A final Christmas Eve word about the unwanted gifts the Trump tax cut is foisting on us. In the short term, it will stimulate consumer demand. The economy may “growâ, but our tax receipts cannot.
Soon, these tax cuts will place our government on a fiscally precarious footing. Expect the credit rating agencies (Moodyâs, Standard & Poors) to start wagging their tongues, warning of their concerns about the countryâs overall debt levels. It is possible that the repatriation of some of the massive off-shore profits that American firms have hoarded may come home. To the extent that they return, and some taxes are paid on them, this (one time) tax receipt will likely make the 2018 and 2019 annual budget deficits somewhat smaller than the colossal ones to follow.
After that, the governmentâs income will fall, and we will hear bi-partisan calls for deficit reduction, and lower spending targets will be the norm. The effects of tax legislation can take a long time to shake out, and there often are unintended effects.
But make no mistake, the GOP will start talking about the Coming Debt Apocalypse next month.
On to a few cartoons. Here is the difference between the parties:
Trumpâs year in review:
War is the answer to any question:
Trumpâs touting of something terrific slides downhill:
Nine. Just nine countries voted against the UN General Assemblyâs resolution on Jerusalem, demanding that the US rescind its declaration that Jerusalem should be Israelâs capital. That included us. Our major allies like Britain, France, Germany and Japan voted for the resolution, though some allies, like Australia and Canada, abstained. The overall vote tally was 128 to 9, with 35 abstentions, for the resolution. From the Guardian:
Nine states â including the United States and Israel âvoted against the resolution. The other countries which supported Washington were Togo, Micronesia, Nauru, Palau, Marshall Islands, Guatemala and Honduras.
Along the way, the world was treated to Nikki Haley telling UN diplomats that she would be taking down the names of those who failed to vote with the US. It may surprise you to know that the Russians call Haley the âWaffle House Bumpkinâ. Trump went further, saying:
All of these nations that take our money and then they vote against us at the Security Council or they vote against us…at the Assembly…They take hundreds of millions of dollars and even billions of dollars and then they vote against us…Well, weâre watching those votes…Let them vote against us; weâll save a lot. We donât care.
Iraq, Afghanistan, Jordan, Turkey and Egypt voted for the resolution. Do you think that means that they don’t need the money badly enough to roll over when ordered? Or is something larger at stake?
Stewart M. Patrick, a senior fellow at the Council on Foreign Relations, said:
I think this was a…self-inflicted wound and really unnecessary, clumsy diplomacy on the part of the United States…More than that, I think it symbolizes the self-defeating notion that for the United States, âitâs my way or the highway.â
Since the Inauguration, we practice foreign policy, kindergarten-style. Taking names and threatening our allies will not make Trump and/or Haley successful statesmen. And no, this isnât an example of “The Art of the Deal“: There will be no deal when one country tries to bully the entire world.
There has been lots of right wingnut talk about the US “getting out of the UNâ, and it isnât beyond the realm of the possible with the current administration.
It is truly painful to watch America in decline, both at home, and abroad. And a time when US global leadership is more necessary than it has been since the end of the Cold War. Come on, Trump, give us back the US we love and the US the world needs.
Will he do it? Can he?
Well, itâs Saturday, and if you haven’t finished your participation in Making America Great by maxing out your credit cards, you need a really big soother. Today, we continue with Christmas music.
So brew a hot steaming cup of Red Rooster Coffeeâs Holiday Blend, ($14.99/lb.) with its notes of crĂšme brulee, caramel, and gingersnap cookie.
Now get in a chair where you can see your (hopefully) fully-decorated tree and turn on the tree lights, settle back and listen to âL’Adieu des Bergersâ (the Shepherdâs Farewell) by Hector Berlioz.
The GOP tries to recover from going all in on Roy Moore. They now have the votes to pass their tax cuts, thanks to a few Senators who said they had reservations, but who really have no moral center. The Mueller investigation may be sidelined by the Senate, and the new Star Wars movie hit theaters.
