Barr has told those close to Trump he is considering quitting over the president’s tweets about Justice Dept. investigations

Attorney General William P. Barr has told people close to President Trump — both inside and outside the White House — that he is considering quitting over Trump’s tweets about Justice Department investigations, three administration officials said, foreshadowing a possible confrontation between the president and his attorney general over the independence of the Justice Department.

So far, Trump has defied Barr’s requests, both public and private, to keep quiet on matters of federal law enforcement. It was not immediately clear Tuesday whether Barr had made his posture known directly to Trump. The administration officials said Barr seemed to be sharing his position with advisers in hopes the president would get the message that he should stop weighing in publicly on the Justice Department’s ongoing criminal investigations.

“He has his limits,” said one person familiar with Barr’s thinking, speaking on the condition of anonymity, like others, to discuss internal deliberations.

Late last week, Barr publicly warned the president in a remarkable interview with ABC News that his tweets about Justice Department cases “make it impossible for me to do my job.” Trump, White House officials said, is not entirely receptive to calls to change his behavior, and he has told those around him he is not going to stop tweeting about the Justice Department. They said Trump considers highlighting what he sees as misconduct at the FBI and Justice Department as a good political message.

The standoff between Trump and Barr intensified Tuesday when Trump declared in a string of early morning tweets that he might sue those involved in the special counsel investigation into his 2016 campaign and suggested that Roger Stone, his friend convicted of lying to Congress in that probe, deserved a new trial.

Hours later, a Justice Department official said prosecutors had filed a sealed motion in court arguing the opposite and that they had Barr’s personal approval to do so.

Barr had a previously scheduled lunch with the White House counsel Tuesday and was still the attorney general by day’s end — indicating that the president’s moves that day were not enough to push him to resign. But he and his Justice Department seemed to remain mired in a political crisis, with an uncertain future.

A Justice Department spokeswoman initially declined to comment. After this article appeared online, Kerri Kupec, a spokeswoman for Barr, said on Twitter, “Addressing Beltway rumors: The Attorney General has no plans to resign.” She did not address what Barr had told others.

White House spokespeople did not respond to questions for this report. Some people familiar with Barr’s thinking cautioned that he would not make a hasty decision to leave, and it is unclear what precisely would trigger him to take such a dramatic step.

It was only a week ago that Trump’s tweet about federal prosecutors’ recommendation that Stone should be sentenced to seven to nine years in prison created a crisis at the Justice Department.

After that tweet, Barr moved to intervene and reduce the recommendation. The four career prosecutors assigned to the matter quit the case, with one leaving the government entirely. Barr has insisted that he made up his mind to get involved before Trump weighed in, but he faced significant skepticism inside and outside the Justice Department.

Over the weekend, more than 2,000 former department employees signed a public letter urging Barr to resign over his handling of the Stone case and exhorted current department employees to report any unethical conduct to the inspector general. Jan Miller, who was the U.S. attorney for central Illinois from 2002 until 2005 under President George W. Bush, said he signed in part to remind rank-and-file Justice Department employees that “they’re not alone.”

“I’m sure it’s a very difficult time to be a line prosecutor in the department right now,” Miller said.

White House press secretary Stephanie Grisham played down the letter’s significance, saying there were “obstructionists all across this government who are working against the president.” Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Judiciary Committee Chairman Lindsey O. Graham (R-S.C.) also came to Barr’s defense in a joint statement.

“The nation is fortunate that President Trump chose such a strong and selfless public servant to lead the Department of Justice,” they wrote. “We expect that, as always, efforts to intimidate the Attorney General will fall woefully short.”

People close to Barr say he is unlikely to be moved by the letter from the former Justice Department employees, which bears the signatures of many who have long been vocal opponents of his. But Barr, the people said, is deeply concerned about morale inside the department, and that is in part why he chastised the president publicly to ABC News.

In the weeks before the interview, Barr had also privately asked the president to stop speaking publicly on Justice Department matters, a person familiar with their discussions said. But his comments have apparently fallen on deaf ears. The day after Barr’s ABC interview, Trump tweeted that he had the “legal right” to ask Barr to intervene in a criminal case.

Trump said Tuesday that he has “total confidence” in Barr and conceded, “I do make his job harder.” He also asserted, though, that he, rather than his attorney general, is “the chief law enforcement officer of the country.”

“The attorney general is a man with great integrity,” Trump said. “I chose not to be involved. I’m allowed to be involved. I could be involved if I want to be.”

Trump has raged privately for months about the Justice Department’s not charging those he considers political foes, and people familiar with the matter say he is particularly upset by the decision revealed last week not to charge former acting FBI director Andrew McCabe with lying to investigators exploring a media disclosure.

