Who’s Afraid of the Budget Deficit?

Democrats shouldn’t put themselves in a fiscal straitjacket.

On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.

There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.

.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.

You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.

But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?

.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.

Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.

Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.

.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.

.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.

.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.

Why Republicans Stick With Trump

It’s all the things he hasn’t done. On key issues, the president has come around to conservative positions.

it’s instructive to examine what Mr. Trump hasn’t done. Since the campaign, Mr. Trump has abandoned many of his previous positions and embraced traditional conservative views.

Spending and taxes. During the election, Mr. Trump promised a $1 trillion infrastructure plan. Some Republicans feared his first initiative on taking office would be a pork-laden spending package reminiscent of Barack Obama’s stimulus bill. They also worried he would cut a deal with Democrats to raise taxes. “I am willing to pay more,” Mr. Trump said in May 2016. “And do you know what? The wealthy are willing to pay more.” Instead, the reverse happened: There’s no infrastructure plan in sight, except for the border wall, and Mr. Trump signed a sweeping bill to reduce personal and corporate taxes.

• Court nominees. In 2015 candidate Trump said his sister, a liberal federal judge, would be a “phenomenal” Supreme Court justice, though he claimed he had been joking. After Justice Antonin Scalia died, Mr. Trump decided to release a list of potential replacements. This was a central reason many conservatives voted for him. In appointing Justice Neil Gorsuch, President Trump made good on his promise. Since then, constitutionalists have cheered the quality and sheer quantity of his appointments to all levels of the judiciary.

• Abortion. In a successful effort to win the Iowa caucuses, Sen. Ted Cruz attacked Mr. Trump’s “New York values.” A Cruz TV ad showed Mr. Trump years earlier calling himself “pro-choice in every respect.” Yet President Trump has reinstated Reagan’s “Mexico City policy,” which prohibits federal funds from going to international groups that provide or promote abortions. Mr. Trump is also moving to require a hard division between abortion providers and clinics that take federal Title X funds, which would be a significant hit to Planned Parenthood.

• Israel. In February 2016, Mr. Trump claimed he would not take sides between Israel and the Palestinians, saying he would be “sort of a neutral guy.” Sen. Marco Rubio labeled this “an anti-Israel position.” Yet in December 2016, when the United Nations considered a resolution calling for an end to Israeli settlements, including in East Jerusalem, Mr. Trump said it was “extremely unfair to all Israelis” and pressed the Obama administration to veto it. Then this year Mr. Trump made good on his promise to recognize Jerusalem as Israel’s capital and move the U.S. Embassy there. Time and again, he has proved to be a reliable ally for Israel.

• Guns. In a 2000 book, Mr. Trump wrote: “I support the ban on assault weapons and I support a slightly longer waiting period to purchase a gun.” After the school shooting in Parkland, Fla., earlier this year, President Trump did briefly suggest expanding background checks and raising the age limit to buy certain guns. But he quickly reverted to strong Second Amendment rhetoric, while saying that massacres could be prevented by fixing mental-health services and arming teachers.

 Health care. In 2015, candidate Trump told “60 Minutes” that his plan would provide universal health coverage paid for by the government. “I am going to take care of everybody,” he said. Campaigning in New Hampshire a few months later, he said Medicare could save an unrealistic $300 billion if the government negotiated with drug companies to lower prices. But as president, Mr. Trump has pursued more-conventional Republican policies, such as adding work requirements to Medicaid, expanding short-term insurance plans, and broadening association health plans.

• Defense. In a 2013 interview, Mr. Trump seemingly supported the sequestration cuts to defense spending—only complaining that, as “a very small percentage of the cuts that should be made,” sequestration wasn’t big enough. In 2015 he suggested, unworkably, that by eliminating waste he could strengthen the military while still reducing spending. Yet in his first address to Congress as president, he proposed a 10% increase to the Pentagon’s budget, which he later called “historic.”

It isn’t unusual for a politician to change positions. Unsurprisingly, voters tend to be more forgiving of flip-flops when they agree with the final result. This explains why Mr. Trump is forgiven for abandoning Republican orthodoxy on free trade and entitlement reform: those convictions were always held more by donors than voters. The same is true of support for “comprehensive immigration reform.” If he were to cross his party on issues like taxes, abortion or guns, it would be quite another story. But in the meantime, begging Republicans to ditch Mr. Trump is a waste of time.

 

 

David Frum: Trumpocracy & The State of Western Democracy

The donors believe that Trump would be the vehicle for getting what they want and that the price would be bearable.

People drawn to authoritarians as a way to achieve and punish what/who they want.

It was not Trump’s cunning that allowed him to achieve ..  it was the complicity

 

They got the:

  • tax deal,
  • reduction of environmental restrictions,
  • Obamacare relief/stabotage,
  • Financial Regulation dismantalment,
  • Stop Financial Protection,
  • Neil Gorsuch is more important to the rank and file than donor class.

It has long been a debate about who pays the corporate income tax.  The rise of the stock prices shows that the market thinks the corporations will benefit most.

In the cold war, the presidency was respected and partisanship restrained.

Big Legislation: Tax Cuts and Health Care repeal were passed/attempted without hearings.

Autoimmune disorders: military leaders might be tempted to protect the country by escaping civilian control

How informative do you think the President’s Daily briefing is, knowing that the president is not very curious and gets most of his information from Fox and Friends?

John Kelly: If you have not served, you have no right to ask me questions. (Un-American)

Modern Authoritarianism is not 1933, it attempts to stop 5-6% of people to take power.

Quote: A Democracy only lasts so long as the people realize they can vote themselves benefits.

Reality: Asset holders are fearful and contemplate radicalism.

Americans don’t realize how out of date they are — the plans they have are solutions to different problems.  (not inflation: 1970s).  You can’t fetishize policy.

Conservatives will not abandon conservatism, they will abandon democracy. (43 min)

Women’s suffrage was enabled by the conservative idea that the women would suppress drunkenness, etc

You address broad-based radicalism by repressing the few and making concession to address the factors which make people sympathetic. (48-49 min)

 

He’s taking everything you out to be working on and putting it to a dead end.

The dissolusioned young men facing declining wages need a bigger answer than they’ve got to address their privilege.

Facebook has a business model that is very sensitive to government pressure: if they were ruled to be a “publisher”, they would have to hire human editors.  They have

President Trump, Deal Maker? Not So Fast

His 17 months in office have in fact been an exercise in futility for the art-of-the-deal president.

  1. No deal on immigration.
  2. No deal on health care.
  3. No deal on gun control.
  4. No deal on spending cuts.
  5. No deal on Nafta.
  6. No deal on China trade.
  7. No deal on steel and aluminum imports.
  8. No deal on Middle East peace.
  9. No deal on the Qatar blockade.
  10. No deal on Syria.
  11. No deal on Russia.
  12. No deal on Iran.
  13. No deal on climate change.
  14. No deal on Pacific trade.

.. Even routine deals sometimes elude Mr. Trump, or he chooses to blow them up.

.. “Trump is an anarchist,” said Jack O’Donnell, a former president of the Trump Plaza Hotel and Casino, who became a sharp critic. “It was his approach in business, it is his approach as president. It does not take good negotiating skills to cause chaos. Will this ever lead to concessions? Maybe, but concessions to what? Not anything that resembles a deal. I just do not see him getting much done.”

.. I don’t think it’s that counterintuitive to say that playing hardball will lead to better trade deals eventually,” said Andy Surabian, a Republican strategist and former aide to Mr. Trump.

.. We’ll see what the final outcome is, but it’s already a success just to get them to the table.”

.. the major tax-cutting package that passed late last year. But even that was negotiated mainly by Republican lawmakers, who said Mr. Trump did not seem engaged in the details.

.. And as legislative challenges go, handing out tax cuts without paying for them is not exactly the hardest thing that politicians do.

.. In effect, the agreement with Mr. Kim is like a deal to sell parts of Trump Tower without settling on a price, date, inspection or financing. It is not nearly as advanced as agreements that President Bill Clinton and Mr. Bush made with North Korea, both of which ultimately collapsed.

.. But no modern president has sold himself on the promise of negotiating skills more than Mr. Trump has. He regularly boasts that deals will be “easy” and “quick” and the best ever.

.. He has pulled out of Mr. Obama’s Iran nuclear deal, Paris climate accord and Trans-Pacific Partnership, but promises to negotiate better versions of those deal have gone nowhere.

.. Mr. Trump set his sights on what he called “the ultimate deal,” meaning peace between the Israelis and Palestinians. He said it was “frankly maybe not as difficult as people have thought.” A year later, his team is only now preparing to release a plan.

.. “What the president seemingly fails to understand is that in foreign policy and in trade policy — unlike in real estate transactions — the parties are all repeat players,” 

.. “The country you insult or seek undue advantage over today you will have to work with again tomorrow.”

.. Mr. Trump’s approach so far has been to make expansive demands and apply as much pressure as he can. He argues that crushing sanctions he imposed on North Korea forced Mr. Kim to meet. He now hopes to extract concessions from China, Canada and Europe after slapping punishing tariffs on them.

.. “Trump is a bilateral player, in part because that’s what he is used to from his building days, but also because he keeps himself the king, the decider, the strongman,” said Wendy Sherman, who was Mr. Obama’s lead negotiator on the Iran nuclear deal. “In the case of North Korea, however, he wouldn’t have gotten this far — which isn’t all that far — without the South Koreans or the Chinese.”

..  When he gave up on immigration on Friday, he blamed it on Senate Democrats, even though the immediate impasse was among House Republicans who do not need the other party to pass a bill.

.. “Republicans should stop wasting their time on Immigration until after we elect more Senators and Congressmen/women in November,”

.. It was in effect an acknowledgment by Mr. Trump that he cannot reach across the aisle and can only govern with Republicans.

.. the challenge on immigration is that the president has to grapple not just with Democrats but also with Republicans who do not share his philosophy on the issue.

.. Mr. O’Donnell, the former casino president, said Mr. Trump has always oversold his deal-making skills. The casino he managed, Mr. O’Donnell noted, brought in $100 million a year yet still went bankrupt.

.. “The fact is, Trump casinos should have been one of the greatest success stories in the history of casino gambling, but bad deal making caused him to lose all three properties,” he said.

INSIDE TRUMPS’ BITTER BATTLE Nephew’s ailing baby caught in the middle

Even when it comes to a sick baby in his family, Donald Trump is all business. The megabuilder and his siblings Robert and Maryanne terminated their nephew’s family medical coverage a week after he challenged the will of their father, Fred Trump. “This was so shocking, so disappointing and so vindictive,” said niece Lisa Trump, whose son, William, was born 18 months ago at Mount Sinai Medical Center with a rare neurological disorder that produces violent seizures, brain damage and medical bills topping $300,000.

.. “When [Fred 3rd] sued us, we said, ‘Why should we give him medical coverage?

.. Asked whether he thought cutting their coverage could appear cold-hearted, given the baby’s medical condition, Donald made no apologies. “I can’t help that,” he said. “It’s cold when someone sues my father. Had he come to see me, things could very possibly have been much different for them.

.. Fred Jr. smoked and drank heavily, two traits that disgusted his father.

.. During the baby’s three-week stay at Mount Sinai, Robert Trump called to assure his nephew that whatever the child needed would be covered by Precise, the Trump company medical plan.

.. he bears an uncanny resemblance to his famous uncle. “He has beautiful curly blond hair and looks quite a bit like Donald,”

.. Robert Trump referred to the round-the-clock nurses for baby William as “highly paid baby-sitters.

This Economic Phenomenon Is Making Government Sick

K-12 education hasn’t improved very much and also costs more, an economic phenomenon that has been labeled the “cost disease.” It turns out the cost disease also shapes politics: To the extent governments manage, run or fund low-productivity-growth sectors, the spending required to sustain those sectors can automatically boost the size of government over time.

.. Part of the problem is that fixing people is harder than fixing machines, because it requires the cooperation of what are often recalcitrant patients. That’s why productivity improvements are difficult to achieve in education as well. Online learning can be potent and very cheap, but it is hard to get enough of the students to care.

.. If patients and students would diet properly, take the right medicines and crack open their textbooks, more drastic cost improvements could result.

.. The first problem will be that other areas of government spending (“discretionary spending”) will tend to suffer, as money is soaked up by the low-productivity sectors. Voters will feel that governments are neglecting some of their most important interests, such as infrastructure.

.. All of the various sides may be correct in their major claims, but none will have a workable solution. This actually isn’t so far from where the health-care debate stands now, and where the retirement and nursing home debate is headed as America ages.

.. As it stands, we’re set to re-create these debates at higher and higher levels of government spending in the low-productivity sectors. And I don’t view such dramatically tense, life-or-death issues as conducive either to rational decision-making or to a broadly liberal, consensus-based politics.

.. If you care about politics, I suggest spending less time on the candidates and more time studying productivity growth. I also suggest spending more time thinking about how to make working with human beings as easy and as fruitful as manipulating physical capital. Often the real political problem is not the people who disagree with you, but rather the empirical regularities of economies and the humans who inhabit them.

Considerations On Cost Disease

Countries like South Korea and Israel have about the same life expectancy as the US but pay about 25% of what we do. Some people use this to prove the superiority of centralized government health systems, although Random Critical Analysis has an alternative perspective. In any case, it seems very possible to get the same improving life expectancies as the US without octupling health care spending.

.. Or instead of slogging through the statistics, we can just ask the same question as before. Do you think the average poor or middle-class person would rather:

a) Get modern health care
b) Get the same amount of health care as their parents’ generation, but with modern technology like ACE inhibitors, and also earn $8000 extra a year

.. It’s actually even worse than this, because we take so many opportunities to save money that were unavailable in past generations. Underpaid foreign nurses immigrate to America and work for a song. Doctors’ notes are sent to India overnight where they’re transcribed by sweatshop-style labor for pennies an hour. Medical equipment gets manufactured in goodness-only-knows which obscure Third World country. And it still costs ten times as much as when this was all made in the USA – and that back when minimum wages were proportionally higher than today.

.. Imagine if tomorrow, the price of water dectupled. Suddenly people have to choose between drinking and washing dishes. Activists argue that taking a shower is a basic human right, and grumpy talk show hosts point out that in their day, parents taught their children not to waste water. A coalition promotes laws ensuring government-subsidized free water for poor families; a Fox News investigative report shows that some people receiving water on the government dime are taking long luxurious showers. Everyone gets really angry and there’s lots of talk about basic compassion and personal responsibility and whatever but all of this is secondary to why does water costs ten times what it used to?

.. I’m not sure how many people currently opposed to paying for free health care, or free college, or whatever, would be happy to pay for health care that cost less, that was less wasteful and more efficient, and whose price we expected to go down rather than up with every passing year. I expect it would be a lot.

.. Right now the standard of living isn’t just stagnant, it’s at risk of declining, and a lot of that is student loans and health insurance costs and so on.