Domestic Policy – Page 42 – The Wrongologist

Sunday Cartoon Blogging – May 29, 2016

Californians will be pleased to know that when Donald Trump becomes president, he can stop their drought overnight. California just went through the driest four-year period on record.

But Trump isn’t sold. He told supporters in Fresno, CA that the dry spell is bogus. Trump said the state was denying water to Central Valley farmers to prioritize the Delta smelt, a native California fish nearing extinction — or as Trump called it: “a certain kind of three-inch fish.” He told the crowd:

We’re going to solve your water problem. You have a water problem that is so insane. It is so ridiculous where they’re taking the water and shoving it out to sea…

At least we know where Trump stands on the issue:

If I win, believe me, we’re going to start opening up the water so that you can have your farmers survive.

Never mind that this is a state, not a federal issue, because Trump will win on the environment too.

In other news, Hill’s email problem gives her a few hurdles:

COW Hillarys Hurdles

So far, we’ve heard what we already knew, she broke a rule that others had broken before her. Of course, to Republicans, breaking an agency rule is proof she’s broken the law. Maybe, but rules ain’t the same as the law. She needs to put this behind her, or face death by a thousand cuts.

We got our first look at Hill’s emails:

Bill & Hill feel the Bern in CA:

COW kids in car

Trump and Bernie wanted to debate. You know who the target was:

COW Trump Bernie

Apparently, we have no antibiotic for the Superbug:

COW Superbug

The GOP plans to make the transgender toilet rule a centerpiece in the campaign:

COW Toilet

Will We See a Recession Soon?

With Trump vs. Clinton vs. Sanders sucking all of the oxygen out of the news cycle, it is probable that you missed the release by the Federal Reserve on May 18^th of its delinquency and charge-off data for all commercial banks in the first quarter. It isn’t a pretty picture.

Heres a few nuggets:

Delinquencies of commercial and industrial (C&I) loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have ballooned. C&I loans are classified delinquent when they are 30 or more days past due.
Between Q4 2014 and Q1 2016, delinquencies have increased by 137% to $27.8 billion. Currently, they are halfway to the all-time peak during the Financial Crisis in Q3 2009 of $53.7 billion. And theyre higher than they were in Q3 2008, when Lehman Brothers melted down.

Below is a chart of delinquencies released by the Board of Governors of the Fed. The shaded areas are times of economic recession. Wolf Richter of Wolf Street added the emphasis in red to point out where we stand in relationship to the 2008 Lehman moment:

C&I Deliq Q1 16

As you can see from the chart, business loan delinquencies are usually a leading indicator of economic trouble. They begin rising at the end of the credit cycle since loans made in the good times start to go bad when the economic situation changes. Then, the obligations of interest payments and loan repayments begin to pose a problem for weaker borrowers whose sales, instead of rising as expected when times were good, may be flat or shrinking while expenses can be rising. Suddenly, there is not enough money to service the loan.

It is however important to also consider Economic Injury Disaster Loans (EIDLs). Although no one can accurately predict what might happen in the future to an absolute degree of certainty, economists should always consider the possibility that we might see an increase in businesses seeking SBA eidl status in the event of a recession.

That being said, this all started with the oil and gas sector reacting to lower crude oil prices in 2015, but it has moved beyond the oil patch. Total US commercial bankruptcy filings in April, 2016 rose 3% from March, and are up 32% from a year ago, to 3,482, according to the American Bankruptcy Institute.

This is happening at an interesting time.

First, the health of the economy will be a huge deal in the General Election. Both Trump and Clinton have a stake in saying it isn’t as good as it could be. Yet, it is highly unlikely that we will be in a recession in November 2016, because our current economic momentum will carry us for at least another 6 months.

Second, the Fed is now indicating that it believes the economy is strong enough to raise rates for a second time this year, perhaps as soon as June, according to the Feds recent Open Market Committee minutes. That supports the idea that no recession is imminent.

But we still have this pesky loan delinquency data.

Loan delinquencies must be cured within a specified time. If not, they’re taken from the delinquency bucket and dropped into the default bucket. If defaults are not cured within a specified time, the bank deems a portion (or all) of the loan balance uncollectible and writes it off, therefore moving it out of default and into the write-off bucket. This is a factor in many different loan types, such as the usda business loans on the market.