McCabe authorized the FBI to begin investigating Trump personally in 2017 for possible obstruction of justice in connection with the probe into whether his campaign coordinated with Russia, and Trump has suggested he might sue those involved. That case was ultimately taken over by special counsel Robert S. Mueller III.

Trump also has complained to associates that he has not been able to view the findings of U.S. Attorney John Durham, whom Barr tasked with examining the Russia probe’s origins. Durham’s probe is ongoing, and he has not yet prepared any report detailing his conclusions, a person familiar with the matter said.

People familiar with the matter said Trump has no plans to remove Barr as attorney general, despite his frustrations. Apart from his ABC News interview, Barr has been a particularly loyal and effective Cabinet secretary for Trump, willing to take political heat for the commander in chief.

Barr absorbed significant criticism for casting the findings of Mueller’s investigation in a way that some saw as overly favorable to Trump, and for commissioning internal Justice Department reviews of politically sensitive matters, including the Russia probe.

But Barr has been persistently vexed by Trump’s tweets, and he saw the president’s commentary on Stone last week as something of a last straw.

Trump had largely refrained from law enforcement commentary over the holiday weekend before erupting once more on Tuesday morning. The president quoted at length Andrew Napolitano, a former New Jersey Superior Court judge and Fox News commentator who, by Trump’s telling, argued that Stone should receive a new trial because of “the unambiguous & self outed bias of the foreperson of the jury.”

“Pretty obvious he should (get a new trial),” Trump quoted Napolitano as saying.

Trump also reprised old attacks on the Mueller investigation.

“The whole deal was a total SCAM. If I wasn’t President, I’d be suing everyone all over the place,” Trump wrote. “BUT MAYBE I STILL WILL. WITCH HUNT!”

Grisham, the press secretary, said Tuesday that “the president’s obviously frustrated.”

“For three years, he has been under attack in one way or the other, and the Mueller report is another example of that,” Grisham said during an appearance on “Fox & Friends,” during which she also alluded to the Stone case. “I mean the foreperson of a jury was somebody who was very vocal about not liking President Trump or his supporters. . . . That’s scary stuff.”

The tweets came just before prosecutors and defense attorneys convened for a hearing in the Stone case to determine whether Stone’s request for a new trial needed to be resolved before his sentencing, scheduled for Thursday. Stone’s team had demanded the new trial Friday, one day after Trump suggested that the forewoman in the federal case had “significant bias.”

Trump was referring to Tomeka Hart, a former president of the Memphis City Schools Board of Commissioners and an unsuccessful Democratic candidate for Congress. Hart has identified herself as the forewoman of the jury in a Facebook post, saying she “can’t keep quiet any longer” in the wake of a Justice Department move to reduce prosecutors’ sentencing recommendation for Stone.

U.S. District Judge Amy Berman Jackson, who is presiding over Stone’s case, decided that Stone will be sentenced Thursday, though the “execution of the sentence will be deferred” while she decides whether Stone deserves a new trial. The Justice Department is notably opposing Stone in that matter — with Barr’s approval — and a Justice Department official said that decision “was made independent of the White House.”

Trump told reporters Tuesday that he thought Stone had been “treated unfairly” but that he had not given any thought to pardoning him. Trump did issue several pardons to others Tuesday, including Rod Blagojevich, a former Illinois governor who was convicted on corruption charges in 2011 related to trying to sell President-elect Barack Obama’s vacated Senate seat, and Bernard Kerik, a former New York police commissioner jailed on eight felony charges, including tax fraud.

Asked whether Stone deserves any prison time, Trump demurred, saying, “You’re going to see what happens.”

Stone has been a friend and adviser to Trump since the 1980s and was a key figure in his 2016 campaign, working to discover damaging information on Democratic opponent Hillary Clinton.

A jury convicted Stone in November on charges of witness tampering and lying to Congress about his efforts to gather damaging information about Clinton. Stone’s were the last charges arising from Mueller’s investigation into Russian interference in the 2016 election.

Stone’s defense has asked for a sentence of probation, citing his age, 67, and lack of criminal history.

Lawrence Summers: One last time on who benefits from corporate tax cuts

I recently asserted that Kevin Hassett deserved a failing grade for his “analysis” projecting that the Trump administration proposal to reduce the corporate tax rate from 35 to 20 percent would raise the wages of an average American family between $4,000 to $9,000. I chose harsh language because Hassett had, for what seemed like political reasons, impugned the integrity of people like Len Burman and Gene Steuerle who have devoted their lives to honest rigorous evaluation of tax measures by calling their work “scientifically indefensible” and “fiction.” Since there have been a variety of comments on the economics of corporate tax reduction, some further discussion seems warranted.