Moore was supposed to be a deal with the devil, but the GOP had nothing left to offer him:
Xmas tax cuts come early for Trump supporters:
Tillerson and Trump try to get on same page about North Korea:
Her Majesty The Queen tries to think of a way to uninvite The Donald to the UK: (hat tip to Gloria G. and Jane T. Gloria says she loves the Corgi in the background)
Muller investigation moves to new phase:
Newest Star Wars movie reminds us of how old we are:
Trumpâs scale back of National Monuments shows us his REAL monuments:
Wrongo has suggested many times that America needs a revolution. He thinks that the US political process has been so captured by large corporations and the very rich that the average person no longer can have any impact on policy. In many states, the average person isnât even totally confident that he/she will be permitted to vote the next time they go to their local precinct.
We are in the midst of a political crisis: The people have lost faith in systems which they feel donât respond to real people and in representatives that wonât represent us, or the society at large. Rather than debate issues thoughtfully, we are whipsawed by the appeals to emotion launched daily into the ether by the tweeter-in-chief.
Two current issues demonstrate the danger. First, Jerusalem. It turns out that Tillerson and Mattis opposed the presidentâs decision to recognize Jerusalem as the capitol of Israel, and move our embassy there. You know from the headlines that Trump wouldnât listen to anyone who told him this would be a very bad idea. The State Departmentâs response was to issue a worldwide travel alert for those Americans who think theyâre still welcome around the world. The WaPo reported that a Trump confidant said:
Itâs insane. Weâre all resistant…He doesnât realize what all he could trigger by doing this.
The so-called adults in the room utterly failed on the Jerusalem issue, so are we supposed to put our trust in them to steer a sane course on the Korean peninsula?
What are we talking about here? Can we wait out Trump, and just work like hell to replace him with a better president in 2020? Would nuclear war get him re-elected?
What about the GOPâs control of both houses of Congress? On Thursday, Speaker Ryan told us what we face next year: the GOP will tackle the budget deficit and national debt by cutting Medicare and possibly Social Security, now that the GOPâs donor class has their tax cuts.
Things have to change, and there are only two options, neither very good. First, we can try and excise the moneyed influence via the ballot box. That is the âdemocratic revolutionâ that Bernie championed in 2016. The definition of democratic revolution is:
A revolution in which a democracy is instituted, replacing a previous non-democratic government, or in which revolutionary change is brought about through democratic means, usually without violence.
Since we no longer have a functioning democracy, a âdemocratic revolutionâ to bring it back is what we require. Is it the only way to right the American ship of state?
The second option is a coup of some kind.
It could be via impeachment, assuming there were high crimes and misdemeanors that Trump had committed, and assuming a Republican House would impeach him, and a Republican Senate would convict him.
It could come via a 25th Amendment action, which might be marginally more acceptable to Republicans, but is as unlikely as impeachment.
Least desirable, and least likely would be a true coup, where the âadults in the roomâ (in the oval office, or the Pentagon) get leverage over the Commander-in-Chief. Could a real coup stay bloodless? That seems highly doubtful, and Wrongo would rather trust Trump than a junta.
Removing Trump wonât fix whatâs wrong with the Republican Party. We need to prioritize and triage this situation, focusing first on taking back the House and Senate before 2020.
Who can we count on to right the ship?
Not todayâs Democrats. They are led by Chuck Schumer who approves of Trumpâs Jerusalem decision. The Democrats must fire Pelosi and Schumer, or die.
What about Americaâs largest voting bloc, Millennials? Can they step up to the challenge?
What about Americaâs women? In 2016, women supported Clinton over Trump by 54% to 42%, while Trump carried non-college educated white women 64% to 35%. The #metoo movement promises to become much more than the outing of bad guys: It could weaken both male privilege, and their power.
Firing a few slime balls isnât revolutionary, but voting them out of office would be a paradigm shift.
The stock market is in the stratosphere, and consumers are happily clicking on Amazonâs “place order” tab.
Measly tax cuts will trickle down to rubes like us, while the plutocrats will die of laughter.
Can women and millennial voters look beyond the GOP’s messaging that the Muslims are always to blame, and Israelis suffer the most?
