Month: March 2017

Viewed as a stand-alone, Germany in 2017 is unquestionably a success story. Unemployment and inflation are low; the country is running a large trade surplus; and the debt is at reasonable levels.  If you’re a German today, life is pretty good.

Viewed as the leader of Europe, Germany has been an abysmal failure.  Its attempts to Teutonize its neighbors by imposing austerity have led to economic stagnation throughout much of the EU and a corresponding nationalist backlash. Putin is looking more dangerous by the day, and even the US may now see the Germans more as an enemy than a friend. Britain is leaving the EU, whose very existence can no longer be taken for granted.  If you’re a German today, you’re looking for friends, and you’re not sure whom you can call.

Since the Alternative for Germany tainted its anti-euro stance by hobnobbing with racists, there is no likelihood of any meaningful change in German opinions regarding the EU in the foreseeable future.  My guess is that the coalition will continue, and that the German government will pull back from its unrewarding EU leadership role and hope nothing evil fills the void.  That will be the topic of tomorrow’s post.

                   Angie

Angie, Angie

When will those clouds all disappear?

 

There’s no lovin’ from the Don.

All your US friends are gone.

Let me whisper in your ear.

Angie, Angie,

Where will you lead us from here?

 

No more bailouts for the Greeks.

Won’t they just leave you in peace?

You can’t say they’re satisfied.

But Angie, Angie

They can’t say you never tried.

 

All your dreams for the EU

Now it seems that they’re all through.

Come on, baby, dry your eyes.

But Angie, Angie

Keep democracy alive.

 

Angie, Angie

It ain’t time to say goodbye.

 

Parody of “Angie” by the Rolling Stones.

It may not be completely fair to judge the merits of a religion by the company it keeps, but it is consistent with human nature;  after all, other than Constantine’s conversion, nothing helped spread Christianity like the martyrs.  In light of that, the inevitable association of Christianity with irascible old Trump voters screaming about abortion, gay rights, and the wall isn’t exactly going to help spread the gospel among young people in this country.  In the long run, the connection between Trump and the religious right is going to accelerate the decline in Christianity, bigly.

Much has been made over the years about the impact of the Christian right on American politics, but it may well be that the more significant change has run in the other direction, and not for the better.  If Christians really want to take their country back, they would be well-advised to make more of an effort to win the intellectual and moral argument instead of imposing their will on the rest of us through the political process.

The condition of France in 2020 is obviously going to depend largely on the outcome of this year’s election.  If the current polls are accurate, and there is no particularly good reason to doubt it, the two finalists will be outsiders with very limited support in the National Assembly.  I can foresee four different scenarios, only one of which is positive:

1.  Macron wins, and succeeds in building a bipartisan center-right coalition for change within the current system:  This will only happen if he has very impressive political skills.

2.  Macron wins, but cannot get anything meaningful done through the legislative process:  France continues the Hollande drift, only more so.

3.  Le Pen wins and attempts to make constitutional changes by referendum, but fails:  The political temperature of the country reaches new highs, but nothing is accomplished.

4.  Le Pen wins and succeeds in pulling France out of the euro and the EU by referendum:  I don’t see how that makes France great again.

If I were a betting man, I would put my money on #2, but that remains to be seen.

Well, that certainly was timely, wasn’t it?

The political argument for Scottish independence has never been more compelling.  The Conservative Party barely has a presence in Scotland, but it is likely to govern the UK for the indefinite future.  The Scots voted overwhelmingly against Brexit, but are stuck with its consequences.  It would appear, therefore, that the government of the UK no longer has much of a claim to represent the interests of the Scottish people, and that is a big problem.

On the other hand, the economic argument for independence has rarely been weaker.   The value of “Scottish” oil is diminishing by the day, so there is no obvious way for an independent Scotland to pay for a Scandinavian-style welfare state.  In addition, a Scotland within the EU would undoubtedly have to adopt the euro, with all the consequences that entails.  An independent Scotland would be proud, but poor.

If Scottish independence does become a reality, my guess is that the new country will be forced by the markets and the EU to adopt strong austerity measures almost immediately.  In the long run, Scotland will have to look more like Ireland than Norway–that is, with an open, deregulated, low tax economy and a limited welfare state–in order to survive economically.

Do the Scots love the idea of independence more than their welfare state? We’ll find out in the next few years.

Now that the ghastly CBO score for AHCA is a matter of public record, you can expect the GOP to respond in two ways.  The first, naturally, is to attempt to discredit the CBO, which is led by experts that were handpicked by the GOP itself; the second is to argue that AHCA is about “freedom,” not the number of uninsured.

Republicans love “freedom.”  What it means in any given case depends on who you are.  The “freedom” Republicans aspire to most is “freedom” for wealthy people to avoid paying taxes.  For some reason, the “freedom” to be uninsured doesn’t have the same cachet among the medically needy;  it has about the same value as the “freedom” to be hungry or homeless.

