President Barack Obama recognized that the economy can’t do without them for now and were also on board with a corporate tax cut. If that had been touted as the main feature of the bill, the Republicans might have coaxed a few votes from Democratic representatives and senators in districts and states where corporations are major employers and majors donors, which would have given some bipartisan cover in case things go wrong.
The bill also delivers some tax cuts to the middle class, although not all of it, and even many of the beneficiaries might conclude that it’s not as big and beautiful a Christmas gift as was promised. Despite all the populist rhetoric on both the left and the right the hate top 1 percent pay bear about half the country’s tax burden, the top 20 percent pick up 85 percent of the tab, and a full 60 percent pay either no federal income taxes or so little that any further cuts would only amount to little. If you’re in that 50-to-80 percent segment of the population that is paying you might get a notable if not princely amount each year until the cuts expire, but if you live in a nice house in a high-tax state or haven’t gotten around to having children or are paying rather receiving alimony or have other certain circumstances it might just turn out to be a tax hike.
How that turns out in the overall mid-term voting remains to be seen, but we will hazard a guess that those Republicans holding crucial House seats in such states as California and New York and Illinois are going to regret getting  rid of the state and local property tax deductions. The sorts of Republicans you find in those well-heeled districts with high-priced houses are already inclined to abhor the boorishness of Trump and his burn-it-down populism, and without a stake in a party-line Republican tax bill they won’t have any reason to support the party.
In those less well-heeled and more reliably Democratic districts the law is likely to further enflame the ever-raging fires of class resentment, no matter how salutary the overall economic consequences. All of those congressional Republicans have always denied that the law delivers a far bigger tax cut to the rich than it does the middle class, and Trump has assured his true believers that he’s going to take a huge hit because of it, but these arguments not only verifiably but also obviously untrue. The expert analyses of the bill vary wildly, and you can believe whichever you want based on how they share your ideological leanings until you complete your tax forms, but all of them agree that someone richer than you is going to reap bigger benefits than you.
That doesn’t bother us, as we’re the penurious but Republican sorts who harbor no class resentments, and we still hold out hope of snatching some small benefit from any overall salutary effect on the economy, but we do wish that Trump and all those congressional Republicans hadn’t so brazenly lied about it. The arguments for income inequality are complex and hard to make, but President Ronald Reagan persuasively made it during a longer and more thorough debate for his even bigger tax cut bill, and they always work better than a bald-faced lie. Trump’s lie that all the businesses he scandalously hasn’t divested himself of won’t benefit is particularly galling, and we can’t begrudge the Democrats the political points they’ll score because of that.
The law also repeals the provision of the “Obamacare” law that requires citizens to purchase not only health coverage but health care coverage of a certain type that may or may not be needed, which was the part we most hated about that hated law, but that’s also a mixed bag. Trump brags that he’s kept a campaign promise to repeal Obamacare, which is true enough because eliminating it’s individual mandate will ultimately sink the whole project, but because he hasn’t kept his campaign promise to replace Obamacare with something big and beautiful that will cover everyone at at a far lower cost it’s likely to end up with a lot of people losing coverage and many people more for what they’ve still got.
We do expect the effect on gross domestic product and unemployment numbers will be salutary, though, and hold out hope that some better health care policy will ensue from the coming calamity, so the Grand Old Party might yet survive all the public disapproval of the moment. During their big celebration party at the White House the congressional Republicans took turns lavishing praise on Trump in terms so obsequious they would have embarrassed a North Korean general, on the other, and in the long run the party will suffer consequences for such brazen lies as that.