Will they care enough about whatever Mueller turns up on Trump to go out and vote?
Revolution is in the air. Why should the right have all the fun?
Big Ben being cleaned. In order to clean the four clock faces, every 5-7 years, skilled climbers hang down from the belfry on ropes, and they clean the front of each clock face. There is one removable panel of glass on each face, which is removed during the cleaning so that the clock maintenance staff can talk to the cleaners while theyâre working. (“you missed a spot?”) Hat tip to Wrongoâs friends at the Goodspeed Opera House!
Yesterday we pointed out that there is a very large program that the country needs to fund if we are to maintain our position in the global superpower competition. The issue at hand is the stunning thought that we might lose up to 75 million jobs to automation in the next 13 years, and that we need to train the out-of-work unfortunates for new jobs in a different economy.
Itâs highly unlikely that we would need to train that many, but it could be 25 million Americans. And we have no idea where the money would come from to accomplish that. After all, the Republicans now plan to reduce tax receipts bigly, thus adding to the deficit and thereby, to the total debt of the country.
We know that as soon as the new tax cuts begin accruing to their patrons, the GOP will start talking about reducing the budget deficit by cutting non-military expenses. Ron Brownstein conceives the Republican tax plan correctly:
Gaius Publius observes: (brackets and editing by the Wrongologist)
As they did in the 1980s, Republicans are laying a “deficit trap” for Democrats. As they did before, they’re blowing up the budget, then using deficit [fear] to force Democrats to “be responsible” about cutting social programs â “because deficits matter.”
In the 1980s Republicans ran up the deficit, then insisted that Democrats work with them to raise taxes on the middle class to over-fund the Social Security (SS) Trust Fund. This converted SS from a pay-as-you-go system that increased revenues as needed via adjustments to the salary cap, to a pay-in-advance system. That allowed any excess SS money to be loaned back to the government, partially concealing the large deficits that Reagan was running up.
Today, Republicans are expanding the deficit again, and are already starting to talk about deficits to argue for cuts in what they call “entitlements” â Medicare, Medicaid, and eventually Social Security, even though Social Security can be self-funding.
Fear of deficits is the go-to Republican ploy to try to maim or kill the FDR and LBJ-created social safety net. To the extent that Democrats are willing to accept the GOPâs argument that both parties need to be responsible to decrease the deficits, they will support cuts in social services. Even Obama was willing to consider doing just that in the name of âbipartisanshipâ. More from Gaius:
The reality â Deficits aren’t dangerous at all until there’s a big spike in inflation, which is nowhere near happening and won’t be near happening for a generation…
Do we want the US government to shrink the money supply year after year after year, by running budget surpluses, or do we want to grow the amount of money in the private sector, making more available for use by the middle class? The trillions spent on the current GOP giveaway to the already-rich could have been given to college students in debt, or people still underwater in their mortgages since the Wall Street-created crash of 2008. It could have been used to build better roads, airports, seaports or a national high speed internet backbone.
What would be the effect of that re-allocation of money?
Back to Gaius Publius for the final words. Which of these three options would you rather the government choose:
Spend money on the already-rich?
Spend money on you and the countryâs needs, ignoring the pleas of the already-rich?
Hoard as much money as possible in a vault and spend the least possible?
The first is the GOPâs current tax plan. The second is a plan for the many, an FDR-style economic policy. The third is the GOPâs wet dream, one that they will ask Democrats to help them accomplish once the already-rich have banked their share of our tax money.
Wrongoâs fear is that at some point down the road, a compromise will be offered up: Cuts to social programs in exchange for a repeal of some of the more onerous tax cuts. The only issue will be the extent of the cuts to social programs.
It will be celebrated as bipartisan sanity returning to Washington.
The Senateâs tax bill was written by lobbyists, and was hardly read by lawmakers. About 2 pm Friday afternoon, Claire McCaskill (D-MO) tweeted a list of Manager’s Amendments she’d received from a lobbyist rather than from her Republican colleagues. From McCaskill:
None of us have seen this list, but lobbyists have it.
