Category: Economic Policy

Monday Wake Up Call – April 9, 2018

The Daily Escape:

Canada Warbler

Are you worried yet? Last week ended with the stock market falling off the cliff. The Dow was down over 700 points, but recovered slightly to lose “just” 572 points. With the stock market, no matter what you plan on investing in, there are always risks. Before you do decide to get into this industry though, it is important to understand that there are some things you should know about stocks. It only makes sense to do your research into this before committing to anything. The volatility of the stock market makes it essential that you swallow your ego and seek professional guidance based on thorough and extensive research. Stocktrades can be of service to anyone looking to up their game and make sure their choices are as safe as possible. You’ll never be able to have a 100% success rate, with the risks summed up by recent events involving the President. Trump caused this by seemingly being pissed that the Chinese would fight back after his in-your-face tariff announcements.

Now, the Dow Jones average is down 9% from its January high.

And the administration couldn’t seem to get its messaging straight. Former TV pundit Larry Kudlow, now Trump’s economic advisor, told reporters on Wednesday the threat of trade sanctions was only a negotiating tactic. A rally of more than 3% followed. But Trump upended that notion on Thursday, ordering a review of even larger tariffs. So, on Friday, Kudlow said the opposite, claiming he had just heard about the additional $100 billion in tariffs Trump announced on Chinese imports.

From Bloomberg:

The Republican president’s renewed ramblings on trade dominated US equity markets this week, with a tweet-induced swoon on Friday leaving the S&P 500 Index 1.4 percent lower than where it started on Monday.

And there goes Trump’s reputation as the stock market president. A retired former colleague of Wrongo’s at the big NY bank is all over Facebook touting the Donald’s success at driving the stock market, but this chart from Bloomberg shows he’s wrong. It compares Trump’s first 444 days with the first 444 days of other presidents:

So, what to do? Do investors ride the roller coaster that is the Trump approach to trade, and watch Mr. Market deal with it by hammering their 401k? Or do they jump into cash and lock in a loss? From Benjamin Studebaker:

Theoretically, a full blown trade war with China could be really damaging. If the US and China were to stop trading tomorrow, the total value of US-Chinese trade lost would be about $648.5 billion. That’s about 3.5% of US GDP and 5.7% of China’s.

US inflation would increase, since American consumers will try to substitute more expensive goods for those they can’t import from China. Chinese unemployment would rise, as non-Chinese firms relocate from China to other developing countries to evade the tariffs.

The US wouldn’t be hurt as badly, because after a while, firms would find new locations to operate from. But the trade war won’t create many new American jobs – the offshore firms would either stay offshore, or they’d automate production in North America. The Chinese would be more lastingly damaged, as there isn’t a consumer market large enough to replace America’s.

That’s what Trump means when he says that trade wars are “easy to win” for the US. We can damage China more than China can damage us. Studebaker concludes:

But make no mistake–such a trade war would be highly disruptive. In 2009, the US economy contracted by 2.8%. A full blown trade war would blow this figure out of the water. It would be political suicide for the administration.

Trump’s stated goal is to get China to negotiate to protect US intellectual property rights. This is why his proposals have been relatively small – he’s not looking to break Beijing, just to bring it to the table.

If Trump can get China to make a deal with him, he can pass this off as a major foreign policy achievement. And because the stock market has been in panic mode, any positive result could make Trump look good in the eyes of his supporters.

OTOH, his supporters, like my former Bank colleague, think everything Trump does looks good.

Maybe the trade war won’t happen. But, maybe Trump should remember what Luke Skywalker said in the Last Jedi:

This is not going to go the way you think…

The “Art of the Deal” guy should know there are two sides to any negotiation.

So, wake up, Mr. Market! Stop jumping off a cliff with every tweet. To encourage you, here are Elvis Costello and the Attractions with their 1978 hit “Pump It Up”. Maybe it will give Mr. Market an idea about the right direction for the stock market:

Sample Lyrics:

Pump it up, until you can feel it

Pump it up, when you don’t really need it

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

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It’s Past Time To Make Changes To Our Economic System

The Daily Escape:

2011 Art piece by Steven Lambert

Does capitalism work for you? Well, you certainly work for capitalists. The real question is whether capitalism still provides economic security to all of us.