— Bud Norman

Trump Gets Fed

Way back when politics and economics and all that made some sort of sense, before this crazy election year, much of the media would always devote a great deal of ink and internet pixels to the latest oracular pronouncements of the Federal Reserve Board. These days it takes a lot to knock president-elect Donald Trump off the front pages, but the almighty Fed was still able to elbow its way to a column just above the fold on Wednesday with a mere slight upward tweak in the interest rate, and we expect plenty of further commentary about it as the commentariat figures out the hard-to-figure Trump angle.
The Fed’s quarterly-or-so oracular pronouncements were damned hard enough to decipher even way back when politics and economics and all that made some sort of sense, and even the smart guys on Wall Street always seemed to have a hard time figuring it out, but in the age of Trump it’s exponentially more complicated. All of the inviolable laws of economics will ultimately be enforced, which does not bode well, but all of the inviolable laws of politics have been so brutally violated in this crazy election year that there’s no reliable guide to what comes next. What’s come before has been worrisome enough
For the past eight years or so the Fed has been “quantitative easing” enough money at pretty-much-zero-percent rates into the economy to sustain a a doubling of the national debt and two percent-or-so growth rate in the gross domestic product and a stock market boom that has outrun that pace like a hare past a tortoise. The past eight years or so have also seen the unemployment rate go from a depth-of-recession rate over 10 percent to a relatively robust 4.6 percent, with household wages and a few other economic indices also showing recent improvement, and given the latest enthusiasm of the stock markets the Fed has apparently decided that now is the time to put an ever so slight foot of the economic brake.
History shows that recessions have always come to an end, though, and always with a more robust and v-shaped recovery than the last eight years or so have seen. That 4.6 percent unemployment rate is not bad, but the numbers of the underemployed and those of working age but out of the work are horrible by modern standards. As for the ongoing stock market boom, we place more faith in Aesop’s fable about the tortoise and the hare. That long awaited uptick in household income is welcome, but doesn’t seem to have placated the most recent electorate. For the past eight years or so we’ve groused that President Barack Obama’s penchant for government-run health care and similarly disruptive regulatory schemes have had something to do with this, and enough people in a few key states were just as eager to put the brakes on Obamanomics, and thus Trump won, so at this point it becomes murky.
Since Trump’s victory the stock markets have been exuberant, perhaps irrationally so, as Alan Greenspan might have said, at the prospect of all that quantitatively eased money flowing at pretty much zero interest rates through an already recovering economy suddenly disencumbered of all those Obama-imposed layers of regulations and taxations and rhetorical scoldings, along with all the cheap oil that’s going to come gushing through the Environmental Protection Agency’s weakened barriers. As much as we dispute the Fed’s self-congratulatory reasons for its slight touch on the economic brakes, we’re the self-doubting sorts who can’t really fault their decision as we head with one headlight into the economy’s dark and twisting road. Even before taking office Trump has intervened in the affairs of businesses ranging from aerospace to air conditioning, and is proposing a bigger-than-Obama-sized infrastructure plan to revive an economy that isn’t in recession but isn’t all that great, none of it bodes well for the national debt, and so far Trumponomics looks to be just as disruptive as its predecessor but in all in sorts of unpredictable ways. so perhaps some pat on the brakes is indicated.
Way back when Trump when merely a long shot candidate for the presidency he was “tweeting” his outrage that the Fed was keeping interest rates artificially low for the political benefit of Obama, which we didn’t argue, and so far as we can tell at this moment he hasn’t “tweeted” anything to the contrary since the Fed’s announcement. Perhaps he’s trying to figure out the political and economic implications himself, and finding it damned complicated, and maybe he’s cocky enough to think that he can make his deregulation of this and regulation of that work well enough even with slightly higher than zero percent interest rates, and in such a crazy election year as this he might even be right. This is a complicated matter, though, even for such a savvy businessman as Trump.
Trump has always come out ahead of his creditors, through six bankruptcies and two divorces and untold lawsuits by everyone from stiffed busboys to disgruntled real estate students, but now he’s up against the biggest bank of them all. The Fed is by law entirely independent of any branch of the federal government, and that law is likely to be backed by all the Democrats and a bigly number of Republicans in the legislative branch and a majority of the judicial branch, so we expect that Trump will sooner or later pick a fight with them. In the past the Fed has usually won these these confrontations, most famously when the aforementioned Greenspan agreed to open the monetary spigots in exchange for President Bill Clinton’s more business friendly policies, which wound up winning Clinton reelection in ’96 but couldn’t win his re-relection in ’16, but in this crazy election year everything seems up for negotiation.