Republicans just took 200 years of Constitutional process and trashed it so they could tell their constituents corporate benefactors that they had passed something this year.
That doesnât seem to be the right way to do things, but the GOP no longer trusts that its ideas will carry the day if they are put under scrutiny and debate. Presuming this dogâs breakfast gets through conference, six months from now, the Republican leadership will be standing at a podium, looking very concerned. They will say America needs immediate reforms to Social Security and Medicare (please donât say âentitlementsâ) in order to reduce Americaâs out-of-control deficits. Rubio and a few other high-ranking Republicans have openly said that this is their plan.
Here is a handy chart from the CBO on how the tax cuts for individuals break down:
David Stockman notes that 97% of the $1.412 trillionrevenue loss over the next decade, based on the Senate bill, is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (along with the repeal of the related AMT).
All the rest of the tax bill is a zero-sum stirring of the pot. Of note, $83 billion of the tax cuts go to the estates of 5,500 dead people per year, since the bill doubles the estate deduction to $20 million per couple.
But they did all of this to help the little guy, amirite? On to cartoons. More than the tax bill happened last week, so letâs review: Flynn and Manafort. House of cards?
Flynn has fans everywhere:
Trump Code-talks too:
Santa uncovers some nasty stuff:
Roy Moore says what he means, and means what he says:
The Oberlausitzische Library of Science, Gorlitz Germany
There is a growing concern that the mall as we know it is in big trouble. RadioShack, The Limited, Payless, and ToysâRâUs were among 19 retail bankruptcies this year. From Dave Dayden: (brackets by the Wrongologist)
This story is at odds with the broader narrative about business in America: The economy is growing, unemployment is low, and consumer confidence is at a decade-long high. This would typically signal a retail boom, yet the [retail store] pain rivals the height of the Great Recession.
Many point to Amazon and other online retailers as taking away market share, but e-commerce sales in the second quarter of 2017 were 8.9% of total sales. There are three reasons for so many sick retailers.
First, while online sales are âonlyâ 8.9% of total retail sales, these businesses have very high fixed costs and low net profit margins. The Stern School at NYU tracks net profit margins on thousands of businesses across many sectors, including retail. The margins for Specialty retail for the year ending January 2017 was 3.17%. It was 1.89% for Grocery and 2.60% for General retailers. If a high fixed cost business loses 9% of sales, it can easily wipe out the bottom line.
Second, many retail companies carry high debt levels. Bloomberg explains that private equity firms (PEâs) have purchased numerous retail chains over the past decade via leveraged buyouts, where debt is the primary source of the money used to buy the business. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder if interest rates rise.
Third, there are just too many stores in our cities and suburbs to sustain sales in a world where online shopping is growing rapidly.
Worse, billions of dollars of that PE-arranged debt come due in the next few years. More from Bloomberg:
If today is considered a retail apocalypse…then whatâs coming next could truly be scary.
This chart shows what percentage of retail real estate loans are delinquent by area:
There are large areas of America where more than 20% of the loans are past due. More from Bloomberg: (emphasis by the Wrongologist)
Through the third quarter of this year, 6,752 locations were scheduled to shutter in the US, excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That’s more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008…Apparel chains have by far taken the biggest hit, with 2,500 locations closing. Department stores were hammered, too, with Macyâs Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the total.
This threatens the retail sales staff and cashiers who make up 6% of the entire US workforce, a total of 8 million jobs. These workers are not located in any one region; the entire country will share in the pain.
These American retail workers could see their careers evaporate, largely due to the PEâs financial scheme. The PE’s, however, will likely walk away enriched, and policymakers will share the blame since they enabled the carnage.
Our tax code makes corporate interest payments tax-deductible. So the PE kingpins load up these companies with debt and when they walk away, they get tax credits for any write-offs, incentivizing them to borrow and play the game again. The PE firm might lose some or all of its equity, but in most cases, it already drew cash out via special dividends and fees, so it has made its money.
The lenders, employees, state development authorities are the ones left holding the bag.