Steve Lambert, the artist who designed the sign, engaged with people across America over a three-year period about whether capitalism was still working. He learned that people were split about 50/50 on the premise:

People usually first react to the piece by falling back on the comfort of abstractions and repeating popular myths. For example, the true/false dilemma is much easier to resolve when the only alternatives to capitalism are presumed to be failed communist dictatorships. It’s also much easier to pretend that the only “true” definition of capitalism is the kind of free-market extreme idolized by thinkers like Ayn Rand and Friedrich Hayek

Or thinkers like Paul Ryan, Mitch McConnell and Donald Trump. Lambert learned that people generally agreed with the concept, assuming “you are willing to work hard, or work smarter”:

I’ve always found the formulation “work hard, work smart” disturbing. When you invert the expression, it implies: if capitalism doesn’t work for you (that is, if you’re poor, out of work or have a demeaning job), it’s your fault. To put it more bluntly, you are lazy and stupid.

If we ignore the fact that until recently, wages have stagnated for decades, and that what most people earn in a lifetime is insufficient to cover a modestly comfortable retirement, maybe you can say that capitalism is working.

We have been told that federal budget deficits impair our ability to grow the economy, or to put food on our individual tables. In fact the opposite is true. This idea makes us believe that our ability to earn a living requires some degree of suffering by other Americans.

As Claire Connelly says: (emphasis by Wrongo)

“We can’t afford it” has been the proverbial comforter of opponents of the welfare state harking back to the Clinton / Blair days….This argument has been used as an emotional crutch for people who don’t want to admit that they’re comfortable with homelessness and unemployment….If their bottom line is stable.

This lie sets us against each other, implying that the well-being of everyone else is a direct threat to our own. And who wins? The beneficiaries of the newly lowered taxes, corporate America and its management teams. More from Connelly:

Do we really want to live in a world….Where most people will be lucky to earn minimum wage, or wait for months to get paid. If at all. A world where we are not entitled either to a job, or an education, or affordable health care or a social safety net?

We are likely to see a $1.3 Trillion budget pass both houses of Congress this week. It is deficit spending run wild. Wrongo knows that both parties believe that deficits don’t matter, and to a great extent, he agrees.

But these deficits are larger than they had to be, due to the massive corporate and wealthy individual tax cuts the Republican House and Senate just passed. And it’s not only the size of the deficits, it’s the mis-allocation of funds by our neo-con overlords.

This is what capitalism has delivered for America: More than 45 million of us (14.5%) live in poverty. In 2016, another 49.5 million Americans were age 65 and older, and half of them (24.75 million) had yearly income of less than $23,394.

That adds up to about 70 million (22%) of Americans.

One idea that is gaining attention is a Jobs Guarantee program. The Center on Budget and Policy Priorities (CBPP) recently released a paper arguing for a national jobs guarantee through a national infrastructure bank. The CBPP plan envisions an infrastructure bank that would fund vital projects and ensure that jobs are well-paid. The government would use this job-creating ability to expand jobs in sectors where the market won’t currently invest, like a national high-speed internet network.

Government guarantees of employment aren’t radical. They aren’t communism, or socialism. We did it before with the New Deal. It reinforces traditional American values around work, and it builds the tax base by taxation on the jobs created. Here’s a final quote from Steve Lambert:

My favorite response to the sign was from a 17-year-old high school student in Boston. She said: “Capitalism can’t work for everyone. If it did, it wouldn’t be capitalism.”

This is where the conversation needs to go: We have to change an economic system that fails so many.

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Will Tariffs Bring Prosperity?

The Daily Escape:

Detail of art painted on a truck, Pakistan – 2017 photo by Caren Firouz. South Asian “truck art” has become a phenomenon, inspiring gallery exhibitions.

Will new tariffs help our economy? The view of a typical Trump supporter:

Some of us are happy about these tariffs because it starts a long overdue conversation about trade: Everyone knows that the press, congress, economists, and the multinationals love existing policy, and that most of them couldn’t care less about trade imbalances. If this is the only avenue our democracy has to change trade policy, then we’re all for it.

Yet, the conventional wisdom is that Trump’s tariffs on steel and aluminum will do more harm than good. There are several concerns. To the extent we need steel and aluminum to use in our domestic production, it will cost more, and prices will have to go up, assuming that the manufacturers are unwilling to lower their profit margins. Ultimately, those increased costs hit the American taxpayer.

Another concern is retaliation. Our trade partners can block our exports, or charge retaliatory import tariffs of their own. Just 12% of US GDP are exports, so we’re less exposed to that threat than other economies that have a larger percentage of their economies dependent on exporting. However, jobs can be easily lost if China, Brazil, or the Euro Zone block some of our exports.

