Cromwell

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.

You’ve undoubtedly seen plenty of black-and-white footage of World War II, and some of you may have seen recently unearthed video in color, but did you know that world leaders talked trash to each other on Twitter?  Here are a few recently discovered tweets:

1938

@NevillethePM

Finished the deal with @Fuhrer3reich in Munich today!  #Peace in our time!

 

@englishbulldog1

In your time, maybe.  Not in the rest of the world’s.

 

1940

@Fuhrer3reich

Enjoying my vacation in Paris!  Give up and save rotting British Empire, @englishbulldog1!

 

@englishbulldog1

We survived Napoleon, @Fuhrer3reich.  You couldn’t water his horse.

 

1941

@Fuhrer3reich

Caught you napping,  @Redstar17!  Hear Moscow is really nice in late summer. Looking forward to it.

 

@Redstar17

Bring your winter clothes, @Fuhrer3reich.  You’re going to need them.

 

@TherealTojo

Take that, FDRtheprez!  The rising sun rules the Pacific!

 

@FDRtheprez

You missed our carriers, @TherealTojo.  We’ll be back.

 

1942

@Fuhrer3reich

Going to change the name of Stalingrad to Hitlergrad, @Redstar17!

 

@Redstar17

Remnants of 8th Army enjoying warm Russian hospitality.  See you in Berlin, @Fuhrer3reich!

 

1944

@CommanderIke

Nothing like a nice day on a French beach.  Sorry we missed you, @Desertfox!

 

@Desertfox

Worst birthday party ever.

 

1945

@Fuhrer3reich

Master race let me down.  Signing off.

 

@wildaboutharry

Hey, @TherealTojo:  BOOM!

I barely had to change this one.

Cruel To Be Kind

Oh, I just can’t pay another meds bill.

Though you say you’re my friend, I’m at my wits’ end.

You say your love is bona fide

But that don’t coincide

With the things that you do.

And when I ask you to be nice, you say

 

(Chorus)

We’ve got to be cruel to be kind, in the right measure.

Cruel to be kind, it’s the very design.

Cruel to be kind, means that we love you.

Baby, we’ve got to be cruel to be kind.

 

Well, I do my best to understand, Paul.

But I’m still mystified, and I want to know why.

I pick myself up off the ground, to have you

Knock me back down, again and again.

And when I ask you to explain, you say

 

(Chorus)

 

Parody of “Cruel To Be Kind” by Nick Lowe.

 

The Obamacare bill in the House.

Opposition has yet to be doused.

Will you win or you lose?

It depends on your views.

Either way, lots of people will grouse.

Obamacare was created in response to spiraling medical costs and a failing insurance market.  There were three key components to the legislation:  the individual mandate; community rating; and subsidies for people who otherwise couldn’t afford insurance.  While the ideas behind Obamacare largely originated with the Heritage Foundation and were first implemented by Mitt Romney, the GOP hurled itself furiously at the program as being an expensive and unfair (i.e., tilted towards the poor) infringement on markets and personal freedom.

The House GOP plan has now been released.  It keeps community rating, replaces the individual mandate with a penalty for gaps in coverage, cuts taxes on the rich, rolls back the Medicaid expansion, but only in the future, and ties subsidies to age rather than income.  In short, it is the reverse Robin Hood version of Obamacare, not its negation.

Will it pass?  The vote will certainly be close.  There is plenty for everyone to hate in the bill, which will undoubtedly increase the number of uninsured throughout the country, damage the markets, and benefit young, healthy, and wealthy people at the expense of the poor and the sick.   The bottom line, however, is that after years of frenzied assaults on the premises of Obamacare, all the legislation really does is transfer some resources from the poor to the rich; the entitlement program loathed by conservatives still stands.  Was that really worth all the agitation?

On a related note, travel ban 2.0 is out, and it eliminates many of the features that made the first version so obnoxious.  The drafting process was more measured and inclusive, the ridiculous ambiguities of the first version are gone, Iraq and green card and visa holders have been excluded, the preference in favor of Christians is gone, and so on.  It may very well pass legal muster this time.  Unfortunately, the ban is a solution in search of a problem;  there is no evidence that people from the six countries in question have engaged in terrorist acts in the US, or that they are currently being inadequately vetted, or that there is a real plan to improve the vetting process.  All we are left with is a signal to the rest of the world that America is no longer an open society, and significant damage to our tourist industry.  The clash of civilizations will, apparently, have to wait for another day.

Finally, the Trump defense budget has been shown to be a mere 3% increase over Obama’s proposed budget, and there is no evidence of any strategic plan behind it.  Apparently throwing money at the military, by itself, is supposed to deter our enemies.  I think not.

All in all, Macbeth’s despairing description of life fits the actions of the GOP and the Trump Administration to date:  a tale told by an idiot, full of sound and fury, signifying. . . not much.

So it is Steve Bannon’s intent to “deconstruct the administrative state.”  Let’s turn the tables and deconstruct him.  What lies behind the mask?

On foreign policy, I see two different threads that are not completely consistent.   The first is a Huntingtonian “clash of civilizations” motif that focuses primarily on Islam, although concern about China is present, as well.  The Huntingtonian approach ignores the fact that hundreds of millions of Muslims don’t hate us, and are in fact the principal victims of what amounts to a civil war within Islam.  My real problem with this strain of Bannonism, however, is that the logical solution to the “clash of civilizations” would be to unite all Christians, including South and Central Americans and Europeans, against Islam, but Bannon doesn’t attempt to do that.

In practice, Bannon is just a 1930’s style ethnic nationalist who thinks we won World War II and the Cold War, but lost the peace by putting the interests of our so-called “allies” ahead of our own.  It is as if the British and the French, having won World War I, wanted to tear up the Treaty of Versailles and divide up Germany in 1932. It just doesn’t make any sense, and why someone would want to return to the world of the 1930’s, given how that turned out, is beyond me.

In domestic policy, Bannon appears to subscribe to a Palinesque view that red America is the only real America, and has been sold out by an unholy elite conspiracy involving big business, the media, the judicial system, intellectuals, and both parties.  As a result, while blue America prospers, red America withers economically, and its values, the bedrock of the country, are no longer respected.

Note that Paul Ryan and the “old” GOP are almost as guilty as Barack Obama if you accept this point of view.  There are a number of problems with it:

1.  Notwithstanding Bannon’s opinion, blue Americans have just as much claim to be “real Americans” as red Americans, and the American culture that he wants to protect is dynamic and hardly limited to the contributions made by dead and elderly white people;
2.  The economic phenomena of which he complains can be found throughout the developed world, and thus are not the result of policy cooked up by American elites;
3.  Red Americans benefit from free trade in the form of lower prices for manufactured goods;
4. Agricultural interests in red America have been among the big winners of free trade, and would suffer from the creation of “Fortress America;”
5.  All of the data indicate that the loss of American manufacturing jobs since World War II is due primarily to automation, not free trade; and
6.  If his plan is to “drain the swamp” of members of the elite who have benefited from the corrupt status quo, his boss has a strange way of showing it.  Trump has filled his cabinet with billionaires and intends to propose a regressive tax cut that will make the current elite even wealthier.

For all of his outrageousness, Bannon represents the interests of an old, tired America, not a dynamic, progressive one.  His ideas run counter to the interests of most of his own party, without which Trump cannot govern.  He is, therefore, doomed to fail.

As I have noted repeatedly, the GOP is made up of four ideological factions: Christian Democrats; Pro-Business Pragmatists (PBPs); Conservative Libertarians; and Reactionaries.  Trump ran as a representative of the Reagan Coalition, which consists of PBPs and Reactionaries; what set him apart from most Reagan Coalition candidates was his willingness to openly embrace Reactionary positions to which most other GOP candidates typically just give lip service.

Reactionaries and PBPs have diametrically opposed views on a number of issues, such as immigration, tax cuts for the wealthy, free trade, and entitlement cuts. How is Trump managing these potential conflicts thus far?

With head fakes, rumors, and misdirection plays.  He lets it be known that he is considering a much more business-friendly position on immigration in his State of the Donald speech, but it never materializes.  He selects deficit hawks for his cabinet, but then presents a budget framework without cuts to Social Security and Medicare.  He says his tax cut plan will focus on the middle class in spite of all of the evidence to the contrary.  He talks constantly about trade issues, but he hasn’t actually taken any protectionist actions yet.   And so on.

Of course, this kind of balancing act can’t go on forever;  at some point, he has to actually deliver the goods instead of just keeping everyone’s hopes up.  We’ll know where he actually stands by the end of the year.

                   Spring Break

He’s gazing out into the distance, again.

The sun has gone over the hill.

He’s reading his book and he’s petting his dog

And wishing that time could stand still.

 

The game is approaching the end of the fifth.

He says it’s time for a refill.

The air is as soft as a baby’s behind.

And he wishes that time could stand still.

 

The beach is just teeming with tourists again.

The sunset’s a daily thrill.

She orders another, and muses aloud

That she wishes that time could stand still.

 

The bombers are ready, and missiles will fly.

There’s oceans of blood to be spilled.

I know it sounds gloomy, but nevertheless

We know that time never stands still.

On Trump’s loyal crony named Jeff.

On Russia, I fear he’s tone deaf.

I guess he forgot.

His seat’s getting hot.

If he goes, well then, who will be left?

Let’s face it:  three American administrations tried, and completely failed, to persuade the North Korean regime to give up its nuclear program, because the regime obviously believes that nuclear weapons are essential to its continued existence. Gorbachev could tell you that a nuclear arsenal is no guarantee that your political system won’t implode, and the regime already has a substantial conventional deterrent, but whatever.  It is what it is.

That leaves us with three options:

1.  A Chinese-inspired coup, followed by a partial liberalization of the political and economic systems:  For everyone but the regime, this is the best possible outcome.  The Chinese get to expand their influence; the North Korean people get a more tolerable system; the South Koreans don’t have to worry about picking up the huge check for reunification; and we get an end to the nuclear program. Unfortunately, the regime is only too aware of this possibility, which is why any North Korean bigwig who becomes close to the Chinese tends to end up on the business end of an anti-aircraft gun.  China is, in a way, as big a threat to the regime as we are.

2.  Learn to live with a North Korean nuclear threat:  Deterrence has always worked with all of the other nuclear powers, so why not North Korea?  The obvious response is that it would be risky to rely on the rationality of a hermit state that places such an unwarranted value on its nuclear program.

3.  A preemptive strike on the nuclear program, accompanied by a promise not to seek regime change and a threat to annihilate North Korea if there is any retaliation:  The risk of this approach, of course, is millions of deaths in South Korea and, potentially, even Japan.  If Trump truly believes in “America First,” however, what’s that to him?  It would be up to Kim to decide whether to live with the humiliation of losing his weapons or to retaliate and watch the complete destruction of his country.

I have predicted previously that Trump will roll the dice with the lives of our allies and launch the preemptive strike.  I stand by my prediction.

Just because Trump didn’t, in the words of one commentator, “bite the head off a bat” doesn’t mean the State of the Donald speech was the greatest thing since the Gettysburg Address.  Both stylistically and substantively, it was a lousy speech.  If Obama had given it, everyone would be talking about how bad it was.

The phrase “soft bigotry of low expectations” was applied initially to the education of low-income and minority school children, but it applies here, too. We are entitled to better.