— Bud Norman

Race and the Race

Democrats are constantly calling for a frank national conservation about race, as if it hasn’t ranked right up there with sports and weather and the sex lives of celebrities as one of the three or four most discussed topics of the past 240 years or so, but there are times when we wonder just how frank they want that conversation to be. Thursday night’s Democratic presidential debate was one of those times.
If you haven’t been following the Democrats’ low-rated reality show, self-described socialist and Vermont Sen. Bernie Sanders, the cranky-and-kooky-old-coot next door character, has lately usurped the starring role from former First Lady and Senator and Secretary of State Hillary Clinton, who started out as the heroine of the series. A couple of episodes ago a lot of fishy officiating and some suspicious coin tosses delivered an embarrassingly minuscule margin of victory for Clinton in Iowa, then the next week she suffered a rout in New Hampshire, but now the scene significantly shifts to South Carolina. Attentive viewers of the show will have noticed that Iowa and New Hampshire are so chock full of white people that even most of the Democrats there are white, while South Carolina’s white people are so overwhelmingly Republican these days that most of the Democrats in the state are largely black, and although no self-respecting Democrat would care to frankly converse about it that is the all-important backstory to this week’s episode.
The same unmentionable backstory would have you believe that our heroine and aspiring queen is much adored by her would-be black subjects, and there are polls to back this up, but some plot twist might await. She once served as Secretary of State for the First Black President, even though she was once his fierce rival, and somehow remains married to the first First Black President, although no one can quite remember why he was once so beloved by his black subjects, and the lovably-cranky-and-kooky-next-door-neighbor is from a state so white that the Eskimos have 200 words for it, and there’s also something slightly Jewish about him, which is another one of those complicated subplots in these Democratic shows that is best not frankly discussed, but there’s still some uncertainty. Sanders is offering free stuff and a guillotines-and-all revolution, which always have some appeal, the heroine and queen in waiting is looking more and more like a corrupt and incompetent villainess, which eventually dispirits even the party’s most die-hard fans, and Thursday’s debate offered both a chance to make their discreetly worded pitches to the South Carolina’s largely black Democrats.
Which apparently means trying to out-do one another with fulsome praise for the past seven years and a month or so of First Black President Barack Obama’s administration. A truly frank conversation would acknowledge that pretty much every economic indicator from unemployment to household wealth to home ownership to business start-ups indicates that it has been a disaster for black America, race relations have not improved, that the coming downturn is bound to be worse yet, but that went politely unmentioned in the Democrats’ South Carolina debate. Obama’s approval rating among black Americans still exceeds even the worse-than-Depression-era unemployment rate for black youths, and in Democratic politics fealty to his legacy is just as important as advocating minimum-wage hikes that will surely exacerbate that black youth unemployment problem.
The Democrats’ idea of a frank conversation about race is also full of indignant talk about rolling back the community policing and stiff-sentencing policies that drastically reduced the rates of murder and other serious crimes in black communities and throughout the nation at large, which we frankly cannot understand at all. Listening to rich white Democratic lady and the merely well-off white Democratic gentleman from the whitest state in the union you’d think that it was some mean old Republicans who passed all those community policing and stiff-sentencing policies that have locked up so many misunderstood young black men, but we were living in an inner-city war zone at the time and well recall that the rich white Democrat woman’s husband signed the bill they’re talking about the well-off gentleman from the whitest state in the union also voted for it and all of our black neighbors and most of the Congressional Black Caucus were also clamoring for get-tough measures. The “Black Lives Matter” movement, which no doubt includes a few of the thousands of black lives that were saved provably saved by those get-tough measures, is more concerned with the smaller numbers of lives lost to police shootings, however, and therefore so are the Democratic candidates.
A truly frank conversation about the matter would acknowledge that some of those police shootings were entirely justified, such as the one that set off all the rioting and arson and lawsuits and federal investigations in Ferguson, Mo., and that the ones that do arouse the most justifiable suspicion almost invariably occur in Democratic jurisdictions where every agency of the local government is corrupt and the local economies have been devastated by Democratic taxation and regulatory policies. The Democrats pride themselves on frankly noting the racial income inequality in America, and happily ignore the growing inequality over the past seven years and a month or so for the First Black President, but they won’t acknowledge the direct correlation between education or income, or the fact that Democratic-aligned teachers’ unions and Democrat-dominated academia and a general Democratic revulsion to private enterprise and innovation have prevented the voucher and charter school reforms that might address that glaring educational inequality.
In such a gloriously diverse country as America a truly frank discussion about race would also acknowledge that illegal immigration from mostly Latino countries has also had a mostly adverse economic and political effect on America in general and its black citizens in particularly, but there’s also a caucus coming in Nevada and the Democrats there are largely Latino, so the frankness of that conversation was proscribed. Both candidates dared to criticize the First Black President for recently deporting some of the trainloads of unaccompanied minors from Central America in recents years, following many years of non-enforcement of the laws and executive orders about unaccompanied minors that seemed to invite them all in, and although we doubt this played well with South Carolina Democrats they really don’t have any choice except for some Republicans named Cruz or Rubio, or maybe that Spanish-speaking Bush guy with the Latino wife, and it might even be Trump.
Any of those guys could make a convincing pitch to black Democrats in South Carolina or elsewhere, about breaking up the educational monopolies and the big city machines and the plans to make everyone equally poor, but that would require a truly frank national conversation and the democracy of reality television doesn’t yet seem ready for something that real.