Trump’s rationale for new tariffs is two-fold. First there is a national security risk caused by diminished capacity in sensitive industries. Second, good jobs will come back to America if we produce more stuff.

Let’s deal with national security first. No doubt we have surrendered some of our strengths in sensitive products and technologies. But, it’s not a critical issue for steel or aluminum. We can get them from many countries that are currently our allies.

Artificial intelligence, advanced semiconductors, and software are an entirely different matter. There are legitimate national security-based rationales for restriction in those areas.

But, we are in trouble with some of the exotic steels that the Defense Department uses in weapon systems. For example, the Belgian firm Fabrique Nationale is the prime contractor for a lot of the high end small arms. Some of these specialty steels are only manufactured in annual production lots. Trump’s tariff won’t shift the production of those exotic steels to domestic sources.

So even in the few cases in which a tariff might serve a national security purpose, the Trump tariff will fail.

And while the Chinese dump steel below cost on global markets, most others (Canada, Brazil) do not, and we buy a lot more from them than we do from China. And there is no scenario whereby Canadian steel exports are a “national security” risk, Trump’s primary rationale. And the Trumpets seemingly can’t see the difference between primary aluminum (China exports nearly none) and semi-manufactured aluminum products, such as bars, plates, and wire rod, which they export a lot.

But, don’t foreign governments subsidize their steel industry? China does. However, that means that China is essentially giving us cheap steel. The question for Trump is: Will we gain enough jobs in our domestic steel industry to outweigh the losses to us in higher prices across all industries?

Maybe, but it hasn’t worked that way in the past.

Tariffs help lazy and/or incompetent businesses. Imposing new tariffs will just put off the day when the toxic combination of bad management, lack of investment, poor infrastructure, and bad government causes these protected industries to implode.

If you are a manufacturing company that is internationally competitive and well run, how would you like it if your steel and aluminum suddenly became 25% more expensive? All to protect some other lazy SOB who hasn’t invested in his plant in 20 years?

The correct response should be to find out why your product isn’t competitive, and then fix it. Much of American industry has done that, by automating, by moving abroad for cheaper labor, or to be closer to raw materials.

Ultimately, Trump’s tariffs will just postpone the day when our uncompetitive sectors must modernize, or go under.

And that result is always a net loss of jobs.

The best think tank idea is to establish tariffs (or quotas) based on the amount industries pay their labor in foreign countries vs. what US employers pay. If the foreign country’s prices are lower, than a tariff would kick in. This would help us with US firms who manufacture overseas. They would have the choice of paying higher wages to US laborers, or paying a tariff on their imports to the US.

Trump’s message is: If you want unfettered access to the US market, make it here. If the US consumer pays more, that is a price he’s willing to take to have the manufacturing base.

This is a debate worth having.

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Thinking About Trump’s Infrastructure Plan

The Daily Escape:

Lincoln Highway – photo by Andrew Smith. The Lincoln Highway was the first highway to connect the east and west coasts of the USA in 1916. It was a combination of newer and older roads of varying quality.

Eisenhower’s National Highway System had its origin in a road trip that he took across the country in 1919, 33 years before he was elected president. From Atlas Obscura:

Lt. Colonel Dwight D. Eisenhower traveled with the military in a motor convoy across the country, from DC to San Francisco… This was one of the first major cross-country road trips, and it planted the idea in Eisenhower’s mind that the federal government could and should make improving US highways a priority…

In 1919, America’s network of roads that Eisenhower traveled on was, for the most part, still rudimentary.

In 1916, the Lincoln Highway had been designated, but it wasn’t a proper highway. The Eisenhower convoy mostly traveled the Lincoln Highway, with some detours. The motorcade included more than 80 vehicles. It left Washington DC on July 7, 1919, and took seven and a half hours to reach its first stop at Frederick, Maryland, a distance of 46 miles. That’s where Eisenhower joined the group.

That 6 miles an hour pace is what the convoy would average in its drive across the country. It took them 62 days to make it to San Francisco.

In 1919, usable roads hardly existed west of Indiana. When it rained, vehicles got stuck in soft spots on the roads, up to their hubs, and had to be pushed out. In Nebraska, they found sand to be the enemy. One day, it took seven hours to pull all the trucks through 200 yards of quicksand.

