Cromwell

We had to evacuate.  Posting will resume when we return and power is restored.

As I’ve noted many times, Donald Trump was elected over the objections of the GOP establishment, and owed nothing to them.  As a result, he was in a position to govern as a man above party, and to sell himself to the highest bidder.  He chose not to do that, but the GOP Congress has been unable to accomplish anything meaningful to date, so why not dismiss them as a pack of pathetic losers and make deals with Democrats?  He even gets good press and better poll ratings that way.

The problem is that Trump has identified himself so clearly with the policy priorities of the GOP that to change course now, particularly on tax cuts, would look ridiculous.  In addition, his only real political skill is throwing red meat to his base.  How is he going to make deals with Schumer and Pelosi while concurrently sucking up to white supremacists?  I don’t see how the blue base would permit it.

The more likely outcome is that Trump will position himself as a Don Quixote figure, bravely (if with mixed success) battling the swamp creatures–Republican and Democrat alike–in Congress.  That will play well with the base, but it doesn’t bode well for the GOP in 2018.

Thomas Jefferson notoriously owned a Bible that he had edited to exclude the parts that made no sense to him.  Steve Bannon must own a Bible like that, too; the difference is that he took out the parts about love, compassion, and charity, and retained only the Old Testament passages about kicking butt.

And so, we’re all waiting for Irma.

We just hope it won’t hit terra firma.

We’re hunkering down.

Lots of folks leaving town.

‘Cause the forecasters’ plots aren’t too firm-a.

My wife and I spent the Labor Day weekend in Chicago.  It was my first visit;  I was impressed by how attractive the city is.  I was also impressed by its dynamism and resilience;  the industries that originally drove the local economy are essentially gone, and yet the city thrives, and the skyline continues to evolve to this day.

You know that there were plenty of losers as the city evolved, but you never hear anything about them.  That leads to today’s question:  why did Trump’s embrace of the losers of technological change and globalization succeed, when previous losers went unheard?  Here are my hypotheses:

1.  Feelings of entitlement have grown as time has gone on.  If your job disappeared in the 1920’s, for example, you didn’t look to the government to bring it back;  you just moved on.  Decades of prosperity and increased government involvement in the economy have changed that;  in addition, years of developing roots in a community make it that much harder to leave.

2.  The welfare state hasn’t kept pace.  Capitalism creates wealth, on an aggregate basis, but it doesn’t come with any guarantee that the wealth will be shared fairly.  The alliance between the PBPs and the Reactionaries, whereby the latter provide votes for benefit and tax cuts in exchange for protection from the supposed predations of “those people,” has resulted in massively increased inequality since the early 1980’s.  The Trump victory can be viewed as an effort by the Reactionaries to drive a harder bargain with the PBPs.  They are likely to be disappointed, and the outcome is going to be explosive.

The North Korean regime, which has no interests other than its own survival, clearly views its ability to strike the United States with nuclear weapons as being some sort of a guarantee that it won’t go the way of the Libyan government.  I’ve noted before that this analysis is faulty, and that nuclear weapons didn’t exactly win the Cold War for the Soviet Union.  There is another historical piece to this puzzle, however.

There is little doubt that George W. Bush genuinely (if incorrectly) believed that Iraq possessed weapons of mass destruction.  It would have been impossible for him to sell the Iraq War to the American public without that belief.  And so, the US went to war with Iraq even though its government fully believed that it would be confronting an enemy with weapons of mass destruction.  In effect, the illusion of those weapons caused the war and the downfall of Saddam Hussein.  He would probably still be alive today if he had come clean and made it clear the weapons did not exist.

In light of this, does it really make sense for Kim Jong-Un to put such faith in his nuclear program?  I think not.

 

I don’t doubt for a minute that there are enough votes in both the House and the Senate to pass a reasonable stand-alone legislative solution to DACA.  That would require Ryan and McConnell to rely primarily on Democratic votes, just as they always do when it is time to keep the government open and raise the debt ceiling.

Immigration divides the GOP like no other issue.  If the Reactionaries were to go off and create their own party, it would probably be in response to immigration legislation.  And so, if you’re waiting for the Republican leadership to do the right thing and permit a vote on DACA legislation, you could be waiting a long, long time.

Harvey wasn’t Katrina, because geography didn’t make southeast Texas the deathtrap that New Orleans was.  Nevertheless, Harvey will have a significant impact on our politics, as follows:

1.  There are potential benefits to strong leadership.  Not botching the response to Harvey, which would include defaulting on the debt or shutting down the government at a time of crisis, would be a nice start for Trump and the GOP.  You wouldn’t think that would be a lot to ask, but it’s 2017, after all. . .

2.  Rugged individualism, as a political credo, doesn’t get you very far after a hurricane.  Republicans can expand the government to fight wars without looking like hypocrites because swagger is such a big part of their identity, but they struggle to deal with recessions and environmental disasters.  And so, you have the spectacle of Ted Cruz begging for money from the federal behemoth he so purports to despise.

3.  What’s the price of climate change?  If you just had your house ruined by Harvey, how do you feel about the notion that your loss is the price that has to be paid for others to continue to enjoy the benefits of a fossil fuel economy?  Is the GOP going to come right out and tell people a measure of annual hurricane damage is OK if it means a few GOP voters in West Virginia get their coal mining jobs back?  Not bloody likely. That’s why it’s just easier to deny climate change altogether;  the alternative of admitting a problem and doing nothing to solve it is politically unpalatable.

While Trump is polling dismally, he takes some comfort in the ongoing rise in the DJIA.  At least he has the confidence of the investor class–the country’s “winners”–right?

Even if you assume (I don’t) that he won’t drag down the economy with some appalling foreign policy decision or a vast increase in the size of the deficit, the fact is that the market is going to face a significant correction at some point in his term.  What happens then?  Will he stand before the country as a strong, confident leader and provide the necessary reassurances?  Or will he panic like a man on golf cart and start insisting that the Fed and Congress do something, anything, to solve a problem for which he, of course, is not to blame?

You can probably guess which option I’m taking.

 

I will be on vacation for a few days.  Posting will resume next Tuesday.

 

The 45th President Don.

He hasn’t a clue what goes on.

His vaunted tax plan

Is just kicking the can.

You could call it a typical con.

                      Poor Poor Pitiful Me

Well, I stood all day in the employment line

For a job at the factory.

But they’re only hiring nurses now.

Poor poor pitiful me.

 

(Chorus)

Poor poor pitiful me.

Poor poor pitiful me.

The world’s passed by

Just don’t know why.

I’m a victim now, can’t you see.

Woe, woe is me.

 

Well, I met a man at the U of A

Trying to buy books for the school year.

I looked around, then I asked him, “Hey!

How on earth did you get in here?”

He looked surprised, but then he told me why.

“It’s a thing called affirmative action.”

Whites like me need not apply,

He said with some satisfaction.

 

(Chorus)

 

Parody of “Poor Poor Pitiful Me” by Warren Zevon.

It is reasonably clear at this point that the GOP tax cut plan will retain the mortgage interest deduction.  Here are the pros and cons of that approach, from my perspective:

Pros

1.  It is appropriate for the tax code to promote home ownership, because home owners are more vested in the community and are thus better citizens than more transient renters.

2. Eliminating the deduction will cause home values to fall, thereby making millions of Americans poorer.  The last time that happened, the economic result was disastrous.

3. The deduction creates a mild stimulus to construction, which in turn provides jobs at decent wages for just the kind of people who have been struggling.

Cons

1. Would reducing home values and thereby making housing more affordable be such a bad thing?
2.  Encouraging Americans to put their money in housing, as opposed to other assets, is an unjustified intrusion into the market that has, in the past, promoted damaging real estate bubbles.
3.  Encouraging home ownership has reduced the mobility of labor and thus damaged the economy.

To me, this is a fairly close argument.    If it were up to me, I would probably support a slow phase-out of the deduction as a compromise, but, of course, it isn’t up to me.

The details of the tax cut plan are still under discussion, but its general parameters are fairly clear;  the centerpiece will be a cut in corporate income tax rates, which will be offset at least slightly by the elimination of some deductions. The GOP then intends to sell this plan, not as a reprise of the Bush tax cuts, but as a populist measure that will create jobs, increase wages, and punish the rich.

It will do nothing of the sort, of course.  The primary beneficiaries of the plan will be the fabulously wealthy, and there is every reason to believe that the outcome will be share repurchases and increased dividend payments, not new investment.

While Trump is poorly qualified to be president in more ways than I can remember, he is eminently qualified to take on the task of selling this plan to the American public.  It is Trump University on a massive scale.

David Brooks says the GOP has changed for the worse, and cannot stand.  Back in the day, when he worked for conservative publications, he never heard racist remarks in the workplace or at parties, and the GOP leadership fought fiercely against racism.  Since 2005, however, the white identity element of the party, while still not a majority, has increased substantially in size, and now controls the White House.   It’s not a pretty sight.

The reality of the situation is much different.  I’m willing to accept that Brooks and his former colleagues aren’t racist.  However, the GOP has always relied on white nationalist votes during my lifetime;  they are (and have been since the 1970’s), in fact, the core of the party in many areas. The PBP faction has used them in order to obtain tax cuts and deregulation for business.  The white nationalists (Reactionaries) finally figured out that they weren’t getting anything out of the bargain except some lip service, and demanded change.  The Trump presidency is the result of their frustration.

If the Reactionaries ultimately split off from the rest of the party, they will win majorities in most southern states,  the remnant GOP will win some western and midwestern states, and the Democrats will prevail everywhere else.  There go your big tax cuts!  That’s why it probably won’t happen.

The argument in favor of the state and local tax deduction is clear and simple:  it avoids requiring the taxpayer to make a payment with funds to which he has no legal title.  Repealing it would cause even more hardship than, for example, imposing a tax on unrealized capital gains;  at least in that case, there is an asset that could be sold to pay the tax.  One might as well tax pots of gold at the end of the rainbow.

It appears that the GOP tax reform plan will nonetheless end the deduction, mostly for ideological reasons.  The idea behind it is to force blue states to become more like red states:  in other words, to change their high taxing and spending model.  This is, of course, a violation of the federalist principles that many Republicans pretend to espouse, but only at their convenience;  if you don’t believe me, ask any GOP politician whether he thinks abortion should be lawful on demand in blue states if Roe v. Wade is overturned.

There are enough GOP House members from blue states to prevent this from happening.  Will they follow the party line at the risk of their own political survival?  That is the key question on this front, and I do not pretend to know the answer.