— Bud Norman

Another Annus Horribilis

Years always seem to end in the dead of winter, when the trees are bare and the skies are gray and the prairie winds blow bitterly cold, and thus far 2015 is proving no exception to that desultory rule. In this case it seems altogether apt, as 2015 has been a desultory year. Even the most determined optimist would find it hard to identify much good news from the past six months of headlines, in any section of the paper.
The economy sputtered along steadily enough that the Federal Reserve has hiked interest rates a teensy-weensy bit, and the unemployment rate didn’t seem so bad if you just excluded all the underemployed and the huge number of people who’d given up on finding any sort of work, but the working stiff’s wages were still stagnant and even the investor class was having the hardest time making a profit since the legendarily hard times of the Great Depression. The global state of affairs further deteriorated, with the Middle East exploding in an even greater than usual hatred and the deadly repercussions being felt as far away as Paris and San Bernardino, refugees from that troubled region and Central America and elsewhere in the Third World pouring into the west in such numbers that they overwhelmed the resources and generosity of the First World, and elite western opinion blaming it all on capitalism. Academia went utterly mad in 2015, government regulations proliferated at an unprecedented rate, the popular culture offered no compensatory movies or songs or novels or dance crazes that we noticed, and our favorite sports teams suffered frustrating seasons.
The new year that starts tomorrow promises an extra Leap Year day, an inevitable spring, and a long and leafy summer that will lead to an autumnal Election Day that could possibly put some of this right, but the past year doesn’t make us hopeful. So far the Democrats seem more riled up about impoverishing the rich than enriching the poor, and the polls predicts that they’ll nominate a woman who has parlayed political influence into extraordinary wealth to make the point, so there’s little chance for progress there. Meanwhile the Republicans, until recently infuriated by crony capitalism and Russian arrogance and a shallow popular culture, are threatening to nominate a man who brags about buying off politicians and revels in the praise of Vladimir Putin and was the star of a long-running reality television show to make their point. The infuriation of 2015 will make level-headed decision-making difficult in 2016, although we can hope the warmer weather will help.