Elected in 1952, Eisenhower hoped to build the highways that he had talked about for years. The Federal-Aid Highway Act of 1944 had authorized the construction of a 40,000-mile “National System of Interstate Highways”, but hadn’t provided funding to pay for the construction.

Eisenhower’s new Federal-Aid Highway Act passed in June 1956. It authorized the construction of a 41,000-mile network of interstate highways spanning the nation. It also allocated $26 billion to pay for them. The federal government would pay 90% of the costs of construction, using a national fuel tax.

Thereafter, that great American institution, the road trip, could begin. Today, the Interstate Highway System is more than 46,000 miles long.

Flash forward to 2018. We know public spending peaked at 2.2% of inflation-adjusted GDP in 2009 and has fallen ever since. By late last year, it was down to about 1.6%.

President Trump said while introducing his new infrastructure plan:

It is time to give Americans the working, modern infrastructure they deserve.

Reading Trump’s plan, it is clear he thinks we deserve nothing. Disagree? Start by looking at Trump’s budget proposal. Jared Bernstein says:

The budget proposes $200 billion over 10 years, but as budget analyst Bobby Kogan tweeted: “The budget cuts $178 billion in
transportation [not including cuts to] water, broadband
and energy. This means [Trump is] giving $200 billion with his left hand but taking away that much with his right.”

$20 billion a year doesn’t go very far. The plan shifts at least 80% of the investment in infrastructure to private investors, states, and cities. This is problematic, because Trump’s tax plan significantly lowers the amount of federal taxes that state and local taxpayers can deduct from their tax bill. This will make it much harder for states and cities to raise the revenue to support infrastructure spending, or any other public needs.

The LA Time’s Michael Hiltzik says it best: (brackets and emphasis by Wrongo)

The whole package should mostly be seen as [typical of] the Trump administration’s approach to governing: programs with virtually no rationale and without adequate financing, along with a commitment to getting government off the backs of the people so Big Business can saddle up.

This is Right Wing ideology at work. They passed a huge tax cut in order to “starve the beast” that is the US government, while at the same time, they will “feed the beast” via $trillions of deficit financing. Cities and states are not flush with cash for new infrastructure projects, and the private sector won’t do anything that reduces shareholder return, so Trump’s plan is dead on arrival.

As for financing America’s roads, increase fuel taxes. Let drivers amortize the building costs, a system Eisenhower used. Add tolls where we must. Make the traffic move faster and safer.

Trump should be like Ike: Pay for our infrastructure!

Claw back some tax cuts. Cut defense spending. Pay for purer water for our towns and cities. Pay for better schools, a smart electric grid, and better ports and airports.

Pay for them all with federal dollars.

(Wrongo is indebted to the tywkiwdbi blog for covering the Eisenhower road trip on Lincoln’s birthday)

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Saturday Soother – February 10, 2018

The Daily Escape:

Lighting the Olympic torch – photo by Chang W. Lee

Did anybody see the bus that ran over Wrongo’s 401k?? It was a tough week on the retirement savings front for anyone who uses the capital markets to bolster their net worth. Retail investors are trapped – they can’t sell their holdings quickly, and there doesn’t seem to be a safe haven for their cash if they manage to get out of the markets only slightly bruised. Fear seems to be guiding Mr. Market.

Also, Washington finally passed a bi-partisan budget deal, but only after a brief shutdown. Sadly, it adds more than $1 Trillion to the national debt. It’s hard to square the Republicans’ deficit hawk ideology with their sudden willingness to spend whatever it takes to give the military whatever it wants.

During the recession, (Obamatime) the Republicans argued that responsible people tighten their belts when times are bad, just like people do with their household expenses. Now, we really shouldn’t use that argument for governments who can create their own currency. Despite that, if you really think the government should be run like a household, wouldn’t a responsible family increase their savings and pay down their debts when times are good? That would give them a “rainy day” fund that they could dip into when times were bad. Or, they could then go back into debt to get through the rough patch.

But today’s Republicans are saying: “Times are great! Let’s max out the credit card”. This will soon be followed by: “Oh shit, now I have to starve the kid so I can make the payments on my student loans”.

They won’t even follow their own dumb rules.

That was the week that was. A stomach-churning, no sleeping, hot steaming pile of anxiety. You need a real break.

To help you forget about your financial losses and your government’s foolishness, settle into a comfortable chair with a Vente cup of Volcanica Coffee’s Blue Mountain Peaberry coffee from the Clydesdale estate in Jamaica (only $89.88/lb.). You can’t afford it after what happened on Wall Street, but like Congress, you have a credit card. So go for it!