The GOPâs new tax plan proposes a cap on the deductibility of interest payments over 30% of a companyâs earnings. But, the GOP left a loophole: Real estate companies are exempt from the cap.
Surprisingly, this benefits Donald Trumpâs businesses! It also helps PE firms that split the operating side of the businesses they buy from the property side, as most do. They put the borrowing onto the property side, and continue to deduct the interest.
So financialization businesses like PE will continue to strip the value out of companies with hard assets.
Billions in asset-stripping and thousands of operations sent overseas. Labor participation rate is stagnant, yet we are assured that if we pass big corporate tax cuts, the US economy will grow fast enough to more than compensate for the losses.
The week was dominated by two stories, the Republican tax cut efforts; and the variations on the sexual harassment theme by men in positions of power.
Letâs talk about sexual predation by men. We shouldnât be pushing all predators to the front of the same firing squad. Without diminishing or excusing what any of these scumbag politicians have done (Al Franken, Bill Clinton) pedophiles are in a detestable class all by themselves. We are now in the middle of a teachable moment, where publicizing how badly men have treated women in our society might bring about real behavioral change. This is solely due to those many, if not most, women who are saying that they arenât going to take it anymore. This tsunami of accusations and personal testimony will bring down some of the worst of the predators. In this case, sunlight is the best disinfectant.
The GOP wrote the bill. Now, weâll see who votes for it:
The elephant will always protect his best constituents:
Using the Pot/Kettle meme brings risk:
Mitch has selective beliefs when women tell their truth:
The sexual predator issue focuses the thinking of Republicans:
Trump chose Jeff Sessions for Attorney General in part because Alabama would be a lock to elect another Republican. Weâll see in 3 weeks if that works out as planned.
Bonus Republican hypocrisy: Do these people ever hear themselves?
Remember when conservatives said “activist judges” were a bad thing? Sure you do. Well, last Thursday, the Senate Judiciary Committee on a party-line vote, 11-9, approved 36 year-old Brett J. Talley, a right-wing activist, for consideration by the Senate to be a federal judge in Alabama.
Talley has never tried a case. He was unanimously rated ânot qualifiedâ by the American Bar Associationâs judicial rating committee. Since 1989, only four people have been ranked not qualified to be federal judges by the ABA, and two of these ratings have taken place under Trump.
Talley has practiced law for only three years, and while blogging last year, he denounced âHillary Rotten Clintonâ and pledged his support for the NRA. Talley said on his blog that he:
Agree[d] completely with a reader’s âthoughtful responseâ which stated…We will have to resort to arms when our other rights â of speech, press, assembly, representative government â fail to yield the desired results…
BTW, Sen. Jeff Flake (R-AZ), that proud beacon of conservative sanity, and the lamenter-in-chief of the current sorry state of the GOP, voted to approve him.
Talley is not without some qualifications. He earned his BA in philosophy and history, Summa Cum Laude, from the University of Alabama, where he was Phi Beta Kappa. He got his law degree from Harvard, where he served as an articles editor of the Harvard Journal of Law and Public Policy.
In his brief legal career, Talley served as an associate in the DC, offices of Gibson, Dunn & Crutcher. He was a law clerk for Judge Joel F. Dubina on the United States Court of Appeals for the Eleventh Circuit, and was also a law clerk to Judge L. Scott Coogler of the US District Court for the Northern District of Alabama. He served as the Deputy Solicitor General in the Alabama Attorney General’s Office. Earlier, Talley was a speechwriter for Senator Rob Portman and as a senior writer for Mitt Romney’s presidential campaign.
Dianne Feinstein asked Talley how many times he had appeared in a federal district court. This was his reply:
To my recollection, during my time as Alabamaâs deputy solicitor general, I participated as part of the legal team in one hearing in federal district court in the Middle District of Alabama…
So, while we were distracted by Trumpâs Asia trip and the Judge Roy Moore disaster, a rabidly partisan 36-year-old attack dog with scant legal experience was approved by the Senate Judiciary Committee on a party-line vote for a lifetime appointment to the federal judiciary.