The analysis from Hassett, chief of the White House Council of Economic Advisers (CEA), relies heavily on correlations between corporate tax rates and wages in other countries to argue that a cut in the corporate tax rate would boost returns to labor very substantially. Perhaps unintentionally, the CEA ignores our own historical experience in their analysis. As Frank Lysy noted, the corporate tax cuts of the late 1980s did not result in increased real wages. Actually, real wages fell. The same is true in the United Kingdom, as highlighted by Kimberly Clausing and Edward Kleinbard. These examples feel far more relevant to the corporate tax issue analysis than comparisons to small economies and tax havens like Ireland and Switzerland upon which the CEA relies.

There has been a lot of back and forth, but notably no one has defended the $4,000 claim as a “very conservatively estimated lower bound,” let alone endorsed the plausibility of the $9,000 claim. In fact, the Wall Street Journal op-ed page published two very optimistic versions of what the wage increase could be, which were below CEA’s lower bound.

Casey Mulligan and Greg Mankiw also do not defend CEA’s numbers, but do make use of simple academic abstract models that do not capture the complexities of a policy situation to argue that wage increases could be larger than the tax cut. The inadequacy of their analyses illustrate why well-resourced, team-based institutions with a strong culture of attention to detail like the Congressional Budget Office, the GAO, the Joint Tax Committee Staff or the Tax Policy Center are so important.

Mankiw’s blog is a fine bit of economic pedagogy. It asks students to gauge the impact of a corporate rate reduction on wages in a so called “Ramsey” model or equivalently in a small fully open economy, with perfect capital mobility. Even with these assumptions, he does not get answers in the range of the CEA’s estimates.

As a device for motivating students to learn how to manipulate oversimplified academic models, Mankiw’s blog is terrific as one would expect from an outstanding economist and one of the leading textbook authors of his generation. As a guide to the effects of the Trump administration’s tax cut, I do not think it is very helpful for three important reasons.

.. First, a cut in the corporate tax rate from 35 to 20 percent in the presence of expensing of substantial or total investment has very little impact on the incentive to invest. Imagine the case of full expensing. If a company is permitted to deduct all of its investment costs and then is taxed on all of its investment profits, the tax rate has no impact at all on the investment incentive. If investments are financed in part with deductible interest, as would be true even under the Trump plan (where expensing would be total), a reduction in the corporate tax rate could easily reduce the incentive to invest.  Mankiw assumes implicitly that capital lasts forever and companies take no depreciation and engage in no debt finance.  This is not the world we live in.

The United States is not a small open economy. If it were, the effect of an effective investment incentive would be a major increase in the trade deficit as capital inflows forced an excess of imports over exports. I imagine that President Trump at least feels that a greatly augmented trade deficit is not good for American workers.

Third, a big cut in the corporate rate does not happen in isolation as a break for new investment.  Mankiw’s model does not recognize the possibility of monopoly profits or returns to intellectual capital or other ways in which a corporate tax cut benefits shareholders without encouraging investment. It means either increases in other taxes or enlarged deficits, both of which have adverse effects on households. It also means that capital moves out of the noncorporate sector into the corporate sector, tending to hurt workers in the noncorporate sector.

.. The main point of my paper, which Mulligan entirely ignores, was that because of slow adjustment costs, the impact of tax changes was felt primarily on asset prices for a long time. This meant that as my paper showed, the primary impact of a corporate tax cut would be to raise after-tax profits and the stock market. This in turn, as I noted, primarily benefits wealthy individuals.

.. It is worth noting that Larry Kotlikoff and Jack Mintz’s response to criticismsof the Trump tax plan suffers from the same deficiencies as Mulligan’s. The authors include no corporate tax detail, no recognition of the impact of the tax proposal on asset prices, and no treatment of the budget consequences of tax cuts.

.. The newest boldest bit of claim inflation regarding the tax bill comes from the Business Roundtable: “a competitive 20 percent corporate tax rate could increase wages sufficient to support two million new jobs.” This would, coupled with job growth projected even in the absence of a corporate rate cut, take the unemployment rate well below 3 percent! I would be very interested to see the underlying analysis.  I would be surprised if it is convincing.

.. By far the highest quality assessment of corporate tax issues has been provided by Jane Gravelle, writing under the auspices of the Congressional Research Service.  It looks at all the literature. It recognizes that the issues are complex and cannot be captured by a single model or regression equation. It does not start with a point of view. Unfortunately it provides little support for claims that corporate rate cuts will raise revenue, help the middle class or spur rapid wage growth.
.. During my years in government, I served with 7 CEA chairs — Martin Feldstein, Laura Tyson, Joe Stiglitz, Janet L. Yellen, Martin Baily, Christy Romer and Austan Goolsbee. I observed all of them fighting with political figures in their Administrations as they insisted that CEA analysis had to be of a kind that would be respected and validated by outside economists. They refused to cheerlead for Administration policies at the expense of their professional credibility. I cannot imagine any of them releasing an estimate as far from the professional mainstream as $4000 to $9000 wage increase from a corporate rate cut claim. Chairman Hassett should for the sake of his own credibility, that of the Administration he serves and the institution he leads, back off.

The World Bank Is Remaking Itself as a Creature of Wall Street

Jim Yong Kim, the World Bank’s president, is
trying to revitalize a hidebound institution.
But his embrace of Wall Street is controversial.

.. In the fall of 2016, Jim Yong Kim, the president of the World Bank, sat down with some of the most powerful figures in the global economy.

Hosted by Christine Lagarde, the head of the International Monetary Fund, their discussion focused on financial trouble spots around the globe. There was scant talk about poverty, which the World Bank has committed to eradicate.

.. The World Bank, once a powerhouse of global finance, is searching for relevance. Mr. Kim’s unusual solution: embrace Wall Street.

.. Developed-world governments that are the bank’s members provided the bulk of its money, which was used to make loans to developing nations for infrastructure projects and the like.
.. the bank’s war chest is dwarfed by the funds pouring into developing countries through financial markets. Perhaps most important, the World Bank’s biggest benefactor and largest shareholder — the United States — has become its most trenchant critic.

.. Instead of relying solely on contributions from reluctant donor governments, he is pushing private investors — sovereign wealth funds, private equity firms and insurance companies — to pony up trillions of dollars for projects in Indonesia, Zambia, India and elsewhere. His pitch: They can reap rich returns by putting their money to work alongside the World Bank.

.. Trained as an anthropologist and medical doctor, Mr. Kim now says that the world of high finance is “some of the coolest stuff I have ever looked at.”

.. The son of Korean immigrants, Mr. Kim worked in the slums of Haiti and Peru, guided by the liberation theology of Catholic priests and the outrage of leftist intellectual Noam Chomsky.

.. as a public health crusader and a vocal critic of the bank for imposing heavy-handed solutions on poor countries — made him acutely aware of the institution’s frailties.

.. provides cash to companies in exchange for equity stakes, the World Bank currently drums up more than $7 billion a year from the private sector to invest in ventures in the developing world. Mr. Kim wants that figure to increase eventually to $30 billion.
.. The World Bank promised to protect investors against some losses.
.. those benefiting from the World Bank’s lending practices were “the people who fly in on a first-class ticket to give advice to governments.”
.. The argument was that growing investment flows into developing countries rendered World Bank lending mostly superfluous.

.. Last year, the World Bank dispensed $61 billion in loans and investments. By contrast, investors now inject more than $1 trillion a year into emerging markets

.. In effect, he was pitching the bank’s services as a middleman, ready to back projects with guarantees and other incentives. No longer could the World Bank be the sole provider of loans, which, he said, are “crowding out” the private sector.

.. the World Bank economists whose pay is tied to how many loans they churn out

.. “One of the most difficult things to do in a large bureaucracy is to change incentives,

.. “And if you have a large bureaucracy full of economists it is especially hard, because it turns out that economists really hate it when you change the incentives.”

.. On Wednesday, the bank’s top economist, Paul Romer, abruptly resigned.

.. His end came after he claimed, in an interview with The Wall Street Journal, that the World Bank’s closely-watched report on business conditions in different countries had been altered for political reasons.

.. the bank tends to see private sector solutions — those involving the profit motive — as morally questionable.

.. World Bank staffers are used to talking to governments, and now they have to leverage the private sector? It is a different skill set, and flexibility is not the hallmark of development institutions.”

.. “He had to work against his own incentives,” Mr. Kim said, referring to the bank’s practice of rewarding staff for loans. “And that is part of the institutional problem here.”

.. “He has pursued a strategy of making himself popular in Davos by attacking the organization and its staff,” said Lant Pritchett, a retired World Bank executive. “It is this idea that his hand has been hampered by bureaucratic machinations. That may be accepted in Davos — but it’s completely false.”

.. His biggest coup was working with Ivanka Trump

.. They eventually settled in Muscatine, Iowa, where Mr. Kim was a high school quarterback before going on to Brown and securing advanced medical and anthropology degrees from Harvard.

.. Mr. Kim concluded by announcing that the bank would no longer back oil and gas drilling projects.