The Clydesdale coffee region is near the center of Jamaica’s Blue Mountain coffee area. The Clydesdale Estate was founded in the 1700’s.

Now, listen to a throwback to the 2012 Olympics in London. Here is the London Symphony Orchestra conducted by Sir Simon Rattle with a performance of “Chariots of Fire”. The performance includes physical comedy by Mr. Bean (the British comedian Rowan Atkinson):

This isn’t high art, but it is fun, and tangentially relevant to the Olympics.

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

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The GOP’s Message and the Democrat’s Response

The Daily Escape:

Lake Blanche, UT – 2017 photo by exomniac

We watched the State of the Union (SOTU) speech at the Mansion of Wrong. Outside, it was 15° and very windy. That also appeared to be the climate in the House chamber during Trump’s speech, which Wrongo saw as largely a basket of glittering generalities; rhetoric without action; lies instead of facts; and marching band patriotism. Chants of “USA, USA” in the House chamber should be beneath our politicians, but sadly, some want us to appear to be a banana republic to the rest of the world.

Americans don’t ask their politicians for much, and apparently, willingly accept even less than that without a whimper.

Wrongo wants to focus on the Democratic response to the Trump speech. Roll Call says that there were at least five responses, of which two were “official”, in that they were authorized by the Democratic Party. Rep. Joseph P. Kennedy III (D-MA), grandson of Bobby Kennedy, delivered the English-language Democratic response. Virginia Guzman, the newly elected, and first Latina to be elected to the Virginia House of Delegates, gave an official Spanish-language response.

Democratic Rep. Maxine Waters of California offered an unofficial response to the presidential speech, as did former Rep. Donna Edwards of Maryland.

But the most notable response came from a sitting senator who isn’t a Democrat, Sen. Bernie Sanders (I-VT). He rebutted Trump’s remarks, and in some ways, rebuked Trump and his administration. This is the second year in a row that Sanders has delivered his own speech after the State of the Union. Bernie’s speech was shown on social media, and not on any mainstream TV outlet. You can read the text of his speech here.

Post-SOTU, the Dems are about to get worked over, largely because of their support of the Dreamers. If Chuck Schumer has his way, Democrats are about to charge up DACA hill once again. The outcome is likely to be the same. Wrongo thinks the Dreamers’ cause is just, but it isn’t a good idea to try to ransom them from Trump and the GOP as part of the immigration deal Trump has placed on the table.

Trump wants to alter our immigration system in a very unfair way in exchange for Dreamer amnesty. The question for Democrats is: Should they make the trade? Do they really think that the GOP will start deporting Dreamers in March? Do they think the videos of Dreamers in custody and on their way to homelands they never knew will help Republicans politically?

Take the Dreamers off the table. Proceed with other pressing issues, like funding the government.

And when the DACA protections lapse, there will be a price that Dreamers will have to pay, right along with both Democrats and Republicans, neither of whom would make a deal to extend DACA.

And when Trump wants an infrastructure deal, then Dems should bring up the Dreamers. Change the strategy. Let the “public-private” partnerships he touts for infrastructure be the way he gets his wall, and how Dreamers get amnesty.

It’s important that Dems are right on both the politics and on the merits. Compromise must come on big issues like immigration and infrastructure, and Dems shouldn’t take the first deals offered on either issue.

But to win in 2018 and beyond requires Democrats to offer a strong and compelling platform of their own, one based upon principles. Like health care being a right of citizenship. Like investing in education and infrastructure instead of spending on wars and weapons. Young Kennedy got close to identifying a compelling platform, but he isn’t the messenger for 2018.

There are many people in America who are hurting. Many are under-employed, and not getting the support they need. Simply pointing the finger at Trump is not going to inspire many to go to the polls. Democrats tried this in 2016, and it didn’t work.

People need a positive vision for the USA, and their place in it.

On Tuesday night, Trump would only speak of his plans in very general terms, because he doesn’t have the support in both Houses of Congress to get the job done. While MAGA is a successful campaign slogan, it isn’t a plan for a future that includes all Americans.

Democrats can be a part of the solution, if they find a way to prevent the GOP from taking and holding liberal issues hostage.