This is another example of how the Republican Party has lost its moral and ethical bearings. They also spent the weekend rallying around their other prize Alabamian, Roy Moore, the sanctimonious candidate for the US Senate, who is accused of sexually molesting a 14-year-old adolescent girl.
A brief meditation about on-the-job experience: A person who lacks significant job experience will always be a poor problem-solver. Job knowledge is a prerequisite to solving problems in your occupation. There are things that you just canât learn in the classroom, or by reading a textbook. Does anyone want a first year medical student performing surgery on them? If Talley had sat as second chair for 10+ jury trials, he would have had experience equivalent to a doctor’s residency.
How can this guy be turned loose to run an appeals court courtroom?
This is one area where the GOP is just willing to win. Seemingly, they have a killer/competitive instinct that the left lacks. “Holding your nose” isnât necessary for the GOP. Standards be damned, this Talley guy can be counted on to vote correctly on the key social issues of concern to the Republican base.
Time to wake up America! Trump will fill nearly 100 judgeships that were vacant when Obama left office, thanks to a slowdown engineered by Mitch McConnell during the final two years of Obamaâs term.
Now, not all of them will be lightweight, right-wing ideologues like Brett Talley. So, itâs time for America to beat on the heads of Republican senators whenever an awful nominee is put forward. We have to hope that not all Republican senators will march in lock-step, and appoint all of the Brett Talleyâs that the GOP can find.
To help you wake up, here is the J. Geils Band with their 1974 cover of âFunky Judgeâ, originally by Bull & the Matadors:
While on the subject of judges and music, Stephen S. Trott, a justice of the US Court of Appeals for the Ninth Circuit, was a member of the folk group, The Highwaymen.
We live in the greatest country ever. Our elected leaders wonât even admit to global warming, much less try to fix it. They only offer tax cuts for corporations and rich guys. They donât even want gays to have wedding cakes. And then, thereâs Roy Moore.
President Trump wanted to call it the Cut Cut Cut Act. Congressional Republicans settled on the less catchy and less descriptive Tax Cuts and Jobs Act. What the legislation actually does is sharply reduce taxes for business while rearranging the personal income tax with a mix of cuts and increases. Whatâs needed is to throw out the tax code as we know it. The Paradise Papers show us where to find the changes we need.
Suzan DelBene (D-WA) demonstrated how corporations have successfully reconfigured government of, by, and for the people to prioritize the need and wants of business over those of the living and breathing. DelBene questioned Thomas Barthold, chief of staff for Congressâ Joint Committee on Taxation on the proposed GOP tax overhaul:
Will a teacher in my district who buys pens, pencils paper, for his students be able to deduct these costs from his tax return under this plan?
Simple answer: No.
Will a corporation that buys pens, pencils, and papers for its workers be able to deduct those costs from its tax returns under this plan?
Simple answer: Yes.
Will a firefighter from my district be able to deduct the state and local sales taxes that she pays from her tax returns under this plan?
Simple answer: No.
And will a corporation be able to deduct sales taxes on business purchases under this plan?
Simple answer: Yes.
Will a homeowner in my district be able to deduct more than $10,000 in property taxes under this plan?
Simple answer: No.
Will a corporation be able to deduct more than $10,000 in property taxes under the plan?
Simple answer: Yes.
And if a worker in my district had to move because his employer is forcing him to relocate his family or potentially lose his job, can he deduct his moving expenses under this plan?
Simple answer: No.
But if a company, a corporation, decides to close its facilities in my district, fire its workers, and move its operation to China, say, can it deduct associated moving expenses under this plan? Or stated another way: Can a corporation under this plan deduct outsourcing expenses incurred relocating a U.S. business outside of the United States?
Simple answer: Yes.
Rep. DelBene told you all you need to know. Now, go tell your Congress critter to block whatâs coming. On to this weekâs target-rich cartoon environment:
Trumpâs Chy-na visit showed who could out-negotiate whom:
Roy Moore defenders display GOP hypocrisy
Words to live by:
The Demâs election results in VA and NJ show Trumpâs pickup lines donât work for the Elephant:
Using the Pot/Kettle meme brings risk:
