A household appliance will be the next steppingstone on America's path to restored greatness. The government is poised to punish many Americans, in the name of protecting a few of them, because, in the government's opinion, too many of them are choosing to buy foreign-made washing machines for no better reason than that the buyers think they are better. If you are wondering why the government is squandering its dwindling prestige by having opinions about such things, you have not been paying attention to Whirlpool's demonstration that it is more adept at manipulating Washington than it is at making washing machines.
XIn 2006, when Whirlpool was paying $1.7 billion to buy its largest competitor, Maytag, federal regulators fretted that this would give the company too much market power. Whirlpool said: Fear not, competition from foreign manufacturers such as South Korea's Samsung and LG will keep us sharp and benefit American consumers. Now, however, Whirlpool, which is weary of competition, has persuaded the U.S. International Trade Commission to rule that Samsung and LG should be reproached for what, 11 years ago, Whirlpool said it welcomed: competition.
The U.S. market for washing machines has grown 35% in just five years. Whirlpool's share of this market, although not the 70% it was in 2006, is still more than Samsung's and LG's combined 35%. In this happy circumstance, Whirlpool is profitable. It would, however, like to be more so, and it will be if the president accedes to the commission's unanimous recommendation and imposes a "tariff-rate quota."
This is a tax, paid by American consumers, on imports that exceed a certain quantity that, in the government's opinion (formed with the assistance of domestic manufacturers), is excessive. If you are wondering why the government has nothing better to do than have opinions about such things, you have not been paying attention to modern government's vast diligence on our behalf.
The tariff/tax, which is designed to limit the choices of, and increase the prices paid by, American consumers would be 50% on all imported machines, after the first 1.2 million. U.S. customers caused the importation of about 3 million Samsung and LG washers in 2016.
Back in the day, Henry Ford said people could have the Model T in any color they wanted, as long as they wanted black. General Motors' ascent was helped by offering color choices. Until recently, purchasers of washing machines had to want white ones. And ones that loaded in the top, and signaled the end of a cycle with buzzers. Then came imports in various colors, that loaded in the front, had chimes instead of buzzers, and other features.
Competition increased, and so did Whirlpool's reliance on the government, which in 2012 imposed duties on washing machines imported from South Korea and Mexico. Samsung and LG responded rationally, by what protectionists stigmatize as "country hopping," moving some production to China, then Vietnam and Thailand. And now to the United States. Samsung and LG have announced plans to become domestic manufacturers. Samsung will open a manufacturing plant, with approximately 1,000 employees, in Newberry, South Carolina. LG's plant will be near Clarksville, Tennessee.
Before Whirlpool became dependent on government, it depended on Sears, which in the 1920s threw a financial lifeline to a struggling appliance manufacturer, Upton Machine Co., that became Whirlpool. According to The Wall Street Journal, as recently as 2002, when Sears sold 40% of the major appliances bought in America, sales through Sears generated about a fifth of Whirlpool's revenues. In October, Sears announced that it would stop selling Whirlpool brand products because Whirlpool is powerful enough to make pricing demands that "would have prohibited us from" selling those products "at a reasonable price."
Sears is not what it was just 15 years ago, and is a shadow of what it was in the 1960s when its sales were almost 1% of U.S. GDP. Sears has been prostrated not by perfidious foreigners but by America's efficient "big box" retailers (Walmart, Home Depot, Best Buy, Lowe's, etc.) and by Amazon. The real villains, however, are American consumers, with their persnickety search for high quality and low prices.
The president has until February to exercise his vast discretion regarding things like washing machine imports. If you are wondering how presidents came to have such discretion to impose taxation on American consumers, you have not been paying attention to Congress' creation, by improperly delegated powers, of the imperial presidency.
Economy: After eight long years of subpar growth, economists now warn that the economy, which is just starting to show signs of life, is at risk of overheating. Can these warnings be believed?
X While Republicans were debating the particulars of their tax plan, various economists were busy warning that enacting a pro-growth tax cuts would risk "overheating" the economy.
The argument goes like this: The best the U.S. economy can do these days is about 2% annual GDP growth, which is the path it's currently on. If the tax cuts boost growth above this pace, there's a risk that it could spark inflation, which would require the Fed to raise rates, which would risk a recession.
But who says the economy can only grow at 2%? And why? The answer is remarkably simple, and almost certainly wrong.
To get at that 2% figure, economist basically add together the growth in the labor force and a measure of output-per-worker — better known as productivity. Based on current trends, the expectation is that the population will climb at slightly less than 1% a year, and productivity will climb at about 1% a year.
Wesbury, along with his colleagues Robert Stein and Strider Elass, explain that while population growth is fairly easy to measure, productivity isn't.
In fact, they say, the government is underestimating real productivity growth, because it doesn't know how to measure the impact of new technologies.
"Yes, government sources say it's weak. But anyone who goes outside instead of living in the data knows nearly everything is getting better, faster and cheaper," they write. They note that, among other problems, the government doesn't know how to account for free stuff, like GPS navigation on smartphones, free language translators, Google search results when it measures productivity.
Zachary Karabell, writing for Bloomberg View, notes that, as a result, "there is a growing chasm between what our economic system is and what our numbers are capable of measuring."
Wesbury and company point out that, to the extent that overall productivity isn't higher, one big reason is government. Indeed, two of the industries with the worst productivity growth in the past decade have been power generation and banking — both of which are extremely heavily regulated by government.
Putting this together, it would seem that there is clearly room for additional growth without sparking inflation, especially if the Trump administration continues to liberate industries from excessive, productivity-killing, government regulations.
Indeed, the bigger risk isn't that the economy will overheat, but that the Fed will overreact and raise rates too aggressively.
Regulation: With all that was going on last week, maybe you missed this: President Trump has cut 22 regulations for every new one put on the books over the last year. It's a big reason why the economy is perking up.
For fiscal 2017, major U.S. government agencies put out some 67 actions to deregulate the economy. Meanwhile, they issued just three new major rules. Trump vowed before entering office to cut two rules for each new one imposed, so mission accomplished, big time.
X "The never-ending growth of red tape in America has come to a sudden, screeching and beautiful halt," Trump said on Thursday, as he released the federal government's twice-a-year Unified Agenda for regulation.
The cost savings so far from the effort: Some $8.1 billion in net federal regulatory costs. But the impact on the larger economy is far more significant.
There are literally hundreds of pending rules and regulations, all with varying costs, and Trump has quietly stymied many of them. All told, 1,579 planned regulatory actions have been either withdrawn or delayed in the last year.
As Elizabeth Harrington of the Washington Free Beacon noted, that came in stark contrast to the Obama administration, "which imposed a record 600 major regulations, adding rules that cost the economy $100 million or more at a rate of every three days."
Given the immense cost of regulation to the economy, it's not surprising that many businesses are today reporting higher profits and raising their estimates for coming years. With an estimated $1.9 trillion in regulatory costs each year on the economy, small changes can have a big, positive impact, especially on small businesses that often bear the brunt of costly regulations imposed by bureaucrats.
Nor is this he end of Trump's regulatory pruning. As he presented the new report on Thursday, Trump stood beside a mountain of documents representing the 185,000 pages in the federal regulatory code, a veritable mountain of costly rules that the economy must digest each and every day.
Beside it, the vastly smaller 20,000 pages of rules from 1960, a far smaller pile that could easily fit into a small filing cabinet. Trump says he wants to return to the 1960 level of regulation. That might be hard, and even require changes in law from Congress. But if he got even close to the 1960 level, the economy would surge.
One of the greatest things that can happen to the U.S. economy is that the tyranny of unneeded regulations should end. As he promised, Donald Trump is doing just that.
Once again, New York and California are on Santa's naughty list for their misbehavior in the realm of economic policies.
The Fraser Institute's latest annual Economic Freedom of North America (EFNA) report finds New York ranked 50th and California 49th, based on an index of 10 variables related to government spending, taxes, and labor market freedom. California has been in the bottom five for 14 of the past 15 years. New York has been there in all 35 years of the dataset, and in last place 22 of those years. In contrast, Texas has been in the top five for 11 years in a row, and Florida has been there for 34 of the last 35 years.
X One reason this matters is that residents and businesses frequently vote with their feet in favor of economic freedom. Since the last recession ended (in 2009), population in the 10 most-free states has grown 2? times faster than it has in the 10 least-free states. It has grown nearly 3? times faster in just the past three years. Employment and income have also grown faster in the freer states.
Furthermore, over 230 scholarly articles by independent researchers have used the Economic Freedom data to examine economic freedom at the state level, while more than 400 articles have done the same at the national level (using its companion report that ranks countries). Most of that literature finds that economically free areas tend to experience more broadly positive outcomes, including more economic prosperity. One reason is that high levels of taxes, spending, and regulation make it harder for entrepreneurs to succeed. When businesses can't expand and hire new workers, it hurts everyone.
States that have seen the fastest economic growth, like Texas and Florida, tend to have a common focus in their economic policies: low taxes (including low or no income taxes), a fiscally conservative approach to spending, and a common-sense approach to regulation that makes it easier for entrepreneurs to be successful. States that take the opposite approach, like New York and California, tend to see much less economic prosperity and many more moving trucks leaving the state for greener pastures.
New York and California ranking at the bottom of the Economic Freedom of North America report is not an outlier. Last year's Freedom in the 50 States report, which uses an entirely different methodology, came to the exact same conclusion on economic freedom: NY 50, CA 49. This year's State Business Tax Climate Index ranked New York 49 and California 48; only New Jersey was lower.
If politicians in New York and California want their state's residents to thrive, they should follow the models of states like Texas and Florida. The first step would be to lower their income tax rates. California's are the highest in the nation and New York's are not far behind. Income taxes are particularly harmful for economic growth because they punish productive activity. It's no coincidence that Texas and Florida, to which many businesses and residents are fleeing, have no income tax at all.
New York and California also need to rein in the growth of spending. Allowing the budget to grow only as fast as population plus inflation would make a big difference. Eliminating wasteful spending on things like corporate welfare programs that put small businesses at a disadvantage would be a good place to start. Reducing excessive regulations would also help entrepreneurs be more successful, allowing them to in turn expand their businesses and hire more workers, rather than leaving the state or shrinking payrolls and laying off workers.
Taking the steps necessary to rank higher on the various measures of economic policies, like the EFNA, is a win-win for New York and California (and all other states). Politicians can take the credit for improving the economy, and residents can reap the rewards of that greater prosperity.
Sounds like a great New Year's resolution for politicians everywhere: increase economic freedom. That'll surely get you off Santa's naughty list and onto his nice list!
Stansel is an economist at the O'Neil Center for Global Markets and Freedom in Southern Methodist University's Cox School of Business and the primary author of the Fraser Institute's annual Economic Freedom of North America report.
It's that time of year again, when predictions for the year ahead are made and assessments are given on the year that's coming to a close. Similar to 2016, 2017 was a roller-coaster ride of economic opportunity, technological disruption, and political unpredictability that I believe will continue well into 2018 and beyond.
While globally the business community will continue to face many challenges, as we head into 2018, I view there to be three large umbrella issues:
1) Digital disruption. How to compete in the brave new world of social media, smart machines, automation and big data.
2) Worker displacement. How to educate and train workers for the 21st Century not the 20th Century.
X3) Political unpredictability. This has become the new normal over the last few years. The rise of economic nationalism, threats to international trade and concerns over globalization have called into question the advances made during the last century.
As the COO of Deloitte Global, Deloitte's success stems from understanding clients' needs and concerns at the beginning of what many call the Fourth Industrial Revolution, or 4IR. We continually emphasize that the changes and challenges of 4IR should not be feared, but instead understood, welcomed — and above all, prepared for.
The world-changing advances made possible by artificial intelligence, wireless connectivity and big data — whether in medicine and genomics, in finding cures and personalized treatment for once deadly diseases; or in creating more efficient manufacturing, marketing and supply chains — are just getting started.
Yet, as with the great technological innovations of the past — think the telephone (1876), the microchip (1959), or the World Wide Web (1989) — massive, economy-wide change will not come overnight.
Most successful businesses have time to implement new 4IR strategies and address the disruption that has already come to the hotel and car-service industries. Online companies like Airbnb and Uber disrupt more quickly because the barrier to entry and startup and operational costs are relatively low.
Nevertheless, it's impossible to predict where the next great disruptor will come from, and organizations need strategies to compete. Many forward-looking firms see licensing agreements and mergers and acquisitions as ways to seize the opportunities presented by 4IR — witness Cisco's recent acquisition of artificial-intelligence startup MindMeld, network-software developer Viptela, and applications-management company AppDynamics.
The goal must be to get to the point where the disruptive technologies start delivering productivity improvements for the 4IR. This can help change the perception of the future of work and concerns around job loss, and better inform the skills needed for the future.
The truth is the future of work is here. As robotics and cognitive technologies augment the workforce, companies must rethink talent and technology to shift their focus to essential human skills.
The scale and pace of technological change and the potential impact on jobs is far greater than we have ever seen. Robotics, big data and artificial intelligence are beginning to disrupt entire industries.
Alongside this disruption there is a debate raging between those who believe we are heading towards unprecedented technological unemployment, and those who believe job prospects for people with the right mix of talent have never been better.
Yes, increased automation, 3D manufacturing and new AI efficiencies mean jobs will disappear. But, just as with the onset of the telephone, the microchip and the Internet, other jobs will take their place.
For this transition to happen, however, we need more private-public partnerships and educational programs that give workers the skills they need to compete in the new economy. In addition to improving literacy rates in the U.S. and developing countries, computer literacy and coding are absolute necessities if students are to leave school with real-world skills.
With so much change underway, it was appropriate that the theme for the 2017 World Economic Forum was "Responsive Leadership." As Klaus Schwab, executive chairman of the WEF, explains, responsive leadership means "recognizing the increasing frustration and discontent among those not experiencing economic development and social progress."
Their situation, he rightly points out "will only become more uncertain with the onset of the Fourth Industrial Revolution and its impact on future employment. Responsive Leadership requires a deeper commitment to inclusive development and equitable growth, both nationally and globally."
Policy makers, educational institutions and businesses will face increasingly complex questions that will have to be addressed as the capabilities of new technologies continue to accelerate.
My prior statement brings us to my third biggest concern for 2018 — the rise of economic nationalism and political unpredictability in Europe, the U.S. and elsewhere.
I believe the increase in political unpredictability in advanced democracies grew out of a combination of the aftermath of the 2008 financial crisis, growing intergenerational tensions, and the impact of new technologies.
I believe rather than turning against globalization, policies such as free trade and the organizations and alliances that have supported international cooperation in the past, world leaders must bolster them, and quell the wrongheaded idea that isolationism is anything but destructive — economically, culturally and socially — in our increasingly connected world.
If 2018 is to be an improvement on 2017, government and business leaders must work together to educate and train citizens to create economic growth and the security and jobs needed to fulfill the promise of the Fourth Industrial Revolution. They need to protect the independence and livelihoods of our most vulnerable citizens, and embrace interconnectivity in the real world as well as cyberspace. Now that would be a year worth looking back on.
Friedman is the chief operating officer of Deloitte Touche Tohmatsu Limited (Deloitte Global).
Tax Cuts: While anti-tax cut critics in the U.S. like to say the coming tax reform won't do much for the U.S. economy, China and the major European countries are all bracing for impact. They know the tax-cutting, deregulating U.S. could be about to leave them behind.
The typical response in the U.S. from Democrats and the far-left progressive wing of that party has been dismissive of tax cuts' effect on growth. The headline on a November USA Today column by former Obama administration economic advisor Jared Bernstein pretty much sums up the left's sour attitude: "GOP tax plan won't 'unleash' economic growth. It'll make things worse."
Got that? Make things worse.
X Funny, because none of our largest global competitors seem to feel that way.
Indeed, China is in what could be described as a minor panic over U.S. tax reform. Why? China's high taxes, extreme regulations, high debt and shaky currency make it vulnerable to the $1.5 trillion tax cut that President Trump and congressional Republicans are about to unleash.
Specifically, China fears that hundreds of billions if not trillions of dollars of accumulated trade surpluses will flee the Middle Kingdom's shores to return to the U.S. to be reinvested here as the American economy takes off.
That would not only weaken China's currency, the yuan, but force China's central bankers to jack up interest rates and impose capital controls to protect it and keep inflation from ravaging the economy.
As the Wall Street Journal's Lingling Wei has reported, "What they fear is a double whammy sapping money out of China by making the U.S. a more attractive place to invest."
For the Chinese, it's so serious they're actually talking about tax reform themselves. That's right — a communist nation with sky-high taxes talking about tax reform.
Then there's the Europeans. Finance ministers from five European nations, including Britain, France, Germany, Spain and Italy last week sent a letter to U.S. Treasury Secretary Steve Mnuchin warning that provisions of the tax deal could be seen as providing unfair protection for U.S. companies vs. European ones.
"The letter highlights concerns in Europe that the Trump administration will use tax reform as a route to promote 'America first' trade discrimination, escalating tensions that have already risen in other policy areas like the environment and Middle East peace," noted the Financial Times.
But underlying the trade issue is a more real concern: Once the U.S. cuts tax rates, especially on its corporations, there will be a yuuuge new incentive to invest in the U.S. Europe, which seems stuck in stagnation and whose low-fertility welfare state becomes more burdensome by the year, could see an investment exodus as companies return operations to the U.S.
And that doesn't include the estimated $2.5 trillion in U.S. overseas corporate earnings that are now parked in European accounts because U.S. corporate taxes are so high. Once those taxes are slashed, economists say there will be a flood of repatriated capital hitting the U.S.
It will cause a major monetary and fiscal headache for European Union economic officials. They also don't like that the new tax law would "discriminate in a manner that would be at odds with international rules."
But, in fact, they use their own rules often to punish U.S. firms — such as the spurious antitrust prosecutions and multibillion dollar fines they've pursued to hamstring U.S. tech giants such as Apple, Google and Microsoft, in European markets.
The truth is, most reputable economic analyses of the tax reform come to a similar conclusion: It should raise economic growth by somewhere between 0.5% and 1% a year. Just this week, the Federal Reserve Board boosted its estimate of 2018 GDP growth from its September estimate of 2.1% to 2.5%, largely due to tax reform.
"My colleagues and I are in line with the general expectation among most economists that the type of tax changes that are likely to be enacted would tend to provide some modest lift to GDP growth in the coming years," Yellen said at her final news conference as the Fed's leader.
The Obama years of heavy regulation and a lopsided tax code that punished entrepreneurs and small businesses led to sluggish 2% growth. Thanks to tax reform, the U.S. soon may enter a 3% growth phase, one that will be the envy of all our main competitors.
Turnout would be the key to which of the wildly conflicting polls would best presage the result of Alabama's special Senate election, wrote Republican consultant Patrick Ruffini earlier this week.
XThat proved correct. Statewide, turnout was down 37% from November 2016. It was down less, 31%, in the five metropolitan counties around Birmingham, Huntsville, Montgomery and Mobile, with their black communities and most of the state's highly educated whites.
Turnout was down by even less, 28%, in the 10 rural counties where the majority of voters are black. But it plunged 42% in the remaining 52 small counties. As the returns came in, you could see Republican Roy Moore reaching his target percentages — but not the raw votes he needed. Donald Trump carried those counties by 568,000 votes. Moore did so by only 149,000.
So Democrat Doug Jones, with big majorities in the metropolitan (61%) and black-majority (76%) counties, beat Moore by a 50-48% margin in a state that has voted 60 to 62% Republican in the past four presidential elections.
Moore was a problematic candidate from the outset. He was twice ousted as chief justice of the Alabama Supreme Court for disobeying federal court orders, in violation of the supremacy clause in Article 6 of the Constitution. He also argued that Muslims cannot take the oath of office, in violation of Article 6's ban on religious tests for office. In 2012, he was elected chief justice with 52% of the vote, far behind Mitt Romney's 61%.
Moore might still have won but for The Washington Post's scrupulously vetted Nov. 9 story reporting that in his 30s, he dated teenage girls and sexually molested a 14-year-old. Moore's denials were ham-handed and unpersuasive.
The majority of Alabama voters are evangelical Christians. Many white evangelicals were clearly sickened by the charges and stayed home, voted for Jones or, like the state's senior senator, Richard Shelby, wrote in someone else. Black evangelicals streamed into the polls in large numbers.
Liberal commentators like to chide white evangelicals by noting that many heavily white evangelical areas have high rates of divorce and unmarried births. The same could be said of black evangelicals. Nonetheless, many such voters lament breaches of traditional morality and seek candidates who uphold their higher, though often violated, standards.
There are multiple losers from the Alabama result. One is Sen. Al Franken of Minnesota, who promised to resign in "coming weeks" while denying misconduct far short of that alleged against Moore. Minnesota's governor has announced his replacement, and Franken will surely be gone soon.
Gone also are Democrats' hopes of capitalizing on what would have been an inevitable Senate Ethics Committee investigation of Moore and a probable vote to expel him from the Senate. Mainstream media, which carefully avoided coverage of the bribery trial of Democratic Sen. Bob Menendez, would have joined gleefully in portraying Moore as the face of the Republican Party.
Republicans are losers, as well. Their Senate majority is reduced to only 51-49, so Majority Leader Mitch McConnell can afford to lose only one colleague on partisan roll calls. Democrats' chances of winning a Senate majority next year increase, though perhaps not to the 50-50 level some claim. They need wins in marginal Nevada and Arizona, and their chances of saving their 10 incumbents in states carried by Trump — five by wide margins — look better.
But the biggest loser is surely Breitbart News leader and former Trump aide Steve Bannon. He has been operating under the delusion that as a private citizen, he can spark a national rebellion aimed at somehow removing McConnell as majority leader. Now it's clear that the only possible replacement is Democrat Chuck Schumer.
Bannon campaigned actively for Moore, who would probably have won the nomination even without his help, while Trump endorsed appointed incumbent Luther Strange. Given Jones' small margin, it's obvious that Strange or Rep. Mo Brooks, who finished third in the primary, would have won Tuesday.
Jones deserves credit for a flawless campaign, but his example of taking ultraliberal positions on abortion and immigration may lead Democrats to nominate similar candidates in races against less problematic Republicans. And would Jones have beaten Moore if the Senate had been 50-50 and his win would have led to Democratic control?
Jones' victory depended on multiple Republican mistakes, enumerated in an amusing tweetstorm by The New York Times' Alexander Burns, much as a lock picker depends on getting every tumbler to fall into place. The result is consequential but won't be easy to replicate.
Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.
Regulation: For years, advocates preached the net-neutrality gospel with a fervor normally reserved for end-of-the-world preachers. Now that the FCC has voted to dismantle its net-neutrality regulatory scheme, we'll be able to see just how misguided these zealots have been.
In a tweet after the ruling, the ACLU said the decision "represents a radical departure that risks erosion of the biggest free-speech platform the world has ever known."
Mignon Clyburn, one of the two Democratic commissioners at the FCC, claimed that overturning the Obama rules would give "the green light to our nation's largest broadband providers to engage in anti-consumer practices, including blocking, slowing down traffic, and paid prioritization of online applications and services."
Most of the other reactions aren't fit to print here.
The problem: While everyone says they are for net neutrality, nobody seems to actually know what it is, including the Obama FCC chairman who wrote the rules. When asked a couple of years ago how the FCC intended to apply its new regulatory authority, Tom Wheeler said: "We don't know; we'll have to see where things go."
Tellingly, the first goal under net neutrality was to impose costly — and since repealed — privacy rules that had nothing to do with net neutrality. The second was to target an unlimited-video data plan provided by T-Mobile.
Shorn of all the histrionics, the FCC's net-neutrality regime was little more than a blatant power grab by the Obama administration, and one that was completely unnecessary. There had been no evidence of consumer harm under the rules in place before 2015, and most of the claims about what ISPs will do — like those listed by Clyburn — are little more than ghost stories.
In any case, the idea that the internet can only survive and thrive with the heavy hand of government guiding it has no historical support whatsoever.
Before 2015 — when the rules went into effect — the internet grew and prospered in ways no one could have imagined, all with minimal government interference. No, because of minimal government interference.
Companies raced to build out broadband networks. The once-monopolistic phone and cable companies suddenly found themselves having to fight for customers' loyalty. The result was that cable companies quickly improved their speed and reliability.
Phone companies that had pretended that DSL was high speed starting laying fiber networks. Mobile broadband improved to the point where having a landline connection became almost superfluous. Content, services and internet applications exploded.
Thankfully, Ajit Pai held steadfast to his belief that the free market would continue to provide such growth and innovation, and despite vicious verbal attacks and threats on his life he was able to roll back the regulatory clock.
So what happens next? There will be legal challenges, of course. But assuming the FCC prevails, consumers most likely won't notice any difference. Even the New York Times — which had, like every other news outlet, championed the Obama regulations — admitted that "despite all the uproar, it is unclear how much will change for internet users."
As long as internet access is competitive — and it is — providers won't be able to engage in "anti-consumer" practices, because consumers will just switch ISPs.
By the way, the internet is about to get even more competitive.
Just days before the FCC's ruling, AT&T launched an international trial of Project AirGig, which promises 1-gigabit-per-second speeds. Current broadband services are measured in megabits per second, using existing power lines.
Also under development are 5G wireless networks, which can deliver speeds of 10 Gbps and could replace the need for wired connections at home.
The only question left is whether the net-neutrality zealots will apologize when their doom-and-gloom prophecies fail to materialize. More likely, they'll just come up some new world-ending "problem" that demands a government solution.
While the debate continues to rage, consumers would do well to remember that their interests are always best served by a free and open market, not by a handful of government bureaucrats issuing mandates and regulations from Washington, D.C.
Republican politics was starting to feel like a version of Mel Brooks' "The Producers." In the play, two scammers devise a tax write-off scheme in which they will make a killing by losing money on a Broadway show. They reach for the most grotesque, tasteless musical the human mind can conceive — "Springtime for Hitler" — and are undone when it's a surprise hit.
XRoy Moore could have sprung from the imaginations of Democratic operatives hoping to find the embodiment of every stereotype that liberals cherish about conservatives.
Ignorance? In a July radio interview, the anti-immigration hardliner couldn't say who the Dreamers are or what DACA refers to. He did not know that the U.S. Constitution, which he purports to revere, forbids religious tests for public office. In the Republic of Moore, Muslims would be barred from serving their country.
Conspiracy monger? He trafficked in the birtherism about Barack Obama and suggested that parts of the Midwest are ruled by Sharia law.
Anti-gay? Moore is not just a traditionalist who opposes same-sex marriage; he wants to put homosexuals in prison, and claims that the U.S. is the focus of evil in the modern world for permitting gays to marry.
Irresponsible? Moore was twice removed from office for failing to obey the law.
Anti-Semitic? When your wife defends against the charge by saying, "One of our attorneys is a Jew," it's not a good sign.
Racist? Anti-woman? Here's where the Moore show veered into wild satire territory, or would have if we hadn't actually seen it unfold. Moore said he agreed with Trump about making America great again. When, exactly, a voter asked, was America at its greatest? "I think it was great at a time when families were united, even though we had slavery, they cared for one another," said the dolt Steve Bannon chose as the kind of Republican who would stick it to Mitch McConnell and the establishment. Remember how we all spat out our coffee when Joe Biden accused Republicans of wanting to put black folks "back in chains"?
As for women, Moore was the Democrats' jackpot — a supposedly religious conservative flamboyantly fulminating against immorality who was himself a child molester. You could not write this as fiction, because it's too incredible.
In the aftermath of Doug Jones' victory, many Republicans are saying they "dodged a bullet" because if Moore had been elected to the Senate, Democrats would have used him to discredit the entire Republican Party.
Their relief is understandable but premature. Though the morning-after commentary has tended to focus on Steve Bannon's noxious role, the Moore candidacy was not his responsibility alone. A number of key Republicans — Richard Shelby, Mitch McConnell, Mitt Romney, Mike Lee, Cory Gardner and others — treated Moore as radioactive, but an amazing percentage were willing to say that a sleazy bigot was fine as long as he would vote for the president's agenda.
Prominent "family values" conservatives such as James Dobson, Tim Wildmon and the infinitely flexible Jerry Falwell Jr. stood by their endorsements of Moore. Sean Hannity issued what seemed to be an ultimatum to Moore to give an account of himself regarding the teens he dated/molested, but then, Obamalike, backed away from his own red line. He said the people of Alabama would judge (as they certainly did, but not in the way Hannity was presumably hoping). Other Fox News hosts returned to the Clinton well again and again, implying that if Bill Clinton hadn't been held responsible for Juanita Broaddrick, well then ...
And of course, Moore's most crucial booster was Donald Trump, someone with more than a passing interest in the "he denies it all" defense. The Republican Party has not dodged him, and cannot. You can scan the exit polls of the post-2016 elections so far and draw a scary 2018 picture for Republicans. African-Americans, who weren't motivated to turn out in off-year elections even when President Barack Obama implored them to, showed up in force in Alabama. Suburban educated voters — the key to Republican general election victories — have turned against the party in formerly swing state Virginia, and even in reddest Alabama.
The Republican Party has voluntarily donned a fright mask that the hapless Democrats and the evil mainstream media could never have pinned on them. It is probably too late to avert the reckoning that is coming, but even if only as a gesture of civic hygiene, individual Republicans might wish to make clear that the Molotov cocktail politics that Trump brought to the Oval Office is not what they represent.
Charen is a Senior Fellow at the Ethics and Public Policy Center.
The loss of the Alabama Senate seat just reinforces the message to Republican tax reform conferees all the more. Your job is to "maximize the positive," economic growth for America, which Congressional Democrats — none of whom support tax reform — will rue on election day 2018.
At every fork in the road (policy choice), you should "spend" the $1.5 trillion tax cut lid (as allowed by absurd Congressional budget rules and the official — always wrong — "bean counters" of the Congressional Budget Office and Joint Committee on Taxation to whom you are held hostage) to pursue the most powerful economic growth choices.
When the economy booms, tax revenues soar and deficits shrivel, not grow. This is why it is so short-sighted to make compromises in the tax reform bill that undermine growth, supposedly to reduce the deficit:
In the Senate bill the corporate rate cuts go into effect in 2019. The effective date needs to be moved to 2018, as in the House bill, so that economic growth launches immediately.
While the tax reform bills reduce the corporate rate to 21%, smaller businesses organized as "pass-throughs" receive a 17.4% deduction in the Senate bill, which leaves the ultimate rate paid over 30%. It is important to restore "pass-through" parity with corporate rates, which can be done by also cutting the top individual rate to 35%, further promoting growth.
In the Senate bill the death tax is never repealed but continues to "finance World War I." The pro-growth effects of repealing this unfair and grossly unpopular tax completely were recently demonstrated in Sweden, where businesses, capital and jobs that had fled started returning as soon as the death tax was repealed.
The Senate bill retains the Alternative Minimum Tax (AMT) for individuals, and adds a new one for corporations. Both have the perverse, anti-growth effect of nullifying expensing (immediate deduction for capital investment rather than years long depreciation). Such expensing has one of the most powerful pro-growth effects of anything in the bill, as the Tax Foundation has tirelessly explained.
Meanwhile Conferee responsibilities require that they concurrently "minimize the negative," adjusting those policy choices that anger our base, with limits on home mortgage interest deductions, education tax benefits, and state income-tax deductions (zeroing out this deduction over four years would placate some blue state Congressional Republicans, while giving grassroots time to mobilize state tax insurrections back home).
If tax reform is done right, it will promote economic growth, as it did under both Presidents Kennedy and Reagan, and will increase revenues by far more than the $1.5 trillion over 10 years that the "bean counters" calculate it will lose.
Most voters do not know that Kennedy and Reagan mostly fixed the individual side of the income tax code, though since Reagan Washington has been backtracking. But counting federal and state corporate tax rates, America now has the highest business taxes in the developed world, with corporate rates at nearly 40%, and pass-through rates even higher.
Many voters question why, despite all the talk about middle-class tax cuts, the focus seems to be reducing corporate and business rates. Republicans need to pivot to explain effectively how the bill will benefit the middle class, blue-collar working people and millennials through higher economic growth, increased jobs and higher wages.
Boston University economist Larry Kotlikoff and colleagues have produced the most comprehensive, sophisticated economic model in America, if not the world. Their model shows that cutting the corporate rate to 20% would draw $5 to $6 trillion in increased capital into America, increasing wages for the average family by $3,500 a year. That means $35,000 over the first 10 years.
Their model also shows that the tax reform bill will not increase income or wealth inequality. Nor will it increase the deficit or the national debt as a percentage of GDP, due to booming growth in federal revenues.
This is most important of all for millennials, who will be living their entire lives either under the Obama era stagnation, or the new American Dream. The rest of the world understands this. Only Congressional Democrats remain united in their opposition, denying tax reform even a single vote. They will pay the price for that in November 2018 — and beyond.
Uhler is founder and chairman of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He worked with both Ronald Reagan and Milton Friedman.
Ferrara is a senior fellow with the Heartland Institute and NTLF. He served in the White House Office of Policy Development under President Reagan, and as associate deputy attorney general of the U.S. under President George H.W. Bush.
Sen. Susan Collins believes she's on a mission to save the individual insurance market from collapse, but the opposite is much closer to the truth.
The fix she is insisting her GOP colleagues accept to win her vote on tax cuts would cost working-class Mainers more than $1,000 in health insurance tax credits a year and quite possibly blow up the individual insurance market in the process.
Among individuals now signing up via HealthCare.gov for 2018 coverage in Portland, 30-year-olds earning 200% of the poverty level (about $24,000 for a single person) can get a free bronze plan.
Even if Republicans kill off the individual mandate, there's a good chance working-class Mainers would sign up for a free bronze plan — or at least they would if they knew they could get something for nothing.
With no mandate, what are the chances young, healthy working-class Mainers, who probably are struggling to save much of anything for the future, will shell out more than $1,000 for a policy that provides few benefits before hitting the $5,500 deductible? Pretty slim.
Collins is demanding that Republicans pass two pieces of health care legislation as a price for winning her vote on their bill to cut nearly $1.5 trillion in taxes over a decade. Her requested health care fixes are aimed at protecting insurers from the fallout from repealing the individual mandate to buy insurance. That repeal could lead millions of relatively young and healthy people to drop coverage they view as unaffordable. Because those remaining in the insurance pool would tend to have high health care bills, killing the mandate will push up average premiums by an estimated 10%.
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Collins has expressed concern that middle-class Mainers earning more than 400% of the poverty level, who aren't eligible for subsidies to buy coverage on the ObamaCare exchanges, will bear the brunt of mandate repeal. The boost in premiums would, in effect, "cancel out their tax cuts," Collins has said.
But she doesn't seem to realize that the impact of the fixes she is demanding would be to raise taxes on the working class, while exploding premiums and guaranteeing an increase in the ranks of the uninsured. The hard bargain Collins is trying to drive with fellow Republicans would be no bargain for her constituents.
One of the two bills Collins wants passed would, in fact, be modestly helpful. She is proposing $5 billion in reinsurance funding in each of the next two years, essentially reimbursing insurers for a portion of the expenses run up by their highest-cost customers.
But that help would likely be swamped by the damage from the other legislation she wants to see passed. That bill, which emerged from well-intentioned bipartisan talks led by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., actually would cut federal spending on health insurance subsidies by about $200 billion over a decade. So Collins' package would cut health insurance support by about $190 billion over a decade.
Puncturing A Life Raft
The effect on working-class and moderate-income Mainers who would have their health insurance subsidies cut by $1,000 or more each year would undoubtedly be extremely negative. So why doesn't Collins seems to get it?
In her defense, there's a long list of influential people in Washington who have been flummoxed by the workings of ObamaCare. At the top of that list is surely President Trump. In October, he announced that he would halt payments which the Affordable Care Act promised to insurers to reimburse their expense for dramatically shrinking deductibles and other out-of-pocket costs for low-income households who buy silver coverage.
Trump, who had the authority to end the payments funded by President Obama without a congressional appropriation, had long threatened the move as an act of sabotage. But most state health insurance officials seized an opening identified by some very clever Urban Institute scholars to jury-rig their exchanges in a way that turned attempted sabotage into a life raft.
Alexander and Murray had worked on getting Congress to fund the cost-sharing subsidies because experts had warned that insurers would have to raise premiums on all customers to offset their expense in transforming basic silver plans into platinum for low-income households, as they are obligated to do. Yet insurers, instead, piled all of that expense onto silver plans, sending silver premiums skyward. Because premium tax credits are based on the cost of the second-lowest-cost silver plans, the size of those subsidies soared, which is why many more people can get free high-deductible bronze coverage in 2018 than in prior years.
Now Collins wants to puncture that life raft. Her deal to vote for repealing the mandate in exchange for making bronze plans much costlier is certain to lead to an exodus of healthy people from the exchanges.
Even worse, this will happen as Trump opens the floodgates for insurers to sell short-term, off-exchange coverage that charges people based on their health status. For relatively young and healthy people who earn too much for exchange subsidies, this will be too good to pass up. Bottom line: Even with a dollop of reinsurance funds, Collins' effort to keep premiums affordable for middle-class adults with preexisting conditions is virtually certain to fail.
A Real Fix
If Collins wants to start fixing the individual insurance market, instead of breaking it further, there's a very logical solution that doesn't require an individual mandate and isn't partisan. The very best step for public policy, within the realm of the possible, would be to give people a choice. A choice between the comprehensive coverage that Democrats want them to have — and that many people with chronic conditions or low incomes clearly need — and the consumer-driven model that Republicans believe in, which allows people to opt for high-deductible coverage and set aside funds to cover basic medical needs.
The central problem of the Obama exchanges is that the rules stacked the deck in favor of those needing comprehensive coverage, leaving far too many in the working class with three unappealing options: a silver plan that costs too much; a bronze plan that won't pay their medical bills until long after they're in financial distress; or an individual-mandate penalty for opting against coverage that may be of little use.
That's why 50% of the people eligible for premium tax credits leave them on the table and go uninsured. It's not because they don't want insurance, but rather because of the terms on which it is offered. That doesn't even count people who earn up to 250% of the poverty level and have left part of their subsidy unclaimed because they bought high-deductible bronze plans. Remember, cost-sharing subsidies only were made available to those who bought comprehensive silver plans. Disappointing enrollment is a prime explanation for why ACA exchange subsidies in 2017 cost $46 billion vs. the $71 billion projected in 2015,
Giving people the flexibility to use their subsidies to buy policies they can afford is pretty simple. Consider a healthy couple of 30-year-olds in Portland, Maine, with a child on Medicaid and income of $40,000. In 2017, they could choose between a low-deductible silver plan that costs $2,400 in premiums — probably more than they would spend unless they were expecting big medical expenses with a second child on the way — or a $1,600 bronze plan with an untenable $12,000 deductible.
There's no good reason not to also make the cost-sharing subsidies available to people who select bronze plans. Allowing them to use those subsidies to offset bronze premiums and deposit the rest in a Health Savings Account — essentially giving them a tax cut — would have enabled that Portland couple to get a free bronze plan and have $1,000 left over to offset medical expenses. That approach is central to the Health Care Security & Freedom Act.
No one who didn't need a comprehensive plan would turn down such a great deal. But there's a problem: If Collins gets her deal, as much as $500 billion in funds available for health insurance subsidies over the next decade ($200 billion from "fixing" cost-sharing subsidies and $300 billion that won't be spent on ObamaCare's consumer-unfriendly plans if the individual mandate is killed) will vanish. That will make it very hard to find funds to offer insurance in a way that works for the finances of either the working class or middle class.
About a year into President Trump's first term, the jury for much of the country and for most of the major media has returned its verdict: Trump is a failure. Trump is incompetent. Trump cannot lead. Trump has no legislative victories. Even former President Carter said he had never seen a president so maligned in the media. Meanwhile former President Obama all but compared Trump to Hitler.
XTrump endures a nightly beating from the cast of late-night comedians who take turns calling Trump racist, sexist, dumb, inarticulate, overweight, overwrought and, of course, clueless. His reported consumption of 12 Diet Cokes per day provided material for the comics' writers. Nothing seems to be off limits, not even first lady Melania's choice of White House Christmas d?cor.
Based on the beating Trump endures daily from a hostile "news" media, coupled with the nightly drubbing at the hands of Stephen Colbert, Jimmy Fallon, Jimmy Kimmel et al., one could reasonably assume that Trump's approval ratings must be among the worst any leader could have.
Trump got pounded by much of the left for his decision to move the American embassy in Israel from Tel Aviv to Jerusalem. Never mind every president since 1995 has promised to do so.
Trump got hammered for backing Judge Roy Moore in the Alabama Senate race. Trump first backed Moore's Republican primary opponent. When Moore won, Trumped switched his support to him. But when several allegations came out about Moore's alleged sexual misconduct, Trump called on him to drop out "if the allegations are true." The Republican National Committee pulled its endorsement and funding. Trump then did a 180, presumably fearing the loss of a Republican Senate vote in a chamber that is only 52-48 Republican versus Democrat.
Democrats used the allegations against Moore to remind voters of the "Access Hollywood" tape in which Trump made crude remarks about women and fame.
When the Rasmussen poll put Trump's approval rating at 46% a month ago, comedian Jimmy Fallon quipped: "Did you see this? Trump just went on Twitter and bragged about a poll showing that he has a 46% approval rating. Really? That's like posting a math quiz on the fridge where you got a D-plus."
But how many Trump haters know that his "D-plus" is still better than the grades of leaders of other important countries?
Take Germany's internationally respected Chancellor Angela Merkel, the leader of her party since 2000 and the head of the federal government since 2005. According to The Times of London, the approval number for her and her party just three weeks ago was an all-time low of 29.2%: "Angela Merkel's poll ratings fell to an all-time low yesterday after the breakdown of talks on forming a coalition government as the German president, Frank-Walter Steinmeier, stepped up efforts to avoid new elections."