That’s why the delinquency statistics usually do not get very large loans and don’t stay delinquent for a very long period.

Of course, there are other loans that might be impacted by these trends too. For example, it would be interesting to analyze the trajectory for merchant funding options such as a business cash advance loan for businesses in need of a financial boost. Ultimately, only time will tell what the future holds for loans and the financial sector in general.

Regardless, the Fed has painted itself into a corner. They have to raise rates because low rates are destroying many pension funds and they hurt retirees who rely heavily on interest-bearing investments. Pension funds have been modeled on interest rates of between 6%-8%, which have not been seen for at least 10 years.

But, a Fed rate hike would add more risk of more loans becoming delinquent.

And the largest American corporations are awash with the debt that they used to fund buy-backs of their shares. That debt has to be renewed periodically. If rates rose high enough to help pension funds, it could wound quite a few large companies.

If that wasn’t bad enough, South America, Europe, and the Chinese are looking increasingly fragile. Even if the Fed engineers a domestic miracle of sorts, it may not be enough. The financial world can be a minefield when we are trying to hang on to our hard-earned money.

So, prepare to hear both Trump and Hillary tell you they have the answers.

Since their global corporate benefactors now rule the world, they should be able to figure out what to do with it.

The Pant Load Party

Happy Friday! You are busy, and don’t need a long-form note from Wrongo. But, here are a few items you may have missed that accurately describe the Republican Party today:

First, The GOP didn’t follow its own rules during a vote on Thursday. The subject was a measure to ensure protections for the LGBT community in federal contracts, and it failed to pass after “initially passing” during the time allotted for members to vote. Then, the Republican leadership urged their members to change their votes. The leadership kept the vote open as they pressured members to change sides, allowing lawmakers switch their votes without following the “Regular Order” process of walking to the well at the front of the chamber.

By changing their votes, the House GOP inserted a poison pill that overrides Obama’s executive order banning LGBTQ discrimination in federal defense contracts. From The Hill:

Initially, it appeared Rep. Sean Patrick Maloney’s (D-NY) amendment had passed, as 217 “yes” votes piled up over 206 “no” votes when the clock ran out. The measure needed 213 votes to pass. But it eventually failed, 212-213, after a number of Republican lawmakers changed their votes from “yes” to “no” after the clock had expired.

The Pant Suit vs The Pant Load© Part II – Funding Infrastructure

Here is an issue on which the presidential candidates of the two parties seem to agree: Funding infrastructure, or at least, funding roads.

Over the past 50 years, US investment in transportation infrastructure as a share of GDP has shrunk by half. China is outspending us four to one and Europe two to one on transportation infrastructure. We have over 100,000 bridges in this country old enough to qualify for Medicare.

The Economist reported that the American Society of Civil Engineers (ASCE) thinks that additional spending of $1.6 trillion is needed by 2020 to bring the quality of the country’s infrastructure up from “poor” to “good”. The Economist indicated that over the past decade, America’s roads have fallen from seventh to fourteenth in the World Economic Forum’s rankings of the quality of infrastructure.

Part of the problem is that the federal tax on gasoline, which provides most of the funding for federal spending on roads, has been 18.4 cents per gallon since 1993, yet over that period, the price of construction materials and the wages of construction workers have both risen by more than 75%.

And Congress hasn’t helped. They have passed 35 stop-gap funding bills to extend transportation funding. However, most transportation projects are not built in just one year, they are complex, multi-year projects.

Last December, Congress passed the “Fixing America’s Surface Transportation Act”, or the FAST Act – which authorized $305 billion over fiscal years 2016 through 2020 for roads, bridges, public transit, and rail. Of that amount only $70 billion represents a new cash infusion for road repairs. Since the total highway need is $740 billion, there is a big funding gap.

Bizarrely, most of the funding for FAST was paid for by raiding the capital of the Federal Reserve. The Congressional Budget Office recently projected that the money in the Highway Trust Fund will run out in six years, and the fund faces a shortfall of $100 billion by 2026.

The funding gap hasn’t escaped the attention of the two presidential candidates. In a rare show of agreement, they are both for infrastructure spending. So, what do they want to do? Unsurprisingly, Trump hasn’t proposed a specific funding level. In his book, “Crippled America: How to Make America Great Again“, Trump says he’s in favor of major public investment in infrastructure repair and expansion.

“If we do what we have to do correctly…we can create the biggest economic boom in this country since the New Deal when our vast infrastructure was first put into place. It’s a no-brainer.”

It’s a “no-brainer” but, with “no amount”.

Hillary Clinton wants to commit $275 billion in public funds over five years, including $25 billion in capital for a new national infrastructure bank to generate another $225 billion in direct loans, loan guarantees and other forms of credit.

Neither candidate is proposing anything that meets the total financing need.

Today, the federal government is responsible only for about 25% of spending on highways and the FAST alternative will be an unreliable future funding source. Federal net investment has been negative since 2011, meaning that Congress is not spending enough to maintain the roads and bridges we have.

By contrast, many states have raised local taxes on gasoline: 12 states have raised gas taxes in the last 18 months. Most states tax by the gallon, and have benefited from the falling oil price, which has boosted sales of gasoline by 3% nationally. In fact, states are beginning to spend more than the federal government as a percentage of GDP:

State Spending to GDP Growth

But, state gas taxes have the same problem as the federal gas tax: They are fixed per gallon, so inflation erodes their value over time. And state budgets can’t grow to the sky. In many cases, states are under pressure to balance their budgets.

As a result, state politicians are burning political capital just standing still. That means the presidential candidates and Congress must find a way to finance more federal infrastructure investment.

Perhaps the gas tax is the wrong way to go. Rising vehicle fuel economy means more miles driven on fewer gallons of gas. With the move to electric cars, Highway Trust Fund revenue will be even lower. And fewer people own cars, but everyone benefits from good roads. People buy food trucked on our roads. They buy clothes, furniture, etc. trucked on our roads. They are carried to hospitals in ambulances on those roads.

The solution is a general road tax that everyone pays.

So, be on the lookout for Trump or Clinton’s rhetoric on infrastructure solutions. This is a yuuge problem that is not going away.

Sunday Cartoon Blogging – April 24, 2016

(Mr. Wrong and Ms. Right are in Bordeaux. Next, we visit the Normandy Beaches)

RIP Prince. “When Doves Cry” was a personal favorite:

COW Doves Cry

Wrongo didn’t appreciate when Prince was so popular, how gloriously filthy some of his mainstream songs were when you watched MTV, or heard them on the radio. The web has few Prince live performances because of his tenacious control over his artistic product. Check out this video from his 2004 induction into the Rock and Roll Hall of Fame:

Those who read the Wrongologist in email can view the video here.

Apparently, the guitar that Prince used in the video was a cheap Telecaster knock-off. The Diminutive One tosses it into the audience as he finishes. Rolling Stone reports that it almost didn’t happen: George Harrison’s widow, Olivia, wanted the performance of “While My Guitar Gently Weeps” to be limited to people who knew George — unlike Prince, who later claimed he had never even heard the song before it was sent to him to learn for the performance.

Obama of Arabia meets up with his homies:

COW Whats New

Tubman on the $20 bill gives new meaning to new money:

Clay Bennett, Chattanooga Times Free Press

Irony anybody? A 2-term President who was a soldier, a lawyer and served in Congress both in the House and Senate, and a Democrat, is replaced by a pro-Lincoln freed slave who worked for the US Army and was a Republican? And the guy responsible for it is a Democrat!

Trump and the GOP get ready to play delegate football:

COW Lucy

Trump told the GOP he was gonna be a new man in the General Election:

COW New Trump

Inside The Rock of Gibraltar

Wrongo and Ms. Right visited Gibraltar yesterday. You are familiar with the Rock that is part of the Prudential logo. Gibraltar is a tax haven. And while it isn’t in the Panama Papers, Gibraltar has a branch of the Panamanian law firm, Mossack & Fonseca, whose leaked documents have focused all of us on tax havens and possible tax evasion.

Gibraltar has 33,000 residents and 1.5% unemployment. About 11,000 Spanish citizens cross the border daily for work, since there is about 40% unemployment in Spain.

It’s hard to imagine when you look at it from the outside, but the Rock of Gibraltar actually has more than 32 miles of tunnels inside. Most were built during WWII. In 1940, Britain, who controlled Gibraltar, was at war with Germany and Italy. The future for Gibraltar was uncertain, since it was surrounded by the enemy. Churchill and the British military believed that an attack on Gibraltar was imminent, so they decided to construct a network of tunnels, building a military fortress inside the Rock.

The tunnels eventually accommodated an underground city. They were built to house 16,000 soldiers along with enough food to last for 16 months. Within the tunnels there was a power generating station, huge fuel storage tanks, 3 hospital units, ammunition magazines, and a vehicle maintenance workshop.

Gibraltar never came under siege, and the need to accommodate thousands of troops never came to pass. But Churchill, Eisenhower, De Gaulle and others toiled inside the Rock at various times during the war. General Eisenhower used the tunnels as his headquarters for the invasion of North Africa. He later wrote:

At Gibraltar our headquarters were established in the most dismal setting we occupied during the war…. Damp, cold air in block-long passages was heavy with a stagnation that did not noticeably respond to the clattering efforts of electric fans. Through the arched ceilings came a constant drip, drip, drip of surface water that faithfully but drearily ticked off the seconds of the interminable, almost unendurable, wait which occurs between completion of a military plan and the moment action begins.

Here is an old photo of the tunnels:

Gibraltar Tunnels

The humidity is high, in excess of 90%. The walls and ceiling are Jurassic limestone. These tunnels make you reflect on how often the military plans for something that never comes to pass.

Beyond the planning is execution, at a huge cost in human capital and materiel, often accompanied by heroic effort, and loss of lives.

We saw the same in Iraq and Afghanistan. NPR reported that the US Army abandoned more than $7 billion of equipment, about 20% of what the Army brought into Afghanistan. At the time of our wind-down, we realized that we had no way to move our equipment out via land, so it would have to be flown out, at ruinous expense.

Apparently, we failed to plan for some obvious outcomes.

We did the same thing in Iraq, bequeathing to the Iraqi government more than $580 million of equipment that supposedly saved us more than $1 billion in shipping costs. We want and need our military to plan for exigencies, even some which may seem remote. Otherwise, we can get caught with our pants down.

But how many times have we heard that “No one could have foreseen” some event or problem that causes us to lose money, people or prestige on the global stage? We leave $8 billion of equipment in the Middle East because we didn’t plan effectively? We can’t connect the dots between Saudi immigrants taking jet pilot lessons and Osama bin Laden’s rumored plans to attack the US?

How come it’s not too expensive to take our military equipment into a country, but it’s too expensive to take it back out?

The threat to Gibraltar was genuine. With 70+ years of hindsight, it is easy to second-guess the British tunnel building as excessive. But, at the time, there were enemy bombing raids that led to the evacuation of most civilians.

Those tunnels are an artifact of the military history of a piece of strategic ground. It was the Allies’ gateway to what was at the time, a hostile Mediterranean. Controlling Gibraltar allowed the Allies to mount the campaign in North Africa, and later, in Italy.

Maybe we plan properly in our wars of necessity, but plan poorly in our wars of choice.

And You Know That It’s Right

Last week Andy Newman died. You need to be as old as Wrongo to know who he was, but it’s likely you have heard the 1969 song “Something in the Air”, or of the group who recorded it, Thunderclap Newman. Back then, if you weren’t on the LBJ/Nixon Establishment team, you wanted change. Wrongo was discharged from the US Army in 1969. 1969 was Woodstock, the first man on the moon, Vietnam, the Manson family, the Black Panthers, and the 500,000 person march on Washington,

The song captured a moment.

The group was the idea of Pete Townshend, and he plays bass on “Something”. The guitarist was Jimmy McCulloch, who went on (in 1974) to be the lead guitarist in Paul McCartney’s band, Wings, and compose the song “Medicine Jar” for the album “Venus and Mars”. McCulloch died at 26 from a morphine and alcohol overdose.

This is a blip in rock and roll history, but the track survives. It was covered by Tom Petty. Wilco has performed it live for years. Steely Dan performs it live on tour as well. The song has been used in many movies, including The Magic Christian (1969), Almost Famous (2000) and The Girl Next Door (2004), and in commercials for Coca-Cola and British Airways.

It was written by Speedy Keen, who had been Townshend’s chauffeur. Andy Newman was the piano player for Thunderclap Newman, the nickname coming in high school from his heavy-handed playing style. He did not have a long career in music. After this one-hit wonder, he became an electrician.

Here is the song:

Some lyrics:

Call out the instigators
Because there’s something in the air
We’ve got to get together sooner or later
Because the revolution’s here, and you know it’s right
And you know that it’s right

1969 and 2016 are similar. It doesn’t matter who wins the presidency this year, there will still be widespread anger and discontent, the populace is no longer willing to accept political lip service instead of solutions. And they want the two Americas that the rich and powerful have foisted on us to be more equal.

Lock up the streets and houses
Because there’s something in the air
We’ve got to get together sooner or later
Because the revolution’s here, and you know it’s right
And you know that it’s right

The difference between then and now is that people today no longer believe in the American dream, they are no longer on the same page. We’ve become a strange brew of very narrow interests, all competing for the ears of our politicians, but they never do anything. Back in 1969, many of us wanted change. Today, despite (or because of?) Bernie and The Donald, and the two Establishment parties, we have no change, just political chaos.

Hand out the arms and ammo
We’re going to blast our way through here
We’ve got to get together sooner or later
Because the revolution’s here, and you know it’s right
And you know that it’s right

Different from 1969, we don’t have to hand out the ammo, it’s already in most homes.

But, sadly, just like in 1969, we have no answers. Bernie isn’t the answer, Trump isn’t the answer. The Establishments of both parties do not have answers.

And you know that it’s right

The Revolution WILL Be Televised

There is a lot of talk that the 2016 election is the start of a political rebellion in the US. We see the large, enthusiastic Sanders/Trump crowds, and the candidates’ relative success with winning primary elections, and have to ask:

Will it remain a political rebellion, one that expresses itself through the electoral process?
Will it continue beyond the 2016 election, assuming an Establishment candidate wins?

It began with the failure of the US economy to add permanent jobs for the middle class, and the lower classes after the Great Recession. Our column outlining that all jobs created since 2005 were temporary or contractor jobs showed that people are living paycheck to paycheck, but fewer have benefits, and all are afraid that they could be out of work with any personal or economic hiccup.

And wages are not rising the way corporate profits are, as this chart shows:

Corp Profits to HH income

So, fewer jobs as an employee, and no change in household income. More risk, no more money. Life for the average person in the US is harder and more frightening for a large group of people. Maybe they are not yet a critical mass of voters, but there are enough angry people that the Establishment political machines may be disrupted.

Since many see the worsening of the life of the middle class to be permanent, there is little reason for hope if you are on the fringe of our society. So, we’re watching that play out in the 2016 electoral race. People are finally getting tired of one or the other of these two campaign pitches:

We are the greatest nation on earth, but only if we elect candidate X, because candidate Y will ruin us
Or, you can’t have a good job with dignity, or good schools, or ask us to address any other of our serious problems, because we can’t afford it and people won’t pay more taxes

And as Gaius Publius says, there’s no other way to see the Sanders and Trump insurgencies except as a popular rebellion, a rebellion of the people against their “leaders.” On the Sanders side, the rebellion is clearer. Sanders has energized voters across the Democratic-Independent spectrum with his call for a “political revolution,” and that message is especially resonant with the young. From The Guardian:

Analyzing social survey data spanning 34 years reveals that only about a third of adults aged 18-35 think they are part of the US middle class. Meanwhile 56.5% of this age group describe themselves as working class.

Fewer Millennials (who number about 80 million in the US) are describing themselves as middle class. The number has fallen from 45.6% in 2002 to a record low of 34.8% in 2014. Ms. Clinton will need to rely on Sanders supporters falling in behind her – and faced with the prospect of a Trump presidency, many may do so. She also intends to try to win over “moderate” Republicans, assuming that the Bernie voters have nowhere to go.

That might work, since as Benjamin Studebaker says, Clinton is arguably closer to the Republican establishment than are Trump or Cruz. In fact, the Democratic and Republican establishments are both closer to each other than either is to its own anti-establishment wing. Consider that Clinton and the Republican Establishment both:

Support the Trans-Pacific Trade Partnership (TPP)
Support immigration reform
Support foreign aid
Oppose Medicare for all
Oppose tuition free college
Oppose a $15 minimum wage

It would not be unreasonable for moderate Republicans to conclude that Clinton is closer to their ideological needs than are Trump or Cruz. Clinton may play for the other team, but at least she’s in their league.

The Establishments of both parties have no vision when it comes to solving income stagnation for the 99%, or solving our crippling health care cost increases, the trade treaty fiasco, and the military establishment’s continued sucking of more and more money from our budget.

These cumulative burdens will break people’s belief in a better, more secure future. Either policy changes are enacted by the next Establishment president and Congress, or things could start to come unglued.

Which means that for almost every one of us, this could be the most consequential electoral year of our lives.

So, the Establishment wings of both parties need a Monday wake-up call. Here to rouse them from slumber is Iris DeMent with “Livin’ in the Waste Land of the Free”:

Those who read the Wrongologist in email can view the video here.

Is Trump Our Next Andrew Jackson?

(This is our second column about how the history of a progressive Democratic President has meaning today. You can read the first here)

From Politico:

America has never seen a presidential candidate like this before. Detractors point to his lack of political experience, his poor grasp of policy, his alleged autocratic leanings and his shady past. They believe this man without much of a political platform (but with interesting hair) has neither the qualifications nor the temperament to be president. Yet in defiance of conventional wisdom, he is leading his three main rivals in the race for the White House, and party bigwigs are at a loss how to respond.

No, it’s not Donald Trump. It’s Andrew Jackson, and the year is 1824.

We think of Jackson as the quintessential American populist, a president who took on the banks (well, one bank, the Second National Bank, yesteryear’s Fed). Jackson was a general in the Army, the guy who won the Battle of New Orleans against the British. He was a lawyer, elected into the House of Representatives, and a Senator from Tennessee, all before he was a two-term President.

So, not quite the same resume as the Short-Fingered Vulgarian.

Jackson was born in the backwoods of the South, his father died before he was born, and his mother raised him with the collective support of her family. He was the first member of his family to be born in the New World. He lost one brother in combat during the Revolution; another died as a POW. His mother died while nursing American prisoners. Jackson was, by today’s standards, a child soldier.

He was also the greatest war hero of his generation. And he once took a musket ball in the chest before killing a rival in a duel.

Can you picture Mr. Foul-Mouthed Comb-Over participating in a duel?

Jackson ran for president three times, winning a least a plurality of the popular vote each time. But in his first try in 1824, the election was decided in the House of Representatives, and the presidency went to John Quincy Adams.

Jackson was a fabulous campaigner. Tens of thousands flocked to see this charismatic outsider who positioned himself as a steadfast defender of the Republic. Jackson’s rallies dwarfed those of his rivals, yet he had plenty of baggage.

Jackson was, his rivals believed, more of a celebrity than a serious candidate. They learned a tough lesson, as are Trump’s Republican rivals today.

The dominant political party in 1824 were the Democratic-Republicans. It was the party of Thomas Jefferson. Founded in the 1790s, it believed in an agrarian-based, decentralized, democratic government. The party opposed the Federalists who had authored and ratified the US Constitution. By 1830, the Democratic-Republican Party had been split in two. Adams, in league with Henry Clay, favored modernization, banks, and federal spending for roads, which the Andrew Jackson faction (the Democrats) opposed.

We see a similar party split looming on both sides today. And there are other parallels. The 1820’s were a time of discontent, financial panics, threats of rebellion, and outbursts of violence. Both the agrarian and new industrial classes felt that the central government was either hostile, or indifferent to their needs. They felt that equal rights for all had been replaced by a plutocratic class who kept most of the benefits to itself.

Today, Jackson is less likely to be portrayed as the champion of the working class than as a big-time slaveholder and Indian fighter. His infamous policy of Indian Removal supported the confiscation of Native American lands and their eviction west of the Mississippi. This led to the “Trail of Tears” the forced removal of nearly 125,000 Native Americans from Georgia, Tennessee, Alabama, North Carolina and Florida.

There is a similarity between Jackson’s Indian Relocation act and Trump’s proposed “deport all illegal Hispanics” policy. A big difference between Trump and Jackson is that Jackson was pro-immigrant; he enjoyed political support in the cities of the North, particularly among the Irish immigrants who had recently arrived in the US.

Jackson started out with very limited resources, whereas Trump has inherited wealth. Jackson took on the greatest army in the world at the time, and won. Trump led pranks at his military high school.

Jackson worked his way up the political ladder and had considerable experience in government at local, state and national levels, while Trump ran one losing campaign, and is now embarked on a second.

Jackson was opposed to big banks, whereas Trump owes his success to the big banks.

2016 shapes up as a change election, like 1932, 1860 or Jackson’s in 1828. As in 1828, the Establishment Republicans may finally see what 40 years of promising their base one thing, and then doing exactly the opposite reaps.

That same threat is facing the Democrats.

We’ve Had Threats To Our Constitutional Rights Before

“The Past Is Never Dead, It Is Not Even Past” – Faulkner

Does this sound familiar?

They called for imprisonment of Americans who came from a foreign country. They called for shutting down immigration from certain countries and deporting the immigrants already here. They were for stifling dissent against a looming foreign war by calling the anti-war protestors traitors. They passed laws that curtailed several rights granted in the Bill of Rights.

An administration worked hard to “sell” a war to the American people.

This is not America in the post-9/11 period, it was during World War I, not during Iraq, or our current battle against ISIS.

And it occurred while a progressive Democrat was in the White House.

On April 6, 1917, Woodrow Wilson delivered his war message to Congress. The US, Wilson said, was to embark upon a crusade to “make the world safe for democracy“. Unfortunately, Wilson’s administration gave rise to the greatest attack upon civil liberties (up to that time) since the passage of the Sedition Act in 1798.

Wilson had two problems. First, the citizenry had to be mobilized behind a war effort that did not involve a direct attack on the US. Second, he felt a need to guarantee our internal security against both real and imagined enemies. To solve the first problem, in April, 1917, Wilson established the Committee on Public Information (CPI), under the leadership of George Creel, a respected progressive. The Committee’s job was to convince citizens that the war was righteous, and to educate all Americans about American war goals.

Writers turned out “true” stories concerning what the Germans planned to do to America; speakers toured the nation delivering anti-German talks. Movie audiences thrilled to “Pershing’s Crusaders” and came by the thousands to hate the enemy by watching dramas such as “The Kaiser, the Beast of Berlin.”

Congress also enacted laws that curtailed our constitutionally guaranteed freedoms of speech and press. Shortly after Wilson’s war message, in June, 1917, the Espionage Act was passed. This made it a crime to make false reports which would aid the enemy, incite rebellion among the armed forces, or obstruct recruiting or the draft. In practice, it was used to stifle dissent and radical criticism.

In October, 1917, another law required foreign language newspapers to submit translations of all war-related stories or editorials before distribution to local readers.

In May, 1918, the Sedition Act bolstered the Espionage Act. It provided penalties of up to 20 years imprisonment for the willful writing, uttering, or publication of material abusing the government, showing contempt for the Constitution, or inciting others to resist the government. Under this Act, it was unnecessary to prove that the language in question had affected anyone or had produced injurious consequences. In addition, the Postmaster General was empowered to deny use of the mails to anyone who, in his opinion, used them to violate the Act.

In October 1918, Congress passed the Alien Act, by which any alien who, at any time after entering the US was found to have been a member of any anarchist organization, could be deported.

Volunteer organizations sprung up, dedicated to discovering alleged traitors, saboteurs, and slackers. The volunteer groups were hyper-patriotic, and were often responsible for violations of civil liberties, although the government made no real attempt to discourage or limit their activities.

With the quiet consent of the Department of Justice, the American Protective League’s 250,000 civilian members—many of whom wore official-looking badges reading “Secret Service”—undertook vigilante actions against supposedly disloyal socialists, pacifists, and immigrants; they engaged in domestic surveillance operations; and raided businesses, meeting halls, and private homes in an effort to uncover pro-German sympathizers. As a result, force became the order of the day.

Somewhere during the fight to make the world safe for democracy, Americans lost their tolerance, compassion and mercy, and much of their democratic ideals.

Does this sound familiar?

The various Acts of 1917 and 1918 helped destroy what remained of the left wing in America. Victor Berger, the first socialist elected to Congress, was sentenced to 20 years in prison for hindering the war effort. Eugene V. Debs was sentenced to 10 years in prison for making an anti-war speech.

On November 11, 1918, the Allies and Germany signed an armistice: the war was over.

The American public had shown a willingness to tolerate and even to participate in censorship, mugging, imprisoning, harassment, and forced deportation of Americans who didn’t agree with them.

Given where we are today, it could easily happen again.

Don’t bet against it.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Domestic Policy