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Saturday Soother – January 27, 2018

The Daily Escape:

Two Harbors, Lake Superior, MN – 2018 photo by Fhallopian

You may have missed the Op-Ed in the NYT by 2015 Nobel Laureate Angus Deaton, entitled “The U.S. Can No Longer Hide From Its Deep Poverty Problem”. In it, Deaton says this:

According to the World Bank, 769 million people lived on less than $1.90 a day in 2013; they are the world’s very poorest. Of these, 3.2 million live in the United States…

That’s $1.90 per DAY. Deaton asks:

Surely no one in the United States today is as poor as a poor person in Ethiopia or Nepal?

Well, only 3.2 million of us. That’s one percent of the American population. Deaton analyzes the World Bank’s study, and concludes that the minimum level per day should be higher in rich countries like the US. He quotes a study that says that the needs-based absolute poverty line should be more like $4/day in rich countries:

When we compare absolute poverty in the United States with absolute poverty in India, or other poor countries, we should be using $4 in the United States and $1.90 in India.

If we do that, there are 5.3 million Americans who are absolutely poor by global standards.

The time has come to ask a truly uncomfortable question: Will our society provide a role for people who for reasons of reduced mental or physical capacity, cannot contribute enough to earn their keep? There are millions of Americans who, by virtue of incapacity, or other challenges, are unemployable. They have no place in the workplace, and never will.

Most likely, you wouldn’t hire them, and neither will anybody else.

If the answer is we cannot provide them with a job to do, what is society’s responsibility to them? What is our individual responsibility?

Ponder that while you think about which beer you are going to buy for the Super Bowl party next Sunday.

Speaking of poverty (the intellectual kind), the State of the Union speech is next Tuesday. CNN tells us that Massachusetts Congressman Joe Kennedy will give Democrats’ response to Trump’s State of the Union:

Kennedy, 37, is seen as a rising star in a party that has many in the senior ranks well into their 70s.

So, prepare for your back to the future moment when another young Democrat named Kennedy spends a moment on the national stage. Americans trying to live on the same amount per day as Ethiopians, and Trump getting standing ovations from one side of the House on Tuesday; both can make you sick.

So, try to take your mind off of Davos, immigration, and poverty for a few minutes and prepare for a soother. Kick back and brew a hot steaming cup of CafĂ© Cubano by Don Pablo Coffee Growers and Roasters. CafĂ© Cubano isn’t from Cuba, it’s from Florida. But it is bold & complex, with a very smooth cocoa-toned finish, and says the brewer, never a bitter aftertaste. (2lbs/$13.99)

Now, click on the video below and watch a snowboarder glide peacefully through the woods and down a mountain of perfect powder near Steamboat, CO. He is accompanied by a rendition of “Clair de Lune” (Moonlight) by Claude Debussy. There is no moonlight in the video, but it is very relaxing:

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

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Do Democrats Have a Winning Political Strategy?

The Daily Escape:

Frozen branch in Lake Erie, Cleveland OH – 2018 photo by Igorius

The Democrats’ demand of passage of DACA legislation, or they would block a Continuing Resolution (CR) to keep the government open, lasted 72 hours. No DACA legislation was passed, but Dems are touting a Republican promise of debate about DACA over the next three weeks.

That promise comes from Mitch McConnell, the guy who stole Merrick Garland’s Supreme Court seat, and got away with it.

Wrongo believed that dying on DACA hill was a bad political choice for Democrats. After all, there are 700,000 Dreamers, but 320 million Americans would be affected by a government shutdown. Their negotiating position shows how weak the Dems are today.

Those Dems who say that capitulation on the CR was worth it to secure the Children’s Health Insurance Program (CHIP) funding for six years, should remember that the CR runs out in three weeks. Then it will be up for discussion again.

So from the Dems viewpoint, if by February 8th, the Republicans have not dealt with DACA, the Dems can shut the government down again, this time using the narrative that Mitch McConnell is a liar, and that they gave Republicans a chance to fix the problem. Unfortunately, McConnell has been called a liar before.

But if February 8 comes, and Democratic Senators back off on another confrontation to protect the Dreamers, that will not only be terrible for Dreamers, it’s terrible for Democrats. They have a few weeks to pressure Republicans to get this done.

OTOH, it is difficult to see why Republicans would do anything different. Paul Ryan and Mitch McConnell will use these three weeks to tighten the screws, and finish the job. That would start with McConnell taking the House’s already passed Securing America’s Future Act (SAF) to a vote.