How about France's President Emmanuel Macron? According to the U.K.'s Daily Express headline in October, "Emmanuel Macron Loses France's Trust: Poll Shows Majority Questioned Have No Faith in Him." The Express reported: "The majority of French people — 54% — 'do not trust the head of state to fix the country's social and economic problems,' according to the Elabe poll for Radio Classique and Les Echos. ... His current approval ratings, however, pale in comparison to his high postelection ratings, when some 60% of French voters expressed satisfaction with their new leader."
Recall the zeal with which some in the U.S. media greeted Macron's election. Time magazine reported: "An untested whizkid has shot to power as President of France in his very first election campaign, crumpling older, hard-bitten veterans in his wake. ... Aged just 39, Macron is France's youngest leader since the famed French emperor Napoleon Bonaparte, who took power at age 35."
Then there's Britain's Prime Minister Theresa May. The Telegraph reported last month on a poll by ORB International: "It shows that two in three people disapprove of the way the Brexit negotiations are being handled. ... Some 44% of the public backed her at the start of June, but after she lost the Conservatives' parliamentary majority in a snap election that she called, the figure dropped to 34%. It is now just 26%."
Finally, look at the poll numbers of Canada's Justin Trudeau. According to Bloomberg Businessweek, his numbers are down significantly from when he was elected: "Two years into Trudeau's first term, a polling aggregator run by the Canadian Broadcasting Corp. shows his support at 37.9%, down eight points from a year ago — still strong in Canada's three-party system."
Yes, Trump's numbers are low — for now. But other leaders on the world stage are doing worse, in some instances far worse. So before much of the country and the media write Trump off as a failure, how about we try just a little perspective?
Elder is a best-selling author and nationally syndicated radio talk-show host. To find out more about Larry Elder, or become an "Elderado," visit www.LarryElder.com.
Scandal: For 18 months, the FBI has been fixated on determining whether President Trump worked with Russia to influence the 2016 election. But explosive text exchanges between top FBI agents suggest it should be looking in the mirror.
X The text messages sent between Peter Strzok and Lisa Page, which became public on Wednesday, provide a rare and illuminating window into just how rabidly partisan putatively nonpartisan law enforcement officials can be.
In the exchanges, they called Trump an "idiot," a "loathsome human," an "enormous do-che," and said "this man cannot be president."
When not berating Trump, they were praising Hillary Clinton. In one text, Strzok said: "God Hillary should win 100,000,000-0." In another, he said that "a lot of people are holding their breath hoping" about Clinton.
When Hillary accepted the party's nomination in July, Strzok texted "Congrats on a woman nominated for President in a major party! About damn time!" During one of the presidential debates, he texted: "Oh hot damn. HRC is throwing down saying Trump in bed with Russia." In one of Page's texts, she said Hillary "just has to win now."
On their own, these texts might not be a big deal, even if the two are career government employees. Everyone is entitled to their opinions.
But Strzok and Page weren't just a couple of bureaucrats crunching numbers in a windowless office at the Bureau of Justice Statistics.
Strzok was a key player in the FBI's investigation into whether Clinton had broken the law by using a private, unsecured email server to handle highly classified documents. He interviewed several of the people involved, including Clinton herself.
He was also the person who watered down the language in the statement used by Comey to exonerate Clinton, changing it from "gross negligence" to "extremely careless," which as we noted in this space was critical to Comey's claim that Clinton didn't break any laws.
Remember, too, that when Strzok was busy airbrushing Clinton's email crimes, he would have known that, had the FBI done the right thing and indicted her for putting national security at risk, it would have crushed her campaign, and helped elect the man Strzok clearly felt should never be president.
In other words, Strzok had motive, means and opportunity to sabotage that investigation.
Strzok and Page were also deeply involved in the FBI's investigation into alleged Russia meddling, which started almost immediately after Comey let Clinton off the hook, and was sparked by a dodgy Clinton-financed "dossier." In fact, according to CNN, Strzok signed the document making the Russia probe official.
So did these FBI agents act on their fervent anti-Trump beliefs in ways that might have compromised the integrity of both investigations?
The text exchanges suggest they very well may have. Consider:
Strzok texted Page saying that while he wanted to believe "that there's no way he gets elected" he was "afraid we can't take that risk," then added cryptically that "it's like an insurance policy." The text doesn't make clear what the "it" was, but does suggest the topic was discussed with the deputy FBI director Andrew McCabe.
In August, Page told Strzok he should stay where he is because "you're meant to protect the country from that menace," meaning Trump. She then sent a link to a David Brooks column in The New York Times which argued that, with Trump, "There comes a time when neutrality and laying low become dishonorable. If you're not in revolt, you're in cahoots." To which Strzok said "of course I'll try to approach it that way … I can protect our country at many levels."
Days after the election, Page texted to say she bought "All the President's Men,'' a book about Nixon's demise from the Watergate scandal, because "I needed to brush up on Watergate.''
One of the texts also suggests that both knew they should be careful when discussing Clinton. In April 2016, Page texted "you say we text on that phone when we talk about Hillary because it can't be traced."
At the very least, these messages cast still more doubt on both the Clinton email and the Russia investigations, and lend more credence to claims that both were driven primarily by a desire by federal officials to protect Clinton's election chances, and hurt Trump in any way possible.
Politics: Republican Roy Moore went down in flames to his Democrat opponent, Doug Jones, in a special Alabama senatorial election. Jones took 49.9% of the vote, vs. Moore's 48.4%. Predictably, Democrats were ebullient over their win in deep-red Alabama, seeing it as an omen for 2018. Not necessarily.
Yes, a win is a win, and this certainly whittles the Republicans 52-48 edge in the Senate to a very uncomfortable, razor-thin 51-49.
Vice President Mike Pence better get some comfy walking shoes, because, with four squishy Republicans counted among their number, the GOP could need Pence as a tie-breaking vote on any number of issues in the Senate next year.
That said, Democrats have little to rejoice about.
Start with the Republican candidate, Roy Moore, whom National Review's Jim Geraghty said "may very well have been the worst Senate nominee for any major party in American history."
X That, we suspect, was a bit of hyperbole, but the point is well taken. Moore was a bad candidate, with obvious flaws. He had been accused by 9 women of making unwanted sexual advances decades ago, including one allegation of sexual assault on a 14-year-old girl.
Moore flat-out denied the charges. But many Alabama voters believed the women, and voted their conviction.
Moreover, every time Moore spoke he seemed to stick his foot in his mouth. It was such a problem that he just basically stopped campaigning toward the end, even leaving the state.
Moore also suffered from little official support from his own party.
Not surprising, since his electoral history shows, at best, a mediocre, uncharismatic candidate, one who's won a series of squeakers over election opponents. The GOP establishment, in large part spooked by the wave of accusations of sexual harassment now hitting Congress, walked away from Moore and basically handed the race to his Democratic opponent.
Yet, despite Moore's obvious flaws as a candidate, he still managed to come within 1.5 percentage points of Jones.
Many angry Republicans, including former Republican Sen. Richard Shelby, chose to write-in another candidate rather than vote for the politically damaged Moore. The total write-in vote, presumably nearly all Republican, totaled just under 23,000 — or 1.7% of the total vote, more than the final vote margin.
Jones needed an extremely high turnout by Democratic voters — an unprecedented 92% of their 2016 presidential election vote turned out for the Dems, while many Republicans stayed home — to win. African Americans, in particular, turned out in high numbers.
And while the Republicans lost, what did the Democrats win?
A tenuous seat that they will almost surely lose when it's contested in the next election. But they do have a chance to regain some seats next year in the mid-terms.
Even so, this wasn't a swing election, where a Red State suddenly goes Purple or even Blue. Jones came across as a nice guy in his campaign, but his high-tax, pro-abortion, pro-ObamaCare, pro-big government beliefs won't be an easy sell to very conservative Alabama voters next time around.
We keep reading that there were three big losers in this fight: Steve Bannon, who aggressively backed Moore, and Donald Trump, who actually did a robo-call recording on Moore's behalf, and Senate Majority Leader Mitch McConnell, who now has a smaller margin of control.
But Trump actually supported Luther Strange in the Republican primary over Moore, so the loss isn't as big as it could have been. It will, however, make it somewhat harder for him to get his agenda through Congress next year.
Does this bode well for the Democrats in the 2018 mid-term election cycle? Maybe. Maybe not. After all, as we noted, this wasn't a swing election — it was really about one very flawed candidate.
As pollster and political consultant Doug Schoen noted on the Fox News web site, "regardless of Moore's failure to win, early indications from exit polling indicate deeply negative favorability and approval ratings for both major parties."
To win back the House, Democrats have to take 24 seats. Meanwhile, to regain control of the Senate, Dems need only two more Senate seats, and "Democrats are so far feeling confident about pulling off victories in GOP-held seats in Nevada and Arizona," according to The Hill.
President Obama, for instance, though personally popular, lost 66 House seats and 15 Senate seats in the 2010 and 2014 midterm elections.
Typically, turnout is as much a third lower than in a presidential election year. In 2018, 36 governors, at least 34 senate seats, and 435 House seats will be up for election. Based on past experience, it will be tough for Republicans to hold the substantial majorities they have at both the state and federal level. Turnout for both parties is key.
That said, don't expect an Alabama-effect to sweep the nation. Voters usually vote on bread-and-butter issues. The Trump economic growth boom is just starting to be felt. If it continues and there are no major foreign disasters to deal with, voters may feel hesitant to change horses in midstream.
When historians examine President Trump's tax program, they will surely be struck by a large and momentous contradiction. Although the nation faces endless budget deficits — and although the president purports to speak about the future — his tax program does little or nothing to curb long-term deficits and, arguably, might make them worse.
It is said that the tax gap of the Trump-Republican program — the net amount of the tax cut — is somewhere between zero (the administration's position — the tax cut will pay for itself through stronger economic growth) and $1.5 trillion over a decade (the position of many economists who doubt much of a boost to economic growth).
Wrong, on both counts. A more realistic estimate of the tax gap is somewhere between $7 trillion and $12 trillion, again over a decade.
XHow do I get these fantastic figures? The answer is that I ignore Trump's program altogether and simply deal with existing deficits, as estimated by the Congressional Budget Office (CBO). It's not that I believe that Trump's program will work as promised. I don't. My real point is that, in many ways, it's too small to matter.
Even if it works, it won't cure chronic deficits. And neither party is pretending it will. Both find it more convenient to argue over the plan's distributional effects — are the rich and well-to-do unfairly favored? — than to close the gaping deficits.
Here's some basic arithmetic that reinforces my point. Although it's a bit tricky, stick with me.
Our economy — the annual production of goods and services, or gross domestic product (GDP) — is now approaching $20 trillion. So every 1% of GDP is worth about $200 billion. In fiscal 2017, the deficit was 3.5% of GDP, or almost $700 billion. Over a decade, and assuming unrealistically that the deficit doesn't rise, taxes would need to increase by $7 trillion in today's dollars to balance the budget.
But what if the deficit does rise? By the late 2030s, the CBO estimates that annual deficits will reach 6% of GDP, almost doubling from their present level. The increase mainly reflects the growing number of elderly drawing Social Security, Medicare and Medicaid, in addition to swelling interest payments on the existing debt. To balance the budget would require annual tax increases averaging $1.2 trillion, or $12 trillion over a decade, both in today's dollars.
Either way, the required tax increase would be enormous, ranging from about a fifth of today's tax burden to about a third. If instead Congress tried to balance the budget by cutting spending, the reductions — including defense — would be huge.
Some tentative conclusions emerge from this exercise:
Plausible rates of economic growth aren't fast enough to eliminate massive deficits, though they would help. The required growth to do more than Trump has already proposed is simply too high. The present and estimated-future deficits are so large that they can only be reduced through the politically painful process of raising taxes or cutting spending.
The presumption of politicians of both parties, despite some loud rhetoric to the contrary, is that large deficits and growing federal debt do not now pose a serious threat to the economy. It's easier to defer major changes — to hope that something will come along to cope with the deficits — rather than wade into the quagmire of substantially higher taxes or lower spending.
If this optimistic assumption about deficits — call it "benign neglect" of deficits — turns out to be wrong, the U.S. economy faces a serious jolt somewhere in the future.
What's clear is that, regardless of the fate of Trump's tax program, it's not the be-all and end-all in economic policy that both friend and foe suppose it to be.
Samuelson has written about business and economic issues for the Washington Post since 1977.
As the teacher of a graduate-level tax policy class at Johns Hopkins University, it was with great interest that I read Chris Tomlinson's Dec. 8column in the Houston Chronicle.
Mr. Tomlinson dedicated his column to criticizing the tax proposal now before Congress, calling it "a bill that promises reckless cuts, the same old loopholes, little simplification and an even larger federal debt."
Tomlinson's criticisms would warrant a failing grade in my class. Let's consider each in turn.
The reform measure adopted by the House would, according to Congress' Joint Committee on Taxation, reduce federal revenue $1.4368 trillion over 10 years. (The Senate passed a similarly-sized bill.) Tomlinson rounded that figure to $1.5 trillion, but what's an extra $63.2 billion among friends?
Indeed, $1.5 trillion is a lot of money. But given that the federal government is poised to collect more than $43 trillion over the decade, this "reckless" cut constitutes a mere 3.5% reduction.
X Tomlinson is correct that sweeping tax cuts don't pay for themselves, but the anticipated economic growth resulting from these cuts would reduce the net revenue loss to something closer to $1 trillion — shrinking this so-called "reckless" reduction to 2.3%.
Same Old Loopholes
Tomlinson contends: "While congressional Republicans slashed away at deductions claimed by individuals, they left most of the deductions, credits and tax avoidance tactics for corporations in place."
In fact, Congress' Joint Committee on Taxation details 37 provisions in the House bill for repealing and limiting deductions, credits and special rules currently enjoyed by corporations. These modifications would raise $818.6 billion over 10 years. The bill uses that money to lower tax rates.
Broadening the tax base and lowering tax rates in this manner is the mark of well-designed tax reform.
Taxes will never be truly simple for all but, despite Tomlinson's protestations, the House and Senate bills would simplify taxes for most Americans.
The House measure simplifies the tax code by scrapping most itemized deductions and nearly doubling the standard deduction to $12,200 for single taxpayers and $24,400 for married couples.
And, in a masterstroke of simplicity, the House bill also abolishes the Alternative Minimum Tax. Grapple with the AMT and you'll soon understand why it has been derided as the " epitome of pointless complexity."
Larger Federal Debt
In what's meant to be a criticism, Tomlinson charges: "Congress' own nonpartisan Joint Tax Committee reports that tax cuts will add about 0.8% to gross domestic product over the next decade, not nearly enough to raise new tax revenues for this bill to pay for itself."
Given that the Congressional Budget Office projects U.S. economic output will total nearly $237 trillion over the decade, a 0.8% increase would boost that number by $1.9 trillion. That's the equivalent of adding Italy's economy to our own.
When the economy grows, that means that wages, salaries, and income from savings grows. That additional output — in this case, the size of Italy — is additional income for workers and savers. And it is far larger than the loss of revenue to the government. Tax reform should be about raising the people's income, not the government's.
The nonpartisan Tax Foundation believes the Joint Committee on Taxation severely underestimates the positive impact tax reform would have on the economy. It estimates the House-passed bill would add $6 trillion to gross domestic product over the decade — the equivalent of adding Italy three times over!
So, yes, Tomlinson is correct that the tax reform measures would add to the federal debt. But for every dollar added to the debt, the economy would grow by $1.90, and perhaps considerably more.
Carterteaches at Johns Hopkins University and heads the Washington, D.C. office of a Fortune 500 company. Previously, he served as the head of tax policy implementation on President Trump's transition team and was a deputy assistant secretary of the Treasury under President George W. Bush.
The first time ended badly, so when, 156 years later, Alabamians were incited to again try secession, this time from the national consensus that America is a pretty nice place, they said: No. No, that is, to rubbish like this:
Interviewer: "(Ronald Reagan) said that Russia was the focus of evil in the modern world."
Roy Moore: "You could say that very well about America, couldn't you?"
Interviewer: "You think?"
Moore: "Well, we promote a lot of bad things, you know."
Moore: "Same-sex marriage."
Interviewer: "That's the very argument that Vladimir Putin makes."
Moore: "Well, then, maybe Putin is right, maybe he's more akin to me than I know."
In April, Alabama's Republican governor, Robert Bentley, resigned one step ahead of impeachment proceedings arising from his consensual affair with an adult woman. Eight months later, Alabamians spurned presidential pleas that they send to the U.S. Senate a man credibly accused of child molestation. But the dispiriting truth is this: Behavior that reportedly got Moore banned from the Gadsden, Alabama, mall was, for most Alabama Republicans, not a sufficient reason to deny him a desk in the U.S. Capitol.
Although the president is not invariably a stickler for precision when bandying factoids, he said the Everest of evidence against Moore did not rise to his standards of persuasiveness. This fleeting swerve into fastidiousness about facts came hard on the heels of his retweeting of a video of a Muslim immigrant in the Netherlands beating a young man holding crutches. Except the villain was born and raised in the Netherlands. Undaunted, Trump's remarkably pliant spokesperson, Sarah Huckabee Sanders, defended her employer from the nitpickers: What matters, she said, is not that the video is unreal but that "the threat" (of turbulent Dutchmen?) is real.
Moore was such a comprehensive caricature — Sinclair Lewis could not have imagined this Elmer Gantry — that the acid rain of reports about his sexual predations, and his dissembling about them, almost benefited him by distracting attention from: the remunerative use he made of a "charitable" foundation. And his actions as a public official that by themselves sufficed to disqualify him from any public office. He is an anti-constitutional recidivist, twice removed from Alabama's highest court for his theocratic insistence that his religious convictions take precedence over U.S. Supreme Court decisions, so he could not have sincerely sworn to "support and defend the Constitution" and to "bear true faith and allegiance to the same."
XWhen reports of Al Franken's misbehaviors against adult women surfaced, the National Republican Congressional Committee pounced: "Democrats who took Senator Franken's campaign money need to ... return his donations." (Combined, they totaled $15,500.) When, 18 days later, Trump endorsed Moore, the Republican National Committee immediately sent $170,000 to Alabama. If the RNC, which accurately represents the president's portion of the party, did not have situational ethics it would have none.
Moore has been useful as a scythe slicing through some tall stalks of pretentiousness: The self-described "values voters" and "Evangelicals" of pious vanity who have embraced Trump and his Alabama echo have some repenting to do before trying to reclaim their role as arbiters of Republican, and American, righteousness. We have, alas, not heard the last from them, but henceforth the first reaction to their "witness" should be resounding guffaws.
Elation is in order because a gross national embarrassment has been narrowly avoided. But curb your enthusiasm because nationally, as in Alabama, most Republicans still support the president who supported the credibly accused child molester. Alabama, however, has perhaps initiated the inevitable sorting of Republicans who retain a capacity for disgust from the Vichy Republicans who have none. After the president's full-throated support of the grotesque, he should be icily shunned by all but his diehard collaborators. For example: When the president stages a signing ceremony for the tax legislation, no etiquette requires any Republican to be photographed grinning over his shoulder. Stay away.
By basking in the president's approval, Moore became a clarifier. Henry Adams, great-grandson of the second president and grandson of the sixth, was unfair to the 18th when he wrote, "The progress of evolution from President Washington to President Grant, was alone evidence enough to upset Darwin." By joining Steve Bannon's buffoonery on Moore's behalf, the 45th president planted an exclamation point punctuating a year of hitherto unplumbed presidential depths. He completed his remarkably swift — it has taken less than 11 months — rescue of the 17th, Andrew Johnson, from the ignominy of ranking as the nation's worst president.
The House of Representatives and Senate have now approved separate plans to overhaul the federal tax system. It now appears likely that a reconciliation process will quickly produce legislation that can pass both chambers of Congress and be signed into law by President Trump.
The tax bill will help the Federal Reserve, too. With improved economic performance, Fed officials can move with greater confidence to normalize monetary policy and rein in the scope of monetary policy by refocusing their efforts on stabilizing inflation.
Although Congress has given the Federal Reserve a dual mandate to achieve both price stability and maximum sustainable employment, the Fed makes its best contribution to maximizing employment by creating and maintaining an environment of stable prices.
That was Milton Friedman's main message in the Presidential Address he gave to the American Economic Association 50 years ago, in December 1967.
XThis lesson was learned the hard way by the Fed during the 1970s, when its attempt to exploit a perceived Phillips curve trade-off to lower unemployment at the cost of higher inflation led, instead, to the worst of both worlds: high unemployment and high inflation.
The subsequent Volcker-Greenspan consensus of successfully pursuing low inflation and inflationary expectations that evolved from the misguided policies of the 1970s supported healthy economic performance during a period commonly referred to as The Great Moderation.
Outgoing Fed Chair Janet Yellen re-emphasized Friedman's message on the limited capabilities of monetary policy in an important speech last March, in which she attributed much of the disappointingly slow growth in employment and income since the Great Recession to "structural challenges that lie substantially beyond the reach of monetary policy."
Echoing Friedman, Chair Yellen noted, more specifically, that:
"Monetary policy cannot, for instance, generate technological breakthroughs or affect demographic factors that would boost real GDP growth over the longer run or address the root causes of income inequality. And monetary policy cannot improve the productivity of American workers. Fiscal and regulatory policies — which are of course the responsibility of the Administration and the Congress — are best suited to address such adverse structural trends."
The Trump administration has already taken first important steps to reduce some of the burdensome regulations that have raised operating costs and been the source of inefficiencies that have constrained growth.
Regulatory reforms that affect labor markets, licensing agreements, the food and drug industries, power production, and a host of other areas have been a primary source of elevated business confidence. The higher confidence has contributed to stronger business investment and, if continued, will also promote labor productivity gains.
The corporate tax reforms at the heart of Congressional bills, particularly lower marginal tax rates, expensing of new investment, and the move toward a territorial system of international income taxation, will raise expected after-tax returns on investment.
Additionally, the one-time low tax on repatriated cash and assets that corporations now hold overseas will put that valuable capital to work, whether businesses use the funds to invest in expansion plans or distribute them to shareholders. At the same time, workers will benefit from higher wages.
Both higher expected rates of return on investment and enhanced economic performance will put upward pressure on real interest rates and, by extension, the "natural" interest rate. In response, it will be appropriate for the Fed to quicken its monetary policy normalization with additional increases in its federal funds rate target.
This rise in policy rate will be a reflection of the stronger economy, and will be necessary to prevent inflation from overshooting the Fed's long-run two percent target. These monetary policy actions will work, therefore, to prolong rather than threaten the ongoing economic expansion.
Likewise, improved economic performance should give Fed increased confidence to move more quickly in reducing the size of its balance sheet, unwinding the effects of its three massive waves of quantitative easing.
With mortgage markets functioning normally, the Fed should scale back its role in the mortgage and other credit markets, reducing asset price distortions and allowing funds to be allocated more efficiently across competing uses. Once again, more rapid policy normalization will contribute to an environment more conducive to healthy long-run growth.
Congressional tax plans will provide more than just a short-term boost to the economy. They will provide the Fed latitude to remove itself as an outsized force in the credit markets and refocus on its traditional central banking role of stabilizing prices. Fiscal and monetary policy will then be working together to create preconditions for a more robust and durable economic expansion.
Levy is the chief economist of Berenberg Capital markets, LLC for the Americas and Asia and a member of the Shadow Open Market Committee. The views expressed in this column are the author's own and do not reflect those of Berenberg Capital Markets, LLC. This piece originally appeared on the Manhattan Institute's Economics21.org blog.
A cascade of embarrassing details has poured out over the last few weeks on how special counsel Robert Mueller's staff is a gang of Democratic partisans with a rooting interest in Hillary Clinton in 2016. Mueller deputy Andrew Weissman even attended the doomed election-night Clinton "victory party" in New York.
Those news items are pouring out from every direction except the "news" media.
The network anchors can barely mention the fact that senior FBI agent Peter Strzok was removed from Mueller's team months ago for exchanging anti-Trump, pro-Hillary text messages with the woman with whom he was having an affair, who was another FBI official. Or that former Associate Deputy Attorney General Bruce Ohr met with ex-British spy Christopher Steele and the opposition-research firm Fusion GPS, which assembled a dossier of unverified dirt on President Trump. They're not outraged that Mueller and Justice Department officials have kept these facts from Congress. Mueller is stonewalling Congress; the media are stonewalling the public.
It's apparently distasteful to report that among the 15 Mueller lawyers, nine are Democratic donors — several of whom contributed to Clinton's 2016 campaign. Jeannie Rhee donated to Clinton and former President Obama and defended The Clinton Foundation against a racketeering lawsuit. Rhee even represented Clinton personally to prevent the release of her emails. Aaron Zebley represented Justin Cooper, the former Clinton aide who helped set up her private email server and destroyed several of her mobile devices to obstruct investigations.
This information isn't disturbing to the "objective" media. Reporting it is. CNN host Don Lemon found it "shocking" that there has been a "huge rise in anti-Mueller and FBI rhetoric from right-wing media recently." This is how CNN greets facts it doesn't like: It says they are merely "rhetoric" from ideologues. They run against The Narrative.
To see how The Narrative is concocted, see Time magazine's gushing tribute to Mueller in its Person of the Year issue — as if a June cover story titled "The Lie Detector" wasn't enough. In the issue, he's called "A prosecutor known for rigor and rectitude goes after the president's men."
XTime's Massimo Calabresi gushed, "the special counsel has held the country in his thrall" with "rare bipartisan support and a team of veteran cops and prosecutors." Why, "There is barely a handful of people in all of America with the reputation and experience to take on the task of untangling a multipronged Russian influence operation." Mueller is snidely juxtaposed against "the arrival in our nation's capital of a roguish figure elected on the exhilarating notion that rules are to be flouted."
This is how Democratic hacks write copy. Somehow, the Clintons have never been roguish figures who demonstrated that all the rules in their way would be ignored.
On the criticism of Mueller's partisanship and stonewalling, Time says: "The pressure has hurt the President more than the prosecutor. Mueller is a lifelong registered Republican." There was no mention in its ridiculous puff piece of any Democratic partisanship on Mueller's staff. None at all.
For contrast, recall Time's Men of the Year issue at the end of 1998. Back then, anti-Kenneth Starr commentary wasn't "shocking." It was mandatory. Time insisted Starr had engaged in a witch hunt and "disastrously" included stark sexual details in the Starr Report. The magazine responded to Clinton's impeachment with moral equivalence, saying: "The more Starr pushed, the more Clinton stalled. And in the end, each drove the other to a kind of madness." Time concluded that "like Bill Clinton, he still dreams of being found not guilty."
But Time now insists Mueller is "the personification of the idea that rule of law remains paramount." There's a reason these "news" magazines have crumbled: They are only trustworthy if what you want to read is a Democratic National Committee talking-points memo.
Bozell is the president of the Media Research Center. Graham is director of media analysis at the Media Research Center and executive editor of the blog NewsBusters.org.
This week, America found a new cause to rally around: Keaton Jones. Keaton is a middle school student who was apparently viciously bullied at school for the crime of having a scar on his head from the removal of a tumor. His mother filmed a video of him crying as he explained that other kids had poured milk over his head and mocked him; through his tears, Jones questioned why kids treat one another this way.
The video was absolutely heartbreaking.
It was particularly painful for me. I skipped two grades. By the time I hit sophomore year of high school, I was half a foot shorter and 40 pounds lighter than the other kids. The other kids had been in classes together for years; I was a newcomer. That meant being physically shoved into trash cans and lockers. On one overnight trip, some of my classmates handcuffed me to a metal-framed bed and then hit me repeatedly on the rear with a belt. I pretended to sleep through it, and rather unconvincingly.
So I know what Keaton went through. Being bullied makes you feel like a bottle about to burst — the frustration eats away at your stomach lining and makes you dread going to school. It makes you miserable; even when you're happy, you're constantly waiting for the next shoe to drop.
Still, I don't think Jones' mom should have taken that video.
I think that for two reasons. First, all the celebrity Jones has achieved here won't help him when the cameras turn off. The bullies will still be there, but they'll be twice as cruel, thanks to their belief that he has made fame and fortune off of them. They'll seek to justify their bad actions with more bad actions.
Second, Jones himself isn't going to be helped by this in the long term. No child should have to be bullied, and if someone ever tries to bully my kids, I'll step in with the full range of possibilities at my disposal. But being bullied can have two possible effects: You learn to stand up and cope, or you learn to identify as a victim. If you can hold your head up high even while you're being bullied, you're likely to live a stronger, happier, fuller life. That doesn't mean you're going to be able to knock out the bully a la Daniel in "The Karate Kid." But it does mean you'll be able to better deal with the vicissitudes life has to offer. Those won't end with middle school.
We worry — rightly — about bullying in schools. But we should also worry about how victims treat their victimhood and how they can turn that victimhood into strength for the long haul. Our society has sympathy for victims of bullying, as it should. But we should recognize that just as a wounded animal must be prepared to re-enter the wild lest it die in wild conditions, children must be prepared to live in wild conditions. Those conditions represent life for most people at most times. We can and should stick up for victims against bullies. But we should also focus on empowering victims to become the future bulwarks against bullying — for themselves and for their children.
Shapiro is host of "The Ben Shapiro Show" and editor-in-chief of DailyWire.com.
Climate Change: It's a heart-rending video: The National Geographic tape shows a plainly starving, shockingly thin polar bear rummaging for food. It's near death. The tragic scene went viral on the internet.
"When scientists say bears are going extinct, I want people to realize what it looks like," said SeaLegacy photographer Paul Nicklen, whose video of the bear was later shared online by National Geographic.
And, of course, the media wasted no time in fixing blame: global warming.
The New York Times came right out and said it: "Experts and environmentalists say the broad answer — however controversial and nuanced it may be — is to reduce the present levels of global greenhouse gas emissions in order to curb global warming. In January, federal wildlife officials issued a report that called climate change the biggest threat to the survival of the polar bear."
Not to be outdone, Britain's leftist The Guardian newspaper laid it on thick: "Video footage captured in Canada's Arctic has offered a devastating look at the impact climate change is having on polar bears in the region, showing an emaciated bear clinging to life as it scrounged for food on iceless land."
Cristina Mittermeier, co-founder of SeaLegacy, the group that actually shot the footage of the starving bear, called the video the " face of climate change" in an Instagram post.
X Unfortunately, the global warming guilt-mongering by the media and their allies in the green movement is almost entirely false.
Both the media accounts above and several others noted the lack of ice. But the area in question where the polar bear was wandering lacks ice every year at that time. They call it "summer." So the lack of ice proves nothing, other than the utter tendentiousness of what passes today for environmental reporting.
The fact is, polar bears get diseases like parasites and cancer just like any other animal — or humans, for that matter. The bear in question is plainly starving, but it's not clear why.
It's important to note, however, that starvation is a leading cause of death among polar bears, especially the old and the young. Though they have no real predatory enemies, they can be outfought for food by bigger, more robust bears.
Even the National Geographic, which put out the video, was somewhat circumspect in its conclusion about the bear, noting, "As a whole, polar bear populations around the world are not in immediate peril."
Nor are polar bears in peril where the starving bear was filmed, on Baffin Island.
As the Canadian Post noted, "According to data collected by the federal government, polar bears along the entire west coast of Baffin Island are 'stable.' On the southeastern side of the island (around the Nunavut capital of Iqaluit) polar bears have even experienced a 'likely increase.' It's only on the island's northeastern corner — in a management area that meets Greenland — that polar bears are suspected to be in decline."
This is not science, nor is it documenting the "effects" of climate change as some would have it. It's mere green propaganda.
"One starving bear is not evidence of climate change, despite gruesome photos," wrote Susan Crockford, a zoologist, on her website " Polar Bear Science."
It should be noted that in other countries with significant polar bear populations, including Norway and Russia, polar bear populations are increasing. On Norway's Svalbard Island, for instance, the Norwegian Polar Institute reported a 42% increase from 2004 to 2015. Russia also reports increases.
A far cry from mass starvation of polar bears due to global warming.
This is an old trick of the environmentalists, who long ago discovered that people care a lot about so-called "charismatic mega-fauna" like whales, polar bears, lions and the like. So as soon as they get their hands on a heartbreaking video like this one, they exploit it to its maximum potential.
Like everyone else, we felt sympathy for the stricken bear. But it's both dishonest and wrong to exploit a dying animal for your political cause — especially one that would involve a massive change in the global economy, increased poverty and thousands of human deaths just to reduce the Earth's temperature by a few thousandths of a degree.
Election Meddling: With every new revelation, the "dossier" on President Trump, which got the entire Trump-Russia-collusion story going, looks more and more scandalous. Not because of what it reveals about Trump, but what it is revealing about behind-the-scenes efforts to ruin his presidency. The latest twist involves a senior Justice Department official who was just demoted for his connection to it.
When the existence of the now-discredited dossier first came to light, it was described simply as information compiled by a former British intelligence operative with a high degree of credibility in the spy community.
The fact that a two-page summary had been presented to Trump and President Obama in early January lent it still more credibility. As one news outlet put it, the dossier was "credible enough to warrant inclusion of their claims in the highly classified report on Russian interference in the presidential campaign."
From that point on, it was treated as an authoritative report pointing to Trump's collusion with Russians to meddle in the U.S. election.
It was only much later — and long after its phony claims had been seared into the public's consciousness — that the truth about this dossier started to emerge.
And everything that we've learned since has seriously undermined its credibility, while raising troubling questions about how the FBI and the Justice Department under Obama used it.
X We also learned that, despite the dossier's highly dubious claims and its partisan provenance, the FBI under Obama embraced it.
In fact, just a few weeks before the election, the FBI tried to hire Christopher Steele to continue his work. And then it purposely raised the dossier's credibility — and got its details outed in the press — by handing that summary over to Trump and Obama just before Trump was sworn in.
The big remaining question is whether the Obama administration used the dossier as an excuse to wiretap Trump campaign officials, unmask their names and leak information to the press.
The latest twist in this regard came last week, when the Justice Department demoted Bruce Ohr, who was associate deputy attorney general, after Fox News reported that Ohr had held secret meetings with the dossier's author, Christopher Steele, before the election, and with Fusion co-founder Glenn Simpson shortly after the election to discuss the dossier.
We now learn that Ohr's connection to Fusion GPS was closer still — since his wife worked there while the dossier was being compiled.
At best, this shows a clear conflict of interest on Ohr's part that should have been disclosed long ago. At worst, this latest revelation supports the contention that top Justice officials and the FBI were working with Democrats to keep Trump out of the White House, which in case anyone cares, is highly illegal. And then when that failed, they colluded to wreck his presidency.
As the Washington Examiner's Byron York put it, "with news of Ohr's contacts with Steele and Simpson, Republicans on Capitol Hill — and perhaps some Democrats, too — will wonder just how far the Obama Justice Department officials went in the effort to stop Trump."
House and Senate Republicans are working this week on compromise tax-overhaul legislation in an effort to send it to President Donald Trump as soon as next week. Here are the latest developments, updated throughout the day:
XHouse and Senate negotiators are planning to limit the deduction for mortgage interest to loans of $750,000 or less, according to Representative Tom MacArthur, a New Jersey Republican.
MacArthur said the $750,000 limit would be positive for his district compared to the House bill. He added that lawmakers are still discussing whether to allow a deduction for state and local income taxes as part of a proposed cap of $10,000 for property taxes. He also said he's pushing to preserve a deduction for large medical expenses that the House bill would called for eliminating.
Current law limits the mortgage deduction to loans of $1 million or less. The tax break is one of the sticking points House and Senate lawmakers have been trying to resolve this week. The House bill calls for slashing the deduction cap for new purchases of homes in half -- to loans of $500,000 or less. The Senate legislation preserved the current limit.
The deduction is a cherished tax break that benefits many upper-middle-income and wealthy families. Limiting it would help to generate revenue to offset other tax code changes.
House and Senate negotiators are leaning toward setting a top individual rate of 37%, according to two people familiar with the negotiations. The people asked not to be named because the discussions are private.
The situation was fluid as negotiations continued Tuesday.
Lawmakers have been working to reconcile differences between the House and Senate tax bills. The House bill would keep the top individual rate at the current 39.6% level, but adjust it to apply to taxpayers earning more than $1 million a year. The Senate legislation lowers the rate to 38.5% for those earning more than $1 million
Republican tax negotiators are also pushing to set a deduction of 20% on business income for pass-through owners, according to the two people. That formula would follow the Senate provision for pass-through businesses such as partnerships, limited liability companies and sole proprietorships. But the Senate bill established a 23% deduction, after efforts by Senator Ron Johnson of Wisconsin and Steve Daines of Montana to make the provision more generous.
A 20% deduction with a 37% top individual rate would effectively give top-earning pass-through owners the same top rate as a 23% deduction with a 38.5% top rate — roughly 29.6%.
"What they're talking about, it works out for me," Johnson told reporters Tuesday. "It's a combination of other things."
House and Senate negotiators are leaning toward setting a corporate rate of 21%, according to three people familiar with the negotiations. The people asked not to be named because the discussions are private.
Slashing the corporate rate from 35% has been a cornerstone of the GOP tax overhaul -- the House bill calls for a 20% rate effective in 2018, while the Senate legislation also calls for a 20% rate, but delays it from taking effect until Jan. 1, 2019.
President Donald Trump sparked discussions about a higher rate on Dec. 2 when he backed off his red line of a 20% rate in the final package. Negotiators have considered using what could be an extra $200 billion in revenue from setting a higher rate of 22% to make up for additional costs expected in the final package, such as expanding the state and local property tax exemption of up to $10,000 to include income taxes. A corporate rate of 21% is estimated to generate an additional $100 billion to offset other tax code changes.
Conservative activists have demanded that congressional Republicans negotiating a final tax package hold the line on a 20% corporate tax rate, and reject proposals to set it at 22%.
"We all are still in intense discussions with our colleagues on the House side," Senate Majority Leader Mitch McConnell said earlier Tuesday.
"We hope to wrap it up pretty soon," said McConnell
New York's Senator Kirsten Gillibrand is spearheading a McCarthyite-purge of sexual harassers from Congress, throwing the nation's capital into turmoil.
What counts as sexual harassment? Good question. Men accused of boorish gestures or vulgar remarks face the same disgrace as outright rapists. And never mind if the accusations lack proof and the accusers remain anonymous.
Same is true of the charges dredged up this week against President Trump. You heard them last year when he was campaigning for president.
One accuser, Jessica Leeds, said that forty years ago Trump groped her on a plane. But reporters were not able to confirm the flight, date, or even year the incident was supposed to have occurred and couldn't track down one witness to support her story.
The same was true with several other accusers. No facts. No wonder the public dismissed the claims and elected Trump.
On Monday, Leeds and two other accusers reiterated their old, unsubstantiated charges at a press conference. In response, six Democratic Senators, including Gillibrand, are calling for Trump to step down from the presidency. It's as if the #MeToo movement lessens the standard of proof and makes due process unnecessary.
That's what's happening in Congress too. Take the anonymous former campaign worker who's accusing Rep. Ruben Kihuen, D-Nev., of touching her thigh twice, making her feel uncomfortable. Kihuen denies it, but House minority leader Nancy Pelosi commends the woman for coming forward (anonymously?) and demands that he resign.
What about Kihuen's right to a fair hearing and the presumption of innocence? Pelosi and the sex vigilantes are all too ready to toss due process in the wastebasket.
Gillibrand conceded Senator Al Franken, D-Minn., was entitled to a Senate Ethics Committee investigation, but last week, she was out front bullying him into resigning immediately. That's like saying the accused is entitled to a fair trial, but let's execute him first.
Same thing happened to John Conyers, D-Mich., who insisted on his own innocence and at first rejected calls to resign. But ultimately he was forced out on December 5.
Franken's alleged to have forcibly kissed a fellow actor, and touched several women inappropriately during photo-ops. One accuser says when "we posed for the shot he immediately put his hand on my waist, grabbing a handful of flesh. I froze. Then he squeezed. At least twice." That's it?
Rep. Blake Farenthold, R-Texas, is accused of bantering that he had "wet dreams" about a female staff member, who says she was fired for complaining about it. Farentholdt denies it. Yet Republican Mia Love, R-Utah, striving to keep up with sex bully Gillibrand, is calling on Farenthold to step down immediately, without a House Ethics Committee hearing.
Then there's Rep. Trent Franks, R-Texas. Distressed that he and his wife couldn't conceive, he asked two office aides to bear his child as a surrogate, offering one of them $5 million. Last week, House Speaker Paul Ryan, not to be outdone by the sex vigilantes on the left, demanded Franks resign for his blundering behavior.
A fair penalty? Since the Civil War, only two members of Congress have been expelled, both for multiple felonies like bribery and tax evasion. Even New York Congressman Charlie Rangel, found guilty of 11 counts of violating congressional ethics rules in 2010, was only censured, not asked to resign.
Only once did Congress threaten a member with expulsion for sexual misconduct. In 1995, the Senate ethics committee voted to expel Senator Bob Packwood, R-Ore., after reviewing 10,145 pages of evidence, of "habitual pattern of aggressive, blatantly sexual advances" and destruction of evidence. They had the goods on him.
Sexual harassment holds women back. Good riddance to it. But in the zeal to right that wrong and to preen as defenders of women, politicians are trampling American values — due process, the presumption of innocence, and penalties that fit the crime. These are too precious to lose.
McCaughey is a senior fellow at the London Center for Policy Research and a former lieutenant governor of New York state.
The Federal Communications Commission will soon vote to undo net neutrality, an Obama-era power grab. Despite many claims to the contrary, this move by the FCC would be the right decision for consumers and end the agency's micromanagement of the internet.
Analysts expect the FCC on Dec. 14 to roll back a 2015 policy called the Open Internet Order, in which the FCC determined it possesses the legal authority under the Telecommunications Act of 1934 to regulate internet service providers (ISPs) using rules intended for phone companies and electric companies.
The rules, commonly referred to as "net neutrality rules," were initiated by former FCC Chairman Tom Wheeler, who served under President Obama. Before Wheeler decided to take over the internet, ISP regulation was successfully handled for decades by the Federal Trade Commission. Wheeler's order put five unelected government regulators at the FCC between consumers and ISPs, drastically expanding FCC's power.