If AHCA were truly about “freedom,” the GOP could have simply struck all of the mandates from Obamacare and left the rest intact.  It is true, of course, that any such legislation would have roiled the markets, but, if “freedom” is really an overriding objective, that would be a price worth paying, and the 30 percent surcharge is going to damage the markets in any event.  If, on the other hand, AHCA were about limited government, it would be a straight repeal of Obamacare.

No, AHCA is simply a mechanism to redistribute wealth from the poor and medically needy to the wealthy.   That’s not what I call “freedom.”

I remember many years ago reading a book about the Supreme Court called “The Brethren.”  It was written from an unsophisticated left-wing perspective, and the question that ran through it (implicitly) was whether the Chief Justice was evil or stupid.  It fell fairly heavily on the side of stupid, although there was some evidence for both positions.

Having dealt with government for over 30 years, I can tell you from personal experience that the average official is not particularly malevolent, and is not capable of generating a conspiracy.  In the real world, if you’re faced with this question, the default position should be stupid.

It is with this mindset that I considered the issue of whether the GOP leadership deliberately created a bill that is destined to fail in order to avoid paying the political price for it, and to move on to what it really wants–tax cuts.

From a policy perspective, yes, the bill is ridiculous.  It maintains most of the structure of Obamacare that is so obnoxious to the hard right, while depriving millions of people of their health insurance.  As a result, you might well view it as a “solution” in search of a problem.  From a political perspective, however, it gives the GOP exactly what it wants:  the destruction of a key part of Obama’s legacy; and a big tax cut for the rich.  Furthermore, it is carefully weighted with goodies for both factions:  a Planned Parenthood defunding measure here; a tax credit there.  Trump and Ryan are both clearly and publicly invested in it, and the bill is moving with remarkable speed in spite of its critics.

And so, it is my opinion that the GOP conspiracy does not exist, and that the leadership does fully intend for this awful piece of legislation to become law.

The next few years in the UK will, of course, be dominated by Brexit and its collateral damage, both economic and constitutional.  By 2020, however, the Brexit process will presumably be over.  What will the political landscape look like at that point?

The Conservatives will win a huge majority at the next election.  Since Labour will, for all intents and purposes, be dead, all of the real opposition will be found within the Conservative Party itself, which will no longer be subject to any effective discipline (that, presumably, is the reason Theresa May hasn’t called for an early election).  Infighting among hard and soft Brexiteers is likely to become ugly, particularly if the economy starts to struggle.  That is when things will start to get interesting.

My prediction is that the two-party system will return, but the parties will look different, particularly if the Scots vote for independence (the subject of tomorrow’s post).  The opposition party will look, not like today’s outdated version of the Labour Party, but more like the Democratic Party in the US;  its support will come primarily from the London area, and it will promote a dynamic, open, multi-cultural society, as opposed to the nostalgic fish-and-chips world of the hard Brexiteers.

The New Democrats will fight for as close a relationship as possible with Europe. In the long run, I think they will win, because the demographics of the Brexit vote suggest that time is on their side.

We don’t know, of course, because his behavior has been the very opposite of transparent, but I strongly suspect that the record will ultimately show that there was no meaningful collusion between Trump and the Russians during the campaign. The Russians saw an opportunity to make our system look bad, and succeeded beyond their wildest dreams;  Trump was basically the unwitting, lucky beneficiary of their efforts.

The real significance of this episode is that it shows, to no one’s surprise, that Trump is uniquely ill-equipped to deal with a political crisis.  When transparency is required, he retreats to a bunker; when things are going badly, he doubles down; when he needs to stop digging, he starts on a new hole.

Imagine what is going to happen when he is confronted with something genuinely serious!  It’s going to get ugly, folks, and not just for him–we are his hostages.

Donald Trump is in the Oval Office, contemplating the portrait of Andrew Jackson. He looks grim.

Kellyanne Conway enters the room.

KC:  (in an obnoxiously whiny voice) Mr. President!

DT:  What, K.A.?  Can’t you see I’m busy?

KC:  You don’t look busy.

DT:  Shows what you know.  What do you want?

KC:  Jeff Sessions is here, and he wants to see you.

DT:  I don’t want to talk to him.  Tell him I’m not here.

KC:  Why?

DT:  He screwed up that Russian thing royally.  I’m pissed off at him.

KC:  What do you want me to tell him?

DT:  I don’t know . . . tell him I’m in Florida playing golf.

KC:  But that would be a lie, er, alternative fact.

DT:  Don’t be a dingbat, K.A.  Just do as I say.

Conway leaves.  Ivanka Trump and Jared Kushner enter the room.

IT:  Hi, Dad!  How’s it going?

DT:  Not very well.  The crooked media putting out fake news about me, the conservatives are on my back, and now I find out that Obama has bugged the Oval Office!

IT:  That’s terrible, Dad!  How did you find out about the bugs?

DT:  It’s all over Breitbart.  I know it’s true;  that guy would do anything to bring me down.  Sticks his head under the desk.  Hellooooo, Barack!  I know you’re in there somewhere!

IT:  We need to talk to you about a couple of things.

DT:  I’m just dying to hear them.  What?

IT:  We need to start making some progress on government support for day care.

DT:  Not that woman thing again!  I agreed to support that for the purposes of the campaign, but we won, and now it’s over!  I’ve got more important things to do.

IT:  But Dad, you promised!

DT:  The right is all over my back as it is.  I don’t want to hear another word about it!

IT:  But Dad. . .

DT:  Stifle yourself!

JK:  I need to talk about the Middle East.

DT:  Another favorite topic.  Just do what my buddy Bibi wants and you’ll be OK. He’s a real butt kicker, like me.   He’s my kind of guy.

JK:  That’s the problem.  How am I supposed to come across as a credible mediator if you’re always sucking up to Bibi?

DT:  You’ll figure it out.  Don’t be a meathead.  Now I have to get ready for a meeting with Shinzo somebody, so you need to go.  They leave.

Trump picks up a briefing book, stares at it for a minute, sighs, and then puts it down.  He then picks up his phone and starts tweeting furiously about Obama and Arnold Schwarzenegger.

From both an economic and political perspective, there is a great deal to be said for the estate tax:  it doesn’t interfere very much with the normal incentives to create wealth; there is a guaranteed pile of assets from which it can be paid; and it helps to reduce inequality.  For some reason, however, the Democrats have always seemed to be far more focused on marginal income tax rates than on keeping a robust estate tax. The question for today is why?

There are several possibilities.  First, they may view it as being an insignificant source of revenue in the big fiscal picture.  Second, they may buy into the notion that it is fundamentally unfair to impose further misery on the (presumably) grieving heirs. Third, some extremely wealthy people, for a variety of reasons, are Democrats, and the party may be responding to their interests.

It would be very easy for the Democrats to make the point that Trump and his heirs will be among the principal beneficiary of the repeal of the estate tax when the tax reform bill starts moving.  Under these circumstances, however, will they actually take advantage of that opportunity?  I have my doubts.

There was an article in the NYT a few days ago that confirmed what many people have been saying all along:  that many members of the WWC are resentful of what they see as the Democrats’ excessive interest in the welfare of the poor and minorities.  They support cuts in welfare spending because they don’t see anything in it for them.  On the other hand, they do not support cutting programs such as Social Security and Medicare which provide benefits tied to payments made through employment.

The GOP pitch to the WWC goes something like this:

1.  We’ll bring your old mining/manufacturing job back by imposing tariffs and cutting environmental regulations.
2.  We support your conservative social values.
3.  We’ll protect your pocketbook from the insatiable demands of the undeserving poor.

The Democrats can respond to these arguments as follows:

1. They can’t outbid the GOP when it comes to cynical nostalgia, so they just have to sit back and wait for Trump to fail on his promises to revive the economy of the last century.
2.  They can, and should, make a point of being more sensitive to rural, conservative culture.  They cannot, however, go so far as to agree with the GOP that it is the only genuine American culture.
3.  They need to make a bigger effort to show support for initiatives designed for poor workers, such as an expansion of the EITC.  Expanding the welfare state to include more members of the WWC is in no way inconsistent with Democratic principles.

The last point is where you find the intersection between Trump and Sanders voters.  Bernie’s program went too far, and was poorly focused, but his conspicuous interest in including the WWC in the welfare state was good politics.

 

Call it Ryancare, not Trumpcare!  Ryan genuinely cares about tax cuts for rich people; I only want to be able to say I kept my promise and got rid of Obamacare!

The fact that Barack Obama and Paul Ryan agreed on the need for corporate tax reform tells you that it is not essentially a partisan issue.  It is, however, an issue that results in winners, losers, and trade-offs, which is in some respects worse.

The GOP has shown very little ability or desire to balance interests over the last decade or so;  their default position is to throw money at everyone if they really want a deal.  Trump, for his part, has cost himself any possible Democratic support, even on issues like this, by choosing to govern as a hard line Republican instead of a de facto third party candidate independent of the establishments of either side.  As a result, I strongly suspect that any corporate tax “reform,” particularly involving a border adjustment, will die at the hands of the prospective losers, and the only thing left will be an across-the-board tax cut that will do little except increase the height of the already enormous corporate cash mountains.

According to an article in yesterday’s Politico, the GOP leadership is putting a great deal of faith in Trump’s ability to close the deal on the Obamacare replacement bill.  The idea is that the negotiator-in-chief can mediate away the differences between the conservative and moderate dissenters and provide political cover for the former in red states.

On its face, it makes some sense.   Trump obviously has negotiating skills, even though they are undoubtedly overblown, and he is invested in getting a bill, not in any policy inherent in the bill.  On the other hand, he has made it clear that he views negotiations as a zero-sum game in which the strong prevail, which is not an appropriate approach for a mediator, he is unfamiliar with critical policy details, and he can’t provide any cover to moderate opponents of the deal.   Whether he can deliver is, therefore, an open question.