Once Senate Dems say “no” to that, McConnell can say “Well, we put a DACA bill on the table, and the Dems rejected it. I lived up to my promise.” There will be some tinkering by middle-of-the-road Dems around the edges of the SAF bill. Then it will be attached to the CR. How long do you think it will be before 10+ Dems cave, and pass it?

Fault lines exist. A dozen Senate Democrats broke with party leaders to vote against the bill, including a number of potential presidential candidates, a sign they knew exactly where their base is, even if the leadership doesn’t.

Democrats need to use their time in the minority to remake the Party. They should pursue and deliver programs that offer real benefits for middle and working class voters. They need a plan to deal with income inequality. Fundamental questions about what being a Democrat means in the 21st Century must be addressed.

FDR provides a great example for today’s Democrats. In the 1930s, FDR responded to a financial crisis with bold, creative policies that delivered massive, tangible benefits to working people. Because of what FDR did, the Republicans were forced to go in his direction to stay politically competitive. Republicans began to promise that they could improve the programs they once opposed.

Here is what Roosevelt said in a speech about Republicans at the time:

Let me warn you, and let me warn the nation, against the smooth evasion that says ‘Of course we believe these things. We believe in social security. We believe in work for the unemployed. We believe in saving homes. Cross our hearts and hope to die. ‘We believe in all these things. But we do not like the way that the present administration is doing them. Just turn them over to us. We will do all of them, we will do more of them, we will do them better and, most important of all, the doing of them will not cost anybody anything’

In the post-war period, the Republican Party looked more like Dwight Eisenhower than like Ronald Reagan.

And today, Democrats must emulate FDR: Move Republicans to the left, not move the Dems further to the right. This isn’t about finding someone to create an Obama third term. Democrats shouldn’t prioritize getting rid of a bad president, they need to build a serious alternative to Republican ideology.

The Democratic Party has failed many times to produce a political strategy which would force the Republican Party to change direction. And they look like they may fail once again. The Democratic leadership believes that the party needs to unify at all costs to present the strongest possible electoral challenge to Trump in 2020.

It’s counter-intuitive, but to secure a future Democratic majority, Dems must first decide to be a party with a plan that addresses income inequality.

They can knock out Trump without moving to the right.

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GOP Asks “Hillbilly Elegy” Author To Run For Senate

The Daily Escape:

Snow in the Sahara Desert, Algeria. The snow lasted only a few hours on the ground, since the average low winter temperature is 54°F – 2018 photo by Zinnedine Hashas

With the speculation about Oprah as a candidate, we knew it wouldn’t be long before the Republicans dredged up a celebrity non-politician too. Politico is reporting that Mitch McConnell wants JD Vance to run for the Senate in Ohio against Dem incumbent Sherrod Brown:

Top Senate Republicans have quietly reached out to J.D. Vance — the star author of “Hillbilly Elegy” — about running for Senate in Ohio after the abrupt withdrawal of GOP candidate Josh Mandel last week… McConnell has told associates that he would prioritize the race if Vance jumps in.

McConnell has a good idea. If Vance runs, he is interesting enough to force Democrats to defend an otherwise safe Senate seat. People seem to think Vance is a white working class whisperer.

Wrongo and Ms. Right were persuaded by many Eastern Liberal Elite friends to read Mr. Vance’s book. The pitch was that Vance explains to liberals why white Trump voters from southeastern Ohio and West Virginia wouldn’t vote for Hillary, and don’t lean progressive in their politics.

Maybe. Wrongo thinks that by writing his book, JD Vance was just pushing propaganda that fits the policy preferences of leading Republicans. Try reading this:

We spend our way into the poorhouse. We buy giant TVs and iPads. Our children wear nice clothes thanks to high-interest credit cards and payday loans. We purchase homes we don’t need, refinance them for more spending money, and declare bankruptcy. . . . Thrift is inimical to our being.

Or, this:

We choose not to work when we should be looking for jobs…

Vance’s stereotypes are shark bait for conservative policymakers. They feed the mythology that the undeserving poor make bad choices and are to blame for their own poverty, so why waste taxpayer money on programs to help lift people out of poverty? After all, Vance got out of hillbilly Ohio without them.

People shouldn’t decide policy based on Vance’s anecdotes; they should care about the bigger picture. After all, are conversations with cab drivers a sound basis for economic and geopolitical policy?

It is depressing that Vance places so much blame on welfare rather than, say, neoliberalism and corporatism. They are the ideologies that moved jobs offshore. Their firms leveraged, and later bankrupted manufacturing firms in the heartland. They are the ones who precipitated the economic holocaust in Middle America.

And despite what Vance tells us, most poor people work. Of the families on Medicaid, 78% include a household member who is working. People work hard in jobs that often don’t pay them enough to live on.

After graduation from Yale, JD Vance became a venture capitalist. First, he worked in Silicon Valley for Peter Thiel, and now works for Revolution LLC, a Washington, DC-based venture capital firm, co-founded by AOL founders Steve Case and Ted Leonsis.

It is fair to say that Vance’s hillbilly days are way back in the rear-view mirror. Yet, he remains naïve. He was on “Face The Nation” on December 31st, talking about the Trump tax cut:

When the president talks about tax reform, he talks about the people who will benefit…He talks about American jobs. He talks about the fact that we’re going to be taking money that’s overseas and bringing it back to the US so that it will employ American workers. I think that focus again on the American working and middle class is- is-is to me the most thoughtful and, in some ways, the most genius part of Trump’s approach to politics.

Vance just revealed himself to be another reptilian conservative. We should remember this quote from economist J. K. Galbraith:

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

The grift goes on.

 

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Monday Wake Up Call – January 8, 2018

The Daily Escape:

Frozen Waterfall in Adirondacks – 2018 photo by I_am_Bob

A December 29th WSJ article charted the growing gulf in health and well-being between urban and rural America:

About 1 in 7 Americans live in rural parts of the country—1,800 counties that sit outside any metropolitan area. A generation ago, most of these places had working economies, a strong social fabric and a way of life that drew a steady stream of urban migrants. Today, many are in crisis. Populations are aging, more working-age adults collect disability, and trends in teen pregnancy and divorce are diverging for the worse from metro areas. Deaths by suicide and in maternity are on the rise. Bank lending and business startups are falling behind

These rural counties now rank the worst among the four major US population groupings (the others are big cities, suburbs and medium or small metro areas). In November 2016, these rural districts voted overwhelmingly for Donald Trump, based in part on his pledge to revive these forgotten towns by scaling back trade agreements, ending illegal immigration and encouraging manufacturing companies to hire more American workers. He also promised a $1 trillion infrastructure bill that would help create jobs, but, like the other promises, it may never become a reality.

Back in the late 1970s – 1980s, the nation’s basket cases were its urban areas. A toxic stew of crime, drugs and suburban flight made large cities the slowest-growing and most troubled places. But violent crime in the cities (despite claims by a well-known, Very Stable Genius) have declined to the point that there no longer is any “safety premium” from living in rural America.

Today, by most key measures of socioeconomic well-being, the largest cities are as safe, and are much wealthier than our rural and small metro areas.

For decades, America’s small towns barely grew. Rural families had just enough children to offset losses from those who left, and those who died. The decline in median household income is reflective of that trend. The graph below is based on census data. It shows that household incomes (adjusted for inflation) peaked around the end of the Clinton administration and continue to decline, and not just in rural areas:

 

 

These rural parts of America are caught in the vise of limited economic opportunity coupled with terrible health outcomes.

About half of these counties would be called “failed states” if they were countries, meaning that the infrastructure of skilled labor, healthcare, privately owned commerce and aggregate demand for goods and services are not enough to make them economically viable.

Education gaps also have long-term consequences. More jobs, particularly full-time jobs with benefits, require a bachelor’s or advanced degree. Without a larger share of college graduates, small towns have little hope of closing the income gap.

Solution? We need to create a way to finance those who might be willing to move to economically viable regions. Many people today can make a living just by being connected by phone and internet.

If they were to choose to reside in a rural town, they would become an economic generator, helping these communities that truly need the help. If the nascent infrastructure proposals by the GOP include building up our nation’s broadband system, it could help to support a dispersed work group more easily.

Every demographic region except rural America has improved on most quality of life measurements. In those aspects where things have gotten worse, such as diabetes and suicide rates, rural America has the highest rates.

Time for America to wake up: We need a Marshall Plan right here at home to renovate our small towns and rural areas. To help you wake up, listen and watch the Philadelphia sextet The War on Drugs perform “Holding On” from their 2017 album “A Deeper Understanding”. Watch the atmospheric video:

Takeaway Lyric:

I went down a crooked highway
I went all outside the line
I’ve been rejected, now the light has turned and I’m out of time

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

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