Over the past decade, the debate over net neutrality has been warped by activists who support government having a significant role in the operation of the internet. When properly defined, net neutrality has traditionally meant consumers should be able to access the legal content they want using the legal applications and devices they want. For example, a network owned by Spectrum Cable should not be permitted to block data going to and from an AT&T customer's router.
The present debate has virtually nothing to do with this idea, however. Instead of being a fight over anti-competitive business practices, today's net neutrality debate is about something called "paid prioritization," a technical term used to describe an agreement between a content provider and a network owner. Under a paid prioritization agreement, a content provider's data can travel on less-congested network routes in exchange for an agreed-upon fee.
X Like taking a toll road, when networks are clogged with data during high-traffic times of the day, prioritization agreements allow consumers to receive requested data faster. All kinds of data — emails, funny cat videos, your Twitter feed — travel over the internet, but some data types are more tolerant of delays or temporary congestion than others.
The bits comprising an email don't need to arrive at a recipient's computer all in the same order they were sent in, but other kinds of data, such as video or audio, are less tolerant of delays. Receiving the data bits in the wrong order or at the wrong time can cause distortions, stutters and other playback problems.
Imposing net neutrality on the internet is similar to empowering the U.S. Department of Transportation to mandate no one is allowed to pay to travel along well-maintained toll roads instead of a clogged government-funded highway during rush hour. Instead of mandating "neutrality," when FCC created the net neutrality rules, it imposed the equality of mediocrity for internet content providers.
By getting government out of the business of telling ISPs how to run their networks, the current FCC is working hard to undo the agency's past excesses, putting consumers and private businesses back in charge of how the internet operates.
Progressives in Massachusetts believe they've taken the first step toward a government-run, single-payer health care, thanks to a bill that passed the state Senate in November.
The measure would, among other things, commission a study to analyze the cost of a statewide single-payer system. If the tab is less expensive than the status quo, lawmakers would be obligated to start transitioning to such a system. The bill will soon head to the state House for consideration.
But the Bay State's cheerleaders for single-payer shouldn't get their hopes up. Studies conducted in other states have found that implementing single-payer requires tens of billions of dollars in new taxes. Voters and legislators are unlikely to approve of such an eye-watering price tag — not to mention the rationing of care endemic to single-payer systems.
Massachusetts isn't the first state to consider single-payer. Vermont, Colorado, California, and New York have all done so recently. And they've all concluded that such a program would be too expensive.
Vermont — home of the pied piper of single-payer, Sen. Bernie Sanders — was the first to reject it. In 2011, then-Gov. Peter Shumlin signed a single-payer bill into law. But by 2014, he had abandoned his push. He concluded that the new 11.5 percent payroll tax on businesses and 9.5% income tax required to fund the program "might hurt the economy."
Last year, Colorado voters rejected Amendment 69, a ballot initiative to replace private health insurance with a single government-run health plan called ColoradoCare, by an 80-20 margin. The measure would have required a new 10 percent payroll tax. The program's yearly budget would have approached $36 billion — and thus more than doubled the state budget. Even Democratic Governor John Hickenlooper discouraged voters from supporting the amendment.
XColoradoCare's price tag is a fraction of that for California's proposed single-payer system. The Healthy California Act, which passed the state Senate 24-13 in early June, would run $400 billion a year, according to an analysis by the chamber's Appropriations Committee. A more sympathetic review, conducted by University of Massachusetts, Amherst, economist Robert Pollin, estimated the bill's cost at $331 billion.
Healthy California's proponents claim that much of that money would come from the federal government, as beneficiaries of Medicare, Medi-Cal, and other federal programs are folded into the new state system. But the state would still have to raise about $200 billion; the Senate Appropriations Committee thinks a 15% payroll tax would be needed to do the trick.
New York's State Assembly recently green-lit a similar single-payer proposal that would cost an estimated $226 billion by 2019. That's more than three times what the state currently collects in taxes.
Single-payer's proponents claim it's a bargain for ordinary people. Sure, they may pay more in taxes. But they no longer face premiums or deductibles. And single-payer cuts for-profit insurers out. So overall healthcare spending must be lower.
Not necessarily. The California state Senate's Appropriations Committee estimated that the Healthy California Act would require new spending of between $50 billion and $100 billion per year.
The only way Massachusetts or any other state can reduce health spending under single-payer is by paying doctors, hospitals, and drug companies less than they would earn in a more market-oriented system. Providers respond by curtailing how much care they'll provide. And that results in long waits for patients.
Single-payer systems around the world rely on this low-reimbursement approach — with disastrous results. Patients in the United Kingdom's single-payer system, the National Health Service, commonly wait more than a year for basic operations.
Canada's single-payer system is no better. In 2016, patients waited a median of 20 weeks between referral from a general practitioner and receipt of treatment from a specialist. This is more than double the median wait time of 9.3 weeks in 1993. It's no wonder more than 63,000 Canadians left the country last year to obtain treatment elsewhere.
Here at home, the single-payer Veterans Health Administration, is failing our nation's heroes. Despite a $15 billion reform effort launched in 2014 to clean up the agency, the VA remains a hotbed of incompetence. In 2015, more than 200 patients died while waiting for care at a Pheonix VA medical center. More than one in three veterans who call the VA's suicide hotline don't get through to a professional.
This is precisely the kind of ineptitude and tragedy that Massachusetts can expect if it turns its health sector over to government bureaucrats. If Bay State lawmakers insist on pushing forward with single-payer, taxpayers and patients should brace for higher costs and worse care.
Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The Way Out of Obamacare (Encounter 2016). Follow her on Twitter @sallypipes.
Republicans are supposed to be the party that cuts the job-killing capital gains tax, not raises it. But because of a quirk in the Senate-passed tax bill, the tax on capital gains may go up — and for some types of long-held assets, fairly substantially.
Most members of Congress don't even know of this stealth capital gains hike. Here's the story: At the start of the year, Republicans promised to reverse the near-60% rise in the capital gains tax under former President Barack Obama — a hike that helped bring investment rates to historic lows.
The GOP plan was to eliminate the Obamacare 3.8% investment-tax surcharge on capital gains and dividends? That repeal never happened.
But now, the Senate tax-reform bill proposes to raise several billion over the next decade by changing the rules on how stocks are taxed.
It would require shareholders to sell their oldest shares in a company before their newest purchased ones. The older the share, the larger the taxable capital gain. This is called the first-in, first-out accounting system.
Consider this example: Let's say you bought 100 shares of Apple stock in 1998 at $100 a share?, and then you bought another 100 shares in 2008 at $300 each. If you were to sell 100 shares at $500 a share, you would have to "sell" the oldest stock and pay a $400 per share capital gains tax, versus $200 a share under the current law.
XNow, this accounting change may actually make sense, except that the gains on long-term stocks are not adjusted for inflation.
So on many sales of long-held stock, as much as half of the reported and taxable "gain" is due to the compounding effect of inflation. The actual capital gains tax paid could more than double for many stock and asset sales.
Therefore, the Senate rules would require millions of Americans to pay taxes on phantom or illusory gains. That is patently unfair and would discourage the very long-term investment that economists and politicians agree that we need.
If you were to give us $1,000 today, we would be glad to give you $1,500 25 years from now, because inflation is likely to run ahead of that pace. Believe us — you haven't made a $500 profit on this transaction. But the government thinks you have.
There are other huge inequities in this new policy. Under the Senate bill, there's an exception for mutual funds, exchange-traded funds and other institutional funds. They would continue to apply the tax treatment under current law.
So get this: The little guy who wants to buy and sell stock on his own has to pay the higher capital gains tax, but the big investment funds have a more generous set of rules with lower taxes. Huh?
The mutual-fund industry convinced the Senate that conforming to the new rule would be too complicated. That's good news for Fidelity Investments and Vanguard. But what about Joe Lunchbucket? This new rule is complicated for him, too. This law is going to nearly force small investors to purchase stock through the big fund managers — and, of course, pay their fees.
Most important, this is bad for the economy. The higher tax penalty on investment would discourage people from buying stock or investing in small startup companies in the first place.
This would also exacerbate the lock-in effect of the capital gains tax. History shows that when the tax on gains is higher, Americans are much more reluctant to sell their shares and pay the higher tax.
This benefits old, established companies like Boeing and Microsoft but dries up capital for smaller, fast-growing firms that could be the next-generation Apple, Google or Uber.
In other words, this stealth capital gains tax contradicts the entire purpose of an otherwise prosperity-generating tax bill. We want lower business tax rates and investment tax rates to get more growth, more jobs and higher wages. A backdoor capital gains tax would accomplish the opposite.
Kudlow is a senior contributor for CNBC.
Moore is a senior fellow in economics at The Heritage Foundation. His latest book is "Fueling Freedom: Exposing the Mad War on Energy." He served as an economic adviser to the Trump campaign.
Chicago is in the throes of a New York-circa-1970s-style fiscal crisis. Abetted by Illinois' government, the Windy City is adopting one of the borrowing tools that helped New York get its finances in order: a complex municipal bond, structured to protect investors in a possible bankruptcy.
But unlike New York, Chicago and Illinois are using this invention to delay reform.
Chicago has spent two decades digging itself into a hole. Back in 2000, the city had racked up $12.3 billion in debt, in current dollars; now, it owes $20.2 billion. Back then, the debt burden per person was roughly $4,400; these days, it's $7,500.
Even scarier is what Chicago owes to pensioners: $31.5 billion, up from $5 billion in 2000. Last year, Chicago's pension funds took in $900 million from the city and its employees and earned nearly $541 million in investment income, but the fund paid out more than $2 billion.
Chicago has less money set aside in its pension funds today than it did a decade and a half ago.
Illinois and Chicago did try to reform the city's pension plans in 2014. But the Illinois Supreme Court struck down the changes, observing that, though "fiscal soundness is important," the state and city could "not utilize an unconstitutional method" — impairing benefits that the state constitution protected — "to achieve that end."
You would think bondholders would worry. Yet last February, they lent Chicago a fresh $1.2 billion, despite warnings in bond documents that "the retirement funds have significant unfunded liabilities and low funding ratios" and despite the city holding a junk rating.
Customers were willing to buy the bond, maturing in 2029, at about 6% annual interest — above the 3% rate that New York could borrow, but not sufficient to deter Chicago.
Chicago worries that interest rates will rise even higher. The credit cutoff would serve as a powerful signal. Chicago keeps telling retirees and workers, including recent hires, that it can pay pensions that it can't afford.
The city won't stop doing that — until it is forced to.
Rather than heed the marketplace's muted alarm, Chicago and Illinois are trying to turn the alarm off. In August, to maintain the city's ability to borrow cheaply, Illinois passed a law allowing Chicago to issue debt under a more complex structure than "general obligation" bonds.
Some background: A healthy city borrows to build or to maintain infrastructure. It typically has two ways to give investors confidence that it will repay that debt.
First is a "revenue bond," backed by specific user revenues. If a city builds a water-treatment plant, residents and businesses pay a fee for the water, and investors can count on that money to repay the debt.
Second, in cases where infrastructure doesn't pay for itself — local roads — the city will borrow under a "general obligation" and pledge its "full faith and credit" to repay the bond. The implication is that the city will raise taxes or slash spending, or both, if other repayment efforts fail.
When investors no longer believe in that "full faith and credit," a city can borrow money through a third method, pioneered by New York during the 1970s crisis. Saddled by social-welfare obligations, New York could no longer repay its debts, yet it needed to borrow more to provide services while it figured out its budget mess.
New York's financial industry solved this problem by inventing a hybrid bond that combined the strongest features of revenue and general-obligation bonds.
The state would set up a nonprofit entity, known as a "Municipal Assistance Corporation." MAC, as people called it, would borrow the money — and give it to the city.
To repay the debt, MAC would first collect the city's sales taxes from the state, use those revenues to pay its debt obligations, and only then deliver any leftover money to the city.
The sales taxes, in other words, were "securitized" — pledged to protect a certain kind of debt. The new instrument comforted bondholders. They no longer trusted New York City to pay back its own borrowing.
But they felt that they could depend on the new state-chartered corporation to collect the city's money to pay the debt.
The structure, in legal terms, was "bankruptcy remote." New York could file for insolvency — as was then a risk — but the sales taxes would continue to repay the special MAC debt, even in such a bankruptcy.
Ratings agencies approved the new financial instrument, awarding it "A" ratings even as they suspended the city's ratings in the face of default.
The ability to borrow through a safer instrument can buy a distressed municipality time to reduce its spending or raise taxes, or both, in an orderly fashion. After its 2013 bankruptcy, Detroit turned to a MAC-style mechanism.
State governments can also use the power that the mechanism affords to oversee local finances, whether through bankruptcy, as in Detroit, or outside of it, as in New York.
Yet the potential for irresponsibility is evident in Chicago. Thanks to the new Illinois law, Chicago is following New York's 1970s lead, creating a MAC-like organization to issue bonds this fall. Like Gotham, Chicago is securitizing the bonds with sales-tax revenues.
The state will pay the interest on the new debt before sending the remaining funds to Chicago, so as "to achieve higher credit ratings and reduce debt-service costs," noted The Bond Buyer. "The program is designed to bypass the city's weak bond ratings by insulating the bonds and assigned revenues from the risk of being dragged into bankruptcy."
The bond structure will mark the second time in a year that Chicago has issued structured debt. Last winter, Chicago's school district — a legally separate municipality, despite the same tax base — issued a half a billion dollars in bonds through a new instrument designed, as Reuters put it, "to separate the debt from the district's severe financial woes and protect it in a potential bankruptcy."
Yet this mechanism works in the long term only if fiscal reforms accompany it. New York state let New York City issue MAC bonds only if it acceded to a state takeover of its finances. Gotham had to pare spending and hike taxes — and then the city struck luck in the early 1980s, when Wall Street took off.
Chicago, by contrast, will continue to manage its own finances. Further, the city faces a more severe long-term financial outlook. Seventies-era New York experienced a liquidity crisis, which could be solved with higher revenues and a temporary reduction in services.
Chicago is looking at a solvency crisis: Even with tax increases and service cuts (both of which could drive away residents), the city is unlikely to make good on its pension commitments. Illinois, with its own credit rating hovering just above junk and with pension problems in other municipalities, is in a weaker position to help than New York state was.
It's not clear that this bankruptcy-remote structure would protect against losses if Chicago defaults on its general-obligation bonds, anyway. True, New York's bond structure worked; investors were repaid.
But these bonds worked less because of their airtight design than because New York is in a solid fiscal position. Elsewhere, municipal borrowers that issued similar bonds aren't faring so well.
Officials approved the territory's first-ever sales tax, but Puerto Rico didn't trim its budget. Instead, it issued $1.3 billion in new bonds, backed by the sales tax, via a MAC-style outfit, Cofina.
The government warned investors that the borrowing was not backed "by the full faith, credit and taxing power of the commonwealth" — but it reassured them, too, that it would collect more than enough from the sales tax to cover payments. Investors bought the bonds later that year at below 6% interest.
Investors comfortable with Cofina made it possible for Puerto Rico to raise $17 billion, almost as much as it owed in general-obligation bonds. By 2012, the territory owed nearly 100% of its GNP — and its economy was in trouble. Five years later, it would be bankrupt.
Cofina's structure failed to help Puerto Rico establish financial stability, and it failed to protect investors too — the territory defaulted not only on its general-obligation bonds but also on Cofina debt.
It may be years before Cofina bondholders know whether they will do better or worse than general-obligation investors.
Cities and states have an incentive to favor holders of general-obligation bonds. An entity like the one that Chicago has created to issue sales-tax-backed debt has no purpose but to issue such bonds. Like a corporation, it could default and vanish. Chicago, by contrast, will stick around. The city would want to maintain its ability to issue debt after any bankruptcy.
MAC-style securitized debt for municipalities is a good idea if it helps them avoid radical cutbacks — shutting off streetlights at night — in favor of gradual change.
It's not a good idea when it delays change. In devising legal structures to protect bondholders from a crisis, Chicago may make its crisis worse.
Gelinas, CFA, is a senior fellow at the Manhattan Institute and contributing editor to City Journal, whose Autumn issue this was adapted from.
Media Bias: In the span of a few days, two major news outlets came out with huge Trump/Russia bombshells that blew up in their own faces. In both cases, the error involved getting something as simple as a date wrong.
CNN was in a frenzy on Friday over an apparent scoop by reporter Manu Raju, who claimed that an email sent to President Trump, Donald Trump Jr, and others on the campaign — and dated Sept. 4, 2016 — offered Trump access to purloined WikiLeaks documents.
The story, posted on CNN's website at 8 a.m. and carried the headline: "Exclusive: Email shows effort to give Trump campaign WikiLeaks documents," claimed that the email had been "described to CNN by multiple sources and verified by Trump Jr.'s attorney."
A later update to the story also noted that Sept. 4 was also the day that Trump Jr first tweeted about WikiLeaks and Clinton.
Raju noted that the "timeline is important here," because the date on the email was more than a week before WikiLeaks posted these documents on its website.
It looked like a genuine smoking gun — showing how Trump was colluding with WikiLeaks to spread documents hacked by Russia — and spread like wildfire across social media and on other news outlets.
Except the story was completely bogus.
Unlike CNN, the Washington Post obtained an actual copy of the email, and found that it wasn't sent on the Sept. 4th. It was sent on Sept. 14th — after WikiLeaks had posted the documents online and promoted that fact to the world.
In other words, there was no story here whatsoever.
One week before CNN committed journalistic malpractice, ABC News's Brian Ross announced to the world that "Michael Flynn promised 'full cooperation to the Mueller team' and is prepared to testify that as a candidate, Donald Trump 'directed him to make contact with the Russians.' "
That story, too, looked like a smoking gun. It would show that Trump was in fact working with Russians prior to the election. In fact, the news was so shocking it sent the stock market reeling.
But it, too, was false. The meetings in question all took place after Trump had won the election. In other words, they had nothing whatsoever to do with collusion or election meddling.
Reuters and Bloomberg also botched a Trump story last week, when they reported that Special Counsel Robert Mueller had subpoenaed Trump's Deutsche Bank records. He hadn't.
Even the liberal-leaning Politico noted that CNN's disaster "extends (the) run of journalistic mishaps."
This sort of blatant journalistic malpractice, which seems to be getting more egregious the longer Trump is in office, is bad enough.
Worse has been the reaction of fellow journalists, who instead of demanding higher standards from their peers, are busy making excuses, downplaying the importance of the screw-ups, or using these foul-ups as a way to attack Trump.
Consider that in response to Raju's reporting fiasco, CNN said the network had "followed the editorial standards process. Multiple sources provided him with incorrect info."
X So CNN's "editorial standards process" allows reporters to run Trump-bashing stories based entirely on a document it didn't have in hand, but that the Washington Post was able to obtain the same day? How reassuring.
After Ross' epic error, ABC News initially issued a mild "clarification" to the story, and rather than firing him, it suspended Ross for all of a month.
Meanwhile, other reporters, rather than using these failures to take stock of the impact that their raging anti-Trump bias is having on the credibility of their profession, circled the wagons.
USA Today commentary editor Jill Lawrence, for example, decided to twist the episodes into an attack on Trump for his "hypocrisy," because Trump has attacked the media for false reporting even though he has said things media have labeled as "lies."
Lawrence even laughably — and lamentably — claims that Trump's "attacks, falsehoods and secrecy are inspiring great journalism." She goes on to say that "The profession I love is going to emerge from the Trump era stronger than ever."
And they say Trump is delusional?
New York magazine's Benjamin Hart suggested that only real problem with CNN's "incorrect" report was that it "provides fuel for pro-Trump media."
When it comes to tax policy, each side plays its part. Republicans overstate the growth implications of tax reform, and Democrats accuse them of favoring the rich.
When the New York Times' Michelle Goldberg recently described the proposed GOP tax bill as "wretched," and certain to make "the rich richer and the poor poorer," the refrain was so trite that it was difficult to get even a little bit riled up.
X Readers need only consider the Republicans' planned elimination of the state and local tax (SALT) deduction. We actually think the elimination of the SALT deduction is a very good idea. After all, why should Texans and Floridians subsidize Albany's and Sacramento's addiction to spending?
The quid pro quo is that it's revenue neutral to exchange the SALT deduction for 3% lower taxes, across the board. Top-bracket people would pay 3% less in Texas and 3% more in California and New York City.
That's not what's on the table. In the House bill, the rich will pay a 39.6% tax rate, plus 2.35% for uncapped FICA, plus 13% for those who work in California or New York City, for a 55% marginal tax rate. For individuals earning between $400,000 and $1.2 million, there's an effective "bubble" rate of 46%.
Add in uncapped FICA taxes and the top brackets for California or New York City, and the marginal tax rate exceeds 62%. Yowza!
Where was this rate in 2017? The wealthy paid 39.6%, plus 2.35% for uncapped FICA, plus 1.2% for phase-out of deductions, plus 8% (the net cost of state and local taxes in California or New York City, after the tax deduction), for a little over 51% marginal tax rate.
For the affluent, between $400,000 and $1.2 million income, they'll pay 11% more, which means their take-home pay drops 22%. The truly rich, with multimillion dollar incomes, in California and New York, will now pay 4% more than before, which means an 8% pay cut.
The Senate plan trims taxes for the affluent and the rich by 1% relative to the House plan, which leaves the rich in California and New York City with a 6% pay cut.
Republicans who view California and Wall Street as ATMs for their campaigns may be in for a surprise. What if their donors decide not to donate to people who gave them a 6% or 8% — 0r 22%! — pay cut?
The greatest tax reform since Reagan? Pah! Ronald Reagan cut the top rate from 70% to 50% to 28%, and capital gains from 40% to 20%.
Republican voters who believe the Party was put on this earth to reduce spending and taxes are right to be puzzled. In 2017, Republicans are at war with one another over whether to leave the top rate at 39.6% or trim it to 38.5%.
Are we to shed tears for the rich, if this tax bill leaves them 6% or 8% or even 22% poorer? No, they're still rich. But, we may want to consider unintended consequences, which are many and could be severe.
The politics of envy is easy. It's popular to hate the rich, but it's pretty demoralizing — even for the rich — when taxes take over half.
If the owner of your company is tired of the hassle or decides to move the business to a low-tax state, what happens to your job? These are costly disruptions to business, and unintended consequences.
It's no secret that part of the Republican motivation for keeping the top bracket high is a fear of angering the class warfare crowd. C'mon. Republicans will be attacked whether they reduce the tax burden a lot, a little, or not at all. So, they may as well try to do the right thing.
The proposal is billed as the "Tax Cuts and Jobs Act." There are no companies, no innovation, no progress and no new jobs without investment. People generally become rich by introducing ideas, businesses and innovations that enhance living standards.
If they don't provide a product that others want, and thereby improve others' lives, they have no customers. In so doing, they create countless new jobs. Innovators can only animate their ideas when they're backed with investment that generally come from wealthy individuals.
The rich, by virtue of being rich, uniquely have the funds that can be invested in the companies and jobs of tomorrow. By raising taxes on the rich in high-tax states, the Republicans are placing a bull's eye on some of the very individuals most capable of creating the jobs that their tax legislation promises.
If that money is moved to government coffers, will it be invested in invention, innovation, and products that people crave? When was the last time you craved a product — other than a wealth transfer like social security — offered by the government?
All of this raises a basic question: Why the intense focus on the supposed revenue implications of tax relief?
Fearful of their own bold 2016 rhetoric about aggressively shrinking the burden of government, Republicans refuse to cut spending and then forget that tax reform should actually reduce the flow of dollars into Washington. After all, the more Congress spends, the more control it has over the economy.
Another motivation for the GOP's approach might be simple payback. The people who are most hurt reside in Democratic-leaning states. Payback is dangerous. When power changes hands, Republicans could find themselves on the receiving end of tax warfare.
For now, top earners in high-tax states are collateral damage in a war that the GOP should not be fighting.
Arnott is chairman and CEO of Research Affiliates LLC.
Tamny is Director of the Center for Economic Freedom at FreedomWorks.
Tax Reform: Will the tax reform now being readied for takeoff hit some investors hard? It just might. And it's a lesson in why simplicity and equal treatment in tax reform is so important.
The current tax plan in the Senate would make it tougher for holders of long-term capital gains in the stock market to minimize their tax liability, thanks to an obscure proposed change in accounting rules.
The Senate proposal would require those who own shares in a company and who subsequently wish to sell those shares to sell the oldest ones in the portfolio first — an idea known in accounting as "first in, first out," or "Fifo."
Well, it shouldn't be called "Fifo," but Fido, because it's a real dog.
It might sound good and even logical on the surface. But it isn't. And it could have major ramifications for investors, as Bloomberg News aptly notes.
X "The U.S. tax overhaul may severely limit investors' ability to minimize capital gains on stock — driving up the taxes they'd owe if the Senate gets its way," Bloomberg said.
It's even worse than that, and a big reason why those pushing tax reform shouldn't get caught up in trying to offset the supposed "cost" of one tax cut by increasing another tax.
The problem with the Fifo idea is that it severely punishes long-term holders of stocks. Those who sit on long-term stock gains will pay taxes that are much higher due to the long-run compounding effects of inflation — an "inflation tax," if you will.
As economist Stephen Moore argues in IBD today, "on many sales of long-held stock, as much as half of the reported and taxable 'gain' is due only to the compounding effect of inflation."
These are, as Moore rightly notes, "phantom gains," not real ones. The government, in essence, is taxing you for money you never really earned in a real sense.
And that's not the end of it.
The Senate bill excludes mutual funds and other popular investment vehicles run largely by the institutional investment industry. So small-time, individual investors — that could be you — will pay the tax, but not the big guys.
Moreover, in the old system, investors could choose which stocks to sell, and when. That was a boon for charities, since investors would be able at their own discretion to donate their high-tax shares to charity, thereby maximizing the net gain to both the giver and the recipient.
Under the Senate bill, that incentive disappears.
All this complication comes in the service of raising a measly $2.4 billion over the next decade in a bill that's expected to "cost" around $1.5 trillion, according to the Joint Committee on Taxation. It's a major distortion for investors and the economy.
As we've said many times before, we are pro-tax reform. We support this bill. But here, in the final days and minutes, it can still be improved. Getting rid of this awful provision would do just that.
It's important to note that true tax reform is also tax simplification and should focus on true fairness — that is, all taxpayers being treated equally by the tax code.
This Fifo provision violates both of those requirements and should be removed immediately. For small investors, it's an ugly blemish on an otherwise mostly noble effort at tax reform.
This provision exists due to politics, not economics. If for some reason it's not eliminated, it should be a top priority in the next Congress to get rid of it.
The Senate-passed tax bill is a policy triumph that will provide a shot of performance enhancing drugs into the veins of the economy.
It's not perfect, but the combined effect of cutting business tax rates, eliminating the state and local tax deduction, and repealing the ObamaCare individual mandate tax, means we are at the precipice of the biggest conservative policy victory ?since the Reagan years.
If Republicans were wise, the House would vote immediately to approve the Senate bill, and get it to President Trump's desk for immediate signature before anything can go wrong. Think ObamaCare repeal fiasco.
But since they are insisting on a conference, there are still a number of ways to further improve the bill, grow the economy even faster, and counteract some of the liberal complaints against it.
XSome of these reforms were in the original campaign tax plan that Larry Kudlow and I helped draft for ?then-candidate Donald Trump.
Here they are:
1) No stealth capital gains tax hike.
The Senate bill changes the rules for capital gains taxation. It requires shareholders to sell their oldest shares in a company before their newest purchased shares. The older the share, the larger the taxable capital gain.
This accounting change might make sense except that the gains on long term stocks are not adjusted for inflation. So on many sales of long-held stock, as much as half of the reported and taxable "gain" is due only to the compounding effect of inflation.
So the Senate rules will require millions of Americans to pay additional tax on phantom gains. That is patently unfair and will discourage the very long term investment that the economy needs now.
Worse, under the Senate bill, there is an exception for mutual funds and other institutional funds. Companies like Fidelity and Vanguard would be exempt from the tax, but not the little guy who wants to buy and sell stock on his own. Unfair. Kill it.
2) Repeal the corporate state and local deduction.
Big companies like Boeing, Apple and Microsoft get to continue to deduct their state and local taxes. Small businesses don't.
This is absurd and only shows the continued power of K Street swamp lobbyists. This tax deduction requires companies and families in low tax states to subsidize companies in high tax states. No business or individual should be given this sweet heart favor.
Get rid of the corporate SALT deduction and states like New Jersey, Iowa and Pennsylvania will be forced to cut their corporate tax rates to stay competitive. It's a win win for everyone.
3) ?Cut the highest income tax rate.
The money raised by eliminating the state and local tax deduction for corporations should be used to pay for a reduction in the highest income tax rate. This will provide relief for people living in high tax states like New York, Connecticut, and California (who lose the state and local deduction) and will allow small businesses to get a bigger tax cut as well.
As Arthur Laffer and Steve Forbes always remind us, the highest income tax rate is the one that does the most harm.
4) Close the George Soros Loophole
George Soros just recently gave $18 billion to his family foundation and the money went in tax free. This is possibly the biggest tax dodge in American history. ?Millionaires and billionaires who give money tax-free to private foundations — Gates, Buffett, Zuckerberg, and the rest — should pay capital gains tax on these assets, then give it to the foundation.
This will raise hundreds of billions of dollars for the government over time and can then lead to a lower capital gains tax for everyone.
5) Eliminate the death tax and tax capital gains at death.
The original Trump tax plan called for elimination of the unfair death tax. But it also called for the end of the "step up basis at death" on capital gains. Right now when a rich person dies, he or she can pass on the assets without paying capital gains tax on the appreciated assets.
And that build-up in wealth is never taxed directly. This takes liquidity out of the capital markets because older Americans avoid the capital gains tax by dying with the stock or other financial assets in their possession.
Now it looks like Congress will keep the high death tax rate in the Senate bill and merely increase the exemption level.
Trump's plan was better for family businesses and for the overall economy and fairer to everyone. Eliminate the death tax — which is above 40% — and tax these assets at the much lower capital gains rate of 23.8%.
These are small tweaks to the tax bill that will make a big difference for growth and fairness. But above else, Congress, stop dithering, and get going to deliver this pro-growth tax bill before Christmas.
Moore is an economic consultant with Freedom Works and a CNN senior economic analyst.
The Pentagon and the welfare state have been locked in brutal combat for decades, and the Pentagon has gotten clobbered. Protecting the country was once the first obligation of government. No more. Welfare programs — Social Security, Medicare, food stamps and other benefits — dwarf defense spending. As a result, we have become more vulnerable.
Here is the assessment of Mackenzie Eaglen, a defense specialist at the right-leaning American Enterprise Institute:
"The United States now fields a military that could not meet even the requirements of a benign Clinton-era world. The services have watched their relative overmatch and capacity decline in almost every domain of warfare ... for nearly two decades. As rival nation-states have accelerated their force development, the Department of Defense has stalled out, creating a dangerous window of relative military advantage for potential foes. ... While the United States continues to field the best military personnel in the world, policy makers have asked them to do too much with too little for too long."
Politically, the vaunted military-industrial complex has been no match for the welfare state's personal handouts. There has been a historic transformation. In the 1950s and 1960s, defense spending often accounted for half of the federal budget and equaled 8 to 10% of gross domestic product (the economy). In 2016, defense spending was 3% of GDP and 15% of the federal budget, according to the Office of Management and Budget. Meanwhile, welfare programs — called "human resources" by the OMB — accounted for 15% of GDP and 73% of federal spending.
(A note for policy wonks: Some military spending occurs outside the Defense Department, but including this spending would not much change trends or conclusions.)
There are many telltale signs that defense spending, though now exceeding $600 billion annually, is being squeezed. A new study by Todd Harrison and Seamus Daniels of the Center for Strategic & International Studies reports the following:
"For FY (fiscal year) 2015, the Army's active duty end strength reached the lowest level since the end of World War II."
"The Army has noted in Congressional testimony that two-thirds of its Brigade Combat Teams (BCTs) are not at an acceptable level of readiness because of personnel shortages, maintenance backlogs and insufficient training."
"From its peak in FY 1987 to the trough in FY 2015, the Navy's ship count fell by more than half."
"The total aircraft inventory of the Air Force declined by 44% from its peak in FY 1986 to FY2016."
Sizable increases in defense spending seem warranted to compensate for past underfunding and to confront new challenges. China and Russia loom as potential adversaries; North Korea could become a global menace; the Middle East remains a cauldron of conflict; global terrorism survives; and new forms of warfare — cyberattacks, drones and space-based conflict — demand new responses.
Proposals abound. The plan of AEI's Eaglen would, among other things, increase the Army's number of active-duty soldiers from 476,000 to 519,000; raise the number of Navy ships from 275 to 339 by 2025; expand the Air Force's inventory of planes to 6,391 by 2022, up from 5,465; and accelerate research and procurement.
Sen. John McCain and Rep. Mac Thornberry — the chairmen of the Senate and House Armed Services Committees — have endorsed a similar proposal. So has the Trump administration, though with less detail. The problem is not policy; it's politics.
Eaglen's plan would cost $672 billion more than existing law over the next five years. Will Congress vote to spend that money? If so, will it be financed through higher taxes (seems dubious, given Republicans' misplaced zest for tax cuts); reductions in other government programs (also dubious — if cuts were popular, they'd already have been adopted); or borrowing (the easiest alternative, but embarrassing)? Present congressional budget negotiations for FY 2018 focus on a smaller increase in defense outlays.
Defense spending is increasingly a political orphan. Republicans are wedded to tax cuts. Democrats are addicted to welfare spending, mislabeled as "entitlements."
What these political preferences share in common is that they provide immediate political gratification for large constituencies: lower taxes or higher benefits. By contrast, defense spending confers smaller benefits on smaller constituencies, mainly workers at military bases and government contractors.
In the competition for scarce public funds, the military-industrial complex is at a distinct disadvantage with the welfare state, an essential and permanent part of our social fabric. No one is going to dismantle it. But the favoritism toward the welfare state weakens the military. It is time to recognize and rectify this bias because it poses a fundamental threat to our collective well-being.
Samuelson has written about business and economic issues for the Washington Post since 1977.
The first use of nuclear weapons occurred Aug. 6, 1945. The second occurred three days later. That there has not been a third is testimony to the skill and sobriety of 12 presidents and many other people, here and abroad.
Today, however, North Korea's nuclear bellicosity coincides with the incontinent tweeting, rhetorical taunts and other evidence of the frivolity and instability of the 13th president of the nuclear era. His almost daily descents from the previous day's unprecedentedly bad behavior are prompting urgent thinking about the constitutional allocation of war responsibilities, and especially about authority to use U.S. nuclear weapons.
Last month, for the first time in 41 years, a congressional hearing examined the Atomic Energy Act of 1946 that gives presidents sole authority. There was serious discussion of whether a particular presidential order for their use might not be "legal" — necessary, proportionate. But even if, in a crisis, time permits consulting lawyers, compliant ones will be found: President Obama's argued that the thousands of air strikes that killed thousands and demolished Libya's regime did not constitute "hostilities."
The exigencies of crisis management in an age of ICBMs require speed of consultations, if any, and of decisions. And the credibility of deterrence requires that adversaries know that presidents can act in minutes. Furthermore, the authority to employ nuclear weapons is, as was said at the congressional hearing, "intertwined" with the authority "to take the country to war."
So, as a practical matter, President Trump can unleash on North Korea "fire and fury" without seeking the consent of, or even consulting, Congress. This, even if North Korea has neither attacked nor seems about to attack America. A long train of precedents tends to legitimate — although not justify — practices, and this nation has engaged in many wars since it last declared war on June 5, 1942 (when, to satisfy wartime legalities, it did so against Hungary, Bulgaria and Romania). Over many decades, Congress has become — has largely made itself — a bystander regarding war.
Sen. Lindsey Graham, R-S.C., says, "If we have to go to war to stop this, we will." By "this" does he means North Korea's possession of nuclear weapons, which it has had for 11 years? Or ICBMs, which it is rapidly developing?
If so, Graham must think war is coming, because there is no reason to think that North Korea's regime will relinquish weapons it deems essential to its single priority: survival. As Vladimir Putin says, North Korea would rather "eat grass."
U.S. actions have taught this regime the utility, indeed the indispensability, of such weapons. Would America have invaded Saddam Hussein's Iraq if he had possessed them? Would America have participated in destroying Libya's regime in 2011 if, soon after Saddam's overthrow, Moammar Gadhafi had not agreed to abandon his nuclear weapons program?
North Korea, says Trump, is a "situation we will handle" — "we will take care of it." Does "we" denote deliberative and collaborative action by the legislative and executive branches? Or is "we" the royal plural from the man whose general approach to governance is, "I alone can fix it"? Trump's foreign policy thinking ("In the old days, when you won a war, you won a war. You kept the country"; we should "bomb the shit out of (ISIS)") is short on nuance but of Metternichian subtlety compared to his thoughts on nuclear matters: "I think, for me, nuclear is just the power, the devastation is very important to me."
A U.S. war of choice against North Korea would not be a pre-emptive war launched to forestall an imminent attack. Rather, it would be a preventive war supposedly justified by the fact that, given sophisticated weapons and delivery systems, imminence might be impossible to detect. The long war on the primitivism of terrorists has encouraged such thinking. A leaked 2011 memo from the Obama administration's Justice Department argued that using force to prevent an "imminent" threat "does not require ... clear evidence that a specific attack ... will take place in the immediate future."
So, regarding al-Qaida, the memo said that because the government might not know of all plots and thus "cannot be confident that none is about to occur," any leader of al-Qaida or "associated forces" can be lawfully targeted at any time, without specific knowledge of planned attacks.
It would be interesting to hear the president distinguish a preventive war against North Korea from a war of aggression. The first two counts in the indictments at the 1946 Nuremberg trials concerned waging "aggressive war."
Jobs: With 228,000 jobs created in November, joblessness at a 17-year low of 4.1% and wages rising, it can no longer really be doubted: Donald Trump's relentless focus on tax cuts, deregulation and draining the swamp is great for job growth.
Even some normally critical media now admit the economy's underlying shift: "The American job market is the strongest it's been in a decade, and arguably the strongest since 2000," wrote The New York Times on Friday.
The Times is right. And the change is noteworthy, especially when viewed year-over-year.
Even though the workforce expanded by just under 1.1 million workers in the past 12 months, the number of people employed is up 1.87 million. That's why the unemployment rate continues to drop.
But the most interesting part of the jobs report, which goes almost unnoticed by the media, is that it's not just a few groups seeing more jobs and opportunity — it's broad-based, with minorities, women, men and even those with low incomes, showing the best gains.
X For instance, every education group — ranging from those with no high school diploma, to those with a bachelor's degree or higher — saw significant declines in unemployment in November 2017 from November 2016. And the biggest drops were for those with the least education, not the most.
Meanwhile, groups that have lagged in recent years also show major improvements. For instance, the jobless rate for African Americans dropped from 8% to 7.3%, while for Hispanics it fell from 5.7% to 4.7%. For Asians it stayed at an ultralow 3%.
Among adult men 20 years and over, unemployment has plunged from 4.3% last year to just 3.7% now. Likewise, adult female unemployment declined from 4.2% to 3.7%.
Only one group is doing notably worse: Teenagers. Those aged 16 to 19 have seen their jobless rate rise from 15.2% to 15.9% in the past year. It's no fluke: Hefty minimum wage hikes around the country have slashed youth employment.
Even manufacturing, long a laggard in our economy, has rebounded smartly. The economy added 189,000 jobs in the last year, the Bureau of Labor Statistics notes. At the same time, federal government employment is down by 3,000, CNSNews.com reports.
As for wages, average earnings rose five cents an hour, or 2.5%, from last year. But economists Brian Wesbury and Robert Stein of First Trust add that number to the change in total hours worked to get what they call "total earnings." Those are up "a sturdy 4.8% from a year ago," they said, and "wages are rising faster in the lower income ranges than in the higher ones."
Trump's many political foes in the media and inside the Beltway have painted him as a clueless friend of the elite and an enemy of working people. As this jobs report clearly shows, that's just plain wrong. And with Trump's big tax cuts on the way, job growth isn't likely to end soon — more good news for all Americans.
In the wake of a growing pile of sexual misconduct accusations, Sen. Al Franken, Comedian of Minnesota, was pressed by a majority of Senate Democrats to resign. When the number of accusers reached a critical mass, "They turned on one of their party's most popular figures with stunning swiftness," reported the Washington Post.
That's a pretty dramatic decline from the heights just nine months ago, when the Post was preparing him for the White House. Its headline then was "Al Franken May Be the Perfect Senator for the Trump Era — a Deadly Serious Funnyman." He was "having a breakout moment as a political star," and he "spent the last eight years proving that he's good enough, smart enough, and doggone it, people like him."
Post reporter Karen Tumulty, the writer of the piece, turned to Franken's close friend Norman Ornstein, who insisted, "He has that Perry Mason quality." Except no one ever saw Mason putting his hands over a sleeping woman's breasts.
After the Democrats purged Franken, liberal journalists like Andrea Mitchell complained about a "rush to judgment." In a discussion with her on MSNBC, Tom Brokaw said political and media institutions "have to agree to a kind of codification of what is objectionable and how people should be held responsible for it." He added: "This is not third-degree murder. This is not a stick-up of some kind in which you can clearly identify a crime. This is a subjective judgment about inappropriate behavior."
That's correct. Judgment about ethics over the years has been remarkably subjective. No one can say the Senate has no place for men who abuse women. Sen. Ted Kennedy was honored by the media for four decades after leaving Mary Jo Kopechne to drown in his car at Chappaquiddick. In 1989, Mitchell marked the 20-year anniversary of the drowning with a gushing tribute to Teddy winning respect. "Some call him King of the Hill, with a hand in every big issue," she said.
All those Democrats and liberal journalists turned around dramatically in 1991 and chose a very different subjective judgment against then-Supreme Court justice nominee Clarence Thomas. Anita Hill, his former employee, had no photograph of Thomas grabbing her. She never even claimed that he did. He was accused of talking dirty, and for that alone, Democrats wanted him voted down.
XWith the rise of Bill Clinton in 1992, the subjective judgment changed once more. Sexual misbehavior was again acceptable — and victims were not. The media that compared Hill to civil-rights icon Rosa Parks then found Clinton accuser Paula Jones to be a "Dogpatch Madonna," who they claimed pinched men in the rear down at the Red Lobster.
Make no mistake: Franken's ouster is in part a Democratic Party maneuver to clean house in the event Judge Roy Moore is elected to the Alabama Senate. The former Franken-promoting Washington Post got the Moore ball rolling with a disturbing article that included Leigh Corfman's claim that Moore initiated sexual contact with her in 1979, when she was 14. She expressed her displeasure at the contact, and he drove her home.
This accusation is more serious than Anita Hill's and, as distasteful as it is, much less serious than Juanita Broaddrick's rape charge against President Clinton or Mary Jo Kopechne's death. But the Mitchells and Brokaws grade sex scandals by checking the party label first. If Corfman had accused Clinton with a similar tale, the media elites would have felt sick and dragged their feet, just as they did with Jones and Broaddrick.
Don't cry for Al Franken, who is rich and famous and has liberals feeling badly for him, despite all the accusers. Today's situational ethics didn't permit him to stay in the Senate and get the Kennedy treatment.
Bozell is the president of the Media Research Center. Graham is director of media analysis at the Media Research Center and executive editor of the blog NewsBusters.org.
Global Warming: We keep hearing how climate change is "settled science," even though science is never settled. But if it were, why are scientists going to court to intimidate those who would dare challenge the global warming dogma?
Back in June, the National Academy of Sciences published a paper with a typically bland title: "Evaluation of a proposal for reliable low-cost grid power with 100% wind, water, and solar."
The paper, which had 21 authors, was a robust critique of work done by Stanford professor Mark Jacobson, whose widely cited research claimed that the U.S. could easily switch to 100% renewable energy in as few as 35 years.
In their response, the authors said Jacobson's work suffered "significant shortcomings" including "invalid modeling tools … modeling errors, and ... implausible and inadequately supported assumptions."
Tough words to be sure. But hardly out of the norm for scientific debate. Indeed, this kind of back and forth serves as the very heart of science.
But instead of simply defending his own work, Jacobson decided to file a $10 million lawsuit against the National Academy of Sciences and the paper's lead author, Christopher Clark, for defamation of character.
This, mind you, is after Jacobson tweeted that his science critics were being "intentionally scientifically fraudulent with falsified data."
Jacobson isn't the first such scientist to sue his critics. Pennsylvania State University climatologist Michael Mann sued Canadian climatologist Tim Ball several years ago for defamation of character after Ball challenged Mann's famous global warming "hockey stick" paper.
X In that paper, Mann purported to show that the current warming trend looked like the working end of a hockey stick compared with global temperatures stretching all the way back to year 1,000. Ball and other scientists wanted to see the data Mann had used, suspecting that he'd "adjusted" the temperature record to make the present look unusually warm. Ball's version of the temperature record showed the medieval period as warmer than the present. At one point, Ball said that Mann "should be in the State Pen, not Penn State."
Now another scientist finds himself being sued by environmentalists because his results failed to conform to what they wanted. In this case, the highly respected geoscientist Ricardo Villalba conducted a scientific survey of Argentina's glaciers.
Green groups said that his survey favored mining interests, and so filed suit against him. Villalba now faces criminal charges for violating a 2010 law meant to protect Argentina's glaciers.
Whatever the intent of these lawsuits, the effect is to chill scientific research and debate. Scientists will think twice about challenging any aspect of the climate change religion if the result could be an expensive lawsuit.
Makes one wonder what Francis Bacon would think of the state of climate science today.
Coastal cities and towns across the United States are now facing significant pressure from Moody's Investors Service, one of the world's most important credit agencies, to battle climate change. Failing to do so, Moody's warns, could result in downgraded credit ratings.
In a recent report to clients, Moody's outlined several indicators its analysts use to assess "the exposure and overall susceptibility of U.S. states to the physical effects of climate change" while crafting credit ratings for state, city, and regional government bonds. Among the indicators Moody's listed is the share of a community's economy that's linked to the coast.
Moody's says cities with large ports or an extensive fishing industry, for instance, are at a greater risk of climate change-related disasters.
"Extreme weather patterns exacerbated by changing climate trends include higher rates of coastal storm damage, more frequent droughts, and severe heat waves," Moody's wrote in a press release accompanying the report. "These events can also cause economic challenges like smaller crop yields, infrastructure damage, higher energy demands, and escalated recovery costs."
Moody's claims state and local governments that don't adequately prepare for these increased risks will likely face credit downgrades in the future. Moody's identified Texas, Florida, Georgia and Mississippi as the states with greatest risks, and thus as the states that must urgently spend more money preparing for what Moody's seems to think is inevitable climate change disaster.
X If the evidence were to clearly show that future climate change is inevitably going to create additional extreme weather events and damage to coastal areas, then Moody's analysis would make perfect sense. Increased risks should be met with more preparedness.
However, the climate change assumptions Moody's has built into its forecasts aren't based on the existing evidence, which shows dire extreme weather events have not substantially increased in recent years.
Prior to Hurricane Harvey making landfall in Texas in August as a Category 4 hurricane, the United States experienced an historic major-hurricane drought. From November 2005 to August 2017, not a single hurricane that measured as Category 3 or higher on the Saffir-Simpson hurricane intensity scale made landfall along an American coast — the longest such drought since modern hurricane records were first created in 1851.
In testimony given before the House Committee on Science, Space, and Technology in March 2017, Roger Pielke, Jr., Ph.D., a professor at the University of Colorado at Boulder and formerly a scientist at the National Center for Atmospheric Research, noted, "There is little scientific basis in support of claims that extreme weather events — specifically hurricanes, floods, drought, tornadoes — and their economic damage have increased in recent decades due to the emission of greenhouse gases. In fact, since 2013 the world and the United States have had a remarkable stretch of good fortune with respect to extreme weather, as compared to the past."
Moody's is basing its analysis of future climate change risks on the credit agency's commitment to climate change alarmist dogma, not on scientific data, and this isn't the first time it's happened. In June 2016, Moody's urged countries around the world to ratify the Paris climate agreement and said it planned to use the Paris agreement commitments to guide future credit analyses.
Moody's embrace of the extremely costly Paris agreement is telling, especially since even those supportive of the accords have said they would have a relatively minimal impact on global temperature.
Researchers at MIT's Joint Program on the Science and Policy of Global Change estimated that compared to the 2009 Copenhagen agreement, the Paris agreement would likely only prevent an additional 0.2 degrees Celsius of warming by 2100. Even without the Copenhagen agreement, the MIT researchers estimated it would prevent only 1 degree C of warming by 2100.
By coercing communities to spend billions more to prepare for natural disasters that may never come, Moody's is attempting to impose its climate change fantasies on the millions of American families who would have to shoulder the burden of added government costs made to prevent a downgraded credit rating.
Rather than indulge in climate alarmist fiction, Moody's should instead stick to what the available data actually reveals when creating its credit assessments.
If the Arab Spring taught us anything, it is that populist forces once unleashed can lead to widespread disruption and destruction. Egypt, Libya, Syria, Yemen, Bahrain have all suffered to varying degrees from the chaos when revolution from below meets resistance from above and foreign powers exploit the conflicts for their own purposes.
Although democratic purists may decry the narrowing space for civic discourse and political participation in many countries around the world, the events of this decade demonstrate that reform from the top down can be preferable to change from the bottom up.
Saudi Arabia, for example, has taken this lesson to heart. King Salman and his son Crown Prince Mohamed are taking a controversial path to catapulting their country into the future. Armchair punditry has criticized Saudi Arabia's leadership for its crackdown on dissent and arrests of high-profile members of the royal family and business tycoons.
Yet contemporary history is replete with examples of "revolution from above" that produced profound, positive, stable and sustainable change. Authoritarian socioeconomic development was the model pursued successfully by both Japan and South Korea.
As pointed out by Ali Shihabi, Executive Director of the Arabia Foundation, the rulers of China and Dubai have also effectively tackled their society's social and economic challenges with a combination of selective coercion, institutional reform and economic incentives.
XAnother example of a work still in progress is Kazakhstan. President Nazarbayev, Kazakhstan's "Leader of the Nation," has ruled the country since independence in 1991. He was re-elected in 2015 with 98% of the vote. Despite regular criticism of the regime's authoritarian tendencies, it has chosen to pursue a policy of top-down reform in which intra-elite deliberations and state-led implementation are the preferred mechanisms for economic, political and social development.
This approach has produced impressive results. Rates of GDP growth, foreign direct investment, education, employment and per capita gross national income are consistently strong. Kazakhstan ranks in the top 40% of international indexes for economic freedom, global competitiveness, ease of doing business, global entrepreneurship and human development.
Fighting corruption and empowering women are among the toughest issues confronting emerging market states. Taking meaningful action in response to citizens' demands for fairness and equality requires strong and determined leadership. Ten thousand Kazakh civil servants have been prosecuted for corruption since 2001.
According to Kazakhstan's Academy of Public Administration, the number of individuals prosecuted for mediating a bribe increased by 200% in the period 2012-2015. The number of individuals prosecuted for offering bribes increased by 226% in the same time span, while the number of individuals prosecuted for accepting a bribe increased by 132%.
Transparency International's 2016 Corruption Perceptions Index (CPI) improved Kazakhstan's ranking from 135th to 131st of the 176 nations surveyed. In commenting on this indicator, the vice dean of Nazarbayev University's Graduate School of Public Policy noted: "One of the key messages that Transparency International highlighted … was that the number of countries in which corruption had increased from 2015 to 2016 exceeded the number of countries in which the level of corruption had instead declined. Nonetheless, this small improvement in the CPI score represents a step in the right direction. It means that Kazakhstan is doing the right thing and that the international community is taking notice that Kazakhstan is on the right track."
Kazakhstan's efforts to promote women's equality have demonstrated similar progress. According to Secretary of State and former Deputy Prime Minister Gulshara Abdyalykova, women contribute 40% of GDP and make up 52% of those engaged in small to medium enterprises. Save the Children's 2016 Girls' Opportunity Index, ranked Kazakhstan 30 out of 144 countries — ahead of the United States — due to the relatively high rates of women in Parliament and low rates of adolescent fertility and maternal mortality.
Women hold 20% of Kazakhstan's Parliamentary seats and ministerial positions, a proportion similar to many European countries. The World Economic Forum's Global Gender Gap Index places Kazakhstan 43rd out of 142 countries surveyed.
Liberal Western democracies are admittedly a standard to which to aspire, but they should not be the primary criteria by which we judge other nations. Countries do not become modern overnight. It took America almost 100 years to abolish slavery, 150 years to grant women the right to vote and 200 years to pass the Civil Rights Act. And we still have not come to terms with the legacy of the Civil War, in which three-quarters of a million of our citizens were killed by their own countrymen.
The United States is well-served by allies who demonstrate a commitment to being responsible international stakeholders, to upholding the rule of law and to working with us in pursuit of a more equitable world order. By these measures, Saudi Arabia, and Kazakhstan, or Iraq and Afghanistan for that matter, should be commended and supported as they forge their unique and authentic futures.
Ereli (@erelija) was the U.S. ambassador to Bahrain and deputy State Department spokesperson during the Bush administration.
Imagine an electoral system where a small group of well-connected insiders hand-picks candidates for voters to consider. Challengers are discouraged, and the favored candidate of the party insiders always wins.
This isn't an example from years past in the Soviet Union; rather, it's the status quo today in the elections for executive positions within the United Auto Workers. Last week, the troubled union elevated a slate of union insiders to replace the outgoing set of insiders.
If the UAW hopes to improve its credibility among workers, this has to change.
It's been a challenging year for the UAW. For starters, the union has suffered a series of costly organizing losses, most recently at a Nissan plant in Canton, Miss., and at the Fuyao Glass plant outside of Dayton, Ohio. These votes weren't even close, with workers in both cases rejecting union representation by a 2-to-1 margin.
The UAW had an unflattering history to contend with in both votes. It had already failed twice in organizing Nissan, and in Dayton the UAW was trying to organize a plant it had previously helped close. But perhaps the biggest hurdle for the union was the widening FBI corruption investigation into training centers that it managed with the Big Three automakers.
X The scandal is as sordid as it is serious. Money that was earmarked for worker training or charitable purposes was instead diverted to provide high-priced perks (Mont Blanc pens, anyone?) for union and company leadership. The scandal, described by the Detroit Free Press as a "sophisticated money-laundering scheme," also provides a window into the "culture of six-figure paychecks" and "liberal expense accounts" that UAW executives enjoy.
In an environment like this, you'd think a clean slate of new officials would be necessary for the union to rebuild their standing with current and future workers. Instead, the union's influential Reuther Caucus — which has selected the new union president for the last seven decades—this week picked a slate comprised of current UAW executives.
One of the UAW leaders who the FBI is interested in as part of its investigation — Vice President Cindy Estrada — was re-nominated for her current position. Another, the Secretary-Treasurer Gary Casteel, was involved in the union's organizing loss in Mississippi. It defies belief to think that the only options the union has to provide leadership among the union's ranks of 400,000+ people are the executives who've presided over the organizing losses and scandals we have presently.
Cronyism seems to be prevalent in the nomination process.
This is personal for me. I'm a 21-year UAW-Ford autoworker, and I still work on the line 40 hours a week in Ypsilanti, MI. The UAW thrives in Michigan thanks to a business model that forces workers to accept it as the exclusive representative in the workplace. For decades, it was able to force donations into its coffers from people who simply want a job, and redirect that money to both political and social causes they may not support.
Michigan's right-to-work law, passed in 2012, changed that and permitted myself and others like me to opt out of paying dues to the union. Unfortunately, the UAW is still the only representation game available if you're an autoworker at the Big Three — meaning that workers are forced to accept the union's leadership — or lack of — whether they want to or not.
Therein lays the heart of the UAW's problem in today's workplace environment: Its business model is outdated and has been for a generation. Labor experts have proposed a 21st century business model that will take unions into the next century; it would permit, for instance, workers like myself to represent themselves.
But even before we can get that far, union officials must first admit that the problem exists, and allow UAW members the opportunity to select and vote for their new union officials in a secret-ballot election.
Until that happens, their credibility will continue to diminish with workers.
Are the current Republican tax bills, passed by the House and Senate and being reconciled in conference committee, an attack on "feds, eds and meds"? That's a reference to the government, education and health care jobs that local Democrats in Dayton, Ohio, told Sen. Sherrod Brown have been fueling the area's comeback.
The Dayton area's reliance on government is in tension with its history as an incubator of private-sector inventiveness, which more than a century ago produced the first cash register, the first airplane and the first automotive electronic ignition.
That's a melancholy reflection. But the implied complaints about the tax bills have more basis than the apocalyptic rhetoric coming from journalists (Kurt Eichenwald: "America died tonight") and Democratic politicians (Nancy Pelosi: "the end of the world").
The Republican tax bills would indeed reduce revenues to the "feds," with surprisingly small rate cuts for high earners and by cutting the corporate rate from 35% to 20%. The current rate, the highest in the world, has to be lowered sooner or later, as most liberal economists (and Barack Obama) have long admitted.
And it is hard to take seriously those moaning about increased budget deficits from those unwilling to reform entitlements, which includes all Democrats and many Republicans, notably Donald Trump.
The critics have more of an argument when it comes to "eds" and "meds." But there's a counterargument there, as well — that the tax bills push against the counterproductive government policies that have been pushing up education and health care costs, to the detriment of the consumers thereof.
The tax bills would impose a new 1.4% tax on the investment income of endowments of very wealthy colleges and universities. They would eliminate deductions for student loans and tax tuition waivers for graduate students.
These institutions have been coasting on their reputation for excellence and as havens of free thought, even as they impose speech codes, conduct kangaroo courts on sexual assault charges and allow humanities and social science departments to be dominated by postmodern agitprop and gibberish.
XStudent loans impoverish many students, especially dropouts, while the money they pump into universities produces administrative bloat, to the point that there are more administrators than teachers in higher education today. Government subsidies produce an oversupply of people with doctorates, causing their theses to go unread and their job prospects to be dismal.
Polls show that many voters have become aware of the intolerance and unaccountability of these institutions and that the economic rewards of a degree are diminishing. The tax bills send a signal to the people running higher education that they'd better change their ways.
On health care, the Republicans have sent a similar signal by repealing the ObamaCare mandate to buy insurance. It turns out that this "tax" — as Chief Justice John Roberts insisted it is — falls most heavily on those with modest incomes, leading many of them to conclude that ObamaCare policies are a bad deal.
Or consider the yelps about the Republicans' planned repeal of the deductibility of state and local taxes (except for some property taxes). This would be progressive in its incidence, because most of the increased federal revenue would come from high earners in high-tax states, especially New York, New Jersey, Connecticut and California, whose residents tend to vote Democratic.
Americans in lower-tax states have been effectively subsidizing bloated public payrolls and astonishingly generous pension plans. Removing the deduction would put pressure on politicians in high-tax states and on the public employee unions to hold taxes and spending down.
This change, plus a possible Supreme Court ruling that public employees cannot be forced to pay union dues, should reduce the largesse that public employee unions have been contributing to Democratic candidates in these states and nationally. Seeing as public employee union dues come from taxpayers, this amounts to public financing of the campaigns of one political party. It shouldn't be surprising that the other party wants to stop it.
An Agriculture Department report on the expenses of raising a child showed that over the past several decades, the costs of health care and education — despite or because of government subsidies and regulation — have increased much faster than inflation, while the costs of food and clothing, mostly provided by the private sector, have actually decreased in real dollars.
The Republican tax plans can be seen as a pushback against "feds, eds and meds" inflation and a push toward something more like what private-sector innovators (like those in long-ago Dayton) have been able to deliver.
Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.
In 2003 a genetics paper revealed that one in 200 men alive in that year was a direct descendant of Genghis Khan (1162-1227). Khan was the Mongol emperor whose armies swept out of the north to conquer pretty much all of Asia. His successors took big chunks of Europe as well. When Marco Polo traveled to China, he met the conqueror's grandson Kublai Khan.
Genghis Khan is thought to have left more corpses in his wake than any other invader. The Mongol hordes earned their fearsome reputation. Khan sent emissaries to the city of Merv in Turkmenistan demanding tribute and the pick of the city's most beautiful women. The Seljuk Turks refused and killed the messengers. Khan's army returned three years later. The city's leaders, perhaps having heard of Khan's ferocity in the interim, surrendered, but Khan's wrath was not assuaged. He ordered the entire city to be annihilated. Each soldier was to behead 300 civilians. Merv, which contained libraries, gardens and palaces, was razed and made uninhabitable for 100 years.
The Mongol conqueror is supposed to have said:
"The greatest joy for a man is to defeat his enemies, to drive them before him, to take from them all they possess, to see those they love in tears, to ride their horses, and to hold their wives and daughters in his arms."
Roughly 800 years later, his Y chromosome is to be found in 16 million men. Talk about conquests.
Let's just imagine that most of world history is analogous to the Mongol invasions. Great armies or small armies or just neighboring clans sweep in, kill the men and rape the women (or take them as wives eventually, but it's the same result genetically). Whose genes are we all more likely to have inherited — the conquerors or the conquered? How many of us are walking around with Henry VIII's genes or Casanova's?
It's not just that the aggressors raped their way to success, either. Somewhere in our lizard brains, we admire the strongmen, and yes, that means you, ladies. Every woman who is drawn to the "bad boy" or the "leader of the pack" is expressing a primitive preference that has never been quite squelched.
So, when it comes to oafs like Al Franken and (insert your favorite reprobate here) and people ask, "How could he behave that way?" the answer has to begin with: Men will do what they think they can get away with. And for the last several decades, in matters of sex, it has been more or less anything goes. That may be changing as we speak.
XNow, some fear, we are in the midst of a "moral panic." I dislike the term, because it's sometimes applied to plain old morality. When Tipper Gore launched a campaign to label lyrics for profanity and other objectionable content, her effort was called a panic. On the other hand, anxiety about Satanic child abuse supposedly rampant at day care centers was not a moral panic so much as mass hysteria.
In any case, some, such as Ella Whelan at Spiked, think they detect some of that: "This is now a witch hunt on social media. ... The panic about harassment and women's safety is spinning out of control. Listening to some feminists, you'd be forgiven for thinking women are in danger every time they step into the street."
Others are worried that flirting and office romances may be considered out of bounds in the current climate. Cathy Young notes that a tweet by the singer-songwriter Marian Call telling men "how happy women would be if strangers & co-workers never 'flirted' with us again" became an Internet sensation for a day or two.
I don't speak for Call or the thousands who retweeted her, but it sure seems like the quotation marks around the word flirt were key. The men who are receiving much-deserved comeuppance right now were not flirting. Showing a woman pornography is not a come-on. Grabbing her by the hair and force kissing her is cave man stuff, not a hint of admiration.
These high-profile slobs were doing what they thought they could get away with. Most men, I hope (and I bet most women hope), still know how to flirt without being offensive. Because if we're going to embark on building some sort of counter-counterculture, it's going to have to target grossness, not romance.
Charen is a Senior Fellow at the Ethics and Public Policy Center.
Climate Change: The green movement has found many things in modern life that cause global warming, but the latest really left us scratching our heads: Trading Bitcoins. At this point it might be easier to ask, is there anything that doesn't cause global warming?
No, it's not a joke. Just about anything these days (Hat tip: The Daily Caller) even remotely connected to civilization, human flourishing and comfort is, we're told, a "cause" of global warming. It's a crucial element of the Global Warming religion, which has only waxed even as real religion has waned.
Both Vox and The New Republic point out that in order to "mine" Bitcoins on the computer, it takes a lot of energy. The argument goes that, since most Bitcoins now are mined by Chinese citizens and since China derives a growing amount of its energy from cheap-but-dirty coal, Bitcoins are increasing the amount of CO2 in the air.
And more CO2 equals more warming, QED.
"Bitcoins are contributing to the warming of the atmosphere without providing a significant public benefit in return," writes The New Republic's Emily Atkin.
X Of course, Atkin must possess special, recondite knowledge about exactly how warm the earth should be at all times, and also about what precisely constitutes a "significant public benefit" from Bitcoins.
Meanwhile, over at Vox, warming worrier Umair Irfan frets that Bitcoin mining on the web uses huge amounts of energy, "on par with the energy use of the entire country of Morocco, more than 19 European countries, and roughly 0.7% of total energy demand in the United States, equal to 2.8 million U.S. households."
Sounds like a lot. But the energy estimates he uses are in dispute, as Irfan, to his credit, points out.
The important point is that people find Bitcoins useful, or they wouldn't exist. That's one of the reasons why a single Bitcoin is today priced at over $16,000 — up from $1 in April of 2011. With a global value now estimated a $167 billion, Bitcoins are clearly viewed as a worthwhile expenditure of time, money and energy.
Moreover, the total number of Bitcoins is, by rule, capped. So the amount of "mining" of Bitcoins on the internet — Bitcoins are "mined" when market participants use their own computer and a special algorithm to validate certain highly secure transactions, thereby earning Bitcoins for doing it — will at some point inevitably begin to decline. It will just take too much effort and cost too much.
Even so, these writers' views really go to the heart of the global-warming belief system: Since human civilization requires lots of energy, and it does, everything associated with human civilization must cause global warming. Everything.
You can take this to its absurd ends, and that's exactly what they do. Nothing humans do, no matter how valuable or life-enhancing it is, is immune from criticism. Some global warmists would even forcibly limit population in order to prevent warming. Some have even wistfully hoped for mass human extinctions.
Of course, those who now issue jeremiads about the climate change threat posed by Bitcoins likely won't give up their electric cars soon, which are only as clean as the power plants that charge them.
Nor will they stop flying on fuel-guzzling commercial jets to attend the next global-warming conference, wherever it is.
Nor will they stop swiping their ATM card at the local Starbucks to buy their daily triple-soy-latte, which, by requiring energy, also contributes to global warming.
No, the fact is, human civilization, and all the wonderful things it entails, requires massive amounts of energy to work. And that's not bad: Next time you're in a hospital or in an elevator in a super-tall building, give silent thanks for the steady, reliable supply of energy that helps make it all possible.
As for concerns about global warming, the science behind them is rather dubious. Even so, those concerns would pretty much disappear if the greenies would embrace the latest, and extremely safe, technology for nuclear energy. It's a near endless supply of clean electricity that produces no CO2. So the supposed "threat" of global warming could end, while the rest of us could keep our civilization. Win-win!
Meanwhile, for those of you in the Bitcoin world, don't be green-shamed into stopping your activities. You're not the real enemy of these warming fanatics; civilization is.
Scandals: Among the many troubling revelations to have emerged regarding the FBI these days, one of the worst is finding out that an avowed Trump-hater softened language in a memo to exonerate Hillary Clinton.
Let's rewind the tape a bit. Until August 31, 2016, with the presidential election in full swing, former FBI director James Comey gave the impression that he hadn't arrived at his decision to let Clinton off the hook until after he had all the facts.
But in late August we learned that, in fact, Comey and his team began drafting his get-out-of-jail-free statement for Clinton in April — right around the time President Obama publicly declared Clinton innocent of any crimes, and well before the FBI had interviewed dozens of key witnesses, including Clinton herself.
Then, in early November, we learned that an early draft of that memo had accused Clinton of being "grossly negligent" in handling classified material because she used an unsecured private email server while Secretary of State.
At some point during the editing process of that memo, "grossly negligent" became "extremely careless," which is how Comey put it in the final version.
The change was monumental. The criminal statute regarding mishandling classified material specifically cites "gross negligence" as a violation of the law, even if there is no intent involved. Had that language remained, Comey's claim that "no reasonable prosecutor" would take the Clinton email case would have been laughable.
So changing the language was obviously meant to clear the path for letting Clinton off the hook, whatever the facts might be.
X This week, the other shoe in the memo story dropped, when it was reported that Peter Strzok had made that particular edit.
Strzok, for those who don't know, had been kicked off the Trump/Russia investigation this summer — a fact we also only learned about in the past few days — after it turned out that he'd been sending anti-Trump, pro-Hillary texts to an FBI colleague.
So the key person who made a material change in a memo exonerating Clinton was a big Clinton supporter and a Trump hater.
On top of this, we only recently learned that officials at the FBI were in a frenzy after learning of Bill Clinton's off-the-books tarmac meeting with then Attorney General Loretta Lynch on June 27, 2016.
But the FBI wasn't interested in finding out what was said at that highly suspicious and inappropriate confab. Nope. They wanted to know who leaked the information.
"These new FBI documents show the FBI was more concerned about a whistleblower who told the truth about the infamous Clinton-Lynch tarmac meeting than the scandalous meeting itself," said Tom Fitton, president of Judicial Watch, which uncovered the memos, adding that they "show the FBI worked to make sure no more details of the meeting would be revealed to the American people."
Now, contrast all this with the way the FBI has been pursuing — since July 2016 — claims made in the Clinton-campaign-DNC-financed "dossier" supposedly showing that Trump colluded with Russian meddling in the presidential election.
Before and after the election, the FBI has been ferociously investigating this, determined to find any shred of evidence that might support the dossier, and yet has come up empty. Now, under Special Counsel Robert Mueller, the entire focus seems to have shifted from providing any evidence of collusion to catching anyone in Trump's circle who committed unrelated crimes.
We're not conspiracy mongers here. But it's hard to see this as anything other than an effort by the Deep State first to protect Hillary's election chances at all costs, and then, when that failed, to ruin Trump's presidency — at all costs.
And people wonder why nobody trusts the government any more.
Normally, it takes months for a new administration's economic policies to take effect. But there was a sharp surge in business and consumer optimism, and the stock market has been on an upward trajectory, since the day Trump got elected. The IBD/TIPP Economic Optimism Index has been in positive territory for 15 months straight. What's more, Trump was able to take immediate executive action on regulations, which sent a signal to businesses, markets and consumers alike.
Now it appears that overall economic growth for the entire year could be, you guessed it, "unexpectedly" high.
On Friday, the government will release the unemployment figures for November. But at 4.1%, the unemployment rate is already "unexpectedly" low. The consensus was that unemployment would average 4.6% for the year, but it's been under 4.6% since March.
X At the start of the year, economists were in widespread agreement that inflation-adjusted GDP would grow 2% to 2.3%. The National Association of Business Economists survey put it at 2.2%. The Congressional Budget Office predicted growth would be 2.3%, as did Trump's own economists.
But annualized growth was 3.1% in the second quarter and 3.3% in the third. The Atlanta Fed's GDPNow measure, which includes economic data available for the fourth quarter up to this point, currently stands at 3.2%. If that holds for the quarter, then growth for the year would be above 2.3%. (It would also mark the first time the economy has put together three straight quarters of 3% or higher growth since 2005.)
All of this marks a sharp turnaround from the past eight years when, under President Obama's economic stewardship, GDP growth never once came close to meeting the consensus forecasts.
At the start of 2016, for example, the White House forecast 2.6% growth for the year and the CBO 2.7%. The actual number: 1.5%.
Month after month during Obama's eight years in office, economic indicators kept coming in worse than expected.
And after each disappointment, Obama would blame "headwinds" and promise that strong growth was just around the corner.
So, let's review.
Economists were continually overestimating growth under big-spending, high-taxing, regulatory-happy Obama, and underestimating growth under Trump's pro-business, tax-cutting, deregulatory policies.
One might be tempted to conclude that these economists are either ideologically biased or pretty lousy at their jobs.
At the very least, it gives one reason to be suspicious when these same economists warn that Trump's promise of 3% growth is "unrealistic," or that the economy is close to "overheating," or that tax cuts will only make things worse.
Merline is Deputy Editor of Commentary and Opinion at IBD.
No one can say we weren't warned. For years, scholars of all shapes and sizes — demographers, economists, political scientists — have cautioned that the populations of most advanced countries are gradually getting older, with dramatic consequences for economics and politics. But we haven't taken heed by preparing for an unavoidable future.
The "we" refers not just to the United States but to virtually all advanced societies. In fact, America's aging, though substantial, is relatively modest compared with many European countries and Japan.
The latest warning comes in a massive report on government "pensions" — what Americans call Social Security — from the Organization for Economic Cooperation and Development (OECD) in Paris. The OECD is a group of mostly advanced nations, and the report warns that "the pace of pension reforms ... has slowed."
The problem is simple. Low birth rates and increasing life expectancies result in aging populations. Since 1970, average life expectancy at age 60 in OECD countries has risen from 18 years to 23.4 years; by 2050, it's forecast to increase to 27.9 years — that is, to nearly 90. The costs of Social Security and pensions will explode.
Governments are aware of these pressures and have raised eligibility ages. But changes have been modest and grudging. Only three countries have retirement ages exceeding 68 (Italy, the Netherlands and Denmark). The increases in the official retirement age are slower than the projected increases in life expectancy, meaning there's more time for retirement. For men, the average OECD retirement age is projected to increase 1.5 years to "just under 66 years around 2060." For women, the rise in the retirement age is about 2.1 years, also to around 66.
The implication: Unless retirement ages are raised sharply or benefits are cut deeply, more and more of the income of the working-age population will be siphoned off through higher taxes or cuts in other government spending to support retirees.
The prospective pressures will be enormous, as the nearby table (abbreviated from the OECD report) indicates. It shows the "dependency ratio" for some major countries. The dependency ratio relates the number of elderly (those 65 and older) to the working-age population (those 20 to 64). If the two populations were identical, the ratio would be 100%. Although that's not the case for any major country, most face steep gains. Germany, for example, goes from an elderly population that's about a third the size of the working population (35% in 2015) to one that's more than half (59% in 2050).
"Few reforms are as contested as raising the retirement age," says the OECD report ("Pensions at a Glance 2017"). "Why is it so unpopular to work longer even among people with longer life expectancy and in good health?"
Good question. The answer illuminates a dilemma of democracy: Giving people what they want in the present may damage our collective future.
Samuelson has written about business and economic issues for the Washington Post since 1977.
The Republicans' tax legislation is built on economic projections that are as confidently as they are cheerfully made concerning the legislation's shaping effect on the economy over the next 10 years. This claim to prescience must amaze alumni of Bear Stearns and Lehman Brothers, which were 85 and 158 years old, respectively, when they expired less than 10 years ago in the unanticipated Great Recession.
The predictions of GDP and revenue growth assume, among many other things, continuation of the current expansion. It began in June 2009 and has been notable for its anemia relative to other post-1945 expansions: Its average annual growth rate has been 2%; theirs, 4.3%. But it also has been remarkably durable. It is 102 months old; the average since after World War II is 58 months. Unless the business cycle has been repealed, a recession is almost a certainty during the 10-year window for which the tax bill has been tailored.
What the legislation's drafters anticipate, indeed proclaim, is that Congress will not allow to happen what the legislation says, with a wink, will happen. So, this might mark the historic moment when Washington decided that it no longer will bother to blush. The legislation says the tax reductions for individuals will expire by 2025. Treasury Secretary Steven Mnuchin, however, says "we have every expectation that down the road Congress will extend them." Of course Congress will. The phantom expiration is an $800 billion fudge, a cooking of the books in order to cram the tax bill into conformity with arcane parliamentary procedures that make the measure immune to filibuster. We have been down this road before: For the same reason, some George W. Bush tax cuts of 2001 were scheduled to expire at the end of 2010; 82% of them (measured by revenue) did not.
The Democrats' denunciation of the Republicans' tax cuts because they especially benefit the wealthy is a recyclable denunciation of any significant tax cut. The top 1% of earners supply 39% of income tax revenues, the top 10% supply 70%, the bottom 50% supply 3%, 60% of households pay either no income taxes (45%) or less than 5% of their income, and 62% of Americans pay more in payroll taxes than in income taxes. So, any tax cut significant to macroeconomic policy — any that might change incentives sufficiently to substantially change businesses' and individuals' behaviors — must be primarily a cut for the affluent.
Democrats pretend to worry that Republicans are executing a diabolical double play, using tax cuts to placate donors, then citing the cuts' enlargement of the national debt as an excuse to cut entitlements. Surely Democrats know that Republicans are not insubordinate to their president, who has vowed to oppose any significant (i.e., touching Social Security or Medicare) entitlement reforms. Besides, whenever Republicans run large budget deficits — the tax legislation probably means that the next decade's will be even larger than they would have been — they serve the Democrats' basic agenda: They legitimize the bipartisan penchant for making big government seem cheap. Republicans, too, give people $X worth of government services and charge the recipients $Y, with Y significantly less than X.
XIn 2002, when Dick Cheney — a strict constructionist, but not of economic data — said "Reagan proved deficits don't matter," the publicly held national debt was 33% the size of GDP; today it is 75%. At some point, the debt's size matters, and we seem determined to learn the hard way where that point is.
This tax legislation, an amalgam of earnest hoping and transparent make-believe, is a serious lunge for sustained 3% growth. Without this, the economy, and hence the entitlement state, will buckle beneath the strain of 10,000 of the elderly each day becoming eligible for Social Security and Medicare. The Republicans purport to know how changed tax incentives will affect corporations' and individuals' decisions, and how those decisions will radiate through the economy. Republicans do not know — nobody, including the Republicans' equally overconfident critics, does — but they might be right, and their wager is worth trying.
Economics is a science of incentives, and like all sciences it is never "settled." Both sides, with their thumping predictions, have given hostages to the future, which will deal harshly with some. Perhaps most. Possibly all of them.
Rep. John Conyers, D-Mich., hospitalized for an undefined stress-related illness, announced his retirement after serving more than 50 years in the House. Two other Conyers — a son and a great-nephew — immediately announced plans to vie for the elder Conyers' seat. The great-nephew said, "His doctor advised him that the rigor of another campaign would be too much for him just in terms of his health."
Despite his sudden retirement, Conyers "vehemently" denies all accusations that he ever committed sexual harassment. "My legacy can't be compromised or diminished in any way by what we are going through now," Conyers said in a radio interview from the hospital. "This too shall pass. My legacy will continue through my children."
One former aide describes how the congressman, who was driving while she was in the passenger seat, attempted to fondle her: "He was trying to feel me up with his right hand. I kept pushing his hand away. Then he put his hand on my neck and started trying to tickle me. We were on I-75, and he was driving erratically. I was saved by the bell because we got pulled over by the police for the way he was driving." Another former staffer claimed that Conyers would sit "close to (her) while stroking and rubbing (her) thighs," and that once, while she was at Conyers' home, he "came out of the bathroom completely naked."
After initially defending Conyers as an "icon," House Minority Leader Nancy Pelosi, D-Calif., called for Conyers to resign. Her call for his resignation, however, came 50 years too late.
For what has Conyers, a co-founder of the Congressional Black Caucus, achieved in his over half-century of service? Every two years since 1989, Conyers has introduced a bill for reparations for slavery. It has never gotten out of committee.
This blacks-are-owed-something-because-of-slavery mindset is dangerous and counterproductive. It is this mindset that is the basis for "affirmative action," or race-based preferences.
While "affirmative action" to achieve "diversity" is now a staple on college campuses, some warned about its unintended negative consequences. Archie Epps was one. He served as one of Harvard's first black deans. He criticized Harvard for admitting unqualified black students, and warned the school as early as the late '60s about the perils of admitting scholastically unqualified students to achieve "diversity." Epps predicted that lowered standards for incoming black students would lead to a higher dropout rate, precisely what has happened.
Similarly, Judge Macklin Fleming, a former Yale graduate, wrote a letter in 1969 warning the dean of Yale Law School about its new "quota" policy, which guaranteed that 10% of each entering class would be composed of black students. Fleming predicted that "minority groups" that outperform relative to blacks, such as Asian-Americans, would be penalized in favor of lesser-qualified minorities. He predicted that those admitted with lower standards would struggle academically. The students, Fleming predicted, would make demands for watered-down courses or would accuse "racist" professors of giving them poor grades. All of this, he argued, would create a supposition that minorities are not as competent as non-minorities. Their degrees would be viewed with suspicion.
Conyers supports race-based preferences. Yet in 2000, The Detroit News evaluated the affirmative action programs of seven colleges and universities in Michigan. They reported: "Among black students who were freshmen in 1994, just 40% got their diplomas after six years, compared to 61% of white students and 74% of Asians. ... Universities knowingly admit students who have a high chance of failing. ... The 10 years' worth of data analyzed by The News shows that the more selective a university is in choosing its students, the more likely its students are to graduate."
One history professor even said: "We're throwing them out after taking their money and they're getting nothing out of it. We're mugging (the majority) of them, taking their money, taking their dignity. I feel like I am participating in a vast criminal conspiracy."
Conyers opposes school vouchers, which would allow the money for education to follow the student rather than the other way around. In Detroit, the average urban high school student reads several grades below grade level. Urban parents want vouchers so they can send their child to a private or parochial school, and not to the underperforming public school chosen by government.
Conyers opposes the privatization of Social Security. The libertarian think tank CATO Institute calculates that because blacks die at a younger age, there is a net transfer of about $10,000 from black workers to non-black workers.
Conyers does not understand the connection between the welfare state and the demise of the nuclear black family. In 1965, 25% of black babies were born to unmarried mothers. Fifty years later, and over $22 trillion spent on the "War on Poverty," and now 72% of black kids are born out of wedlock.
Conyers' indifference about open borders allows unskilled illegal workers to compete for urban jobs and puts downward pressure on wages.
It is long past time for Conyers to pack up his race cards and call it a career.
Elder is a best-selling author and nationally syndicated radio talk-show host.
Mideast: Despite a firestorm of protests, President Trump says he will recognize Jerusalem as Israel's capital and eventually move the U.S. embassy there from Tel Aviv. Consider it another Trump promise kept.
Presidents of both parties have promised for years to recognize Jerusalem as Israel's capital. Yet, somehow complications inevitably arose — "Europe" claimed it would "complicate" peace talks, or the Palestinians said it would make peace impossible, or radical Islamists threatened unrest and terrorism by the "Arab Street" in response to the provocation.
X But a loophole in the law let U.S. presidents issue "waivers" of the bill every six months. In each presidency since then, including two Bushes and one Obama, waivers were issued and nothing ever did happen.
But isn't this a "radical" or unexpected move, as some now assert? No. As recently as last June, the U.S. Senate voted 90 to zero to recognize Jerusalem as Israel's capital. To say there should be bipartisan support for Trump's action is an understatement.
The facts are plain: Jerusalem was Israel's capital 3,000 years ago, before its people were scattered by various foreign regimes — ranging from the Babylonians to the Romans to the Muslim Arabs and, much later, the Ottoman Empire — in the Jewish diaspora.
When Israel was re-established in 1948, Jerusalem was again its capital. And it's been so ever since.
As for the Palestinians, they won't even recognize Israel's right to exist — even though there has never been an independent state called Palestine. This latter fact makes Palestinian claims to sovereignty over parts of Jerusalem highly problematic, to say the least.
But why is preventing Jerusalem from being Israel's capital such a big deal?
Because getting rid of the state of Israel is at the heart of both the Palestinians' founding charter and their current law. Delegitimizing Israel's control of Jerusalem is merely a step in that process.
Its foes must now deal with the uncomfortable fact that Jerusalem is Israel's functioning capital today, with its legislature, its high court and its prime minister all residing there. And it's unquestionably the center of the nation's religious life.
The Palestinians have cynically used the ancient capital of Israel as a political bargaining chip for years. Their claim is that Jerusalem's status can only be determined in talks between Israel and the Palestinians as part of a "two-state" solution of the Israeli-Palestinian dispute.
And they have support. As the BBC noted Wednesday, Mideast "leaders" now "warn" darkly about what might happen as a result of Trump's move:
"Palestinian leader Mahmoud Abbas warned of 'the dangerous consequences such a decision would have to the peace process and to the peace, security and stability of the region and of the world.'
Jordan's King Abdullah said the decision would 'undermine efforts to resume the peace process' and provoke Muslims. Jordan acts as custodian of the Islamic sites in Jerusalem.
Egypt's President Abdul Fattah al-Sisi urged Mr Trump 'not to complicate the situation in the region.' "
Meanwhile, BBC also reports that "Ismail Haniya, the chief of the Islamist Hamas group that runs Gaza, said a shift of the embassy and recognition of Jerusalem as the Israeli capital would cross 'every red line.' "
For the record, Hamas is a terrorist group, as is Fatah. They run "Palestine" — the West Bank and Gaza — with iron fists. So if violence breaks out, it's because they condone it and encourage it.
It will be their fault, and they will once again show why a Palestinian state dedicated to the annihilation of its neighbor Israel would be a very bad idea.
That Jerusalem was both the sacred and political capital of Israel is an historical fact and beyond dispute. That it was never the capital of Palestine is also beyond dispute, given that Palestine was never a sovereign nation.
The U.S. has appeased the Palestinians for decades on the issue of recognizing Jerusalem as the capital of Israel, but it has achieved nothing. Every time peace seems close, a new Palestinian intifada is declared, violence explodes, and hopes of a lasting deal are dashed.
The extreme reaction to Trump's move is really just an attempt to test his mettle. But Trump's position has been clear from the start and is absolutely fair.
As President Trump said Wednesday, "We are not taking a position of any final status issues, including the specific boundaries of the Israeli sovereignty in Jerusalem, or the resolution of contested borders. Those questions are up to the parties involved."
The message: It's put-up or shut-up time for the Palestinians.
Once again, despite unhinged critics, Trump is only keeping America's promises — on Jerusalem as on so many other things. Too bad other politicians won't do the same.
After weeks of biting their tongues about accusations that Sen. Al Franken groped women, Democratic senators are now lining up to call for his resignation. They clearly have the public on their side, according to the latest IBD/TIPP poll.
A few days ago, New York Sen. Kirsten Gillibrand told a reporter that "it's his decision," when asked whether Franken should resign after half a dozen women accused Franken of groping them. Other Senate Democrats also refused to call for his resignation, even as accusations piled up, instead deferring to a pending ethics investigation.
X The sudden shift came after a seventh woman said Franken tried to kiss her after she appeared on his radio show in 2006. At least one of the other six said Franken had groped her at a public event after he was elected senator in 2008.
On Wednesday, just one day after Gillibrand repeatedly refused to call for Franken to step down at a Politico Live event, she took to Facebook on Wednesday to call for his resignation. "I believe it would be better for our country if he sent a clear message that any kind of mistreatment of women in our society isn't acceptable by stepping aside to let someone else serve," she wrote.
Within an hour, nine other Senators had followed suit. By Wednesday afternoon, more than a dozen said he should step down.
The public is clearly behind the push for politicians like Franken to resign, rather than wait for voters to render their verdict when the come up for reelection.
The latest IBD/TIPP poll asked whether elected officials should leave office either on their own or by force if they are "accused of committing acts of sexual misconduct while in office."
The poll found that 57% say they should leave office, with only 34% saying it should be up to voters in the next election.
Democrats feel more strongly about this than anyone else. The poll found that 67% of Democrats say such officials should leave office on their own or be expelled, with just 26% saying it should be up to voters. Among Republicans, 51% say they should leave, as do 53% of Independents.
The poll also found that 63% of women say they should leave either voluntarily or forcibly, while 52% of men feel that way.
There wasn't a single group in the IBD/TIPP poll where a majority felt that voters should decide these politicians' fates.
Other Democrats have been caught up in sex scandals in the wake of the revelations of misconduct in Hollywood and among prominent journalists.
Nevada Rep. Ruben Kihuen is accused of propositioning a female staffer several times during his 2016 campaign. House Minority Leader Nancy Pelosi has called on him to resign.
Michigan Rep. John Conyers announced he would leave office after several women accused him of inappropriate behavior.
Pelosi herself has come under fire for how she's handled these scandals. Kihuen, for example, claims that Pelosi knew about the complaint against him before he was elected, yet supported him anyway.
Pelosi also was widely criticized for her initial response regarding Conyers, in which she called him "an icon in our country" and dismissed his accusers. She later called on him to step down.
The Financial Accounting Standards Board (FASB) and their international counterpart the International Accounting Standards Board (IASB) issued new standards for recognizing revenue from contracts with customers in 2014.
The goal was to simplify and harmonize revenue recognition practices globally. The new standards are based on one overarching principle: "Companies must recognize revenue when goods and services are transferred to the customer, in an amount that is proportionate to what has been delivered at that point."
X These new rules ASC 606 and IFRS 15 — or " ASC 666" as Accounting Todaycalls it — will force companies to completely re-evaluate when and how they account for their revenue.
For those that don't put in the extra accounting work before the January 2018 deadline to assess potential damage, they could face something worse: misappropriation of standards and earnings restatements.
"With the FASB ASC 606 accounting rules we get lunatic things like software companies recognizing term licenses upfront despite not getting the cash," said analyst Richard Davis at Canaccord Genuity. "This is what Enron did and, as I recall, that episode didn't work out super well for anyone."
Unicorns are feeling the pain too. Deloitte released a new survey of 3,000 companies indicating slow progress among private companies on implementation of the new revenue standard may delay IPOs.
With the ASC 606 deadline only months away, many predict disaster for those who are unprepared.
"Because many public companies have underestimated the impact of the new revenue recognition standard and are likely behind where they should be in preparing for the new standard, I anticipate we'll see an increase in late 10-Q filings for Q1 2018 and increased material weaknesses and restatements related to revenue," predicts Steve Hobbs, Managing Director of Protiviti.
He added, "Regulators and external auditors will continue to have revenue recognition in their targets, particularly during the transition reporting periods."
Investors might be unaware or underestimating the potential negative impact on their portfolio as most assume companies are taking appropriate steps to meet the 2018 deadline.
"In my opinion, most investors are completely unaware of the impact of ASC 606, as they have received virtually no guidance from most public companies on what revenue under the new standard will look like," warns Tim Saunders, vice president of finance at Tintri.
"In some cases, a company's revenue recognition model may change significantly and investors will have to revise their valuation estimates."
One investor who has seen the warning signs of 606 fallouts is Pine River Capital Head of Equities Joe Bishop.
"I worry that, in the long term, this change will increase the chances that investors will be misled," he says. "Revenue recognition is always a paramount concern when examining business value, especially when digital goods and services are involved. ASC 606 can create significant discrepancies in how revenue is recognized in similar economic transactions depending on the terms of a contract. Caveat Emptor."
Shauna Watson, managing director for finance and accounting at RGP Global, said "It will be interesting to see how investors (and internal management reporting departments) deal with the lack of comparable information, and whether non-GAAP or unaudited comparable information is released."
She advises, "If revenue has completely disappeared because of the adoption of the standard, being wrapped into the cumulative effect adjustment, investors may want to account for that cash flow in their models despite not being characterized as revenue."
To avoid such catastrophes, finance teams must work diligently to assess the impact of 606 on the bottom line.
If not, Saunders predicts, "The expression 'lost revenue' will become a very familiar one to CFOs, financial analysts and investors soon after the standard goes into effect, although the phrase is virtually unknown today. Companies will highlight the effect of deferred revenue that they can't take to their income statement in explaining revenue fluctuations once the standard has taken effect."
Now that you know why everybody is suddenly talking about accounting, the question is — what will you do about it?
If you're a C-Suite executive and your company does not yet have a plan to put in the work to deal with these changes, it's time to wake up.
And if you're an investor who doesn't know how your companies are handling this change, make sure you pay extra attention to Q3 earning reports and new disclosures around ASC 606.
Populist economic messages from the current administration promise a growth rate above 3%, high-paying American manufacturing jobs and a fix for trade imbalances with the rest of the world.
But if we truly want to thrive for the long term in the inevitable global economy, we need to ask: What is it about America that attracts capital investment, job creation, and economic activity?
My eight-year-old Kayan gets it. Like kids across America, he's obsessed with great inventors and entrepreneurs like Elon Musk, Steve Jobs, and Bill Gates, who started and built the world's greatest tech companies from scratch. The dreams of our young innovators, and the system that instills those dreams is the secret to America's greatness.
X America's system of free enterprise encourages risk-taking and breakthrough innovation by promising enormous rewards, guaranteed through the protection of intellectual property rights which are enshrined in Article 1 of the U.S. Constitution.
When IP rights are protected, the system works – investment in innovation booms, and the economy grows with all the benefits of improved living standards that follow.
Our IP system helps ensure that when our young entrepreneurs risk it all and work 120-hour weeks to realize their vision, that it won't be stolen by some big company who copies their ideas and leaves them with nothing.
Our IP protection helps us foster the best and brightest talent — more than half of the top 25 engineering and technology universities are in the United States. The U.S. spends more on research & development than any country in the world.
U.S. inventors hold more of the world's patents than any other country, too. As a result, the U.S. has a huge trade surplus in "charges for the use of intellectual property" of nearly $80 billion per year. This is nearly four times the surplus of the next closest country, Japan, and nearly twice as much as all the other countries in the world that have a surplus combined.
For a country with trade deficits totaling more than a half-trillion dollars annually, IP is one of the few bright spots where we have a surplus.
This shouldn't be surprising since a huge portion of our economy is reliant on intellectual property. A 2016 report by the U.S. Department of Commerce found that IP-intensive industries accounted for nearly 40% of U.S. GDP and supported 45.5 million jobs covering 30% of all employment.
The current administration seems to understand the important role of IP in global trade. In August, President Trump signed an executive memorandum kicking off an investigation into Chinese violations of trade rules related to intellectual property.
The administration estimates that the U.S. IP stolen by China may be as high as $600 billion and may have resulted in the loss of tens of millions of jobs.
Going after China for trade practices that disadvantage U.S. companies may be a good first step, but the much more significant problem is the weakening of the IP system right here at home.
In a country whose economy and comparative advantage is directly tied to IP protection, you might think that our laws and policies would be designed to strengthen those protections. You would be wrong.
Through the ironically-named America Invents Act of 2011, Congress created a system that makes it easier for patent infringers to challenge granted patents.
The system is so skewed against patent owners that the chief judge of the U.S. Court tasked with hearing all appeals of patent litigation called the system "death squads" for "killing property rights."
The courts have also reduced the value of American inventions by narrowing the range of technologies that can be protected by IP, making it harder to stop infringers from using stolen technology, and limiting the rewards that innovators can receive from proven infringers.
Many of these steps were taken to flatten the so-called patent trolls, and they've worked: Litigation rates are way down; weak patents are regularly challenged and destroyed; and patent-holder success rates are down.
Unfortunately, innovative U.S. companies are finding it increasingly difficult to defend themselves against outright copying by infringers, especially foreign competitors. We are in grave danger of burning down the house to get rid of the mice.
If we want to make America great again, it's time to strengthen the U.S. patent system. We need to ensure that our most innovative companies are able to defend themselves and reap the reward of their investments in innovation.
To keep the American system of innovation going, we need a strong IP system that will encourage our young innovators to dream big and pursue their boldest ambitions.
Patel is executive vice president and chief intellectual property 0fficer with TiVo.
When you're the source for "breaking news" but it turns out to be "faking news," you're in trouble.
ABC News "chief investigative correspondent" Brian Ross reported on retired Army Gen. Michael Flynn's plea deal with special counsel Robert Mueller by claiming that Flynn is "prepared to testify that President Trump, as a candidate, Donald Trump, ordered him, directed him to make contact with the Russians which contradicts all that Donald Trump has said to this point."
It was a nuclear explosion. Within minutes, the stock market plunged 350 points.
It quickly became clear that was flat-out wrong. Later, ABC News added on the evening news what it disingenuously called a "clarification" — actually, it said, Trump directed Flynn to contact the Russians after the election. Not only is that not scandalous but it is also completely expected for a new president. After more uproar, ABC finally found the reporting to be a "serious error" and suspended Ross for four weeks without pay.
It's a classic journalistic mistake to try and be first to report something before it's verified. But in the Trump era, when liberals believe the president is a uniquely dangerous threat to America — and even the world — any news that could lead to speculation about Trump's impeachment or resignation is like catnip. Journalists are prone to overhype anything that could spell "The End."
This suspension might have been an adequate punishment ... if Ross hadn't already made a long line of whoppers. Conservatives remember the 2012 movie theater mass shooting in Aurora, Colorado, by James Holmes and how Ross came on in breaking-news mode to announce that there was a "Jim Holmes" on a Colorado Tea Party Patriots website ... as if that were a perfect starting point to identifying a mass shooter. It wasn't.
But there are more.
In 2001, Ross claimed that the anthrax used in deadly attacks after 9/11 in Washington, D.C., and New York was coated with bentonite, a chemical compound found only in biological weapons made by then-Iraqi leader Saddam Hussein's henchmen. Former President George W. Bush press secretary Ari Fleischer remembers the event. He tweeted: "I explicitly told ABC News not to go with the anthrax story because it was wrong. Brian Ross went with it anyway — and one week later issued a murky, hard to understand correction."
XIn the first month of the Iraq War in 2003, Ross reported that Hussein's cousin Ali Hassan al-Majid (or "Chemical Ali"), an Iraqi general, had been killed. Several media outlets forwarded that report. Six months later, U.S. officials announced that they had him in custody.
In 2006, Ross claimed that Pakistani officials had arrested al-Qaida explosives expert Matiur Rehman, who had an "official" list of terrorist recruits and could lead to then-al-Qaida leader Osama bin Laden. A Pakistani official denounced the report as "fictitious." Then-ABC consultant Alexis Debat warned ABC that the report was not true a day after it was initially broadcast.
In that same year, Ross breathlessly relayed that the FBI was investigating then-House Speaker Dennis Hastert for bribery in the Jack Abramoff lobbying scandal. "Justice Department officials describe the 64-year-old Illinois Republican as very much in the mix of the corruption investigation," he said. This prompted the Justice Department to deny that there was any federal probe of Hastert, and Hastert demanded a retraction of the statement and threatened to sue ABC.
None of these whoppers ever led to any suspension of Ross, who's been at ABC since 1994. His liberal colleagues have given him six Peabody awards and six George Polk awards, so his reputation inside the network was apparently unscathed by his large errors.
It's a little bizarre that these days, alleged sexual harassers like Charlie Rose and Matt Lauer are dumped abruptly, while Brian Williams has an hourlong nightly show on MSNBC, and Brian Ross gets a slap on the wrist. These supposed guardians against "fake news" make it look like fact mangling isn't really a serious offense. Brian Ross should be fired.
Bozell is the president of the Media Research Center. Graham is director of media analysis at the Media Research Center and executive editor of the blog NewsBusters.org.
House and Senate Republicans are racing to hammer out a tax cut agreement that blends the House bill passed on Nov. 16 with the Senate version that squeaked through at 2 a.m. Saturday morning with one vote to spare. Failure to compromise is not an option. They must deliver a final bill to the president for signing before Christmas.
The stakes are high economically and politically. For too long, America's uncompetitive corporate tax rates have suppressed growth and wages, and driven companies to leave the U.S.
If Republicans fail on tax reform, they could lose their grip on Congress in the midterm elections. That would leave President Trump without a legislative partner to push through his pro-growth agenda.
Here's the road map for success: The House should adopt the Senate's repeal of the ObamaCare penalty, and the Senate should agree to slash corporate taxes as of Jan. 1, 2018, not a year later as the Senate bill currently says.
Senators postponed the corporate tax cut until 2019 in order to pare $127 billion from the cost of tax reform and stay within Senate rules. But economist Arthur Laffer warns that delaying the cut will encourage companies to defer production and income for a year until their profits are taxed at the lower rate. That could tank the economy in 2018, and take the GOP majority in Congress down with it.
A safer bet to keep the cost of the bill within Senate rules is for GOP Senators to embrace the House's proposal for a $1,600 child tax credit, instead of raising it to $2,000. That compromise would cut $150 billion off the cost.
Doubling the child tax credit to $2,000 as the Senate bill does, and paying for it by delaying corporate tax cuts is a whopping mistake.
X"Yes, everybody likes kids. But not everyone has them. Only a small segment of the population benefits from that credit," explains economist Larry Kudlow, a chief architect of the Trump tax plan. "Everyone will benefit" from reducing corporate tax rates immediately. It will "create an investment boom. There will be no losers."
What should the House take from the Senate's version? According to House Majority Leader Kevin McCarthy, his members are ready to adopt key Senate provisions, including continuing to allow homebuyers to deduct interest on up to a $1 million mortgage. The House plan caps it at $500,000 mortgages.
Democrats, meanwhile, are claiming that eliminating the penalty — in effect, making ObamaCare voluntary — will spell disaster for millions of people with ObamaCare plans. That's demagoguery. People who want to stay in ObamaCare won't lose their subsidy or their eligibility.
But abolishing the penalty will be a big tax break for the 6.7 million filers currently getting whacked for not buying Obamacare-compliant insurance.
Removing the penalty may cause ObamaCare premiums to rise slightly — the Congressional Budget Office speculates about 10% — but most buyers get subsidies that insulate them from premium hikes. Those who don't will finally have the freedom to buy plans without Obamacare's costly requirements and save a bundle on insurance.
As the calendar runs out, House and Senate Republicans will have to compromise on a dozen other differences between their tax bills, including the treatment of medical expenses, interest on student loans, the alternative minimum tax and gains on selling stock.
There will be winners and losers with each decision. But on balance, Americans will get to keep more of what they earn. And businesses will be encouraged to invest, grow and hire.
Tell the prima donnas and fence-sitters in Congress who failed to repeal ObamaCare that it can't happen again. The nation needs tax cuts now.
McCaughey is a senior fellow at the London Center for Policy Research and a former lieutenant governor of New York state.
This week, Republicans in the Senate finally passed their long-awaited tax reform plan. It lowers individual income tax rates across the board, although it does claw back some government revenue in the form of elimination of state and local tax deductions. It drops corporate tax rates as well. It is, in other words, a significant but not atypical Republican tax cut designed to boost economic growth by allowing Americans to keep more of their own money.
The tax cut will almost certainly increase the deficit, however. Even with dynamic scoring — the assumption that the economy will grow at a faster clip thanks to tax cuts — the tax cuts could lead to $1 trillion in lower revenue through 2027. This has led some conservatives to sour on tax reform altogether, rightly saying that Republicans were, until a few months ago, complaining incessantly about former President Obama's blowout deficits and the burgeoning national debt, which now stands at a cool $20.5 trillion. That doesn't include long-term unfunded liabilities, which are slated to bring the debt to some $70 to 75 trillion in coming decades.
So, which is more important: cutting deficits or cutting taxes?
The answer, in the long run, is obvious: cutting deficits. Deficits impoverish future generations; they undermine the credibility of our financial commitments; they prevent us from fulfilling promises we have already made to our own citizens. There are already millions of Americans who will never receive Social Security in the amount they have been promised; there are already millions of Americans unborn who will spend their lives paying off the commitments made by others for political gain.
At the same time, were we to raise taxes to pay off our debts, we would enervate our population and inure citizens to high taxes. Citizens of European states are used to insanely high tax rates; the impetus for spending cuts based on desire for lower taxes disappears after years of habituation to those tax rates and unsustainable government benefits. Europeans are used to the very social programs that continue to bankrupt them despite high tax rates; they're not clamoring to cut programs based on their distaste for those tax rates.
XThis puts American politicians in somewhat of a Catch-22. If they stump for spending cuts, they're cast as uncaring and cruel; if they stump for tax increases to pay for those spending cuts, they're cast as uncaring and cruel. Thus, the deficit continues to grow.
So, what should Republicans do about it? They ought to cut taxes, and then they ought to acknowledge that cuts are necessary to keep taxes low. Let Americans get used to keeping their own money. Let them understand that services aren't free. Then, be honest about the costs associated with big government programs.
In the end, both Democrats and Republicans will have to face a simple truth: It's either government cuts or bust. There's no reason for Republicans to give away their only leverage — the taste of the public for a dynamic economy based on individuals retaining their earnings — in order to shore up programs Democrats will only work to expand.
Shapiro is host of "The Ben Shapiro Show" and editor-in-chief of DailyWire.com.
Clinton Scandal: Americans overwhelmingly support the appointment of a special counsel to investigate the 2010 deal that gave Russia direct control over one-fifth of the U.S.' uranium, a new IBD/TIPP Poll shows.
Of the 50% who said they were following the uranium story closely, 68% said they would like the "Justice Department to appoint a special counsel to investigate the uranium deal with Russia," the poll's data indicated.
The convoluted deal involved a transaction in which Uranium One, a Canadian firm, was acquired by the Russian government-controlled nuclear monopoly Rosatom.
But the deal had to be approved by the U.S. government, due to Uranium One's extensive holdings in the U.S. The acquisition sailed through, in part because Secretary of State Hillary Clinton gave her strong approval.
X However, it was later revealed that investors in Uranium One linked to Russia had given the Clinton Foundation more than $140 million in donations.
As we wrote in October, "while top Obama administration officials were deciding whether to hand over control of one-fifth of the nation's uranium supplies to Russia, the FBI had piles of evidence that officials at Rosatom were flagrantly violating U.S. laws and possibly compromising national security. The FBI also had evidence that officials had directed millions of dollars to Hillary Clinton's family charity, creating a clear conflict of interest."
Unfortunately, no one in the Obama administration let the public know all of this before the deal was approved. In fact, Hillary Clinton's role didn't come to light until she left the Secretary of State's office to run for president.
As usual, there were partisan differences based on party affiliations, but support for a special counsel was strong.
Even among Democrats, some 54% said a special counsel needed to look into the deal; 82% of Republicans said the same, as did 66% of independents. The support is broad and multipartisan.
The poll also asked of respondents whether they "believe that Russian donations to the Clinton Foundation played a role in the previous administration's decision to approve the uranium deal with Russia or not."
Here the answer again showed a majority answering yes, by 55% to 36%, with 9% saying they were unsure.
But a much more pronounced partisan split was evident in the data, with only 24% of Democrats saying that donations to the Clinton Foundation played a role in the deal being approved, vs. 84% of Republicans and 53% of independents.
While the 2010 deal may seem long ago, it is relevant today. Robert Mueller, who today heads the troubled investigation into the Donald Trump campaign and alleged meddling by the Russians in the 2016 presidential election, headed the FBI from 2000 to 2011.
It's not clear why his office, which found evidence of egregious lawbreaking by the Russians, never publicized his findings or issued a warning about letting the deal go through.
Recent revelations that key members of his current investigative team — in particular, FBI agent Peter Strzok, a veteran of both the Hillary Clinton and Donald Trump investigations — held strongly anti-Trump views, as expressed in emails that have been made public.
The IBD/TIPP Poll suggests strongly that this news has unsettled Americans and raised serious questions about the conduct of both Hillary Clinton and the Obama administration. And, on a bipartisan basis, they'd like some answers.
President Trump's approval rating remained steady this month, with 36% approving of the job he's doing as president, while 59% disapprove, according to the latest IBD/TIPP Poll.
X Trump's favorability rating, however, dropped three points to -22, with 36% viewing his leadership favorably and 58% unfavorably.
The proprietary IBD/TIPP Presidential Leadership Index — which combines results from job approval, favorability and leadership questions — dropped 3.3% this month to 38.5. Trump's average since he took office is 40.8.
The December IBD/TIPP includes results from 901 people surveyed nationwide from Nov. 27 to Dec. 4. It has a margin of error of +/-3.3 percentage points.
On a partisan basis, Trump's approval is 79% among Republicans, but just 3% among Democrats, and 33% among independents. Regionally, Trump's approval rating is highest among rural adults (45% approval), and lowest among urban dwellers (26% approval). Forty three percent of men approve of Trump's performance, while only 28% of women do.
Trump gets slightly higher rates when people are asked specifically about his handling of the economy and the threat of terrorism. On both, 40% give him either an excellent or good rating.
On the economy, Trump not surprisingly gets his highest rating from Republicans, 81% of whom give him top marks, and his lowest from Democrats, only 7% of whom say he's doing a good job.
Meanwhile, 53% say the economy is improving, which is unchanged from last month but up from 49% a year ago. Among investors, 57% say the economy is improving, compared with 47% of non-investors. And those making more than $75,000 are far more likely to think the economy is improving (60%) than those making under $30,000 (only 32% of whom say it is).
The poll also found that 41% say they are satisfied with the direction of the country — up from 35% in October — while 58% aren't satisfied.
Methodology: The December IBD/TIPP Poll was conducted Nov. 27-Dec. 4. It includes responses from 901 people nationwide, who were asked questions by live interviewers on phones. The poll's margin of error is +/-3.3 percentage points.
The IBD/TIPP Poll has been credited as being the most accurate poll in the past four presidential elections, and was one of only two that correctly predicted the outcome of the November elections.
Each month, the IBD/TIPP Poll, a collaboration between Investor's Business Daily and TechnoMetrica, produces an exclusive Presidential Leadership Index. This index combines results from several questions in the monthly IBD/TIPP Poll to gauge how well the president is viewed when it comes to leading the country, both domestically and internationally.
X The index includes questions on presidential approval, favorability measures on the president's handling of domestic and foreign policy issues, and whether the president is providing strong or weak leadership.
In addition, IBD/TIPP each month asks questions focused on the public's outlook overall. These questions gauge satisfaction with the direction of the country, respondents' quality of life and the United States' standing in the world.
The IBD/TIPP Presidential Leadership Index edged down in December to 38.5, a 3.3% drop from the month before. This marks the fifth time the index has been under 40 since Trump took office.
The Leadership Index comprises three subindexes measuring the president's favorability, job approval (see below), and whether he is providing strong or weak leadership. Trump gained ground on all three subindexes in November.
President Trump's job approval rating was flat in December at 36%, which marks the ninth straight month that this rating has been below 40%. These low approval ratings come despite continued signs of a strengthening economy and increased consumer optimism.
Direction Of The Country
The Direction of the Country index was also flat in December. The index had been trending downward for months, but is currently above the 37 average during President Obama's eight years in office.
Quality Of Life
The Quality of Life Index dipped in December to 56.9 from last month's 57.9. The average for this Index under President Obama was 53.7. Unlike other measures, the Quality of Life Index has been relatively steady for the past 16 years. It peaked at 63.1 in January 2004. It's lowest level was 43.5 in June 2008.
Standing In The World
Another measure included in the monthly IBD/TIPP Poll tracks the public's view of the United States' standing in the world. After climbing 12% in November, the index retreated slightly in December to 39.2. Over the past 17 years, the highest this index ever got was in the immediate aftermath of 9/11, when it hit 74.9.
Media Bias: In late November, President Trump suggested a new contest for what he called the "Fake News Trophy." Which news network, he said "is the most dishonest and/or distorted in its political coverage of your favorite President (me)." We took him up on his offer, and the results surprised even us.
The IBD/TIPP Poll asked in its December poll "which television outlet is the most and least honest and fair in its coverage of President Trump?"
The poll found that 27% rated Fox as the most honest and fair in covering Trump, beating the No. 2 CNN by 11 percentage points. But when asked which network was the least fair in covering Trump, 34% said Fox, while 24% said CNN.
The third-place finisher on both questions, CNBC, came in the single digits, with 7% saying it was most fair, and 7% least fair. Broadcast news networks barely registered among poll respondents.
We can hear liberals cheering. But look into the numbers and you see that the reason Fox tops both lists is entirely due to partisanship.
Sixty-percent of Republicans rated Fox as most fair, most likely because they think it's the only news network that isn't out to get Trump. But 59% of Democrats rated Fox as least fair, presumably because they also think Fox isn't out to get Trump.
A similar, but less pronounced split shows up with CNN, with 27% of Democrats saying it's providing the most honest and fair coverage of Trump, while 45% of Republicans say it's the least honest and fair.
Among independents, 23% rated Fox most honest and fair, while 14% said it was CNN. But 30% of independents ranked Fox as least honest and fair, with 27% giving CNN the thumbs down.
Regionally, urbanites rank CNN as more honest and fair than Fox (20% vs. 17%), while rural dwellers give Fox much higher marks than CNN (36% vs. 13%).
In essence, the poll results are less about the reliability and objectivity of the press and more a reflection of the deep division in the country when it comes to Trump. To Democrats, anything short of calling for Trump's head is to be dishonest.
XBut poll results aside, we can say without question that it is the mainstream media — which includes CNN, MSNBC, network news, the New York Times, the Washington Post and other major outlets — have been about as dishonest and unfair as they could possibly be when it comes to covering Trump. That's not just our opinion. That's what various surveys and analysis of news coverage have concluded.
Time and again, these news outlets have dropped all pretense of objectivity, and abandoned basic journalistic principles, in their Ahab-like quest to destroy Trump's presidency. In this context, any news outlet that isn't out to get Trump would look biased in his favor.
Just look at the case of ABC News' Brian Ross, who got a crucial detail about Michael Flynn's guilty plea wrong, which sent shock waves across the country and drove the market down.
Ross claimed Flynn said he'd been directed to contact Russian officials while Trump was still a candidate — that is, before the election.
But those meetings in question all took place after Trump won the election.
Any cub reporter would understand the difference, and the importance of getting such a crucial fact straight.
ABC suspended Ross for 30 days and has banned him from covering stories related to Trump.
That's good as far as it goes. But what about all the other Democratic activists pretending to be journalists? When will they be pulled off their Trump beats?
Whenever I'm asked if the Trump tax cut is for the rich, I say yes. It is a tax cut for the rich. It is a tax cut for the middle class. It is a tax cut for small businesses. It is a tax cut for the Fortune 100. If you pay federal income taxes, you will, in almost all cases, be getting more take-home pay come Jan. 1.
One of the ironies of the left's "these are tax cuts for the rich" mantra is that many upper-income people I know in states such as California, New Jersey and New York complain to me they are getting a sizable tax increase. The lower income-tax rates don't compensate for the loss of the state and local tax deductions.
Well, yes, under the Trump tax plan we are no longer going to subsidize big government in blue states. Now those who choose to live in blue states are going to have to join with their neighbors, collect their pitchforks and demand tax and spending cuts from city hall and the state capital.
Here's some advice to blue state pols: Pare the hyper-extravagant pensions, and stop paying your government employees 30% more than comparable private-sector workers get.
Liberals from blue states argue that red states tend to get more money from the feds and pay less in taxes. But here again, blue state voters are the ones responsible for these inequities. Blue staters tend to send liberal politicians to office, who then vote for bigger federal spending — even though a greater share of the money goes to the red states. Maybe somebody needs to write a book called: "What's the Matter With Massachusetts."
What is not true is that the rich get all the benefits of the tax cut and middle-income families pay more.
Cato scholar Chris Edwards recently put the lie to that claim. He examined the impact of the tax bill on the average tax filer in every income group with an income above $40,000. He didn't include people who make less than that because very few in that income range have any income tax liability — and you can't cut taxes on people who don't pay taxes.
Edwards' remarkable analysis showed that as family income levels go up, the percentage reduction in tax burden goes down: Lower-middle-class people — who make between $40,000 and $50,000 a year — will see a 46% reduction in taxes paid; people who make more than $1 million will see roughly a 7% reduction in taxes (again, the exact rate depends on what state they live in).
XBy the way, the left also leaves out another impact of the tax cut that helps the middle class: a higher stock market. Some 54 million Americans have 401(k) plans. At least another 40 million have IRAs or pension plans. Where do you think that money is invested? Americans should look at their 401(k) accounts right now. They are surging in value in anticipation of the tax cut.
This has contributed to a surge of economic optimism and Christmas shopping and spending. You want to kill the economy — and Christmas? Follow Chuck Schumer and Nancy Pelosi's advice and kill the tax cut.
That's not likely to happen. There is a high likelihood this tax cut will be enacted before Christmas. My friend Arthur Laffer says that he hopes taxes go up for everyone next year — because Americans are going to be making a lot more money as prosperity spreads to every state. Talk about a happy New Year.
Moore is a senior fellow in economics at the Heritage Foundation. His latest book is "Fueling Freedom: Exposing the Mad War on Energy." He served as an economic adviser to the Trump campaign.
Health Reform: The CVS Health bid to buy Aetna will "reshape" health care, or so headlines would have us believe. Actually, it's a sign that the health care landscape is already being reshaped — by consumers, instead of central planners.
Every merger comes with promises that the merger will produce "synergies" and that consumers will ultimately benefit, and CVS Health ( CVS) and Aetna ( AET) are no exception.
"We know we can make health care more affordable and less expensive," is the way CVS Health CEO Larry Merlo put it.
Whether the merger lives up to those promises is something the market should determine. But, unfortunately, there's one thing standing in the way: a handful of antitrust regulators who can block the merger if they think it will prove anti-consumer.
Despite its pro-business, deregulatory inclinations, the Trump administration has been far from hands off when it comes to antitrust enforcement. The Justice Department is suing to block AT&Ts acquisition of Time Warner, despite the fact that this is a vertical merger that normally gets blessed by antitrust enforcers.
Unlike the previous horizontal merger attempts between Aetna and Humana and Anthem and Cigna — which were largely a response to ObamaCare and which would have consolidated the insurance industry — the CVS and Aetna deal would be vertical in nature.
The combined company would have a stronger hand when negotiating discounts with drugmakers, and against the threat of new competitors like Amazon ( AMZN), which clearly has an interest in getting into the health care delivery business.
What's most interesting about this merger, however, is that it's a sign of the increasing clout of consumers in the health care marketplace.
This consumer empowerment has been the untold story of a successful health reform, most likely because it was based on free market principles and pushed by Republicans against fierce Democratic opposition.
X The GOP's Health Savings Account reform let people set up tax-exempt accounts that are tied to high-deductible health plans.
The HSA reform was meant to accomplish two things: reduce the imbalance in the tax code that favored employer-provided health benefits over out-of-pocket spending, and reduce health costs by giving consumers more skin in the game.
It's worked better than even advocates could have hoped. Just 12 years after HSAs were introduced, these plans now command almost 30% of the employer market. Overall, more than 20 million people are enrolled — twice as many as were enrolled in 2010, according to the insurance industry trade group American Health Insurance Plans.
These accounts now have some $37 billion in assets, according to HSA investment advisor and consultant, Devenir, which expects assets to top $50 billion by the end of next year.
Unleashing an army of cost-conscious consumers is what's been driving the industry to offer more low-cost alternatives. One study found that employer costs are 7% to 22% lower with HSAs than they would have been with traditional insurance.
This is how health care should work, and would work more effectively if the government would get out of the way. Consumers would be free to shop around for the best deals in health care, and keep any savings they realize. Doctors, hospitals, insurance companies, pharmacies would compete to provide the best quality at the lowest cost. Innovators like Amazon would find ways to disrupt the market.
And rather than stand pat, companies like CVS would refashion their business to meet the needs of today's consumers.
The government should be encouraging this trend by among other things repealing ObamaCare's central planning, opening the insurance market to cross-state sales, expanding HSAs and the like.
At the very least, the federal government shouldn't squelch market-driven innovations with misguided antitrust actions.
Warts and all, if I were a voting member of Congress, I would certainly cast a yea for the tax-cut plans passed by the Senate and House that are headed for conference (to work out minor differences) in the weeks ahead.
These bills are not perfect, especially on the individual side. But the business tax cuts will generate an investment boom in the years ahead. And those cuts will bring economic growth back to its historical norm of 3% to 4%.
Incredibly, the Joint Committee on Taxation, or JTC, scored growth for the Senate plan at less than 1%. So much for its "dynamic" model. The Tax Foundation estimates 3% to 5% growth over the next 10 years. That's more like it, but it's still too low.
Look, the central cause of the 2% real-GDP growth slump over the past 17 years has been a lack of capital formation with virtually no real business investment, flattened productivity and barely any increase in real workforce wages.
Yet the tax plans under discussion — which go back to the work of economist Steve Moore, Treasury Secretary Steven Mnuchin, White House senior adviser Stephen Miller, economist Art Laffer, Forbes Media Chairman and Editor-in-Chief Steve Forbes and myself — are remarkably similar to the Trump campaign draft on the business side.
So I can say with confidence that the current tax package is directly aimed at reducing the current high tax cost of capital and increasing after-tax returns from investment.
Incentives matter. If it pays more after tax to build new capital stock and generate more business-equipment investment, people will do so. This is standard economics.
XThere may be disagreements on the numerical effects, but the principle has worked in the past (with Presidents Kennedy and Reagan) and will work in the future.
A 20% corporate tax rate, immediate full expensing, repatriation of U.S. corporate cash overseas, and a 23% discount for subchapter S corporation pass-throughs (much credit to Sen. Ron Johnson for this) will generate way more growth and investment than mainstream forecasters suggest.
At various times, President Trump has talked about 3%, 4% and even 5% growth. Despite the dreary mainstream models, I believe the president will turn out to be correct.
What's more, faster economic growth will generate much higher tax revenues. From businesses to investors to entrepreneurial startups, less tax avoidance and sheltering will raise revenues far beyond the standard consensus estimate.
Supply-siders like myself always buck the trend on pricing out lower tax rates. But again, we were right in the '60s, '80s and '90s running against the tide. So I suggest history will repeat itself.
By the way, in terms of the revenue hunt going on in Congress, I wish somebody would look at the lowball estimates compiled by the JTC with respect to repatriation. It estimates $25 billion in 2018, $21 billion in 2019, and $6 billion to $7 billion in the three years following. This is nuts.
Assuming about $3 trillion coming back home at an average tax rate of 10%, that's $300 billion in new revenues — way beyond the JTC estimate. And that's conservative. It could be $350 billion in the first year or two, which would be substantially more revenue and a way bigger pay-for than what the JTC predicts.
And there's more on the dynamic side. Booming stock market gains of roughly $6 trillion as of late could generate another $600 or $700 billion in revenues from capital gains, as well as hundreds of billions of dollars more in dividends, which generate massive revenue increases.
None of this is scored. The government forecasters don't understand international flows and the interactions of stocks, capital gains and dividends. Their estimates are probably several trillion revenue dollars short.
Sure, there are things on the individual side that should be changed. Personal tax rates should be much lower. A backdoor capital-gains tax hike on individual investors must be erased. And the proliferation of tax credits is inefficient and complex with no marginal incentives to promote growth.
Yes, everybody likes kids. But not everyone has them. And a lot of people like dogs and cats. Shouldn't they get tax credits, too? No. If you're looking for more money in your pocket, more take-home pay, the best prescription is to slash personal tax rates for everyone.
(By the way, why didn't Congress end the carried-interest loophole for private-equity firms?)
But here's the crux of the matter: An investment boom generating much faster growth will benefit everyone. Small businesses, new businesses, investors and wage earners will all prosper from a tax-cut-led investment boom.
Yes, a rising tide will lift all boats. The great news is that President Trump, the Senate and the House are absolutely moving in the right direction — and gathering momentum on the way.
Justice: One of the FBI's finest who worked on the Russian election-meddling investigation turns out to be a die-hard Hillary Clinton supporter who also worked on the botched Clinton email investigation. No, we're not making this up.
The political contours and misconduct in special counsel Robert Mueller's investigation into alleged collusion between the Donald Trump campaign and the Russian government just get weirder by the day.
As the New York Times reported last weekend, Peter Strzok, whom the newspaper of record called "one of the most experienced and trusted FBI counterintelligence investigators," was summarily demoted by Mueller last August.
Strzok, one of the lead investigators into Hillary Clinton's mishandling of classified information on her private server, played a similar leading role in investigating the Trump campaign's supposed ties to Russian officials seeking to undermine the 2016 election.
So why did Mueller let him go last August?
XIt turns out the married Strzok, that FBI paragon, was tweeting bad things about Trump to an FBI lawyer "colleague" — in fact, his mistress.
This, as he led a highly sensitive investigation of the man who was elected the next president.
Mueller was right to let him go. But as they always say, and as Gen. Mike Flynn has found out the hard way, it's not the crime — it's the cover-up.
The House Intelligence Committee months ago subpoenaed the Justice Department and FBI for information on why Strzok, the golden boy investigator, would suddenly be "transferred" to a personnel job — a clear and humiliating lateral demotion.
No information was forthcoming for four months, says House Intelligence Committee Chairman Devin Nunes, who is furious about it. He's not alone in believing Mueller and the FBI have a politicized investigation on their hands, and that the DOJ and FBI are trying to hide it.
"This is part of a months-long pattern by the DOJ and FBI of stonewalling and obstructing this committee's oversight work, particularly oversight of their use of the Steele dossier," Nunes said on Saturday.
Nunes' committee is now drawing up contempt citations. We'll be anxious to see if those are ignored as well.
Meanwhile, the Justice Department has also launched an investigation into "the role played in the Hillary Clinton email investigation by Peter Strzok," Fox News Reports.
Strzok is key to the entire investigation. It was he who handled the "interrogation" of Hillary Clinton on July 2, 2016, about passing classified documents onto her private email server.
Just three days later, then-FBI Director James Comey, who now spends his days responding to Trump's tweets, exonerated Clinton after conferring with Strzok — and before his investigation was even complete.
After Comey was fired earlier this year and Robert Mueller was named in May to be the special counsel in investigating the supposed ties between Trump and the Russians, Strzok went to work for Mueller's team.
As others have noted, the team Mueller has put together looks less like a bunch of objective legal investigators and more like a gang of political hit-men. A number are contributors to the Democratic Party and to Hillary Clinton.
And now, Strzok.
"Many of Mueller's prosecutors — it has been extensively reported — have made campaign contributions to Clinton and other Democratic political candidates," wrote the Daily Caller's Chuck Ross. "And a review by the Daily Caller shows that Mueller lawyers involved in the cases against four Trump associates are Democratic donors."
Could Trump even possibly get a fair shake from them? Of course not.
But this has only revealed what we knew, and said, all along: that this investigation had nothing to do with collusion (a crime with no strict definition) or other possible infractions such as obstruction, but rather about, first, sinking Trump's candidacy and then, when that failed, his presidency.
"Mueller's investigation is a semblance of law-enforcement disguising the brute reality that Trump is being punished for winning the election and defying Obama policy," as Andrew McCarthy, himself a former federal prosecutor, wrote in the National Review.
We couldn't agree more.
We are on the record long ago calling for an end to this travesty of an investigation, which has now gone on for 1-1/2 years with nothing to show.
Mueller should be fired, Comey reprimanded, and the investigation shut down. More and more, it looks as if this has nothing to do with justice, and everything to do with a group of rogue bureaucrats trying to get Trump impeached.
A divided U.S. Supreme Court let President Donald Trump's travel ban take full effect while legal challenges go forward, handing him a major victory and suggesting the court ultimately will uphold the restrictions.
Trump will now be able to bar or restrict entry by people from six mostly Muslim countries, even if they have a relationship with a U.S.-based person or institution. The order effectively supersedes a compromise the justices reached in June, when they let an earlier version of the ban take partial effect but exempted people with a "bona fide" U.S. connection.
Justices Ruth Bader Ginsburg and Sonia Sotomayor dissented from the new order.
Lower courts had partially blocked the new policy, issuing orders that tracked the Supreme Court's June decision.
The administration gambled that the high court would be more receptive to the newest version of the ban. The policy bans or restricts entry by people from the predominantly Muslim countries of Iran, Syria, Chad, Somalia, Libya and Yemen. The policy also bars entry by people from North Korea and some Venezuelan government officials.
The new Supreme Court order doesn't directly address the merits of the legal challenges. Two federal appeals courts are scheduled to hear arguments in the coming days. The high court could agree to consider appeals later, perhaps soon enough for a ruling during the current term that ends in June.
The administration argued that the newest version of the ban, announced on Sept. 24, was put in place only after national security officials thoroughly reviewed vetting procedures on a country-by-country basis. The Department of Homeland Security would be able to add or remove travel restrictions on countries as conditions change.
The challengers to the policy say Trump is exceeding his authority under federal immigration law and violating the Constitution by targeting Muslims.
The World Series is over and NFL playoffs will soon start, but the biggest sporting event of the year takes place this month. And the refs won't be wearing whistles and stripes — they'll be wearing long black robes.
The Supreme Court is today hearing oral arguments in a case to repeal the federal ban on sports gambling. The justices should make the right call, repeal the ban, and get Washington, D.C., out of the business of deciding whether Aunt Harriet will be arrested for betting on the Patriots.
Back in 1992, years before Fantasy Football dominated water-cooler conversation and the World Series of Poker conquered ESPN ratings, Congress passed the Professional and Amateur Sports Protection Act (PASPA) preventing betting on sports in every state except the lucky four that it grandfathered in — Nevada, Montana, Delaware and Oregon.
As a result, you can wager on the Knicks in Carson City, Nevada, but if you place a bet in Carson, California, the FBI might kick in your door and drag you off for questioning.
X This makes no sense, especially when public opinion surveys show that a majority of Americans approve of sports betting, and 69% agree that states should decide for themselves.
In 2011, New Jersey voted for a state constitutional amendment to permit sports gambling, which the state legislature enacted, only to be sued by the NCAA and the four major sports leagues. In the Third Circuit, the leagues prevailed over the voters of New Jersey, but a rematch was granted by the highest court in the land.
Now, this week, the Supreme Court is hearing oral arguments in Christie v. NCAA, led by the attorney general of New Jersey and supported by amicus briefs from 20 other states and several Indian tribes. If the Supreme Court does not strike down PASPA, Congress should quickly repeal the act.
The question here is not, "Will people gamble?" The question is, "Will they gamble safely?"
Americans spend at least $150 billion each year on sports betting, according to the American Gaming Association. The precise figure is uncertain. Why? Because players and bookmakers must hide their activity from the federal government.
By banning sports betting, PASPA drives activity under the table and funnels money into the pockets of old-fashioned, cigar-chomping bookies hiding in basements, or to the cyber-accounts of offshore bookmakers in the Caribbean with names like 1Vice and 5Dimes.
You have a choice between dealing with a Tony Soprano wannabe in Jersey or some guy in Jamaica wearing a Bob Marley beanie.
No wonder law enforcement agencies like the Fraternal Order of Police and the Major County Sheriffs Association have spoken out for repeal.
Not only does PASPA waste precious law enforcement resources to chase down sports bettors, it fosterscriminal activity by making illegal bookmaking more lucrative for those who get away with it.
Without PASPA, states could generate revenue to support schools, hospitals, and people with gambling addictions. The District of Columbia and 43 states promote lotteries, which yield about $20 billion for state budgets.
In contrast, PASPA prevents 46 states from generating tax monies for needed programs, instead driving those monies offshore or to the four grandfathered states (which, by the way, also support repealing PASPA).
Oxford Economics estimates that legalized sports betting would create up to new 152,000 jobs in the U.S., along with an extra $5 billion in tax revenue.
Where do professional sports teams stand on the issue? With the exception of the NBA, which supports repeal, other leagues are cowering in their clubhouses, issuing hypocritical statements, mumbling about integrity, and probably placing side bets on the outcome.
The NHL speaks out against repeal, but gladly located its newest team, the Golden Knights, in Las Vegas.
The NFL celebrates the Raiders' upcoming move to Las Vegas, where fans will use iPhones to bet while sitting in the bleachers. Outside of Nevada, the NFL runs its own fantasy leagues in every state and directs teams to display fantasy statistics on stadium jumbo screens.
The NFL would, no doubt, be "shocked, shocked" to find out that some fantasy participants make money on the games.
In last year's Super Bowl, fans wagered $4.7 billion. Ninety-seven percent of those fans were breaking the law. Is it the fault of the fans or of an outdated, puritanical law?
When the Supreme Court hears arguments, the justices should think of the late Antonin Scalia. Not for his piercing intelligence, nor for his sharp writing. But for his after-work activities. "I'm a damn good poker player," he told New York Magazine.
The justices should honor their former colleague, and the majority of good Americans, by letting them go about their lives without sending agents from Washington, D.C., to bust up the office pool.There are no winners under PASPA — only losers.
Buchholz practices corporate and intellectual-property law and writes about the business of travel, leisure and sports.
This has nothing to do with politics or social and cultural issues and everything to do with simple morality, the most basic rules of law, respect for human life and self-preservation.
Law enforcement officers are being deliberately targeted across our nation and that reality has to be truly shocking and disturbing to us all at the highest of levels.
And yet … it is not.
X Every week now we read of at least one law enforcement officer killed in the line of duty.
"Line of duty."
"Line of duty" being the official way to say "murdered while literally putting their very lives on the line to protect every single person in this country from harm."
Not only are these law enforcement officers being killed. Many are being systematically stalked and then assassinated.
Officers who are male, female, white, black, Hispanic, Asian, liberal, conservative, straight and gay.
Human beings. Men and women with spouses, children, and hopes and dreams for their own futures.
Truly heroic men and women who often can't even afford to live in the cities and towns they protect.
Men and women who do — with zero apologies to our increasingly useless politicians — the most critically important job in the nation.
Without their dedication and daily sacrifice, there would be no United States of America. None.
Every day would be a scene out of the movie "The Purge," where law is suspended and any and every crime and act of revenge goes.
The murder of law enforcement officers cannot be allowed to become the new "normal" in the United States of America.
For if it does, the risk to us all will grow exponentially with that new normal.
Law enforcement officers truly are the last line of defense against evil.
Not that very long ago, the killing of a law enforcement officer was a line that was basically never crossed. Ever.
Today, there is a growing "rebellion" against "authority" of any type.
Teachers are being assaulted. Firefighters are being assaulted. Flight attendants are being assaulted. Politicians are being assaulted. The list goes on and on.
No one and no profession now seems to be off-limits to this spreading irrational, ignorant and ultimately suicidal anarchy.
Look. Are there bad and corrupt law enforcement officers out there? Of course. Those in law enforcement who betray their sacred oath for their own benefit must be exposed. One is too many and any and all must be prosecuted to the full extent of the law.
That said, the number of law enforcement officers who violate the law and shame themselves is minuscule in comparison with those who stand shoulder to shoulder with the shared mission to protect us all.
Hate, anger and violence seem to be at all-time highs in our nation.
There is no "other opinion." There is no "other side." There is no "dialogue" or "talking it out."
There is only: "Agree with us across the board or you are the enemy."
The internet has allowed for the creation and opening of Pandora's boxes filled with ignorance, lies, hate speech, and the various tools needed to sow deep divisions and mistrust between Americans of goodwill.
Those tactics are now being deliberately marshaled and directed at law enforcement in our country.
Civilization without law enforcement is barbarism.
Stand with those who willingly put themselves between us and danger while you still can.
This is not about politics. It's about common sense, respect and … survival.
MacKinnon is a former White House and Pentagon official and author of the new Christmas novel "The North Pole Project – In Search of the True Meaning of Christmas."
Whether it's a proposal for a new highway project, tax breaks for solar energy, the building of a civic center, or subsidies for Hollywood film producers, you can find an economic impact study touting how great the project or policy will be for the local economy.
The formula is simple and predictable. A special-interest group that stands to benefit from the project funds an economic impact study that provides impressively large "hard numbers" on jobs, wages and additional output that will be generated.
The interest group will then tout the results in press releases that will be picked up by an uncritical media. Ultimately, these studies are meant to influence politicians who will determine the project's fate.
X These studies have several things in common.
First, they typically use proprietary, off-the-shelf models with acronym names like IMPLAN (Impact Analysis for Planning), CUM (Capacity Utilization Model), or REMI (Regional Economic Model Inc.).
Professional consulting firms buy the rights to use the models. Interest groups then hire the consultants to conduct the studies. Typically, these consultants are not economists. Instead, they are experts in using the models.
All studies based on these models ignore basic principles of economics. As a result, they do not measure what they claim to be measuring: the project or policy's impact on the economy.
To assess the impact of any economic project properly, it is important to understand more than just observable economic activity that will occur. Equally as important is the economic activity that won't occur but otherwise would. By definition, these latter impacts, while real, are not observable.
The second category is what economists call opportunity costs. They are the result of the fact that all economic activity uses scarce resources. Under normal conditions, had the project under consideration not been pursued, these resources would have been used for other purposes.
By their nature, opportunity costs relate to resources that are diverted from economic activities that would otherwise be pursued. They are therefore unseen.
Any economic impact study that does not attempt to assess opportunity costs cannot legitimately be called economic analysis. In fact, not to take account of these costs is considered to be the biggest mistake that noneconomists make when thinking about economic issues.
As 19th-century economist Frederic Bastiat famously pointed out: "There is only one difference between a bad economist and a good one: The bad economist confines himself to the visible effect; the good economist considers both the effect that can be seen and those effects that must be foreseen."
For example, imagine that a local government decides it wants to spend $40 million on a convention center. What would a meaningful economic impact study have to consider?
Of course, the study would have to look at "the seen," that is, the effect of the $40 million expenditure on the industries that are directly impacted, such as the construction industry and local suppliers of materials and equipment. These would be immediate effects as the construction begins and is carried out to completion.
Local restaurants and hotels might also benefit and increase their output as a result of new convention-center-related business. If labor is paid more in these industries, then these workers will go out and spend some of that money, increasing the demand for other products. These are called secondary or multiplier effects of the $40 million expenditure.
But none of this is free. Every dollar that is spent and every resource that is used, including labor, has an unseen opportunity cost, starting with the original $40 million.
The follow-up question is simple: What economic activities would have occurred if that money remained in the hands of the taxpayer?
It would have been spent on various goods and services or saved in local banks and therefore would have had an economic impact that also would have had secondary effects associated with it. This would have to be subtracted from the visible effects.
During the process of building the convention center, local resources will be used. The demand for labor is likely to increase. Wages for some will increase. But this happens in the process of bidding these resources away from other uses.
Some local industries unrelated to the convention center will see their costs rise and will either contract their business or reduce investment in future expansion. Some workers will see a reduction in demand for their services. They will face the prospect of lower wages or even unemployment.
The measurements of visible effects actually describe how the building of the convention center, or any similar project, absorbs resources away from other economic activities.
A true assessment of the economic impact of this or any other project would have to estimate losses due to these unseen activities and subtract them from the values associated with the seen activities.
The commercial models used for economic impact studies do not even attempt to consider opportunity costs. The "unseen" goes unexamined and therefore unaccounted for.
As a result, the possibility of the project generating a net reduction in income, output or employment is ruled out before the analysis even begins.
Bastiat would label this as "bad economics." I would go a step further and argue that it is not economics at all.
Cordato, Ph.D., is senior economist and resident scholar at the John Locke Foundation in Raleigh, N.C.
When players took a knee or raised a defiant fist during the NFL's pregame national anthems, they were simply acts of protest, we were told. Yet a person could honestly conclude that it was part of a plan to extort the league.
The protests were started last year by former San Francisco 49er quarterback Colin Kaepernick, who knelt, he said, to draw attention to the oppression of black people and "people getting paid leave and getting away with murder," presumably an allegation that white police officers were killing innocent black men in a wave of slayings.
Kaepernick's protest, though, was short on facts, according to Heather Mac Donald of the Manhattan Institute. She said "large-scale oppression of blacks by the police or society as a whole is just false," and backed it up with data.
"The facts are these," she wrote in September 2016 in the Washington Examiner. "Last year, the police shot 990 people, the vast majority armed or violently resisting arrest, according to the Washington Post's database of fatal police shootings. Whites made up 49.9% of those victims, blacks, 26%. That proportion of black victims is lower than what the black violent crime rate would predict."
XLater in the month, Mac Donald, using FBI statistics, wrote in the Manhattan Institute's City Journal blog that "contrary to the Black Lives Matter narrative, the police have much more to fear from black males than black males have to fear from the police. In 2015, a police officer was 18.5 times more likely to be killed by a black male than an unarmed black male was to be killed by a police officer."
No matter. Others joined Kaerpenick and have continued to grandstand on the sidelines with the petulant and impotent-by-NFL-standards quarterback is no longer in the league. They have done a fine job of dividing a nation and creating racial tension that had been inflamed over eight years by President Obama.
One of the players who kept up the practice, Malcolm Jenkins, a safety for the Philadelphia Eagles who has raised a fist during the anthem since the second week of the 2016 season, explained that his actions were an effort "to draw awareness to injustices in this country, disenfranchised people of color."
But now Malcolm apparently feels he's done enough. He said last week that he will no longer protest before games. Is this because he's convinced that the "injustices" have been corrected? No.
Malcolm's decision was made after the NFL pledged to contribute $89 million over seven years to social justice causes. To his credit, though, he kept his end of the deal, standing Sunday night during the national anthem without a raised fist.
While Jenkins said in an open letter that "it was never about the money or having our voices bought," the entire drama has the odor of a Jesse Jackson shakedown. For years, Jackson reportedly threatened corporations with protests, boycotts, and malicious accusations of racism unless the corporations made donations to groups Jackson supported.
A Judicial Watch report from 2006 said "Jackson had been exposed … as an extortionist who uses his influence as a civil rights leader to essentially blackmail wealthy corporations with absurd discrimination threats."
The NFL had a chance to avoid this and save itself a lot of trouble (and money). It could have simply suspended any player who refused to stand for the national anthem, as the NBA did in 1996 when Mahmoud Abdul-Rauf wouldn't stand.
They suspended him without pay, which cost him about $32,000 a game, which quickly brought a resolution — rather than forfeit the money, Abdul-Rauf, born Chris Jackson in Gulfport, Miss., and raised a Baptist, complied with league rules.
The NFL could have even changed its policy and required players to remain in their locker rooms or in stadium tunnels while the anthem was being played. That would both deny the protesting players a stage and give paying customers a break from a disrespectful display that offended them.
Instead, the NFL gave in to political correctness and ran away in fear of being called a racist organization, a label easily handed out in our overheated social and political environment to anyone who doesn't fully buy into the social justice warrior mob mentality. It's learning a painful lesson: Weakness and a lack of principle are always costly.
We don't need an economic boom, but that's what we may be getting. Since the 2016 election, the stock market is up roughly 24%, reports Wilshire Associates. The price of the cybercurrency bitcoin soared more than 1,000% before retreating. The unemployment rate of 4.1% is the lowest since 2000. The economy's growth has exceeded 3% for the past two quarters.
Anyone familiar with the post-World War II economy is bound to feel ambivalent about these dazzling developments. On the one hand, after so many years of disappointment following the Great Recession of 2007-09, it's nice to see the economy outperforming. Since the low point in late 2009, nonfarm jobs have increased by 17 million. On the other hand, extended booms give rise to long busts that have been hugely destructive in human terms — meaning higher unemployment and lower incomes.
Since World War II, there have been two instances of these grand boom-bust cycles. The 106-month expansion in the 1960s was followed by more than a decade of economic turmoil: double-digit inflation, four recessions (unemployment peaked at 10.8% in late 1982) and a stagnant stock market corrected for inflation. The second grand cycle started with the tech boom of the 1990s that lasted exactly a decade. It led to the economic carnage of the 2008 financial crisis and Great Recession.
The ultimate source of these boom-bust episodes is human nature. Although prosperity is a good thing, long stretches of good times can become self-destructive. People — consumers, business owners and managers, bankers, investors, entrepreneurs — become sloppy, overconfident and complacent. They become increasingly vulnerable to economic setbacks, but their careless behavior continues because it is crowd-driven.
This history cautions prudence. We don't know whether the economic recovery that began in mid-2009 will end in some sort of crack-up. But we should minimize the odds of this happening by avoiding policies that overstimulate the economy when it doesn't need more "stimulus."
In the present context, there are two implications. First, the Federal Reserve should continue raising short-term interest rates, which are still low. And second, the Republican tax legislation now being considered by Congress should not increase budget deficits by a penny. The various tax proposals are estimated to add from $1 trillion to $1.5 trillion to deficits over a decade, depending on how the calculations are done.
Lowering tax rates is good; borrowing to do so, as opposed to closing other tax breaks, is bad. What's often overlooked is that even before the Republican tax proposals, projected budget deficits were sizable. The Congressional Budget Office estimates them at $10 trillion cumulatively from fiscal 2018 to 2027.
XMany mainstream economists have convinced themselves that the tax proposals won't stimulate the economy or threaten the recovery. Here's the conclusion of a study from Moody's Analytics:
"Neither the House or Senate (tax) plans would meaningfully improve economic growth. ... Growth would be stronger initially, since the deficit-financed tax cuts are a fiscal stimulus. But given that the economy is operating at full employment, stronger inflation and higher interest rates will result. The economic benefit of the lower tax rates on business investment is washed out by the higher interest rates."
Maybe. But in practice, this view may be too sanguine. Suppose the strong demand of a boom economy causes inflation to exceed expectations — say 4% instead of 2%. The increase could set off a destructive chain reaction. Higher inflation begets higher interest rates. (The Fed raises short-term rates; market pressures push up long-term rates on bonds and mortgages.) Higher interest rates darken the economic outlook, causing stocks to crash and confidence to slump.
The truth is that we don't fully understand the effects of budget deficits on the business cycle. On the other hand, we better understand history, and history suggests that the bigger the boom, the bigger the subsequent bust. A patient economy may ultimately be more rewarding and sustainable than its more spectacular counterpart.
The conversation about a cake lasted less than a minute but will long reverberate in constitutional law. On Tuesday, the Supreme Court is scheduled to hear 60 minutes of speech about when, if at all, making a cake counts as constitutionally protected speech and, if so, what the implications are for the Colorado Civil Rights Commission's contention that Jack Phillips violated the state's law against sexual-orientation discrimination.
Phillips, 61, is a devout Christian and proprietor of Masterpiece Cakeshop in Lakewood, Colo., where he works as — his description — a cake artist. Charlie Craig and David Mullins entered his shop to order a cake to celebrate their wedding. Phillips said that although he would gladly make cakes for gay people for birthdays or other celebrations, he disapproves of same-sex marriage on religious grounds, and so does not make cakes for such celebrations. (He also refuses, for religious reasons, to make Halloween cakes.) To be compelled to do so would, he says, violate his constitutional right to speak freely. This, he says, includes the right not to be compelled to contribute his expressive cake artistry to a ceremony or occasion celebrating ideas or practices he does not condone. Well.
The First Amendment speaks of speech; its presence in a political document establishes its core purpose as the protection of speech intended for public persuasion. The amendment has, however, been rightly construed broadly to protect many expressive activities. Many, but there must be limits.
Phillips was neither asked nor required to attend, let alone participate in, the wedding. Same-sex marriage was not yet legal in Colorado, so Craig and Mullins were to be married in Massachusetts. The cake was for a subsequent reception in Denver. But even if the cake were to have been consumed at a wedding, Phillips' creation of the cake before the ceremony would not have constituted participation in any meaningful sense.
Six decades ago, the civil rights movement gained momentum through heroic acts of civil disobedience by African-Americans whose sit-ins at lunch counters, and other challenges to segregation in commerce, produced the "public accommodations" section of the 1964 Civil Rights Act. It established the principle that those who open their doors for business must serve all who enter. That principle would become quite porous were it suspended whenever someone claimed his or her conduct was speech expressing an idea, and therefore created a constitutional exemption from a valid and neutral law of general applicability.
Photography is inherently a creative, expressive art, so photographers have a strong case against compulsory documentation of ceremonies at which they must be present. Less clearly but plausibly, florists can claim aesthetic expression in floral arrangements, but their work is done before wedding ceremonies occur. Chauffeurs facilitate ceremonies, but First Amendment jurisprudence would become incoherent if it protected unwilling chauffeurs from their supposedly expressive participation in ceremonies to which they deliver actual participants.
It is difficult to formulate a limiting principle that draws a bright line distinguishing essentially expressive conduct from conduct with incidental or negligible expressive possibilities. Nevertheless, it can be easy to identify some things that clearly are on one side of the line or the other. So, regarding Phillips' creations:
A cake can be a medium for creativity; hence, in some not-too-expansive sense, it can be food for thought. However, it certainly, and primarily, is food. And the creator's involvement with it ends when he sends it away to those who consume it. Phillips ought to lose this case. But Craig and Mullins, who sought his punishment, have behaved abominably.
To make his vocation compatible with his convictions and Colorado law Phillips has stopped making wedding cakes, which was his principal pleasure and 40% of his business. He now has only four employees, down from ten. Craig and Mullins, who have caused him serious financial loss and emotional distress, might be feeling virtuous for having done so. But siccing the government on him was nasty.
Denver has many bakers who, not having Phillips' scruples, would have unhesitatingly supplied the cake they desired. So, it was not necessary for Craig's and Mullins' satisfaction as consumers to submit Phillips to government coercion. Evidently, however, it was necessary for their satisfaction as asserters of their rights as a same-sex couple.
Phillips' obedience to his religious convictions neither expressed animus toward them nor injured them nor seriously inconvenienced them. Their side's sweeping victory in the struggle over gay rights has been decisive, and now less bullying and more magnanimity from the victors would be seemly.
Senate Republicans narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans.
XThe 51-49 vote -- achieved only after closed-door deal-making with dissident senators -- brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. Trump has promised to sign tax-cut legislation before the end of 2017.
Before any bill goes to Trump, lawmakers will have to resolve differences between the Senate bill and one the House passed last month, a process that could begin Monday. Although both versions share common topline elements, negotiations on individual provisions inserted to win votes, particularly in the Senate, may be protracted and difficult. The final product will end up being a central issue in the 2018 elections that will determine control of Congress.
Both measures would cut the corporate tax rate to 20 percent from 35 percent -- though the Senate version would set that lower rate in 2019, a year later than the House bill would. Also, the Senate bill, unlike the House version, would provide only temporary tax relief to individuals, ending tax cuts for them in 2026. Both bills are expected to add more than $1.4 trillion to the federal deficit over 10 years, before accounting for any economic growth. Senator Bob Corker of Tennessee, who had cited concerns over the bill's effects on federal deficits, was the only Republican dissenter.
The bills are aligned on other provisions as well. For example, on the contentious issue of individual deductions for state and local taxes, the bills agree: They'd eliminate all but a deduction for property taxes, which would be capped at $10,000.
But they differ on the home mortgage-interest deduction; the House bill would restrict that break to loans of $500,000 or less with regard to new purchases of homes. The Senate legislation would leave the current $1 million cap in place.
And they differ -- narrowly -- on the tax rates they'd apply to multinational companies' accumulated offshore earnings. The House bill would tax those profits at 14 percent for earnings held as cash and 7 percent for less-liquid assets. The revised Senate bill contains a lengthy section that has no direct mention of the rates, but a person familiar with the Senate plan said they'd be 14.5 percent for cash and 7.5 percent for less-liquid assets.
Senate Republican leaders muscled the sweeping legislation through the chamber less than two weeks after releasing the bill draft. Many GOP lawmakers, including Corker and Lindsey Graham of South Carolina, have expressed concerns that the party has little to show so far before next year's congressional elections, after the collapse of an Obamacare repeal earlier this year and no action on issues ranging from immigration to infrastructure.
Republicans were able to bring the legislation to a vote using Senate rules that allowed them to approve it with a simple majority, therefore without any Democratic support. The GOP controls just 52 votes in the chamber, eight shy of what's typically needed to move controversial measures that draw delaying tactics by opponents.
That narrow majority made it important for Senate leaders to try to hold every member's vote; moderate Senator Susan Collins of Maine used that leverage to secure various concessions, including an agreement to enhance an individual deduction for large unreimbursed medical expenses through the end of next year. The House bill would eliminate that tax break.
Democrats decried the bill's deficit impact and complained they were shut out of the process to help draft the measure. They cited research showing that the legislation primarily benefits the nation's highest earners and business owners, and will bleed federal revenues in a way that hurts domestic programs.
"At a time of immense inequality, the Republican tax bill makes life easier on the well-off and eventually makes life more difficult on working Americans, exacerbating one of the most pressing problems we face as a nation -- the yawning gap between the rich and everyone else," said Minority Leader Chuck Schumer of New York during debate on the bill.
'Back of a Napkin'
Schumer noted that a set of last-minute revisions to the bill changed it in ways that had yet to be analyzed by the Joint Committee on Taxation, Congress's official scorekeeper for the effects of tax legislation. "Is this really how Republicans are going to rewrite the tax code? Scrawled like something on the back of a napkin?"
Attention now shifts to a House-Senate conference committee -- a specially appointed, temporary panel that will be charged with hashing out the differences in the bills and preparing a final version for both chambers to consider. Party leaders will select a small group of lawmakers, likely from the House and Senate tax-writing panels in each chamber, who would then be approved by each chamber.
That work could start as early as Monday, with many high-stakes issues to be worked through. The deadline of Dec. 31 is an artificial one, though -- aimed partly at securing a victory well in advance of the 2018 congressional elections. Republicans would have until the end of 2018 before they lose their ability to clear final passage in the Senate without a filibuster.
Both bills share some key central elements: They both almost double the standard deduction for individual taxpayers while eliminating personal exemptions. They both allow companies to fully and immediately deduct the cost of their spending on equipment for five years. But the Senate version would slowly step down the expensing provision after the five-year period -- a feature that the House bill doesn't provide for.
Yet there are many differences -- ranging from the taxation of business income to the amount set for the child tax credit -- and Senate negotiators may have the upper hand during talks. That's because the wafer-thin two-vote majority in the Senate will make it harder to usher a final bill back through that chamber.
The House bill would consolidate the current seven individual tax brackets to four, leaving the top tax rate at 39.6 percent. The Senate bill would have seven brackets -- with lower rates, and a top rate of 38.5 percent. Studies have shown that many of the tax bill's benefits would go to the highest earners -- and some middle-class taxpayers might actually pay more -- a finding that could impact the House-Senate talks.
The Senate bill includes a repeal of Obamacare's mandate that most Americans have health insurance or pay a penalty. The House bill does not.
Senators approved a 23 percent tax deduction -- subject to certain limitations -- on business income earned from partnerships, limited liabilities and other so-called pass-through businesses. The House version would create a 25 percent tax rate for such business income -- with restrictions on which businesses could qualify. Small businesses would get extra relief under the House legislation as well.
The House bill would also eliminate the estate tax, while the Senate version would limit the tax to fewer multimillion-dollar estates, but leave it in place. And after 2025, the limits would lift.
Under current law, the estate tax applies a 40 percent levy to estates worth more than $5.49 million for individuals and $10.98 million for married couples. The Senate bill would temporarily double the exemption thresholds. The House bill would double the exemption thresholds, and then repeal the tax entirely in 2025.
Free Trade: Both political parties these days give short shrift to the idea of free trade. It's a pity, because, as a new report shows, it's the key to a better life for all.
In its "2018 Index of Economic Freedom," the Heritage Foundation reminds us that not only is the idea of free trade appealing, but the evidence for its importance in raising standards of living is overwhelming.
"Countries with the most trade freedom have higher per capita incomes, more secure food supplies, and cleaner environments," the report notes.
Or, put even more simply, "Citizens of countries that embrace free trade are better off than those in countries that do not."
Exaggeration? They back it up with data. Applying standardized measures of free trade to 183 countries around the world, the report's authors break it down in thirds: A bottom third, with the lowest degree of free-trade policies; a second third, right in the middle; and the highest third, with the most free trade.
X It wasn't close. On every measure, the free-trade nations scored highest on all conventional measures of economic well-being.
For instance, nations in the bottom third of free trade averaged $3,145 a year in per capita income. The middle third, $7,432. The top: $27,037. The free traders have nearly nine times the average income of the non-free traders, and almost four times the income of even the middle group.
But that's not all. Food security, using the Economist Intelligence Unit's Food Security Index as a measure, showed similar differences. The non-free-trading nations scored just 41.8 on a scale of 0 to 100 on food security; the middle third, 58.0; the top, 74.2.
Free traders are environmentally cleaner than others. Using Yale University's 2016 Environmental Performance Index as their gauge, they found the non-free traders had the least healthy environments, at 56.7 out of 100; the middle tier of free traders were better at 66.9; but the free traders' index was 79.8.
Finally, they also looked at political stability. Even there, free-trade nations reign supreme. Based on the World Bank's Stability And Absence of Violence data, the bottom third of free traders score just 33.9 out of 100; the midlevel free traders a slightly better 42.0; but the freest traders hit 66.5.
We all know that free trade also has drawbacks. Nothing good is without cost. In the case of the U.S. industrial heartland, free trade has at times caused factories to close and the communities they're in to suffer. Hardworking, well-trained people have lost jobs and livelihoods. These are facts that, in part, explain why not all politicians back free trade.
Regulations: By all accounts, President Trump is moving aggressively to lighten the regulatory burden on the economy. While the discussion has focused on saving businesses money, could the effort also be a lifesaver?
For decades, free-market conservatives have pointed out that federal regulations can easily backfire, costing lives rather than saving them.
The auto fuel economy mandate, for example, forced automakers to build smaller cars, which led to more highway deaths from crashes because smaller cars provide less protection.
The FDA's cumbersome and costly approval process for new drugs can cause needless deaths from people denied new treatments that could have been on the market sooner.
Increasing airport security can be deadly if, by making air travel more inconvenient, it prompts people to drive instead of fly.
Other safety regulations can induce people to take greater risks, on the assumption that the new safety features will protect them. Drivers in cars with anti-lock brakes, for example, tend to drive more aggressively. Skiers wearing helmets tend to go faster.
The basic premise is that there is a clear connection between prosperity and longevity. Something that reduces prosperity will have an impact on lives. So, if a regulation promises to save 100 lives, but costs a king's ransom to implement, the net result could be that more people die from lower income than are saved by the rules. (Remember, these are all statistical lives lost and saved, not actual lives.)
XThe idea that there's a tipping point for regulations has been around for a while, but the new analysis, by Vanderbilt University's Kip Viscusi and Mercatus Center research fellow James Broughel, applies new statistical techniques to come up with what they say is a more precise cutoff point.
What they found is that if a regulation costs $99 million a year, it will cause one extra death in the country. So if the proposed regulation doesn't save more than one life for each $99 million in costs, it will result in a net loss of life.
By this calculation, expansions to Medicaid made before ObamaCare cost up to $867,000 per life saved — well below the cutoff point.
On the other hand, several air quality regulations from the EPA impose costs that are well above that threshold.
As the authors note, this way of measuring things can help lawmakers "screen out ineffective policies."
More important, it's a reminder that there are always two sides to any coin — a commonsense notion that always gets forgotten when big-government types are pushing for more federal regulations.
Nearly two and a half centuries ago, Adam Smith taught that "the interested sophistry of merchants and manufacturers" had created monopolies that "confounded the common sense of mankind."
These days, the interested sophistry of merchants, manufacturers, and well-connected special interests, who use the federal government as their ATM, have confounded mankind's common sense in the form of the U.S. tax code.
The thing is 4 million words long. Every year, Americans waste 6 billion hours and $195 billion just trying to comply with it. And when they fall short, it costs them even more. In 2015, taxpayers, desperate for a little clarity, called the IRS helplines more than 56 million times — and over 50% of those calls went unanswered. No wonder: Congress has created a tax code so complicated, vague, and ambiguous that even the IRS cannot figure it out.
Those who can afford the expense hire tax lawyers and accountants; but they also have trouble navigating the system.
That's because for years, powerful industries and politically connected special interests have lobbied Congress for deductions and tax credits. And they've done so under the misguided notion that it will benefit them. It doesn't. As economist Milton Friedman put it, "the most important single central fact about a free market is that no exchange takes place unless both parties benefit."
X In the long run, if it isn't good for the taxpayers footing the bill, it won't be good for business.
And that's what we've seen.
So many businesses and industries have special deductions now. And when products are subsidized or mandated, the economic incentives to adapt and improve disappear. Products stagnate. They can no longer find their way and the good that they may offer is never realized. Subsidies have poisoned the very things they were meant to prop up.
Even worse, these deductions have complicated the tax code and stripped the system of transparency. When my wife and I go out to dinner and the bill comes, I can see exactly what taxes I'm paying on my meal, and I know that the rest of the diners are paying the same rate. Not so with the U.S. tax code, and that's wrong. We ought to know what everyone else is paying.
On top of the complexity and unfairness, the special carveouts and deductions have contributed to a crushing tax burden shouldered by ordinary taxpayers, small businesses, and even the poor who pay no taxes, but still pay too much for the things they buy. In the past several years, average economic growth languished below the historic norm of 3% as opportunity dwindled.
In short, these deductions are sand in the gears of our economy and we're all losing.
We all need to look at ourselves in the mirror and ask, "Am I asking for something to be carved out for me?" Let's ask our representatives in Congress to make our tax code simple and open, and free of sophistry. As we eliminate the carveouts, we can lower the tax rates, and simplify the process of compliance to unleash economic growth and restore opportunity.
Lawmakers should work together to free up the economy. The legislation currently under consideration in the U.S. Congress is a big step in the right direction.
Tax reform will increase wages, make our country globally competitive, allow people to keep more of what they earn, and help propel us onto the path toward Adam Smith's recipe for prosperity: "peace, easy taxes and a tolerable administration of justice."
Schweitzer, Ph.D., is the president, chairman of the board, and chief technology officer of Schweitzer Engineering Laboratories and a member of Freedom Partners Chamber of Commerce.
After years of unconstitutional rule making, the Consumer Financial Protection Bureau is finally headed in a new direction. Office of Management and Budget Director Mick Mulvaney recently took over as the CFPB's acting director, replacing the politically inclined Richard Cordray.
Rejecting a smooth transition of power for political purposes sets a dangerous precedent, and it could come back to haunt Democrats down the road if Republicans choose to similarly obstruct a future Democratic director.
Whether English wants to believe it or not, change is long overdue at the CFPB. Under Cordray, the agency went rogue, churning out dozens of job-killing financial regulations while escaping congressional oversight — and any accountability from the American people. The CFPB not only receives its funding as a fixed percentage of the Federal Reserve's annual budget — exempting the agency from the normal appropriations process — but can also issue countless mandates without supervision from Congress or any other regulatory agency.
Moreover, the CFPB's director can only be fired by the president and for just cause — always an uphill battle.
XDon't just take my word for it. The U.S. Court of Appeals for the District of Columbia Circuit has described the agency as "unconstitutionally structured" and a "gross departure from settled historical practice." As U.S. Circuit Judge Brett Kavanaugh argues, the CFPB's structure "poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency."
It gets worse. Earlier this year, the Department of Justice (DOJ) filed court papers asking a federal appeals court to order the restructuring of the CFPB. The DOJ argues that the agency's structure comes into a separation-of-powers issue, since its directorship isn't sufficiently answerable to the president.
In the DOJ's words: "There is a greater risk that an independent agency headed by a single person will engage in extreme departures from the president's executive policy." Given the CFPB's virtually unilateral power, the Justice Department also emphasized that the president should be able to fire the agency's director at will.
Of course, the CFPB's unconstitutional structure is only exacerbated by its unprecedented rule making. Since his former agency's inception in 2010, Cordray consistently abused his unilateral power to target credit card companies, traditional banks, and different types of lenders.
Perhaps the hardest-hit victim is the payday loan industry, which provides short-term loans to millions of low-income individuals. These loans are designed to efficiently allocate lines of credit to the Americans who need it most.
But the CFPB's recently released "payday rule" would impose unreasonably high standards on these quick, transparent transactions to lengthen the lending process. By inundating payday lenders with piles of paperwork, the agency's goal is to build a wall between low-income Americans and the capital they need.
At least, that was the goal with Cordray in charge. Under new leadership, the CFPB has a chance to shift its attention from crippling financial regulations to true "consumer protection," holding financial institutions accountable but also recognizing that their services are indispensable to a vibrant U.S. economy.
The bedrock of the American dream is not only hard work, but also access to capital — an essential component of financial security. And, more often than not, financial institutions are the ones providing credit and making upward mobility a possibility.
Washington bureaucrats have no business getting in the way of the American dream. Here's to a brighter future for consumer protection.
Bowers is the managing director at the Center for Consumer Freedom.
Economy: On Thursday, the Joint Committee on Taxation confirmed that the Senate tax cut bill will boost economic growth and create jobs. Yet Republicans started freaking out that the bill might produce a slight increase in deficits over the next decade.
Every independent analysis of the Senate bill now confirms that it is a pro-growth bill. The only question now is how much growth will it produce. The JCT report says that the Senate plan will increase GDP by an average 0.8% over the next decade, and increase the number of jobs by 0.6%. Those might seem like small numbers, but they represent more than $100 billion in additional economic output and a million new jobs.
Given the incredibly sluggish pace of economic growth since the recession ended, you'd think boosting annual growth would be the paramount concern.
As to the "cost" of the tax cut, the JCT says that the added economic growth will generate almost $500 billion in additional revenue, offsetting a third of the tax cut's official price tag.
These are almost certainly a low-ball estimate.
As the Tax Foundation explains, the JCT's forecast "includes several important assumptions that limit its growth results, particularly, assumptions regarding the Federal Reserve's response to potential inflation and the United States being a closed economy."
The latter assumption makes a huge difference because, by the JCT's reckoning, businesses can only count on U.S. savings for capital, which, the argument goes would be crowded out by additional government borrowing.
What's far more likely is that, with tax rates, particularly corporate tax rates, sharply lowered, investment from abroad will pour into the country.
XA separate study by Boston University economist Laurence Kotlikoff, MIT's Seth Benzell and Guillermo Lagarda of the Inter-American Development Bank, which employed a highly-sophisticated economic model that accounts for all the world's capital, also found that cutting the corporate rate to 20% will spark far more growth that the JCT says.
The JCT also assumes that the Fed will clamp down on growth. That could happen, but it's more likely that the Fed will take a cautious approach to interest rates, and the current schedule of increases "has already been priced into the economy," the Tax Foundation notes.
By being more realistic about the economic responses to the Senate tax bill, the Tax Foundation finds stronger growth, more jobs created, and a resulting increase in tax revenues that covers all but $500 billion of the 10-year cost of the tax cuts.
Still, isn't $1 trillion, or even $500 billion, a huge increase in deficits? It would be, if it happened in one year. But we're talking about the total increase in 10 years. The Congressional Budget Office projects that total deficits over those years, without any tax cuts, will be $10 trillion. So at most it would amount to a 10% increase in deficits over the next decade.
Even if the JCT were right, extremely modest spending restraint would more than compensate for the net cost of the tax cut. Trimming annual growth of federal entitlement spending by just a half a percentage point a year would save $1 trillion, for example.
It's worth pointing out that spending cuts will be far more easy to accomplish in a growing economy than one that continues to slog along.
Deficits and mounting national debt are legitimate concerns. But as we've pointed out in this space before, it's out-of-control spending — driven by entitlement programs — that is the problem.
Tax cuts or not, these programs need to be reined in.
The United States ranks 11th in economic freedom, according to the 2017 " Economic Freedom of the World Report" published by Canada's Fraser Institute. The research provides important lessons about "economic nationalism," which has reemerged as a populist force both in the U.S. and elsewhere around the world.
Hong Kong and Singapore are once again the most economically free, followed by New Zealand, Switzerland, Ireland, the United Kingdom, Mauritius, Georgia, Australia, and Estonia. The U.S. tied with Canada.
Venezuela, South America's socialist basket case, is in last place due to years of monetary mismanagement and political corruption.
The report measures the level of economic freedom in 159 countries by gathering country-specific data on 42 variables in five broad categories: (1) size of government, i.e., taxes and spending; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to trade internationally; and (5) regulation of credit, labor and business.
An 11th-place ranking might not sound bad, but the United States was once ranked 2nd.
XThis plunge in economic freedom has hurt the U.S. economy through self-inflicted wounds such as unnecessarily burdensome regulations, undisciplined government spending and reckless money creation following the Great Recession. These policies were imposed by the U.S. government, not by China or any foreign power. Yet economic nationalists have been blaming other countries for America's lackluster economy.
Former White House Chief Strategist Steve Bannon told the Hollywood Reporter, "The globalists gutted the American working class and created a middle class in Asia."
"The economic war with China is everything," Bannon toldThe American Prospect. "If we continue to lose it, we're five years away, I think, 10 years at the most, of hitting an inflection point from which we'll never be able to recover."
Bannon's zero-sum reasoning is not supported by the evidence.
Top-ranking Asian countries increased their standard of living by learning from the example of a younger America when government did not intrude into every aspect of commercial life.
Hong Kong and Singapore, for example, former British colonies industrialized through commercial trade, were overwhelmingly poor not long ago (circa 1940-1960). But both chose low taxes, fluid labor markets, restrained government spending, low debt, and open global trade to become economic leaders.
In contrast, the U.S. has moved steadily in the opposite direction. So regarding economic freedom, the students have become the teachers, and the lessons are clear.
The U.S. cannot afford to retreat into "government managed" trade or, worse, isolationism. Instead, it should open its markets, end anti-competitive policies, and fully engage the world through mutually beneficial trade.
Hong Kong, Singapore, New Zealand and Switzerland — the four countries with the freest economies — outperform or match the U.S. in 83% of the categories used to measure freedom in trade, open capital markets, and access to sound money. Quite simply, the freest countries have better economic policies.
The lesson: The United States must become more open, not more closed, in order to compete internationally and prosper.
Statistical analysis in the freedom report also found that "the rise of anti-immigrant, nativist populism" is not the result of economic insecurity from globalization. Rather, anti-immigrant sentiment is primarily driven by high levels of social welfare spending and taxes, which reduce economic freedom and sets groups against each other.
Statist policies fuel anti-immigrant, anti-globalism sentiments, and conjuring scapegoats will not solve the underlying policy problems that make the U.S. less competitive. Indeed, new barriers to commerce will only make America poorer again.
If the U.S. wants to restore its global economic leadership, it needs to eliminate anti-competitive policies and institutions, and counter nationalistic sentiments by removing barriers to the free exchange of goods, services and people.
McQuillan, Ph.D., is a senior fellow and director of the Center on Entrepreneurial Innovation at the Independent Institute in Oakland, Calif.
Tcheau is a policy researcher at the Independent Institute.
Former national security adviser Michael Flynn pleaded guilty to lying to federal agents and is providing cooperation that promises to take Special Counsel Robert Mueller deep into Donald Trump's administration.
Speaking in court as part of his plea agreement, Flynn, 58, said Trump's team asked him to make contact with Russians and that he told incoming administration what he was doing. Flynn called a senior official from the transition team for guidance before talking to the Russia's ambassador to the U.S., and then reported back to the transition team after the call.
The plea is a major step for Mueller's quickly advancing investigation. Mueller has already charged Trump's former campaign chairman Paul Manafort and his deputy over their earlier business activities, as well as a guilty plea from George Papadopoulos, a campaign adviser who pursued Russia's help during last year's election. Papadopoulos is cooperating with the probe.
Flynn agreed to cooperate as part of a deal in which he pleaded guilty in a Washington, D.C., court Friday to a single charge -- that Flynn lied to Federal Bureau of Investigation agents about two conversations with the ambassador, Sergey Kislyak. He faces a maximum of five years in prison and a $250,000 fine.
Stocks and the dollar plunged on the news, while Treasuries, often viewed as the safest of investments, rallied.
Flynn told the agents that he didn't ask Kislyak on Dec. 29 to moderate Russia's response to U.S. sanctions imposed by the Obama administration that day -- a statement he now admits is a lie. He also lied by claiming not to recall the ambassador saying Russia had decided to do just that.
"This shows a Trump associate negotiating with the Russians against U.S. policy and interests before Donald Trump took office and after it was announced that Russia had interfered in our election," Senator Dianne Feinstein, a Democrat from California, said in a statement. "It's critical that we determine whether Flynn spoke with the Russians on his own initiative and who knew and approved of his actions."
In a previous conversation with the Russian, he discussed a U.N. matter, asking him to delay or defeat a security council vote. He also lied to the FBI about that.
In cooperating with Mueller's inquiry, Flynn is seeking leniency for himself and possibly his son, who worked with him in his private business. The charge doesn't delve into Flynn's work on behalf of Turkey, which is also under investigation, or his failure to promptly disclose such work to U.S. authorities.
Flynn was forced to resign less than a month into Trump's term. The White House was warned by the Justice Department that Flynn could be subjected to blackmail because his dealings with Russians hadn't been disclosed.
After he left the administration, Flynn filed an updated foreign registration form showing that he hadn't disclosed multiple contacts and payments from foreign entities while serving as an campaign adviser to Trump starting in February 2016.
At the time, Flynn, a retired Army general, ran a consulting business called Flynn Intel Group. In one case, Flynn's company received $530,000 from Inovo BV, a Dutch company working on behalf of Turkey's government, to lobby the U.S. for extradition of a dissident cleric who has opposed President Recep Erdogan of Turkey.
He's also disclosed payments from RT, described in an unclassified U.S. intelligence report as "the Kremlin's principal international propaganda outlet," and Kaspersky Government Security, a cybersecurity business that U.S. authorities say works closely with Russia's main intelligence agency, the FSB.
The charge Friday stems from various conversations between Flynn and Kislyak, including one in Trump Tower with Jared Kushner, Trump's son-in-law and senior adviser. FBI agents subsequently asked Flynn whether he had talked with Kislyak about sanctions imposed by President Barack Obama in retaliation for Russia's election meddling.
Flynn, who as a private citizen during those conversations was barred from negotiating with foreign powers, told the agents that sanctions hadn't come up. The Justice Department informed the White House that Flynn's denial contradicted the contents of phone calls intercepted by intelligence agencies, potentially exposing him to blackmail by Moscow, the Washington Post has reported, citing unnamed current and former U.S. officials.
Flynn resigned on Feb. 13 after only 24 days on the job. In his resignation letter he apologized to the president and vice president for giving them "incomplete information" about his interactions with the Russian ambassador.
Flynn has since drawn criticism for failing to disclose his consulting work for foreign governments while he was the top defense adviser to Trump's presidential campaign and serving in the transition and cabinet. Top House Democrats say that Flynn failed to disclose a 2015 Middle East business trip tied to a plan to build nuclear plants in the region using money from Saudi and Russian investors. The Democrats called the omission a crime.
Flynn rose to the top of the military's intelligence apparatus during a career notable for both his battlefield successes and his breaches of the Pentagon's chain-of-command.
After he was fired by Obama in 2014 for bucking his military superiors, Flynn started a private lobbying and consulting practice that did business in foreign countries including Russia and Turkey. Flynn didn't disclose those contacts and payments, as required, when applying for his security clearance to work in the Trump White House, even though several of his clients worked on behalf of the Russian and Turkish governments.
Flynn's son, Michael Flynn Jr., also worked for the consulting firm and is under investigation by the special counsel. The son gained attention during the 2016 president election for promoting conspiracy theories about Hillary Clinton on social media.
The FBI's investigation of Flynn gave rise to the appointment of the special counsel overseeing the wider Russia probe. Even after Flynn's firing, Trump defended him publicly, calling him a "very good person" who had done nothing wrong. In private, Trump asked his FBI director, James Comey, to end the examination of Flynn, Comey has testified. After Comey refused, he was fired, he said. Soon after, Mueller was appointed as special counsel.
The charge against Flynn casts a renewed spotlight on Attorney General Jeff Sessions. Sessions recused himself from any investigation into Russia's attempts to influence the 2016 election after Democratic lawmakers accused him of lying to Congress about his own conversations with Russian officials.
Flynn's 33-year military career stretched from the 1983 Granada invasion, where he was a platoon leader, to stints as director of intelligence for the U.S. Central Command, the Joint Chiefs of Staff and the International Security Assistance Force. He retired in 2014 after Obama fired him as director of the Defense Intelligence Agency.
"The Republican tax bill hurtling through Congress is increasingly tilting the United States tax code to benefit wealthy Americans." That's the beginning of a 37-word first sentence in a stage-setting front-page story in The New York Times on the tax bill under consideration in the Senate this week.
It's a nice illustration of creatively phrased advocacy journalism. "Hurtling" suggests irrational, uncontrolled, threatening movement; "tilting" suggests abandoning upstanding fairness; spelling out "the United States tax code" suggests an ominous attack on a respected national institution. And all this "to benefit wealthy Americans."
This is less reportage than it is advocacy journalism, written to advance the argument, with which many people agree, that Republican tax bills are harmful because they make federal taxation less progressive. But it's also an argument against any tax cut at any time. After all, if you start off with a progressive system that imposes higher rates on high earners and doesn't tax low earners at all — as is the case with the current federal income tax — then every tax cut takes that shape.
Missing from the arguments of Republicans' critics is acknowledgment that we already have what is, by most measures, the most progressive national tax system in the world. Other advanced countries tend to rely more heavily on regressive sales (value-added) taxes, and many have less steeply graduated income taxes.
Currently, the top 1% of earners account for about 40% of federal income tax revenue; the next 9% provide about 30% more. You could make the system more progressive with more progressive income tax rates or by raising the amount of income subject to the payroll tax, but at the risk of redirecting high earners' attention from productivity to tax avoidance. Such changes tend to reduce economic growth, just as tax cuts tend to increase it.
In fact, this year, Republican tax writers have devoted much less attention to cutting income tax rates for high earners than their predecessors did in 1981 and 2003 or their presidential nominees in 2008 and 2012. Instead, they want to increase the child tax credit and double the standard deduction. That would reduce taxes for many modest earners and get the government out of the business of encouraging some behaviors and therefore discouraging others. This could reduce the scope of lobbyists larding up the tax code with special exemptions and favors.
The Republican plan attacks two of the three largest "tax expenditures" by limiting or eliminating the deductions for home mortgage interest and state and local taxes. The monetary benefits of this would largely come from "wealthy Americans," especially in high-tax, high-housing-cost states, where they vote heavily Democratic. These progressive changes could only be made by Republicans, who have few House members and zero senators from such constituencies.
Sophisticated critics of the Republicans' plan, such as former Treasury Secretary Lawrence Summers, avoid arguing against any tax cut ever but say that with low unemployment and increasing growth, this is the wrong time — that economic policy should depend on the economic, not the political, calendar.
XThe problem with this argument is that the biggest cuts in the Republican plan would be to the corporate income tax rate — from 35% to 20%. Today's corporate rate is the highest of any advanced nation. It encourages multinational firms to park billions of dollars abroad rather than invest them here or to be merged into foreign-based rivals.
Moreover, economists of just about every stripe agree that the economic burden of the corporate tax falls on not just stock owners but also employees and consumers. The only disagreement is on who bears how much.
So there's a widespread consensus for a corporate rate cut. Barack Obama proposed one in February 2012 but never got around to negotiating seriously with congressional Republicans. Republicans today are only acting responsibly, at the political risk of demagogic charges that rate cuts for corporations and unincorporated businesses paying as individuals would aid "wealthy Americans."
Some critics focus on provisions fashioned to take advantage of budget procedures and Congressional Budget Office scoring rules mostly set in the 1970s. Both parties are guilty of gaming this increasingly dysfunctional system, especially the CBO's wildly oscillating cost estimates of the ObamaCare mandate.
As this is written, it's not clear whether Senate Majority Leader Mitch McConnell can round up the needed 50 votes or, if he does, whether a conference committee will hammer out a version that can pass in the House, too. In any case, the Republican tax plan is something more serious and responsible than "hurtling" missiles "tilting" the tax code toward the "wealthy."
Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.
So the friendly morning host with the warm smile was a serial sexual predator? He had a secret lock installed on his office door operated by a button under his desk like a Bond villain? The NPR guy was a Prairie Homewrecker? Next you'll tell us that that nice Bill O'Reilly is a creep. Never mind about that last one, he never even seemed nice.
One popular response to the daily casualty toll of harassers is to suggest that we should all embrace the feminist explanation of male/female relations. That boils down to "believe all women" because women don't lie about these things. It's hard to imagine a flimsier philosophy.
As The New York Times' Bari Weiss observed, this fetishizes women as "Truth personified," which cannot withstand a second's scrutiny. Of course women lie about these things. The Duke lacrosse team was falsely accused of rape, as was a University of Virginia fraternity. Remember the Scottsboro Boys? And a woman working for the ironically named Project Veritas attempted to sting The Washington Post by spinning a false tale about Roy Moore (in hopes of discrediting the Post and Moore's truthful accusers).
Women are often victims, but they are not angels. Yes, powerful men abuse their positions to get sex. But any serious reckoning with sexual misbehavior has to take account of the women who use their sexuality to gain advantage, too. Just as everyone knows men who have harassed, they also know women who have slept their way to the top.
There are other reasons that feminism provides no safe harbor for those wishing to find the moral high ground on questions of sexual propriety. Feminists damaged their credibility by rallying around Bill Clinton -- a partisan taint that persists, as we've seen with Nancy Pelosi's late and grudging condemnation of John Conyers. Feminists cannot pose as impartial champions of women if they're only moved by the plight of those victimized by Republicans.
Beyond partisanship, the feminist record is unhelpful. From the inception of "second wave" feminism in the 1960s, the movement embraced sexual "liberation" as part of women's liberation. Feminists weren't so much upset that some men behaved like pigs as they were that women couldn't do the same without loss of reputation. It was the "double standard" they took aim at, not sexual license itself. In fact, much second-wave feminist literature was devoted to boosting the idea of women's supposedly superior orgasmic capacity compared with men. In "Sexual Politics," Kate Millett declared, "All the best scientific evidence today unmistakably tends toward the conclusion that the female possesses, biologically and inherently, a far greater capacity for sexuality than the male."
XLike the new left they emerged out of, feminists joined hands with sexual revolutionaries in rejecting all of the old sexual mores -- including marriage. "Destroy the patriarchy," they chanted. They agreed with the Playboy Foundation (a contributor to the NOW Legal Defense and Education Fund) that linking sex with morality at all was an outdated idea.
And so professional feminists actually helped midwife the loose sexual culture we have today. Arguably, this culture has permitted men to behave even more shabbily toward women than the old mores did. This may sound odd, but I think it's true. Even the sexual harassment has become grosser than it was a few decades ago. I know of a few women who faced harassment in the 1970s and 1980s (myself included), but honestly, it was practically as polite as a Victorian drawing room compared with the stories we are hearing now about Louis C.K. or Harvey Weinstein or Mark Halperin. Womanizers used to at least make an effort at seduction. Now they seem to act out repellent narratives from porn movies.
Our 50-year excursion into sexual excess may yet provoke a counter-revolution. Women are clearly finding their voices, and men (at least many men) are recognizing how dishonorable and grubby this behavior is.
To find our way out of this mess, we need to apologize to our ancestors who understood that sexuality requires careful fencing. Openly sexual talk -- such as Matt Lauer and others apparently indulged -- does not belong in the office. Watching porn should not be normalized. And at the risk of being called a prude, I'll also add that we should clean up our language. Profanity defiles. Let's rediscover aspiration.
Charen is a Senior Fellow at the Ethics and Public Policy Center.
The swift revolution against sexual harassment is ending the careers of a series of media "icons," left and right. But perhaps nowhere is this hypocrisy more notable (and deeper) than at PBS and NPR. These were the entities that made sexual harassment the boiling feminist issue when Anita Hill testified during Clarence Thomas' confirmation hearing in 1991.
Here's an easy question: Why didn't this sudden spirit of self-discovery and investigation happen back then? Or in any year since? It could have happened when then-President Bill Clinton settled with Paula Jones in 1998, or even last year as these networks enjoyed reporting on sexual harassment scandals inside Fox News. All along the way, it appears that very same sexual harassment was alive at both PBS and NPR.
And mum was the word.
In case you missed the trend — and with all the other scandals breaking, who could blame you? — on Nov. 1, NPR first forced out its vice president of news, Michael Oreskes, following accusations of sexual harassment during his tenure at NPR and The New York Times. Soon after he stepped down, five complaints were filed by women of NPR. On Nov. 3, The Washington Post said that "NPR's employees unleashed their fury" at CEO Jarl Mohn "over his handling of a sexual harassment scandal that appears to have spread." A few days later, Mohn took a medical leave.
The TV folks at PBS followed on Nov. 21, when they abruptly ended its broadcasts of longtime talk-show host Charlie Rose.
On Nov. 29, NPR followed that by firing Chief News Editor David Sweeney, who'd been at the taxpayer-subsidized radio network since 1993, for allegedly harassing subordinates.
That same day, Minnesota Public Radio cut all business ties with star Garrison Keillor of "A Prairie Home Companion" for alleged sexual misconduct. Keillor was especially dismissive of the charges, which came right after he wrote a Washington Post commentary in which he ridiculed the demands for Sen. Al Franken to resign over allegedly groping women as "absurd." Confident of his sex appeal at age 75, Keillor boasted, "If I had a dollar for every woman who asked to take a selfie with me and who slipped an arm around me and let it drift down below the beltline, I'd have at least a hundred dollars."
Indeed, there seems to have been something smarmy about Keillor all along. Meet Garrison Keillor: sexual harassment victim. Howard Mortman of C-SPAN tweeted out an old National Press Club address by Keillor from April 7, 1994, in which Keillor proclaimed, "A world in which there is no sexual harassment at all is a world in which there will not be any flirtation."
XThis line did not make the press accounts at the time. Instead, the Associated Press reported the part of the speech where Keillor "chided the press" for trying to keep from the American people the "terrible truth" that "America gets along pretty well," and the fact that Clinton "is a soulful man" who "enjoys his work."
Bill Clinton, soulful harasser ... meet Garrison Keillor, soulful harasser.
The bifurcated public funding/private business nature of public broadcasting made men like Rose and Keillor less accountable, as there was not always a human resources department to handle complaints. They are profit-making multimillionaire contractors who acted as their own bosses. Their female employees were sitting ducks.
In what way, then, is "public" broadcasting morally superior to corporate broadcasting? And how deep is the hypocrisy on the left considering it waited decades to hold sexual harassers in its own taxpayer-funded ideological sandboxes accountable? They don't deserve one more red cent from taxpaying Americans.
Bozell is the president of the Media Research Center. Graham is director of media analysis at the Media Research Center and executive editor of the blog NewsBusters.org.
Climate Hysteria: With climate change activists and the big media still in high dudgeon over President Trump pulling out of the Paris Climate Deal, yet another study shows no acceleration in global warming for the last 23 years. Piece by piece, the church of global warming is being dismantled.
The University of Alabama-Huntsville study, conducted by climate scientists John Christy and Richard McNider, shows that not only is the temperature rising far more slowly than predicted, but that the Earth's atmosphere appears to be less sensitive to changing CO2 levels than previously assumed.
How do the study's authors know this? They corrected a mistake that many other studies and model forecasts leave uncorrected: First, they used only satellite data, the most comprehensive and accurate temperature numbers available.
Then, they took out the temporary, yet significant, impact of both volcanoes and the El Ni?o and La Ni?a climate episodes that periodically wreak havoc on weather around the world.
Once removing the influence of those naturally occurring events, the study's authors were able to come up with a stable base temperature for the world. Doing this, they found that the rate of global warming currently was 0.096 degrees Celsius per decade — exactly what it was 23 years ago.
This casts serious doubts on the dozens of models used in coming up with the U.N. Intergovernmental Panel on Climate Change's dire forecast of massive global warming based on rising levels of CO2 in the atmosphere, mainly from human activity.
XGiven that CO2 levels have risen sharply in recent decades but the pace of warming has remained essentially the same suggests that CO2 doesn't have the warming effect that many models assume.
Rick Moran, writing at the American Thinker, puts it this way: "The UAH paper destroys the models that predict rising temps that correlate with rising CO2 levels."
Yep. And it means that the U.N.'s prescription for this surge in CO2 — the massive downsizing of the global economy and the imposition of rigid socialist planning on all industrial economies — is nothing more than quackery, the worst kind of medicine.
But it's the science that is important. Recent analytical studies of global warming models used for the U.N. predictions have found they tend to "run hot" — that is, predict far more warming than actually occurs. This study goes a long way to explaining why.
And over time, the difference in temperature estimates is enormous. Going all the way back to 1880, the study notes that most climate models predict nearly 4.1 degrees Fahrenheit rise in temperatures. But the calculated value from the actual data are less than half that, 2 degrees F.
And by the way, this is a published, peer-reviewed journal study, not a bunch of estimates from questionable mathematical models that were created to serve a political purpose, not a scientific one. It is of course in the interest of the researchers and the governments that fund them to find catastrophic global warming. And that's exactly what they do.
At some point,the left-leaning big media will be forced to recognize the growing evidence of the global warming fraud — just as the holier-than-thou media have in recent days had to come to grips with the tragic reality that the media outlets they work for are filled with serial sexual predators.
Tax Reform: Critics of the Republican tax cuts fret that they will have a profound effect on American lives. If true, that's all the more reason to cut taxes and simplify the tax code.
A lengthy New York Times "analysis" of the Senate tax bill published on Wednesday carried the ominous headline: "It Started as a Tax Cut. Now It Could Change American Life."
The story is full of scary sounding words like "re-engineering" and "behemoth" and "far-reaching." It quotes various sources calling the plan a "repudiation of the social contract" and a "grand deception," and warns that it will widen income inequality, hurt educational opportunity, cut into social programs.
The writers call it a "trickle down revival" based on "the presumption that when people in penthouses get relief, the benefits flow down to basement tenements."
This, mind you, is what passes for a news story these days.
It's not worth spending the time picking apart the multitude of dubious claims in that story, such as that business tax cuts won't help workers (they will), that the tax cut plan won't boost growth (it will), or that it will increase income inequality (it won't).
It's arguable, in fact, that tax hikes increase income inequality. After all, income inequality increased by 2.8% under tax-hiking President Obama and 1.8% under tax hiking President Clinton. But income inequality was dead flat in the wake of President Bush's tax cuts.
The broader point is that this story, and many others like it, expose something the journalists — and all the sources they quote attacking the tax cuts — don't seem to understand.
The mere fact that changing the tax code can have widespread implications beyond how much money the federal government takes in is a huge indictment of the tax system in place today.
For decades, both Democrats and Republicans have used the tax code as a way to hide spending. Instead of authorizing money for a program aimed at achieving some public policy goal, lawmakers rejiggered the tax code, adding special breaks here, refundable tax credits there, or punitive taxes somewhere else.
Today, the hundreds of "tax expenditures," as they are called, add up to $1.4 trillion a year, according to the Treasury Department. That's just for the ones directed at individuals. Those aimed at corporations add up to another $200 billion.
Among the biggest are the exemption from taxes for employer provided health benefits ($214 billion a year); deduction of state and local taxes ($104 billion) and mortgage interest ($65 billion).
The problem is that tax expenditures are notoriously inefficient, and they tend to shower the most benefits on the wealthiest Americans — since the value of special tax breaks goes up as people move into higher income tax brackets.
X About 88% of the benefits of the state and local tax deduction go to those with incomes above $100,000, for example. Worse, this deduction is a huge subsidy to high-tax states, paid for by low-tax states. (Which is a big reason Democrats are so hostile to getting rid of it.)
The mortgage and employee health deductions are similarly skewed to high-income taxpayers.
Worse, these tax expenditures force tax rates up, which in turn increases the pressure to add more special tax breaks.
The goal of reform should be to move the tax code in the exact opposite direction — toward lower rates and fewer "tax expenditures." In other words, a flat tax that raises enough money to fund government programs that people are willing to pay for, and does so in the most efficient and least economically distorting way.
The House and Senate bill take some steps in the right direction. They'd both get rid of the state and local tax deduction, while the House bill would cap mortgage interest deductions.
But there is far more work to be done before anyone can claim that the tax code has been "reformed." Yes, this will change life in America as we know it, but that's exactly the point.
Global warming, as both a major science debate and an economic issue, has become a major dividing point in American politics.
Recent global agreements brokered by the U.N. seek steep reductions in world C02 output to slow the presumed warming of the earth's atmosphere, while also seeking alterations in the economy that would move energy sources away from fossil fuels toward renewable natural energy.
XBut a growing contingent of scientists and economists call into question the climate change dogma, saying that the temperature data show no clear recent warming and noting that the benefits of warming, if it existed, might be greater than the costs. This split will define the political debate in the near term.
Former president Barack Obama and most of the Democratic Party signed on eagerly to the U.N. agenda, which entails major reductions in the size of the U.S. economy.
President Donald Trump, by naming a Cabinet filled with energy executives and global warming skeptics, has made clear his policy is likely to be far more friendly toward conventional fossil fuels than Obama's was.
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It is a political, tactical and moral mistake for Republicans to continue backing Judge Roy Moore for Alabama's Senate seat.
In brief, he has been accused by multiple women of, decades ago, making unwanted and inappropriate sexual advances toward them when they were teenage girls — one as young as 14 — and he was in his 30s. At least four women say he initiated sexual contact with them.
When asked if he thought the Moore allegations were true, Senate Majority Leader Mitch McConnell, R-Ky., said, "I believe the women, yes. ... I think he should step aside" — a sentiment shared, publicly and privately, by nearly all Republican senators.
President Donald Trump at first struck the right chord. After his hand-picked Republican candidate lost the primary election, Trump called Moore to congratulate him. Everything was fine, until the allegations. Then Trump said, "If the allegations are true, he should drop out." When the Republican National Committee withdrew its funding for Moore, Trump went along with it.
Then Trump began to twist, and he now says that Moore is innocent until proven guilty, that these are all old claims and that we can't have a lefty in the Senate:
"(Moore) denies it," the President said last week. "Look, he denies it. I mean, if you look at what is really going on, and you look at all the things that have happened over the last 48 hours, he totally denies it. He says it didn't happen. And, you know, you have to listen to him also. You're talking about, he said 40 years ago this did not happen."
Trump then blasted Moore's Democratic opponent, Doug Jones, via Twitter: "The last thing we need in Alabama and the U.S. Senate is a Schumer/Pelosi puppet who is WEAK on Crime, WEAK on the Border, Bad for our Military and our great Vets, Bad for our 2nd Amendment, AND WANTS TO RAISES TAXES TO THE SKY. Jones would be a disaster!"
These are not good enough reasons.
XAgain, Moore was not Trump's guy. Luther Strange — the incumbent appointed to complete the term of former Sen. Jeff Sessions, who became Attorney General — was Trump's choice. But Steve Bannon, Trump's former aide, wanted Moore, presumably because the former judge supported Bannon's desire to ditch Senate leader Mitch McConnell. Yet during the Luther Strange and Roy Moore debates, the candidates fell all over themselves to argue who would be more closely linked to the Trump agenda. So, no matter who won, he figured to be an ally to the President.
Defenders of Moore ask, why now? After decades in public service, why are these allegations only now coming out? A better question, why the allegations in the first place? Are they credible? But to answer the timing question, the more likely "culprit" is not Democratic opposition, but Harvey Weinstein, whose sexual abuse and misconduct opened the door for other accusers in other fields to come forward. That these allegations are only now being taken seriously is too little too late, but the timing could not have been worse for Moore.
Of course he is "innocent until proven guilty." This is not a court of law. This is politics. Are the defenders of Moore willing to discount all of his accusers but believe the accusers against Bill Clinton?
The voluminous allegations against Harvey Weinstein, a friend and patron of the political left, have forced the Democrats to reconsider their adoration for the likes of Bill Clinton and Ted Kennedy, whose resumes include credible allegations of sexual assault, allegations long ignored.
For now, Republicans occupy the high moral ground, as Democrats, already dealing with allegations of sexual misconduct by Sen. Al Franken, D-Minn., and Rep. John Conyers, D-Mich., squirm to explain how and why they ignored, downplayed or accepted the sexual behavior of party icons Clinton and Ted Kennedy.
With Moore defenders, in part, circling the wagons on Moore, many Trump voters apparently cannot answer this question: Why did you "overlook" the allegations made by some dozen women against now-President Donald Trump?
Trump was not running against Mother Teresa. Trump ran against Hillary Clinton, a woman against whom a credible allegation was made that she verbally intimidated Juanita Broaddrick just two weeks after Bill Clinton allegedly raped her. Conservative Barbara Olson's book "Hell to Pay" and liberal Christopher Hitchens' book "No One Left to Lie To" depict Hillary as the Toscanini of the "nuts or sluts" strategy effectively employed to malign and marginalize her husband's accusers.
This is the person against whom Donald Trump ran. So, no, Republicans need not apologize for supporting Trump against a person whose actions enabled, covered up for and therefore perpetuated her husband's misconduct.
By supporting Roy Moore, Republicans, on the issue of sexual misconduct, risk turning into the my-guy-wrong-or-wrong hypocrites from across the aisle.
Elder is a best-selling author and nationally syndicated radio talk-show host.
American democracy's comic opera frequently features collaborations of "bootleggers and Baptists." These entertainments are so named because during Prohibition, Baptists thought banning Demon Rum would improve public morals (oh, well) and bootleggers favored the ban because it made scarce a commodity for which there was a demand that they could profitably supply. On Monday, the Supreme Court will listen — with, one hopes, a mixture of bemusement and amusement — to arguments concerning another prohibition.
This one concerns a law banning what many millions of Americans do anyway — illegally betting between $150 billion and $400 billion annually on sports events. Illegality prevents precise knowledge, but if the sum is just $150 billion, that sum exceeds the combined revenues of Microsoft, Goldman Sachs and McDonald's. The Baptists in this case are those who consider gambling a vice that state governments should discourage. The bootleggers are those who supply illegal gambling services on the internet and elsewhere.
The court's nine fine minds need not and should not trouble themselves with the question of whether this particular prohibition is sensible. They should, however, defend federalism by telling the national government to stop telling state governments what laws they cannot change.
Twenty-five years ago, gambling was rapidly becoming regarded less as a vice that state governments should discourage and more as a source of revenues that those governments would encourage. But in 1992, U.S. Sen. Bill Bradley, D-N.J., a former college and NBA basketball star who worried about the possible corrupting effects of gambling on sports, authored the Professional and Amateur Sports Protection Act (PASPA). It says no government entity may "authorize" wagering on sporting events. This has not deterred the many millions of Americans who since 1992 have wagered trillions on such events. Next March, the sum wagered on the college basketball tournament — approximately $9 billion — will exceed the NBA's estimated revenues for the 2017-2018 season ($8 billion).
In a 2011 referendum, New Jersey voters authorized their Legislature to do what it did in 2014: partially legalize sports betting by repealing a law prohibiting such wagering at racetracks and casinos. The NCAA and professional sports leagues objected, saying that by "authorizing" such gambling New Jersey was violating PASPA. A federal circuit court agreed, rejecting the state's argument that PASPA violates the 10th Amendment. ("The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.") The court said New Jersey's partial repeal affirmatively authorized sports wagering by directing it to particular venues. The court argued that PASPA did not unconstitutionally "commandeer" state resources because it did not compel New Jersey to take a particular action or devote resources to administering federal choices.
An amicus brief supporting New Jersey argues that federalism precludes the national government from forbidding a state to pass a law "that neither violates the Constitution nor addresses any matter pre-empted by federal law." Congress has not chosen, as it could, to prohibit sports betting; instead, Congress has paralyzed states, preventing them from changing laws that such betting violates, and effectively commandeering state resources to enforce a policy that the state dislikes.
The brief also says: "Depriving the body that enacted a law of the ability to repeal or amend that law defeats the purpose of representative democracy." It is indisputable that Congress cannot "directly compel New Jersey to enact a prohibition on sports betting." Therefore Congress may not prevent the state from repealing such prohibition. In either case, the state is being forced to regulate behavior it would prefer to deregulate or to regulate in its own manner.
As currently construed, PASPA requires states to disregard an emerging consensus: In 1993, 56% of Americans disapproved of legalizing sports betting. Now, 55% approve. Twenty states have joined an amicus brief supporting New Jersey, and legislation has been introduced in a dozen states to legalize sports betting if New Jersey wins. The professional sports leagues are recalibrating their thinking, partly because legalizing and regulating sports betting would make it easier to detect suspicious surges of bets that might indicate rigged competition, and partly because wagering expands and intensifies fans' engagement. For example, bettors watch more NFL games, and watch for longer, than non-bettors.
Besides, the NFL is moving the Oakland Raiders to a city built by gambling, Las Vegas, where an NHL franchise has just begun its first season. The outcome in the Supreme Court is difficult to predict. It is, however, legal to bet on it.
Nothing in President Donald Trump's first federal budget, issued earlier this year, produced more howls of indignation than the proposal to kill off a remnant of the War on Poverty known as the Community Development Block Grant program, or CDBG.
Politicians, advocates, the media, and executives of nonprofits that receive these often-sizable grants denounced Trump's plan as devastating. Typical was Democratic senator Tom Udall of New Mexico, who was "appalled." Newspapers nationwide published hundreds of articles about the local initiatives that would die if Trump got his way.
The overheated rhetoric came in defense of one of the nation's most wasteful and ineffective domestic-spending programs. Conceived in the early 1970s as a way to give local officials a say in how federal poverty aid gets doled out, the CDBG has sent some $150 billion to impoverished neighborhoods in Baltimore, Buffalo, Newark, and other struggling cities, with little positive to show for it.
Worse, the CDBG has created a local patronage racket, funding politically connected nonprofits. Congress eventually extended CDBG funding to wealthier areas, so that grants now help build tennis courts and swimming pools in neighborhoods with above-average incomes.
Still, though the budget passed by the House of Representatives removed CDBG, the Senate restored it for the time being. That the grants survive at all and still generate such overblown rhetoric illustrates why true reform of federal spending can be so hard.
XWhen President Lyndon B. Johnson announced the national War on Poverty in 1964, he pledged that it would be a grassroots campaign, with local residents having significant input and local organizations receiving funding for urban revitalization. LBJ's successor, Richard Nixon, decided formally to decentralize antipoverty programs by putting aid money into block grants and letting state and local officials decide how to distribute it.
Local officials quickly betrayed the CDBG's ostensible antipoverty mission, using the grants to supply patronage jobs and set up nonprofits run by their allies. By 1977, the New York Times was already calling the program "unduly optimistic" in its faith in local officials to spend the money wisely. One federal investigation found that nearly one-third of the operatives in Boston mayor Kevin White's political machine worked for the city as CDBG coordinators.
President Jimmy Carter decided to build support for the increasingly criticized program by expanding it to include "non-distressed" communities—thus making CDBG fans out of suburban legislators and Sunbelt-city mayors whose cities received grants. Carter's reform shielded the program from later efforts to eliminate it, but scandals became endemic. In the early 1980s, for example, authorities indicted Florida officials for taking bribes from builders in return for work on CDBG-funded projects. Audits later in that decade in Chicago and other cities found millions of dollars in block-grant funds unaccounted for.
In the ensuing decades the program has been subject of persistent stories of abuse. One reason is because CDBG allows generous grants for so-called soft projects like senior-citizen initiatives, youth day camps, housing-counseling services, and recreational facilities. Such projects are supposed to help build "viable urban communities"—a vague notion that resists measurement.
Soft-money grants have enabled some of the program's most embarrassing scandals. In 1986, the Philadelphia district attorney disclosed that CDBG grants had gone to a leader of the radical group Move, whose confrontation with Philly police sparked a conflagration that killed 11 and destroyed 61 homes. The money had been funneled to the group through another radical local organization, Icon, which had received more than $800,000 in block grants; Icon had also paid with grant money for an appearance by militant Black Muslim leader Louis Farrakhan, which the group justified on the grounds of "community building."
These days, the CDBG hands out money for projects that have little to do with its poverty-combating mission. When the Obama administration tried to reclassify some New York communities as too rich to receive "antipoverty" grants, New York senators Charles Schumer and Kirsten Gillibrand joined a group of affected mayors in blasting the feds for "pulling the rug out from communities that were relying on federal funds for critical infrastructure programs."
Among the "critical" infrastructure: improvements to tennis courts and a baseball field in the town of LaFayette, where average family income totals $77,800 annually, and the kitchen of a community center of Elbridge, where family income averages $82,000 annually.
Even when CDBG money gets spent in struggling areas, the impact is usually negligible. Since the program's inception, Detroit has received $1.9 billion, Baltimore $1.1 billion, Buffalo $750 million, and Newark nearly $500 million, but these cities have remained among America's most impoverished—far from the "cities of spacious beauty and living promise" that LBJ vowed to nourish. In 2005, the Buffalo News estimated that its home city had received more block-grant dollars per resident than virtually any other place in America, but "scant evidence" existed of the investment; generations of local politicians had "frittered away much of the money," the paper wrote.
In one glaring example, the city poured $60 million in CDBG money into a downtown theater district, only to wind up with "a lot of bad debt and struggling businesses," the paper observed. Public outrage changed nothing. Some six years later, federal auditors again blasted Buffalo for failing to monitor tens of millions of dollars in block-grant spending, and demanded that the city repay half a million in misspent funds.
Cities and states us CDBG money to make loans to businesses in distressed areas on the dubious assumption they suffer primarily from lack of investment, which government can remedy with taxpayer money. There's little evidence this works, though, and much of it turns out to be frivolous. Recently, for instance, local officials have lent $80,000 in CDBG money to a brewery and tasting room in Ozaukee County, Wisconsin, $205,000 to an apiary in northern Michigan, $25,000 to a T-shirt store in Batavia, New York, and $90,000 to a distillery in Gardiner, Maine.
These kinds of grants and loans reflect the CDBG's loose standards and ill-defined goals. In 2003, the Office of Management and Budget, reviewing federal spending, declared that it wasn't clear how the CDBG defined "community development," that much of the money it provided went to places that didn't need it, and that no long-term measurements were in place to determine if the communities spending the money were making any progress.
The Bush administration suggested drastically cutting back CDBG funding to focus solely on needy neighborhoods, concentrating narrowly on economic development, and gauging the effectiveness of the spending by clear standards such as increases in jobs, declines in poverty rates, and gains in local property values. The Bush proposals went nowhere in Congress.
Nowadays, the purpose of the block grants seems lost in the mists of time. When advocates for the grants, including many journalists, defend them, they often refer to recipients that give help to those in need. In the wake of Trump's budget announcement, for example, newspapers published more than 500 stories detailing how CDBG cuts would derail the popular Meals on Wheels program, which delivers food mostly to elderly Americans.
Aside from inaccuracy (the CDBG finances just 3 percent of Meals on Wheels), the stories ignored the essential point about the grants—that their original aim was to help revive economically distressed areas. Program defenders typically say little about that mission, since few examples exist of CDBG money stimulating real change.
For the War on Poverty's architects, the blight corroding urban communities of the 1960s was caused by powerful external forces—above all, globalization, which destroyed blue-collar jobs, and racism, which led middle-class urbanites to flee to the suburbs to escape the era's social upheavals. Rarely did the antipoverty warriors consider how local corruption and mismanagement in places like Newark, Detroit and Buffalo might contribute to urban decline.
Meantime, the most successful urban-revival efforts turned out to have little to do with Washington's antipoverty agenda. From 1975 through 1993, New York received nearly $3.7 billion in CDBG money. The city's population shrank from about 7.5 million to 7.3 million, the local economy gained virtually no jobs, and crime hit record-breaking levels. Then, in 1994, Rudy Giuliani took over as mayor and argued that New York's future lay in its own hands, not Washington's.
He instituted policing reforms, made work a requirement for able-bodied welfare recipients, and revived key institutions, like the City University of New York. Mayor Michael Bloomberg, his successor, largely followed up on those efforts. New York thus enjoyed 20 solid years of effective governance. The city's population rose by 1.2 million people, its crime fell to levels unseen since the early 1960s, and its economy added 1.1 million new jobs. Antipoverty grants didn't accomplish that; leadership did.
Today, at $3 billion annually, CDBG is a small part of the federal budget. But as one of the last vestiges of the War on Poverty, it remains symbolically important, as the recent press outrage illustrates. If Washington can't junk a program that clearly doesn't work, what federal spending can ever be cut?
Malanga is the George M. Yeager Fellow at the Manhattan Institute and senior editor of City Journal from which this was adapted.
WMD: Until quite recently, the nuclear threat posed by North Korea was mostly hypothetical. But in recent days, after yet another successful missile test, it's become clear that the threat is all too real and immediate. The time for more talk is running short.
Anyone who wasn't concerned about North Korea's growing missile prowess before should be now. North Korea told the world Wednesday that it fired a new Hwasong-15 intercontinental ballistic missile over Hokkaido, the northernmost island of Japan. Ominously, it came just two weeks after North Korea reportedly exploded a hydrogen bomb underground.
Just six months ago, the world was worried about North Korea's missiles being able to eventually hit Guam or Alaska. This latest test went just 620 miles, but did so after reaching a height of nearly 2,800 miles and staying in the air for 54 minutes.
David Wright, a physicist and co-director at the Union of Concerned Scientists web site, put this into perspective in a blog post: "If these numbers are correct, then if flown on a standard trajectory rather than this lofted trajectory, this missile would have a range of more than 13,000 kilometers (km) (8,100 miles). This is significantly longer than North Korea's previous long range tests, which flew on lofted trajectories for 37 minutes (July 4) and 47 minutes (July 28). Such a missile would have more than enough range to reach Washington, D.C., and in fact any part of the continental United States." (Emphasis ours).
Let's sum up quickly: This missile can fly 8,100 miles. Washington, D.C. is 6,850 miles from Pyongyang. See the threat now?
And no, those aren't just scare-words from an anti-nuclear scientist-activist.
XDefense Secretary Jim Mattis had this to say: "It went higher frankly than any previous shot they've taken, a research and development effort on their part to continue building ballistic missiles that can threaten everywhere in the world, basically."
Or, as North Korea's communist ruler Kim Jong Un put it, "We have finally realized the great historic cause of completing the state nuclear force."
Since the start of this year, North Korea has tried out 23 missiles in 16 tests, and it continues to pursue advanced technology to deliver a workable nuclear bomb that can be carried by its new ICBMs.
"The U.S. and South Korea believe Pyongyang may be able to put a miniaturized warhead on a missile sometime in 2018 — giving it the theoretical capability to launch a missile with a warhead atop it that could reach the U.S.," CNN reported.
Surprisingly, that might not be the most immediate concern. Others note that an electromagnetic-pulse attack on the U.S., carried by one of the North Korean ICBMs, could have a catastrophic impact.
Based on a recent report to Congress, "A large nuclear blast outside the atmosphere and above the U.S. could short out electric systems across the continent and cause airliners in flight to crash." Not to mention taking down local power plants, transportation systems, cell phone service, TV service, refrigeration, everything the modern world economy depends on.
It's not a comforting thought. We would do well to refocus some of our energies away from petty political squabbles, and start pondering what to do about this.
President Trump has promised new sanctions on North Korea following the test, while China is sending a team of diplomats to its client state for emergency talks. But we have been talking and even doing deals with North Korea for decades now, to no effect.
President Clinton in 1994 gave North Korea food and energy aid, in exchange for its promise that it would end its nuclear program. It didn't. Instead, it got together with Iran and worked to create nuclear weapons with which they could menace the world.
Thanks to President Obama's 2009 policy of "strategic patience," both Iran and North Korea have had another eight years to become nuclear powers — which will soon give them the ability to use nuclear blackmail on their immediate neighbors and us.
Unless North Korea relents, we'll face a hard choice: Continue talking and hope that North Korea sees the light, or take down Kim Jong Un and his hateful totalitarian regime.
We think the latter is the only real choice. As our November IBD/TIPP Poll showed, 73% of Americans say they are "very concerned" or "somewhat concerned" about the "possibility of a nuclear attack by North Korea against the U.S. or its allies." This will only grow with recent revelations.
We have a choice: Take down Kim's murderous regime and end this growing threat once and for all, or forever regret missing the chance.
Higher Education: Thanks to years of extremely bad public policies, the federal higher education programs dump tens of billions of dollars a year in grants and aid, only to produce an ocean of debt and millions of graduates ill-suited for the workforce. House Republicans are set to introduce a sweeping reform plan that would start to repair this wreckage.
The House Republican reform plan, previewed by The Wall Street Journal on Wednesday, would revamp the student loan program by among other things capping loans, putting colleges on the hook for defaults, and removing various Obama-era loan forgiveness programs. Community colleges would also get more funding to better coordinate courses with job requirements, and the bill would expand apprenticeship programs.
It will no doubt face incredibly stiff opposition from Democrats and the college lobby. But there is also no doubt that reform of federal college aid programs is desperately needed.
Let's review the current situation.
Federal college aid has exploded in recent years, with per-student spending on grants and aid climbing an average 3% a year since 2006, after inflation, according to the College Board. This year, federal grants and aid will total $153.9 billion, or $16,000 per student.
All that money has mainly fueled hefty tuition inflation — with annual college costs climbing 2.4% at private and 3.2% at public four-year schools.
XAt the same time, we've seen an eruption in loans, most of which are now carried on the federal books, thanks to President Obama's decision to nationalize the student loan industry in 2010. Outstanding federal student loans shot up from $154.9 billion in 2009 to more than $1 trillion today.
What's more, student loan debt now accounts for about 10% of household debt, double its share from 2009, according to the Federal Reserve Bank of New York.
And despite repeated efforts by Obama to make it easier for students to avoid paying back loans, default rates are currently 11.5%, up from 11.3% the year before, according to the Department of Education. That default rate, by the way, is more than 50% higher than credit card debt.
Meanwhile, some six million jobs are going begging — not because the economy is at "full employment," but because employers can't find workers with the proper skills and training to take them on. In fact, roughly the same number of people are looking for work.
So, to sum up: The federal government has thrown massive amounts of money to make college cheaper, created a catastrophic student loan crisis, and produced a huge pool of adults who don't have any marketable skills.
The only real beneficiaries of this set-up have been colleges and universities, which have been able to boost tuitions with impunity, and pour money into more administrators and fancier dining, while not having to worry about whether they're providing a useful service to their customers.
To call this a public policy failure would be the understatement of the century.
Yet, in the face of this, the only proposals coming from Democrats are to keep heading toward the cliff while mashing down on the accelerator. The party's leaders want still more taxpayer money thrown at colleges to make them "free", even easier borrowing terms for students, and more ways for them to avoid paying back their loans. (What's the definition of insanity, again?)
The Republican reform plan looks like a good start. Just don't expect the upcoming debate to be civil or educated.
The U.S. Justice Department finally is confronting Harvard University and other elite colleges that blatantly discriminate against Asian-American applicants with a quota system.
To get into Harvard, students of Asian heritage have to score hundreds of points higher on competitive exams than non-Asian applicants with similar or even inferior academic records. That's why the Trump administration's Justice Department is demanding Harvard's admissions records and launching an investigation. No surprise that Harvard is stonewalling. The university has plenty to hide.
Harvard's quota system is destroying the American dream for countless Asian families across the nation. Often new to the country and struggling economically, these parents make sacrifices for their children's education and encourage their children to study diligently. It pays off. For example Asian students make up 60% of the students in New York City's highly competitive specialized public high schools, like Stuyvesant and Bronx High School of Science.
But Harvard is shutting its door to many of them. As the number of Asian-American college applicants with top academic credentials soared over the last two decades, Harvard has kept acceptances at around 20% of each entering class. Harvard doesn't admit that, but the proof is in plain sight.
In 2014, Harvard was sued by Students for Fair Admissions, an advocacy group of mostly first generation Asian-Americans, including parents of high school students striving to qualify for Ivy League admissions. Their lawsuit claims that the rigid racial makeup of every Harvard class — with fixed percentages of whites, Hispanics and blacks — is the result of an illegal quota system and insidious discrimination.
In states like California that bar affirmative action in public college admissions, the soaring number of college-age Asian-Americans has led to a rapid increase in their presence on competitive campuses. Asian-American students now win nearly half the places at California Institute of Technology, up from only a quarter in 1992. But not so at Harvard — proof, according to Students for Fair Admissions, of a secret quota.
The Students for Fair Admissions lawsuit also cites Harvard admissions officials stereotyping Asian applicants. One official described an applicant as "quiet, and of course, he wants to be a doctor." Harvard seems to pigeonhole Asian students as math and science grinds who add little to campus life.
Harvard has spent millions of dollars on legal maneuvers and court filings, trying unsuccessfully to get the lawsuit dismissed and to shield the college's "holistic" admissions process from scrutiny. But a federal judge is compelling the college to hand over six years of admissions records. Stuyvesant, Boston Latin, Thomas Jefferson High School for Science and Technology in Virginia and Monta Vista in California — all Harvard "feeder schools" — were also subpoenaed to provide information. This lawsuit is expected to be tried in Boston late in 2018, but no doubt will end up at the U.S. Supreme Court.
Don't count on the high court to back up Harvard's use of racial preferences to achieve campus diversity. Last year, the Justices split 4-3, when they halfheartedly allowed the University of Texas at Austin to consider race as one of many factors contributing to student body diversity. Justice Anthony Kennedy, writing for the majority, struck an uncertain tone, suggesting the issue would need to be revisited, and Justice Samuel Alito specifically cited discrimination against Asian-American applicants as a problem.
Meanwhile, the Trump administration's Justice Department is pulling no punches. In response to a complaint from more than 60 Asian-American groups alleging discrimination at Harvard, civil rights lawyers at Justice are demanding to see admissions records. So far, Harvard has not produced a single document. The Justice Department has imposed a final deadline of Dec. 1, and is threatening to sue the university.
Harvard's racial quota system is indefensible. Fortunately, its days are numbered, because finally we have a Justice Department willing to fight for colorblind fairness in college admissions.
McCaughey is a senior fellow at the London Center for Policy Research and a former lieutenant governor of New York state.
The network news divisions boast about how much they care about the truth and then rage against President Trump when he calls them makers of "fake news." But when it comes to the politicians they adore, especially those they wish would run for president, the truth takes a back seat.
Exhibit A right now is Elizabeth Warren, who falsely claimed in a professional directory to be descended from Cherokee Indians, so as to be listed as a minority when she was hired as a professor. When Trump makes fun of her by calling her "Pocahontas," the networks get oh so upset and call it a "racial slur." But they don't seem to care one iota about how American Indians feel regarding white people who take on a fake minority identity.
The story broke during Warren's 2012 campaign against then-Sen. Scott Brown in Massachusetts. That May, liberal writer Garance Franke-Ruta summarized for The Atlantic: "the progressive consumer advocate has been unable to point to evidence of Native heritage except for an unsubstantiated third-hand report that she might be 1/32 Cherokee. Even if it could be proven, it wouldn't qualify her to be a member of a tribe." So a Senate candidate committed a race-based fraud. CBS broadcast programs touched the story once.
In June, Nancy Cordes reported that Warren said her relatives told her of her Cherokee background. Then, Cordes aired this double-lie sound bite from Warren: "I know my family's heritage. It's also been clear from the very beginning that I never got any special breaks from it." If she knew her family heritage, why couldn't she document it? Why invent the heritage if not to derive advantages from it?
Cordes then neatly bundled and threw away the entire controversy: "Recent polls show most voters in Massachusetts don't think Warren's heritage is a big deal," she said. Those "truth" tellers implied that we shouldn't get too disturbed by a little lie to get hired at an Ivy League.
NBC also touched it just once that year, on the "Today" show on Oct. 2, after David Gregory moderated a Brown-Warren debate. He asked Warren, "Do you consider yourself a minority?" She replied: "I listed myself as Native American. ... It's part of who I am." Gregory later asked her: "Are you hiding something?" Again, Warren lied: "No, I'm not. I never used it for college, for law school or to get a job."
XOver and out.
Just try to put those sentences together: "I listed myself as Native American in a professional directory ... and I never used it to get a job."
In response, the "facts first" media simply walked away. To address this honestly was to call her a liar. PolitiFact has only seven rulings on Warren, four "Mostly True" and three "Half True." The site has never addressed this lie.
By the way, ABC never covered this controversy in 2012.
When Trump called her Pocahontas in 2016, the networks brought out the weasel words. ABC's Mary Bruce reported, "Friday night, Trump hitting hard, attacking her for once claiming she was Native American." Once claiming? She has claimed it for years. She claimed it throughout the 2012 campaign. She claimed it in five recipes she submitted to a "Pow Wow Chow" cookbook.
The same routine continued this week when Trump called her Pocahontas while honoring Navajo code talkers from World War II. Nancy Cordes at CBS breezily recounted, "It's a reference to the Massachusetts senator's past claims of Cherokee ancestry." But she added: "Democrats called it a racial slur. Warren called it disturbing."
It's disturbing, all right. It's disturbing that Warren routinely gets a pass on her lies. These are the benefits the liberal media hand out to their favorites.
Bozell is the president of the Media Research Center. Graham is director of media analysis at the Media Research Center and executive editor of the blog NewsBusters.org.
Two weeks ago, it seemed that former President Bill Clinton was finished as a public figure. A variety of public intellectuals on the left had consigned him to the ashtray of history; they'd attested to their newfound faith in his rape accuser Juanita Broaddrick or torn him to shreds for having taken advantage of a young intern, Monica Lewinsky.
The moral goal was obvious: Set up a new intolerance for the sexual abuse of women. The political goal was even more obvious: Show that Democrats are morally superior to Republicans, and in doing so, shame Republicans into staying home rather than voting for Alabama Republican senatorial candidate Roy Moore, who has been credibly accused of sexual assault of minors.
Then it all fell apart.
On Sunday, House Minority Leader Nancy Pelosi, D-Calif. — the first female speaker of the House — brushed off Clinton's scandals with a simple one-liner: "Well, I think it's, obviously it is a generational change. But let me say the concern that we had then was that they were impeaching the president of the United States, and for something that had nothing to do with the performance of his duties."
That's the $64,000 question. She really doesn't — just as the Democrats never had to defend Clinton. If they'd kept their mouths shut and let Clinton resign, then-Vice President Al Gore would have been president. There's a high likelihood he would have been re-elected in 2000.
If the Democrats were to let Franken fall today, his replacement would be appointed by a Democratic governor of Minnesota. If they were to let Conyers go down, he'd be replaced in a special election in what The Cook Political Report deems a D+32 district, meaning it performed an average of 32 points more Democratic than the nation did as a whole in 2016. Democrats wouldn't miss a beat, and they'd have a shot at taking out Moore to boot.
By defending Franken and Conyers, Democrats give Republicans ample opportunity to back Moore and point at Democratic hypocrisy all the while. While Republicans can at least point at the potential loss of a Senate seat to justify backing Moore, Democrats wouldn't suffer any loss by dumping Franken and Conyers.
There's only one real reason Pelosi would stand by accused Democrats: She doesn't care. Her logic with regard to Clinton is the only one that matters. He was a Democrat, and his sexual improprieties had nothing to do with his capacity for voting for her agenda. This was the national argument we had in 1998, and it was settled in Clinton's favor. Character doesn't matter. Only agenda does.
Republicans bucked that agenda. They don't anymore.
In order to shame Republicans, Democrats seemed to buck that agenda this time around. But that was all bluster.
Bill Clinton didn't just escape impeachment in 1998. He won the argument. He taught Americans that no matter how scummy our politicians might be, so long as they side with us on matters great or small, we ought to back them. We ought to back them not because our principles are important but because there might be some point in the future when our principles are at stake, and we don't want our feet held to the fire then, do we?
In the famous play "A Man for All Seasons," Sir Thomas More, betrayed by his former colleague Richard Rich in exchange for the post of attorney general in Wales, says: "Why, Richard, it profits a man nothing to give his soul for the whole world. ... But for Wales?"
We're willing to give our souls for nothing. Or perhaps they're already gone.
Shapiro is host of "The Ben Shapiro Show" and editor-in-chief of DailyWire.com.
Not since Ronald Reagan graced the Oval Office has Congress been better poised to boost economic growth and prosperity through a thoughtful revamp of the federal tax code. Unfortunately, the House and Senate are taking entirely different approaches — only one of which is pro-growth — to tackling one of the most blatant drags on the U.S. economy: the estate tax.
Known as the "death tax," the estate tax has long been recognized for its destructive nature. "Of all taxes imposed by the federal government," according to a 1998 report by the U.S. Congress' Joint Economic Committee, "the estate tax is one of the most harmful to economic growth when measured on a per-dollar-of-revenue raised basis. Although the estate tax is relatively small in terms of revenue raised, it exerts a disproportionately negative impact of the economy."
When President Trump and congressional Republicans announced their commitment to reform the federal tax code, it was a given that reform would include killing the death tax. To do otherwise was unthinkable — at least from my perspective as the head of the tax policy implementation staff on Donald Trump's transition team.
As expected, the tax reform measure passed by the House earlier this month permanently repeals the estate tax. The measure adopted by the Senate Finance Committee, however, not only fails to repeal the estate tax, but what little relief it provides is scheduled to expire at the end of 2025.
The non-partisan Tax Foundation reckons eliminating the estate tax would lift capital investment, enhance labor productivity, and increase "labor force participation by the equivalent of 159,000 full time jobs."
XIt's no wonder then the Tax Foundation calculates the estate tax provisions in the House-passed bill would boost the economy 0.7% over the decade. Eliminating the estate tax accounts for fully one-fifth of the additional 3.5% economic growth the House measure is expected to produce should it become law.
The Senate's estate tax provisions, by contrast, would have a negligible impact on the economy. The Tax Foundation estimates the Senate's proposal to double the estate tax exemption would boost the economy 0.1%. But because the increase in the exemption is temporary, even this meager benefit would soon dissipate.
While the estate tax's deleterious impact on the economy is well known, you'd be surprised by how little revenue the tax actually generates. Adding up all the money raised by levying the estate tax on the lifetimes of work and savings of Americans who died last year amounts to roughly one-half of one percent of federal revenue. That's literally enough to fund the federal government for all of two days.
And if repealing the estate tax leads to faster economic growth as expected, much of that revenue would be replaced by increased tax revenue via the individual and corporate income taxes, the payroll tax, and federal excise taxes. Most tax cuts don't "pay for" themselves, but repeal of the estate tax is perhaps, in the long run, the exception that proves the rule.
Repealing this tax is more than just tinkering with a cog in the machine that generates (a little) federal revenue. Its significance transcends mere numbers. It's the impact on the family owned hardware store or supermarket, the farm that's been cultivated for decades, and the ranch that's grazed cattle for generations.
For hundreds of years, these sectors of the economy were the very best representation of the American Dream: individual families working and striving to build a business, prosper, and accumulate wealth that can be handed down to the next generation. Today, that dream is chiseled away by a government that sees fit to confiscate as much 40% of those assets because mom or dad or grandpa's heart stopped beating.
And before people start complaining how this is another "tax break for the rich," can we all just admit that genuinely wealthy people (and you know who you are), don't pay the estate tax anyhow? Those people choose instead to pay accountants and tax lawyers to come up with work-arounds.
Abolishing the estate tax would benefit rich and poor Americans alike. As the Tax Foundation writes, "After macroeconomic impacts of a larger capital stock are considered, it (eliminating the estate tax) would increase after-tax incomes for all taxpayers." Granted, the increases would be relatively small at first—ranging from 0.7% to 1.8% across income quintiles — but a return to shared prosperity trumps continued stagnation.
If the aim of tax reform is to increase available capital, promote labor, and grow the economy, few steps are more obvious than abolishing the estate tax. They've figured this out in the House. Let's hope the Senate follows suit.
Carter served as the head of tax policy implementation on President Trump's transition team. Previously, he was a deputy assistant secretary of the Treasury and deputy undersecretary of labor under President George W. Bush.
The Fed: Jerome Powell, nominated by President Trump to lead the Fed when Janet Yellen leaves the post early next year, faced his hearing before the Senate Banking Committee on Tuesday. Based on his remarks, he won't be rocking the Fed's boat.
Trump passed on much better-known names such as Stanford economist John Taylor and former Fed Governor Kevin Warsh to name Powell, a little-known quantity who has served on the Federal Reserve Board only since 2012. In a piece written earlier in November, the Wall Street Journal called Powell — a former lawyer, investment banker and Treasury official under the first President Bush — "Mr. Ordinary."
Yet, even as a relative newcomer to Fed policymaking, in 2013 Powell (then the only Republican on the board) questioned the Fed's 0%-interest-rate policy and challenged former Fed Chairman Ben Bernanke to publicly announce a scaling back of the bank's bond-buying program, part of its policy of quantitative easing. Powell and two other board governors got their way, but the plans set off the so-called bond market "taper tantrum" that, for a short while, led to a spike in market interest rates.
In the intervening years, Powell seems to have softened somewhat, crediting the Fed's low interest rates with helping to rebuild U.S. job growth — just as Yellen did. Since the "taper tantrum" episode, Powell has built a reputation as a quiet consensus-builder, someone unlikely to dramatically shift Fed policy from the path set by outgoing Chair Janet Yellen and Bernanke.
Indeed, as Reuters reports, Powell, an Obama Fed appointee, sides with outgoing Chair Janet Yellen "in arguing that the Fed's easy-money policy has paid off by bringing millions back to work without any clear sign it has thrown markets off kilter."
XIn comments Tuesday, Powell told the Senate the Fed would "respond decisively and with appropriate force" to emerging problems in the economy. But he also agreed that regulations on financial companies and banks were "tough enough" and could even be lightened, especially on smaller banks that have been devastated by harsh regulations imposed by 2010's Dodd-Frank financial reforms.
He faced especially tough questions from Republicans, including this one from Sen. John Kennedy of Louisiana: "Why as a (Fed) governor have you repeatedly voted to punish (small banks) and regulate them half to death?"
Powell responded, "I guess I would quibble with that characterization of my votes and the things we've done."
Democrats, for their part, worried he'd go too far the other way, becoming a rubber-stamp for easier regulations on banks. "I've got to say this worries me," said hard-left Democratic Sen. Elizabeth Warren. Others noted that he had met at least 50 times with Wall Street executives since becoming a Fed official.
So it wasn't a lovefest. For the record, we aren't entirely certain what path Powell will take the Fed down. But we have had many doubts about an activist Fed using its growing power to "fix" anything it sees wrong with the economy, and still do.
Unlike Powell, we're not so sure that the Fed's unprecedented official policy of 0% interest rates, in place for nearly a decade, is responsible for the steady job market growth. It should have been much faster. But at the same time, we're very sure that zero rates and QE distorted both financial and housing markets.
And potential problems loom for the next Fed chief.
For one, as the Fed unwinds its $4.5 trillion balance sheet created after the financial crisis, more pressure inevitably will be put on interest rates. Will a sudden rise in rates take down financial markets and cause another housing meltdown?
Of even graver concern, the U.S. banking sector was so damaged during the last downturn, only about 20% of all financial activity now takes place within banks. Is the Fed impotent when it comes to halting a crisis in the four-fifths of the financial market it doesn't directly control?
And, as we've noted before numerous times, the Fed's judgment has been routinely poor throughout its history, usually because it keeps rates too low for too long, or raises rates too fast and too far in response to inflation fears. Every postwar recession has been preceded by a major run-up in interest rates by the Fed.
Powell, who is almost certain to be confirmed, has a chance to end this cycle of failure by taking measured policy steps and deferring to Congress on bigger issues.
But we hope and urge him to become a quiet revolutionary at the Fed, which has grown too big and powerful for its — and our — own good. As an outsider without an economics Ph.D. and no clear institutional allegiances, Powell is situated to quietly reshape the Fed: lowering its policy profile, reducing its meddling in the economy, and diminishing its dangerous market activism.
At the very least, we would propose a kind of central banker's Hippocratic oath for the likely next Fed chief and all those who follow: "First, do no harm."
Scandals: It's bad enough that lawmakers created a taxpayer-financed protection scheme that let them sexually harass their employees. The fact that the mainstream press has apparently been contributing to this cover up is even worse.
On ABC News' "This Week", veteran journalist Cokie Roberts made a rather revealing admission in the wake of accusations from women that far-left Rep. John Conyers had assaulted them.
"Every female in the press corps knew that, right, don't get in elevator with him," she said, apparently referring to Conyers. "Now people are saying it out loud." She added that "we all talked about (it) for years."
Every female in the press corps knew that Conyers was abusive toward women "for years" and did nothing about it? Try to imagine a reporter making such a casual admission about a prominent Republican.
It's hardly the first time reporters have covered for Democratic abusers.
Press were extremely reluctant to cover the Anthony Weiner sexting scandal when it first broke, and even defended his behavior, as Wendy Kaminer did in the Atlantic in 2011 when she declared that Weiner's actions didn't constitute harassment because the "women to whom he directed his texts had unmitigated freedom to delete and ignore him." Recall that at the time, Weiner was a rising star in the Democratic Party.
XBill Clinton's rapacious behavior toward women was an "open secret" back when he was governor of Arkansas, and the press either ignored credible charges of rape and assault or attacked his accusers. Only now are some in the press admitting that they perhaps shouldn't have been so quick to defend Clinton against these charges.
At the same time, the mainstream press has been eager to find and call out Republicans who crossed the harassment line. Nothing wrong with that. But such accountability should be nonpartisan.
Roberts' admission makes it clear that the problem isn't just that Congress circled the wagons, but that the press was willing to lend a hand to protect their fellow "progressives."
(For years, reporters provided the same service for liberals in Hollywood, as well as for predators in their own ranks, which explains why virtually all the people being outed these days are Democrats.)
But Roberts' admission also raises a question: How many other lechers in Congress have reporters known about "for years" and decided to keep quiet about?
All we know for certain at the moment is that there have been lots of secret settlements in the past two decades.
In 1995, Congress granted itself a get-out-of-jail free card when it passed — and Bill Clinton signed into law — the Orwellian-named Congressional Accountability Act.
That law supposedly required lawmakers to live under the civil rights and labor laws they imposed on everyone else, but put taxpayers on the hook for any violations and prevented the settlements from being made public.
In the wake of the Conyers and Sen. Al Franken groping stories, the "Office of Compliance" released a tally of these payments. Since 1995, there have been 264 that cost taxpayers more than $17 million.
We don't know how many of these payments went to silence accusations of sexual harassment, since the complaints aren't detailed. But it's a safe bet that many of them were.
The New York Times had it right when it pointed out in an editorial this week that "Decades of hushed-up complaints show sexual misconduct is as terrible an open secret in Congress as in Hollywood. Legislators have a chance to correct their poor handling of a national problem. They should seize it."
The Times should have added that liberal press must also be held to account for working with Democrats to keep this misconduct under wraps.
Wisconsin Sen. Ron Johnson has caused a bit of a hullabaloo by complaining that small businesses don't get the benefits that corporations do in the GOP tax plan. Johnson has credibility here because he is one of those rare breeds in Congress who actually knows something about running a business, having done so for nearly 30 years.
Sen. Johnson's beef with the House plan is that the effective tax rate on a successful small business would be almost 36% (as opposed to 39.6% today), compared with the new 20% rate for a corporation, such as General Electric Co. or Boeing.
He has a persuasive argument, though the tax gap is not as unfair as it may at first seem. Unlike a small business, a C-corporation is double taxed (because its owners also pay a dividend and or a capital gains tax of 23.8% on top of the 20% corporate tax), so the tax rate it pays would be close to the 36% a small business pays. But it's also true that many of the shareholders of American corporations — including university endowments, charities and many pension funds — are not subject to tax.
In any case, it would be highly desirable, for policy and political reasons, for the Republican tax plan to provide more relief for small businesses, which create more than half the jobs in our country. One solution is to go back to the original proposal by Donald Trump and the House and cut the highest individual income tax rate to 35%, which is the rate most profitable small businesses pay. Another idea is to increase the exclusion on small-business income from 17% (in the current Senate plan) to closer to 20%. This would get the effective rate down to just above 30% for family-owned businesses.
How can we make that happen without breaking the budget rules? The added small-business tax relief has to be paid for, and there is a very smart and economically sound way to do that: Eliminate the deductibility of state and local taxes for corporations. It is wildly unfair for a small business to lose this deduction while corporations keep it. The strong case for elimination of state and local tax deductibility equally applies to families, small businesses and large corporations. Tax filers located in low-tax jurisdictions should never pay more tax to subsidize those located in high-tax locales.
The only explanation for Congress' taking these deductions away from small businesses but not corporations is that corporate America has more political muscle in Washington.
Some have argued that if corporations can no longer deduct their state and local taxes, the effective rate on these companies will rise to about 23 or 24% — thus negating some of the value from cutting their rate in the first place. That's wrongheaded thinking for several reasons. First, in states that have no corporate income tax, such as South Dakota and Wyoming, the rate will still be 20%. So if companies want to pay closer to 20%, they are going to have to move to a low-tax state, such as North Carolina or Utah.
Should we really shed tears for Google or Apple if they have to pay an effective corporate tax rate of 23%, only because these companies choose not to move out of California? Getting rid of the deductibility of state and local taxes will force the states with the highest corporate tax rates to lower their rates, or fewer corporations over time will headquarter there.
It's do-or-die time for tax reform. If Republicans get smart they can achieve a two-for-one policy victory here: They can give an additional tax cut of at least $100 billion to small businesses and they can fix the inequity in their tax plan by putting small and large businesses on an equal footing. Ironically, Democrats have been trashing the Trump tax plan as "tax breaks for large corporations." If they want to now go out and defend one of the most indefensible tax write-offs for corporate America in the entire tax code, let them.
Moore is a senior fellow in economics at the Heritage Foundation. His latest book is "Fueling Freedom: Exposing the Mad War on Energy." He served as an economic adviser to the Trump campaign.
There are powerful reasons to kill ObamaCare's individual mandate to buy health insurance. This regressive tax has fallen primarily on modest earners who face a choice of paying a fine or buying the cheapest $7,000-deductible plan, which may be of little use until long after their finances are in distress.
X Yet how the individual mandate is eliminated makes all the difference in the world. If done while easing up on ObamaCare's counterproductive rules — from the employer mandate to coverage options that have led just as many people to leave subsidies on the table as to claim them — getting rid of the mandate could facilitate a big step toward universal coverage.
But getting rid of the mandate in the way Republicans propose, as a $300 billion pay-for that will help keep the cost of tax legislation under the $1.5 trillion maximum allowed under Senate rules, would not only ensure that millions of people drop their insurance on top of the 28 million already uninsured, but it would deepen already-daunting fiscal challenges and seriously undermine any hope of fixing our troubled individual insurance market for the foreseeable future.
Understanding the true impact of repealing the individual mandate is necessary for making sense of the Joint Committee on Taxation's official score of the Senate tax legislation. Because millions of individuals would give up their health insurance tax subsidies, JCT found that households earning up to $40,000 a year would face an ever-larger tax hike equal to $6.4 billion in 2021 alone (or a $4.4 billion tax hike once the effect of the corporate tax cut is considered).
Republicans say, in essence, "No harm, no foul." If people are voluntarily dropping coverage, that hardly amounts to a tax increase. Yet the GOP argument that people would be giving up coverage they don't want, while technically true, depends on a flawed presumption that all those millions of people with modest incomes would reject health insurance, not because of a lack of affordability, but because they would prefer to be uninsured.
No Subsidies Left Behind
Just consider a scenario in which people were able to use their available health insurance subsidy to cover the full cost of a high-deductible or catastrophic health insurance policy and have at least $200 left over for a Health Savings Account deposit — $100 of which could be cashed out if left unspent at year end.
If there were this kind of flexible option that included free cash on the table, the word would get out and there likely wouldn't even be any need for advertising to get close to 100% enrollment among the subsidy-eligible group.
The key point is that every dollar of the projected savings from killing the individual mandate depends on keeping ObamaCare just as consumer unfriendly as it was in 2017. In other words, taking those savings – all that extra tax revenue lying around because even more people leave their health insurance tax credits unclaimed — and applying it to tax cuts means that a significant chunk of the funding now available for health insurance premium tax credits will essentially disappear, all but ruling out consumer-friendly and coverage-increasing reforms of the ACA in a fiscally fraught future.
Keep in mind that Republicans' self-professed goal in seeking to repeal and replace the ACA was to make health insurance options more user-friendly. For years, Republicans have discussed giving people the option to buy coverage that is no more expensive than the tax credit available to pay for it, using any left-over portion of the credit to deposit in a Health Savings Account. Some of the GOP's leading lights on health care have gone further to propose automatically enrolling the uninsured in such plans.
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Yet Republicans never put those kinds of health care fixes on the table this year, because giving people insurance options that they can afford means that more people might use their tax credits to buy coverage, and that would come at an inconvenient budgetary cost. In fact, the Congressional Budget Office concluded that the GOP Better Care Reconciliation Act, which nearly passed this summer, offered options so unattractive that " few low-income people would purchase any plan," despite being eligible for tax credits.
Affordability issues, including deductibles of up to $7,000 or more for the cheapest bronze plans, are by far the biggest reason why nearly 8 million people who remain uninsured didn't use their available tax credit, according to the Kaiser Family Foundation.
Another 3.7 million full-time workers who are uninsured don't qualify for ACA tax credits because their employer offers coverage. Yet under ACA rules, employers are allowed to offer high-deductible, bronze-type coverage that costs a worker close to 10% of income — nearly $2,000 for a worker earning $20,000. That's nearly 10 times the cost of a subsidized bronze plan on the exchanges this year for someone at that income level.
Killing the employer mandate would make these millions of modest-wage, full-time workers who were thrown under the bus by ObamaCare eligible for individual market subsidies, but that would come at a cost. CBO says that eliminating employer mandate penalties would, by itself, cost $170 billion in tax revenue over a decade. If the GOP kills the individual mandate separately, instead of killing off both mandates simultaneously, the employer mandate will likely be around for the foreseeable future.
Those ACA employer coverage rules hurt not only hurt full-time workers, but entire families. Because of what is known as the family glitch, spouses and children of workers with a compliant offer of employer coverage also are denied subsidies to buy coverage on the insurance exchanges.
In addition, about 3 million people who are ineligible for ACA subsidies because they earn more than 400% of the poverty level are uninsured, as are 2.4 million who earn too little to qualify for exchange subsidies and live in states that didn't expand Medicaid.
Having a robust nongroup market for insurance that serves people well should be a priority for the nation. The dynamism of our economy will be better served if entrepreneurs and idealists who are willing to step out on a limb don't have to fear that their health insurance support will come crashing down. Demographic changes make it increasingly important for people to have the flexibility to step back from full-time work to help care for an aging parent or a sick child. Amid minimum-wage pressures and health care mandates, ultra-competitive markets and the advance of technology threaten to widen the cracks in our employer-centric insurance system that millions of workers, many with modest wages, are already falling into. And don't forget that we're entering the ninth year of an economic expansion. When the next recession hits, all of these pressures will multiply and millions more people will depend on insurance outside the employer system.
Regulation: After Consumer Finance Protection Bureau chief Richard Cordray submitted his resignation, President Trump picked a suitable temporary director to replace him: Mick Mulvaney, the current director of the Office of Management and Budget. The swamp didn't like it.
It turns out that Cordray, quite illegally, on his way out named his deputy, Leandra English, as the temporary director. When Mulvaney arrived at work Monday morning, he was forced to issue a memo saying "Please disregard any instructions you receive from Ms. English in her presumed capacity as acting director."
He was being polite. This was nothing more than an attempt at a bureaucratic coup d'etat, or "resistance" in the popular phrase of the far left.
The fact is, Trump has every right by law to name a temporary acting director of a federal agency. And if you don't believe it, here's what Mary McLeod, the CFPB's very own general counsel, had to say about that: "Questions have been raised whether the president has the authority under the Federal Vacancies Reform Act (FVRA) to designate Mick Mulvaney ... as Acting Director of CFPB. ... This confirms my oral advice to the Senior Leadership Team that the answer is 'yes.' "
What has really turned this whole thing on its head is that English now has the gall to sue Trump for naming Mulvaney to the post. English claimed she, not Mulvaney, was the "rightful" occupant of the temporary director's slot. Why? Well, because, that's why!
XIf nothing else, this shows what a monumental, perhaps even Sisyphean, job it will be for Trump to drain Washington's fetid bureaucratic swamp. It's not the dirty water so much as the swamp monsters that make it such a perilous task.
Those who work in the CFPB, which was created by the Obama administration in 2010 as the right arm of the financially disastrous regulatory monstrosity known as Dodd-Frank, think of themselves as having a special mission: to regulate every nuance of the U.S. consumer financial world, supposedly to "protect" consumers.
It's important to know, as well, that the CFPB is the fevered brainchild of Sen. Elizabeth Warren of Massachusetts. She — along with her New England senatorial tag-team partner and socialist stalwart, Vermont Sen. Bernie Sanders — inhabits the farthest fringe of the Democratic Party. As with all so-called progressives, she believes that the American people are ignorant sheep that need to be herded by wise shepherd-kings (that is, bureaucrats like Leandra English) for their own good.
This is why Warren, English and other members of the inside-the-Beltway progressive "resistance" are even willing to break the law: For them, the ends always justify the means, the law be damned.
As we've said before, the CFPB is basically a rogue agency, with virtually no accountability to Congress or to the American people for that matter. It was designed that way. And no, this is not just a question of governance style; it's a question of constitutionality, of the rule of law.
The mainstream media have largely treated this as a kind of he-said/she-said spat. It's not. It's quite serious. If Leandra English can declare herself head of a major U.S. agency, then the chances of truly reasserting control over the administrative state would shrink to near zero.
So what to do? Well, almost certainly Trump will be upheld in his right to name a temporary replacement for Cordray. So what if the remaining CFPB minions refuse to acknowledge the reality? As some have suggested, it's time to seriously clean house.
"The president should fire her immediately, and anyone who disobeys Director Mulvaney's order should also be fired summarily," said Arkansas Sen. Tom Cotton. "The Constitution and the law must prevail against the supposed resistance."
Here, here. It's time to roll back the power of the bureaucrats, and reclaim power for elected officials who actually answer to the voters. If that doesn't work, we'll repeat what we've suggested before: Shut the useless, money-wasting, economy-distorting CFPB down. It won't be missed.
Tax Reform: The Senate tax bill would reduce income taxes for people at every income level — even those who don't pay taxes. That's the official conclusion of the Joint Committee on Taxation. So why are Monday's headlines screaming that the tax cuts would make the poor much worse off?
The story claims that the "Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation's poorest would be worse off." Later, the Post story talks about the bill's "harsh impact on the poor."
This conveniently fits with the Democrats' evergreen talking point on tax cuts — that they benefit the rich at the expense of the poor. But is it true?
Not. At. All.
First of all, the CBO doesn't describe the Senate bill as being "harsh" to the poor. That's the spin put on by the reporter.
The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.
X But note the word "spending" above. Since this is a tax-cut bill, why is "spending" part of the calculation at all?
That's in there because the CBO includes the spending impact of the Senate bill's repeal of ObamaCare's individual mandate.
And this is where things get really fishy.
As we've noted in this space, the much-hated ObamaCare mandate has been hugely ineffective in getting people to buy insurance. But the CBO nevertheless assumes that once the mandate is gone, millions of people will suddenly drop insurance — including millions of people who are currently getting health coverage for free through Medicaid. In fact, the CBO projects that 1 million would drop Medicaid coverage in 2019, and 5 million will do so by 2024.
(Note that the tax bill doesn't change Medicaid eligibility or ObamaCare subsidies one iota.)
Let's assume that the CBO is right — even though it strains credulity to the breaking point — and millions of people give up free or nearly free insurance once the mandate goes away.
The result would be that the government would pay less subsidy money to insurance companies. And state and federal Medicaid costs would decline. So yes, federal spending would go down, and those spending reductions would technically be concentrated in lower-income groups.
But to describe this as "harsh" treatment of the poor is to engage in blatant deception.
These are people who would have voluntarily chosen to go without insurance, and by doing so saved taxpayers money. That's hardly the same as cutting benefits.
When Republicans demanded a distribution table that looked only the impact of the tax cuts in their tax cut bill, the result was remarkably different.
What that table (shown nearby) indicates is that everyincome group will get tax relief — including those who don't pay taxes because of the bill's hike in refundable tax credits.
And, by the way, none of these tables accounts for the economic boost, the new jobs and the increased income that will result from the GOP's tax cuts.
Anyone want to claim the poor will be hurt by that?
When the Senate Banking Committee meets for incoming Fed Chair Jerome Powell's confirmation hearing, it must ask incisive questions about three key issues: current inflation dynamics, the Fed's operating framework and monetary rules.
Although he has been on the Federal Reserve Board since 2012, already going through two confirmations, he is now in line to become the most important economic policymaker in the world. Powell's answers on these topics will give the Committee — and the wider public — important indications of how he will lead the Fed.
First, the Committee should ask for specifics about his views on inflation.
To many Fedofficials, inflation has become a puzzle — largely because it seems to have disappeared. Earlier this year, Powell admitted that low inflation numbers were " kind of a mystery." Since adopting a symmetric 2% inflation target in 2012, the Federal Reserve has routinely undershot it, seeing a decline to 1.3% in recent months. Senators need to ask for answers beyond the specific price changes — things like e-commerce, falling wireless prices, or prescription drug prices — that Chair Yellen has cited as headwinds for inflation.
Those are microeconomic issues. Senators should seek Powell's views on what macro factors might be holding inflation down.
XAt the annual Jackson Hole gathering of Fed officials last June, Powell said that below-target inflation gave the Fed time to raise rates. The Committee should press Powell on whether persistent undershooting of the inflation target would prompt him to delay the three rate increases projected for next year. Senators should also ask if the Fed's inability to hit its inflation target suggests there needs to be a change in the dual mandate.
Second, the Committee should press for clarity on Powell's view of the Fed's operating framework, and ask in particular whether he thinks post-crisis changes to the way the Fed conducts monetary policy are contributing to the inflation "mystery."
Before the 2008 crisis, reserves — cash held by banks at the Federal Reserve — were scarce. Banks kept reserve balances at the Fed to satisfy regulatory requirements, and would lend excess reserves to each other as part of the settling and clearing of payments on any given day. The interest rate on these loans is the federal funds rate. The Fed would implement its policy decisions by changing the quantity of reserves available to the banking system, thereby raising the federal funds rate if it wanted tighter monetary policy, or lowering it if it wanted policy to be looser.
But since quantitative easing flooded the financial system with reserves, monetary policy can no longer be conducted that way. The Fed now uses two administered rates — interest on excess reserves and the overnight reverse repo rate — to maintain control over short term interest rates, with IOER being the "key tool" for conducting monetary policy. The Fed directly sets a range for the policy rate, rather than influencing it by actively participating in the federal funds market.
In a speech in June, Powell indicated his support for continuing to use the two administered rates to set monetary policy. As long as the Fed's balance sheet remains at its current size, this is to be expected; as things stand, altering the amount of reserves in the financial system would have no effect on the policy rate.
But what about once the balance sheet has been cut down to size?
Powell has said that the precrisis framework was resource-intensive for the Fed and its counterparties, and that the current floor system would be more robust over time.
Does he believe the current system would prove better in combating a recession or in handling a crisis, or does it have some other advantages?
Has he considered the possibility that the Fed's post-crisis operating framework, which revolves around an above-market interest rate paid on excess reserves, is part of the Fed's failure to reach its inflation target?
Third, the Committee should seek further details on Powell's views on monetary policy rules.
Powell concluded a speech in February by saying that simple policy rules are "useful" in identifying the appropriate path for monetary policy, particularly in a crisis. Just as importantly, rules provide benchmarks against which a central bank's previous performance can be judged. Earlier in that speech, Powell referred approvingly to the Cleveland Fed's dashboard of seven monetary policy rules.
Senators should ask Powell which of these rules he favors over others. They should further inquire as to how the Fed might use rules under Powell's leadership. Rules are an important check on the potential biases of FOMC members and would help ensure the proper conduct of monetary policy.
The inflation puzzle, the operating framework, and monetary rules represent some of most pressing issues in central banking today. To gauge whether Jerome Powell is ready to be a careful steward of monetary policy, the Senate Banking Committee should focus its questions on precisely those issues.
Lacey is a policy analyst at the Cato Institute's Center for Financial and Monetary Alternatives.