— Bud Norman

The Greeks and the Rest of Us

The situation in Greece seems hopeless, no matter how its citizens vote on an emergency referendum Sunday, and the rest of the world seems in pretty sorry shape as well.
Apparently nobody in Greece can understand the 72-word question being put to the voters, assuming that the government is able to print up enough ballots and get them distributed to all the polling places on time, and it’s certainly Greek to us. So far as we can gather, however, a “yes” vote is for accepting the European Union’s seemingly generous offer to continue the loans that have been keeping the Greek economy barely afloat, although in exchange for draconian budget cuts and other austerity measures that will almost certainly be painful to the already pained average Greek, and a “no” vote likely means a Greek exit — or “Grexit,” as it’s become known — from the EU and its onerous demands as well as extravagant promises of continued government largesse, although in reality it will more likely cause the complete collapse of the Greek economy and start causing all those ample government checks to bounce right out of the last of the country’s failing banks.
The very young and stupid Greek Prime Minister and his socialist party are backing the “no” vote, on the argument that it will allow him to negotiate an even more generous deal with his EU creditors, but only the most rash would predict how that might turn out. Germany’s Chancellor Angela Merkel and that the rest of the EU elite would obviously prefer not to lose a charter member of their club, which might bolster the growing number of Eurosceptics in Britain and other important countries as well, and make it embarrassingly clear that their essential organizing policy of a one-size-fits-all currency for a fissiparous coalition of 28 countries that still stubbornly cling to some sense of national interest and have very differently-sized economies was unworkable all along. On the other hand, Greece has become so unproductive and such a pain in the EU’s economic posterior that the club might well decide it is best rid of it, and that if Greece instead becomes a client of Moscow that it would be a small victory for what remains of the West in the renewed Cold War.
In any event, the Greeks will still wind up broke and rioting in the streets against the reality that they can’t forever keep on sending out retirement checks to 50-year-olds and unemployment checks to the more than 50 percent of the 20-somethings who are without jobs and taxing the in-betweens to such an extent that they’ve all stopped paying taxes and produce children and future taxpayers at a dwindling rate and have it all total up to about half the country’s gross domestic product, even if has seemed to work just fine up to now. These schemes always work out for while, and it’s so great when they do that the mean-spirited fuddy-duddies who warned that it would all come to a bad end are thoroughly discredited, but eventually reality intrudes and it does come to bad end and there’s nothing for the idealistic and generous to do but riot in the streets. One is tempted to shake his head in pity and disgust at the Greeks, who once upon a long-ago time gave the world Plato and Aristotle and Euripides and Aristophanes and Sappho and all sorts of intriguing ideas about human nature, but those same long-ago Greeks have taught us to notice that such weakness to temptation is by no means a uniquely Greek thing.
While the Eurocentric American media has mostly paid attention to Greek’s travails, a few stories have leaked out that Puerto Rico is also on the verge of default and bankruptcy. The same sort of extravagant promises made by politicians, and eagerly believed a majority of the country’s voters, have led a large portion of the island’s residents to take advantage of its immigration relationship with the United States and move mainland, which of course has contracted the economy and increased the need for government relief and raised the debt and further hindered the economy and forced more people to flee. Greeks and Puerto Ricans are relatively minor players in the world economy, but Chicago, the third-largest city of the first or second largest economy depending on your accounting methods, whose municipal bonds are now rated as junk, is finding that the promises made to and believed by its vast number of its public servants were a few billion dollars more extravagant than its dwindling number of taxpayers could keep. Similar situations prevail in numerous other American cities and counties and states, as well, and of course the the debt of the federal government is keeping a relative pace with that of Greece. Unlike Greece in its post-Drachma days the United States can keep printing greenbacks to service that debt, and unlike the Euro or the Drachma the greenback is the world’s reserve currency, which seems to be working up to now, but only the rash would predict how that’s likely to turn out.
Lest we sound unduly pessimistic about America so soon before the Fourth of July, we would also note that China, which is the first or second largest economy in the world depending on which accounting method you believe, also has its debt woes. Even in the still more-or-less Communist country felt obliged to make extravagant promises to the people, the people were eager to believe, and now they’re stuck with the gargantuan tab for giant ghost cities and other ambitious make-work projects. Similar examples of human beings succumbing to human nature be found all over the globe, and probably in at least one of the countless tax jurisdictions where you live, and at various points throughout human history.
In between those various points of human history when the clash extravagant promises and economic reality turned out very badly, there were periods of prosperity and the self-sufficiency of citizens and the resultant improvement in human achievement that resulted from the lessons that had been so painfully learned. They all ended when enough time had past that the lessons were forgotten and the extravagant promises became all the more enticing, but the process tends to repeat itself.
There’s some faint hope, we suppose, that here in America these lessons will be re-learned from the examples of Greece and Puerto Rico and China and Chicago and the rest of the bankrupt parts of the world, and that perhaps the inevitable crisis can be forestalled until the next presidential election when the people will choose correct course. Only the most rash would predict how that might turn out, though. Our guess is that the next presidential election will more likely be about homosexual marriage and the latest celebrity’s sex-change operation and subsidized condoms the Confederate battle flag and whatever shiny objects the media might find, and of course the extravagant promises that politicians always make the people are always eager to believe. For now, at least, it all seems to be working out, or at least well enough to make those further extravagant promises sound plausible.

— Bud Norman

The Chill and the Boom

There’s no way to stretch out the holidays any further, and unless you’re lucky enough to occupy a high government office it’s time to get back to work and the long, hard grind through winter. For us that means resuming our reading of the news, among other things, although with all those high government officials still on vacation there’s not much there except the miserable weather.
Last year around this time the weather was just as miserable, but many of the media were eager to use that as an explanation for the upcoming miserable data showing a quarterly contraction in the economy. This time around the same media were disappointed that the holidays distracted attention from a robust 5 percent in the gross domestic product over the past quarter, and don’t seem eager to speculate how the frigid temperatures prevailing just about everywhere north of the Florida keys might slow the long awaited Obama boom. This is no time to be touting the president’s, so they’re filling the news hole the airtime with talk of that GDP figure and the the recent decline in gasoline prices and the slow but steady growth in the jobs market and the record highs in the stock market. Except for the college and professional football playoffs and the usual internecine Republican squabbles and the miserable weather there’s not much else, so their giddiness is understandable.
They won’t want too much attention paid to the economic news, of course, lest the public notice how the rosy reports differ from it own frost-bitten reality. The smart guys at Zero Hedge always manage to find the dark cloud within any silver lining, and they noticed that much of that 5 percent growth last quarter was achieved by an increase in consumer spending on higher health insurance premiums that was supposed to be counted in the contracting winter quarter that the government had already written off and was instead added to the far most robust report they’re now crowing about. Such Chinese-style statistical legerdemain is by now a common feature of the long awaited Obama boom, as is the apparent assumption by many of the media that paying higher health insurance premiums rather than the lower ones promised during the Obamacare sales job is a benefit to the economic well-being of the nation, and has thus gone largely unmentioned by many of the media.
That slow but steady growth in the jobs market has not raised the labor participation rate from the lowest level since the ’70s, largely because the number of legal and illegal immigrants has increased at a slightly faster and just as steady rate. The president’s extra-constitutional to confer amnesty on millions of illegal immigrants and thereby invite millions more is being touted by many of the media as part of his remarkable comeback after the mid-term election shellacking, along his with extra-constitutional agreement with the Chinese to combat global warming, but they probably won’t too much attention paid to that.
Those plunging gasoline prices are hard to ignore while shivering next to the pumps, but it will take a lot of doing by many of the media to make anyone think that the president’s policies have anything to do with it. The same president who made a campaign promise of skyrocketing electrical rates and appointed an Energy Secretary who openly pined for European gasoline prices and has denied drilling permits on federal land deserves no credit for America’s frackin’ oil boom, and any attempt he makes to claim credit will only make him seem all George W. Bushy and diminish his standing with the environmentalists of his party. The happily deflationary effects of lower gasoline prices will only encourage the Federal Reserve to keep up the money-printing that has fueled those bubbly record stock market indices, however, and somehow the president will get credit for that without losing his standing among the Wall Street-hating socialists of his party.
Nor will many of the media wonder if the Republican obstructionism and gridlock they’ve decried the past four years have anything with those rosy numbers they’re touting. Since the Republicans gained control of the House of the Representatives after two years of complete Democratic control of the Congress and presidency, and the officially reported deficits have gone down and government spending as a percentage of the Gross Domestic Product has also declined, both which conservative economic theory considers a spur to economic growth, but better to report on those crazy conservatives’ challenge to the relatively timid House leadership. No use pointing out that most of the nation’s economic growth has occurred in states controlled by Republicans, either, especially when the governors of the most successful of them are among the contenders for the ’16 presidential race that is already affecting the reporting of many of the media.
Judging by the miserable weather forecasts we probably won’t be getting out of the house until then, and although the question seems of little interest to much of the media we can’t help wondering what effect it will have the economy if the rest of the country is similarly to get out to the store, but at least we’re back on the job and following what there is the of the news.

— Bud Norman

Independence Day

The past several Independence Days have been bittersweet. It is still sweet to celebrate the ideas of life, liberty, and the pursuit of happiness that gave birth to our nation, but there’s no escaping a bitterness when looking around at what has become of them.
Almost everywhere is evidence of the decline and fall of America. The news briefs on the radio invited us to take heart in the latest job numbers that have pushed the unemployment rate down to a more or less respectable 6.1 percent, but they were too brief to mention that the number of working age Americans not working actually increased, that the number of full-time jobs actually decreased, and that the more the U-6 rate which includes the underemployed and involuntary part-time workers and discouraged workers remained at a Depression-era 12.1 percent. That $17 trillion of debt and all the bubble-inflating money printing that has kept the numbers even at these sluggish levels also went unmentioned, and of course there was no time to consider if the looming disaster of Obamacare and its incentives for employers to hire part-time workers who rather than pony up for the mandates on full-time workers has anything to do with it.
Obamacare and all the rest of the thousands of regulations and taxes and assorted governmental intrusions into the economy are clearly part of the problem, but there’s a nagging suspicion that it’s not all that’s gone wrong. The government is bossier and more lawless and as as incompetent as ever, as shown by the relentless storers about everything from its use of the almighty Internal Revenue Service to punish the dissenters to the endless waivers and delays and recess appointments and far-reaching executive orders issued by the president to the infuriating mistreatment of American veterans by their health care service or the administration-made invasion of illegal immigrants unfolding on the nation’s southern border, but none of that would have happened if the public hadn’t allowed it.
Another one of the great ideas that gave birth to our nation was a notion that America and its and government aren’t quite the same thing. The government had important work to do, and over the years it has done it with varying degrees of success and ethical behavior, but the heavy lifting was done by the likes of Thomas Edison in his laboratories and Duke Ellington at the Cotton Club and Milton Friedman in his office at the University of Chicago’s School of Economics and those guys eating lunch on the beam of the New York City skyscraper in that iconic photograph. The people used to do great things, and the government would let them, but for whatever reason we’re seeing less of it these days. Nowadays the great inventions are new social media and libido-boosting pills, the music no longer swings or bops or boogies or rocks but rather just thuds a monotonous nihilism, the big economic idea seems to be that no one should be allowed to get rich, and the photographer in search of an iconic image will have to find a disgruntled fellow in casual Fridays attire sitting glumly in an office cubicle. There’s still some space left between the government and the people, but it isn’t being put to good use.
Fireworks are already being ignited around our neighborhood in defiance of the city’s ridiculous ban, though, and the people of a small town in southern California have just risked the wrath of the high-minded media to repel an invasion of illegal immigrants, and some encouraging polls show people are wising up about the government. Ideas such as life, liberty, and the pursuit of happiness are not easily extinguished, and might yet reassert themselves. There’s still some room left to make them happen again, and people who still prefer them to free contraceptives or the state’s protection from an oversized soft drink, and reason for hope.
A former Miss Texas has invited over to her swank lakeside home for a party, and a hipster pal down the street has asked that we join him in blowing things up along the banks of the nearby Arkansas River, and we’ll charcoal some hamburgers and bratwurst in between and revel in the sweetness of the American idea. Come Monday we’ll resume our modest efforts to make it come true again, and we urge you to do the same.

— Bud Norman

Minimum Wages and Minimal Logic

Those mischievous economists at the Congressional Budget Office are back in the news, this time with a report suggesting that raising the minimum wage would also raise the unemployment rate.
The notion that raising the cost of something such as unskilled labor might also reduce the demand for it will seem reasonable enough to anyone with a rudimentary understanding of economics, but it has provoked an outcry among those with a more sophisticated view of these things. There apparently are studies out there by some experts or another suggesting that raising the cost of something doesn’t affect the demand for it and that people will gladly continue paying a higher price for something long after the cost has exceed its actual economic value, no matter how many centuries of economic history sense suggest otherwise, and we are told that it would be downright anti-science to argue with an expert’s study. Advocates for an increase in the minimum wage also note that the CBO has concluded that minimum wage workers would make more money if the minimum wage were increased, which will also seem reasonable enough to anyone with a rudimentary understanding of economics, and argue that so far as social justice and all the jazz goes the lost jobs would be offset by the gains those lucky enough to keep their swelled wages.
Neither argument is convincing. The president and any economists supporting his call for raising the minimum wage to $10.10 an hour clearly haven’t spent much time lately in the drive-thru lane of a fast-food restaurant, where they surely would have encountered uncouth and innumerate workers whose feeble efforts could not possibly provide a profitable return on that exorbitant amount, and we don’t doubt there are far more of them than the 500,000 or that the CBO has estimated will get the axe. There’s also the distinct possibility that a few million more over-paid workers will demand a bump up above the minimum and find that they are no longer worth the cost. Despite our dissatisfaction with these workers’ performances we are not so insouciant about their fates as the more high-minded activists seem to be, and we don’t share the view that they’re better of unemployed at $10.10 an hour rather than employed at the current rates.
This is a most unfashionable point of view, however, and it remains to be seen if it will prevail. The last time the CBO raised such a fuss was when it reported that more than a million people will be induced to leave the labor force rather than relinquish their Obamacare subsidies, and presidential and bien-pensant opinion concluded that they’d all better off and free to pursue careers in the arts. As much as we’re looking forward to the artistic renaissance that will surely flower from all those fast-food workers laid off to make room burger-flipping robots, it doesn’t seem likely to spur an economic revival any time soon.

