The Trump Recession is coming

History suggests that the next recession is not far off. The current expansion, though relatively weak, has been steady since June 2009, making this the third-longest upward climb on record. Juiced by the tax cut, the United States is on track to record 107 months without a recession in April, passing the boom of the 1960s in duration. That will leave only the decade-long, 120-month run in the 1990s — when the end of the Cold War met the rise of the Internet to create a Golden Age for the U.S. economy — to be beaten.

.. Trump might ask George H.W. Bush what it’s like to have a recession arrive during a reelection campaign.

.. By delaying the inevitable, Trump’s tax cut may prove to be a double-edged sword. The recession that might have arrived in 2018 and passed like a summer storm will likely be shoved back a couple of years. If the piper presents his bill in the midst of Trump’s reelection campaign, the president better look out, because Democrats going back to John F. Kennedy score their wins when Republican presidents stumble into late-term economic woes.

.. Perhaps Trump should have followed Ronald Reagan’s example, accepting a recession early in his first term and trusting the recovery would come in time to lift him to reelection. That option is gone now. Having juiced the economy with tax cuts, Trump must either find a way to skim the froth — prod the Fed for rapid rate increases? unsettle the world with ill-advised trade wars? — or cross his fingers and power through. My prediction is that he’ll throw open the government’s liquor cabinets and pour out every stimulating drop he can get his hands on in a desperate effort to keep the party going through 2020.

What a morning-after that is likely to be.

Faust on the Potomac

Trump is morally and intellectually incapable of being president. He has also exploited his office for personal gain, obstructed justice, and colluded with a hostile foreign power. Everyone who doesn’t get their news from Fox has basically known this for a while, although Wolff helps focus our minds on the subject.

.. Republicans in Congress are dealing with this national nightmare: rather than distancing themselves from Trump, they’re doubling down on their support and, in particular, on their efforts to cover for his defects and crimes.

Remember when Paul Ryan was the Serious, Honest Conservative?

.. Now he’s backing Devin Nunes in his efforts to help the Trump coverup.

.. Republicans have become the Grand Obstruction Party. Why?

The answer, I think, is that the cynical bargain that has been the basis of Republican strategy since Reagan has now turned into a moral trap

.. The cynical bargain I’m talking about, of course, was the decision to exploit racism to advance a right-wing economic agenda.

.. For more than a generation, the Republican establishment was able to keep this bait-and-switch under control: racism was deployed to win elections, then was muted afterwards, partly to preserve plausible deniability, partly to focus on the real priority of enriching the one percent.

.. But with Trump they lost control: the base wanted someone who was blatantly racist and wouldn’t pretend to be anything else.

.. just about everyone in the Republican establishment decided that they could work with that.

.. were willing to overlook it as long as they could push their usual agenda.

.. They guessed, correctly, that this wouldn’t be a problem: Trump didn’t even hesitate about abandoning all his campaign promises and going all in for cutting taxes on the rich while slashing benefits for the poor.

.. some speculated that this would be a temporary alliance – that establishment Republicans would use Trump to get what they wanted, then turn on him. But it’s now clear that won’t happen.

.. Republicans, far from cutting him loose, are tying themselves even more closely to his fate. Why?

.. Trump’s very awfulness means that if he falls, the whole party will fall with him.

.. Republicans could conceivably distance themselves from a president who turned out to be a bad manager, or even one who turned out to have engaged in small-time corruption. But when the corruption is big time, and it’s combined with obstruction of justice and collaboration with Putin, nobody will notice which Republicans were a bit less involved, a bit less obsequious, than others.

..  now have the Republican party as a whole fully complicit in Trump’s crimes

.. expecting the GOP to exercise any oversight or constrain Trump in any way is just foolish at this point. Massive electoral defeat – massive enough to overwhelm gerrymandering and other structural advantages of the right – is the only way out.

Trickle Down? Not Now, and Not for a While at Best (Wonkish)

It’s nonsense, of course. Think of the motivation: lots of companies are raising wages at least a bit in the face of tight labor markets; pretending that it’s because of the tax cut is a cheap way to curry favor with an administration that has no hesitation about using regulatory and antitrust decisions to reward friends and punish enemies. It’s basically Carrier all over: make a Trump-friendly splash by declaring that he persuaded you to save jobs, then lay off lots of workers after the cameras have moved on.

.. even if you believe economic analyses that suggest corporate tax cuts are good for wages, it shouldn’t happen right away. Any trickle-down should come about because the tax cuts lead to higher investment, which leads over time to a larger capital stock – and it’s the increase in the capital stock, which may take many years, that leads to the wage rise.

Tax Bill Hysteria

“Our current corporate tax system is outdated, unfair and inefficient. It provides tax breaks for moving jobs and profits overseas and hits companies that choose to stay in America with one of the highest tax rates in the world. It is unnecessarily complicated and forces America’s small businesses to spend countless hours and dollars filing their taxes. It’s not right and it needs to change.”

That was Barack Obama in 2012, with a proposal to cut rates to 28 percent. Other prominent Democrats who have previously called for cutting corporate taxes include Tim GeithnerMs. Pelosi, and Chuck Schumer.

.. Many developed countries, including Germany, Sweden and Britain, have all slashed their corporate rates in recent years. Lo, the sky did not fall.