— Bud Norman

Five Long Years of Stimulation

Monday marked the fifth anniversary of the American Recovery and Reinvestment Act, better known as “the stimulus,” but we did not observe the occasion with a celebration. What with the economy the way it is, and having failed to apply for any available federal funding, we could ill-afford a fancy party or a bottle of fine champagne.
There was a warm rush of nostalgia, however, as we recalled the giddy optimism that attended President Barack Obama’s lavishly ceremonial signing of the law. We were told that the law would cost a mere $800 billion, already a insignificant sum by Washington standards, and yet keep the unemployment rate from topping 8 percent and bring it down to 5 percent by 2013 with “shovel-ready jobs” while lifting two million Americans out of poverty and saving the world from global warming by creating a new “green energy” industry. Since then the cost has grown to $2 trillion, the unemployment rate hit 10.1 percent and stayed above 8 percent for four years before enough people finally gave up looking for a job to push it down to the current 6.6 percent, the poverty rate has risen to a 50 year high, the president has joked that the shovel-ready jobs were “not as shovel-ready as we expected,” and the “green jobs” that survived the bankruptcies of the subsidized companies turned out to cost about $5 million apiece. This winter’s wicked weather suggests some success in combating global warming, but otherwise an objective observer might reasonably conclude that all the optimism seems have been unfounded.
Still giddy after all these years, the law’s indefatigable apologists offer two lines of defense.
One is that even if the stimulus did not live up to its promises it did at least prevent the country from sliding into another Great Depression and the earth from sliding out of its orbit and into the sun. The White House economists did overstate the stimulative effect of the stimulus, according to this popular theory, but only because they had generously underestimated the damage done by the stinginess and de-regulatory zeal of that free-market-crazed cowboy George W. Bush. This ignores that only months before signing the stimulus into law Obama had criticized Bush’s “irresponsible” and “un-patriotic” budget deficits, and fails to name a single regulation Bush eliminated that might have caused the financial downturn, and conveniently omits any mention of the Clinton-era “affordable housing” policies and their sub-prime shenanigans that did in fact cause the crash, but it has the emotionally satisfying appeal of blaming Bush.
The other argument is that the stimulus failed to achieve its stated goals only because it was far too small. One might expect that a $2 trillion infusion of freshly-printed cash would be sufficient to stimulate some economic activity, especially if you throw in a third trillion from the Trouble Assets Relief Program passed just a few months earlier, but apparently not. The theory that if what you’re doing only seems to be making things worse you should do far more of it is not new, having been around at least since it informed the Roosevelt administration policies that prolonged the actual Great Depression for nine years before the massive stimulus program that was World War II came along, and its temptation to those handing out the money has not diminished over the years.
Neither of these arguments can be definitively disproved, as economics does not allow for the sorts of controlled laboratory experiments that would settle such questions in the harder sciences, but there does seem ample reason for a healthy skepticism. The notion that handing out a couple trillion dollars of Monopoly money to reliably Democratic constituencies is the only logical way to revive an economy has an inherently suspicious ring to it, and much of the stimulus money was spent in ways that are remarkably unproductive even by government standards.
Those cheeky iconoclasts at The Washington Free Beacon chose ten especially outrageous expenditures that illustrate the point. One program spent $389,357 to find why young men drink malt liquor and smoke marijuana, when we could have told them for a far more economical sum that it’s to in order to get drunk and high, and another spent $8,408 to find out if mice can get drunk, which could have been learned for the price of a mouse and a beer. Another spent $1.2 million on a University of California-San Francisco study of erectile dysfunction in overweight men, while Yale University was given $384, 949 to study duck penises. (This genital pre-occupation reminds of us an old bureaucracy joke too blue to repeat here, by the way, but if you’re interested shoot us an e-mail with proof that you’re of age in your state and we’ll pass it along.) Yet another $100,000 went to fund anti-capitalist puppet shows, a particularly peculiar way of promoting economic growth, and still another $600,000 was spent to plant trees in the wealthiest neighborhoods of Denver, which presumably offset the benefits to the hated rich with commensurate benefits to beloved and impoverished Mother Nature. If such wacky use of public funds does not convince you of the wisdom of the stimulus, perhaps the $1.3 million spent on signs advertising the benefits of the stimulus did the trick. Judging by the amount of Obamacare’s budget spent on advertising its blessings, the government seems quite convinced that you’ll fall for it again.
Which is not to say the apologists aren’t quite right, of course. Perhaps such spending did save the country from breadlines and a return to the hit parade for “Brother, Can You Spare a Dime,” and perhaps it would have worked better yet if only we’d be willing to shell out a cool million for even more duck penis revelations, and there is no denying that the earth hasn’t slipped out of its orbit and into the sun. We can’t quite shake a nagging suspicion that Keynesian is bunk, and that like global warming it’s a scam to legitimize the government’s ravenous appetite for power, but if we could afford a fine bottle of champagne we’d drink it.

— Bud Norman